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Dissenting Opinion: Brewer, Gray, JJ.

No sale was made, no contract of sale entered into at the price fixed by the Comptroller. The contract entered into was by virtue of the alternative authority given.

That contract was upon this proposition from Mr. Cornell: "Appreciating, however, as I do most fully, your motives for desiring to give the utmost possible security and permanency to the funds which are, in a great degree, to constitute the endowment of the Cornell University, I shall most cheerfully accept your views so far as to consent to place the entire profits to be derived from the sale of the lands to be located with the college land scrip in the treasury of the State, if the State will receive the money as a separate fund from that which may be derived from the sale of scrip and will keep it permanently invested, and appropriate the proceeds from the income thereof annually to the Cornell University, subject to the direction of the trustees thereof, for the general purposes of said institution, and not to hold it subject to the restrictions which the act of Congress places upon the fund derivable from the sale of the college land scrip, or as a donation from the government of the United States, but as a donation from Ezra Cornell to the Cornell University. Acting upon the above basis, I propose to purchase said land scrip as fast as I can advantageously locate the same, paying therefor at the rate of thirty cents per acre in good seven per cent bonds and securities, and obligating myself to pay the profits as specified in chapter 481, of the laws of 1868, into the treasury of the State, as follows: Thirty cents per acre of said profits to be added to the College Land Scrip Fund, and the balance of said profits to be placed in a separate fund, to be known as the Cornell University Fund and to be preserved and invested for the benefit of said institution, and the income derived therefrom to be paid over annually to the trustees of said university for the general purposes of said institution."

It is unnecessary to notice other portions of the correspondence, or to review the contract, for all of significance is expressed in this proposition. It is not an absolute sale of the scrip for so much money. The obligation assumed by Mr. Cornell, to the State was thirty cents an acre, and the net prof

Dissenting Opinion: Brewer, Gray, JJ.

its of the location of the scrip on public lands, and sale of the lands. In briefer words, thirty cents an acre and net profits was his offer. True, he proposed that only part of the profits, to wit, thirty cents an acre, should pass to the fund: but what authority had the commissioners for making such a limitation in the contract? Suppose, after the making of the contract, the commissioners had declined to transfer the scrip to him, could he have compelled the specific performance, by mandamus, of that contract? Would not a clear and satisfactory answer have been that the commissioners had no authority to partition the profits? The limit of their authority was a contract by which the agent and locator should pay to the State the whole net profits of the location. As Mr. Cornell could not have compelled, by mandamus, the performance by the commissioners of the contract, so, on the other hand, having received the scrip and located it, and disposed of the land, and paid the money into the State, that unauthorized stipulation becomes surplusage. It cannot relieve the State of New York from its liability as trustee. It is not potent to turn a portion of the proceeds of this scrip into other channels, or to other uses. The fact that all the proceeds were going to the selected beneficiary, doubtless led the commissioners to indifference as to the stipulations of the contract; but such indifference did not enlarge their powers nor make valid the stipulation in excess thereof. It seems strange that a trustee can avail itself of a disregard by its agent of his instructions so as to relieve itself of responsibility for about four-fifths of the proceeds of the trust property; yet such is the result of the conclusions reached by this court.

We are sustained in this view by a report of a majority of the commission, appointed in 1874 by the legislature of the State of New York, to inquire into this fund; for they say: "The question was raised in the Comptroller's report of 1869, and earlier, whether this agreement of 4th August, 1866, was a sale of the scrip to Mr. Cornell; whether it was not, in substance, an agency with a transfer of title for the purpose of facilitating the object in view.' We are of the opinion that the agreement was an actual sale to Mr. Cornell; but that all his profits, made from these lands, are part of the purchase

VOL. CXXXVI-14

Dissenting Opinion: Brewer, Gray, JJ.

