U.S. Supreme Court
United States v. North Carolina, 136 U.S. 211 (1890)
United States v. North Carolina
No. 3, Original
Argued April 2, 1890
Decided May 19, 1890
136 U.S. 211
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 percent 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. chanrobles.com-red
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 147 bonds under the seal of the state, signed by the governor, and countersigned by the public treasurer, for $1,000 each, payable in thirty years from date, with interest at the yearly rate of six percent, alleged in the declaration to be payable half-yearly 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 25, 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, 1885, 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 percent 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. * chanrobles.com-red
The declaration alleged that at the dates when the bonds became payable, payment of the principal was demanded by chanrobles.com-red
the United States, and refused by the State of North Carolina. The State of North Carolina pleaded payment of the principal chanrobles.com-red
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 second 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 percent 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, while 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 $41,280, but that, if it did not so bear interest, judgment is to be entered for the defendant. "