Antoni v. Greenhow/Dissent Harlan

HARLAN, J., dissenting.

I understand my brethren of the majority, in the opinion read by the chief justice, to declare: That the bonds and coupons issued by Virginia, under the funding act of 1871, constitute contracts, within the meaning of that clause of the federal constitution, which forbids a state from passing any law impairing the obligations of contracts; that the holder of a coupon, so issued, against whom state taxes are assessed, is entitled under his contract to have it applied in payment of his taxes, when offered; that the statute of January 14, 1882, in so far as it prevents the tax-collector from receiving it, when so offered, for any purpose except that of identification and verification, is in conflict with the federal constitution, and therefore void; that as a general rule, the laws applicable to the case, in force at the time and place of making a contract, including those which affect its validity, construction, discharge, and enforcement, enter into and form a part of the contract itself; and that while the state may alter or change existing remedies for the enforcement of a contract, it may not make such alterations and changes in the forms of action or modes of proceeding as will impair substantial rights, or leave the party without an adequate and efficacious remedy for their enforcement. I understand them, also, to reaffirm Bronson v. Kinzie, 1 How. 316, where, among other things, this court, speaking by Chief Justice TANEY, said:

'It is difficult, perhaps, to draw a line that would be     applicable in all cases between legitimate alterations of the      remedy, and provisions which, in the form of remedy, impair      the right. But it is manifest that the obligation of the     contract, and the right of a party under it, may, in effect,      be destroyed by denying a remedy altogether; or may be      seriously impaired by burdening the proceedings with new      conditions and restrictions, so as to make the remedy hardly      worth pursuing. And no one, we presume, would say that there     is any substantial difference between a retrospective law      declaring a particular contract or class of contracts to be      abrogated and void, and one which took away all remedy to      enforce them, or incumbered it with conditions that rendered      it useless or impracticable to pursue it.'

I do not understand the court to throw any doubt upon or in any degree to qualify the decision, either in Providence Bank v. Billings, 4 Pet. 560, where this court, speaking by Chief Justice MARSHALL, said that it had 'been settled that a contract entered into between a state and an individual is as fully protected by the tenth section of the frist article of the constitution, as a contract between two individuals;' or in Green v. Biddle, 8 Wheat. 84, where it was said, through Mr. Justice WASHINGTON, that 'the constitution of the United States embraces all contracts, executed or executory, whether between individuals or between a state and individuals, and that a state has no more power to impair an obligation into which she herself has entered than she can the contracts of individuals;' or in Woodruff v. Trapnall, 10 How. 207, where, speaking by Mr. Justice MCLEAN, the court declared that 'a state can no more impair, by legislation, the obligation of its own contracts, than it can impair the obligation of the contracts of individuals;' or in Wolff v. New Orleans, 103 U.S. 366, where, speaking by Mr. Justice FIELD, this court unanimously held 'that the prohibition of the constitution against the passage of laws impairing the obligation of contracts applies to the contracts of states, and to those of its agents acting under its authority, as well as to contracts between individuals.'

These propositions meet my hearty approval, as well because they rest upon a sound interpretation of the constitution, as because they have been long established by the decisions of this court. But, with my brother FIELD, I am constrained to withhold my assent from so much of the opinion of the court as holds that the remedy provided by the act of January 14, 1882, is adequate or efficacious for the protection and enforcement of the rights of parties holding bonds and coupons issued by Virginia under the funding act of 1871. On the contrary, the former act, especially as modified by that of April 7, 1882, is a palpable and flagrant impairment of the obligation of her contract, and, consequently, is unconstitutional and void. If the act of January 14, 1882, be upheld in its application to bonds issued under the act of 1871, it is difficult to perceive that the constitutional inhibition upon laws impairing the obligation of contracts is of the slightest practical value for the preservation of the rights of those dealing with states. Indeed, the act of January 14, 1882, in its necessary operation, as directly and effectually impairs the commercial value of the bonds and coupons issued under the funding act as would a statute which repudiated the bonds outright, and forbade the receipt of their coupons, under any circumstances, for taxes, debts, or demands due Virginia.

