Craig v. Missouri/Dissent Thompson

Mr Justice THOMPSON.

This case comes up by writ of error, from the state court of Missouri, on a judgment recovered against the plaintiffs in error, in the highest court in that state; and the first question that has been made here, is, whether this court has jurisdiction of the case, under the twenty-fifth section of the judiciary act of 1789.

If the construction of this twenty-fifth section was now for the first time brought before this court, I should entertain very serious doubts whether this case came within it. The fair, and as I think the clear import of that section is, that some one of the cases therein stated, did, in point of fact, arise, and was drawn into question; and did receive the judgment and decision of the state court. It is not enough, that such question might have been made. A party may waive the right secured to him under this section. This would not in any manner affect the jurisdiction of the state court; and might of course be waived. In the present case, there is no doubt but the facts which appeared before the state court presented a case which might properly fall within this section. The defendants might have insisted that the state law was unconstitutional, and that the certificates issued in pursuance of its provisions were void. And if the court had sustained the act, it would have been one of the cases within the twenty-fifth section. But the court was not bound to call upon the party to raise the objection, for the purpose of putting the cause in a situation to be brought here by writ of error. It cannot be doubted, but that there might have been an express waiver of this right; and I should think an implied waiver would equally preclude a review of the case by this court; and that such waiver ought to be implied in all cases where it does not appear, that in point of fact the question was made, and received the judgment of the state court. But to entertain jurisdiction in this case, is perhaps not going farther than this court has already gone, and I do not mean to call in question these decisions; but have barely noticed the question, for the purpose of stating the rule by which I think all cases under this section should be tested.

The more important question upon the merits of the case is, whether the constitution of the United States interposes any impediment to the plaintiff's right of recovery in this case. And this question has been presented at the bar under the following points:

1. Whether the certificates issued under the provisions of the law of the state of Missouri, are bills of credit, within the sense and meaning of the constitution.

2. If so, whether, as they formed the consideration of the note on which the judgment below was recovered, the note was rendered thereby void and irrecoverable.

The first is a very important question, and not free from difficulty; and one upon which I have entertained serious doubts: but looking at it in all its bearings, and considering the consequences to which the rule established by a majority of the court will lead, when carried out to its full extent, I am compelled to dissent from the opinion pronounced in this case.

The limitation upon the powers of the state of Missouri, which is supposed to have been transcended, is contained in the tenth section of the first article of the constitution of the United States. 'No state shall emit bills of credit.' Are the certificates issued under the authority of the Missouri law, bills of credit, within this prohibition?

The form of the certificate is prescribed in the third section of the act (act 27th of June 1821) as follows:

'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 two per centum per annum, from this date,' &c. And the thirteenth section declares, '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 the discharge of salaries and fees of office.' It is proper here to notice, that if the latter branch of this section should be considered as conflicting with that prohibition in the constitution, which declares that no state shall make any thing but gold and silver coin a tender in payment of debts; no such question is involved in the case now before the court, and the law may be good in part, although bad in part.

