64 Tenn.

Volume 64 — Tennessee Reports

43 opinions

64 Tenn. 1State v. President of Bank of Tennessee (1875)
1. Constitutional La.iv. Obligation of contract. When impaired. When the common school fund was made a part of the Capital of- the Bank of Tennessee, it became assets of the bank to which creditors of the bank had a right to look, and a trust fund applicable to the payment of its debts. The act, therefore, of February 16th, 1866, appropriating the assets of the bank as school fund impaired the obligation of the contract between the bank and its creditors and was a nullity, as was also the assignment made in pursuance of that act, so far as it gave preference to the school fund. 2. Same. Same. Power of bank acting under ante-bellmy, charter not affected • by attempted disunion. The acts by which it was attempted to dissolve the relations of the State of Tennessee with the Federal union, had no effect in changing the charter of the bank, but it had the same powers after as before the acts to carry on a legitimate banking business, The receiving of deposits was a part of such legitimate banking business, and the claims of deposit creditors of this character are entitled to payment out of the assets in the order indicated.' by law. 3. Same. Same. Same. Assets. Order of payment. So likewise was the issuance of its notes in compliance with, the terms of its charter a legitimate part of its banking business. Such notes are, therefore, entitled to a priority of payment out of the assets of the bank, whether issued before or after the 6th of May, 1861, the date at which the ordinance of secession was passed, and the provisions of the amended Constitution of 1865 and accordant State legislation repudiating the liability of the bank for deposits received and notes issued after that date, are held void as impairing the obligation of contracts. 4. Bank Notes. When bank compellable to receive them at face value for debts. Where at the time notes of a bank are issued and put in circulation, the law is that such bank should take its own circulation in payment of debts due to the bank, such law is a part of the contract between the bank and the’holders of the notes so issued. The law being such at the time, the notes of the bank issued after May 6,1861, commonly known as the “ new issue,” were emitted, it is held that a debtor had the right to discharge his debt to the bank in such notes at their face value. •5. Bank Assets. What not. Special deposit. State bonds purchased by school land funds in pursuance of law, and deposited by the counties interested, with the Bank of Tennessee, if capable of identification, belong to such counties and are not assets of the bank — but as to so much of those funds as cannot be so traced into State bonds now held by the bank, the counties entitled to such funds are its creditors without priority over other depositors or general creditors.
64 Tenn. 101State v. President of Bank of Tennessee (1875)
1. Statute oe Limitation. Does not apply to bank notes. See. 2779 construed. The statute of limitations barring actions on notes, unless brought within six years from the accrual of the cause of action, does not apply to notes issued by banking corporations under the laws of this State; and this is so, whether the notes have ceased to circulate as money or not, or whether the bank itself is in operation, or has suspended, or has, from any cause, ceased to exist as a corporation. 2. Same. When statutes of three years as to personalty and seven as to realty not applicable. The assignment of the assets of the bank of Tennessee, directed by the act of February 16, 1866, while invalid so far as it sought to give preference as against the statutory beneficiaries, was yet effectual to pass the legal title to the trustee, to whom the assignment was made, and this court having declared the preferences therein void, the holding of the trustee in their favor could not be deemed adverse in such sense as to vest him with the right as against the three beneficiaries. The statutes vesting title to personal property in the adverse holder thereof in three years, and to such holder of realty in seven years, can have no application to this case; besides, it is held that the trustee, having failed to execute the required bond, was appointed a receiver of the court, and, as such, held the assets of the bank for the benefit of those to whom the court might award them, and he is, therefore, estopped from setting up the statute of limitation, either for himself or any persons other than those ultimately entitled. Case cited: Moore v. Oroehet, 10 ITum., 367. 3. JURISDICTION OE CHANCERY COURT OVER ASSETS OE DISSOLVED COR-eorations. Upon the dissolution of a moneyed corporation its assets become trust funds for the benefit of its creditors and stockholders, and while in a court of law no’ suit could be maintained by or against such dissolved corporation without special .authority from the Legislature, yet a Court of Chancery, by virtue of its inherent equity powers, has ever had the right to take charge of the funds and administer them for the benefit of those entitled. Sec. 1493, et seq., of the Code, extending the corporate life of corporations five years for winding-up purposes, does not take away the jurisdiction independently Subsisting in the Court of Chancery. Oases cited: lhgrahcam v. Terr~j, 11 Hum., 576; White v. Campbell, 5 Hum., 38; ]J!farr V. The Bank of West Tennessee, 4 Cold., 476. Authorities cited 18 How., 480; 15 How., 304; Aug. & Ames on Corporations, sec. 779a; Adams on Eq., 3d American Ed., 229; 3 Mason,~ 308; 2 Kent, marginal note A, 307; 2 Story's Eq. Jur., sec. 1252' Up~on v. T bileoek, 1 Otto, 45; 8 Peters, 281; Miss. R., 319; 8 Ga., 493; 3 Edwards' 0. 14., affirmed in 9 Beige, 152; Foster et al v. Essas Bank, 16 Mass., 244. Code cited: Sees. 1403-4-5-6-7.
64 Tenn. 123Briefs & Arguments in the Cause of the State & Watson v. Bank of Tennessee (1875)
W. F. Cooper for the State. The State also appeared, and, by the Attorney-General, filed a separate demurrer. It is a matter of history, of which the court will take judicial notice, that early in the year 1861, the State of Tennessee undertook to separate from the Federal Union, and, in fact, join the Southern States in the late civil war. The reiusal of the State executive to obey the call of the President of the United States for troops to suppress insurrection was made in April, 1861, and from that time the •State ceased to yield obedience to the laws of the United States, and prepared for war. From that time, also, the Government of the United States ceased to recognize the acting State Government of Tennessee, and shortly after ■the occupation of Nashville, in February, 1862, replaced it by a Military Governor of its own appointment. On the 6th of May, 1861, the acting Legislature for the State, then in open rebellion, authorized the issuance of five millions of bonds, bearing eight per cent, interest, and known as war bonds, expressly for the purpose of raising money for the arming and equipping of troops, and purchasing supplies and materials of war. The public acts of the General Assembly chartering the Bank of Tennessee, show that tbe bank belonged exclusively to the State, and was its fiscal agent. The record of this case shows that the acting executive of the State, after tbe separation and commencement of war, used the Bank of Tennessee and its resources in aid of the rebellion, and, through a military board, which was •organized on the 26th of April, 1861, drew from the bank for war purposes $4,625,460.48, and in return paid to the hank in the eight per cent, war bonds, $4,300,000. The facts, as agreed upon in this case, show that the money thus drawn from the Bank of Tennessee by the military board was used for the “ arming and equiping of troops and the purchase of military stores in the war then flagrant between the United States Government and the Confederate or rebellious states;” and that the fact that the money so drawn was to be used, and was used for these purposes, was known to the officers and directors of the Bank of Tennessee. It further appears that the circulating notes of the bank and its branches were insufficient to meet the usual banking business of the bank in 1861, and the drafts or checks drawn upon the bank by the military board, and that the bank was compelled, “in order to meet its regular business and the demands of said board,” to resort to the issuance of the bank notes now in controversy in the Atchison and Duncan branch of the case, known as the “ new issue ” of said bank, “ and that said notes constituting the ‘ new issue ’ were all put into circulation after the 6th of May, 1861.” The court judicially knows, as matter of history, that the Government of the United States was in open war with the acting Government of the State of Tennessee from before the 6th of May, 1861, and did not recognize such government as lawful; that it sent a Military Governor to Tennessee early in 1862, who continued to act as such until after the Constitutional Convention of 1865, and re-organi-^ation of the State Government; that the government established by the Military Governor, and by the Convention and re-organization as aforesaid, was alone recognized by the Executive and Congress of the United States as the lawful government of the State. By the joint resolution of Congress, passed on the 24th of July, 1866, the State of Tennessee was “ restored to her former practical relations to the Union.” This resolution recites, as causes for restoring the State to its relations, that “whereas, in the year eighteen hundred and sixty-one, the Government of the State of Tennessee was seized upon and taken possession of by persons in hostility to the United States,” * * * “and, whereas, the people of the State did, on the 22d of July, 1865, by a large populor vote, adopt and ratify a constitution of government whereby slavery was abolished, and all ordinances and laws of secession, and debts contracted under the same were declared void; and, whereas, a State Government has been organized under said constitution,” etc. This resolution of the political department of the United States Government recognizes the illegality of the acting State Government in 1861, and bases the restoration of the State to its practical relations in the Union upon the constitutional amendments of 1865, and the ordinances thereto attached. Among the ordinances thus referred to are those contained in the 5th and 6th sections of the schedule, which are as follows: On the 4th of May, 1866, in compliance with this act, the president and directors of the bank did make a general assignment of' all the property and effects of the bank to Samuel Watson, in trust, to realize the assets, and after meeting the expenses of the trust, to make distribution and dividends, as follows: On the 16th of May, 1866, the original bill in this cause was filed in the name of the State of Tennessee and Samuel Watson-, trustee, against the President and Directors of the Bank of Tennessee, Wm. G. Brownlow, Governor of the State of Tennessee, A. J. Fletcher, Secretary of State, and S. W. Hatchett, Comptroller (these three as custodians of the bonds in which the coin of the Bank of Tennessee had been invested under the act1 of the Legislature of the 9th of June, 1865), and against A. G. Jackson, and a number of others named, as creditors of the bank, and against “ all creditors of the Bank of Tennessee or claim to be” — (sic). The bill sets forth the act of the 16th of February, 1866, entitled “ An act to wind up and settle the business of the bank of Tennessee,” that, in obedience to this act, the deed had been made as hereinbefore stated, a copy of which is exhibited with the bill, and that the bill was filed “in order to close up s*id trust, with the aid and under the supervision of the honorable court, complainants having been advised by the Governor of the necessity of filing a bill for that purpose.” On the 31st-of May, 1867, Mark R. Cockrill filed his answer to the original bill, in which he claims to be a depositor of the Bank of Tennessee, his deposits having been made after the 6th of May, 1861, and amounting to the sum of $15,655.41, without interest. On the 17th of April, 1869, D. W. C. Senter, Governor, A. J. Fletcher, Secretary of State, G. W. Blackburn, Comptroller, and Jno. H. Eaton, Superintendent of Common Schools, as a Board of Commissioners of the School Fund, were, upon petition, made defendants to the original and amended bills, and also to the cross-bill of Mark R. Cock-rill. 3. The fund known as the Common School Fund was a trust fund for the benefit of the children of the State forever, the principal, by the terms of its creation, to remain inviolate-into whosesoever hands it might come. 1. That the State had the right to invest the common school fund, as capital, in the Bank of Tennessee; that they did so invest it, and that neither the State nor the Superintendent oí Common Schools have any claim or demand on account of said investment, as against said bank.or its assets, save as a stockholder in said bank. 2. That being a mere stockholder, it was not competent for the State of Tennessee to authorize said bank to make an assignment, preferring the State or the school fund as a stockholder over the creditors of the bank. 6. That the State subscribed $5,000,000 to the capital stock of said bank, and, as a fact, has never paid up to the full amount of its subscription, it is bound now to pay the said subscription for the benefit of the creditors of the bank, and is also bound to the creditors for the unlawful conversion of the coin funds of said bank. 7. That said bank, having been established for the benefit of the State, and the faith and credit of the State pledged for its support, said bank was, in law, the financial agent of the State, and the State was liable for the issue as a principal debtor, and not as a security or guarantor. The learned counsel for McKennie in the court below seemed to labor under the impression that a state or sovereign, by condescending to be a party complainant to a suit in court, not only divested itself of all its sovereign prerogatives, but subjected itself at once to be sued in any mode, and for any cause, a party defendant might see.proper to ground an action upon. And he seems to have relied upon Hullett v. King of Spain, 2 Bligh., N. S., 31, and other cases brought by foreign sovereigns in the English Chancery Court, in which it has been held that such sovereign is liable to a c.ross-bill in the case. If he demands equity he must of course be willing to do equity. But I do not understand those cases to hold that a sovereign, by suing in the court of chancery, subjects himself to a cross-bill other than such as would be allowed in like cases between individuals. The claim, too, of cross-action must of course be one in which the court can undertake to adjust the defendant’s equity through the sovereign’s right of recovery, as for' example a claim of set-off. The court would never undertake to give a positive decree for any amount in favor of the defendant against the sovereign, for such a decree would be simply nugatory. And certainly if a court of Chancery should ever undertake to render such a decree.against a foreign sovereign, it would never think of doing so against its own sovereign without the permission of the latter formally given. (1 Dan. Ch. Pr. 18 and 132; Sto. Eq. Pl., sec. 55.) 1. That it made good the deficiency in the capital stock of the bank. ' Now, it will be noticed that there is no pledge on the part of the State that the capital shall be five millions of dollars. The language of the second section is merely an expression of the legislative expectation and intention at that time, that the capital should be of that amount, but there is no pledge that it shall be, much less is there any pledge that the State will “indemnify for all losses arising from such deficiency.” It is only by mingling the language of the first section, where it has a different meaning altogether, with the language of the second section, with which it has no connection-, that the position assumed in the charge of the cross-bill can be said to have any plausibility. But this mingling of the language of the two sections is not justified by the context, and is in clear violation of the legislative intent. The next ground of positive relief against the State is to charge the State with eight per cent .bonds issued under the act of the 6th of May, 1861, and bought by the bank, or with the amount of money taken from the bank to pay for them. Let us now see what are the rights, if any, of the complainants in the cross-bills, as against the assets of the Bank •of Tennessee in the hands of S. Watson, trustee. The people of the State of Tennessee undertook to separate from the United States and join the Confederate States. This was accomplished, as far as it could be done, by the act of separation and the legislation of the 6th of May, 1861, and the effect of what was done was to bring the State, as then controlled, and especially its legislative and' executive branches, and the bank ‘of Tennessee as their fiscal agent, into rebellion and war with the United States. It has been repeatedly decided by the courts of the United States, that war is a state of facts, and needs no proclamation of the President or act of Congress to establish it; but that if anything was needed, it was supplied by the President’s proclamation of the 15th of April, 1861, declaring the existence of an insurrection. The Prize Cases, 2 Black., 635; Lawrence’s Wheat, 535. Now, what was the effect of the status brought about by the acts of the rebellious government in this State on the 6th of May, 1861, and afterwards, until the lawful authority was restored, upon the acts of the rebellious government with its citizens, and upon the acts of the citizens as between themselves? It is upon the answer to this question that the correctness of our first position must, in a great measure, depend. “The laws passed by its Legislature during that time [during the time a state is in rebellion] were nullities; its taxes wrongfully collected ; its salaries and compensation to its officers illegally paid; its public accounts improperly settled, and the judgments and sentences of all its courts in civil and criminal cases null and void, and the officers who carried the decisions into operation answerable as trespassers, if not in some cases as criminals.” The Dorr rebellion of Rhode Island, which was the particular rebellion under consideration, was not a rebellion of a part of the State against the whole. It was a rebellion of the whole State by holding conventions elected by, it was claimed, a majority of the people, and by a Legislature chosen in like manner, and its successful and continued organization would, as C. J. Taney said, have made the acts of the old government illegal and void. It is the political department of the government that survives the -rebellion, without reference to the abstract question of right or wrong, which is clothed with the power “ to pronounce upon the legality or illegality of the government acting for the time being.” And this, whether the rebellion be of a- whole State, as in the case just mentioned, or of a part of a State, as in the case of the Franklin Government presently to be noticed, and whether the rebellion continue for only two or three years as in both these instances, only for a few months as in the case of our own rebel State Government, or for twenty years as in England during the great revolution which ended with the Protectorate of Cromwell. To the same effect as Luther v. Borden, is one of our own early cases, Ingram v. Cocke, 1 Tenn., 19, in relation to the acts of the Franklin Government. . The court say in that case: “When governments defacto cease to exist, the former or legitimate government, by their legislative arts, usually furnish the grounds upon which municipal courts proceed in giving an opinion.” In other words, to use the language of the Supreme Court of the United States, White v. Hart, 13 Wall., 651, “the result (to the rebel citizen) depends upon the rule as defined in the law of the sovereign against whom he has offended.” The action of the political department under which the judges hold their offices, upon anything done pending the rebellion, is conclusive upon the courts. See also Rose v. Himely, 4 Cr., 273; 3 Wheat, 324, 364; 13 Pet., 420; White v. Hart, 13 Wall. 649. “Respecting the power of government (to confiscate enemy’s property), said Marshall, C. J., no doubt is entertained. That war gives the full right to take persons, and confiscate the property of the enemy wherever found, is conceded. The mitigations of this rigid rule, which the humane and wise policy of modern times has introduced into practice, will more or less affect the exercise of this right, but’ cannot impair the right itself. That rpmains undiminished, and when the sovereign authority shall choose to bring it into operation, the judicial department must give effect to its will.” Brown v. United States, 8 Cr., 110, 143. And by the fourth section of the 14th amendment to the Constitution of the United States, it is declared that “all debts, obligations and claims incurred in aid of insurrection and rebellion against the United States, shall be held illegal and void/’ and the United States and any state are forbid to assume or pay the same. In the opinion of the Chief Justice, it is too clear for argument, that, while the State was in rebellion, and its citizens refusing to recognize their constitutional obligations, both the State and its citizens lost their rights under the Constitution of the United States. They could not claim the latter, while they themselves were openly repudiating the former. They became “enemies” to all intents and purposes, besides incurring the consequences of rebellion, and might be so treated accordingly, at the option of the government. By the joint resolution of May, 1861, number 25, it was, among other things, “Resolved further, That the supervisors of banks, by and under the concurrence, in writing, of the military and financial board, may temporarily suspend the operation of any provision of the bank code, when, in their judgment, the public good demands it. The suspension to date from the time they file with the Secretary of State their written resolution to that effect.” It will be seen that the General Assembly were at first cautious in the language used in these acts, becoming gradually more and more outspoken. Practically, as shown by the evidence, the legislation was as effective at first as in the end, and the bank was the mere tool of the rebel government. The two last acts cited drop the mask entirely, and the Legislature controls the assets of the bank, without going through the form of consulting the officers or directors. It is too weak a phrase to say that the bank was the right arm of the rebel State Government — it was the government itself, and its every act was the act of that government. As well might you attempt to shield from the charge of illegality acts of the military board, because those acts were between private citizens, as the acts of the Bank of Tennessee. And no one will pretend that the acts of the rebel government, and all its branches and agents, were not void. See U. S. v. Keehler, 9 Wall., 83; Hickman v. Jones, 91 Wall., 193. The statement of the business of the bank in 1861, in connection with the demands made upon it by the military board, shows that the new issue was put into circulation to meet the extra demand for currency occasioned by the calls of that board. The drafts of the board and of the rebel State Government are far more than enough to cover the ngw issue. No amount of testimony could make it plainer that the bank was forced to resort to the new issue by the draft upon its resources for war purposes. If so, it is obvious, that being issued for an illegal purpose, they are void in whatsoever hands they may come. Thomas v. Richmond, 12 Wall., 349; Hanauer v. Doane, 12 Wall., 342; 2 South Rev., p. 73. In Weith v. City of Wilmington, 68 N.C., 24, it was held that bonds (or coupons cut therefrom), given, after the war, in renewal of a bond issued by a municipal corporation, for money borrowed to be used in aid of the rebellion, were void in the hands of an innocent purchaser for value and without notice, and this upon general principles. And in Hanauer v. Woodruff, 15 Wall., 439, it was held that bonds issued in aid of the rebellion were not validated by being used as a circulating medium in a portion of the territory occupied by the rebels. The argument against this view is, that some of the business of the bank in 1861 being of the usual character, it is impossible to distinguish between the legal acts and the illegal, and that the doubt will inure to the advantage of the holder. But, as matter of fact by the evidence, the “new issue” must be taken to have been put in circulation solely by the pressue on the bank occasioned by the demands of the military board and rebel government. No doubt, some of the old issue, which otherwite would have lain in the vaults, was used on account of the same pressure. The old issue thus used cannot be identified, the new can. It is not the consideration upon which it toas actually issued that constitutes its illegality. Some Confederate money may have been issued to buy food for women and children. It is the fact that the money was issued at all that makes it illegal; its use being shown to have arisen by reason of theexigency of the war. No one could contend that Confederate money was not void as between the holder and the maker, the Confederate Government, although it may have been issued, in some instances, upon an innocent consideration, and may have constituted a good consideration in contracts between individuals. So, we insist, that no matter what may have been the actual consideration for the issuance of any part of it, the “ new issue ” is illegal as between the holder and the bank, as the-fiscal agent of the rebel State Government. See Thorington v. Smith, 8 Wall., 1, 11, as commented on in Naff v. Crawford, 1 Heis., 123. In Miller v. Andrews, 3 Col., 381, which was the case of the transfer by the Planters Bank of one of its discounted notes on the 14th of May, 1865, it was correctly ruled that the maker of the note might still pay it to the assignee in the circulating notes of the Planters Bank, because the assignment was made before the act of the 8th of June, 1865, presently to be mentioned. 3. By the general power inherent in banking corporations. The act of the 8th of June, 1865, ch. 55jsec. 2, expressly conferred upon the Bank of Tennessee, and all other banks in the State, the power of making a general assignment, if there were any doubt of the right independently of the act. The act provides for a preference in favor of the noteholders, but it is obvious that no creditors other than the noteholders could take exception to the deed for a failure to give this preference; and if the noteholder be, as in this case, secured otherwise by the right to use the notes in the payment of taxes, and does not complaiu, the assignment would be good against every other class of creditors.- Besides, the act of February 16, 1866, impliedly repeals the proviso in favor of the noteholders so far as the Bank of Tennessee is concerned, and no person has a right to question the validity of this repeal except the noteholder. The assignment in controversy is, therefore, good under the statute, and there is no person now before the court authorized to contest any preference given by it, if the claim preferred be a genuine debt of the bank. Whether the school fund is such a debt I will consider presently. The third section of the act of January 19, 1838, ch. 107, under which the Bank of Tennessee was chartered, provides that the money belonging to the common school fund “ shall be handed over to the President and Directors of the Bank of Tennessee as capital in said bank, and said President and Directors, or a majority of them, shall be authorized and required for and on behalf of the State, and with a pledge of the public faith and credit, to issue to the superintendent aforesaid state stock or certificates of debt, for such sum or sums as may be from time to time paid over by the said superintendent to the President and Directors.” The residue of the section speaks of the issue to be made to the suner-intendent as “certificates of stock,” and of the vesting of the fund in stock in said bank. It is the rather loose wording of the entire section which seems to have misled the learned counsel for the defendants. The true nature of the transaction may be easily gathered from the section taking it altogether, when coupled with the first section of the act and the constitutional provision already quoted. The first section of the act commences thus: “That a bank shall be and is hereby established in the name and for the benefit of the State.” The plain intent and obvious meaning are that a bank is created exclusively belonging to the State, ,the whole of the stock of which shall be owned by the State; but .as part of the capital stock the superintendent of the common school fund, as its constitutional custodian, is directed to pay the fund to the bank, receiving therefor, not the certificates of the capital stock of said bank, as erroneously supposed by the learned counsel of defendants, but, in the plainest and most unambiguous language, “State stock or certificates of debt,” to be issued by the President and Directors of the bank, “ for and on behalf of the State,” and as its agents, “ and with a pledge of the public faith and credit.” The legal effect of this is as plain as the language used. The State takes the fund and invests it, as its own, in the capital stock of the bank, and the bank becomes debtor of the Board of Commissioners, backed by the State for the amount, which should have been evidenced, whether it was or not, by a formal instrument described as “state stock or certificates of debt.” There is not the least pretense for saying that the Board of Commissioners of the common school fund was ever a stockholder in said bank. It was a creditor of the bank and the State, according to the clear intent of the Legislature, and had an undoubted right to be secured out of the property of the bank as has been done. And even if there were a doubt as to the intent, the fact is patent that the fund went into the bank, of which the State was the sole stockholder, and the board would have a right to follow it. All persons who dealt with the bank did so with the fact patent upon the face of the bank -charter, and with full knowledge of the constitutional provisions. The Board of Common School Commissioners, as a constitutional body, -were and are entitled to look both to the bank and the State for this sacred fund, and it was the duty of the bank, the State and the General Assembly to see that the fund was secured as has been done. The State, as a stockholder (even as the sole stockholder), bears the saíne relation to the bank as any other stockholder. Briscoe v. Bank of Kentucky, 11 Pet., 257; United States v. Bank of Georgia, 9 Wheat., 904. ARGUMENT OP J. B. H EISK ELL, ATTORNEY GENERAL. By act of that session, p. 157, ch. 75, entitled “An act to provide for a reduction of the State debt,” the president of the bank was directed to return the fifteen hundred bonds to the Secretary of State, and the Governor was directed to cancel and destroy them. The act further repealed so much of the act to charter the bank as authorizes the Governor to issue bonds for that purpose. These bonds were accordingly destroyed, and the capital stock was thus by public act reduced from $5,000,000 to $3,500,000, and upon this basis the bank ever after did business. New issue — effect of ti-ie war — status of TENNESSEE. It has been said tnat the Convention of 1865 was a mob. All the first steps in the organization of a new government are the acts of mobs. The convention of 1865, by adventitious assistance, imposed their government on an unwilling majority, and organized and kept in force all the paraphernalia of executive and legislative authority — of courts, and offices, and laws — and we to-day enforce statutes passed by their authority. They assumed, with the power I have already admitted as part of the law by which civil wars are regulated, to define what acts of the late government were void, and to make that declaration of perpetual obligation, they put it into the Constitution of 1865. The Legislature olso acted in virtue of the organic act, and declared the same by statute. Such act not being in contravention of any constitutional restriction anywhere, was valid until repealed, and irrepealable until the Constitution was changed. When the Constitution of 1870 was made, ic became re-pealable, but it remained in force, and remains still unre-pealed upon the statute book. It is said this is a mere regulation affecting the bank and the assignment. This answers the purpose as well as any other statute. If it was then valid, it authorized the assignment on the terms of excluding the contracts of the bank after the 6th of May, 1861, and its subsequent issues. And the assignment then being lawful, with that exclusion, remains valid. Without any such express stipulation in the deed, the act itself would have the effect of that stipulation — being the authority under which the act was done, and the actual declaration of the trust. The repeal, then, of the prohibitory clause in the Constitution does not affect this assignment, or the statute under which it was made. It only places it within the legislative control. CONSTITUTION- OP THE UNITED STATES — CONTE ACTS; The following language is .held by the court in United States v. McRae, 8 Law Rep., 84, Eq.: “The moneys, goods and treasure, which were at the outbreak the public property of the plaintiff, and which were seized by the rebels, still contiaued their moneys, goods and treasure, their rights of property and rights of possession being nowise divested or defeated by the wrongful seizure of them. And if, at the end of the rebellion, any of such moneys, goods or treasure, or the produce thereof, capable of being identified or earmarked, could be traced into the possession of any person, the rightful owners would be entitled to apply to the proper tribunal having jurisdiction over such person to award restitution. If such person were an accomplice, a 'particeps criminis, or had received the property with full notice of the title of the rightful owner, the latter would be entitled to an order for restitution simplieiter. If he had received it as an innocent factor, banker, or other agent, the right to restitution would be, or might be, of a more qualified or limited kind. It would be, or might be, subject to any claim or lien which in his character of innocent bailee without notice he might have.” The rights would depend upon the law of bailment, etc. The Bank of Tennessee is as much the creature and agent of the State as if it was the treasury itself; as much so as the fiscus of the German States, where the treasury is what we would call a corporation, subject to suit. Of course, such an ideal existence must have its legal existence with the government of which it is part, and be subject to its fate. It is supposed that this argument is like that which was urged against the bank when it was first chartered, that it was not a valid corporation, because it had no individuals named as corporators. In truth, the view I take and that are antipodal. I look exclusively at the substance that stuck in the bark. I say the Legislature might declare the treasury safe subject to suit, or the treasury, and it would be so. As to the bank, it sets apart a particular fund, and allows that fund to be reached by a suit in a particular form against the bank. But the suit is, in substance, against that particular fund of the State, and so far a suit against the State, in substance, but not in form. It is clothed with certain incidents appertaining to individuals by the law of its creation, but it has only a formal existence separate from the State. Subject the treasury to suit, and it will be separate to the same extent, nearly. Take the instance of the Franklin government, and suppose it to have seized upon the trustee of one of the counties it hád assumed to control, and had, through him, attempted to force the county in contracts, would North Carolina have been bound to respect such contracts, or was it at liberty to say such are not the contracts of the county, but only of your agents therein, and they are not binding. WAR BONDS. ASSIGNMENT ACT OE 1866 LEGISLATIVE, NOT JUDICIAL. CASES IN TENNESSEE. In Fry v. Britton, 2 Heis., 606, 609, this court held that a suit brought to enjoin the State by service on.the District Attorney and sheriff was a nullity, both on the ground that the State could not be sued, and on the ground that the suit was not in proper form. Curran v. The State of Arkansas is not of any avail as to the right to sue the State. The jurisdiction was gained under the Constitution of the State, which gave the right to sue the State as an inalienable right of the citizen. Of course it did not stand upon any principle akin to the general law on the subject of the right to sue. When jurisdiction was obtained, and a question arose in the state courts which involved the Constitution of the United States, a writ of error lay to the Supreme Court, and its jurisdiction followed of course. And this is the universal principle. DeHuber v. Queen of Portugal, 7 Eng. Law and Eq., 340, citing Duke of Drunswick v. King of Hanover, then recently decided in the House of Lords, for the proposition, that an action cannot be maintained in any English court against a foreign potentate for anything done or omitted to be done by him in his public capacity as representative of the nation of which he is head, and that no English court has jurisdiction to entertain any complaint against him in that capacity, p. 350. This is precisely the reverse of the position for which the case was cited by my learned friend, (Mr. Humphreys.) This case is decided in 6 Beav., 1, by the Master of Rolls; and reported 13 Law J. Rep., (N. S.) Chanc., 107, either on the same hearing or a subsequent one before the Lord Chancellor probably, and finally in 2 House of Lords Cas., 1. See also, to the same point, Nabob of the Carnatic v. East India Co., 1 Ves. Jr., 371, 387; s. c. 2 Ves. Jr., 56, 60; s. c. 4 Brown, C. C. 180; s. c. 3 Brown, C. C. 292, 310. But in regard to the right of the State to sue her citizens or officers, it is an absolute right fixed by law. One of the purposes for which courts were instituted was to enforce the policy of the State in regard to her revenue. But the same state, as part of the same system of policy, has reserved to herself the right to be exempt from having her liabilitities declared by the same judicial agencies, and reserved to the legislative council, or her accounting officers, the settlement of claims against herself. If the people of a great state prefer, as individuals, that their rights against the community should be left to the legislative will for enforcement, rather than that their fiscal policy should be embarrassed by suits at periods when they would not be able to meet the obligations of their creditors at home and abroad, then no odium can attach to the grand aggregate who, as individuals, concur in this policy; and the Fourth of July talk about republican ideas to the reverse, does not arise to the dignity of common sense. The ■outcry of the foreign creditor, who holds many millions of our bonds, might well be justified if made; but the creditors abroad, against whom this policy is aimed, are patient. The citizen at home, who is compelled to enforce this rule, chiefly on account of the heavy bond debt, has no ground of complaint when his own policy affects his own interest. Whenever the citizen makes a law for others, he must submit himself to that law; and he has no right to complain that his own rule of policy, applied to others, interferes with himself. Let kings and potentates be held in odium if they refuse justice to their subjects; but let republics submit, if they choose to adopt a rule which imposes hard conditions on themselves. It is delivered in the case of Elias & Morris Brown v. The United