What were the rights acquired by the bondholders under the funding act, and other laws of Virginia in force when that act was passed? This inquiry is fundamental in the case, since those rights are entitled to judicial protection, either through the remedies given when they accrued, or through the remedies, if any, subsequently given, which may be adequate and efficacious to that end. Under the contract Antoni was entitled, as all agree, to have his coupon received, when offered, in payment of taxes. If the tax-collector refused to receive it, when so offered, the laws in force when the contract was made gave him the remedy of a mandamus from the supreme court of appeals of Virginia to compel the collector to accept his coupon and cancel his taxes. This is conceded by my brethren of the majority, and no one claims that there was any other remedy at that time for the direct enforcement of the contract. And that remedy, it cannot be denied, was one of value, since the taxes, until paid, constituted an incumbrance upon the tax-payer's property, which he could not prudently overlook, and which he was entitled to have removed. It should be observed, in this connection, that the constitution of Virginia, adopted in 1870, (article 4, § 2,) in express terms, gave original jurisdiction to the supreme court of appeals in cases of mandamus. Such were the contract rights of the bondholders under the act of 1871, and such the remedy then given for their enforcement.

I proceed to inquiry whether those rights have been impaired by the act of January 14, 1882. The first section of that act declares that the officer to whom coupons, issued under the act of 1871, are tendered in payment of taxes, debts, or demands due the state, 'shall receive the same for the purpose of identification and verification.' The second section provides that he shall, at the same time, require the tax-payer to pay his taxes in coin, legal-tender notes, or national-bank bills, and, upon such payment, give him a receipt for the same; and, in case of a refusal of the tax-payer so to pay, the officer is directed to collect the taxes as all other delinquent taxes are collected; that is, by levy and distraint. It may be observed here that where the tax-payer elects to stand upon the terms of his contract, and refuses to pay his taxes in coin, legal-tender notes, or bank bills, the act, curiously enough, does not direct the officer to return the coupons so tendered.

But having possession of the coupons, and the coupon holder having refused to surrender his contract rights, the third section of the act requires the collector to deliver the coupons to the judge of the county court of the county or the hustings court of the city in which such taxes, debts, or damands are payable. Thereupon, the act declares, the tax-payer shall 'be at liberty to file his petition in said county court against the commonwealth,' and have a jury impaneled to try whether the coupons are 'genuine, legal coupons, which are legally receivable for taxes, debts, and demands,' with right of appeal by either party to the circuit court and court of appeals. 'If it be finally decided in favor of the petitioner that the coupons tendered by him are genuine, legal coupons, which are legally receivable for taxes and so forth, then the judgment of the court shall be certified to the treasurer, who, upon the receipt thereof, shall receive said coupons for taxes, and shall refund the money, before then paid for his taxes by the tax-payer, out of the first money in the treasury, in preference to all other claims.'

The alteration made by the act of January 14, 1882, of the remedy by mandamus, is this: If a mandamus is applied for to any court of the commonwealth, the collector shall make return 'that he is ready to receive said coupons in payment of such taxes, debts, and demands as soon as they have been legally ascertained to be genuine, and the coupons which, by law, are actually receivable.' Upon such return the court shall require the tax-payer to pay his taxes to the proper officer, which being done, the tax-payer must file his coupons in court which is directed to forward them to the county court of the county or the hustings court of the city where the taxes are payable, when an issue is framed, upon the trial of which the officer representing the state must require proof of the genuineness and legality of the coupons tendered. A right of appeal is given to the circuit court and the supreme court of appeals. If the petitioner finally succeeds, then the court is required to issue a mandamus for the receipt of the coupons for the taxes assessed. Thereupon the treasurer of the commonwealth must refund to the tax-payer the amount theretofore paid by him out of any money in the treasury, in preference to all other claims. The subsequent act of April 7, 1882, provides that no writ of mandamus shall issue from the supreme court of appeals 'in any case of the collection or attempt to collect revenue, or compel the collecting officers to receive anything in payment of taxes other than as provided in chapter 41, Acts of Assembly, approved January 26, 1882, or in any case arising out of the collection of revenue in which the applicant for the writ or process has any other remedy adequate for the protection and enforcement of his individual right, claim, and demand, if just.'

