US SUPREME COURT DECISIONS

The Levee Board of Mississippi, being authorized by a statute of the state to borrow money and to issue their bonds therefor, to be negotiable as promissory notes or bills of exchange, issued and sold to the amount of $500,000 principal bonds of $1000 each, payable "in gold coin of the United States of America," with semi-annual interest coupons, payable chanrobles.com-red

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"in currency of the United States." In a suit to enforce a trust and lien upon certain lands in the state created in favor of the bondholders by an act of the legislature of the state, the supreme court of the state construed the bonds as obligations payable in gold coin, and held that the power to borrow money conferred by the statute upon the levee board did not authorize it to borrow gold coin or issue bonds acknowledging the receipt thereof and agreeing to pay therefor in the same medium, and that the bonds were void for want of power in that respect.

Held

(1) That the inquiry as to the medium in which the bonds were payable, and, if in gold coin, the effect thereof involved the right to enforce a contract according to the meaning of its terms as determined by the Constitution and laws of the United States, interpreted by the tribunal of last resort, and therefore raised questions of federal right which justified the issue of the writ of error, and gave this Court jurisdiction under it.

(2) That the bonds were legally solvable in the money of the United States, whatever its description, and not in any particular kind of that money, and that it was impossible to hold that they were void because of want of power to issue them.

(3) That as, by their terms, these bonds were payable generally in money of the United States, the conclusion of the Supreme Court of Mississippi that they were otherwise payable was erroneous.

FIELD, J., concurring. No transaction of commerce or business, or obligation for the payment of money that is not immoral in its character and which is not in its manifest purpose detrimental to the peace, good order, and general interest of society can be declared or held to be invalid because enforced or made payable in gold coin or currency when that is established or recognized by the government, and any acts by state authority impairing or lessening the validity or negotiability of obligations thus made payable in gold coin are violative of the laws and Constitution of the United States.

Plaintiffs filed their bill in the chancery court of Hinds County, Mississippi, to enforce a trust and lien upon certain lands created in their favor as holders of bonds of the Levee Board of the State of Mississippi, District No. 1, by an act of the General Assembly of Mississippi approved March 17, 1871, under which the bonds were issued. The bill alleged that the obligation of the bonds and the security provided for their payment by the act of 1871 had been impaired, in contravention of the Constitution of the United States, by several subsequent acts of the Legislature of Mississippi, which were set forth in the bill.

Defendants demurred to the bill upon the ground, among chanrobles.com-red

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others, that the bonds were invalid because the levee board had made them payable in gold coin, and that there was therefore no contract to be impaired. The demurrers were sustained by the chancery court on that ground solely, and the bill was thereupon dismissed and that decree was affirmed by the supreme court of the state on the same ground. 66 Miss. 298.

Thereupon a writ of error was taken out from this Court.

Section 1 of the Act of Mississippi of March 17, 1871, c. 1, Laws Miss. 1871, p. 37, created a body corporate to be known as the "Levee Board of the State of Mississippi, District No. 1," to consist of five members, to reside one each in the Counties of Tunica, Coahoma, Tallahatchie, Panola, and De Soto, to be elected by the board of supervisors of their respective counties, with power to sue and be sued, to have a corporate seal and perpetual succession, to make such bylaws and regulations and alter and change the same as they might deem proper, and to do all acts and things, not inconsistent with the act and the laws of the state, that might be proper to effect the purposes and objects of the act.

Section 3 gave the board power and required them

"to construct, repair, and maintain a levee on or near the east bank of the Mississippi River, extending from the base of the hills on or next said bank of said river in the State of Tennessee . . . to the southern boundary of Coahoma County, . . . in order effectually to protect and reclaim the lands in the district hereinafter designated from overflow by the waters of the Mississippi River,"

etc.

Section 7 declared that all the bottom lands, designating the boundaries, in the Counties of De Soto, Tunica, Coahoma, Tallahatchie, and Pontotco, and six townships in the County of Sunflower,

"shall be, and constitute, as aforesaid, Mississippi Levee District No. 1, which it is the purpose of this act to protect and reclaim as aforesaid, by the agency of said board of commissioners, and the lands embraced and included in said levee district shall be and are hereby declared to be and are made chargeable and liable as hereinafter declared for all the costs, outlays, charges and expenses to be incurred or made

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for the levees, works and improvements provided for and contemplated by this act, or in maintaining the same."

By section 8, for the purpose of building and maintaining levees and works and carrying the act into effect, a uniform charge and assessment of two percent per annum on the value of every acre of the land in the district was levied, which it was provided should continue and be collected in each and every year for twelve successive years from the date of the act, and should be due and payable annually on or before the first day of September in each year for said period, and the value of every acre of unimproved land and of every acre of improved and cultivated land, and every acre of land improved and fenced, but not cultivated, was fixed, except the lands in Sunflower and Tallahatchie Counties.