States. The case itself merely decides that the law of the United States vesting in a special tribunal the power to adjudge cases against the United States, and granting to it to “ generally exercise such powers as are necessary to carry out the powers herein granted to it” (pp. 9, 18), was a grant of power to enforce the decrees of the court by appropriate writs and process against officers of the United States. How, what application has this, or can it have, to a state which has erected no such court, and made no provision of similar, or of any character, in regard to any court existing? Walker v. Congreve is of this class, for the act of the ordnance, office infringing this patent was a wrongful act (p. 5). Carpmael Patent Cases, 356 : Lord Elden had got his blood up, but he dissolved the injunction in that case. “ It will not do to say that the result of the proceeding by mandamus would show the title of the relator to his pay, the amount, and whether there were any moneys in the treasury applicable to the demand ; for apon this ground any creditor of the government would be enabled to enforce his claim against it through the head of the proper department by means of this writ.” Brashear v. Mason, 6 How., 102. “Passed February 21, 1873. “W. S. McGatjghey, “Speaker of the House of Representatives. “A. T. Lacey, “Speaker of the Senate: “Approved February 28, 1873. “John C. Bjeiowe, “ Oovexnor. “ Chas. N. Gibbs, “Secretary of State.” In Briscoe v. Bank of Commonwealth of Kentucky, 11 Pet., 351, it is said: “ No sovereign state is liable to be sued without her consent. Under the articles of confederation, a state could be sued only in cases of boundary.” “The bank could be sued.” Per McLean, J. In the same case, quoting from the case of the United States v. The Planters’ Bank, 9 Wheat., 904, (opinion by Marshall, C. J.,) it is said: “It is, we think, a sound principle, that when a government becomes a partner iu any trading company, it divests itself, so far as it concerns the transactions of that company, of its sovereign character, and takes that of a private citizen. Instead of communicating to the company its privileges and prerogatives, it descends to a level with those with whom it associates itself, and takes the character which belongs to its associates, and to the business which is to be transacted. Thus many states of the Union, who have an interest in banks, are not suable even in their own courts; yet they never exempt the corporation from being sued. The State of Georgia, by giving the bank the capacity to sue and be sued, voluntarily strips itself of its sovereign character, so far as it respects the transactions of the bank, and waives all the privileges of that character. As a member of a corporation, a government never exercises its sovereignty. It acts merely as a corporator, and exercises no other power in the management of the affairs of the corporation than are expressly given in the incorporating act. * * The State does not, by becoming an incorporator, identify itself with the corporation.” • Again, in the same case, quoting from the Bank of the Commonwealth v. Wistar, 3 Peters, 318, opinion by Mr. J. Johnson, the court say: “If a slate did exercise any other power in or over a bank, or impart its sovereign attributes, it would be ‘hardly possible to distinguish the issue of the paper of such banks from a direct issue of bills of credit.” But further, on p. 359, he, speaking of the State banks in which the State is a partner, says: “a state owning a portion of the funds, and having paid in its share of the capital stock, is treated like every other stockholder, and is understood to incur no public responsibility whatsoever. It descends to the character of a mere corporation, and does not act in the character of sovereign. That was the doctrine of this court in the case of the United States v. The Planters’ Bank of Georgia.” In Darrington v. State Bank of Alabama, 13 How., 17, the court say: “ A bill of credit emanates from the sovereignty of a state. It rests for its currency on the faith of the State, pledged by a public law. The State cannot be sued, ordinarily, on such bill, nor payment exacted against its will. * * * The State as a stockholder held its property as a corporation or individual could hold it, in the Mobile bank. The specie in its vaults, notes taken in discounts, and every description of property managed by the directors of the bank, were subject to judicial process, by its creditors. And in such a procedure, the State in its sovereign capacity, could not interfere. Its powers would be no greater than the powers of individual stockholders of a bank under similar circumstances. An illustration of the mode of reasoning adopted in this case is found in the citation of Judge Baldwin's remarks on the submission of cases by states. Judge Baldwin is meeting an objection that the controversy between Rhode Island and Massachusetts being one of boundary, is a political and nota judicial question. He is showing that the true test by which a question is characterized is the mode in which and the tribunal before which it is presented. That a question discussed between states by arms or treaty is political, and the same question presented to a court is judicial. In speaking of this he points out the distinction in the mode of proceeding between the judicial and the political power. The sovereign decides by his own will, a court according to law. A submission to a court without presenting any rule of decision is a power to decide according to the appropriate law of the case. From the time of such submission the question ceases to be a political question, and comes to a court to be decided, and is, therefore, judicial. Such is the purport of the language quoted to show that a reference of a question to a court precludes all further action of the political power. He goes on through many pages to illustrate this idea by reference to authorities and instances. In the course of it he states at page 741 the case of The Nabob of the Carnatic v. The East India Company, 1 Ves. Jr., 371. This case is a happy example to show the nature of the jurisdiction of courts over sovereignties. The East India Company is a peculiar institution. It is a chartered trading company, but it has also sovereign power. It is subordinate to Great Britian, but it rules more millions of people and a wider extent of territory than England itself. This case held therefore two things, that the trading corporation was subject to suit but the sovereign was not. The counsel for McKennie and others fails to discriminate in his attacks upon the bank and the State, between the different aspects of the case. 2. The State is not liable for the new issue, because it was issued during the war, for war purposes, by the government overthrown by the war, and was repudiated by the successful government. STATEMENT OF THE NOMINAL AND ACTUAL CAPITAL OF THE BANK OF TENNESSEE, DUPING- EACH YEAB. Subsequent reports July 1, 1859, and July 1, 1861, and October 1,1861,. show Capital Stock, $3,679,068 33. ARGUMENT OE R. McP. SMITH FOR THE NEW ISSUE. In April, 1861, shortly after the refusal of Tennessee to respond to the President’s call for troops, a Military Board was organized here for the purpose of raising, equiping, and supplying troops for the rebellion. To raise the sinews of war, the State issued what were known as its “war-bond's,” of which $4,300,000 were purchased at par by the Bank of Tennessee, and the price placed to the credit of the State. The bank afterward sold $1,077,000 of these bonds. The Military Board checked out of the bank, from time to time, $4,625,460.48, which were, of course, rebelliously applied. These checks were a heavy drain upon the bank, whose regular business in 1861 was as large as it had been previously; and in order to meet the additional demands of this business, it issued $1,646,299 additional currency — the new issue — of which the mother bank issued $869,639, and the branches $766,660. But it does not appear that any part of even this was, in •fact, so issued. As ciphered out by the Chancellor below, the bank needed not have paid out any of it thus, for the proceeds of the war bonds sold by the bank plus the old issue and the notes of ofher banks on hand, amounted to $1,384,807 more than the aggregate of the military board’s ■checks — not to mention the specie in the vaults, shown to have been $446,719.70. The special counsel of the State says that the entire new issue must be avoided as having originated in the exigencies of the rebellion. The argument is, that but for the drain ■of the rebellion upon the bank the new issue would not have been emitted; ergo, the new issue was emitted in aid •of the rebellion. But would this argument be applied to the obligations of other banks, or of individuals, standing in the same category? The Union Bank and the Planters Bank also bought large amounts of war bonds, and, •doubtless, had to issue additional circulation' to supply for their ordinary business the deficit produced by these purchases. Were these notes, issued in regular discounts, void as having originated in the exigencies of rebellion? Suppose a patriotic individual had invested all his available means in war bonds, and afterward had had to borrow money on his note for the support of his family, would this note have been void as having originated in the exigencies of the rebellion? The foregoing argument against the new issue would reach this note also. It would, equally with the new issue, have originated in an exigency of the maker occasioned by his rebellious investments; and the special counsel, if consistent, would have to call it the offspring of a rebellious exigency, and as such to condemn it as void. The Confederate Government, in the view of the victorious Federal Government, a view now established by its success as the law of the matter, never having been even a government de facto, Confederate notes must now figure as the promises of a nonentity. But the Bank of Tennessee and the State of Tennessee were entities, antedating the rebellion, and never annihilated. If the occasion of its issuance was the only vice of Confederate money, then that which was issued to buy food for women and children would not be void. The stress of the attack upon the new issue rests upon other grounds. Unable to implicate the money itself as guiltily issued, our opponents strike at the capacity of the issuer. They also direct against us a novel theory of the omnipotence of the reorganized State in 1865. The counsel of the bank argues that the bank was a mere organ of the State, and that its officers were essentially State officers; and he insists that upon the attempt of Tennessee to break her federal tie, ipso facto, instantaneously, all legitimate official authority perished within her borders, that of the bank officers among the rest, and that their subsequent emission of the new issue was, therefore, void. He regards the annulling section of the constitutional amendment of 1865 as declaratory only. The special counsel for the State does not go quite so far. He does not regard what was done during the rebellion as utterly void. Yet he will not concede its unqualified validity. He strikes a diagonal between the two lines of thought. He says: “By the rebellion, those who became parties to it, either voluntarily or through coercion of circumstances, are placed at once out of the pale of the law, and every thing they may do, either with their rebel government or between themselves, is tainted with illegality and void, if the legitimate government chooses so to treat it through the action of its political department.” And he regards the annulling section of the constitutional amendment of 1865 as the expression of such choice. “ In 1861, Tennessee, with her then State Government on one side; and, on the other, a party aided by power from States beyond her borders, made the mighty issue, . . . the result was that the then acting State Government was overthrown by revolution, and the new government established by arms and upheld by power. We acknowledge its establishment, and our inability to overturn it, and submit to its authority, not perhaps as rightful or just, but as an existing fact. “From the- time the issue was tendered and accepted, the revolutionists of Tennessee, with aid from abroad, denied the right of the then government. On that issue they fought, and they succeeded in driving the government of 1861 from the State. As the successful revolutionists in the civil war, they have, by the universal law of nations and states, certain rights, one of which is to say what acts of the uprooted government are valid and what are void.” This is certainly a curious conception of the late unpleasantness; that in Tennessee it consisted in a unionist rebellion against legitimate state authority. The United States Supreme Court have regarded it as a territorial civil war in which all Tennesseeans were involved in law as public enemies of the United States — the unionists as'well as the secessionists. Prize Cases, 2 Black, 635; Mrs. Alexander’s Cotton, 2 Wal., 417; The William Bagaley, 5 Wal., 407; The Ouachita Cotton, 6 Wal., 527; McKee v. United States, 8 Wal., 166, etc. This has been the view of the other courts also. The Constitution of 1870, repealing the Schedule of 1865, restored the previous condition of whatever, if anything, was affected by the latter. 2. That, however, the Bank of Tennessee was no more anything else than “ a bank for ordinary banking purposes’5' than any of the other banks of the State; and that hence the new issue stands upon the same footing as the issues of the other banks under similar circumstances. According to that view, when the State Government assumed a hostile attitude towards the Union, it ceased to be a government de jure, and became liable to be removed by the Union, and to have a loyal state government substituted in its room. When rightful government in a state is over-' thrown, it is, according to that view, incumbent upon the Union, under the clause of the Constitution of the United States guaranteeing republican government to the states, to take the initiative in its reconstruction. I. But our first concern is with the view entertained by the United States Supreme Court of the status during the rebellion of the rebel state governments. This view will be found fully set forth in Texas v. White, 7 Wall., 700. The court there held, that whilst the rebel states, being out of peaceful relations with the Union, could not enjoy all the privileges of states preserving such relations, yet at no moment did they, cease to be states; that the Constitution looks to “an indestructible Union composed of indestructible states”; that the obligations of the States as members of the Union, and of their citizens as citizens of the Union, were never impaired; and that their legislatures, being departments of governments established in hostility to the Union, could not be regarded as lawful legislatures. So far, everything suits our opponents very well; but note what succeeds. The court add : “And yet it is an historical fact that the Government of Texas then in full control of the State was its only actual government; and certainly if Texas had been a separate state, and not one of the United States, the new government, having displaced the regular authority, and having established itself in the customary seats of power, and in the exercise of the ordinary functions of administration, would have constituted, in the strictest sense of the words, a de fado government, and its acts during the period of its existence as such would be effectual, and in almost ¿11 respects valid. And to some extent this is true of the actual Government of Texas, though unlawful and revolutionary as to the United States. The last two italicized, clauses go to the pith of the matter. Legislation unobjectionable in itself would be valid; but if in hostility to the United States, it would be void. In Ciiy of Richmond v. Smith, 15 Wall., 429, the city was sued in the United States Circuit Court for action done pursuant to an ordinance passed just before the Federal occupation in 1865. It would have been a perfect defense that the ordinance was not the act of the city. And this defense might have been made out by any argument establishing that the State Government at the time was a mere usurpation. But the city was held liable for the act of its then authorities. If they could implicate the city the state authorities at the time could equally have bound the State. “The stress of the appellant’s argument is this: Louisiana was a state in the Union, but in flagrant rebellion against the Federal Government; it had organized a state government in opposition to the national government, in which was included a judicial system ; the court of the sixth judicial district, etc., was a Confederate court, etc. . . . It is sufficient to say that in our view the sixth district court, etc., was a court of the State of Louisiana; that the rebellion against the national government in which the people of that state were involved, did not annul that court, its power, or jurisdiction, etc.” In the first of these, a person acting under a void appointment as judge was held a judge de facto. In the second, the judges of the Court of Appeals of Virginia appointed under the reconstruction laws but holding after their official character had perished, were held to have been during this time judges de facto, and their decisions as valid as if they had been de jure. On p. 72 of this cas-, the court refer to a decision of Chief Justice Chase in the United States Circuit Courtj that a judge disqualified by the 14th amendment was yet a de facto officer. They also mention Sir Randolph Crew’s case, where the action of judges after their commissions had terminated, through the demise of the Crown, was held valid. Also, Knight v. Corporation of Wells, Lutwyche, 508, where an ineligible mayor’s action in affixing seal to bond of the corporation was held binding. In 3 J. J. Marshall, 401, county court clerk accepted the office of paymaster in the United States army, which, under the laws of Kentucky, ipso facto vacated his office,- but performed some acts afterward, and these were held valid as acts of an officer de facto. In Bate v. Dyer, 9 Hum., 162, defaulter elected sheriff in spite of act of 1848, providing that the election of a defaulter should be void ; held, sheriff de facto. In Calloway v. Sturm, 1 Heis., 768, held that whilst Governor Brownlow may have had no right to appoint Mr. Maynard a supreme judge while he was a member of Congress, vet the appointment constituted him a de facto judge. Smith v. Normant, 5 Yer., 271, overruled, as previously by Venable v. Curd, 2 Head, 586. In State v. McLean, Jackson, October 11, 1873, MS., assessors appointed by county commissioners (themselves not even de facto officers), held de facto assessors. The true distinction between the status of Confederate and state officers may be illustrated from this case. The court say that the county commissioners were not de facto officers (although they acted and were regarded as such), because the law creating their offices was unconstitutional. In other words, there were no such offices as they assumed to fill. There is no such thing as a de facto office. Y de facto officer presupposes a legally established office. Simply the incumbent's title to the office is defective. Now the Confederate States must be held, according to the theory of the United States which, by their success, has become the law of the matter, never to have been a legal organization. The Confederate offices were not, therefore, legally established offices, any more than the aforesaid county commis-sionerships, and so none of their incumbents were de facto officers, any more than the county commissioners. But the states were legally established, “indestructible-” organizations. Their offices were legally established offices, and the incumbents of these during the rebellion were de facto officers. Were it res integra I should unhesitatingly say that the refyel state officers during the rebellion were not only officers de facto, but de jure also; for I never could see how a wrench merely in the federal relations of the State could affect the official character of the State officers. According to the theory of our government that triumphed in the late unpleasantness, the states consolidated themselves to a certain extent into a composite state, called the United States. To this they surrrendered certain of the functions of government. But they retained the remainder unimpaired. As to these they preserved their separate autonomy. Now suppose certain states assume to break away from this arrangement and to form a new one. They erect a new central government, substituting its offices for the similar ones of the former central government. But they do not undertake to remodel their state organizations. Not a single state officer is removed. Not a single office is altered. Everything internal goes on just as before. The same governor, legislature, judiciary; the same justices, sheriffs, constables, clerks, registers, etc., etc.— performing the self-same functions precisely as before. The attempt is a failure. But what was the attempt? It was merely to set up a new central government. It was not to remodel the state governments. The new central government being a failure, its offices of every description will be held by the victorious former government to have been spurious. But how has the attempt to create merely new central arrangements in anywise affected the former state arrangements, which were left untouched? True, the’state governments may have been temporarily operated in the interest of the new usurping central government, and the former central government will treat their action in this regard as void as in defiance of its own paramount authority ; and it may even punish the state officials for thus wielding the state machinery, if in this any law of its own has been violated. But where was the law written that hostility to-the United States wrought ipso facto extrusion from state office? If the officers of a county should lend their aid to insurgents against the state authority, whilst for this they might be .criminally punished, would it operate to vacate their county offices, or, in default of statutory provisions to that effect, even furnish a basis for proceedings for their ouster? If county rebellion against the state would not vacate county offices, how should state rebellion against the Union vacate state offices? Indeed, since the Confederate offices were in nearly every instance counterparts of the corresponding former federal ones, generally, too, the same persons remaining in them,, federal district judges, district attorneys, marshals, postmasters, etc., being now called Confederate ones, but discharging the same functions, throughout generally the same territorial areas, it might have been plausibly contended that in many cases the Confederate officer was a de facto-Federal officer, the former Federal office remaining unchanged in contemplation of law though miscalled for a time, and the incumbent never having got out of it. But overwhelmingly beyond all question, the rebel state-officers were at least such de facto. Their declining to take the oath to support the Constitution of the United States-■did not invalidate their action. In Farmers and Merchants Bank v. Chester, 6 Hum., 458, a deputy clerk acted in defiance of the act of 1794, requiring an oath of office as a prerequisite; and in Margate Pier v. Harman, 5 Eng. Com. L. R., 278, a person acted as a justice without taking the oath prescribed, notwithstanding the statutory prohibition ; and in both cases the action was held valid as that of officers de facto. Cases might be multiplied to the same purport. We have seen that in Texas v. White, the United States Supreme Court recognize the capacity of the rebel state legislatures to perform unexceptionable legislation; — in other words, regard the character of the action itself as the ■criterion'of its validity. So that even conceding that the emission of the “new issue” was the act of the rebel state, it would be valid unless void on account of the character ■of the emission itself; and we have seen that the notes involved in the present case are untainted. II. I come now to the next proposition. It seems odd at this late day to meet with the old misconception so often •disposed of by adjudication, that a state bank is identical with the State that owns it. Were this so, to sue the bank would be to sue the State; the statute of limitations would ■not run against the bank ; the bank would enjoy the State’s priority in the administration of insolvent estates; and the notes of the bank would be bills of credit issued by the State. All these positions have been fully disposed of by the courts. The earliest case upon the subject I have found is Bank of the United States v. Planters’ Bank of Georgia, 9 Wheat., 904. It was urged here that the State being a corporator, and therefore a party in interest, to sue the bank was to sue the State. The reasoning of Chief Justice Marshall in reply to this has been adopted in all subsequent cases. I quote his language: True, here the State owned only part of the stock; but this did not affect the principle. Suppose the State had by successive purchases come to own all the stock, at what point would a transformation have occurred in the character of the bank? In Bank of Kentucky v. Wister, 2 Peters, 124, the State was the sole proprietor of the stock, and it was again urged that the suit was against the State. The court said : “This court is of opinion that the question is no longer an open one. The case of the United States Bank v. Planter’s Bank of Georgia, 9 W., 904, was a much stronger case for the defendants than the present; for there the State of ■Georgia was not only a proprietor but a corporator. Here the State is not a corporator, since, by the terms of the act incorporating this bank, ‘the president and directors’ alone constitute the body corporate, the metaphysical person liable to suit.’’ The Bank of the Commonwealth of Kentucky was entirely similar in all respects relevant to the present controversy to the Bank of Tennessee. The first section of the charter provided that a bank should be established in the name and behalf of the Commonwealth of Kentucky, under the direction of a president and twelve directors, to be chosen by joint ballot of both houses of the General Assembly. The second, that; the president and directors of the bank, and their successors in office, should be a corporation and body politic by the name and style of the “ President and Directors of the Bank of the Commonwealth of Kentucky,” and should be capable in law to sue and be sued, etc. In the third section it was declared that the stock'of the bank should be exclusively the property of the Commonwealth of Kentucky. The president was required to make a report to each session of the Legislature. The treasurer of the State was authorized to receive the dividends of the bank. “But these funds it is said belonged to the State, and the promise to pay on the face of the notes was made by the president and directors as agents of the State. “The State of Kentucky is the exclusive stockholder in the Bank of the Commonwealth, but does this fact change the character of the corporation ? Does it make the bank identical with the State? And are the operations of the bank the operations of the State? Is the bank the mere instrument of the sovereignty to effectuate its designs, and is the State responsible for its acts ? The court then quote from the Bank of Kentucky v. Wister, and United States Bank v. Planters’ Bank of Georgia, the remarks already set forth by me when citing these cases, and add: . “This court did not consider that the character of incorporation was at all affected by the exclusive ownership of the stock by the State. And they say that the case of the Planters’ Bank presented stronger ground of defense than the suit against the Bank of Kentucky. That in the former the State of Georgia was not only a proprietor but a corporator, and that in the latter the president and directors constituted the corpoi’ate body. And yet in the case of the Planters’ Bank the court decided the State could only be considered as an ordinary corporator, both as regarded its powers and responsibilities. But it reared its head again in Darrington v. The State Bank of Alabama, 13 How., 12, counsel probably relying for a distinction between this and former cases upon a clause in the charter of this bank pledging the credit of the State for the ultimate redemption of the notes. The State was The sole stockholder of this bank. They add: “ But it is said that the State employed the bank as an agency through which its bills should be circulated for the profit of the State. The State, as a stockholder, received a profit, if any profit was realized through the .operations of the bank. But this is the condition of individual stockholders in all banks. And as well might it be said that the individual stockholders of a bank issue its notes as that the State of Alabama issued the notes of the branch bank at Mobile. * In Curran v. State of Arkansas, 15 How., 309, the court reiterate the same views. They say: In Bank of Tennessee v. Dibrell, 3 Sneed, 380, the bank recovered judgment against the treasurer of the State, and sought to have his salary retained by the State in satisfaction, upon the ground that, inasmuch as the State was the sole owner of the bank, the judgment of the bank was the judgment of the State, which might offset this against its indebtedness to its officer on account of his salary. As to this notion of identity the court say : “ Otherwise than for the purpose of suit and of holding property, it is not separate from the State. It is a mere state agency, controlled by the State: its acts directed by the State; every act responds to the pulses of the State itself. . . . . The Bank of Tennessee is as much the creature and agent of the State as if it was the treasury itself; as much so as the fiscus of the German States, where the treasury is what we would call a corporation, etc., . . . it has only a formal existence separate from the State. Subject the treasury to suit, and it will be separate to the same extent nearly.” The Attorney-Gen eral evidently cannot discover it; and he does not venture to follow his associate to the position-that the reorganized State in 1865 had absolute power over -all transactions during the rebellion; and so, unable to make the schedule of 1865 crush the new issue on any better theory, he is driven to the old fallaciousness that the bank was identical with the State, so often struck down by adjudication, and yet so persistent in rearing again its head that it seems as if its essence, like that of Milton’s angels, “can not but by annihilating die.” It is sufficiently plain that the Bank of Tennessee was no more identical with the State than the Union or Planters’ Bank would have been had the State bought up all its stock, and it is clear that this would not have transformed the nature of either of these banks from what it was before the stockholders sold out to the State. III. I come now to my third position — adverse to the omnipotence over transactions during the rebellion claimed for the reorganized State in 1865. I maintain that this-had no power to avoid the valid contracts during the rebellion of either the State or of corporations or individuals. I repeat here that I am willing to look at this matter from the point of view of the victorious United States Government, whose triumph established its theory as the law of the contest. According to this theory, the constitutional amendments of 1865 possessed no exceptional potency to over-ride past transactions. They were merely the act of the people of the State, so altering the fundamental law •as to bring the State into harmonious relations with the Union. All rightful government, and therefore republican government, being overthrown in the State, it lay with the.. Union, under the guaranty clause in the Constitution, to take the initiative in its reconstruction. This was done through the Federal agent, the Military Governor. He draughted certain amendments and submitted them to the people of the State in their primary capacity. They responded by adopting them. This was the substance of what was done. In other States the Federal initiative was taken through the agency of the military commanders, under laws of Congress prescribing details of manner, etc., which in Tennessee were left to the Military Governor. In both cases the process was the same — the action of the people in response to the ■ initiative taken by the Union through selected agencies. The Convention of 1865 cut no-figure in the matter, legally considered. They were merely a number of gentlemen called together by the Federal agent for consultation. It does not alter the case that neither he nor they appear to have clearly grasped the true-theory of the proceedings. A constitutional amendment postulates merely the action of the people of the State upon a proposition validly submitted to them. In 1861, the Legislature submitted directly to the people the so-called declaration of independence, under the assumption that the Constitution of the United States being merely a part of the Constitution of each State, the amending power in each state might expunge this part of its Constitution. Ordinarily, conventions are called to consider amendments to the constitution, but no such intermediaries are necessary, and usually they have submitted their work to the popular action. The bearing of all thin is, that the amendments of 1865 were not, as our opponents seem to imagine, a cataclysm of exceptional, spasmodic power over past transactions; but were the result of the normal action of a power stored up in the recesses of the Constitution of the United States for the emergency. All that was Federal about them, however, was the submission of the measures to the people of the State. So it was held in the case of the reconstructive Constitution of Georgia, in White v. Hart, 13 Wallace, 646, where precisely this point was involved. The amendments of 1865, being the action of the people of the State, could effect only what was within the compass of their power. They could not impair the obligation of a contract. Congress could not by express enactment have enabled them to accomplish' that. So expressly say the court in White v. Hart. After confusing the Bank of Tennessee with the State, so as to blend the new issue with the contracts of the State, it is urged that the reorganized State in 1865 did not undertake to impair the obligation contracts of the pre-existing State, but only to decide that this was not legally the State. Could the Attorney General only patent this invention it might make him rich in fame. But, alas,-though apparently useful, the idea is not new. Nor has it been heretofore found even useful. The invention would not work. In State Bank v. Knopp, 16 How., 369, a state attempted by means of a similar dodge to get rid of its contract exempting a bank from taxation. It did not undertake through its Legislature to repeal the exemption. Clearly that would not do. It decided, through the instrumentality of its Supreme Court, that the contract was not a contract at all. But the United States Supreme Court unfortunately held that it was. See also Havemeyer v. Iowa County, and Thompson v. Lee County, 3 Wal., 303 and 327, etc. In the analogous municipal case suppoosed by me, the acts of the de faeto officials would not be affected by the subsequent denial to them of a de jure character. The numerous cases I have cited overwhelmingly establish this. The exigency of the Attorney General requires that his municipal authorities, having after a scrimmage got into possession, should themselves be competent to pronounce void the contracts of their de facto predecessors, made while they were in the full and undisputed possession of the administration. But the, judiciary of the State would prevent this. If the result of the war in Tennessee was the triumph of the unionists, certainly they did not set up the very view of the contest over which they had triumphed — that they were the rebels, and the national forces their foreign auxiliaries. They regarded the war as waged between, not themselves and the State Government, but the government of the United States and an organized rebellion against that government. Their theory was the same as that held by the Supreme Court of the United States, that never for one moment was the Constitution of the United States inoperative in Tennessee, and that every valid contract in Tennesse, as well during the rebellion as before or since, anchored itself as soon as made upon the rock of that Constitution, from the shock of subsequent state impairment. We have also seen that the emission of the new issue was no more, the act of the State than was the emission of similar issues of other banks. The position in question is, the omnipotence of the reorganized State in 1865 over all the transactions of every character within the State during the rebellion. “The people of Tennessee undertook to separate from the United States and join the Confederate States. The effect of what was done was to bring the State as then controlled, etc., into rebellion and war with the United States. It has been repeatedly decided by the courts of the United States that war is a state of facts, etc. Prize Cases, 2 Black, 635, etc. “Now what was the effect of the status brought about by the acts of the rebellious,government in this State on the 6th of May, 1861, and afterward, until the lawful authority was restored, upon the acts of the rebellious government with its citizens, and upon the acts of the citizens as between themselves. ........ “The Dorr rebellion of Rhode Island, which was the particular rebellion under consideration, was not a rebellion of a part of the State against the whole. It was a rebellion of the whole State, etc., and its successful • and continued organization would, as C. J. Taney said, have made the acts of the old government illegal and void. It is the political department that survives the rebellion, etc., which is clothed with the power ‘to pronounce upon the legality or illegality of the government acting for the time being.’ .... [Brown v. United State, 8 Cr. 110, and Miller v. United States, 11 Wal., 268, are referred to in this connection.] It is claimed that the political department of the reorganized State in 1865, before the rebellion had terminated,, had the right not only to disregard whatever acts of the rebel State Government were, according to the triumphant theory now established as law, null and void from the beginning; but to reach .forth its hand and strike down any transaction even of private citizens with each other; e. g., to invalidate a promissory note given by John Smith to Tom Jones for the price of a cow, or a barrel of flour. The conception of the status of transactions during the rebellion involved here, is that they were voidable at the subsequent election of the legitimate government. But in the subsequent portion of his argument, the special counsel, attempting to escape from the inference that if the Schedule of 1865 invalidated the new issue the abrogation of the invalidating Schedule by the Constitution of 1870 must.have restored its validity, propounds a different view. He says in that connection : “The provisions of those sections (the annulling portions of the Schedule of 1865) did not annul .the laws ordinances, acts, and proceedings, specially mentioned. They were illegal and void before. The true effect of those sections was by implication to validate all acts done during the rebellion except those set apart and designated.” Everything was of itself “from the beginning void,” but the Schedule of 1865, by superfluously avoiding certain enumerated things, already void, impliedly validated everything else. But the Constitution of 1870, by abrogating the impliedly validating Schedule of 1865, recalled the previous •condition of universal invalidity; for it remitted to invalidity w.bat the Schedule had evoked therefrom, but could not evoke therefrom what the Schedule had left there. The unexpectedness of the counsels elaborate deduction as to the effect of the adoption of the Constitution of 1870, irresistably suggests the result of Professor John Phoenix’s trigonometrical measurement of the distance from Fort Point to Saucelito, which was, by means of a complicated process of triangulation, determined to be exactly 324 feet. “This result,” wrote the.Professor, “differed very much from our preconceived ideas, and from the popular opinion, the distance being generally supposed to be some ten miles but,” he adds, “ I will stake my professional reputation on the accuracy of our work; and there can, of course, be no disputing the elucidations of science, however incredible they may appear per se.” According to these views, had the work of 1865 merely restored to action the machinery of the State Government without more, all the transactions during the rebellion would have slumbered in their graves of invalidity. The resurrection blast of the Schedule called them into life. But resurrection presupposes a corpse to be revivified. The transactions in question must have enjoyed once some sort of existence to have supplied a basis for subsequent validation. For to validate what never did really exist, would involve special creation. The position of reorganized state omnipotence over transactions during the rebellion is desperate enough. But the position that all transactions during the rebellion were void of themselves, and could become valid only through the quickening power of the reorganized state extended to raise them from the dead, is one that I need not take the trouble to refute. We have seen that in Texas v. White; White v. Cannon; The Sequestration Cases; City of Richmond v. Smith; Pepin v. Lachenmeyer, etc., acts of even the rebel authorities are regarded as having been valid, where devoid of political significance, etc. These transactions, neither North Carolina nor Tennessee thought it worth while, even out of abundant caution, to validate. The former did validate the judgments of the Franklin courts; and the latter, by acts passed in 1801, 1803 and 1815, (Car. and Nich., pp. 349, 350) validated administrations granted, marriages solemnized, and acknowledgments and registrations of instruments made, under the authority of the Franklin government. But whilst it was thought proper to validate the acknowledgments and registrations, there was no provision for the instruments themselves; which, according to the counsel’s argument, impliedly invalidated the instruments, if indeed they were not, as he must hold, previously invalid. And so we have North Carolina and Tennessee involved in the absurdity, either of validating the registrations and leaving void the instruments registered ; or, worse still, of impliedly invalidating the instruments registered by expressly validating the registrations. For if the Schedule of' 1865 validated everything not mentioned as invalidated; similarly, the acts in question of North Carolina and Tennessee invalidated everything not mentioned as validated. It is intelligible how the United States might confiscate, during the rebellion, as enemies’ property, the property of Tennesseeans, loyal and disloyal; but how Tennessee in 1865 could by constitutional amendment confiscate as enemies’-property the new issue, irrespectively of its ownership, surely transcends finite human comprehension. Who were the enemies whose property it was thus sought to confiscate? What as to the portion of the new issue otherwise held? And then, confiscation is an appropriation by the State to its own use, and here the attempt was merely to destroy the new issue, — to relieve the bank of a portion of a portion of its indebtedness, — to take indiscriminately the property of neutrals, friends, and foes, and give it not to the State, but to the bank. But even if the position were sound, what then ? “The successful government” in the late unpleasantness was that of the United States. It was not that of reorganized Tennessee in 1865. That was not the antagonist,-still less the conqueror, of anything. It was born out of the triumph ofthe Federal Government, and had to be1 nursed by that government through a weakly infancy. At the time of, and for some time after, its inauguration, its every official was in the eye of the law, equally with the rest of the citizens of Tennessee, a public enemy of the United' States, whose property was liable to confiscation as enemy’s property, as the counsel himself points out, citing Miller v. The United States, 11 Wall., 268. . “ ... Whereas, the people of the State did, on the’22d of July, 1865, by a large popular vote, adopt and ratify a constitution of government whereby slavery was abolished, and all ordinances and laws of secession and debts contracted under the same were declared void; and, whereas, a state government has been organized under said Constitution, which has ratified the amendment to the Constitution of the States abolishing slavery, and also the amendment proclaimed by the thirty-ninth Congress, and done other acts proclaiming and denoting loyalty; therefore, &c.” This resolution, whilst it mentions approvingly other things done, refrains ex industria from countenancing the repudiation of the new issue, the significance of which silence I need not explain to counsel familiar with the principle, — expressio unius, &c. But the Schedule of 1865 was not the act of “the political department” of any government. It was the act of the people in their primary capacity. In order to have something to stand under his favorite phrase, “political department of the successful government,” the counsel, in addition to distorting the reorganized state government into “the successful government,” had to call in the act of its Legislature of February 16, 1866, directing the bank to make an assignment excluding the new issue from participation therein (the Schedule, though as organic law ranking higher, not answering to the phrase), the particular phrase being in demand to establish a connection with premises misapplied from international law (inapplicable here) to evolve the remarkable conclusions desired by the counsel. But not even from the concession of this position could the much longed for conclusion be reached. For the inquiry would not stop at the rights of conquerors under international law. A further question would be, what powers may the particular conquering government exercise under its own organic law? International law would concede over conquered countries identical rights to the Russian and to the Federal Government. But within the rules of international law their powers would differ as widely as the powers of a despotism and of a constitutional republic over their respective citizens. The Czar might apply, within these rules, his despotic power to the situation ; but the Federal Government must act within the limitations of its own Constitution. The idea is thus well expressed by the Supreme Court of the United States in Scott v. Sandford, 19 How., on pages 449 and 450: So far as international law is concerned, “ the political department of the successful government” might decide whether or not it was proper to allow the subjugated people to bear arms, etc.; but if this were the Federal Government, it would enter upon the conquered territory, as the Supreme Court say, “with its powers strictly defined and limited by the Constitution from which it derives its own existence.” And it could not impart to a state government powers beyond its own. And in Texas v. White, 7 Wall., 726, they declare that the secession of the State was “absolutely null.” They add: • “The obligations of the State as a member of the UnioD, and of every citizen of the State as a citizen of the United States, remained perfect and unimpaired. ... If this were otherwise, the State must have become foreign, and her citizens foreigners. The war must have ceased to be a war for the suppression of rebellion, and must have become a war for subjugation and conquest.” Every act of Congress, and every proclamation of the President, from the very beginning of the rebellion, having reference to the subject, has breathed the same tone, — that the contest was a rebellion, waged against the United States by its own citizens, who were liable to punishment therefor unless exempted by pardon and amnesty, the granting of which involved the same view. This is the view whose triumph amid the shock of arms has established it as law to-day. The Attorney General appears to think that those whom he regards as the successful party in the conflict, had the right after their triumph to do what they pleased, and he makes them please to right about and apply to the situation the very doctrines they had just overthrown. But their right was to establish and act upon their own theory of the contest. By that standard everything must now be .judged from first to last. It has by the ultimate decision of the God of battles, after a sanguinary discussion, been solemnly pronounced to have been the correct rule from the beginning, just as by the decision of this court the victorious litigant is held to have been right from the beginning. According to that view, Tennessee was never out of the Union; the Constitution of the United States was never for a moment inoperative in Tennessee; no contract made in Tennessee at any time was outside of its insurance against state impairment. But we have also seen that the new issue was no more anything other than the notes of “a bank for ordinary banking purposes,” than the issues of other banks, and that therefore the question of the status, at the time of the emission of the new issue, of the State officials, is irrelevant to-the present controversy,. — as irrelevant as it would be if the controversy were upon an individual promissory note, — the invalidity at the time, of official action, not involving that of the transactions of banks or of individuals. And, lastly, we have seen that the Schedule and the act,, relied on to crush the new issue, were futile for the purpose; that Congress did not undertake to infuse extra state-potency into them, and could not have done so if the„y had-attempted it. Ed. Baxter, Solicitor, for Defendants, Duncan and-Atchison. After the return of the assets of the Bank of Tennessee to Nashville at the close of the late war, the General Assembly of the State, on the 9th of June, 1865, passed an act. that the funds then in coin belonging to the bank be invested by the Governor, Secretary of State, and Comptroller, in United States or Tennessee Bonds, and be subject to future legislative control. Law's of Tenn., 1865-6, 1st Sess., p. 53. On the 16th of February, 1866, an act was-passed directing that, the Bank of Tennessee should no longer carry on or do a banking business, but should be placed in liquidation, and its business and affairs should be-settled at as early a day as practicable; and for that purpose a President and Board of Directors were appointed (Acts 1865-6, 2d Sess., p. 37), who were directed “ to cause an assignment and deeds of trust” of all the assets and property of said bank (including $618,250 of United States bonds in which the coin fund aforesaid had been invested), to be made and executed in the name and behalf of the Bank of Tennessee for the uses and trusts following: The said Watson accepted said office of trustee, but owing to the amount of the statutory bond, he never qualified as trustee under section 1974, et seq., of the Code. On the 16th of May, 1866, “the State of Tennessee and Samuel Watson, Trustee, filed a bill in the Chancery Court at Rashville against “the President and Directors of the Bank of Tennessee,” the Governor, Secretary of State, and Comptroller, against certain named creditors of the bank, and against all persons who were or claimed to be creditors of the bank, and aftet reciting substantially the facts as above set forth, the bill states that “ large numbers of persons and bodies corporate claim to be creditors of said bank, and the holders of its issue and many such have already commenced suits against the bank, while others were preparing to do so. That this would entail large and unnecessary costs and expenses; that said bank was insolvent, and said assignment was ordered by the Legislature, and was made and executed in view of said fact of insolvency; that many legal questions present themselves to the trustee in executing said trust with the creditors of said bank, being the holders of its issue, or bank bills, and holders of bills, notes, and bankbooks of deposit, made, issued, or indorsed by .said bank, that said creditors were too numerous to mention, and were unknown to complainants by name or residence.” I repeat, that if the officers and agents of a bank should, as a matter of convenience and dispatch, select some one individual, and convey to, him all the assets on hand to ■distribute ratably among all the creditors, this, even in the case of an insolvent bank, would not be objectionable, because it would only be doing what the law would make them do, and it could be done with less trouble and expense than if all the officers had to join in the execution of the trust. It is only to the right of an insolvent bank to make a preference that I object. But in this case the State of Tennessee was not a creditor, but a stockholder, in the bank to the amount of the school fund. The question, therefore, is not whether an insolvent bank may prefer one creditor over another, but can it prefer one stockholder over all the creditors? But the fact is, that the school fund was never deposited in the bank; it was put into the bank as capital. The language of the charter is, “that the capital of said bank shall be five millions of dollars, to be raised and constituted as follows: the whole of the common school fund/’ etc., together with certain other funds, “shall constitute a part of the capital of the Bank of Tennessee;” it was to be “ handed over to the President and Directors of the Bank of Tennessee as capital in said bank,” and “certificates of stock” were to be issued to the Superintendent of Public Instruction. Nich. Sup., p. 18,19; Code, sec. 965; 5 Cold., 180; 3 Col., 448. Therefore, in securing to the State the amount of the school fund, the bank was simply preferring a stockholder over its creditors. But the counsel take higher ground, and insist that even if the school fund was put in the bank as capital, the State being a mere trustee of that fund, had no right to invest it in the capital stock of a bank; that every one dealing with the bank was bound to know that such investment was a breach of trust; that the school fund could not be diminished by legislative action, and that they have a right to' follow the fund and appropriate the whole assets of the bank to its repayment. It is certainly true that as to a very small part of that fund, the State was a trustee, but the part held by the State in trust was a mere fraction of the entire fund. As to the l-36th reserved for schools, the State was a trustee; but the Supreme Court, in 1831, decided'that the State could not sell these lands, and enjoined the State Treasurer from selling them. Meigs’ Dig., see. 1212; 2 Yer., 534, 535. They remained in their original condition unsold, when the Constitution of 1834 was adopted, and no part of their proceeds could possibly have been part of the common school fund at that time. In fact, it was not until 1843 that Congress, the creator of the trust, authorized the' State to sell them. 1 Head, 175. As to how much money has been received by the bank from the sales of these lands does not appear, but the bank was directed to invest the proceeds as fast as received, in the bonds of this State, and and the interest on said bonds was to be paid over to the townships to which the lands had belonged. Nich. Suppl., p. 93. These bonds were clearly a trust fund, and may be followed wherever found; and the Legislature, by act of 1870, ch. 101, directed the trustee of the bank to pay them over to the county trustees of the respective counties in which the lands that had been sold were situated. Thomp. and Steg. Code, sec. 946a. It will thus be seen that none of the proceeds of the school lands were ever deposited, or invested as capital, by the-State in the Bank of Tennessee. All such proceeds as were received by the bank, we suppose, were invested in bonds, which were held in trust for the schools, and they must look for their indemnity to the bonds. If the bank has' misappropriated the bonds, it may create a debt against the bank, but such debt would- not affect the assets of the bank with any trust, and would not be entitled to any priority of payment out of the general property of the bank. In 1823, the State put on the market all of her own portion of the lands ceded by Congress as aforesaid, and directed their proceeds to be paid into the old Bank of Tennessee, to the credit of the common school fund, to be loaned •and used as other money belonging to said fund. Meigs’ Dig., sec. 474; Caruth. & Nich., p. 171. This was the first provision made by Tennessee for the ■creation of a common school fund; and all of the money thus donated belonged to the State absolutely, unaffected by •any trust whatever. In 1827, certain other funds were added to the school fund, viz.: 1st, all the capital of the old State Bank; 2d, all the stock owned by the State in the old bank of the State at Knoxville; 3d, certain donations made to the State by Mason Lee and John Rice; 4th, escheated lands and personal effects of intestates dying without kindred; 5th, all vacant lands owned by the State, the proceeds of the Hiwas-•see lands, and all lands previously appropriated in the State •to the use of schools; and 6th, the rents and profits of the school lands. King’s Dig., sec. 10,627. • In McEwen’s case it was argued by Mr. Fogg for the State that this fund was “ pledged to a particular purpose,” that it was vested for the benefit of common schools;” that “ legislative control was taken away,” and, therefore, that the resolution of the Assembly authorizing a compromise with McEwen whereby a portion of the fund was lost, wTas unconstitutional and void (5 Hum., 273, 283); but the court held that the State still had the same right to compromise and settle with McEwen that it has to compromise a debt due from a citizen “to the general treasury of the State” (5 Hum., 286); and that it might “surrender a portion of the fund in order to secure the balance.” 5 Hum., ■287. They further held that the Legislature of the State was the “proper guardian and protector of its funds, no matter for what purpose appropriated, and that as such, it was its duty to watch over them to see that they are properly secured, vested and applied;” that this power on the part of the Legislature is supreme, and when exercised can not be revised or called in question by any power whatever.” 5 Hum., 284. This language is wholly incompatible with the idea that the Constitution reduced the powers of the Stale over the fund to those of a mere trustee; or that .the State, in the management or investment of, the fund, is to be hampered by the rigid rules which courts of equity throw around the conduct of private individuals. Suppose, however, that the school fund was a trust fund in the strictest- sense of a court of equity, it would not follow that its investment as capital in the state bank was a breach of trust. Tested alone by the rules of “ sound discretion and good faith,” I ask what better investment could the commissioners have found in 1838 for the investment of $1,500,000 of money? There were no United States bonds on the market; the General Government was then distributing from its plethoric coffers the surplus revenue. The bonds of the State bore but six per cent., which would have paid but $90,000 per year interest; whereas the school fund was to be paid ■$100,000 per year, whether its dividends amounted to that much or not (Nich. Suppl., p. 21); and the public faith and credit of the State were as much pledged to supply any de.ficiency in the school fund subscribed as stock in the bank, as it is to pay any bond that now bears the impress of the great seal of the State. If the fund had been invested in state bonds, it would have stood the danger of repudiation; and unless the State repudiates its obligation to the school fund, it is not now in any danger of being lost. A great deal of ad oaptandum was gotten off in the court below, and much cheap patriotism displayed in behalf of the poor children of the State. It was prophesied that if the assets of the bank were honestly appropriated to the payment of its creditors, the •children of the country must go uneducated, and grave surmises were ominously thrown out as to whether the people would submit to such a result. This attempted intimidation of its own judiciary comes with bad grace from the •State of Tennessee. If she will but redeem her own solemn pledge of the faith and credit of the State to supply any deficiency that might be occasioned to the school fund by its being invested in the stock of the bank,-there will be no danger of the poor children being left uneducated; and the State will occupy a much more honorable position in the eyes of the world than she now does, in attempting to snatch from the creditors the assets of the bank which she had established in her name and for her benefit, and for the support of which we have her plighted faith and credit. The next point taken was, that suppose it were true that the Legislature did have the right to direct the fund to be invested as stock in the bank, yet, as the Constitution had ordained that it should remain “perpetual,” and “never be diminished,” every one dealing with the bank must be presumed to have known that it could suffer no diminution; and must be supposed to have agreed, that come what might, this sacred fund should still be safe. The capital of the bank did not consist alone of the school fund — in fact, that fund did not amount to as much as one-half of the entire capital. We have then the case of a bank having in its possession what is called a trust fund, which it is now unable to repay. It also has certain property and assets which it has accumulated through a period of twenty years, and it is sought to infer from the mere fact of its having such trust fund, that it purchased said property with that fund; but this court have held that “ it must be clearly ■established that the property upon which the trust is sought to be fastened has been paid for out of the specific trust fund. It is not sufficient to prove that the purchaser'of the property had a fund belonging to another in his hands, unless the employment of that particular fund in the purchase be also proved.” 11 Hum., 460. It is next insisted that the act of February 16, 1866, to wind up the bank, expressly declared “all claims and demands of all kinds, after May'6, 1861, to be absolutely null and void,” and, therefore, even if the attempted preference of the school fund was invalid, all creditors whose claims originated after May 6; 1861, it is insisted, are excluded from participation in the assets of the bank. NEW ISSTJE. On the 6th of May, 1861, the Legislature passed an act “to raise, organize and equip a provisional force for the defense of the State,” authorizing the Governor to take charge of the military, direct the defense of the State, organize and equip the military, and with the assistance of the Military Board, to make contracts for arms, etc. Acts 2d., Ex. Sess., 1861, pp. 21, 22. It is agreed that the purposes of said board were the arming and equipment of troops, and the purchase of military stores in the war then flagrant between the United States Government and the Confederate States — that said board continued to do business from the date of their organization until sometime in January, 1862, and during that period made orders in favor of different parties for the purposes for which the board was organized, upon which orders checks were drawn for the funds called for in the orders on the Bank of Tennessee, signed by the president and countersigned by the secretary of the board, and the sums of money appropriated by said board and paid by check on the Bank of Tennessee, were used for the purposes afosesaid, and in payment of the salaries of the Military board and its officers. It is further agreed that the officers and directors of the Bank of Tennessee knew that the purposes for which the Military Board was organized were such as are above set forth, and that the money drawn from the bank upon the orders or checks of said board was to be used and was used for the purposes aforesaid. But there is no proof that the bank purchased the bonds in order to aid the State in the rebellion; on the contrary, Mr. Torbett, the president of the bank, says “the transactions with the State were in good faith and were believed to be for the best interest of the bank. I, as president, was opposed to negotiating for long time six per cent, securities, but proposed negotiating for short time eight per cent, security, believing the bonds of the State to be undoubted security, and eight per cent, remunerative to the bank; we thei’efore bought them,” etc. It is admitted that the ordinary and then issues of the Bank of Tennessee and its branches, were insufficient “ to meet the usual banking business of the bank in 1861, and the drafts or checks drawn upon the bank by the said Military Board, and that the bank was compelled, in order to meet its regular business, and the demands of said board, to resort to the issuance of the bank notes in controversy, known as the “new issue” of said bank, which were all put into circulation after the 6th of May, 1861, and for the purposes aforesaid.” It is also agreed that the military board had no account with, and drew no checks upon, any of the branches of the Bank of Tennessee, but did all their business with the mother bank at Nashville. And by reference to the table showing the issues of the bank it will be seen that $776,660 of the new issue was issued by the branches, and therefore we know that this amount of the new issue was not issued “ to meet the demands of the checks of the military board.” So far from it being necessary to make the new issue to meet the demands of the military board, it can be demonstrated tha,t the bank could mave met all of their demands without increasing its circulation a dollar. $3,548,460 48 This was before Tennessee assumed a hostile attitude. The banks saw it was a dangerous time to expand too far, but the' charge that has been made against the Bank of Tennessee that, after January, 1861, she practically ceased to do business as a legitimate bank, and converted herself into a mere financial agent of the State, is utterly unfounded in fact. While she properly abstained from a reckless expansion, she, in order “to relieve the people,” and as directed by the law above quoted, kept up the line of her discounts, and her statement shows that her “notes and bills discounted” on December 31,1861, exceeded those of the same day in 1860 — $81,982 23. Her “notes and bills discounted” amounted on Dec. 31, 1861, to the sum of. $4,273,968 10- The amounts received from depositors. 1,663,789 And the “new issue”. 1,646,299 - 4,693,995 00 $420,027 00 Showing that the “ demand which it was necessary to meet with the new issue was the legitimate business of the bank in discounting bills and notes, and that there was a surplus only $420,027 left after meeting that demand; this surplus was more than exhausted in paying the ordinary expenses of the State, and for which the State owes the bank $465,487.77, these are the ordinary “peace establishment” expenses, and their legitimacy is not questioned. It is certainly true that the condition of the country, caused by the war, necessitated an increase of banking facilities in Tennessee, as elsewhere, and that the increased •circulation of the Bank of Tennessee in part met that demand. The bank aided the rebellion by this increase of circulation just as the farmer, merchant and other branches of trade and industry aided it by increasing their various stocks in trade, but not otherwise. The new issue was so much like the old issue in its appearance, that the officers of the State appointed to burn the old issue have burned a considerable amount of new issue for old. The difficulty of distinguishing the two is greatly increased by the fact that a large amount of the new issue, though actually issued after may 6, 1861, bears date prior to that time. In fact, the new issue was printed on the same plates, with same style of paper and ink, and the bills were exact fae similes of the same denomination of old issue. Said notes were payable on demand in specie to bearer; there was nothing on their face to indicate that they.were issued for an illegal purpose, and my clients purchased them for their full market value without the slightest notice that any of the notes held by them were ever issued for any illegal purpose whatever. All of said notes were in circulation prior to January 1, 1865, and therefore prior to the amended Constitution of 1865, and the legislation of the State directing that they shall not be paid by the bank. They were issued in the usual way, by receiving the signatures of the president and cashier, then passed into the teller’s cash, and paid out promiscuously with all other bankable funds, as money, to all who had the right to check on the bank. The signing and issuing was done in strict conformity with the charter and laws, as the board understood them, and the amount issued did not exceed the amount authorized by the charter and capital of the bank. We further show, that in 1861, when these notes were issued, there was no distinction made in the issues of the bank, and that up to the adoption of the amendment of the Constitution in 1865, no difierencé was made in the money market, but the issues of the.Bank of Tennessee were bought and sold without regard to dates; and yet, such was the effect of this legislative adjudication, “that they fell to one cent on the dollar.” In fact, it was not until after the war that the distinction between the old and new issue was made; and even the name of “new issue,” now in such common use, was not known until after the war. We concede, that since February 25, 1865, new issue has been at a heavy discount, much heavier than the discount on old issue; that we bought it at from 30 to 52 cents on the dollar, knowing that it had been declared void by the Constitution of 1865, and knowing that the Constitution had no right to make any such declaration. ARGUMENT ON NEW ISSUE. Mr. Paschall, in discussing this section, after alluding to the fact that the Confederate war debt, and the value of the emancipated slaves, amounted to over $4,000,000,000, remarks, that “every one will judge for himself of the influence of such a debt, combined with the danger of having so large a national debt questioned or repudiated. Viewed from the standpoint of extraneous influences upon Congress, no one can now fully comprehend its dangers.” Paschall’s Const., p. 292. And he concludes that the section amounts to no more “than an organic guaranty in respect to the national debt, and an organic repudiation of the rebel debt.” Paschall’s Const., p. 293. But it is said, that though in the character of a mere amendment to the Constitution, i.t could not impair the obligation of contracts; yet, as Congress, in “re-admitting” the State to all its rights in the Union, referred to said enactment as not only legal and proper, but as a necessary step to secure the restoration of its rights, the courts cannot go behind these acts of the political departments of the State and the United States. It is argued that all acts and contracts of every nature and kind done under the usurped authority, were void if the legitimate government afterwards chose so to treat them; that all such contracts are at the mercy of the legitimate government when restored, and it is for the political department to say how they shall be treated by the court. In Texas v. White they held that it was necessary for that state to have been' restored to peaceful relations with the United States before she could maintain a suit in the Supreme Court of the United States (7 Wall., 701); and in White v. Hart they held that the question as to when those relations had been restored was for Congress, and cannot be inquired into by the judicial department. 13 Wall., 649. In Ingram v. Cooke, 1 Tenn., 19, this court held that upon the abolition of the Franklin Government, it was competent for North Carolina to enact that judgments rendered under the Fraklin Government were good, if substantial justice had been obtained; that when governments de facto cease to exist, the former or legitimate governments usually furnish by legislative acts the grounds upon which the courts proceed. • ' But the United States have at all times disclaimed the idea that the late war was one of conquest; they have always said that the war was for the “re-establishment of the national authority, and the ultimate restoration of states and citizens to their national relations” (2 Wall., 278); that “the ordinances of secession were absolutely null and without operation in law; that the obligations of the states as members of the Union, and of every citizen of the State as a citizen of the United States, remained perfect and unimpaired ; that the states did not cease to be states nor their citizens to be citizéns of the Union” 2 Wall., 278; 7 Wall., 726; 6 Wall., 450); that “at no time were the rebellious states out of the pale of the Union; their rights under the Constitution were suspended, but not destroyed; their constitutional duties and obligations were unaffected and remained the same; a citizen was still a citizen, though guilty of crime and visited with ¡punishment.” 13 Wall., 651, 652. They further held that nothing was necessary to bring the reconstructed states back into full communion with the loyal states but to permit-them to restore their representation in Congress. Accordingly, they held, in a case where Georgia in her reconstructed Constitution had declared that no court should enforce any debt created for the sale or hire of slaves, that at no time during the rebellion could the states pass a law impairing the obligation of a contract, any more than before the rebellion or since, “and, therefore, that the clause of the Constitution of Georgia above referred to, had no effect on a contract made previous to it, though the consideration of the contract was a slave.” 13 Wall, 646, 647. They made the same decision on the Constitution of Arkansas. 13 Wall., 656. To claim that all the contracts made by private citizens in the Confederacy during the war were void, or even “at the mercy” of Congress, would lead to monstrous results; Congress could have bankrupted a whole people, and bas-tardised the issue of any marriage made during the war. The Supreme Court of the United States admit that even such acts of the rebel Legislatures were valid as “sanctioned and protected marriage and the domestic relations,, regulated the conveyance and transfer of property real and personal, and provided remedies for injuries to person and estate, and other similar acts. 7 Wall., 733. In Thorington v. Smith, a contract made during the rebellion, and payable in Confederate notes, was enforced through the Federal ■Courts. In the Georgia case, she had presented a Constitution to Congress with the slave clause, and several other new clauses in it. But a glance at the resolution will satisfy the court that the features in the Constitution abolishing slavery, and abrogating the secession ordinances, were only looked to by Congress as satisfactory evidence that the State was sufficiently loyal to be allowed to resume her delegation in Congress ; that they were intended to fix the rights of any private citizen, and that they were certainly not intended to prevent the people of Tennessee, forever, from the exercise of that sovereignty which resides in the people of every state “to alter and change their form of government at their own pleasure,” subject to the sole- condition that it shall remain republican in form. 7 How., 47. It is argued, that although contracts made by private individuals in the seceded States during the rebellion were valid, yet that contracts made by the seceded States themselves were void; that the Bank of Tennessee was owned and controlled by the State, and was its, fiscal agent; that, therefore, it must be regarded as a branch or department of the State government, and its contracts must be regarded as if made by the State itself. I insist that the State of Tennessee, under the peculiar circumstances then surrounding her, had the right to raise and equip a provisional force for her own defense, without violating any provisions of the Constitution of the United States. I am not about to raise the question of the right of a state to secede from the Union. I regard that as settled by the stern arbitrament of war. The Constitution of the United States further provides, that “a well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms ■shall not be infringed.” Art. 2d Amends. U. S. Const. This clause, says Mr. Paschall, has reference to a free government, and is based on the idea that the people cannot be oppressed or enslaved who are not first disarmed;” (PaschalPs Const., p. 256) and Judge Story remarks that it is impossible to keep the people duly armed without some organization. Story on Const., sec. 1897.- On the 16th of January, 1861, they passed a resolution requesting the President of the United States on the one hand, and the authorities of each of the Southern States on the other, to preserve the then statu quo of affairs, to the end that if possible peace might still be preserved. Ibid, p. 45. On the 9th of February, 1861, the people of the State, by an overwhelming majority, voted against even the calling of a convention; the result, as Gov. Harris expressed it, of the “ ardent devotion of our people to the preservation of the Union, and originating with their great loyalty to the Government.” As late as April 18th, some of her most distinguished and influential citizens published an address to the people, in which they took the ground that Tennessee should maintain a position of independence, “ taking sides with the Union and the peace of the country against all assailants, whether from the north or the south. Moore’s Rebellion Reo., Yol. 1, p. 72 (Doc). That this address met the views of a large majority of our people at the time cannot be controverted. But while her voice was “still for peace,” she found herself in the midst of the contending factions, upon the very line of threatened battle, her territory likely to be made the seat of a long, bloody, barbarous and devastating war, in which her citizens were to be exposed to the rapine and insolence of the soldiery of both armies; she saw that the State of Illinois had raised an army of her own, stationed her troops at Cairo, and seized a vessel of one of our citizens while lawfully proceeding on her voyage. She saw that every state north and south of her were raising State forces for their individual protection; that home guards and minute men were being organized in every county in the land; and yet, in the midst of this warlike preparation going on around her, she was still wholly unarmed. Under these circumstances, the act of May 6, 1861, was passed to raise, organize and equip a provisional force for the defense of the State. Tennessee was still in the Union; the ordinance of secession was not even voted upon until June 8, 1861. While she may have had no right to make war against the United States, and could not treat an approach of federal forces as an invasion in the sense of the Constitution, still she had the right to protect her own citizens from the outrages and insults of even the national soldiery, and had the unquestioned right to resist an invasion by any other state;she was the sole judge of the imminence of the danger of such an invasion, and when she saw all the other states arming around her, she was well justified in the course she took. If, then, she had the ‘right to raise and equip the force, her bonds issued to raise money with which to do it, were-not issued in aid of rebellion, but were issued for her de-. fense as a State, and are just as lawful as they would have been if issued to defray the expenses of her patrol and constabulary forces. If the issue of the bonds was legal their purchase was legal, and could not be. rendered illegal by the subsequent use which the State made of the forces. Admit, however, that the purchase of the bonds by the bank was illegal, what would have been the legitimate consequences? The bank, after getting the bonds, might have refused to pay their price to the State, or the State, after getting the money from the bank, may refuse to pay the bonds, as she now most dishonestly does; but admitting all this may be done, upon what principle of law or common sense does it make void the money which the bank paid to the State for the bonds? Suppose the bank had paid for the bonds in gold and silver, would those metals have dissolved and melted from sight of commerce simply because they had been used as a. medium in the discharge of an illegal contract? Ve have demonstrated that nearly $3,500,000 of the money which the bank did pay for the bonds, was the old issue and notes of other banks — now if the mere use of the new issue in payment of the bonds made it illegal and void, why was not the same effect produced upon the old issue and the notes of other banks that were used in precisely the same way? What would be the effect upon commerce if such a doctrine were maintained? Suppose that the purchase of the bonds by the bank from the State was illegal, and that the bank could afterward have refused to pay for them; yet if the bank saw proper not to avail herself of this defense, and preferred to pay as • she had agreed, the payment should be valid, and vest in the State the title to the money used in the payment; (11 Hum., 10, 11) a fortiori the State could pass a good title to the party from whom it purchased the military supplies; and with a still greater reason could that party pass a good title to the innocent holder who knew nothing of any of the previous transactions. But even if the bank had never bought any bonds, and had not owed the State anything, and had cashed the checks of the board as a mere accommodation, the result would be the same, for this court hold that “if one person pay the debt of another at his request, an action may be sustained to recover the money, though the original contract was unlawful, and that fact known to the plaintiff when he discharged it for the defendant.” 