This court waives any determination of the question whether the act of April 7, 1882, repeals so much of that of January 14, 1882, as relates to mandamus. But, referring to the remedy given by the first, second, and third sections of the latter act, it holds that there is no substantial difference between the remedy given by those sections and the remedy given by mandamus in the same act; further,-which is vital in this case,-that the obligation of the contract is not impaired by the changes made by the act of January 14, 1882, in the remedies for its enforcement, in case the collector refuses to accept coupons in payment of taxes when offered for that purpose. Here is the radical difference between the majority of my brethren and myself. To my mind-I say it with all respect for my associates who have reached a different conclusion-it is so entirely clear that the change in the remedies has impaired both the obligation and value of the contract that I almost despair of making it clearer by argument or illustration. Under the contract the tax-payer, it is conceded, is entitled to have his coupon received for his taxes when tendered; while under the statute of January 14, 1882, the collector is forbidden to so receive it; and the tax-payer, in order to protect his property against levy or distraint, and relieve it from the incumbrance created by the assessment of taxes, must pay his taxes in money, and then, if he wishes to get his money back, prove to the satisfaction of 12 jurymen the genuineness and legal receivability of his coupons. Under the contract and the laws in force when it was made, the tax-payer is entitled, in the first instance, to enforce the receipt of his coupons for taxes by mandamus, the sole remedy then given to effect that result; while under the subsequent legislation he is denied the right to a mandamus until he first pays his taxes in money, and then proves to the satisfaction of 12 juryman that they are genuine coupons and legally receivable for taxes. Under the contract, and the laws in force when it was made, the tax-collector was not bound to resist an application for mandamus, and it is not to be presumed that he would do so unless he doubted the genuineness of the coupons tendered in payment of taxes; if, however, he did so, he became liable to pay the costs incurred by the tax-payer when the latter succeeded; while under the act of January 14, 1882, all discretion is taken from the collector, and he is required, although he may know the coupons to be genuine and legally receivable for taxes, to decline receiving them for taxes until the tax-payer, having first paid his taxes in money, shall prove them, to the satisfaction of 12 jurymen, to be genuine.

Let me further illustrate some of these propositions. Suppose the tax-payer holds a bond for $100 issued under the act of 1871. It has 34 years to run, with interest payable semi-annually at the rate of 6 per cent. per annum. The interest for the whole period the bond runs is evidenced by 68 coupons of three dollars each. Under the laws in force when the contract was made, a mandamus to compel the receipt of the first coupon for taxes, having established its genuineness and its receivability for taxes, would estop the collector or the commonwealth from raising any such question as to the remaining coupons of the same bond. But under the act of January 14, 1882, the collector is required, as to all coupons presented, although known to be genuine, to collect money for the taxes for which such coupons are tendered; and that money is retained by the commonwealth, unless the tax-payer, upon every presentation of coupons for taxes, goes through the jury trial prescribed by that act, and obtains a verdict establishing their genuiness and legal receivability for taxes. The verdict as to one lot of coupons does not, under that act, establish the genuineness of other coupons of the same bond. Thus it is demonstrably clear that the tax-payer, before he can enforce the receipt of the entire 68 coupons of one bond for $100, may be required to have at least as many jury trials, covering precisely the same issues, as there may be occasions to use coupons in payment of taxes. Certainly the tax-payer, if not an attorney, cannot go safely before the jury without an attorney to represent him. It is therefore almost absolutely certain that his attorney's fee and costs for each jury trial will be several times greater than the amount of the coupons involved in such trial. The result, then, is that the tax-payer will lose more by presenting his coupons in payment of his taxes then by making an absolute gift of them to the commonwealth.

