Thorington v. Smith

APPEAL from the District Court for the Middle District of Alabama, the case being this:

In November, 1864, Thorington being the owner of a piece of land adjoining the city of Montgomery, Alabama, sold it to Smith and Hartley, all parties being then resident of Montgomery. At the time of this sale the late rebellion was still in active operation and had been so for more than three years. Alabama, or this part of it, was at the time in the occupation of the military and civil authorities of the rebel States, and the Federal government exercised no authority there. There was no gold or silver coin in use, nor any notes of the United States, such as made the circulation of the loyal portion of the country. The only currency in any ordinary use, or in which current daily business could be at all carried on, were treasury notes of the Confederate States, notes in form and general aspect like bank bills, and by which the Confederate States of America promised to pay the bearer the sum named in them, 'two years after the ratification of a treaty of peace between the Confederate States and the United States of America.'

'The whole State of Alabama,' said the testimony in the case, 'was in a revolutionary condition, politically and financially. The value of all kinds and species of property was changing from week to week, and from day to day, and there was no standard of value for property. A large advance frequently took place in the price of property of different kinds within a day or two, say one hundred to two hundred per cent. Speculation pervaded the whole community, and individuals asked whatever they thought proper for any and everything they had to sell. There was no standard value or regular price for real estate at the time mentioned. Prices changed with the fortunes of war. As the prospects grew dark the prices advanced. While, however, the Confederate States treasury notes were the general and really the only currency used in the common transactions of business, there were occasional instances where sales of property were made on the basis of gold and of notes of the United States.'

The Confederate notes, though in fact imposed upon the people of the Confederate States, by its government, were never declared by it to be a legal tender.

The price agreed to be paid by Smith and Hartley, for the land which they purchased was $45,000. Of this sum $35,000 were paid at the execution of the deed in Confederate States treasury notes; and for the residue a note was executed thus:

MONTGOMERY, November 28th, 1864.

$10,000.

One day after date, we, or either of us, promise to pay Jack Thorington, or bearer, ten thousand dollars, for value received in real estate, sold and delivered by said Thorington to us this day, as per his deed to us of this date: this note, part of the same transaction, is hereby declared as a lien or mortgage on said real estate situate and adjoining the city of Montgomery.

W. D. SMITH.

J. H. HARTLEY.

The rebellion being suppressed in 1865, the Confederate States treasury notes became, of course, worthless, and Thorington, in 1867, filed a bill in the court below against his purchasers, who were still in possession, for the enforcement of the vendor's lien, claiming the $10,000 in the only money now current, to wit, lawful money of the United States.

The answer set up, by way of defence, that the negotiation for the purchase of the land took place, and that the note in controversy was made, at Montgomery, in the State of Alabama, where all the parties resided, in November, 1864, at which time the authority of the United States was excluded from that portion of the State, and the only currency in use consisted of Confederate treasury notes, issued and put in circulation by the persons exercising the ruling power of the States in rebellion, known as the Confederate government.

It was also insisted that the land purchased was worth no more than $3000 in lawful money; that the contract price was $45,000; that this price, by the agreement of the parties, was to be paid in Confederate notes; that $35,000 were actually paid in those notes; and that the note given for the remaining $10,000 was to be discharged in the same manner; and it was asserted on this state of facts, that the vendor was entitled to no relief in a court of the United States.

On the hearing below, a witness, who negotiated the sale of the land, was offered to show that it was agreed and understood that the note should be paid in Confederate States treasury notes, as the $35,000 had been. This witness described the note, however, as one payable at thirty days.

The court below, admitting the evidence to prove that the note was in fact made for payment in Confederate States treasury notes, and sustaining, apparently, the view of the purchasers that the contract was illegal because to be paid in such notes, dismissed the bill.

The questions before this court upon the appeal, were these:

1. Can a contract for the payment of Confederate notes, made during the late rebellion, between parties residing within the so-called Confederate States, be enforced at all in the courts of the United States?

2. Can evidence be received to prove that a promise expressed to be for the payment of dollars was, in fact, made for the payment of any other than lawful dollars of the United States?

3. Did the evidence establish the fact that the note for ten thousand dollars was to be paid, by agreement of the parties, in Confederate notes?

A point as to the measure of damages was also raised at the bar.

The case was twice argued.

Mr. P. Phillips, for the appellant (a brief of Mr. Chilton being filed):

1. There is no reason to suppose that the contract was entered into for the purpose of giving currency to the Confederate notes, and thus aiding the rebellion. And the question is not whether the issuing of these notes was illegal, but whether an agreement to receive them in payment of property, made the contract between the parties illegal. If there was no illegal design, the contract was not immoral. The contract, therefore, was legal.

The only question is, what must we hold it to mean.

The note now here on its face is clear and distinct. The promise to pay 'ten thousand dollars' has a well-under-stood, well-defined meaning. Whether made in Massachusetts or Alabama the rules applicable to its construction are the same. The issue presented by the answer is, that this contract did not represent the truth; that, in point of fact, the agreement was for a payment in an illegal currency of a mere nominal value. It is difficult to conceive of a more palpable contradiction of the legal effect of a contract than the admission of evidence to sustain this defence.

The cases are numerous where the struggle has been made to introduce parol evidence to explain the meaning of words, regarded by the court of doubtful import: such as 'current funds,' 'current bank notes,' 'currency.' But where, as in this case, a party has promised to pay so many 'dollars,' no authority will sanction evidence of an agreement that dollars meant not what the law says it meant, but something very different, to wit, Confederate treasury notes. All the authorities are the other way.

2. This question, as applicable to the condition of things set up in the answer, was considered in Roane v. Green, the court holding that it was not competent to prove by parol, on such a note, that Confederate treasury notes was the payment agreed on. In fact, as these notes were never made a legal tender by the rebel government nothing but coin would, even under it, be a discharge of the debt.

Indeed in all these cases of alleged contemporaneous agreements, it may be asked why the verbal condition, if bargained for, was not put in writing also? If the rest of the agreement was sufficiently important to authorize written evidence of its execution, why except the remainder? The obvious inference must be, that all that the parties did in fact agree to was put in due written form, and that all collaterals and appendages, concerning which there was mere conversation, was precisely what they could not agree upon. This, of course, is not always the true inference, but it is of necessity the legal inference.

3. The parol evidence offered, if competent, is insufficient. There was but one witness, and he misdescribes the note in one feature of it, the time namely that it had to run: a most important feature in view of the changes in values at the time when the note was given.

4. Another point not raised below, perhaps, but to which, if the court should think that the contract can be enforced, but not payment demanded in our now recognized currency, we would direct attention, is this. Confederate money is now wholly worthless. Payment in it is no payment at all. What, then, is the measure of damages? The peculiar circumstances of this case perhaps take it out of the rule announced in Thompson v. Riggs, that the value of the money at the time the note was payable is the criterion. The value of gold as marked by these treasury notes, fluctuated daily and hourly, and was different in different parts of the State. While it was 20, 30, or 40 to 1, these treasury notes had an exchangeable power of 2, 3, or 4 to 1 in the different species of property. It may well be that the vendor should have agreed that if the note was paid at maturity, it might be extinguished in these notes; but it by no means follows that in default of payment he was willing to be compensated by the value of these notes in gold.

If, therefore, the date of the maturity of the note is adopted for the purpose of ascertaining the damage, the measure should be, not the value as compared to gold, but rather its relative value in property.

No opposing counsel on either argument.

The CHIEF JUSTICE delivered the opinion of the court.