11 Hum., 16; 2 Sneed, 455; 11 Wheat, 272, 273; 17 How. (U. S.), p. 236. In other words, if you throw the purchase of the bonds entirely out of the case, and put it solely on the ground that the bank, in paying the checks of the military board, was in effect loaning the State so much money with which to pay the parties from whom the military supplies were bought; and if you say further that the purchase of such supplies was an illegal act, still I maintain, in the express language of the United States Supreme Court, “that the money lent would constitute a new consideration, and be the foundation of a new contract which could not be vitiated by a knowledge of the purpose for which the money was lent.” 11 Wheat, 276. The case of Hanaur v. Doane, decided by that court in 1870, is cited against us on this point; that case is opposed to the previous cases decided by the same court, and is in direct conflict with all the cases decided by this court; but even in that case the court admit that if Hanaur had borrowed money from Hunter & Oakes to redeem the duebills himself, the transaction would have been different, “and the loan of money would have been legal, although Hunter & Oakes had known for what purpose Hauaur wanted the money.” 12 Wal., 345. In the case cited, Hanaur, as purchasing agent for the Confederate States, had given his duebills to various parties for supplies purchased .by him for the confederacy, which duebills the court held to be illegal, and Hunter & Oakes, instead of loaning Hanaur the money for him to take up his duebills, they took up the duebills for him, whereby “ they became the holders of the duebills, knowing for what purpose they had been issued, and hence their title, in the opinion of that court, was no better than that of the original holders; but in our case, the bank did no such thing; the purchase was made by the military board, who gave orders in favor of the vendor, which orders may be regarded in the same light as the duebills given out by Hanaur, but the bank never paid any of these orders; never took any of. them, and never claimed title through or under them, but the vendor took the orders to the president and secretary of the board, who drew checks upon the bank in payment of those orders; and the-bank now holds those checks, not as evidence of the debt which the State owed to the vendor, but as evidence of so much money loaned by her to the State, with which the State might pay her illegal debt to the vendor. The whole transaction, whether legal or illegal, between the State and vendor was fully complete and ended before the bank was ever called upon; and all she did was to loan the State the money with which to pay off the debt, taking the check of the State as evidence of the loan. Again, suppose the notes when first issued were illegal in the hands of the original holder, yet the moment the original holder passed them to another, such subsequent holder became himself a direct contractor with the bank. The promise of the bank is to pay the bearer, and whoever is for the time being the bearer may maintain his suit against the bank in his own name, as if the original promise were running to himself. Every time a bank note is paid into the bank, and paid out again, the promise is renewed ; and every time a bank note changes hands outside of the bank, a new contract and a new cause of action is created. Morse on Banks, 403, 404. It is manifest, therefore, that it will not suffice to show that the contract by which the original holder got the bill was illegal, but that it must also be shown that the contract by which the present holder got possession was illegal. This is not pretended. This stipulation in the law was intended as an assurance that the bills of the bank should be entitled to preference in payment out of its assets, and like the guaranty given by the State in regard to receiving them for taxes, this guaranty was given in order to “ afford additional inducements for the people to take them, and hold them as a part of the great circulating medium of the country.” “This guaranty was in no sense a personal one; it attaches to the note, is a part of it, as much so as if written on the back of it; goes with the note everywhere, and invites every one to take it.” 8 Wall., 60, 61. The fact/that the notes were purchased at a discount, does not lessen or affect defendant’s rights in the premises. The statute makes no discrimination against such purchasers. The notes are negotiable, and the purchaser takes (in regard to the right to payment) all the rights and equities of his vendor. 7 Col., 322, 323; 1 Wall., 392, 96; 1 Black, 386. Now, let me ask, who is injured by this construction? The bank is not injured; for, at one time or another in the past, the bank has actually received the full face value of the notes from some one. “A note made in' the course of a real business transaction, for which the original party has given a valuable consideration, is regarded as property, and like other property, the owner may sell it for the most he can get, and the purchaser is entitled to whatever profit he can make upon it.” 3 Head., 727. The other creditors of the bank cannot complain; they made their contracts with the bank with full notice of the preference secured to the noteholders; and if the parties who held the notes when the assignment was made were now the holders of them, the notes would unquestionably be entitled to preference, and the general creditors are in no worse position by allowing that preference to be given to the present holders, than if it had been given to those who held them when the assignment was made. It takes no more of the assets of the bank to pay off the-notes in the one case than in the other. If, instead of robbing the bank under the hypocritical pretext of securing the school fund, she had left the coin in-its vaults to pay its honest debts; if, instead of holding that notes given for Confederate money Avere void, she had allowed the bank to recover the value of the Confederate money which she had loaned to her debtors; if, instead of attempting to prevent the trustee from receiving the new issue in payment of debts due the bank, she had allowed it to be absorbed in that way; and if, instead of attempting to repudiate her liability on the notes of the bank, she had proposed to the holders to fund them, or receive them gradually for taxes if preferred, the State would not only have .averted all loss from the creditors and noteholders of the bank, but she could have met the debt which she owes to .them without serious inconvenience to herself. As it is, by the amendment of 1865, the “new issue” was in an instant reduced from an equality with the old issue to a mere nominal value in the market. The original holders scattered through the State found these notes “turned to ashes” by this infamous legislation, and it has been a positive. benefit to them that the present value of the notes has been advanced to fifty-two cents in the dollar by the defendants risking their own money on their confidence in a returning sense of justice in the State authorities and the restored integrity of the courts. 1. The Constitution of the United States cannot invalidate contracts between private citizens of a state. 5. The contracts of private citizens made in the Confederacy during the war were valid. 7 Wall., 733; 8 Wall., 12, 13; 10 Wall., 480. 2. It is not true as a fact that the bank was used or controlled by the State in aid of the rebellion. IV. I insist that Tennessee, under the peculiar circumstances surrounding her in May, 1861, had the right to •raise an army for her own defense; it was not keeping troops in times of peace, but in times of war. Story Const., sec. 1404; 7 How., 45; 27 Calif., 221, 23 Calif., 175. V. But even if she had no right to raise the provisional army, and if she had no right to engage in the late war, yet as a belligerant, she had the right to purchase war material; this included the right on her part to issue bonds to pay for it, and the right on the part of the citizens to buy the bonds. Bank Tenn. v. Cummings, Nashville, 1872, MS. VI. But if purchase of bonds by the bank was illegal, it would not make the bank notes void which were issued in paying for the bonds. VIII. Even if the contracts between the State and the parties from whom war supplies were bought were illegal; the bank had no connection with them; she simply paid the checks of the State for what she owed the State, and had no right to inquire into the consideration of the contracts to pay which the checks were drawn. 1. Our answer was filed before January 1, 1873. . 4. Property is in custodia leáis. 10 Hum., 365; 2 Sneed, 369. This preference is part of the contract, and cannot be impaired. Cooley Const. Lim., p. 285, 290, 291; 2 Wall., 10, 21; 3 Col., 386. And that defendants purchased them at a discount, makes no difference. 7 Col., 322, 323,; 1 Wall., 96, 392; 1 Black, 386; 3 Head, 727; 26 Geo., 17; 2 Sneed, 485. The bank may as well pay one holder as another. ARGUMENT OF JOHN R.EID FOR DEPOSITORS. The principal question, in this cause, discussed before-this court at its last term, was different from the question now before the court. It was this : Had the assets of the Bank of Tennessee been rightfully seized by the Legislature as a part of the common school fund or were the said assets a trusts fund, which the bank must hold for the benefit of its creditors? That was then the principal question. The principal question now to be discussed is the validity of the circulating notes of the Bank of Tennesseé issued since the 6th of May, 1861, and known as the Torbett money or new issue. The point is distinctly raised in the amended answer and cross-bill of B. R. McKennie and others. In discussing this question I wish to say in the outset, that I have always thought that, in any case, it was unjust to give a preference in payment to the holders of the circulating notes of a bank over the general depositors. It has always seemed to me to be hard, that the law should take the very money which had been placed in the bank by its-depositors and give it to the holders of its circulating notes in preference to, and to the exclusion of, those who had placed it there. Some of these deposits belong to minors- and to other persons not sui juris; some of these deposits are but the sweat of blood of honest toil and painful self-denial ; and some of these deposits belong to others who are guiltless of any wrong. And allow me to say also, that •general deposits in a hank ought to be encouraged as a matter of public policy; because upon these deposits.the usefulness of a bank to the community at large, in a great measure depends. It is true that, in contemplation of law, a general depositor is but a creditor of the bank; that when money is so deposited it becomes the money of the bank. But what more is the holder of its circulating notes? However, it is useless to dwell upon this point; “lta lex seripta est,” and to it I bow in submission. But whilst. I do so, the right will be assuredly conceded to me to demand of the other side proof, not only that they are bona fide holders, but also that the circulating notes so held by them are legal and valid according to the strictest letter of the law. Ho not “show me the steep and thorny way to heaven” unless you are prepared to “reck your own read” and to follow what you preach; do not point me to the law when it is against me unless you are ready to submit to the law when it is for me. Samuél Watson (the trustee of the bank, and one of the complainants in this cause), tells us that the amount of the Tennessee eight per cent, war bonds now held by the bank is $3,223,000; that the whole amount of these bonds taken by the bank was $3,800,000, but that a part had been sold by the bank, and leaving still in the hands of the bank the amount already stated; that the said bonds were placed.to the credit of the military board on the books of the bank; and that up to and including the 31st of August, 1861, the military board had drawn out of the bank $4,195.54 more than the $3,800,000 of the war bonds which had been passed to its credit on the books of the bank as before stated. “It is agreed that the said books and proceedings show that the purposes of the said military board were the arming and equipment of troops, and the purchase of military stores, in the war then flagrant between the United States Government and the Confederate or Rebellious States, and that the sums of money appropriated by them and paid by checks on the Bank of Tennessee were used for the purposes aforesaid, and in payment of the salary of the military board and its secretary and other officers. “It is further agreed that G. C. Torbett was the president and John A. Fisher the cashier of the Bank of Tennessee during the year 1861, and that they are now both dead; that they and the other officers .and directors of the Bank of Tennessee knew that the military board was organized for the purpose of raising, arming and equipping troops, and furnishing military stores and supplies in aid of the rebellion then flagrant against the United States Government, and that the money drawn from the bank upon the order and checks of said board was to be used and was used for the purposes aforesaid. That the ordinary and then issues of circulating notes of the Bank of Tennessee and its branches were insufficient to meet the usual banking business of the bank in 1861, and drafts or checks drawn upon the bank by the military board, and that the bank was compelled, in order to meet its regular business, and the demands of said board, to resort to the issuance of the bank notes, now in controversy, known as the “new issue” of said bank, and said notes constituting the “new issue” were all put into circulation after the 6th of May, 1861, and for the-purposes aforesaid.” And so it appears, ineontrovertibiy, that the president and directors of the Bank of Tennessee, well knowing that the old issue was insufficient in amount to enable it to accept and pay the checks of the military board, and well' knowing that the money to be advanced would be applied by the military board in arming and equipping the troops of the State to fight against the troops of the United States, yet,.nevertheless, resolved to make and did make this “ new issue” with the view of helping and giving aid and comfort to the State in the impending struggle. It is admitted in the written agreement drawn up by Mi*. Trimble and signed by Mr. Baxter, and made a part of the evidence in this cause, that the officers of the bank at the time sympathized with the authorities of the State in the struggle then about to take place with the Government of the United States. It also appears, and being a part of the history of the State, would be judicially known to this court, that the officers of the bank, immediately upon the fall of Fort Donelson, not only fled from their homes in this State to within the lines of the Confederacy, but remained there during the war, and removed with them the assets of the bank from its banking house in Nashville. It also appears from the printed record, that these same officers actually issued $177,000 in the circulating notes of the bank after the assets of the bank had been so removed-from its banking house at Nashville. And so I say, that it is, as it seems to me, manifest to a mind open to the truth, that the bank from the beginning acted in accord with the authorities of the State. I do not, however, consider that this accord must be proved by us to have existed. On the contrary, I think its existence will be conclusively presumed in cases of this character from the bare knowledge of the uses to which the money would be applied. It is as well to state here as elsewhere, that the evidence of Mr. Watson amounts to nothing when sifted, and when what is material is understood. He had no connection with' the bank in 1861, when these circulating notes were issued, and knows no more about the causes which prompted their issuance than any other citizen — no, not half so much, if his answers are to be taken as the full expression of his knowledge. He simply says that the books of the bank do not show that these circulating notes were unlawfully issued or that the first takers knew that they were illegal. No indeed; and they would be very garrulous books'if they showed either fact. And yet it is distinctly admitted in the agreement, which I have already quoted, that these circulating notes were issued to enable the bank to meet the drafts of the military board drawn upon the bank, and known to be so drawn for the purpose of arming and equipping the troops of the State. Granville C. Torbett was the president of the Bank of Tennessee at Nashville, and H. L. Claiborne was one of its clerks. They both tell us that the issuance of the “new issue” was regular in form, and according to the rules of the bank; but neither of them tell us why, or for what purpose this new issue was made. Mr. Claiborne distinctly admits his ignorance, telling us that he was not a member of the Board, and never present at its meetings, and therefore could not know the cause of the making of these notes. Colonel Torbett could have told' us, but did not, and thereby strengthens the conviction that they were made in aid of the rebellion. Now this was all the evidence given by officers of the bank at Nashville. The depositions of the president and ■cashier of the branch bank at Columbia was also taken, and I will now quote from them. Mr. Rye (the cashier of the branch bank at Columbia) repeates in substance the evidence of Mr. Dunnington. He also informs us that a part of the “ new issue ” were signed by the officers of the branch bank, under instructions from the mother bank at Nashville, and the remainder were signed by the officers of the mother bank, and sent to the branch at Columbia. I have, as I believe, now quoted the pith or essence of the evidence in favor of the “ new issue.” If I had quoted the whole of each deposition, in so doing I would have added nothing in strength to that side. And having so done, allow me to make a few observations upon the testimony of Messrs. Dunnington and Rye. “The bills were issued in the usual way, by receiving the signatures of the president and cashier, then passed into the teller’s cash, and was paid out promiscuously with all other bankable funds as money to all who had the right to check on the bank for money. The signing and issuing was done in strict conformity with- the charter and laws as the board understood them.” Yes; these Torbett notes, known as the “new issue,” were passed into the teller’s cash as money. Their formal execution was complete and perfect. The president and directors of the bank did not contemplate, in making these notes, to pay them out to the military board exclusively or solely. On the contrary, they intended to create these notes a part of the funds of the bank, and to pay them out as such indiscriminately with all other kinds of money to any one “who had the right to check on the bank for money.” The act of the president and directors of the bank was therefore consummate when these .circulating notes were passed into the teller’s cash as money. It has been decided that the note of a bank which has been signed by the proper officers and complete in its form, is property, and can be stolen even before put into circulation. 3 Hill’s Reports, 194. • I can see no material distinction between these Torbett notes after they were put into the teller’s cash and other circulating notes of the bank, which had been put into circulation but which had been afterwards paid back into the bank. And it does seem to me clear, that if these Torbett notes had been created for a lawful purpose and were valid, then when they were put into the teller’s cash, that the teller and the security on his bond would be responsible for their safety and for their misapplication. When they were put into the teller’s cash, therefore, it was constructively and in law an issuance. Now, we say that these Torbett notes were unquestionably void down to the time they were put into and made a part of the teller’s cash and during all the time they remained in his cash box, because they were made for an object which the Constitution expressly forbade. If this be so, how could they be made valid by the act of the teller in paying them out to the people? If the teller had the power, its exercise would be in the nature of a miracle — it would be like calling Lazarus from the tomb to life. But we deny the power, and say that no such omnipotence is attached to his office. Suppose the law authorized a bank to issue its circulating notes of the denomination of $10, but forbade it to issue such notes for $5; and suppose further, notwithstanding this prohibition, the bank did issue its circulating notes each for $5, or, rather, put them into the cash of the teller promiscuously with other funds of the bank aid he paid them out to the community; would that make such notes legal ? Could they be sued upon and a recovery had? Unquestionably no. Well, wherein is the difference between the case supposed and that now before this court ? I am aware of the legal principle, that all persons are presumed to know the law, and therefore it could be said that, in the case supposed, it would be presumed that the taker of the five dollar bill knew that it had been issued contrary to law and was void. But we know as a fact that many persons do not know the law, and no doubt many of such bills would pass into the hands of persons wholly ignorant of their illegality. And yet, such persons would not be permitted to aver and prove their ignorance of the law in order to, enable them to recover on such bills. The presumption would be conclusive and upon the ground of public policy. But it may be said that the State and the Bank of Tennessee are estopped from averring and proving that these Tor-bett notes are void because made in violation of the Constitution of the United States; that the State and the said bank are partieeps of the guilt and received the benefit-therefrom, and ought not now to be allowed to make this defense. In reply to this I say, that if I understand the doctrine of estoppel, it does not, in any case, prevent a corporation from denying that it could legally do the act. The law was so held to be in the case of Hood v. The New York and New Haven R. R. Co., reported in 22 Connecticut Reports, 508-9. It was so held in the case of the Pennsylvania, Delaware and Maryland Steam Navigation Company v. Dandridge, reported in 8 Gill and Johnson’s Reports, 248. In the former case the opinion of the court was delivered by Judge Ellsworth, and was written with great care, clearness and force. In the conclusion he says : “We place our judgment upon a plain principle of equity and law, viz: that these defendants are not bound by a contract they had no power to make, and are not estopped from setting up this matter in defense.” How could it be ruled-otherwise ? The estoppel which could be pleaded would be one in pais, and would be based upon the acquiescence or consent of the bank. Of course, if the bank could not legally make the contract, no estoppel could arise. Judge Ellsworth well says that “however individuals may be liable and estopped who untruly hold themselves out as clothed with power, the defendants cannot be estopped on any such principle of law known to this coprt.” Yes, the president and directors of the Bank of Tennessee could do just what the law allowed or permitted to be done and no more. It would be a strange ruling, indeed, to hold that a bank could do indirectly what it could not possibly do di•rectly. In the case of The City Council of Montgomery v. The Montgomery and Wetumpka Plank-road Co., 31 Ala. Reps. (new series), 88, the law is thus stated by Judge Stone: And allow me to say right here, that the State and the Bank of Tennessee are not the only parties interested in this question. If they were, public policy alone would forbid that they should be estopped from averring and proving that the contract sued upon had been made in violation of the Constitution of the United States. But the depositors are deeply interested as to how this question shall be decided. The bank is insolvent, and if the State and the bank are estopped from proving the illegality of this “new issue,” all the assets of the bank will be swept from them. They had no hand ir¡ the issuing of these bills. Are they, too, estopped from proving the illegality? Could the directors of the bank, without their consent, and in violation of the law, thus deprive them wrongfully of their money, and the law deprive them of the right to prove it ? Such a ruling would be execrable. And so I say if the facts be conceded to me as I understand them, then it is clear that these Torbett notes known as the new issue are null and void in ioto. It would indeed be a strange, and, I think, unwholesome doctrine to rule otherwise. And can I be mistaken in the facts? It is certain that these notes were made to enable the bank to supply the State with the necessary money to carry on its war against the United States, because that fact is admitted in the agreement. It is certain that the bank knew that the money so advanced would be so used by the State, because that fact is also admitted in the agreement. I think it does just as certainly appear from the facts in the Record and already stated by me, that the bank, when it consented to enlarge its circulation, did so with the intent to assist the State in the struggle; that was its motive. Now, if I correctly understand the principle upon which the case of Naff v. Crawford was decided, so far from its being contradictory to, it is confirmatory of, the position I have taken and am now endeavoring to maintain. I say the purpose on the part of the bank was to effect or aid a forbidden end, and was to do an illegal act. I have already quoted from Parsons on Promissory Notes and Bills of Exchange to this effect: “So, also, a lease of lodgings for the purpose of prostitution is void.” (Sec. 542.) If a man proposes to borrow of me money, and at the time states that he wishes to get the money to gamble with, or if he proposes to rent of me my house, and at the time states to me that he wishes to use it for a brothel, in either ease it would be an assent on my part to the purpose if I yielded. In other words, it would be an agreement that the money borrowed should be used in gambling, and that the house rented should be used for the purposes of prostitution. But if, after the transaction, I sell the note of the borrower of my money, or of the renter of my property to another (given under the circumstances supposed), in that case the transferee, with or without notice of the illegality of the original transaction, could hold .me liable as endorser. He could not hold the borrower of my money, or the renter of my property — in other words, he could not hold the maker of the note — liable, as-I will attempt hereafter to show, but he could hold me bound upon the subsequent endorsement, even though he knew that the consideration for which the note had been given was illegal. That is the precise point decided in the ease of Naff v. Crawford. Well, if I have correctly apprehended the principle laid down in the case of Naff v. Crawford, and if also it be the law that it would be unlawful, and the contract void, to loan money to gamble with, or to rent a house for the purposes of prostitution, how can it be made to appear that the new issue of the Bank of Tennessee is valid? It is admitted in the agreement of counsel, a part of'which I have already quoted, and to which I have so often referred, that the officers of the bank at the time knew that the money asked for by the military board was to be used in arming and equipping the troops of the State, and knowing that fact, the notes of the bank known as the “new issue” was put into circulation after the 6th of May, 1861, “and for the purposes aforesaid” — that is to say, to enable the bank to meet its regular business and the checks of the military board. If the bank did not assent that the money to be advanced by it should be so applied, then it is difficult to understand what would constitute assent. It knew before it advanced the money for what purposes it was asked and to what uses it would be applied, and knowing these facts, it agreed to advance and did advance the money. And now let me call the attention of this court to the case of Tedder v. Odom, et als., 2 Heis., 68. In that case the parties were private individuals, and neither of them an enemy of the United States in the legal sense of the word. The buyer had not entered into the service of the confederacy up to that time. In the language of Judge Nicholson, the buyer (Tedder) “being about to enter the cavalry service of the Confederate States, purchased of one of the defendants a horse to be used in that serviced’ Of course there remained to him the locus pe/netentice until he did so enter into that service, and up to the time that he did so enter into that service it was perfectly lawful to sell to him. He might change his mind and. never enter into that service. That was one step. But if he did enter into that service, he might not choose, or the government into the service of which he did so enter, might not allow him to so use the horse he bought. That was another step. At all events, it was perfectly lawful -to sell to him whilst he remained a citizen of the United States, and until after he had thrown off his allegiance and had placed himself in antagonism to the Government of the United States. Suppose he had been indicted for treason — I mean, suppose the seller in that •case had been indicted for treason — upon what principle' of law could he have been convicted? How could it be said that in law he adhered to the public enemy, giving him aid and comfort? Or how could' it be said that in law he had done that which was unlawful? In that case, Judge Nicholson might well say, as he does say, that the owner did not agree “to sell the horse in consideration that complainant would use him in the confederate service, but in consideration that complainant would give to him his note for $150, with two securities.” But on the other hand, suppose that the owner had sold the horse to an officer of the confederacy — to one whose duty it was to purchase horses for the confederacy — and it was known to the seller that he was purchasing the horse in that capacity, how would the case stand then? If I put into the hand of one of two combatants a club, knowing at the time that he intends to use it upon his adversary, am I not guilty of an assault and battery? Yes, guilty as a principal? Is not the inference irresistible and conclusive that I intended the injury to be inflicted, and to aid my friend? Could any words that I could use make this point clearer? Well, in the case now before this court, the sovereign State of Tennessee was one of the combatants. She had thrown off her allegiance, and had swung her fist in the face of the United States; she had entered into a league offensive and defensive with the Confederate States, and at the time was in the act of girding her loins for the mighty struggle. At this time the bank increased its circulation in order to enable it to furnish to the State the means to arm itself. Can anybody be found who would say that such an act was lawful? “But the man who sold arsenic to one who he knew intended to poison his wife with it, would not be allowed to maintain an action upon his contract. The consideration of the contract, in itself good, is there taiiited with turpitude, which destroys the whole merit of it. I put this strong case,” says he, “because the principle of it will be felt and acknowledged without further discussion. Other cases,” he says, “where the means of transgressing a law are furnished, with the knowledge that they are intended to be used for that purpose, will differ in shade more or less from this strong ease; but the body of the color is the same in all. ISTo man ought to furnish another with the means of transgressing the law, knowing that he intended to make that use of them.” The doctrine of Lord Eyre has been expressly adopted in other cases. Thus in the case of Langton v. Hughes, 1 Maule & Selw., 593, a person was not allowed to recover upon a contract for drugs sold to a brewer, and which he knew the brewer intended to use in the poisoning of his beer. .A stronger case could not, perhaps, be put to illustrate and enforce my position. Just think of it for a moment. A brewer of lager beer buys poison to put into his beer to make it more palatable, but which he knows will soon kill those who use it. tie buys the poison of a druggist, to whom all the facts are made known, and yet, being overcome by his infernal thirst after money, and being callous to the sufferings of his fellow-creatures, the druggist sells to the brewer upon a credit. Do you say in such a case that a suit could be maintained by the druggist against the brewer? Do you say that the druggist would be allowed to say in his defense that he sold the poison for its value, and in the line of his business, and not to aid the brewer in killing his customers? God protect us from such a ruling. Lord Ellenborough, in the said case of Langton v. Hughes, held to a different doctrine. He said in that case as follows: Many cases may be supposed in which the moral sense would be shocked if it were not so held, and that knowledge necessarily implied a participation in the illegality. Suppose that a traveller were to stop at an inn, and the innkeeper resolved to take his life for his money; suppose, further, that the innkeeper applied to a merchant to buy a pistol with which to take the life of his guest, and before he made* the purchase he stated to the merchant the purpose for which he was going to buy the pistol, and the merchant knowing the facts, and believing that such was the intent, were nevertheless to sell to the inkeeper the pistol, could the merchant in the case supposed- exonerate himself from guilt by averring that he did not colleague with the innkeeper to take the life of the traveller, but simply sold his pistol for its value in money ? I think not but that he would be as guilty in morals and in law as, the innkeeper. Well, if that be so, how could the merchant recover in a court of either law or equity the price of the pistol? If I apprehend and correctly state the law upon this point, then I say, for a stronger and higher necessity, the same principles would apply in a case where a citizen advanced his money or did an act, knowing at the time that the money so advanced or the act so performed would be used in taking the life of the government then over him. No government worthy of the name could tolerate any other principle. If there had been' a combination of men banded together to overthrow the government of the State of Tennessee, and the Bank of Tennessee had created this new issue to enable it to advance to this combination of men money with which to arm and equip themselves against the State, who could stand long enough to listen to the defense that is now made? I well know that almost from the formation of the Federal Government down to the commencement of the late war, two doctrines, diametrically opposite to each other, were held as to the nature of the allegiance which the citizen owed to the Government of the United States. One held that the allegiance which a citizen owed to the Government of the United States was paramount; the other, that it was subordinate to that of the State of which he was a citizen. The latter as a consequence also held that a State could lawfully secede from the United States, and if it did secede, then its citizens were bound to yield to it their allegiance; the other party held that a State could not lawfully secede, and if its citizens attempted so to do, they would be guilty of rebellion, and would be liable to the penalties of a crime of the highest grade. We all knew these two theories, and in taking sides we made up our minds to take, the chances. Now the war decided this point, and decided that our resistance was rebellion. And I say that the south, in laying down its arms, accepted the doctrine that it was unlawful to resist the United States, and that our allegiance to the United States was paramount to that of the State in which we live. “No crime is greater than treason. He who being bound by his allegiance to a government, sells goods to the agent ■of an armed combination to overthrow that government, knowing that the purchaser buys them for'that treasonable purpose, is himself guilty of treason or a misprision thereof. He voluntarily aids the treason. He cannot be permitted to stand on the nice metaphysical distinction, that although he knows the purchaser buys the goods, for the purpose of aiding the rebellion, he does not sell them for that purpose. The consequences of his acts are too serious and enormous to admit of such a plea. He must - be taken to intend the consequences of his own voluntary act.” 3. But it is said that this new issue of the bank was put into circulation in the usual way. Col. Torbett, as I have before stated, tells us that these circulating 'notes were " passed into the teller’s cash, and was paid out promiscuously with all other bankable funds as money to all who had the right to check on the bank for money.” And allow me to say that this is the fact upon which this defense is mainly, if not solely, baséd. But in reply I say that I go behind the issuance or paying out of these circulating notes, and aver that they were void in their inception, because made for an unlawful purpose. That they were made for an unlawful purpose, and therefore void, I have already discussed. And now taking that for granted — that is to say, taking it for granted that these circulating notes were made for an unlawful purpose, and were consequently void — does the fact that they were passed into the teller’s cash and promiscuously with the old issue paid out as money, breathe into them the breath of life? If the subsequent issuance or paying out of this “new issue” would have such an effect, I confess I do not see upon what principle. I have already admitted, and now again admit, that if an innocent person took these notes from the bank for value, such person would have a claim against the bank, which would be legal, and which could be enforced in the courts. But he certainly could not sue upon the notes themselves, because they would be null and void. He could only sue for the value of the consideration he had paid for them. And this court will at once see the material distinction between suing upon the note itself and for the consideration which had been paid. As noteholder, he would be entitled to priority of payment out of the assets of the bank and to the exclusion of all other creditors of the bank, as owner of a claim or debt against the- bank, he would stand upon the same platform as other creditors, and share equally with them. But it may be said, that although the present holders may have had notice of the illegality, yet if there were, between them and the first takers, such innocent holders for value, they would be substituted to their rights. I admit the law to be so. But I insist, and will attempt to enforce the position presently, that neither the first takers and no subsequent holder can acquire any rights to a note void in its inception. However, admitting, for the present, that the principle stated is applicable to the present case, I again, ask upon what evidence in this record do we infer that this new issue passed into the hands of innocent holders for value ? Certainly the law casts upon the holders of this new issue the burden of making such proof. In the case of Paton v. Coit et als., 5 Michigan Reports, 505, Judge Christiancy, in delivering the opinion of the court, holds the following language: I wish, however, to be understood. I do not say that there was no such innocent holders for value. I only say that- if there were such holders, it was a fact to be proved; that the law east the burden of proving this fact upon the present holders of this new issue; and that they have utterly failed to make this proof. 