And the remedy thus given by the statutes, passed after the contract was made, for the enforcement of the tax-payer's admitted right to have his coupon received for taxes, when offered, is pronounced to be adequate and efficacious, and not an impairment of the substantial rights given by the contract. My brethren distinctly admitting that the legislation of 1882 is in hostility to the state's creditors, and has impaired the commercial value both of the bonds and their coupons-in effect, hold that such legislation does not burden the proceedings for the enforcement of the contract with any new conditions or restrictions inconsistent with, or which impair, its obligations. I cannot assent to such conclusion, believing, as I do, not only that it is in direct conflict with every adjudged case cited, either by the court or by my brother FIELD, but that the new remedy is adequate and efficacious, not for the preservation and enforcement, but the destruction, of the contract. The holders of the bonds and coupons are placed by the legislation of 1882 in the position where it is useless and impracticable to pursue the remedies thereby given. To my mind this is so perfectly apparent that I should have deemed it impossible that any different view could be entertained. It should be remembered that the court places its decision upon the ground that the change in the remedy has not, in legal effect, impaired the obligation of the contract, and not upon the ground that this suit is, within the meaning of the federal constitution, a suit against the state. Nor could it be placed upon the latter ground without overturning the settled doctrines of this court. Davis v. Gray, 16 Wall. 220; Osborn v. Bank of U.S. 9 Wheat. 750; Board of Liquidation v. McComb, 92 U.S. 541. It is a case in which 'a plain official duty, requiring no exercise of discretion, is to be performed,' and where performance in the mode stipulated by the contract is refused. In such cases, any person who will sustain personal injury by such refusal may have a mandamus to compel its performance. Board of Liquidation, etc., v. McComb, supra. The acts of 1882, in their application to the bonds issued under that of 1871, are unconstitutional and void, because they impair the obligations of the contract between the parties. The way is, therefore, clear for the court to give the remedy allowed by the law when the contract was made. That remedy is, in law, unaffected by subsequent legislation, which is unconstitutional. The defendant cannot plead such statutes as an excuse for the non-performance of a plain official duty, requiring no exercise of discretion, because, as held in Board of Liquidation v. McComb, supra, in accordance with settled principles, 'an unconstitutional law will be treated by the courts as null and void,' and 'if the officer plead the authority of an unconstitutional law for the non-performance or violation of his duty,' that will not prevent a mandamus from being issued, or an injunction being granted, when that is necessary to prevent threatened injury.

One word in this connection about Tennessee v. Sneed, 96 U.S. 69, to which the court refers as authority for the present decision. In the brief of the attorney general of Virginia the names of the justices who participated in that decision are given, and mine is placed among the number. This is an error into which counsel naturally fell by reason of the fact that there are cases in the same volume preceding that of Tennessee v. Sneed, and cases in the previous volume of our reports, in the decision of which I participated. In fact, however, that cases was determined, and the decision therein announced, before I became a member of this court.

Touching Tennessee v. Sneed, I may say that it does not militate against the views I have expressed. Upon the face of that decision its appears that this court, accepting as authority a decision of the supreme court of Tennessee, held that when the contract there in question was made, no remedy by mandamus was given against an officer of the state charged with the collection of the revenue. And to show that the court did not have before it, and did not decide, any case of the withdrawal of existing remedies by subsequent legislation, I quote this language from the opinion of Mr. Justice HUNT, speaking for the court: 'The question discussed by Mr. Justice SWAYNE in Walker v. Whitehead, 16 Wall. 314, of the preservation of the laws in existence at the time of the making of the contract, is not before us. The claim is of a subsequent injury to the contract.'