The precise meaning and interpretation of the terms, bills of credit, has no where been settled; or if it has, it has not fallen within my knowledge. As used in the constitution, it certainly cannot be applied to all obligations, or vouchers, given by, or under the authority of a state for the payment of money. The right of a state to borrow money cannot be questioned; and this necessarily implies the right of giving some voucher for the repayment: and it would seem to me difficult to maintain the proposition, that such voucher cannot legally and constitutionally assume a negotiable character; and as such, to a certain extent, pass as, or become a substitute for money. The act does not profess to make these certificates a circulating medium, or substitute for money. They are (except as relates to public officers) made receivable only for taxes and debts due to the state, and for salt sold by the lessees of salt springs belonging to the state. These are special and limited objects; and these certificates cannot answer the purpose of a circulating medium, to any considerable extent. A simple promise to pay a sum of money, a bond or other security given for the payment of the same, cannot be considered a bill of credit, within the sense of the constitution. Such a construction would take from the states all power to borrow money, or execute any obligation for the repayment. The natural and literal meaning of the terms import a bill drawn on credit merely, and not bottomed upon any real or substantial fund for its redemption. There is a material and well known distinction between a bill drawn upon a fund, and one drawn upon credit only. A bill of credit may therefore be considered a bill drawn and resting merely upon the credit of the drawer; as contradistinguished from a funa constituted or pledged for the payment of the bill. Thus, the constitution vests in congress the power to borrow money on the credit of the United States. A bill drawn under such authority would be a bill of credit. And this idea is more fully expressed in the old confederation, (Art. 9.) 'Congress shall have power to borrow money or emit bills on the credit of the United States.' Can the certificates issued under the Missouri law, according to the fair and reasonable construction of the act, he said to rest on the credit of the state? Although the securities taken for the certificates loaned are not in terms pledged for their redemption, yet these securities constitute a fund amply sufficient for that purpose, and may well be considered a fund provided for that purpose. The certificates are a mere loan upon security in double the amount loaned. And in addition thereto, (section 29), provision is made expressly for constituting a fund for the redemption of these certificates. These are guards and checks against their depreciation, by insuring their ultimate redemption.

The emissions of paper money by the states, previous to the adoption of the constitution, were, properly speaking, bills of credit; not being bottomed upon any fund constituted for their redemption, but resting solely for that purpose upon the credit of the state issuing the same. There was no check therefore upon excessive issues; and a great depreciation and loss to holders of such bills followed as matter of course. But when a fund is pledged, or ample provision made for the redemption of a bill or voucher, whatever it may be called, there is but little danger of a depreciation or loss.

But should these certificates be considered bills of credit, under an enlarged sense of such an instrument; it does not necessarily follow that they are bills of credit, within the sense and meaning of the constitution. As no precise and technical meaning or interpretation of a bill of credit has been shown, we may with propriety look to the state of things at the adoption of the constitution, to ascertain what was probably the understanding of the convention by this limitation on the power of the states. The state emissions of paper money had been excessive, and productive of great mischief. In some states, and at some times, such emissions were, by law, made a tender in payment of private debts, in others not so. But the great evil that existed was, that creditors were compelled to take such a depreciated currency, and articles of property in payment of their debts. This being the mischief, is it an unfair construction of the constitution of restrict the intended remedy to the acknowledged and real mischief. The language of the constitution may perhaps be too broad to admit of this restricted application. But to consider the certificates in question bills of credit, within the constitution, is in my judgment a construction of that instrument which will lead to serious embarrassment with state legislation; as existing in almost every member of the union.

If these certificates are bills of credit, inhibited by the constitution; it appears to me difficult to escape the conclusion, that all bank notes, issued either by the states, or under their authority and permission, are bills of credit falling within the prohibition. They are certainly, in point of form, as much bills of credit; and if being used as a circulating medium, or substitute for money, makes these certificates bills of credit, bank notes are more emphatically such. And not only the notes of banks directly under the management and control of a state, of which description of banks there are several in the United States; but all notes of banks established under the authority of a state, must fall within the prohibition. For the states cannot certainly do that indirectly which they cannot do directly. And, if they cannot issue bank notes because they are bills of credit, they cannot authorise others to do it. If this circuitous mode of doing the business would take the case out of the prohibition, it would equally apply to the Missouri certificates; for they were issued by persons acting under the authority of the state, and indeed could be issued in no other way.

This prohibition in the constitution could not have been intended to take from the states all power whatever over a local circulating medium, and to suppress all paper currency of every description. The power is given to congress to coin money; and the states are prohibited from coining money. But to construe this, as embracing a paper circulating medium of every description, and thereby render illegal the issuing of all bank notes by or under the authority of the states, will not, I presume, be contended for by any one. And I am unable to discover any sound and substantial reason why the prohibition does not reach all such bank notes, if it extends to the certificates in question.

The conclusion to which I have come on this point, renders it unnecessary for me to examine the second question made at the argument. I am of opinion, that the judgment of the state court ought to be affirmed.