4. My next and last position is, that the new issue of the Bank of Tennessee is a debt incurred in aid of an insurrection or rebellion against the United States, and to decree that it is valid would be directly in the teeth of the 14th amendment to the Constitution of the United States. On the other hand allow me to ask, who are the depositors? I answer for them, and say that the names of every one of them stand upon the books of the bank, and most, if not all, are before this court. They are the very persons who put their money into the bank. They belong to all classes of the State — to the weakest and most helpless as well as to those who are able to bear their cross. They were subjected to heavy and grievous wrongs and losses during the war. They had laid up in the bank this money for their rainy day. They have been standing at the door for ten long years and more and knocking for their own in vain. Is it now, that they are here before the highest tribunal of their State, too much for them to ask and expect that the law, just as it is and without prejudice or partiality, shall be administered to them ? ARGUMENT OF W. H. HUMPHREYS, FOR DEPOSITORS. The Legislature, in January, 1838, incorporated the Bank of Tennessee. The State furnished the capital stock, appointed the directors, and appropriated the dividends to certain specified public purposes. The bank was put in operation, and, in 1865, the Legislature declared, by act, that the bank should no longer do business; that the president and directors thereof should make an assignment of the effects of the corporation, to a trustee, for liquidation; that the trustee should convert the effects into cash, and pay over to the Treasurer of the State, as proper custodian of the school fund, the sum of $1,500,000, as a preferred debt due to the school fund '; that the remaining assets of the bank should be distributed pro rata amongst all creditors whose debts were contracted prior to the 6th day of May, 1861, and that all claims contracted subsequently to that period-should be excluded from payment. The act further declared that if, in the judgment of the Governor, it was necessary to file a bill to carry into effect the assignment of the effects of the bank, the bill should be filed by the Attorney General of the State, making all creditors, and all persons who claim to be creditors, parties, in order that justice may be done to all. ’ The assignment was made, and the bill was filed, alleging the insolvency of the bank. It was filed in the name of the State and the trustee, making all persons who were creditors, or claimed to be creditors, parties, and enjoining them from sueing elsewhere, praying that all proper accounts be taken, and the transactions of the bank be closed, by decree of the court, in conformity with the instructions given to the trustee, to the end that all may come in under one decree, and that justice be done to all.” This cross-bill seeks to subject the State, as the sole stockholder in this bank, to a declaratory decree for moneys pledged as bank stock and not supplied, and for moneys withdrawn at different times, as in 1861 and in 1865, by the State and for general account. The State of Tennessee never did supply the capital stock pledged to be supplied by the charter, and never did reduce the amount of the capital stock subscribed by an act designed to reduce the pledged amount, and is now, at the demand of creditors, bound to supply the amount subscribed, and not paid. The act of 1838 declared that a bank should be established in the name and for the benefit of the State. That act pledged the sum of $5,000,000 as capital stock. It pledged specifically the whole of the school fund as a part of the capital stock of the bank. It specifically pledged, as part of the capital stock of the bank, the “surplus revenue,” received from the Government of the United States, and declared that if the fourth installment should be received, it should be a part of the capita) stock, and be in addition to the $5,000,000. The act further pledged the faith of the State for the support of the bank. We have here the State going in as the sole stockholder in an incorporated bank, as commercial trader.- This is a subscription of $5,000,000 of stock in a bank, creating a stock liability against the State for that amount, and a pledge that it shall be preserved and maintained during the existence of that bank for that bank for the purposes specified in the charter. There was no necessity for the Governor, or any officer of the State, to make an actual subscription, in a book, of the capital stock, as the same act required the Governor to subscribe for stock in internal improvement companies. The “ State of Tennessee shall become á subscriber for one-half of the capital stock in all railroads and turnpikes,” declares the act, and the Governor is authorized and required to make the subscription. But where the State furnished the whole of the stock, appointed all the directors, and received the whole of the profits, such actual subscription was wholly unnecessary. The ownership of the bank, the amount of the capital stock, the enumeration af the items thereof, the statement that it was in the name of the State, for the benefit of the State, and that the State was bound to save harmless all persons dealing with it to the extent of $5,000,000, these declarations, made by statute, are far more explicit, gives far more certain and tangible information of the facts and obligations intended to be made known to the public than any mere subscription in the books of a chartered company. The Legislature had the legal and constitutional authority to invest the school frind as part of the capital stock of the bank, and having so made it a part of the capital stock of the bank, the act of the Legislature of 1865, declaring it a debt against the bank, is unconstitutional and void, and the withdrawal of $460,000 in specie from the bank, as part of the school fund, was without authority of law, and in violation of the rights of the creditors of the bank, and the State is bound to account for the sum so withdrawn. It appears that in 1811 the Legislature incorporated the Bank of Tennessee,” with a capital stock of $400,000. The Governor was directed to subscribe for che sum "of $20,000, with right reserved to withdraw its portion of capital stock at the end of ten years. Scott’s Rev., vol 2, p. 43. In 1817 the Legislature by act directed the collection of the college and academy moneys, which had been loaned to individuals, and when collected, to be invested in bank stock by the treasurer of East Tennessee and the treasurer of West Tennesse, and declared that the moneys so invested should constitute a part of the capital stock of the bank, and that the dividends on the stock should be paid over to the trustees of the institutions by the treasurers, in whose name the stock was subscribed in trust. See Scott’s Rev., vol. 2, p. 433. In the same year the trustees of colleges and academies were directed to invest all the moneys received by them' in the stock of the State or Nashville Bank. 2 Scott, 272. In 1820 another bank was incorporated, called 'the Bank of the State of Tennessee, the capital stock was fixed at $1,000,000. The bills were to be emitted on the credit of the State of Tennessee, the whole to be warranted by the State on the pledge of the proceeds of the public lands and the credit of the ordinary revenue of the State not otherwise appropriated. The bank was placed under the management of a president and ten directors, elected by the Legislature for two years. The proceeds of the sales of the lands of the Hiwassee district were directed to be invested, so far as necessary, to make up the capital stock. Scott’s Rev., vol. 2, p. 624. The validity of the charter was passed upon by the Supreme Court and affirmed. See Hays v. State Bank, M. and Y., 179. In 1827 a law was enacted enumerating the items of the school fund, and declaring that the same should be devoted to the use of common schools forever; amongst them were all the rents and profits of the vacant lands of the State, and the whole of the capital of the State Bank. This act also provides that all appropriations for the use of common schools, should be placed in the State Bank, and become a part of the capital stock thereof, for the use of common schools, the interest to be a fund for annual distribution. Cobb 23, 294. In 1831 the Legislature enacted a law chartering a bank, capital stock two millions, the faith of the State pledged for the redemption of all the notes issued by the bank, and the payment of all debts of said bank in proportion to the amount of stock the State may subscribe in said bank, its notes to be receivable in payment of public debts, and public moneys to be deposited therein so long as the bank shall pay its dues in specie. In 1832 the Union Bank of Tennessee was chartered, capital stock not to exceed three millions, with corporate existence till 1863. The State, by its Governor, was required to subscribe $50,000 of the capital stock, and issue its bonds therefor. The profits of the stock, after certain payments, to be appropriated to the use of common schools. Common school commissioners, county courts, trustees of literary institutions, and any incorporated body, were authorized to subscribe stock in said bank as other individual stockholders. At the same session an act was passed to close the transactions of the Bank of Tennessee, chartered in 1820, instructing the commissioners appointed to redeem the notes, pay the depositors, and after appropriating the sums allotted to common schools and academies, to pay the balance to the Union Bank. It also provided that nothing in the act should be so construed, as to alter or effect, in any way, the claims or liabilities of said bank, but that they should stand as before, thus manifesting a proper regard for all contracts made by an institution based on state funds and state credit. It thus appears that as early as 1811 the precedent of the subscription and ownership of stock in incorporated banking companies by the State was established and executed. It •appears that in 1817 the Legislature of the State established the precedent of investing public moneys for educational purposes in bank stock, and that such portion of such funds as was then in the hands of commissioners to be loaned to individuals on bond, with security, real or personal, was directed to be withdrawn, and re-invested in bank stock. It appears also that it was settled as the public policy by successive Legislatures, under the varied ascendency of parties. Whether wise or unwise, it must be regarded as the policy of our fathers. It was regarded as the safest and most profitable mode of investment of public moneys for educational purposes at that time within their reach, and the system of private loans was abandoned. The guaranty of paper money, issued by incorporated companies, based on public revenues, and on public lands and their proceeds, was also well established at an early period in the financial policy of this State, as it was. in many of the other States. It was connected with the supposed necessities of a new and growing country- The alleged want of capital to develop more rapidly than personal and private credit could do the resources of a country vast in extent, and almost indefinitely great in its resources, aided in the establishment of the system. The people were industrious, energetic, and eager for the promotion of the growth of the. country, and the creation of a paper currency, founded on the necessities of the whole people, for the united purposes of education and material improvement, was thoroughly fixed in the public mind, and established by the law-making department at the time of the meeting of the Convention in 1834. They did not condemn the previous policy of the State. They did not prohibit the investment of public funds for educational purposes in bank stock. They did not prohibit the guaranty of paper money issued by incorporated companies by the State. They not only left the previously established policy in force, but declared it to be the duty of the Legislature, in all time to come, to adopt “ a well regulated system of internal improvement, and to cherish literature and science in all future periods of the government.” That body proceeded to declare that the fund called the school fund, and all the lands and the proceeds thereof, dividends, stocks, and other property of every description whatever, previously appropriated by the General Assembly of the State, and all such as shall be hereafter appropriated, shall remain a perpetual fund, the principal of which shall never be diminished by Legislative appropriation, and the interest thereof should be inviolably appropriated to the encouragement and support of common schools throughout the State, and for the equal benefit of all the people, and no law should be passed authorizing said fund, or any part thereof, to be diverted to any other use than the support and encouragement of common schools, and that the General Assembly should appoint a Board of Commissioners for such term of time as they should think proper, who should have the general superintendence, and who should make a report of its condition from time to time, under such rules and regulations as should be required by law; and that the proceeds of the sales of the public lands coming from the United States to the State of Tennessee should never be appropriated to any other purposes than those of education and internal improvements. This provision was in substantial conformity with the act of 1827. N. and C., p. 171. It gave force and direction to the preceding public policy and statutes. The validity of this investment of the school fund in the stock of this bank, which was controlled by individuals, was passed upon by the Supreme Court of Tennessee. McEwen, superintendent, did not invest all the moneys collected in the stock of the Planters’ Bank as directed by the act of 1835, but loaned a part of the sums collected to individuals, and a part of the money so invested was lost. A bill for an account was filed by the Attorney-General, by the direction of the Legislature, against the superintendent, charging him with' delinquency in not investing the moneys collected in the stock of this bank, as prescribed by-the statute. That wise and able Judge Reese, declaring the opinion of the court, said: “It was never contemplated by the Legislature that the large sums which it was known he (the superintendent) would receive should continue in his hands, and under his control, all experience having shown that very large amounts of funds of others can seldom, if ever, be kept securely, and interest paid thereon, for any length of time, by any individual, however prudent and honest. The Constitution intended the principal to be a perpetual and permanent fund, and the interest to be certainly paid, for upon the preservation of the former, and the prompt payment of the latter, would depend the success and prosperity of the common school system.” The court held the superintendent delinquent in not investing the fund in stock of the bank, as prescribed by law, and decreed that he should be charged with losses arising from noncompliance with the law. But the court said that the Legislature, in the absence of constitutional prohibition, was the guardian and protector of its funds, that it was its duty to see that such funds were properly secured, invested, and applied; that this power was supreme, and when exercised, could not be revised or called in question by any power whatever. The power is the same whether the fund be appropriated or unappropriated, whether it be set apart for internal improvement, banking operations, or any purpose whatever. This power was inherent in the legislative department of the State, and it is neither lost or diminished by the fact that the Legislature may have appointed curators for the safe keeping of the funds, or to superintend the distribution of them in pursuance of appropriations made by law, such as a treasurer, commissioners of internal improvement, or of common schools, or president' and directors of a bank based on state funds. The power of the Legislature over the school fund previous to the adoption of the Constitution of 1834 was absolute. The fund might have been diverted from the purpose for which it was created, and directed in an entirely different channel. It might have been appropriated to the payment of the nublic debt; it might have been distributed in bounties and premiums to our citizens; it might have been applied to lighten the burthen of taxation for the time being, or in any other manner consistent with constitutional obligations. The Constitution of 1834 limited the power of the Legislature over this fund to this extent, and no further, to-wit.: That no law should be passed diminishing that fund, but that it should be a permanent fund, and that the interest which should arise from the fund should be appropriated to the use of common schools, and to no other use whatever; that the Constitution had directed that the Legislature should appoint a board of commissioners to have the superintendence of the fund, and that the Legislature had appointed the board and incorporated it; that the Legislature was not bound to incorporate these public officers; that this public corporation was made for public purposes, and that no private right was vested in it; that the power granted to the board might be revoked and rescinded at any time by the Legislature. So said the court. The legislative and judicial history of the State, therefore, shows that prior to the adoption of the Constitution of 1834, it was the recognized and habitual policy of the State to invest the school funds in bank stock; that the Constitution of 1834 recognized the constitutional existence of bank stock as portion of estate to be preserved for the benefit of schools; that the Legislature of 1835, an able body assembled to organize the State Government under that Constitution, did direct the investment of the school fund in the stock of the Planters Bank, and the Supreme Court of the State, in the face of the argument that this school fund was in part a trust fund, placed in the hands of an incorporate board of commissioners, and out of the control of the Legislature, did declare that the commissioners had no right, legal or equitable, in the fund as against the. legislative power over the fund; that they were public officers, appointed as other officers to take care of the public rights, and the superintendent (an officer required to give bond and take official oath as other officers) was delinquent in duty in not investing the school fund in stock of Planters Bank, as required by the act of 1835. Public corporations are but part of the machinery employed to carry on the affairs of the State, and they are subject to be modified and abolished as the exigency of the public service 'may require. The Legislature may exercise a general superintendence over them and their effects, when they have effects, as in case of a county of township. The Legislature have no authority to take away from a county its property, but may direct the manner in which that property may be used for the benefit of a county. 27 Vermont, 704; 29 Vermont, 19; Cooley, 279, 239; 13 Illonois, 30; 4 Missouri, 512. So in ease where the ordinance of 1789 laid off 16th section of land for the benefit of schools, and commissioners were appointed, it was declared by the Supreme Court of Illinois that the Legislature had the power to lease or sell the land, to direct in what way school funds should be invested and applied. 4 Scammon, 190. The moneys which had been appropriated by law, and then by the .Constitution, for the support of the common schools, having been realized by sale of the stock of banks in which it was invested, and which were controlled by individuals, were now invested in the stock of a bank in which the State was the sole stockholder. The State owned the stock of the bank, and the State owned the school fund, and the president and directors of the bank were constituted the board of common school commissioners, and the superintendent was called an executive officer in the act of 1835. He gave bond to the State for the faithful discharge of his duties, and took the usual official oath. The bank was created in the name of the State, and for the benefit of the State. Was the bank chartered in conformity with constitutional law? The judicial decisions leave no doubt on the subject. The State of Kentucky incorporated a banking institution with usual powers. The directory were elected by joint ballot of both houses of the Legislature. The bank was the exclusive property of the State. The notes were issued and debts contracted in the faith of the proceeds of the public lands, and on the faith of the funds of a former bank owned by the State. The dividends were directed to be paid into the treasury of the State, and the notes were receivable in payment of public dues. The Supreme Court of the United States said a uniform exercise of the power to incorporate banking institutions by the state governments, affords no unsatisfactory evidence that the power has been rightfully exercised. It is, indeed, not contested at the bar. It is also admitted that a state may own stock in a bank, but it is contended that it cannot become the exclusive owner of the stock. They give no rule by which the interest of the State in such institutions must be graduated, nor at what point the exact limit shall be fixed. May a state own a fourth, a third, or three-fourths of the slock ? If the proper limit be passed, does the charter become unconstitutional? and is its unconstitutionality sustained if it recede from that limit? If a state may own part of the stock of a bank, we know of no principle which prevents it from owning the whole. As a stockholder in a bank, it can exercis'e no more power than any other stockholder. The court said that the banking charter having provided for a specific fund subject to legal process by the creditors of the bank, the notes issued by it were not bills of credit, and the law creating the bank was valid. Briscoe v. Com. B. Ky., 11 Pet., 326. This ease was decided in 1837. In 1851 the same principle was settled by the Supreme Court of the United States in the case of The Bank of the State of Alabama v. Darrington, 13 How., 17. The court say the State was the sole stockholder. The capital stock was raised by the proceeds of the sale of bonds and lands of the State. The dividends were devoted to public purposes. The directors were appointed by the State, and the faith of ihe State was pledged for the redemption of its bills and notes. The validity of this charter was assailed, as in the case in 11 Pet., on the ground that the Constitution of the United States prohibited any state from issuing bills of credit; that the issuance ■of notes, bonds on public funds, and for the redemption of which the faith of the State was pledged, was a bill of ■credit. But the court sustained the validity of the charter, ■on the ground that the State had the right to charter banks, to take the stock, and having provided a specific fund pledged to the creditors of the bank by legal execution, it was therefore valid. There has been similar charters in Mississippi, Arkansas, Indiana, and in many other1 states, in none of which have such charters been annulled by judicial decree on the-ground of unconstitutionality. ■ The decision in the case of the Commonwealth Bank of Kentucky was made in 1837, and in 1838 the Bank of the ■State of Tennessee was incorporated. As to the question of constitutional validity, it settled it in all the states in which banks were incorporated in which the exclusive ownership was in the State. The Legislature of Tennessee, in 1838, declared the whole of the school fund a part of the capital stock of the bank. It then guaranteed the perpetuity of the fund, and in 1870 it substantially declared the same guarantee. The act of 1838 was based on the idea that the State had subjected the school fund to the hazards of a commercial enterprise by making it a part of the capital stock of the State Bank, and the State reaffirming the perpetuity of the fund. This must be regarded as an executed transaction, closed forever, with all separate rights merged in the execution of the contract which placed that money in the hands of the president and directors of the Bank of Tennessee as a part of the capital stock thereof. If the charter authorizes the construction of a railroad,, the money and effects placed in the hands of the directors,, or agreed to be placed in their hands, are for the purpose of procuring the right of way, grading the track and furnishing iron, lumber, materials and service for the completion of the structure, etc. The Supreme Court, in Brightwell v. Mallory, says: “ It is a mistake to suppose that the stock of an individual in a bank consists of so much money owned by him in a bank. The money in the bank is the property of the institution, to the ownership of which the stockholder has no more right than any other person not at all connected with the bank. The stockholder has the entire ownership of his own stock, and may sell and transfer it. The certificate of stock declares that he is entitled to so many shares of the capital stock. They entitle him to his proportion of the profits which may be declared from time to time, and when the institution closes business, to his proportion of the capital stock and profits which may remain to be distributed.” 10 Yer., 198; A. & A., 318. In the case of Union Bank v. The State, the Supreme Court says that the capital stock of a bank is the whole undivided interest paid in by the stockholders, the legal right to which is vested in the corporate body for the purposes of the act of incorporation; that by bank stock is meant the right of stockholder to an interest in the dividends and the right to a distributive share of the effects of the bank on hand at the time of the expiration of the charter. 9 Yer., 501. The case of Wood v. Dummer, 3 Mason, 308, was the case of a bill filed by a noteholder against a part of the stockholders of a bank, who had divided the effects of the bank among themselves without payment of the debts. Story says: “The charter relieved the stockholders of individual liability for the debts contracted by the managers of the corporate body, and substituted instead thereof the capital stock of the bank. To this fund credit was given as the only means of payment, which upon general principles, as well as legislative intention, was to be deemed pledged for the payment of the debts of the corporate body.-” See Story’s Eq. Jur., sec. 1252. In the case of The Ohio Life Ins. Co. v. The Nashville Ins. Co., 11 Hum., 31, a bill was filed against the latter company and the stockholders to subject them to pay a debt due the former company contracted by the corporate body. The court said: “The capital stock is the fund provided and intended to be kept for the security and benefit of the creditors of the corporation. The stock subscribed and agreed to be paid becomes the property of the corporation, and the creditors may enforce its payment in equity.” 8 Cow., 396. The Eaton Manufacturing Company having exhausted their effects, the creditors filed their bill against the stockholders to subject them to the payment of their unpaid subscriptions. The Supreme Court of Georgia say, the capital stock is the amount fixed by the stockholders as their stake in the concern, upon which they got their credit and transacted their business. It may not all be paid, still they are liable for the amount so fixed. A case might be made out where the stockholders would be enjoined from paying out dividends till the debts were paid, and to compel them to pay back dividends which had been paid out of the capital stock. The whole capiial stock is a fund held to pay debts which cannot be distributed or otherwise divided among the stockholders till the debts are paid. The leading principles above set forth were established in the great and well considered case of Currin v. State of Arkansas, 17 How. In that case the capital of the bank was furnished by the State exclusively, and placed for banking operations in the hands of directors appointed by the State authorities. On the accruing insolvency of the bank, the State, by acts of the Legislature, seized the remaining estate of the bank, its specie, its bonds, mortgages and other effects, and appropriated them to the payment of the debts of the State. The creditors sued the State under the statute law of the State authorizing the State to be sued. The whole of the effects seized by the State were declared to be a part of the capital stock and property of the bank, pledged as capital stock to be used in banking operations, and pledged'to the payment of the debts of the bank, and that all action by tbe legislative authority to divert the effects from the purposes designated in the charter, and appropriate them to the purposes of the State, were of no validity whatever. This stringent subjection of the capital stock of incorporated companies to the satisfaction of the debts of those who contract with the corporate managers, stands on the satisfactory and well sustained ground, that by the general principles of law the individual property of the stockholder is exempt from subjection to the payment of corporate debts, and they are forced to look to corporate funds alone for payment; and if so, it is necessary that the capital stock should stand pledged and specially guarded against withdrawal, diminution or distribution to protect the creditors from fraud, and to give solidity and credit to corporations to enable them to accomplish the purposes of their organization. Having shown that the school fund was, by the charter, constituted a part of the capital stock of the bank, and that it was therefore specifically pledged against withrawal, diminution or distribution till the debts were all paid, it follows that the instruction by the General Assembly to the bank to pay the sum of $1,500,000 to the Treasurer of the State, as a preferred claim against the effects of the bank,, was in violation of the obligation of the contract made by the State that the school fund should be a part of the capital stock of the bank, and that any assignment made to a trustee with such instruction should be disregarded, and the funds of the bank appropriated to the payment of the debts, and that the sum of $460,900 in specie, taken from the officers of the bank- as school fund and appropriated, was in violation of law and the rights of creditors, and that the State must be held accountable to the creditors for that amount so withdrawn. But if the school fund was a trust fund, and there were proper representatives of that fund before the court holding rights hostile to those of the State, and if the investment of the school fund as capital of the bank was illegal and void, then the State would be bound to make up the deficiency of $1,500,000, which it agreed to supply and never did supply. If the school fund never was legally a part of the capital stock of the bank, how has the State supplied the five millions pledged to the creditors of the State ? If the court shall declare this school fund no part of the capital stock of the bank, the State has unquestionably violated the covenants of the charter that such fund should be a part of the capital stock, and the State being before the court as a party, the court is bound to do complete justice by entering a decree against the State in favor of the creditors for the amounts which it had pledged for the payment of corporate debts,, and which it did not supply. The statute under which it seems these bonds were issued, declares that they were to be issued for the defense of the State. The money drawn was so appropriated. It may be argued that the State of Tennessee did not, by its lawfully authorized officers, take and appropriate the money so withdrawn in payment of its ordinary and current ■expenditures, and in the purchase of bonds issued by the authority aforesaid, and that these complainants who deposited their money in the hands of the directory of the Bank of Tennessee after the 5th day of May, 1861, did not deposit the same in the hands of a directory lawfully authorized to receive such deposits. . In reference to this argument, it is maintained that these complainants deposited their money in the hands of the directory, under and by virtue of the charter as enacted in 1838, and that they deposited it in the years 1858, 1859, 1860, 1861 and 1862. These contracts of deposit do not rest for their validity on any acts passed after the 5th day of May, 1861. The contracts of deposit which they made with the corporate institution, and with the State, as pledging its faith for the support of the bank, was made under and by virtue of the act which created the bank. They placed their money in the hands of a directory, the fidelity ■of which was guaranteed by the State by virtue of laws which had been in existence for more than a quarter of a century, and not by virtue of or under any ordinance of secession, and not for any purpose connected with war or insurrection. These directors, appointed in 1859, were occupying the established banking houses in 1860, 1861 and a part of 1862, at the principal banking house at Nashville, and at all the branches, with all the books of the bank. They had lawfully received these banking houses and books from their lawful predecessors, by lawful election or appointment, and with no disputed succession. They came into possession by no revolutionary ouster, but by uncontroverted appointment. The Legislature, which was in session in 1860 and in 1861 in the State, was lawfully elected in 1859, and were the legitimate successors of the Legislature which had assembled in the State from the foundation of the government, with no revolutionary ouster, no disputed succession. The Governor of the State in 1861 was elected in 1859, and was the lawfully elected and undisputed successor of Blount, Carroll, Cannon, Polk and Johnson. The Governor and the Legislature were elected lawfully in 1859 under the Constitution of the United States and the Constitution of the State, and the laws thereof previously in existence, and occupied these respective positions under the Constitution of the United States and of the State, and the directory which received -these deposits, and which purchased the bonds of the said State, were officers under and by virtue of an appointment made in 1859. The laws under which this board was organized, and the official authority under which they were organized, had existence prior to the year 1861. The officers who delivered to them the possession of the banking houses and stocks, had all the authority so to do that could be acquired from pre-exist-ing statute laws of the state. The contracts of deposit which they made with these directors appointed in 1859, were just such contracts as were made in all the States in peace and in war, and without the slightest connection with a state of peace or war. It would seem impossible on any principle of reason or authority to affirm that the State Government of Tennessee in 1861 or 1862 originated in usurpation, or that the bank directors were usurpers. The entire body of the laws of the State originating in 1860 or 1861, or prior thereto, must be construed as in full force, not incompatible with the Constitution of the United States or the Constitution of the State, unless repealed by a subsequent Legislature, and any officer lawfully appointed must be construed as being of lawful and valid existence until displaced by lawful authority. Every intendment of law and of fact which can be made by a court must be made in support of lawful and constitutional government, for the reason that it is the manifest interest of all men that the whole machinery of trade and of organized society should go on in war as well as in peace. It has been the labor of the soundest and ablest men in all civilized ages, in all countries, to restrict the operations of war to the least possible disturbance of regular operations of internal government. It was declared many centuries ago, by the British Parliament, that no man should be disturbed in his person or property for acts done in defence of existing authority, and on the ground that it was impossible for the great mass of men to know with certainty which side was right in civil commotions and conflicts. Thirty millions of people on one side, with ten millions on the other; we have a wide margin for the exercise of sound principle and conscientious conviction, more especially when we consider the opinions of Jefferson, Sir James McIntosh and the celebrated French statesman, Sully, that organized peoples in insurrection were generally right, and their conduct always based on conviction of right. That statute was enacted on considerations of general humanity, and to moderate the rage of men in the hour of victory. It is said by writers of physical law that nature abhors a vacuum. It is said by writers on public law that humanity shudders at an interregnum. In war, for the interests of general humanity, contracts must be made and enforced, crimes must be punished, courts and officers must exist. The business of merchandizing must exist and be regulated by law. Estates must be distributed, and orphans protected. Taxes must be assessed, collected and distributed. Places for the deposit of produce and of money should exist in war as well as peace, and be protected. Laws and constitutions in existence do not cease to have existence and operative effect, and. courts can only act in safety on the affirmative establishment of the negative fact that they do not exist. We cannot, on any principle of reason,, assume that constitutions, and laws, and officers have ceased to exist, except the fact be shown to be so. Even where no lawful government exists, judicial tribunals enforce the acts-of acting officers, acting corporate bodies and acting governments. It would seem, upon general principles of reason, and in support of the public good, that governmental acts-not in conflict with fundamental law, and in conformity with existing law, should be enforced. Thompson acted for years by Confederate authority, which he was sworn to support, and made contracts on behalf