Section 9 read as follows:

"That for the purposes aforesaid, and to enable them to carry out the purposes of this act, the said board of levee commissioners shall have power to borrow money, and to that end may issue the bonds of said board to the amount of one million of dollars, in such sums and denomination not less than one hundred dollars each, as the said board may prescribe, which bonds shall be signed by the president and countersigned by the treasurer of said board, and be made payable to order or bearer in not less than two nor more than ten years after the first day of January, 1871, and shall bear a rate of interest not exceeding eight percent per annum, for which interest coupons may be attached, payable at such time and place as the board may contract. Said bonds shall be negotiable as promissory notes or bills of exchange, and may be sold and negotiated in any market in or out of the state, on the best terms that can be obtained for the same; but in no case shall any of them be negotiated or sold at a greater discount than ten percent. Said board shall fix a place or places for the payment of the principal and interest of said bonds and coupons, and said bonds or coupons shall be receivable after maturity at par, in payment of any charge or assessment fixed, levied or made by this act. . . . All moneys borrowed by said board or arising from negotiations or sale of any

Page 162 U. S. 295

of said bonds shall be promptly paid into the treasury of said board, and shall constitute a levee fund, and be used and applied to carry into effect the objects and purposes of this act."

By section 10, it was provided that the charges and assessments levied by the act should constitute, as they were from time to time collected, a special fund and trust, to be used by the board firstly in payment of any bonds that might have been sold or used under the act and of any money that might be borrowed under its provisions, and secondly in payment of any other debts or liabilities of said board, and that the

"charges and assessments by this act fixed, levied, and made as aforesaid on said lands shall not be subject to repeal, alteration, or suspension during the time for which they are fixed and levied, as aforesaid, until all the bonds, obligations and liabilities of said board shall be first paid and discharged."

Provision was also made in case of noncollection for application by the holders of any bond or obligation overdue to the circuit or chancery court of any district included for a mandamus to compel the board to collect and pay over, or for the appointment of commissioners to do so.

Subsequent sections provided for a tax collector of the board and for sale on delinquency, bidding in by the board, etc.

By section 20, it was made the duty of the board

"to invest and keep invested in public securities of the United States until required to pay any of the bonds or liabilities of said board, [and] all such part of the funds and moneys of said board as may not at any time be required for present use in paying the matured debts and liabilities of said board, or in carrying into effect the purposes of this act."

It was further provided that in case the charges and assessments made by the act should be adjudged and held inoperative, the board should have power to proceed through commissioners to have just and legal rates, charges, and assessments made on any lands in the levee district sufficient in amount, when collected year by year, to pay all such bonds, loans, debts, and liabilities, and enable the board to carry the act chanrobles.com-red

Page 162 U. S. 296

into effect, and also that the collection of state and county taxes assessed upon any lands that might be purchased by or be vested in the levee board should be suspended so long as the lands were held as assets of the board.

Section 29 provided that all taxes levied and assessed under the act be and the same were declared to be a tax in rem against the lands embraced therein, which lands should be subject to sale without further assessment in each and every year, and that such sale should vest in the purchaser a good and valid title to the lands against the claims of every person having claims or title thereto subject to redemption as provided.

The bill averred that the bonds and coupons held by complainants "were negotiated by said district No. 1, and in course of trade came into the hands of these complainants by delivery," and a list of the bonds and coupons held by each of complainants was filed with and made part of the bill. These bonds were in the following form, all being the same, with the exception of the dates, numbers, and amounts:

"No. 309 $1000"

"Mississippi Levee District No. 1"

"United States of America, State of Mississippi"

"Eight Per Cent Bond"

"One of a series of five hundred bonds of one thousand dollars each, numbered from one to five hundred, consecutively, issued by the levee board of the State of Mississippi, district No. 1, in pursuance of and by the authority granted in an Act of the legislature of the State of Mississippi, approved March 17th, 1871, entitled 'An act to redeem and protect from overflow from the river Mississippi certain bottom lands herein described.'"

"Know all men by these presents that the Levee Board of the State of Mississippi, District No. 1, under and by authority of the law mentioned in the caption hereof, hereby acknowledge themselves, for value received, indebted to the bearer in the sum of one thousand dollars in gold coin of the United States of America, which said sum the said levee board of the State of Mississippi, District No. 1, for themselves and their successors, do hereby bind themselves and engage well and truly to pay to the bearer on the first day of January, A.D. 1878, at the banking house of the National Park Bank, in the City of New York, and the said Levee Board of the

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State of Mississippi, District No. 1, for themselves and their successors, do hereby engage to pay an interest thereon of eight percentum per annum, payable semi-annually on the first days of January and July in each and every year ensuing the date hereof until the maturity and payment of this bond at the place of payment mentioned in the coupons hereto annexed, upon the delivery of said coupons as they severally become due."

"In testimony whereof, the president of the Levee Board of the State of Mississippi, District No. 1, has signed, and the treasurer of said board has countersigned, these presents, and the president has caused the seal of the said board to the affixed hereto, the first of January, in the year of our Lord one thousand eight hundred and seventy-two."

[Seal]

"[Signed] M. S. Alcorn, President"

"[Signed] A. R. Hown, Treasurer"

Upon each bond were printed as an endorsement sections 7, 8, 9, 10, 20, and 29 of the act of 1871.

Attached to the bonds were coupons, of which the following was the form, all being alike except in amounts, numbers, and dates of maturity:

"The Levee Board of the State of Mississippi, District No. 1, will pay to the bearer on the first day of January, 1879, at the National Park Bank of New York, twenty ($20) dollars in currency of the United States, being the semiannual interest on bond No. 52."

"[Signed] A. R. Howe, Treas. "

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