Woodruff v. Trapnall. 10 H. ner proposed, allege that this is a contract binding on the creditor forever? Can he allege that this offer to receive payment in a specific article, unaccepted by him, has changed the nature of his bond, and that a demand of payment according to the letter of his obligation impairs any contract between them? Such a doctrine as regards the contracts of individuals has never been advanced in a court of justice. And why a different rule should be applied to contracts when a sovereign State is one of the parties, has certainly not been explained * It needs no argument to demonstrate that a contract must have at least two parties, and that all laws made by a sovereign State are not necessarily contracts, and therefore irrevocable. The act of the legislature of Arkansas under consideration is entitled: "An act to incorporate the Bank of the State of Arkansas." It creates a corporation and confers certain powers and privileges upon it. So far as it does this, as has been decided by this court, the act may be consid ered in the nature of a contract, and that these powers and privileges cannot be annulled or withdrawn, without the consent of the artificial power thus created, or the individuals for whose benefit the franchise was granted. It is true, also, that when a law is in the nature of a contract or grant, and absolute rights have vested under that contract, a repeal of the law cannot devest those [* 215 ] rights. But the plaintiffs in this case are not corporators, or stockholders in the bank; they hold no franchise, powers, or privileges, under the act of incorporation; they are no parties to the contracts, nor have they any vested rights under it, which have been impaired by the repeal of the 28th section. If the corporation, or those who claim the franchises and powers granted to it, do not complain of an infringement of their contract, no other person can. As to them, it is a mere speculative question, which this court is not bound to decide. So far as it affected the plaintiffs, the 28th section was but a gratuitous offer to accept notes in place of gold and silver, if they would pay their debt, a mere license at the pleasure of the State if not accepted by them. To call it a grant, or vested right under a contract, seems to me a perversion and abuse of terms. But admitting that the directions given in this act to her public officers to deposit the funds of the State in this bank, and receive its paper in payment of its debts, constituted a part of the contract with the corporation, and could not be repealed, did it bind the State after the corporation ceased to perform the functions and duties imposed upon it? If a State creates a banking corporation with a certain capital, and requires it to pay its notes in specie on demand, and agrees to make it a depositary, and use and receive its notes as cash, is the State bound by its contract to do so, when the corporation fails or Woodruff v. Trapnall. 10 H. refuses to fulfil the duties and purposes of its creation? If such be the case, it is certainly a one-sided contract; there is no mutuality in it. Does it make any difference in the case, also, whether the stock of the corporation is furnished by the State or individuals? In neither case are the stockholders individually liable for the mismanagement or defaults of the corporation, unless previously made so by the act of incorporation. The State of Arkansas furnished $1,000,000 as the stock upon which this banking corporation was to issue notes and discount paper. She has nowhere agreed to guarantee the solvency of the bank, or be liable for its issues. If individuals had furnished the stock, they would not be personally liable for its debts. If the stockholders had all made deposits of their money in the bank, and received interest on long deposits, and received its notes as gold and silver, it would not have amounted to a contract with the public, or noteholders, or any body else, that they should continue to deposit their money or receive its notes in payment of debts after the bank became insolvent and its notes worthless. The most refined legal astutia has thus far been unable to discover in such conduct of indi viduals, an implied promise to receive broken bank notes in [216] payment of debts, or a liability to the noteholders, because their conduct had given credit to the bank. But it seems there is a more stringent rule of morality with regard to sovereign States and their contracts. In their case, under some fiction of the law, without regard to the fact or their actual undertaking, there has been discovered an implied contract running with the paper, like a covenant running with land, which renders them liable for all the issues of the bank, into whosoever hands it may come, and forever disables them to lay or collect a tax, or pay a debt, till they have lifted and paid every note of the broken bank in which they were stockholders, although they never directly pledged the faith of the State, or agreed to be liable for a single dollar issued by the bank. If individuals had furnished the $1,000,000 capital under an act of incorporation which did not make the stockholders personally liable, every person who received the notes would do it on the credit of the capital paid in. Why it should not be the same case when a State furnished the capital, I am unable to perceive. Nor can I comprehend how a direction by a State to its officers to make deposits in a bank, and receive its notes in payment of debts, amounts per se to a contract running with the notes, which binds the State to receive them forever, whether the corporation be solvent or insolvent, dead or alive. But the liability of the State for these issues is argued and attempted to be proved by another legal fiction; namely, that the State is the bank, and the bank is the State. And why? Because she created Woodruff v. Trapnall. 