Craig v. Missouri

WRIT of error to the supreme court of the state of Missouri.

In 1823, an action of trespass on the case was instituted in the circuit court for the county of Chariton, in the state of Missouri, by the state of Missouri, against Hiram Craig and others. The declaration sets forth the cause of action in the following terms:

'For, that whereas, heretofore, on the 1st day of August, in the year of our lord 1822, at the county of Chariton, aforesaid, the said Craig, John Moore, and Ephraim Moore, made their certain promissory note in writing, bearing date the day and year aforesaid, and now to the court here shown, and thereby, and then and there, for value received, jointly, and severally, promised to pay to the state of Missouri, on the 1st day of November 1822, at the loan office in Chariton, the sum of one hundred and ninety-nine dollars and ninety-nine cents, and the two per centum per annum, the interest accruing on the certificates borrowed, from the 1st day of October 1821. Nevertheless, the said Hiram Craig, John Moore, and Ephraim Moore, did not on the 1st day of November, or at any time before or since, pay to the state of Missouri, at the loan office in Chariton, the said sum of one hundred and ninety-nine dollars and ninety-nine cents, or the two per centum per annum, the interest accruing on the certificates borrowed, from the 1st day of October 1821; but the same to pay, &c.'

To this declaration the defendants pleaded the general issue; and neither party requiring a trial by jury, the case was submitted to the court on the evidence and the arguments of counsel. The record contained the following entry of the proceedings of the court:

'And afterwards, at a court began and held at Chariton, on Monday the 1st day of November 1824, and on the second day of said court, in open court, the parties came into court by their attorneys, and neither party requiring a jury, the cause is submitted to the court; therefore, all and singular the matter and things and evidences being seen and heard by the court, it is found by them, that the said defendants did assume upon themselves, in manner and form as the plaintiffs, by their counsel, allege: and the court also find that the consideration for which the writing declared upon, and the assumpsit was made, was for the loan of loan office certificates, loaned by the state at her loan office at Chariton; which certificates were issued, and the loan made in the manner pointed out by an act of the legislature of the said state of Missouri, approved the 27th day of June 1821, entitled, 'an act for the establishment of loan offices, and the acts amendatory and supplementary thereto.' And the court do further find that the plaintiff hath sustained damages by reason of the non-performance of the assumptions and undertakings of them, the said defendants, to the sum of two hundred and thirty-seven dollars and seventy-nine cents. Therefore it is considered, &c.'

The defendants in the circuit court of the county of Chariton appealed, in 1825, to the supreme court of the state of Missouri, the highest tribunal in that state; where the judgment of the circuit court was affirmed.

The defendants prosecuted this writ of error, under the twenty-fifth section of the judiciary act of 1789.

The act of the legislature of Missouri, under which the certificates were issued which formed the consideration of the note declared upon, was passed on the 27th of June 1821. It is entitled 'an act for the establishment of loan offices, &c.' The provisions of the third, thirteenth, fifteenth, sixteenth, twenty-third and twenty-fourth sections of the act, are all that have a connexion with the questions in the case which were before the court.

'Sec. 3. Be it further enacted, That the auditor of public accounts and treasurer, under the direction of the governor, shall, and they are hereby required to issue certificates signed by the said auditor and treasurer to the amount of two hundred thousand dollars, of denominations not exceeding ten dollars, nor less than fifty cents, (to bear such devices as they may deem the most safe) in the following form, to wit: This certificate shall be receivable at the treasury or any of the loan offices of the state of Missouri, in the discharge of taxes or debts due to the state, for the sum of $ _____, with interest for the same, at the rate of two per centum per annum from this date, the ___ day of _____ 182

'Sec. 13. Be it further enacted, That the certificates of the said loan office shall be receivable at the treasury of the state, and by all tax gatherers and other public officers, in payment of taxes or other moneys now due, or to become due to the state or any county or town therein; and the said certificates shall also be received by all officers civil and military in the state, in discharge of salaries and fees of office.

'Sec. 15. Be it further enacted, That the commissioners of the said loan offices shall have power to make loans of the said certificates to citizens of this state, residing within their respective districts only; and in each district a proportion shall be loaned to the citizens of each county therein, according to the number thereof, secured by mortgage or personal security: Provided, That the sum loaned on mortgage shall never exceed one half the real unincumbered value of the estate so mortgaged: Provided also, That no loans shall ever be made for a longer period than one year, nor at a greater interest than at the rate of six per cent per annum, which interest shall be always payable in advance, nor shall a loan in any case be renewed, unless the interest on such re-loan be also paid in advance: Provided also, That the commissioners aforesaid shall never make a call for the payment of any instalment at a greater rate than ten per centum for every six months; and that whenever any instalment to a greater amount than at the rate of ten per centum per annum be required, at least sixty days previous notice shall be given to the person or persons thus required to pay: And provided also, That all and every person failing to make payment shall be deprived in future of credit in such office, and be liable to suit immediately, for the whole amount by him or them due.