of-State and county, for which he received money, and discharged the multifarious duties of his office of Clerk of County Court, acts both of a ministerial and judicial character, and these acts were- sustained, and persons protected who acted under them by the Supreme Court. How can it be contended that the acts of this directory were not valid and binding within the limits of the Constitution of the United States and the Constitution of the State, and the laws thereof. They were lawfully appointed iu 1859. They lawfully took possession of the bank and books' •of the bank, and were authorized by the charter of the bank to hold them, and discharge the duties of bank officers till their successors were duly elected and qualified. There were no contending claimants, no disputed succession, no force or fraud alleged in the transfer of the possession. Their action in the receipt of deposits was in conformity to-the charter made by virtue thereof, and not by virtue of statutes enacted, and their acts in th'e due line of administrative duty, for the good of the State as a stockholder. Banks of deposit are a necessary agency of society in war ■as well as in peace, and the right and duty of receiving deposits exist at all times, and can in no sense be regarded as a war agency interfering with the rights of a belligerent. The fact that this bank was owned by the State as sole stockholder, cannot alter the essentially private character of its administrative acts as a bank agency. These bank officers, therefore, were lawfully appointed, they were lawfully in possesion, with lawful authority; their acts were in the line of'lawful administrative duty, and their contracts bound the effects of the bank and the State as the stockholder therein, pledged as it was by the charter,, to support the bank, and see that its creditors were paid and satisfied according to contract. In 1872, after the people of the State were enfranchised, a Convention, elected by the whole people, and representing the whole, abrogated these provisions of the Constitution of 1865. Steiger and Thompson,' vol. 1, p. 113, art. 11. This was the last constitutional declaration of the people in convention assembled, and that obligation put an end to the declaration that the State organization of 1859-60 was -an usurpation. This schedule of 1865 was, therefore, in this respect, as if it had never been adopted, for it will not be contended that if one convention make an ordinance, a succeeding convention may not abrogate that ordinance. Does not that abrogation declare to the courts that the organization of 1861 was no usurpation? If the Convention of 1865 declare the State Government of 1861 an usurpation, as a matter of opinion, does not the abrogation thereof by the Convention of 1870 furnish the strongest evidence, as a matter of opinion at least, that it was not an usurpation, and that the judiciary of the State and the subsequent Legislatures of the State should not act upon it as -an usurpation, or regard its acts as a usurpation, more especially when it is well known that the first convention was not the convention of the popular will, and that the second was. It was no usurpation, for it was a lawfully elected and authorized body. The bank directory was no usurpation, but was lawfully appointed, and the Convention of 1870 emphatically so declared. It cannot be contended that the State of Tennessee had not the right to charter a bank, and authorize it to receive ■deposits as one of the reserved rights of the states. It had so done in 1838, and the laws to that effect existed at the time the complainants made their deposits. It cannot be denied that the State was in the full possession of the right to appoint a directory to this bank; that it had so done-prior to 1861, and that it had a right to continue to discharge their duties as directors till their successors were elected and qualified. It cannot be contended that the Bank of Tennessee had not the power by the charter of’ 1838 to buy and sell state stocks, and this power was habitually exercised by the institution whenever the necessary advantage of the bank was believed to require such a course. It cannot be contended that any of these powers exercised by the State were not within the limits of the general powers which the State had reserved by the Constitution,, and that being within the power of the Legislature, by the State Constitution and the Constitution of the United States,, their acts and resolutions were valid. The cases which have been decided elsewhere in regard to other states are all cases where such states were organized under. constitutions-made up and organized under the Confederate States, and never had at any time any connection with the United-States in their original organization, or subsequently. The Secretary of State, in reply to commissioners appointed by the Confederate States to negotiate separation, declined to receive them on the ground that the ordinances of separation were void; that the law was intact, and the Constitution in force over all the states in all its provisions; that the Constitution had never been suspended in any of the states, but was in full operation and force in all, though its enforcement may have been obstructed by force. So, after the war terminated, the Supreme Court adjudicated that Georgia was a state in 1865, before the adoption of a Slate Constitution imposed by act of Congress, whilst the •State was under militar}' government, when it had no representation in Congress, and that the Legislature was bound by the Constitution of the United States, and could not pass any law impairing the obligation of contracts. So in the case of White v. Texas, it was declared that the State of Texas was a State whilst it was a military province, and had a right to sue in the courts of the United States. The states being, according to the established and accepted theory, always under the operation of the Constitution of the United States, their existence as states was a matter of constitutional necessity, and they possessed all the rights and dignities of states as secured to them by the Constitution, for without constitutional states there could be no such constitutional union as the United States. The states, therefore, notwithstanding the ordinance of separation and of independence, notwithstanding the confederacy of states for the purpose of establishing their independence by confederate action; the states stood during the war and after the war with all the rights which they had reserved by the Constitution of the United States, and amongst these rights were those, the validity of which are contested in this case. According to a just construction of the Constitution of the United States, all those acts of an organized state government which were not in derogation of any law of the United States were valid, and all those not in conformity with the Constitution of the United States were invalid. The Congress of the United States claimed the right to collect the revenues, carry the mails, and hold the courts of the United States, and execute the laws of the United States within the limits of the Confederate States. They did not claim the right to annul the Constitution of the United States, and the valid and constitutional existence of states, with all the rights of states in the hands of the states. They did not claim the right to conquer the states and hold them as subjugated provinces, under the control of the federal sword. The states were to be left after the war with all their constitutional vigor, with all the rights of the other states. It was not supposed that they were to be military dependencies of the United States. It is not necessary to enumerate the provisions of the Constitution which recognize the independent existence of the states, which declare their reserved rights, and which limits their rights and powers. The accepted theory, in the language of the Supreme Court by Chase, is, that there is an “indestructible union with indestructible states,” or an union which was made by states with constitutional existence and rights, which could not be subverted by the Government of the United States without treasonable revolutionary action; and certainly a revolutionary violation of the rights of the states, and a revolutionary subversion of the state governments, would be in principle no way different from any attempt to subvert the laws of the United States, for all violation of the reserved rights of the states is revolutionary in its character. Strike out the confederacy, declare all acts of separation null and void, and enforce the Constitution and laws of the United States; collect the revenues; carry the mails; establish courts for the enforcement of all laws in the withdrawing states,— the states are left as existing with all the rights and dignities of other states. There may have been forfeitures of personal and individual rights which might be enforced by the competent courts, but the forfeiture of rights as states under a constitutional government, rights maintained by the Constitution, is simply an absurdity. Why was not such a power to declare and enforee a forfeiture against a state placed in the Constitution of the United States? It is most probable all would have rejected such a proposition, as equivalent to a power to abolish state governments and states at pleasure. No such thing was provided or proposed. The states, therefore, stood as they stood before the war — as states having rights which could not be subverted, and which were not intended to be subverted, by Congress. The United States Government, acting upon the Constitution, had no power to prohibit the people of the State to make contracts through its corporate agent in regard to corporate property. That government had the right to remove obstructions to the laws of the United States constitutionally enacted, but no authority to obstruct, defeat or annul the entire mass of the contracts and obligations of the people as amongst themselves, or by the State with the people or portions of them. The Constitution of the United States forms the rule by which Congress and the Executive and the Judiciary would be controlled and restricted in its operative force in the removal of obstructions to the enforcement of the laws of the United States, as well as the preservation of reserved rights of the states. If this was placed on ground of a complete conquest — if the Congress of the United States had the right to effect a complete conquest of the states, and subvert all their constitutional rights, by setting aside the Constitution of the United States and of the states — it would be contrary to the usages of civilized states to subvert the laws of the State, invalidate the decrees of the courts and the dealings of the people. Catron, delivering the opinion of the court in United States v. Powers, 11 How., 577, says: “By the laws of nations in all cases of conquest amongst civilized nations having established laws of property, the rule is that laws, usages, and municipal regulations in force at the time •of the conquest, remain in force until changed by the new sovereign.” So Marshall, in the case of Perchman v. United States, 7 Pet., 86, says: “In cases of conquest it is not usual to do more than assume dominion.” When the government took possession of any “rebel district, it acquired no'new title, but merely vindicated that which previously existed” — that is, the Government of the United States acquired the right to carry the mails, collect the revenue, organize the courts of the United States, and ■enforce the laws. It acquired no power over the State of Tennessee except those conferred on the government by the Constitution. After the termination of the war the laws resumed their sway, and all the inhabitants of the country possess all their rights without amnesty or pardon, subject to prosecution ; so, after the termination of the war, the property of no person is liable to capture as enemy’s-property, by reason of hostility to the government. Brightly “War 29,” 2 Wall., 258. So the Supreme Court of Tennessee, in 1867, in the case of Fogg v. Rutledge, said that the United States acquired no rights by success. 3 Col.,. 554. Their power is not measured by force nor by the right of conquest, but by the Constitution of the United States. There can be no other governing rule but the Constitution of the United States, and whilst some courts have-sought to release themselves from all the limitations of the-Constitution, under the pretext that the laws of nations-were in force instead of the Constitution, they will fail before all impartial tribunals. The counsel for the defense have referred to the case of Hickman v. Jones, where the Supreme Court of the United States said that officers who-■arrested persons for treason, under the authority of the courts of the Confederate States, were not protected by Confederate statutes; and also to the case of the United States v. Keechler, 9 Wall., where a postmaster under the-authority of the United States was held not discharged by-payment under authority of Confederate statutes. These-cases, and others to the same effect, have no application either as to the facts or principles upon which they turned,, to this case. The court say, in the latter case, that “ whatever effect may be given to the statutes of the Confederate Government as a government or power of paramount force, or whatever effect may be given in proper cases to the legislation of the states whilst in a state of insurrection, ‘ are-questions which we propose to decide only when they arise/ the acts of the Confederate Congress can have no force as law for any act opposed to the just authority of the Government of the United States.” The Confederate Government had its origin in a combination formed by certain states against certain other states, and admitting the position at all times assumed by the Government of the United States and enforced by them, that the States had no right to withdraw, that secession was unconstitutional, that the Confederate Government had no lawful origin, but was an usurpation, and that its acts could only be enforced as the doings of an acting government, lawful for some purposes, and unlawful as to all its acts in derogation of the constitutional authority of the Government of the United States; yet the case is different with states under regular organization, since the foundation of the Constitution, with their successors regularly installed, and the validity of whose acts can only be invalidated by some defect in constitutional force.. We rest the validity of the acts of this directory, which is now controverted, on the ground that their appointment was a valid and legal appointment, and that their acts were all in conformity with pre-existing statutes, and not unconstitutional; that the legislative body which drew money from the bank was a constitutional body, and that its authority could not be vacated by any authority whatever under the limitations of the Constitution of the United •States; that no collateral evidence could be heard with regard to their titles to the positions which they held, and that their contracts could not be impaired without a violation of the Constitution of the United States. Congress, on the 15th day of J-uly, 1861, enacted a law authorizing the President of the United States to issue a proclamation declaring a state of non-intercourse between the United States and those states which had confederated to establish their independence. On the 15th day of August, 1861, the President, in conformity with the law, did declare non-intercourse. This was based on the right to suppress insurrection. It was derived from the power to make war against the states confederated according to international law. This state of insurrection might embrace the whole people, including the officers of the government, or might embrace only a portion thereof. It might embrace a part of the territory, or the whole, according to the actual facts of the case; or a total non-intercourse might be considered proper to suppress a local rising. The proclamation recited that an insurrection existed; that the insurgents claimed to act under the authority o'f the State Government; that the State Government had not disclaimed the fact asserted, and that the State Government had failed to-suppress the insurrection. IIpw can the proclamation of non-intercourse be construed to mean that-the Government of the State was an usurpation; that its acts and contracts were void; that corporate bodies were annulled or suspended, their officers deprived of office, and pre-existing statutes annulled or suspended ? It may be construed to mean that the government was unable, or so inefficient as to be unable, to put down the insurrection. It seems impossible to assume that the act of Congress was intended to invalidate all the actions of the existing State Government. That Congress did not intend to annul the existence of the State authority originating in lawful authority, as it did, is not only proved by the cautious wording of. the proclamation, but by the well-known fact that that body, at or about the very time of the issuance of the proclamation of non-intercourse, declared, with extraordinary unanimity, that it did not intend to go further than to support and enforce the laws of the United States in all the states, and that it did not intend to subjugate or conquer such states, or subvert the state governments and state laws and institutions, but to preserve unimpaired equality of the states and all their rights and dignities. They intended to take such measures as were necessary to enforce the collection of the revenues, transmit the mails, re-establish the courts, and enforce all the laws of the United States over the withdrawing states, leaving the states in the full possession of all their “reserved” rights, and maintaining, in the language of Chase, “indestructible states in an indestructible Union.” If the acts of secession were revolutionary and void, and the Constitution of the United States was in full force and operation in Tennessee in the year 1861, upholding and protecting the existence, rights and dignity of the State, and limiting the Government of the United States to its constitutional sphere of action; if the Constitution were the governing law in war as well as peace, as said by the court in ex parte Milligan, — then the declaration that the State Government was null and void, and' all its acts, within the unquestioned sphere of state action, void, would be as revolutionary as the action of the State. It seems impossible to assume for a moment that the acts and contracts involved in these transactions of the bank are not of that class which are designated by Judge McLean as within the undoubted and exclusive cognizance of and jurisdiction of the states, and over which the United States could have no supervision so long as we assume that there are any recognized and chartered limitations to the power of the central government. It is respectfully maintained that the Government of the United States could not annul the State Government in regard to these transactions without revolutionary excess in its action, and “shooting madly from its sphere.” The whole history of the times, the express refusal to charge the State authorities with treasonable confederacy, the objects of the act itself, the enforcement of non-intercourse, all go to show that the intention to annul the State action within its regular and constituted orbit was no part of the policy of Congress, and that the resulting invalidity of a vast, mass of contracts, in violation of the Constitution of the United States, and the arresting of the whole movement made in the interests of organized society, would have produced great mischief, confusion and wrong, without aiding in the object sought to be accomplished, to-wit: the simple enforcement of the laws of the United States. But it may be insisted that the State had inserted these provisions in its Constitution before it was admitted to representation in Congress; that the government was an usurpation, and that no debts contracted by the bank after the 6th day of May, 1861, should.be recognized or paid by the State. The Constitution of 1870 abolished the Schedule of 1865, but it provided for the abolition of slavery, as the Constitution of the United States already in force had done. The Constitution of th® United States had already, by amendment, declared that debts contracted by the State should not be recognized or paid by the State. The abolition of the Schedule of 1865, declaring the State Government of -1861 an usurpation and all its acts void, and all ■debts contracted in the name of the State and notes issued by the bank void, left the provisions of the Constitution of the United States in force, and at the same time it declared that the governmet of 1861 was not an usurpation and void. This was the intention of the Constitution of 1870. There was no compact with the United States that the State of 'Tennessee should not modify its own statutes in any particular not conflicting with the Constitution of the United 'States. The laws and constitutional provisions of the State, which the act of Congress admitting the State to representation enumerated as indicating “ loyalty,” or what should be expressed in the language of the friends of constitutional government as evidence of an intention to support the Constitution of the United States, made no compact. The change thereof indicated no determination to defeat the ■operation of the Constitution of the United States, and ■that it was not so regarded is proved by the fact that no •action was taken or proposed to be taken to replace the State under military authority and to supersede the Constitution of the State in any particular. Thus abrogated, the fact of war existing did not authorize the United States to suspend or abrogate the laws and ■constitutional contracts of the State, much less to abrogate ■contracts made between banking corporations and individuals, which the United States had no policy to counteract ■or defeat. In 1869 (Thompson and Steger, vol. 1, p. 1829) the Legislature directed the dismissal of all suits againát the debtors of the institution when the payments were made and the moneys collected by the former officers of the bank, or by the persons lawfully acting as such officers, and having the control of the assets of the bank in the Confederate States, and in Confederate notes, and that such payments, when pleaded, should be valid, and that all suits should be dismissed when brought in the name of the State of Tennessee as sole stockholder in the bank against any president, directors, or cashier of the bank for auy loss sustained by the State, by reason of their participation in the late civil war, receiving Confederate treasury notes, and approval of the removal of the assets of the bank. There has been a full ratification of the acts of the bank as to the collection of its obligations during the term which elapsed between the years 1861 and 1865, and their ratification of payments to these'bank officers acting from 1861 to 1865 by refusing to attempt to enforce the payment against them, on the ground that the payments made to them were illegally made. So they have ratified their course and their title to their offices, by refusing to sustain suits against the officers •of the bank for any losses to the State by reason of their participation in the civil war, in the removal of the assets, or in receiving those notes. When this mass of legislation is considered in connection with the abrogation of the Schedule of 1865 by that of 1870, can we come to any ■other conclusion than that their acts leave the court no other guide than the Constitutions of the United States and •of the State of Tennessee as the test of the validity of its ■instruction to the bank assignee, Watson. The act of January, 1865, amounted to a direction of submission of the question to the courts, nothing more. As a law it was a nullity, as it violated the obligation of contracts. If the act of February, 1866, is a law, the Legislature of 1866 had the power to defeat all the legislation which occurred during.the year 1861, and what is more startling, all the transactions and contracts which arose from that Legislature. The Legislatures which shall assemble hereafter may do the same. How are any of the acts of that body,, or of the directory which came into office under it, or of the acts of officers under them (which the - Supreme Court have-by their decisions validated), how are they to stand against this sweeping power of the Legislature ? The property here proposed to be confiscated was money entrusted to the faith of the State. It is well known that since the organization of this bank in 1838, the practical and legal construction placed upon the covenants in the bank charter was, that money so deposited in the bank was deposited upon the faith of the State, and that the property-of the State was pledged as by a mortgage for the repayment of the money. Money-so deposited is not subject to confiscation. Wheaton, 367, so lays down the law explicitly as standing upon general principles of public law. So-Chancellor Kent quotes the declaration of Mattel and others stating that the argument of the British Commissioners (Mansfield and others), in the case of the Prussian loan, showing that money deposited in trust was not subject to confiscation, was unanswerable. Vol. 1, 65. These authorities show that the practice in England and France and elsewhere, in case of war, was to exempt property so situated. The case of Brown against the United States, which is cited by adverse counsel, was a proceeding in Admiralty for the confiscation of British property, (a cargo of lumber) seized on American shores during the war of 1812. The cargo was not confiscated in that case, though captured in the midst of a war then pending between the United-States and Great Britain. The property was discharged because there was no act of Congress in existence at the time of the capture to authorize proceedings for confiscation. It was declared by Marshall, delivering the opinion of the court, that the declaration of war by Congress did not authorize confiscation. It was declared that there must be an express statute investing the courts with the power to proceed to investigate facts according to the established mode of proceeding. Kent, commenting on this case, says that there was at least one point gained, one advance made, and that was, that private property could not be confiscated without express action by Congress authorizing it; that the right was against universal practice, a naked and impolitic right which ought not to be éxercised. In July, 1862, Congress enacted a law which established a mode of proceeding for the punishment of treason, and the confiscation of estates, as enemies’ property, of a class of persons mostly officers engaged in the Confederate service. There was a cautious discrimination in the persons selected as the intended victims of this proceeding. As this act was for the punishment of treason, it was declared by the Supreme Court'of the State of Kentucky to be unconstitutional and void, on the ground that the property could not be confiscated, except upon the conviction of the persons of treason by indictment, according to the Constitution of the United States. This act, however, was sustained by a decision of the Supreme Court of the United States, there being a dissenting minority. Miller v. United States, 11 Wall. The chief magistrate of the United States remitted the bill to Congress after its passage, on the ground that it did not provide for the confiscation of life estates only in certain cases, and on the ground that it did not operate exclusively on acts committed after the passage of the act. These amendments were incorporated in the act and it was then signed. The argument for the State amounts to this. The State incorporate a bank and appoints a directory. The State invites the citizens to deposit their money in it, with a pledge of the public faith to restore it. The State now seeks to-confiscate the rights of these depositors, because, as the State alleges, its own directors were traitors, and appropriated the money of these depositors to unlawful purposes. • The bonds on which the money was drawn were placed in the hands of the bank, and are now amongst the effects of the bank, if they are valid the lien of the creditors of the bank instantly attached upon the delivery of the same to the officers of the bank as part of the effects of the bank held apd pledged for the satisfaction of the claims of creditors. Waiving all question as to the validity of the bonds, and assuming that they were invalid, the transaction was, in form and on its face, that of a sole stockholder of a bank depositing his invalid security in the hands of his corporate agent, and receiving from that agent an equivalent amount of corporate effects, upon which effects the creditors had a valid lien for the satisfaction of their debts. Although the State, as a stockholder in an incorporated institution, made a contract according to the forms of law with its agent, yet this contract, quasi contract, was a contract in the making of which these complainants had no agency, direct or indirect, and to which it is not possible to assume that they assented. It was the deposit of an invalid security by the stockholder, without any participation by the complainants in the motives or action of either the state authorities or directory, or any knowledge on their part of the intended appropriation of the money withdrawn, much less any participation in any alleged and unconstitutional enterprises which were to be upheld by its use. The corporate body Reid the money, which was paid over to the military board, in trust for the benefit of the creditors of the bank. The directory received for their money an invalid security. The parties who deposited these sums in the bank were no parties to this contract. They had no authority or opportunity to accept or reject this negotiation, to accept or reject these bonds, or to object to the appropriation of the funds of the bank which were taken from the bank. If they had any such opportunity it would have been totally unavailable to them. These complainants have a right to the money which was taken under the form of a legal transaction. It was the State, the people who inhabit its territory, who own the estate; it- was the organized body politic, acting by and through lawful and constitutionally elected officers, who took this money and deposited their bonds as a security for its repayment. It was the people, the organized body politic, who owe this money to the bank and to the creditors of the bank. It was the same organized body politic that covenanted that the capital stock of this bank should be five million dollars, that its debts to the extent of five millions of dollars should be paid, and that the directory should be faithful to their trust, and to those who dealt with them. These creditors look to this organized body politic to comply with their stipulations made in the charter of 1838. If this was the case of a private stockholder taking their trust funds and depositing in lieu thereof a worthless security, would any one controvert the liability of such a stockholder for the sum withdrawn on bill filed by the stockholder against the creditors and corporation ? The State of Tennessee comes into court asking the court to adjust the transactions of the bank’ with the creditors of the bank, and the accounting creditors ask a fulfillment of the guarantees of the State, that the bank should repay them the money deposited. It is no answer to the demands ■of these complainants that the moneys were obtained from the bank and appropriated to the support of insurrection. The State of Tennessee was the sole proprietor of the Bank of Tennessee, and is designated in the statutes of the State as the sole stockholder in this bank. See Rev. Stat., 1869, ch. 48, p. 1829. The property invested for banking purposes is called capital stock. So the Supreme Court of the United States have designated the State as the sole stockholder, where the bank was incorporated, and the whole belonged to the State. Commonwealth of Kentucky v. Briscoe, Currin v. Arkansas, 15 Howard. The case of the United States Bank v. The Planters Bank of Georgia, was tried before the Supreme Court of the United States in 1824. The Planters Bank pleaded that the State of Georgia was a stockholder, and was thereby a party and could not be sued. The court says: Many states take stock in banks. "Whén a state takes stock in a trading corporation, it lays down its sovereignty, so far as the transactions of that company are concerned, and accepts the terms of the charter, and can exercise no power, and is entitled to no privilege which an individual corporator .is not entitled to. 9 Wheat., 909. It imparts to the corporation none of its attributes as a sovereignty. So the court says, in Briscoe v. Commonwealth Bank of Kentucky, whether the State owns the whole or part of the stock in a banking company, it has no more power under the charter than an individual stockholder has. So in the case of Darrington v. The Bank of Alabama, the State supplied the capital stock, appointed the directory, appropriated the profits, made its notes receivable in payment of public dues, and guaranteed the payment of the debts of the bank. The court says, the State holds its property in the bank as an individual would hold his. The specie in the vaults of the bank, the notes taken on discount, and all its property are subject to judicial process, and on such proceeding the State in its sovereign capacity could no more interfere than an individual stockholder. Its power would be no greater than the power of an individual under similar circumstances. 13 Howard, 12, 1851. The State stands as an individual in regard to all the transactions of the company, and in all legal proceedings instituted by the State, or by the creditors of the bank. It is the providing of this fund, and the entire surrender of the sovereignty of the State in all the transactions of the company, which relieves the notes from ■the character of bills of credit, and that character is not at all affected by the fact that the State is- absolutely and primarily liable as a stockholder. These principles are inforced in the great case of Currin v. The State of Arkansas, when a direct liability was enforced against the State, and it was held liable for its seizure of the effects of the bank in which it was the sole stockholder. So the Supreme Court of Tennessee, in Dibrell v. The Bank of Tennessee, holds, that when the State enters into an incorporated company as a trader, banker, or public -carrier, the State stands as other traders, bankers and carriers, and has the same right, and none others, and are •subject to the same liabilities. So, when it enters a company, and appoints its directory, it appoints that directory as a stockholder, or a trader, banker or carrier appoints his directory, and the same relations exist between the State as a stockholder in such company as exists between the individual stockholder and trader, banker and carrier, and the directory they may appoint. The State, as a sovereign state, is not responsible for the paid frauds and wrongs and neglects of its public officers. This is a sovereign prerogative of the State intended to protect the body politic. But when the State enters the precincts of a corporation, it does not impart to or carry into the corporation this prerogative. Its directory stands as the directory of private corporations. The State does not give sovereignty to the corporation. It ■does not exempt itself from liabilities for the frauds, wrongs and neglects of its directory, for in this transaction it is not the State as a state, but it is the State as a stockholder, -under the laws of a private chartered company, with the same rights of exemption that stockholders in other companies have, and none others. The reason of this distinction between the State as a state and the State as a stockholder is manifest. It is the interest of the State, when it enters the arena of trade, that it should hold out to its customers the same advantages that other companies hold out. The State limits its liability to the stock subscribed. It is bound on the plainest principle of protection to place itself upon the same advantageous platform with individuals, and hold itself, as stockholder, liable for the wrongs and neglects of its directory to the same extent that individual stockholders are liable in other incorporated companies. This is indeed the very object of putting the State’s interests in the hands of a directory. Why did not the State act by its constitutional officers, if it did not intend to place this fund and its subscribed and guaranteed liabilities, and itself as stockholder, out of the pale of sovereignty, and upon the same advantageous platform that other stockholders stood ? No person would cheerfully deal with an institution which was not, in regard to its dealings, subject to the laws of the land, and which did not give to the dealer or customer the same rights against the State, as a stockholder, that he had against the stockholder in other institutions; who would deal with an institution which declared that the stockholder would not be liable for the conduct of those whom it holds out to the world as its directory, when other well managed and powerful institutions guaranteed the integrity and fidelity of their directors ? It was essential to the success of the bank that the State should not go into it as a sovereign, but that it should go into it as a stockholder, subject to the general laws of the land which govern individuals. When the State of Tennessee declared in the charter that the State should pay in five millions of dollars capital stock, prescribed the mode of raising it, and that bonds of the State for two and a half millions should be executed and placed in the hands of the directory, in execution of the laws of the' charter, will it be contended that the State stands in regard to the capital stock, their bonds deposited, as a sovereign state or as stockholder ? When it is asserted that such attributes of sovereignty are imported into the enclosure of this charter, and the State stands there as a sovereign power, you establish a distinction eminently injurious to the institution, and calculated to weaken its sphere of success in competition with other powerful and well managed banking institutions. It is well known that the State Bank was able, and barely able, to sustain itself in the market in competition with the Union and Planters and other banks in the State. The East India Company having power to govern that country, and to make peace or war, was held not to act in its sovereign character in making a lease to an individual for the exclusive vending of certain articles within the territories of the company. The company have sovereign powers, said the Lord Chancellor, but in the execution of this lease they have acted as a private company. They have, as a private company, executed a private contract. Cooley, citing 1 Brown’s Ch. Rep. So, half a century later, in the case of the Duke of Brunswick v. The King of Hanover, where a bill was filed in the English Chancery Court to call the King to an account of his guardianship in regard' to certain transactions in Germany, the court took the distinction between acts done as a King in Germany and acts done as a subject in England. In. the one case the court would not take jurisdiction over the King, in the other they would. In the latter capacity he was declared liable to suit by English bill. 2 Phillimore, 414. So, where powers of government were delegated to the city of New York, and the' corporate authorities act exclusively with reference to the matter for the benefit of the city, and not the general public, as in the case of the Croton water works, the city authorities were held to stand in relation to them on the same footing as the.private owners of houses and lands, and responsible accordingly for injuries to individuals. 3 Hill, 531; 2 Denio. The authorities did not import their sovereignty into this transaction, and their officers were held liable as private individuals, as well as corporate officers. The corporation quo ad hoc is a private person. 