Without further elaboration, and referring to the authorities cited in the dissenting opinion of my brother FIELD, I content myself with saying that the principles of law applicable to the present cases are stated in McCracken v. Hayward, 2 How. 612, where this court, speaking by Mr. Justice BALDWIN, said: 'The obligation of a contract consists in its binding force on the party who makes it. This depends upon the laws in existence when it is made. These are necessarily referred to in all contracts, and form a part of them as the measure of the obligations to perform them by the one party, and the right acquired by the other. There can be no other standard by which to ascertain the extent of either than that which the terms of the contract indicate, according to their settled legal meaning. When it becomes consummated, the law defines the duty and the right, compels one party to perform the thing contracted for, and gives the other a right to enforce the performance by the remedies then in force. If any subsequent law affect to diminish the duty, or to impair the right, it necessarily bears on the obligation of the contract in favor of one party to the injury of the other; hence, any law which in its operation amounts to a denial or an obstruction of the rights accruing by a contract, though professing to act only on the remedy, is directly obnoxious to the prohibition of the constitution. * *  * The obligation of the contract between the parties, in this case, was to perform the promises and undertakings contained therein; the right of the plaintiff was to damages for the breach thereof, to bring suit and obtain judgment, to take out and prosecute an execution against the defendant till the judgment was satisfied, pursuant to the existing laws of Illinois. These laws giving these rights were as perfectly binding on the defendant, and as much a part of the contract, as if they had been set forth in its stipulations in the very words of the law relating to judgments and executions.'

Mr. Story, in his Commentaries on the Constitution, (vol. 2, p. 245,) says that any deviation from the terms of a contract, by postponing or accelerating the performance it prescribes, or imposing conditions not expressed in the contract, or dispensing with the performance of those which are a part of the contract, impairs its obligation. And Mr. COOLEY, in his treatise on Constitutional Limitations, summarizes, as I think correctly, the doctrines of numerous adjudged cases in this and other courts, when he says that 'where a statute does not leave a party a substantial remedy, according to the course of justice as it existed at the time the contract was made, but shows upon its face an intention to clog, hamper, or embarrass the proceedings to enforce the remedy so as to destroy it entirely, and thus impair the contract, so far as it is in the power of the legislature to do it, such statute cannot be regarded as a mere regulation of the remedy, and is void,' (p. 289)-language strikingly applicable to the legislation of Virginia.

By an act passed by the legislature of Virginia on the seventh of March, 1872, collectors of taxes were required to accept, in payment of taxes, nothing but gold and silver coin, United States treasury notes, and notes of national banks. But the supreme court of appeals of that commonwealth pronounced it to be unconstitutional as applied to the holders of bonds and coupons issued under the funding act of 1871. 22 Grat. 833; 24 Grat. 169; 30 Grat. 137. Other statutes were subsequently passed, plainly having for their object the destruction of the contracts made under and in pursuance of the funding act of 1871. The constitutional validity of that legislation was involved in Hartman v. Greenhow, 102 U.S. 672. This court there, with only one dissenting voice, sustained the right of tax-payers, holding coupons issued under the act of 1871, to have them received in payment of taxes. Finally came the enactments of 1882, which have so changed the remedies existing when bonds were issued under the act of 1871 that tax-payers, holding coupons of such bonds, cannot use them in payment of taxes without expending more money to enforce compliance with their contract than the coupons are worth.

I cannot agree that the courts of the Union are powerless against state legislation which is so manifestly designed to destroy contract rights protected by the constitution of the United States.

Without stopping to speculate upon the disastrous consequences which would result both to the business interests and to the honor of the country if all the states should enact statutes similar to those passed by Virginia, I sum up what has been so imperfectly said by me: If, as is conceded, Antoni is entitled by the contract to have his coupon received in payment of taxes, when offered for that purpose, and if, as is also conceded in the opinion of the majority, he was entitled, by the laws in force when the contract was made, to the remedy of mandamus to compel the tax-collector to receive his coupons and discharge pro tanto his taxes, it is clear that the subsequent statute does impair the obligation of the contract, by imposing new and burdensome conditions, which not only prohibit the collector from receiving coupons in payment of taxes when offered, but require the tax-payer to pay his taxes in money, not to be returned to him, unless, upon the occasion of each tender of coupons, he submits (without the possibility of recovering his costs of suit) to a jury trial, and proves to the satisfaction of 12 jurymen that the coupons tendered are genuine and legally receivable for taxes.

Upon the grounds stated I dissent from the judgment.