money, and so subject to the restrictions of the act of Congress. Everything that forms a part of the consideration for the sale of the trust property by the State belongs to the trust fund created by Congress." And again: "We are asked, finally, to recommend 'what legislation is necessary to properly secure said funds in compliance with the act of Congress.' None seems to be necessary in reference to the fund to be derived from what are called the ultimate net profits from the location and sale of the lands by Mr. Cornell, under the agreement of August, 1866. By his contract with the State he is to pay these profits into its treasury, and he has twenty years in which to complete the sale of the lands. This fund is, in our opinion, a part of the proceeds of the scrip within the purview of the act of Congress, and cannot be legally distinguished from the other fund. Mr. Cornell seems to have taken this view before entering into the contract; for, in a public communication, dated October 26, 1869, referring to a letter from himself to Comptroller Hillhouse in June, 1866, he says: 'I volunteered to create a fund three or four times as large as that which the State could produce, for the same object that Congress intended, and at my own risk and expenses, without charging a single dime to anybody for my services.' He could not impose on the state treasury a new and distinct trust as to any part of the consideration he was to pay. Unless these profits are part of the purchase-money, the State gave to him for the college bearing his name a monopoly of the scrip on long credit for a price much less than its cash value. The second thirty cents per acre, provided for in the agreement, being dependent solely on contingent profits, which might not be realized, if at all, for twenty years, and then without interest, was not, at the date of the agree ment, equivalent to more than from seven to ten cents. These profits, being part of the purchase-money, the State is bound to receive them, when, from time to time, realized, and invest them in the manner prescribed by the act of Congress, and to appropriate the income to the educational purposes in the act defined."

It is true, a minority of that commission dissented; but the

Syllabus.

reasoning of the minority makes the contract of no validity, except as to the sale of the scrip for thirty cents an acre, and leaves only that amount as the fund for which the State is responsible. The reasoning is that the State was not authorized under the act to itself locate scrip on lands in another State; and if the profits of the location were to belong to the State, it would follow that the State was the beneficial owner of the lands thus located, and therefore there was a direct evasion of the act of Congress. Concede the force of that reasoning, and who can take advantage of it? Can the State which has received the proceeds of such location say that it had no authority to receive them; and can it, after receiving them, repudiate its liability as trustee for that which it has received as the proceeds of the trust property?

It scarcely need be said that no subsequent legislation on the part of the State of New York, and no agreement between it and Cornell University as to the possession of these funds, can have the effect to relieve the State from its liability as trustee, or place the title to those funds elsewhere than in the State.

UNITED STATES v. NORTH CAROLINA.

ORIGINAL.

No. 3. Original. Argued April 2, 1890.- Decided May 19, 1890.

A State is not liable to pay interest on its debts, unless its consent to do so has been manifested by an act of its legislature, or by a lawful contract of its executive officers.

On bonds of the State of North Carolina, expressed to be redeemable on a day certain at a bank in the city of New York, with interest at the rate of six per cent a year, payable half-yearly" from the date of this bond and until the principal be paid, on surrendering the proper coupons hereto annexed;" and issued by the Governor and Treasurer of the State under the statute of December 22, 1852, c. 10, which provides that the principal of such bonds shall be made payable on a day named therein, that coupons of interest shall be attached thereto, and that both bonds and coupons shall be made payable at some bank or place in the city of New York, or at the public treasury in the capital of the State, and makes no mention of interest after the date at which the principal is payable; the State is not liable to pay interest after that date.

Statement of the Case.

THIS was an action of debt, brought in this court, on November 5, 1889, by the United States against the State of North Carolina, upon one hundred and forty-seven bonds under the seal of the State, signed by the Governor, and countersigned by the Public Treasurer, for one thousand dollars each, payable in thirty years from date, with interest at the yearly rate of six per cent, alleged in the declaration to be payable halfyearly until payment of the principal; nineteen of the bonds, dated January 1, 1854, and payable January 1, 1884, and seven bonds dated January 1, 1855, and payable January 1, 1885, issued under the statutes of North Carolina of January 27, 1849, and December 22 and 27, 1852; and the remaining one hundred and twenty-one bonds, dated April 1, 1855, and payable April 1, 1885, issued under the statute of North Carolina of February 14, 1855; and all these bonds, differing only in date of execution and in day of payment, being in the following form:

"It is hereby certified that the State of North Carolina justly owes to the North Carolina Railroad Company or bearer one thousand dollars, redeemable in good and lawful money of the United States at the Bank of the Republic, in the city of New York, on the first day of January, 1884, with interest thereon at the rate of six per cent per annum, payable half-yearly at the said bank on the first days of January and July of each year, from the date of this bond and until the principal be paid, on surrendering the proper coupons hereto annexed.

"In witness whereof the Governor of the said State, in virtue of the power conferred by law, hath signed this bond and caused the great seal of the State to be hereto affixed, and her Public Treasurer hath countersigned the same, this first day of January, 1854."

The material provisions of the statutes under which the bonds were issued are copied in the margin.1

1 The act of January 27, 1849, c. 82, entitled "An act to incorporate the North Carolina Railroad Company,” contains the following provisions :

"SEC. 36. That whenever it shall appear to the Board of Internal Im

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