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Statement of the Case.
The declaration alleged that, at the dates when the bonds became payable, payment of the principal was demanded by
provements of this State, by a certificate, under the seal of said company, signed by their treasurer and countersigned by their president, that onethird have been subscribed for and taken, and that at least five hundred thousand dollars of said stock has been actually paid into the hands of said treasurer of said company, the said Board of Internal Improvements shall be and they are hereby authorized and required to subscribe, on behalf of the State, for stock in said company to the amount of two millions of dollars to the capital stock of said company; and the subscription shall be paid in the following manner, to wit, the one-fourth part as soon as the said company shall commence work, and one-fourth thereof every six months thereafter, until the whole subscription in behalf of the State shall be paid : Provided, the treasurer and president of said company shall, before they receive the aforesaid instalments, satisfactorily assure the Board of Internal Improvements, by their certificates, under the seal of said company, that an amount of the private subscription has been paid in equal proportion to the stock subscribed by the State.
“Sec. 37. That if in case the present legislature shall not provide the necessary and ample means to pay the aforesaid instalments on the stock subscribed for on behalf of the State, as provided for in the thirty-sixth section of this act, and in that event, the Board of Internal Improvements aforesaid shall, and they are hereby authorized and empowered to borrow, on the credit of the State, not exceeding two millions of dollars, as the same may be needed by the requirements of this act.
“ SEC. 38. That if in case it shall become necessary to borrow the money by this act authorized, the Public Treasurer shall issue the necessary certificates, signed by himself and countersigned by the Comptroller, in sums not less than one thousand dollars each, pledging the State for the payment of the sum therein mentioned, with interest thereon at the rate of interest not exceeding six per cent per annum, payable semi-annually at such times and places as the Treasurer may appoint, the principal of which certificates shall be redeemable at the end of thirty years from the time the same are issued; but no greater amount of such certificates shall be issued at any one time than may be sufficient to meet the instalment required to be paid by the State at that time.
“ SEC. 39. That the Comptroller shall register the said certificates at large in a book to be by him kept for that purpose, at the time he countersigns the same."
Sec. 41. That, as security for the redemption of said certificates of debt, the public faith of the State of North Carolina is hereby pledged to the holders thereof; and, in addition thereto, all the stock held by the State in the North Carolina Railroad Company hereby created shall be, and the same is hereby, pledged for that purpose; and any dividends of profits which may, from time to time, be declared on the stock held by the State
Statement of the Case.
the United States and refused by the State of North Carolina.
The State of North Carolina pleaded payment of the prin
as aforesaid, shall be applied to the payment of the interest accruing on said certificates; but until such dividends of profit may be declared, it shall be the duty of the Treasurer, and he is hereby authorized and directed to pay all such interest, as the same may accrue, out of any moneys in the Treasury not otherwise appropriated.
“SEC. 42. That the certificates of debt, hereby authorized to be issued, shall be transferable by the holders thereof, their agents or attorneys, properly constituted, in a book to be kept by the Public Treasurer for that purpose; and in every instance, where a transfer is made, the outstanding certificate shall be surrendered and given up to the Public Treasurer, and by him cancelled, and a new one, for the same amount, issued in its place to the person to whom the same is transferred.” Laws of North Carolina of 1818–49, pp. 153, 154, 155.
The act of December 22, 1852, c. 10, entitled “An act to regulate the form of bonds issued by the State,” contains the following provisions :
“SEC. 1. That all certificates hereafter to be issued for any money to be . borrowed for the State, by virtue of any act now in force authorizing the same, or of any act which may be hereafter passed for that purpose, shall be signed by the Governor and countersigned by the Public Treasurer, and sealed with the great seal of the State, and shall be made payable to or bearer; and the principal shall be made payable by the State at a day named in the certificate or bond; and coupons of interest in such form as may be prescribed by the Public Treasurer, and to be attached to the certificate, and the certificates and coupons attached thereto shall be made payable at such bank or place in the city of New York as he, the Public Treasurer, may think proper, or at the office of the Public Treasury at Raleigh, if pr ferred by the purchaser; Provided, however, that no such certificate shall be issued for a less sum than one thousand dollars, and no certificate shall be sold for a less sum than par value.
“SEC. 2. That it shall be the duty of the Public Treasurer to enter in a book, to be kept for that purpose, a memorandum of each bond or certificate, issued by virtue of this act, the numbers, date of issue, when and where payable, to whom issued, or to whom sold, and at what premium, if any, the same was sold by him.” Laws of North Carolina of 1852, pp. 45, 46.
By the act of December 27, 1852, c. 9, entitled “An act to increase the revenue of the State by the sale of its bonds," " it shall be the duty of the Public Treasurer to have coupons attached to all the bonds of the State hereafter sold by him.” Laws of North Carolina of 1852, p. 45.
The act of February 14, 1855, c. 32, entitled An act for the completion of the North Carolina Railroad,” contains the following:
“SEC. 1. That the Public Treasurer is authorized and instructed to subscribe, in behalf of the State, for ten thousand additional shares of capital
Statement of the Case.
cipal sums of the bonds after they became payable, together with all interest accrued thereon to the days when they became payable.