'Sec. 16. Be it further enacted, That the said commissioners of each of the said offices are further authorised to make loans on personal securities, by them deemed good and sufficient, for sums less than two hundred dollars; which securities shall be jointly and severally bound for the payment of the amount so loaned, with interest thereon, under the regulations contained in the preceding section of this act.'

'Sec. 23. Be it further enacted, That the general assembly shall, as soon as may be, cause the salt springs and lands attached thereto given by congress to this state, to be leased out, and it shall always be the fundamental condition in such leases, that the lessee or lessees shall receive the certificates hereby required to be issued, in payment for salt, at a price not exceeding that which may be prescribed by law; and all the proceeds of the said salt springs, the interest accruing to the state, and all estates purchased by officers of the several offices, under the provisions of this act, and all the debts now due, or hereafter to be due to this state, are hereby pledged, and constituted a fund for the redemption of the certificates hereby required to be issued; and the faith of the state is hereby also pledged for the same purpose.

'Sec. 24. Be it further enacted, That it shall be the duty of the auditor and treasurer to withdraw, annually, from circulation one tenth part of the certificates which are hereby required to be issued, &c.'

The case was argued by Mr Sheffey for the plaintiffs in error; and by Mr Benton for the state of Missouri.

Mr Sheffey, for the plaintiffs in error, contended,

1. That the record shows a proper case for the jurisdiction of this court, within the provisions of the twenty-fifth section of the judiciary act of 1789.

2. That the act of the legislature of Missouri, entitled 'an act for the establishment of loan offices,' is unconstitutional and void; being repugnant to the provision of the constitution of the United States, which declares that no state shall emit bills of credit.

3. That the state of Missouri has no right to recover on the promissory note which is the foundation of this suit, because the consideration was illegal.

He argued, that this case comes fully within the purpose, spirit, and letter of the twenty-fifth section of the judiciary act of 1789. The purpose of that section was, to place within the revising, controlling, and correcting power of the supreme court of the United States, any violations of the constitution of the United States, or of treaties, by state legislation. The harmony of the government, its equal operation, the preservation of its fundamental principles, the peace of the nation, rest securely upon the execution of this power of the supreme court. While this power would be cautiously used; it would be fearlessly asserted and employed, when it was required of the court, and enjoined on the judges. The government of the United States was one for the whole of 'the people of the United States.' It was formed for 'the people;' and its solemn and impressive preamble contains the declaration, that, 'we, the people of the United States, in order to form a more perfect union,' 'do ordain and establish this constitution of the United States.'

To keep the constitution perfect, and preserve it as a government for 'the whole people, the twenty-fifth section of the judiciary law of 1789 was enacted. This law brought into exercise the constitutional powers of the court, but it created no new powers.

In the case of Martin vs. Hunter's Lessee, 1 Wheat. 304, 330, this court have said, 'the twenty-fifth section of the judiciary act of September 24, 1799, is supported by the letter and spirit of the constitution.' And in the same case (p. 324) they say, 'the constitution of the United States was ordained and established,' not by the United States in their sovereign capacities; but, as the preamble declares, 'by the people of the United States.'

That a tribunal should exist, before which questions of a constitutional character may be brought, is not denied by any one; and the constitution itself has provided that which now entertains such questions. It has given to this court the powers which they exercise; great, extensive, superior and responsible as they are; that this court may stand forth as the guardians of the rights of the people claimed and declared in the constitution, and that those rights may be protected from encroachment and destruction. To this court 'the people' look for this protection; and when the invader of their rights is a sovereign state, they have not the less confidence and assurance, that the principles of the government will be preserved. This court know no parties to the cases which come before them for decision. It is the principles which are to govern their decisions in those cases, to which the court look; and they leave to those from whom their powers are derived, to 'the people of the United States,' to decide; not upon their rightful and constitutional exercise of those powers, for to the constitution they are answerable only for their exercise; but whether they shall continue so to use them. The whole people of the United States have given these powers: and they only, by a majority; and not a portion of them less than this constitutional whole; can nullify those powers, or interrupt the exercise of any which are regularly applied under the constitution. The constitution must be changed by the whole people, before the exercise of this power of revision can cease.

This court have never been willing to employ its powers of inquiring into the constitutionality of laws, but where the obligation was imperative, and the case was one clearly within their duties. In the case of Fletcher vs Peck, 6 Cranch, 128, the court declared, 'the question, whether a law be void for its repugnancy to the constitution, is a question which ought seldom, if ever, to be decided in a doubtful case. The opposition between the constitution and the law should be such, that the judge feels a clear and strong conviction of their incompatibility with each other.'

To present the question in the case now before the court, no plea was necessary; the defence arises under the general issue.

The record shows that this was a case, in the courts of the state of Missouri, in which the constitutionality of a law of that state was brought into question. The cause of action is stated to be promissory notes given for certificates issued under the act of the legislature of Missouri establishing loan offices; and the validity of these certificates must have been the whole subject of inquiry in the state courts. Their validity depended solely on the harmony of that act with the federal compact; and the courts of Missouri could only have affirmed their validity by affirming the act under which they were issued to be constitutional and valid; or in other terms, not repugnant to the constitution of the United States.