10 H. the corporation? No; for that would make her liable for the paper of every corporation created by the legislature. It is, then, because she is owner of the stock, receives the profits, makes the bank her depositary, and gives credit to its notes by ordering them to be received in payment of her debts. And it is from this doctrine of identity that this contract of guarantee, running with the paper, has been inferred, or rather imputed to the State. If the same identity exists when individuals stand in the same relation to a corporation, and the same contract of guarantee be imputed to them, (and I can see no reason why it should not,) it is strange that no traces of the doctrine can be found in our books of reports. But there are certain inferences which necessarily follow as corollaries from this decision in this case, and certain doctrines for which it may be quoted as a precedent, (although not directly asserted,) that confirm me in refusing my assent to it. 1. That if the same rules of law for the interpretation of contracts, and the rights of the parties to them, affect all persons, whether natural or artificial, the individual and the sovereign State, it may fairly be inferred hereafter, that, when a bond or *note, [* 217 ] payable in specific articles, is sued upon, the defendant is not bound either to tender them, or plead a tender, but, after judgment for a sum of money, he may make payment to the sheriff of the execution in specific articles, and not in money. 2. That, after a court has solemnly adjudged that the defendant shall pay to the plaintiff a certain sum of money, they can compel him to receive in lieu of it worthless rags. 3. That a defendant, who has been condemned by the judgment of a court to pay to the plaintiff a sum of money, may buy up notes drawn or indorsed by the plaintiff, and by mandamus or rule of court compel the plaintiff's attorney to accept them in payment. 4. If these consequences are not legitimately to be inferred from this judgment, then it necessarily follows that this court exercise a controlling power over sovereign States, and judgments obtained by them, which they cannot exercise over the humblest individual or petty corporation. 5. That this court has the power to compel any State of this Union, who repudiates her debts, to pay them, because such refusal or repudiation impairs the obligation of her contracts. 6. That so long as any portion of the three millions of dollars of notes issued by this bank before 1845 remains unpaid, the State of Arkansas cannot collect a dollar of taxes from her citizens in lawful money. 7. That the courts have a right to compel a State to pay bank Paup v. Drew. 10 H. notes guaranteed by them, before and in preference of all other debts. 8. That the collectors of taxes, so long as any of this issue of bank-notes can be found, may buy them up at the rate of one dollar for ten or a hundred, and have the assistance of the court to compel the State to receive them at par, even where the collector has received gold and silver. 9. That when a State, a corporation, or an individual publish to the world their willingness to accept payment of their debts in the issues of a bank, it amounts to a contract, by implication, with the public, and each individual composing it, to guarantee the notes issued by said bank, and that this contract runs with, and is attached to said notes, in the hands of the bearer, provided the notes were issued before such offer is withdrawn. As I cannot assent to any one of these propositions, and as I believe they are legitimate deductions from the decision of the court, I beg leave to express my dissent from it. [ *218 ] CATRON, J. I concur in the dissenting opinion just delivered by my brother Grier. DANIEL, J. I dissent from the decision of the court in this case, and entirely concur in the arguments and conclusions expressed in the opinion delivered by my brother Grier. 10 H. 218; 17 H. 437; 2 Wal. 10. JOHN W. PAUP, JAMES TRIGG, and RICHARD PRIOR, Plaintiffs in Error, v. THOMAS S. DREW, as Governor of the State of Arkansas, and Successor of ARCHIBALD YELL, deceased. 10 H. 218. The decision in the next preceding case, held inapplicable to a case where the debt due to the State was expressly made payable "in specie, or its equivalent." THE case is stated in the opinion of the court. Lawrence and Johnson, for the plaintiff. Sebastian, contrà. [ *221 ] *M'LEAN, J., delivered the opinion of the court. This is a writ of error to the supreme court of Arkansas, under the 25th section of the judiciary act of 1789.1 1 Stats. at Large, 85. Paup v. Drew. 10 H. A judgment was rendered in the Pulaski circuit court, against the plaintiffs in error, on the 23d of December, 1847, for six thousand one hundred and nineteen dollars and costs, on bonds payable at different times, given for the purchase of a part of certain lands granted to the State by congress, for the support of a seminary, and which lands were sold by the governor, as the agent of the State, under the authority of the general assembly. The bonds were made payable and negotiable at the State Bank of Arkansas, "in specie or its equivalent." The defendants pleaded a tender in the notes of the State Bank of Arkansas, and relied upon, the 28th section of the charter of the bank, which provided "that the bills and notes of said institution shall be received in all payments of debts due to the State of Arkansas;" that the notes of the bank tendered were issued while this section was in full force, and which constituted a contract to receive them in payment of debts by the State, which the State could not repudiate, &c. There was a demurrer to the plea, which was sustained by the court. The case was submitted to a jury, whose verdict was for the plaintiff, on which a judgment was entered. A writ of error was prosecuted to the supreme court of Arkansas, on which the judgment of the circuit court was affirmed. By the act of the 2d of March, 1827,1 the secretary of the treasury was authorized to set apart and reserve from sale of the public lands, within the territory of Arkansas, a quantity of land not exceeding two entire townships, for the use of a university, &c. And by the act of the 23d of June, 1836,2 it is provided, "that the two entire townships of land which have already been located, by virtue of the above act, are hereby vested in and confirmed to the general assembly of the said State, to be appropriated solely to the use of such seminary by the general assembly." Under the act of the State of the 28th December, 1840, these lands were sold by the governor of the State, and the bonds now in question were given on the purchase of a part of them, as above stated. *The entire capital of the bank is owned by the State, [*222] and its concerns are managed by the agents of the State. The directors of the principal bank and of the branches, are elected by the legislature of the State. In the case of Woodruff v. Trapnall, 10 How. 190, decided at the present term, this court held that the 28th section in the charter constituted a contract between the State and the holder of the bills of 14 Stats. at Large, 235. VOL. XVIII. 25 Ibid. 59. 32 |