The United States moved for judgment, as by nil dicit, because the plea did not answer so much of their demand as was for interest after the bonds became payable.
The case was submitted to the decision of the court upon a case stated, signed by the Attorney General of the United States, and by the Attorney General of North Carolina, as follows:
“ The parties to the above-entitled case stipulate that upon the issue joined the facts are that payment of the bonds was demanded and refused at the several times in the years 1884 and 1885 in the declaration alleged ; but subsequently, upon or about the 2d day of October, 1889, all coupons upon the bonds were paid, and that, besides, $147,000 was paid upon account of whatever might then remain due upon the bonds; the United States then contending that because of interest at six per cent per annum, which at that time had accrued upon the principal of the bonds since their maturity, such payment left still unpaid upon the debt the sum of $41,280 ; whilst the State then contended that no interest had accrued upon the principal of the bonds after their maturity, and therefore that such payment was in full of such debt.
“The parties submit to the court that, in case as matter of law the principal of said bonds did so bear interest after maturity, judgment is to be entered for the plaintiff for $11,280; but that if it did not so bear interest, judgment is to be entered for the defendant."
stock in the North Carolina Railroad Company, and that he make payment for said stock, by issuing and making sale of the bonds of the State, under the same provisions, regulations and restrictions prescribed for the sale of the bonds heretofore issued and sold to pay the State's original subscription in the stock of said company; and the same pledges and securities are hereby given for the faithful payment and redemption of the certificates of debt now authorized that were given for those issued under the direction of said act: Provided, nevertheless, that the whole amount of principal money of such bonds or certificates of debt shall not exceed the sum of one million of dollars." Laws of North Carolina of 1854-55, p. 64.
Opinion of the Court.
Mr. Attorney General (with whom was Mr. S. F. Phillips, Mr. J. G. Zachry and Mr. F. D. McKenney on the brief) for plaintiff.
Mr. T. F. Davidson, Attorney General of the State of North Carolina, and Mr. S. G. Ryan for defendant.
MR. JUSTICE GRAY, after stating the case as above, delivered the opinion of the court.
This is an action brought in this court by the United States against the State of North Carolina upon bonds issued by the State and held by the United States. By the case stated, it appears that the State, some time after the maturity of the bonds, paid the principal, together with interest thereon to the time when the bonds became payable; and the only question presented for our decision is whether, as matter of law, the principal of the bonds bore interest after maturity, and according to our opinion upon this question judgment is to be entered for the one party or the other.
Interest, when not stipulated for by contract, or authorized by statute, is allowed by the courts as damages for the detention of money or of property, or of compensation, to which the plaintiff is entitled ; and, as has been settled on grounds of public convenience, is not to be awarded against a sovereign government, unless its consent to pay interest has been manifested by an act of its legislature, or by a lawful contract of its executive officers. United States v. Sherman, 98 U. S. 565; Angarica v. Bayard, 127 U. S. 251, 260, and authorities there collected ; In re Gosman, 17 Ch. D. 771.
In Gosman's Case, just cited, where the personal property of a deceased person had been taken possession of by the Crown for want of known next of kin, and was afterwards recovered by petition of right by persons proved to be the next of kin, who claimed interest for the time the Crown held the property, Sir George Jessel, Master of the Rolls, speaking for the Court of Appeal, summed up the law of England in this short judgment: “There is no ground for charging the Crown with interest. Interest is only payable by statute or by contract.”
Opinion of the Court.
In United States v. Sherman, the Circuit Court of the United States for the District of South Carolina had certified that there was probable cause for an act done by an officer of the United States, for which judgment had been recovered against him in that court; and consequently, by express acts of Congress, "the amount so recovered” was to “be provided for and paid out of the proper appropriation from the treasury.” Acts of March 3, 1863, c. 76, $ 12, 12 Stat. 741; July 28, 1866, c. 298, § 8, 14 Stat. 329. This court held that the judgment creditor was entitled to receive from the United States the amount of the judgment only, without interest; and Mr. Justice Strong, in delivering the opinion, said: “When the certificate is given, the claim of the plaintiff in the suit is practically converted into a claim against the government; but not until then. Before that time, the government is under no obligation, and the Secretary of the Treasury is not at liberty to pay. When the obligation arises, it is an obligation to pay the amount recovered ; that is, the amount for which judgment has been given. The act of Congress says not a word about interest. Judgments, it is true, are by the law of South Carolina, as well as by Federal legislation, declared to bear interest. Such legislation, however, has no application to the government; and the interest is no part of the amount recovered. It accrues only after the recovery has been had. Moreover, whenever interest is allowed either by statute or by common law, except in cases where there has been a contract to pay interest, it is allowed for delay or default of the debtor. But delay or default cannot be attributed to the government. It is presumed to be always ready to pay what it owes.” 98 U. S. 567, 568.
In Angarica v. Bayard, this court held that on money received by the Secretary of State from a foreign government under an international award, invested by him in interest-bearing securities of the United States, and ultimately paid to the petitioner, interest was not payable, because the money was in effect withheld by the United States; and Mr. Justice Blatchford, delivering judgment, said: “The case, therefore, falls within the well settled principle that the United States