9 Wheat., 907. In 1851 the Supreme Court of the United States said, in-regard to a prosecution instituted by the State of Pennsylvania to abate the Wheeling bridge as a nuisance, that when a state became a member of a trading or other corporation, its sovereignty was not involved in the business, but it stands and is treated as other stockholders are treated. So, in the present case, the rights asserted and the relief' prayed are in no respect different from those accorded to an individual. So Daniel, Judge, said: “Here we have the State occupying the position of every private suitor,, asking the action of the court over the subject of nuisances.” 13 How., 664. Where a state comes into court asking a decree against one of its citizens, it has the privileges and rights of a private citizen, and as a general rule none others. When it comes into court its sovereignty is not involved in the business whether it be as plaintiff or defendant. It is bound by the same legal restrictions and liability, and has the same rights and none others. If it had been believed that the school fund was not liable legally as capital stock in the bank, but was a mere deposit having a preferred claim on the bank for payment; that the State-as a stockholder was not liable as other stockholders; that the State came into this corporation not as an individual, but as a sovereign, controlled by no law but its own will, could any one predicate a successful career for such a baseless, hollow and sham contrivance? If it had been supposed that the State could at its pleasure withdraw the two and a half millions it had directed to be placed in the bank as capital stock, and would not be bound to supply its place to the creditors; if it were supposed that the State or its trustee could withdraw what it had invested as state and as capita] stock, — would not the whole scheme have fallen dead-born as proposing a grand swindle? The State contemplated in 1838 no such swindle. The State intended to come into this charter as a stockholder and not as a sovereign state. It intended to pledge all funds, whether trust funds or other funds, to the creditors as other capital stock of 'banks was pledged. The charter was created for the express purpose of placing the capital stock and the State as sovereign and trustee on the same footing as in other chartered institutions. The State of Tennessee subscribed $5,000,000 in this incorporated company just as completely as if it had issued its bonds for that entire amount. A court of equity will consider that as done which the persons have agreed to do. The State of Tennessee declared that the whole of the school fund, stocks, bonds and money, should be a part of the capital stock. The State got into the corporation as a stockholder in order to avoid the provision in regard to the issuance of bills of credit. Having securely seated herself as a stockholder of the corporation, and being besieged, comes into court as a stockholder, sues the creditors as a stockholder, claims rights as a stockholder, and the residue as a stockholder, yet, with the face of a fraudulent monarch of the middle ages, she seeks to shield herself from responsibility for unpaid subscriptions and moneys withdrawn, on the plea of sovereignty. Sovereignty attaches when it appears as a state; it does not attach when the State appears as a stockholder. The State placed itself in the character of a banker and stockholder in this charter. The State stood as a stockholder when these debts were contracted, and this liability it cannot now arbitrarily change by subversion of the rights of its creditors. The State of Tennessee, as a stockholder, declared that the bank should no longer do business, that its effects should be assigned to a trustee for liquidation, that the sum of one million five hundred thousand dollars should, as a preferred claim, be paid over to the Treasurer of the State, the debts and demands against the bank made, and credited prior to the 6th day of May, 1861, should be paid pro rata, all after that should not be paid; that the Attorney General of the State, if it become necessary in the judgment of the Governor, should file a bill in the Chancery Court to execute the deed of trust, and without security to enjoin all creditors from suing said bank, and making all creditors, so far as known, parties, and so far as unknown, parties by publication, to the end that all interested therein may come in under one decree, and that equal justice be done to all. Rev. Stat. 1829, sec. 7. When we look to the whole of the acts of the Assembly on the subject connected with the provisions of the deed of trust made at the time, under the supervision of the high officials of the State directly connected with the disposition of this fund, it would seem that there could not be a reasonable doubt but that the general legal intent, fairly deducible from these proceedings, was to subject the whole subject to a judicial determination, and to submit the matter of the rights of the creditors, and those claiming to be creditors, as well as the rights of the State, to be governed by those principles of justice which control in the adjustment of the litigated transactions of individuals. The great body of intelligent members of the Legislature of 1866 must, as a matter of perfect certainty, have known that a legislative declaration that certain debts were to be paid and others excluded from payment out of the effects of the bank, would be brought to the test of judicial scrutiny, and that these declarations as to the validity of these debts gave the Governor and Attorney General specific instructions what position they should assume before the judiciary, but that such legislative disposition of the rights of the citizens could not bind the judiciary, further than the laws would sustain them in their position. As a matter of fact and of individual intention, members no doubt existed who wished to annul the claims of depositors and other creditors of the bank, but the great body of well-meaning men who assisted in the enactment of this law knew that the questions were judicial questions, which of necessity, without gross tyranny, were to be decided in the last resort by the great department so well qualified to determine the judicial rights of men in controversy with each other or with the government, and that the whole matter was intended to be a submission to the judiciary of the rights of all, with an assertion of specific right on behalf of the State. The great body of enlightened men in the Legislature must have known that the Supreme Court would decide whether the State of Tennessee had a right to invest the school fund in the State Bank in 1838, and whether a legislature sitting in 1865-66 could set aside the action of all preceding legislatures, and declare the school fund no part of the stock of' the bank, and an illegal if not a fraudulent investment, and reclaim it against the creditors. They well knew that they had no right to settle and finally determine that certain claims should be excluded and others allowed, without giving those creditors a judicial hearing. They knew it was-impossible to determine the amount of the residue without-a judicial hearing of various issues of fact and of law involving the whole circle of state liabilities as stockholder-from the commencement to the termination of the bank. They knew that they could not declare the bank insolvent, seize the. remnant of its effects as the property of the State as stockholder or trustee, and smother the whole affair in fraud and violence, and thus close all judicial rights. Although the filing of the bill is submitted to the judgment of the Executive, it is impossible to assume, in the very nature of things, that the mere assertion of a stockholder in a bank could or would determine and conclude the rights-of all the creditors interested in the bank. Can this court assume that the numbers of able and experienced lawyers in that body would not know that the creditors of this bank, which was subject to suit and had capacity to sue, would, not have instituted a proceeding against the bank,, have had a receiver appointed and secured all its effects to-be administered in chancery, notwithstanding any highhanded and arbitrary measures that might have been attempted by the Legislature? As a practical fact, it is well-known that all the claims of creditors now asserted were then upheld as matters which must ultimately be brought to judicial test, and that a large body of creditors would not surrender upon the brutum fulmen of a legislature without a judicial investigation. The bill so states. It cannot, therefore, strike any one with surprise that the Legislature •of 1866 should direct a general creditors’ bill for an account to be filed at Nashville,'in whieh suit all the creditors are required to be brought in, that justice might be done to all. It cannot excite surprise that, as stockholder in this bank, it should assert its rights, or supposed rights, in its own name, and direct what course the- Governor and Attorney ■General should assert on behalf of the State. Although it may be supposed that many members of the Legislature of 1865 may have believed that they had the right to think and declare that citizens of the State who had deposited their money to the extent of nearly a million of dollars in the Bank of Tennessee, had no claim upon the State or upon the bank for their money so deposited, and many others may have believed that this legislative declaration would put an end to the claims forever, and ■close up all judicial controversy on the subject, and that a bill was not necessary, yet the general legal intent stands. The existence of the outstanding claims, the statement of the assertion of these claims, the acknowledgment of bona fide unadjudged legal controversies.by the bill, of the necessity of settlement of them by the judiciary, attest the legal intent of that Legislature to submit to the jurisdiction of the court the rights of all parties, the State included. Can this court, then, assume that when the State directed a creditor’s bill to be filed and the Governor and Attorney General to assert claims as creditor and for the residue as the stockholder, that these creditors would not have the right, according to the established course of chancery, to file a cross-bill to hold the State liable for unpaid subscriptions, and for money withdrawn at different times ? A mandatory statute addressed to the Governor of the State to institute a suit, when the State was a stockholder and creditor, is by necessary construction of law a mandate to bring the suit in the name of the State, and so the Governor and Attorney General instituted it. The State had a large stake in this banking corporation, and it was intended by this mandate or order to protect its interest against mismanagement, waste or loss, and to give the creditors all the benefits this law allowed them to assert their claims against the State, and as a contesting claimant should be a party of record. The facts, then, seem to be, that in 1865-66 the Legislature of the State directed the Governor of the State to file a creditor’s bill in the name of the State against the Bank of Tennessee and its creditors, in order that justice might be done to all; that the Governor did file,the bill in the name of the State, thus judicially construing the mandatory statute to him; that this suit in the name of the State has been so prosecuted for a series of years, and several successive governors have had charge of the suit, and cross bills have been filed, with a view more effectually to present to the court the matter of fact involved, and to hold the State responsible for unpaid subscription and for moneys withdrawn from the bank, and no Legislature has as yet taken any backward step. The proposition is made, after a lapse of six years or more, that the name of the State as a party of record shall be withdrawn. It is now contended on behalf of those depositors who have placed in the hands of these bank directors their money, amounting to nearly a million of dollars, that the Legislature directed the Governor to file this bill in the name of Tennessee, and the Governor having acted upon it, for the benefit of the creditors, and all the creditors being now fully and fairly before the court, according to the mandatory provision of this statute, the present Governor and Attorney General have no authority vested in them by law to revoke and annul the action of their predecessors, and annul the action of the Legislature, and undo what has been done, and take the State as a party of record out of the hands of the court, where the Legislature and his predecessor had placed it. All the power of the Governor over the subject has been exhausted, and was exhausted by the filing of this bill. The action of the Legislature of 1865-66 did not vest the various successive governors with plenary power to act .over the whole subject, and to legislate on the subject in withdrawing or prosecuting the suit as in their discretion might seem fit. It recognized the rights of all creditors who are now present. The Governor has no undefined prerogatives, no inherent power. He is the creature of law, which defines the exact extent of his duties. Chisholm v. The State of Georgia, 1 Curtis. The duty of the Governor is defined in this transaction. He was instructed to file this bill if necessary to do justice to all the creditors of the bank, and the Governor does file it in the name of the State. Where does the Governor get the power to withdraw this prosecution ? He is directed to prosecute, the suit — not to withdraw it. He is directed to prosecute the suit and to do justice to all the creditors — not to prevent the creditors from getting justice by withdrawing the name of the State. When the Governor, for the time being, placed this matter in the hands of the court, be lost all power over the subject-matter, except to see that the suit was prosecuted according to the laws of the land. His power is exhausted. The Legislatures which have been in existence since 1865-66, all, as a matter of law, knew of the institution of' this suit in the name of the State. The acts of .the Chancery Court, and the numerous reports of the trustees to the State, all informed the Legislature from time to time of the prosecution of the suit in the name of the State. They have not assumed to put the State in the dishonorable attitude of getting clear of responsibility, and defeating public justice by directing the dismission of the State as a party. The statute, and the construction thereof by the Supreme Court, gave defendants having counter claims against the plaintiff the right to take judgment over for the balance due, as the law had existed in chancery in bills for an account. The court granted an injunction against the further prosecution of cross actions against the effects of the bank. The Supreme Court of Illinois say, in the case of Brown v. Case & Hurd, that it is rare that the plaintiff will set forth in his bill the matter proper for a cross-bill. It must therefore come from the defendant. In that case the cross-bill prayed for the enforcement of a right to redeem as against a purchaser at a trust sale, and a conveyance from the purchaser pendants lite of the title to the defendant. All these matters show the necessity of the cross-bill in in this case. To recapitulate, it was necessary, because there were other classes of creditors whom the State did not or would not make parties, though they are absolutely necessary to be made parties before the suit could be brought to a close; because the prosecuting creditor was so dilatory in the prosecution of the suit, that the whole fund was likely to be consumed in its administration, and leave nothing for distribution, the State having already paid out about $700,000 more of the effects of the bank in discharge of interest on its public debt; because, in consequence of the deficiency in the allegations of the original bill, the whole of the transactions of the bank with the State necessary to be decided could not properly be decided without a cross-bill of a more complete character than the first. The English 'authorities heretofore cited to sustain this construction, are sustained by high American authority. The case of Rhode Island against Massachusetts was a bill filed by the former state against the latter in the Supreme Court of the United States, that court having jurisdiction where states are parties. The State of Rhode Island was seeking to recover territory in the possession of Massachusetts. It became necessary, in the judgment of the court, in that case to establish and declare the law of England and of the United States, when the rights of sovereign states are concerned, and to define the jurisdiction and authority of the court in such cases as established by precedent. The court say : “A foreign sovereign may sue in the courts of law or equity in England. The sovereign must sue by an agent whom he authorizes to represent him, on whom a cross-bill can be served, with such process as can compel him to do justice to the defendant. This was decided in the case of the Columbian Government v. Rothschild, 1 Sim., 104. These cases were recognized by the House of Lords. In the case of the King of Spain v. Michado & Hillet, it was decided that a sovereign had a right to sue as any other suitor; but when he did sue, it was as any other suitor who submitted to the jurisdiction of the court. When he seeks to subject the defendant, and the defendant appears and pleads, the whole subject-matter of the pleadings must be decided by the judicial power as a judicial question. Such has been and is the settled career of equity in England.” It has not been the law in any state or in Europe to issue final process of execution against a state. Coke gives the quaint reason, that it cannot command itself. The complainants in this cross-bill rest their case on the ground that the State has, by its process, brought in all the creditors to account; that it acted as stockholder in the bank, and appeared as a stockholder, insisting on the application of the general laws of the State to the subject-matter of 'controversy; that the declared purpose of the State was to do complete justice to all, and that it was within the fair scope of the pleadings allowable under the bill, filed to allege and prove the indebtedness of the State to those creditors. In the case of Dean v. Attorney General, where this officer had filed a bill against the agent of the war office, and there was a demurrer to the pleadings of the defendant, Chief Baron Abinger said “it had been the practice, which he hoped would never be departed from, for the officers of the Crown to throw no obstacle in the way of any proceeding before a court of justice where matter arose that required judicial construction.” 1 Young and Coll., 207; 1 Daniel, 166. So in Crawford v. Attorney General, the Lords of the Treasury having demanded that a case be brought before the court, the court said it would be unbecoming the Attorney General to urge any matter of form to prevent it from being properly before the court. Price Ex. 7, p. 1, Daniel 1721. The injustice to individuals, and the frauds which arose by the absence of any remedy by suit against the United States, led to the establishment in 1863 of a special court for the adjudication of all demands against the government, founded on an act of Congress, a regulation of a department, a contract with the government, a court where these demands are adjudicated, and if indebtedness be declared, its suitor entitled to the money, to be paid by appropriation made before or after the decree. So in Great Britain, the person complaining of a grievance, petitions the Chancery Court, stating the facts of the case. This is endorsed by the proper officer, “let right be done,” and the cause is referred to the proper court having jurisdiction over the matter. This is a mandate from' the Crown to proceed in the case according to the laws of the land, appropriate to the case, and authorizing a recovery against the Crown. This right of petition, or to sue the government, is one of the most ancient and valued rights of a British subject. The consent to sue the United States by a claimant or creditor, is given by general law. In Great Britain it is given as it is demanded. "When these depositors placed their money-in this bank, in which the State was sole stockholder, the State was liable to be sued b.y them. ARGUMENT OP NATHANIEL BAXTER, POR DEPOSITORS. On the 16th day of February, 1866, the Legislature directed the Bank of Tennessee to make an assignment of all its assets in trust, to secure — 1st, what it callled the “school fund,” and fixed the amount of that fund at $1,500,000, and interest thereon from and after the 6th of May, 1861. 2d, to pay all the other debts and liabilities of the bank, if the assets should be sufficient; if not, then pro rata; but to exclude all claims and demands of all kinds of date after the 6th of May, 1861, as absolutely null and void. In pursuance of this direction, the bank, on the 6th of April, 1866, made an assignment of all its assets, of every description, to Samuel Watson, in trust for the uses designated by said act of February 16,T866. On the 16th of May, 1866, Mr. Watson and the State of Tennessee, as co-complainants, filed their bill in the Chancery Court at Nashville against the bank and its creditors, asking to be allowed “to close up said trust with the aid, and under the supervision of said court,” and “to enjoin all persons or corporations from suing out any writ against said bank or its trustee, or commencing any legal proceedings whatever against either, in any court of law or .equity.” My client, Mark R. Cockrell, being a creditor of said bank, as a general depositor, procured himself to be made a defendant to said bill, and answered the same, setting forth that he was a creditor, and stating the nature and amount of his debt. As alleged in his cross-bill, upon the faith of the pledges and guarantys of the State, as expressed in the charter of said bank, my client at an early day became a regular depositor in said bank, and on the 1st of February, 1862, had to his credit in said bank, $15,655.41, all of which remains due and unpaid to this day, and by the acts of the Legislature above referred to, such disposition has been made, or attempted to be made, of. the assets of said bank, as to remove them entirely beyond the reach of his debt. Not only so, but it has assumed to repudiate so much of his debt as was deposited subsequent to the 6th day of May, 1861. I furthermore assume that the State, when it created the bank, became a guarantor of all contracts to be made by it within the scope of its chartered authority to the extent of $5,000,000, and that in and by the charter of said bank, it mortgaged the school fund, the surplus revenue, and the proceeds of the Ocoee land sales, together with such other sum as, added to these funds, would make the total of $5,-000,000 (which additional sum it pledged its solemn faith to raise) to secure the creditors of the bank; and consequently, instead of the school fund being a liability of the bank to State, for which the assets of the bank can be taken from its creditors to secure, as a preferred claim, it was a pledge made by the State to the creditors to secure their debts, and upon the faith of its being thus applied, they advanced their money, and that the execution of this deed of trust was a gross and palpable breach of the contract between the State, the bank, and the bank’s creditors, as expressed in the charter of the bank itself. It was chartered on the 26th of April, 1858. The professed object of the State was to establish a state bank, to raise a fund for internal improvement, and to aid in the establishment of a system of education. It was established in the name, and for the benefit of the State, to be known by the name and style of “ The Bank of Tennessee,” and by the terms of its charter the Legislature pledged the faith of the State for the support of said bank, and to supply any deficiency of funds therein specifically pledged, and to give indemnity for all losses arising from said deficiency. Now, what are we to infer from these provisions? What was the plain and unmistakable idea which the Legislature intended to impress upon the public mind ? My client tells, you in his cross-bill how he understood it, and how he construed the proposition submitted to the public by the provisions of the charter, and his interpretation strikes me as being so palpably correct, it is difficult to comprehend how any sane man could construe it differently. He says he understood the object of the Legislature in creating the bank, was to increase the revenue of the State without increasing the direct taxes, and that by indirect means, which should be sensibly felt by the people. That the State had on hand at that time the school fund, the proceeds of the Ocoee land sales, and was expecting to receive her distributive share of the surplus revenue; and it was believed that by establishing a bank based upon these funds, and an additional fund to be borrowed by, the State, amounting in all to $5,000,000, that, besides furnishing to commerce a sound circulating medium, commanding the highest confidence of the people, and without sensibly increasing the burthen of taxation, it was possible to increase the revenue of the State by two or three hundred thousand dollars per annum, which increase could be spared for the purpose of education and internal improvement. But to realize the highest results, and experience in the smallest degree the inconvenience resulting from the competition of other banks then in existence, and which, by their integrity and prudent managemént, had already forestalled the public favor and confidence, it was thought necessary to furnish such security, and give such pledges of the public faith, as would remove from the minds of the people every vestige of distrust. This is the history and character of the institution my client understood himself to be dealing with; this was the character of security he thought he was getting when he deposited his money. Through the medium of this agent, and upon the faith of this fund, the State obtained my client’s money. The State is the real debtor, and conveyed the fund in trust to secure the debts. The capital and assets of the bank is the trust fund; the bank, the trustee, and my client and other creditors, the beneficiaries.- To relieve the subject of that sort of mystification, suppose we state it algebraically. Reduced to its purest simplicity, the transaction stands thus: The State wants its agent, the Bank of Tennessee, to borrow Cockrell’s money' for the benefit of the State. Cockrell will not lend his money to an empty corporation without capital upon its own credit. Then, to enable the bank to borrow the money, the State becomes guarantee for the bank, and “pledged the faith and credit of the State for the support of said bank, and to supply any deficiency of funds therein specifically pledged, and to give indemnity for all losses arising from said deficiency.” But Cockrell says to the State, you are a sovereign power, and I have-no legal remedy by which I could enforce your obligation. I must have tangible security, something upon which an execution or an attachment can be levied, and it placed' within the reach of the courts. Then, says the State, I will place the school fund, the surplus revenue, and the proceeds of the Ocoee land sales, in the possession of the bank, in trust for your benefit, to be held as additional and collateral security, where it will be in reach of the courts, both of law and equity. Says Cockrell, upon doing these things you can have my money. The transaction is closed upon these terms, and the State, through its agent the bank, gets-Cockrell’s money. After getting his money, the State then discovers that the bank (its own agent and trustee) has converted a portion of the school fund improperly, and it is lost. The State now rises into a towering passion — that is, its Governor and Legislature — and requires the bank to execute an assignment upon the residife of the fund, and all its other assets, to indemnify the State for losses occasioned by the bad faith or mismanagement of its own trustee and agent, and in this assignment to give the State priority over Cockrell, as to the very fund upon the faith of which Cock-rell loaned his money. The bare statement of the case presents the absurdity of the proposition in such bold relief that an argument to make it more palpable would be as absurd as the proposition itself. It would be as absurd as an •attempt to demonstrate an axiom. A sovereign state, seen in its robes of imperial purple, impresses the imagination with an awe second only to that which is inspired by the contemplation of Jehovah himself. But when it casts off the mantle of sovereignty and empire, and descends from ils high estate, and engages with little ■dirty men in the dirty scramble for the dirty dollar, it must play fair at least, and conform to the rules of the game. It must adhere to its contracts in good faith, and consent to be bound by them in the courts of law, just as Cockrell is bound by his contracts with the State; and I insist the State had no more right to seize the coin and other assets found in the bank, and appropriate them to its own use, than I or any other debtor, who had borrowed money upon the faith of property which we had conveyed in trust to secure the loan, would have to take the property from the trustee, and appropriate it to our own use, while the debt remained •unpaid. , The State parted with its control of said funds in granting the charter of the bank. The creditors who traded with the bank upon the faith of the charter, acquired vested rights which no power in the State could divest without first paying the debts; and though the creditors of the bank may be without remedy to compel the State to redeem its solemn pledge, and supply the deficiency of the lost capital, yet they have the right and the remedy to hold on to the ■remnant that is left. If- the bank, the State’s own chosen trustee, has wasted or lost a portion of the trust fund, it may be a misfortune to the creditors and the State. But, instead of furnishing a pretext to the State to seize what is left, it only presents the contingency provided for in the charter of a “deficiency of the funds therein specifically pledged,” upon which contingency the State “pledged her faith and credit to supply said deficiency, and to give indemnity for all losses arising from said deficiency.” Instead of the loss of the assets, making the State a creditor of the bank, it makes her a debtor to the bank for the benefit of her creditors. Instead of giving her a right to take what is left, it imposes upon her the duty to supply what is lost, for that is the letter and spirit of her contract with the creditors of the bank. As for identifying the gold coin that was found in the bank as part of the original school fund, the assumption is as baseless as if founded on a shadow. Thirty-five years ago, when the bank was first chartered, the school fund, the surplus revenue, and the proceeds of the Ocoee land sales,, were conmingled together, with such other funds as were raised to complete the capital of the bank, in one common hatch pot, unidentified by any marks by which one fund could be distinguished from another, and the whole medly has been involved and submerged, in involution and revolution, in trade and in commerce — until no man can identify a single dollar as being one of the original dollars of the school fund investment or the proceeds thereof. But suppose I were to concede the identity, what difference would it make. But suppose the honorable court should differ with me as to the power of the Legislature to invest the fund in the stock of the Bank of Tennessee — suppose the board of commissioners had no right to do it — and that the State, in its sovereign capacity, was not bound by it; still, I imagine that would not help the trustee in the case. There is no provision in the charter of the bank authorizing the assignment as made to Mr. Watson. But the bank, in making the assignment, avowedly acts under the authority of the act of February, 1866. This act was the act of the Legislature. If the Legislature had no authority to put this fund in the bank, by what authority can it take it out. If it is clothed with no authority over the fund, it would be as difficult to justify its action in withdrawing it from the bank as in placing it there. Upon what principle can it be said it has power to withdraw it, but not to place it there. But suppose it has the power to withdraw it (if it had been put there by the Governor, or some other unauthorized .functionary of the State), the Legislature having put it there itself, would not it be estopped from disputing its own authority. Can an agent who exceeds his authority repudiate his own act for that reason ? Can an agent, without authority to sell, reclaim the property after he has sold it. The principal may repudiate the unauthorized acts of his agent, but not the agent himself. That doctrine would be monstrous. But even if the State, in her sovereign capacity, were to come before the court at this late day to repudiate an act of her chief and general agent, the Legislature, done more than thirty years ago — an act by virtue of which her coffers have been filled with gold, her children educated, and the iron horse sent eareeing through her plains, would ■ not this honorable court have the courage to tell majesty itself it was too late — that her acquiescence was conclusively presumed, and if not so, would he not be required, to disgorge the profits she had realized from the bank upon the faith of the fund. The act of secession was either valid or void. If void, as it has been pronounced by all the powers and departments of the Federal Government and of Tennessee, it was simply a nullity, affecting nothing, changing nothing, voided nothing that was valid, and validated nothing that was void. It was as the idle wind. But whether valid or void, it relates to nothing but the external relations of the State with the Federal Government, and had no more bearing upon the internal and domestic institutions of the State, and the commercial intercourse and contracts of her citizens, than it had upon the domestic laws and institutions of the other states in the Union. If the act had been constitutional, and had the effect contemplated by its authors, of dissolving the political connection between Tennessee and the other states of the Union, how could it have affected her domestic laws, and the commercial contracts and obligations of her citizens and corporations? If the law had been effective it would simply have released Tennessee from her obligations as a state to the Union; but it could not have dissolved her government; it could not have dissolved the legal obligations of contracts between man and man; it could not have produced internal anarchy. Internally, Tennessee would have continued precisely the same she was before the dissolution, with her internal government and all her domestic institutions intact. If then, an efficient act of secession could have effected no internal disorders, how much less could an abortive and unsuccessful attempt to do it affect her internal relations. Considered as a conquered province, the Federal Government — the conquerer — might impose such terms as her humanity or inhumanity might dictate, and perhaps the Federal Government, as an act of reeon-.struction, or reformation of the Government of Tennessee, had chose to declare the contracts made with the Bank of 'Tennessee, or between citizens, either before or after the 6th of May, 1861, void, the act might have been within the war making power of the government. But the Legislature of 1866 was not the Federal Government — was not the conqueror of Tennessee, and was not invested with the war making power. They were civilians representing the same state in the same capacity as the Legislature that passed the secession act of 1861; and in the same capacity that the Legislature now in session in this capitol are representing it. And the present Legislature might, with the same propriety, and with just as much show of authority, declare all .claims and demands against the Bank of Tennessee, from and after some other year in which some previous Legislature had passed some ■other unconstitutional law, null and void. But if the secession act would avoid the contracts of the Bank of Tennessee, why not avoid the contracts of the other banks deriving their charters from the same source? And if it would avoid the contracts made with banks, why not the contracts of private citizens ? And yet this court, since the close of the war, has been in .the daily habit of enforcing contracts between parties of all descriptions, and as well those made since the 6th of May, 1861, as those made before it. ARGUMENT OP R. McPHAIL SMITH, POR HOLDERS OP' New Issue. The failure to discriminate between the bills and the other claims against the bank to be embraced in the second class, in apparent disregard of the priority awarded by sec. SO of the general banking act of 1860, probably arose from the fact that, at the time when the act directing the assignment was passed, the old issue of the bank was regarded as comprising about all of its liabilities antedating the 6th of May, 1861, except the school fund. Upon the 16th of May, 1866, the Attorney General filed' the bill to carry out the assignment and to enjoin the creditors of the bank from suing it. The State and Watson were complainants; the president and directors of the Bank of Tennessee, together with the creditors of the bank and others, were defendants. Afterwards Mark R. Cockrill answered, setting up a ■claim as a depositor against the bank ; and upon the 24th of May, 1868, he filed, on behalf of himself and all other creditors of the bank, an original bill, which was, however, styled and, as respects form, taken as a cross-bill, in which he attacked the act of February 16, 1866, and the assignment thereunder, upon substantially the same grounds as afterwards did B. R. McKennie and a number of other depositors, who, instead of coming in under the Cockrill bill, filed what is also an original bill, though styled and, as respects form, taken as a cross-bill, the grounds of attack being that, by virtue of the charter of the bank, its capital stock — including the school fund as a part of it — was a trust fund for the payment of the debts of the bank, and that it was not competent for the Legislature to invalidate the debts of the bank created after 6th of May, 1861, or to deprive these debts of their equal right with other debts to satisfaction out of the assets of the bank. The McKennie bill also sought, but ineffectually, to make the State live up to the obligation assumed by it in the charter of the bank, to keep the capital stock up to $5,000,000. And last, upon the 3d of December, 1872, T. A. Atchi-son and W. M. Duncan answered, claiming against the bank as holders of what is known as the new issue, or Tor-bett issue — the bills issued after the 6th of May, 1861, which the Constitutional Amendments of 1865, and the action of the Legislature thereunder, had attempted to extinguish. Afterwards the State was allowed to retire from the cause, which thenceforth proceeded in behalf of Watson as sole complainant. Demurrers were filed to the Cockrill and McKennie bills. First, negatively, that the State being no longer a party to the cause, no question involving either her rights or her obligations was cognizable therein. Second., that the school fund was merely a part of the capital stock of the bank, liable equally with the residue for the debts of the bank, and. that the act of February 16, 1866, and the assignment thereunder, were void so far as they undertook to erect the school fund into a creditor of the bank. For, by that decision, the only effect of the assignment to Watson, had he qualified thereunder, was to convey to him the legal title to the effects of the bank, charged with the same trusts that attached to them in the hands of the officers of the bank before the assignment. The preference of the school fund was expunged, and it was swept into the assets of the bank. The discrimination between the debts created before and after the 6th of May, 