This is not a new question. It has been frequently presented to this court; and has been uniformly decided according to the views of the plaintiffs in error. Martin vs. Hunter's Lessee, 1 Wheat. 355. Miller vs. Nicholls, 4 Wheat. 311. Williams vs. Norris, 12 Wheat. 117. In Wilson vs. The Black Bird Creek Marsh Company, 2 Peters, 251, the court say: 'it is sufficient to bring the case within the provisions of the twenty-fifth section of the judicial act, if the record shows that the constitution or a law or a treaty has been misconstrued, or the decision could not be made.'

2. The certificates issued by the state of Missouri under the law are 'bills of credit;' and thus the law conflicts with the constitution of the United States. They are issued under the authority of the state, and put into circulation by the state; as the representative of money; as a substitute for it; to perform the functions of money, by becoming the medium of circulation.

The prohibition of the constitution is in these terms; and every word in the clause is important and emphatic: 'No state shall' 'coin money,' 'emit bills of credit,' 'make any thing but gold and silver coin a tender in payment of debts.'

What is the form and meaning of these bills? They purport to be receivable at the treasury, or any loan office of the state, in discharge of taxes or debts due to the state. They are issued of different denominations, from two hundred dollars, to fifty cents, payable to no particular person; they are, by the twenty-third section of the law, to be received for salt, by the lessees of the property of the state; by the officers of the state, in discharge of their salaries and fees of office. They pass, by delivery, with every characteristic of money. It is only necessary to state these, the purposes of their issue; the character and form of the certificates; the obligation imposed on the citizens of Missouri to receive them; to establish that they are 'bills of credit;' 'emitted' 'by the state' of Missouri; or 'coined' money: and that, not being 'gold or silver,' they are 'a tender in payment of debts.'

The sufferings of the people of the United States from the issues of paper money, or 'bills of credit,' during the revolution, were yet in full operation when the constitution was formed. While it might be dangerous to deny that many of the means of the war were procured by the emission of that money; the exigencies of the country, strugling for existence, were the only safe apology for their use. When the confederated states were about to become a nation, which should owe its prosperity to sound and just and equal principles; the opportunity to reproduce the same state of things, the same wide and wasteful ruin by the acts of any of the members of the confederacy, was at once decisively and explicitly prohibited by those who formed the constitution. But, if it is contended, that the certificates issued by the state of Missouri were not 'bills of credit,' because it is said they are not declared by the act which directs their emission to be 'a legal tender;' it is asserted, that if even they are not such, it is not essential to 'a bill of credit' that it shall have that incident. The Federalist, No. 44. Many of the bills issued by the states during the war were not made a legal tender; but they circulated widely, and with equally disastrous consequences. 9 Virgin. Stat. at large, 67, 147, 223, 480, &c.

In relation to money as a circulating medium, the states are one. All and each have one and the same interest in a sound currency. These interests are a unit; not only from the neighbourhood of the states to each other, the identity of their interests, and their free and unrestrained intercourse; but because the regulations of the constitution embrace the whole subject of money as a circulating medium.

To the existence of the government, certainly to its convenient fiscal operations, a uniform currency is important, if not essential; and if the principles which may be fairly drawn from a sound construction of the provision in the constitution under examination, extend to bring into doubt the legality of bank notes circulated as money, under the charters granted to banks by state laws; these principles may not be the less true, or their importance of the less magnitude.

3. If the certificates for which promissory notes were given are void, and the act of the legislature of Missouri on which they are founded was against the constitution of the United States; the note upon which this action was brought in the circuit court of Missouri was without consideration, and void. The state cannot receive upon such notes.

Mr Benton for the defendant in error.

The state of Missouri has been 'summoned' by a writ from this court, under a 'penalty,' to be and appear before this court. In the language of the writ, she is 'commanded' and 'enjoined' to appear. Language of this kind does not seem proper, when addressed to a sovereign state: nor are the terms fitting, even if the only purpose of the process was to obtain the appearance of the state. They impute 'a fault' in the state; they imply an omission, or neglect by the state. The language of 'commanding and enjoining' would only be well employed if these had occurred.

The state of Missouri has done no act which was not within the full and ample powers she possesses as a free, sovereign, and independent state. She has passed a law which she considers in the proper and beneficial exercise of her legislative functions; and which had for its object the promotion of the interests of her citizens.

Mr Benton said, that he did not appear in this case for the state of Missouri, as in ordinary cases depending in this court: not as the advocate of the state; for her acts did not require the efforts of an advocate to vindicate them: he appeared rather as a 'corps of observation,' to watch what was going on.

The state had passed a law authorising the governor to employ counsel, and he had been called upon to represent the state. He had listened to what had been going on before the court; and he found a gentleman from another state, imputing to Missouri an act fraught with injustice and immorality.