1861, was effaced, and the bills issued afterwards were declared entitled to the same priority of satisfaction out of the assets as those issued before that date. Any imaginary right of the State, as the holder of the old issue taken up by her for taxes, to share in the distribution, by subrogation to the rights of the tax-paying billholders, was excluded from the cause upon the very conclusive ground that the State was no longer a party thereto. But I would remark in passing that, even were this otherwise, it could give us no trouble; for any such claim upon the part of the State would be instantly overwhelmed by her delinquency, in disregard of her liability under the charter of the bank to keep the capital stock up to $5,000,000. This liability, were she a solvent individual, subject to her present obligations, would constitute an immense trust fund, which, at the instance of creditors, the court would compel to be paid in, and then there would be an abundance for all the creditors of the bank. Bur, being a State, she may skulk behind her sovereignty with no other penalty than that of dishonor. Several holders of new issue have filed their petition, both in the case of Samuel Watson v. The President and Directors of the Bank of Tennessee and others, and in the Mark R. Cock-rill case. In the former they come in as defendants, and in the latter as complainants. This petition has been replied to by Watson in the interest of our adversaries. Our adversaries below seemed unaware that this last position would be as fatal t© them as to us. It has been said that the new issue was repudiated by the State in 1865, and that that set the statute in motion. But the State could not repudiate the new issue any more than A could repudiate B’s note. The new issue was the debt of the bank, not of the State. The State was no more identical with the Bank of Tennessee than with any other bank. If the State had been identified with the bank, the bank would not have been suable; the statute of limitations would not have run against the bank; the bank would have been entitled to the State’s priority in the administration of insolvent estates; and the issues of the bank would have been unconstitutional bills of credit. All these positions have been thoroughly disposed of by the courts. Bank of the U. S. v. Planters Bank of Georgia, 9 Wh., 904; Bank of Kentucky v. Wister, 2 Pet., 124; Briscoe v. Bank of the Commonwealth, 11 Pet., 257; Woodruff v. Trapnall, 10 How., 190; Darrington v. State Bank of Alabama, 13 How., 12; Curran v. Arkansas, 15 How., 309; Fields v. Creditors, 1 Sneed, 354; Bank of Tennessee v. Dibbrell, 3 Sneed, 380. The attempt of the State to extinguish the new issue cannot have set in motion the statute against what were the liabilities, not of the State, but of the bank. The decision in Farmers and Mechanics Bank v. White had declared that the statute did not begin to run against bank notes until an actual dishonor at the counter of the bank. Then the section in question provided that the statute should not run against bank notes at all. But again: Upon the 24th of March, 1868, Mark B,. Cockrill filed, on behalf of himself and all the other creditors of the bank, a general creditor’s bill, attacking the assignment of the bank, and asking to have the bank wound up according to law. This is an original bill in the nature of a cross-bill. Its prayer is that Cockrill be allowed to file the bill in the nature of a cross-bill as well on his own behalf as on that of other creditors of the bank who may elect to have themselves made parties upon the usual terms; that all creditors of the bank who come in and take the benefit of this bill be permitted to file and authenticate their claims against the bank, to be adjudicated by the court; that a rate-bill be ordered if necessary, and the assets of the bank applied in satisfaction of such claims as may be allowed, in full satisfaction if the assets be sufficient, and if insufficient, then pro rata. The original bill in this cause sought to carry out the assignment. The Cockrill bill attacks the assignment as in conflict with the original scheme of the bank under its charter, by which the capital stock was pledged as a trust fund for the benefit óf the creditors. And this court has sus-tamed the view of the Cockrill bill, that the preferences of the assignment are void so far as they vary from the trusts originally impressed upon the assets by the charter. If this affirmed the decree of the court below, then it was not worth while'for them to incur the expense of filing their money; since the school fund, if entitled to its preference, would absorb all the assets of the bank. Now. it was only at the last term of this court that the preference of the school fund was adjudged void ; and at the very term of the Chancery Court in session when that decision was announced, the petition now before the court was filed. Why, simply that the notes were barred as against the bank. And what of that? We are seeking, I repeat, for no relief against the bank; but the assets of the bank were and are, as we shall see more fully by and by, a trust fund pledged for the payment of its debts; and the extinction of the corporate entity had no effect whatever upon the liability of the trust fund for the corporate debts. In the language of the court in Addler v. Milwaukee Patent Brick Manufacturing Company, 13 Wis., 60, “the capital stock constitutes the sole fund to which creditors look for the liquidation of their demands. It is the basis of the credit which is extended to the corporation by the public, and a substitute for the individual.liability which exists in other cases. So far as creditors are concerned, it is regarded in law as a trust fund pledged for the payment of the debts of the corporation.” There it was held that the capital stock of the State Bank of Arkansas was a trust fund for the payment of its debts, by virtue of the very scheme of the institution as defined in the charter, which involved a contract to this effect; and that a law of the State that sought to appropriate the assets to other uses, impaired the obligation of this contract, and was therefore void. This act, so far as applicable, and so far as its provisions were not already involved in the organic law of the Bank of Tennessee, was an amendment of its charter, which it was of course competent for the Legislature to make, unless the obligation of some contract were thereby impaired; the consent of the State, the sole stockholder of the bank, being involved in the act of the Legislature making the amendment. Under this act, and independently of it under the well settled principles rendering it superfluous in the present case, the bills of the Bank of Tennessee were equitable liens upon its assets, their status in this regard resting upon the basis of the contract involved in the charter as it originally stood, and emphatically as thus modified, pledging for their security the assets of the bank, a contract inhering in the bills from the moment of their issuance, and running with them thenceforward. In Marr v. Bank of West Tennessee, 4 Col., 471, the assets of an insolvent bank were declared to be a veritable trust fund, which equity would jealously guard for equal distribution among the entire class entitled to share therein, not permitting any individual of the class to obtain by legal process priority over any other. Upon the insolvency the corporation stepped down and out, leaving on the stage only the officers as trustees and the creditors as beneficiaries. Under the general banking law of 1860, the insolvency operated as an assignment for the benefit of the billholders as preferred creditors. If I hold adversely for seven years a tract of land claiming as trustee for the use of A, the property vests in me as trustee for A. The true owner may at any time during the seven years eject me. But suppose my possession, is lawful, — under a deed vesting the legal title in me but declaring trusts which are void. Suppose that the land came into my possession already impressed with certain trusts, which the deed to me was incapable of affecting, and that the substance of the transaction was therefore that the former holders of the land charged with certain trusts placed it in my hands subject to the same trusts. Now, my possession being legal, I cannot be dispossessed. Suppose that I regard the void trusts declared in the deed to me as those properly attaching to the land, still I cantiot be ejected simply on account of my erroneous legal conceptions. If I am about to carry out my ideas to the. prejudice of the rightful beneficiaries, I may be restrained ; but if (nothing of this kind being apprehended) I am suffered to remain in possession of the land for seven years, will my possession operate, through my mistaken notions, to efface the valid trusts attaching to the land, and to impress upon it the void ones declared in the deed to me ? Watson’s possession of the fund here was lawful; but the trusts of the assignment being void he took the assets charged with the same trusts attaching to them in the hands of the officers of the bank before they were transferred into his hands. The assets-in their hands were a trust fund for the benefit of creditors, and primarily of the billholders, and this trust adhered to them in Watson’s hands. Before, the assignment the officers were the trustees for the creditors, and afterwards Watson was their trustee. And statutes of limitations do not run between trustees and cestuis que trust. “ This cause came in to be heard upon the report of the •clerk and master reporting upon the bond of Samuel Watson, receiver, etc.” The statute of limitations does not run as to property in custodia legis. Moore v. Crockett, 10 Hum., 365. It is a position available in the interest only of the State if she were, as she is not, in the field against us both; and ■one from which her guns would tell equally upon our foe-men and ourselves. Formerly they and we, side by side, successfully withstood "the attack made upon our common rights, as creditors of the bank whose claims arose after the* 6th of May, 1861; an attack made in behalf of the State; although she had formally withdrawn -from the fray; her Attorney General aided by valiant special counsel conducting the assault, which had it prevailed would have captured the entire fund now in controversy for the State; since the school fund, a part of the capital of the bank, could not be a creditor, and the only claims that arose before the 6th of May, 1861,— old issue — were absorbed by the State; so that there remained only the State on the one side, as stockholder, and our adversaries and ourselves on the other, comprising all, or next to all, of the creditors; and both sought to be excluded by the assignment ordered by the State. Does any one seriously think that the further merely metaphysical existence of this impalpable outstanding ens rationis yclept the Bank of Tennessee, apparently so perfectly immaterial, was yet really a matter of tremendous consequence, mysteriously involving the vitality of large tangible interests, — hundreds of thousands of dollars of liabilities to and from individuals, and the disposition of a fund of great value? Immediately after the 1st of January, 1873, the fatal period when this shadow vanished utterly from earth, is it supposed that all the suits throughout-the State upon claims -formerly held by the bank abated ? The dissolution of a corporation is its death. And the death of an individual is his dissolution. Whatever view the gospel may take of the latter, the law regards him as annihilated; not as a living non-resident of our planet. Yet the debts due to him remain collectable, and his estate is to be subjected to the payment of his liabilities. And the analogy holds in the case of a moneyed corporation, only with an a fortiori; since from its very origin its effects are, as we have seen, a trust fund for the benefit of its creditors. In Lenox v. Roberts, 2 Wheat., 373, the point in question was directly presented. The Bank of the United States, in contemplation of its approaching dissolution, made an assignment of its effects to trustees. Then the bank went out of existence. Afterwards the trustees brought suit in equity upon a note executed to the bank and embraced in the assignment, but which had not been endorsed by the bank. The defense was that, th'e note not having been endorsed, the suit had to be in the name of the bank for the use of the trustees, and that no suit in the name of a nonexistent bank was maintainable. But the court held, Chief Justice Marshall delivering the opinion, that it was very clear that the suit of the trustees was maintainable in equity, whether it were so at law or not. We shall see presently that the old common law rule never did apply except to the old common law corporations, -if indeed it was ever fully enforced even as to them. The only corporations known to the old common law were the boroughs, the universities, the monasteries, and other ecclesiastical and eleemosynary bodies; and the old common law rule was drawn from the nature of these bodies, from which the modern moneyed corporations,, though so far resembling them, in the attribute of an artificial personality symbolized by a common seal, as to justify the designation of both as corporations; yet differ so widely and so essentially in other respects as emphatically to preclude the application to them of the rule in question: and in fact it never has been applied, nor has any court either-in England or this country ever seriously thought of applying it, to the case of a modern moneyed corporation; The old common law rule, as laid down by Lord Coke,, whose language is substantially repeated by Blackstone, is that upon the dissolution of a- corporation all of its real estate remaining unsold reverts to the grantor or his heirs; for that the reversion in such an event is a condition annexed by the law, inasmuch as the cause of the grant has failed; also that the personalty vests in the king, and that the debts due to and from the corporation are extinguished. In the archaic times of the old common law the only important property was land, which was therefore called real property. Cattle and chattle were nearly synonymous terms, cattle being about the only chattels then. The credit system had not yet been invented. The old common law corporations neither owed nor had due them any debts worth mentioning. They were not business organizations. England was then an out of the way, semi-barbarous region. The commercial nations were those around the Mediterranean and the Baltic. But after the discovery of the passage to India by the Cape of Good Hope, and the use of the mariner’s compass, and the discovery of America, and the influx of the precious, metals therefrom, had thrown the main commerce of Europe upon the Atlantic.Ocean, and given such impetus to the energy and enterprise of the world, then England, a great island, now in front of Europe, with a fertile soil, fine bays and rivers, and one of the most enterprising populations in the world, became among the foremost in carrying on this-great commerce which had arisen. We are apt to forget how very modern is that commercial, manufacturing England with which we are familiar. The first steamboat was launched in 1807 — upon our own Hudson. The first steam railroad was completed in 1830— the Liverpool and Manchester. The telegraph was first brought into practical use in 1844 — between Baltimore and ■Washington. The application of steam to manufacturing and the general use of insurance are within the memory of old men now living. Formerly, what we call banking— what there was of it — was in the hands of the Jews; then of the Lombards; then of the Goldsmiths. The Bank of England, the earliest English bank, was not established until about the beginning of the eighteenth century. The earliest country bank in England was established at Newcastle-on-Tyne in 1755 — the year that Ch. J. Marshall was born. Men now survive whose grandfathers were alive when Parliament first made promissory notes negotiable— in 1705. A large portion of the commercial law of England was built up by Lord Mansfield, who retired from the bench in. 178'8. The Father of Equity, Lord Nottingham, until whose advent equity was in great measure the individual Chancellor’s notion of what was about right under the circumstances, varying, as Selden said, with the dimensions of the Chancellor’s conscience, did not begin his career until the last quarter of the seventeenth century. Upon the dissolution of a monastery it was reasonable enough to permit the grantor’s heirs to re-enter upon the lands. • They had been given solely for the purposes of the monastery. None of the individuals connected with the institution had any private interest in the corporate property. And it was hard to tell what else to do with the lands in the case supposed, unless indeed they were to be turned over to the king, as Henry VIII. made Parliament dispose of them in his time. As to the personalty, that was of small consequence — perhaps a few fat beeves and a butt of good wine; — -and such as it was, not having emanated from the grantor of the land, there seemed no propriety in giving it to his distributees; and besides at a period tolerably remote this was perhaps impracticable, although the line of heirs could be traced with sufficient ease; and so in default of any better mode of disposition it was turned over to the king, together with wrecks, treasure-trove, waifs, estrays, and the like. There were few debts when credit was scant, and when every corporate liability had to be solemnized with the common seal; and then a body formed ad studendum et orandvm had next to no business transactions. And so no great harm could come of wiping out the debts due both to and from the corporation. In Bacon v. Robertson, 18 How., 480, it was contended that upon the dissolution of a bank whose charter had been declared forfeited, the surplus remaining in the hands of the trustee after payment of the debts, must, under the old common law rule, go to the State, as the substitute for the king; and that the stockholders could claim no right thereto. “The common law of Great Britain was deficient in supplying the instrumentalities for a speedy and just settlement of the affairs of an insolvent corporation whose charter had been forfeited by a judicial sentence. “ In Mumma v. Potomac Co., 8 Pet., 281, it held that the assignment of all the property of a corporation, and the surrender and cancellation of its charter with the consent of the legislature, did not defeat thé right of the judgment creditor to satisfaction out of the property which had belonged to it. “The tendency of the discussions and judgments of the court of chancery in Great Britain and of the courts in this country, is to concede the existence of a distinct and positive right of property in the individuals composing the corporation, in its capital and business, which is subject in the main to the management and control of the corporation itself, but that cases may arise where the coporators may .assert not only their own rights but the rights of the corporate body. “ The instances which support the doctrine -in reference to the lands, consist of the statues and judgments which followed the suppression of the military and religious orders of knights, whose lands returned to those who granted them, and did not fall to the king as an e.scheat; or of cases of dissolution of monasteries and other ecclesiastical foundations upon the death of all their members, or of donations to public bodies, such as a mayor and commonalty. “ But this does not solve the difficulty. The question is, have the bona fide and just creditors of a corporation, dissolved under a judicial sentence for a breach of its charter, any claim upon the corporate property for the satisfaction of their debts, apart from the reservation in the act of the legislature which directed the prosecution ? It was here held that the old common law rule had no application to the case of a dissolved modern moneyed corporation ; — that the State had no interest in its property. Nevertheless, it found its-ways into the books, as a part of the law of corporations, at a time when there were none but the old common law corporations; and as no case occurred calling for its ..exercise even as to one of these, in which event it would' probably have been exploded, it continued to be transcribed by text writers from their predecessors, as applicable to corporations generally, even after a new species of corporations had been evolved in the development of modern commerce, resembling the old common law bodies only in the generic attribute of artificial personality, — thereby justifying indeed the common designation of both as corporations, — but differing widely from them in essential respects which rendered the application to the modern organisms of the old rule as to the consequences of ■corporate dissolution, absurd and impossible. Thus the capital stock of a modern moneyed corporation is a trust fund, and its business but the management of a trust. Its officers are trustees for it; and the corporate entity itself is essentially but a trustee, first for creditors and then for stockholders. Being but a complex embodied trust, the modern moneyed corporation is therefore emphatically a subject of equity jurisprudence, by reason of this very feature, which the old common law corporation wholly lacked. The modern moneyed corporations can prosper only in an equitable medium. They could no more have developed until the rigid old common law regime had mellowed into this, than the complex animals of the present period could have flourished before the present atmosphere had superseded the mephitic environment of the early geological eras, adapted to the rude creations that existed then. In some other of the cases, after the decision had been made upon other gi’ounds, the judge delivering the opinion of the court has cited the old common law rule as conducive to the same result-; assuming indeed that this rule was law, but the rule not being made the ground of the decision, and obviously the point not having been argued as cutting any figure in the case. White v. Campbell, 5 Hum., 38. Here Judge Turley referred to the old rule as la.w. But the case was one where a note, and a deed of trust to to secure it, had been made to a bank after its dissolution. So that the decision was merely that an instrument made to a defunct' corporation is void. So would be one to a dead man. Ingraham v. Terry, 11 Hum., 572. Here judgment had been recovered by a bank. Afterwards the collection was enjoined. Pending the injunction suit, the bank charter expired. The court below decreed for the complainant, upon the ground that the bank judgment had perished with the bank charter. But this court held that the act of 1831 !had vested in the Superintendent of Public Instruction the right to collect the bank judgment. Certainly the old com.mon law rule was not applied here. Hopkins v. Whitesides, 1 Head, 31. Here A. had obtained a charter for a turnpike, and done something towards constructing the road, when the charter was forfeited. Then B. obtained a charter to tonstruct the same turnpike, subject to the condition that A.’s former work should be valued and the amount set apart to him in Stock in the new road, which was done. A acquiesced in this, taking the certificate of stock and executing a receipt. But the second charter was afterwards forfeited; and thereupon A. sued the individuals of the second company for the value of his •work on the road, and it was held, of course, that he could not recover. He had acquiesced in the arrangement by which, in consideration of his former work, he was to be made a stockholder in the new company; and certainly he had no claim against the members of the company. Miami Exporting Co. v. Gano, 13 Ohio, 269, is another -case cited as an authority for the rule. This decision was simply that a corporation cannot after its dissolution prose■cute a suit. Neither can a man after his death. Renick v. Bank W. Union, Ib., 298, is another such case. The decision was merely that a defunct corporation cannot prosecute a writ of error; that its trustees must be before the court. Neither can a dead man prosecute a writ of •error. So must his trustee, — the administrator or executor, — be before the court. Another such case is Merrill v. Suffolk Bank, 31 Me., 57. It, however, decides only that a judgment against a deiunet •corporation is erroneous. So is one against a dead man. Another is Commercial Bank of Natchez v. Chambers, 8 Sm. & Mar., 44. Here, after the bank had taken a writ of •error, the corporation was dissolved. But the motion of the trustee to revive in his name was sustained. This was placed upon a statute; but the point is that the decision is not an authority for the rule in support of which it is cited. It was decided that the dissolution of the corporation did not extinguish its liabilities; — that its assets remained bound therefor. They then referred to the case of the city of London, 8 St. Tr., 1087, where although the corporation was dissolved by the revocation of its charter upon quo warranto, nevertheless the liabilities of the corporation were not extinguished. Then they quoted and approved sec. 1252 of 2 Story’s Ex. Jur., to the effect that the capital stock of a corporation is a trust for the payment of its debts, and that “In the professional opinion of Chancellor Kent, read on the argument of Nevitt v. Bank of Port Gibson, 6 Sm. & Mar., 513, he asserts that there is not an instance in- the English law in which the funds of an -insolvent or forfeited moneyed institution have been permitted to be abandoned, and creditors denied redress and payment out of them ; and he adds that to permit the odious and obsolete doctrine of ancient date, before moneyed institutions were introduced, to be now applied to the dissolution of a bank, perhaps by its own mismanagement and abuse, so that all its assets must be considered as dispersed to the winds, without any owner or power anywhere to collect and justly apply them, would be a disgrace to any civilized State.” Then follows the quotation from Judge Story, to the •effect that the capital stock of banks is a trust fund for the payment of its debts, and that “on a dissolution of the corporation the billholders and the stockholders have each equitable claims,” those of the billholders being prior; after which this court resume: “The assets of such an institution are always liable for its debts, etc. . . . But if they have been distributed among stockholders, or gone into the hand's of others than bona fide creditors or purchasers, leaving debts of the corporation unpaid, such holders take the property charged. with the trust; and a court of equity will follow the property, and compel its application to the corporate debts.” Citing 2 Story’s Eq. Jur., sec. 1252; Mumma v. Potomac Co., 8 Pet., 281; Hightower v. Thornton, 8 Ga., 493; Nathan v. Whitlock, 3 Edw. Ch., affirmed in 9 Paige, 152; Wright v. Petrie, 1 Sm. and Mar. Ch., 319; 6 Sm. and Mar., 513. That is, even if the legal title did vest in the State, it would be subject to the trust, the property being a trust, fund. On page 528 the^court added: “The obligations of its contracts (those of the State Bank, of Arkansas), the funds provided for their performance, and. the equitable rights of its creditors were in no way affected by the fact that a sovereign State paid in its capital, and consequently became entitled to its profits. When paid in and vested in the corporation, the capital stock became-chargeable at once with the trusts, and subject to the uses declared and fixed by the charter, to the same extent, and for the same reasons, as it .would have been if contributed by private persons.” In Foster v. Essex Bank, 16 Mass., 266, a similar winding up act was involved, and its nature explained. Mr. Webster, whose view was accepted by the court, said that the act merely gave a new remedy for a “manifest existing right.” That without such an act the creditors of the corporation would of course have a right to reach its assets in satisfaction of their debts. That if the corporation should dissolve leaving any debts unsatisfied, the creditors could follow the fund in equity, and charge the debts upon it in the hands of those who. should have possession of it. “It’(the powers conferred during the additional three years) is in the nature of an administration upon the estate, and is only doing in a more convenient form what a court of equity with competent powers might do; making the fund answerable for the debts which were created on the credit of that fund.” -In other words, the assets of a dissolved corporation are a trust fund for the payment of its debts, and debts due it are a part of its asséts. Then all the suits throughout the State pending in his-name have abated. Then the fund is now improperly in his hands. The dissolution of the bank is immaterial. The Legislature doubtless thought that, notwithstanding the insolvency of the bank, the notes still “ remain in the hands of innocent holders, as the representatives of the values originally received by the bank for them, subject to the continuing liability and promise of the bank for their ■ultimate payment; and that it would be wrong to allow a bank to avail itself of the statute of limitations to avoid the payment of its notes, and then appropriate the property and effects of the bank to the individual benefit of the •owners of the stock, in defiance of the just claim of creditors.” Such was the reasoning of this court in the case of the Farmers and Mechanics’ Bank v. White, 2 Sneed, 486, and it doubtless induced the Legislature to pass the law taking such notes entirely out of the operation of the statute ■of limitations. This attempt at judicial legislation is supposed to have a precedent in the case of The State v. Turnpike Company, 2 Sneed, 92. 4th. Cockrill’s cross-bill was filed “'on behalf of all the creditors of the bank who would come in under it.” It is true he was a depositor, but depositors were as much interested as noteholders in attacking the trusts of the assignment in favor of the school fund. The cross-bill made no •question with noteholders, but prayed that the assets might be administered “ according to the rights of the parties as they may be ascertained by the court, but not according to the terms of the assignment.” Every creditor interested in attacking the preference in favor of the school fund had the right to come in under that cross-bill. “ A bill filed by one ■creditor as plaintiff in behalf of himself and others, will prevent the statute from running against any of the creditors who come in under the decree. Angelí on Limitations, sec. 331, 5th edition; Hicks’ Chancery Practice, Addenda, 193; 2 English Condensed Chancery Reports, 197. II. The personal and real property of the bank has not become vested in Mr. Watson as trustee under the statute of limitations, so as to deprive the creditors of the bank of their rights in regard to it. It is clear that, however the' possession may have been acquired, he has held it, not as trustee, but as receiver; that the property has been in custodia legis, and that he would be estopped from setting up a claim under the statute of limitations, either for himself or for any one else than those who may be declared entitled to the fund, under the orders and decrees of the court from which he received his appointr ment. Moore v. Crockett, 10 Hum., 367. 3d. Under sec. 1494 of the Code, after the dissolution of the bank, its power to control its assets ceased, nor did the-Legislature have the power to direct their appropriation; but on the contrary,' so soon as the dissolution of the bank occurred, its assets, by express legislation, became a trust fund for creditors, and whoever had them in charge became a trustee for the statutory beneficiaries. 4th. If the argument of our opponents is sound, it would follow that the entire assets of the bank would go to the school fund as the first preferred claim in the assignment, and the depositors, as well as noteholders, would be deprived of everything. But this court has already decided that the school fund was not entitled to any preference, but on the contrary, is itself a part of the assets of the bank, to which the'creditors of the bank had the right to look for the collection of their debts. To give these assets to the school fund by a decree at this term would be, in substance, a re-reversal of the decree of the last term. 5th. It is clear that if the claim of the noteholders on the real estate was barred in seven years, their claim on the personalty of the bank was barred in three years from January 1, 1867. The answer of Duncan and Atchison was not filed until December 3, 1872, and therefore, under the opposing argument, they would not have been entitled to any part of the personal assets; but this •court decided that they were entitled to payment out of the .assets of the bank without making any distinction between personal and real assets. The decree of the last term has, therefore, in effect, settled this point in our favor, and it cannot now be reopened. III. The expiration of the bank charter does not affect the right of petitioners to the relief prayed by them. 1. It is true that this court, in 1844, quoting from the text of the second edition of Kent’s Commentaries, did decide, that upon the expiration of the charter of the old Bank ■of Tennessee, the debts due to and from the corporation were all extinguished. 5 Hum., 39. That case is cited approvingly in 1 Head, 33, where it is said that- the debts due to and from a corporation are all extinguished, without some provision in the charter or some general law to prevent it. In the case of Ingraham v. Terry, 11 Hum., 572, it appeared that the legislature had directed that all the funds of the State Bank, in the hands of various persons, be paid to the superintendent of public instruction for the use of common schools, and that hé had caused a judgment to be taken in the name of the bank against one of the debtors. After the bank’s charter expired, the debtor raised the point that the debt was extinguished, but the court held that the statute vested the superintendent with the right to collect •the claim against the debtor, and that, though the judgment was in the name of the bank, a court of chancery would hold that the superintendent was the equitable assignee of the debt for the use of public instruction, and entitled to ■enforce its collection. If the assignment of the assets of a bank for the benefit of third persons has the effect to keep alive the debts due to the bank, it would also have the effect to keep alive debts due from the bank, for otherwise a debtor would lose the benefit of any set-off he might have. To save the expense and delay of resorting to equity, the Code, secs. 1495, 1496, authorized the trustees to sue for the assets at law in the corporate name; and this power to sue at law was continued for five years, and, if necessary, ¿he Chancellor, upon a proper application, might extend the power for a longer time. If no such application was made, the power of the trustees to sue at law in the corporate name expired; but their original rights to go into equity for the collection of the assets remained unaffected. This is the obvious meaning of our statute; no more, no less. Suppose our opponents were right in their position, what would be the consequences? In the first place, the debts due from the bank to the depositors, would be extinguished, as well as those due thé noteholders. The fact that some depositors have filed their claims, and have even obtained decrees in the cause, would not avail them. The literal language of their case is that all debts due from the corporation are extinguished, and that this applies as well to judgments and decrees as to simple contract, creditors, was expressly decided in the case of Mannassa v. Potomac Co., 8 Pet., 286. The debt to the common school fund would also be extinguished, and the assets would be left for the State, as the sole stockholder of the bank. But, then, under another position assumed by our opponents, Mr. Watson could say that he has held the assets for the creditors and adversely to the State as a stockholder; and having first' defeated the creditors, by insisting that their debts were extinguished, and then defeating the State as a stockholder, by relying on the statute of limitation, he would secure the entire assets of the-bank for himself. Another difficulty suggests itself. The same rule which extinguishes the debts due from the bank, extinguishes all all debts due to the bank, and nine-tenths of the assets consists in debts due from third persons to the bank. The real estate of the bank would revert to the original grantors, and a litigation which has lasted for a decade would end, at last,, in no practical benefit to any of the parties concerned.
64 Tenn. 567Conn v. Scruggs (1875)
Justices’ Judgment. Words descriptive of person. Coireciion. "Where a note on which a judgment was based evidenced the individual indebtedness of the maker, and the words “trustee,” etc., being merely descriptive of the person making the note, a subsequent correction of the judgment, by adjudging the defendant personally liable, was immaterial, and neither enlarged nor contracted its legal force, but where the word trustee is annexed to the name of a defendant to show that his liability is fiduciary, and not personal, the result would be different upon correction of the judgment by the justice. Case cited: Caster v. Wolfe, 1 Heis., 694.
64 Tenn. 569Adkinson v. State (1875)
1. CeimestaX/ Law. Burglary. The Code definition oi burglary, and the statutes on the subject, do not apply to the case of a party who, secreting himself in a mansion house by night with intent to commit a felony, is discovered, and to enable himself to escape by flight from the house opens or unlocks a door. There must be a breaking as well' as an entry in order to make the offense. Code cited: Sec. 4672-4. Authorities cited: Cqoly’s Black., book 4, 226-7; Wheaton Cr. Law, 1636-46. 2. Same. Breaking after entry. Sec. 4674 of the Code cannot mean that breaking after abandonment of the purpose, and for a different purpose than the commission of of a felony, shall be referred arbitrarily to the felonious design. A party who by tresspass enters a house with design to steal, who changes his mind and abandons that purpose, but in going out unlocks a door for egress, would not be guilty of burglary.
64 Tenn. 574Kelton v. Jacobs (1875)
1. Pbagtice. lies adjudicóla. Suit dismissed for want of prosecution, and without examination on the merits, no bar to subsequent suit. 2. Evidence. Mmutor, etc. The principal debtor in a judgment, but who was not party to the proceeding to revive against the stayor, is a competent witness as against the executor of the creditor, to prove that the debt had been paid. Code cited: sec. 3813c.
64 Tenn. 576Spence v. Crockett (1875)
1. Bili.s AND Notes. Certificate of protest. Recitals in only raise a presumption. The statements made by a notary raise only a presumption. They are prima facie true, but they are open to rebuttal. Being but prima facie evidence, it may be overturned by any legal testimony that will satisfy the tribunal having cognizance of the question in dispute that the recitals of the instrument of protest are in fact untrue. 2. Same. Same. Where the Circuit Judge instructed the jury that “it will require the testimony of one credible witness and corroborating circumstances, or two credible witnesses to rebut the certificate of a notary public.” Held, that this was error. The recitals of the certificate are but recitals of matters of fact, and of the judgment the notary has formed as to matters where there may be room for difference of opinion.
64 Tenn. 581Collier v. Yearwood (1875)
1. Repievin. Parties. In replevin the plaintiff recovers personal chattels in specie. Where property is owned by two jointly, not susceptible of separation, so that the plaintiff could aver that some particular part belonged to him, the action would have to be brought in the joint name of the two owners. '2. Where the property belongs to a third party, the plaintiff cannot recover ; and if the property has been taken from the defendant, there must be judgment for its return.
64 Tenn. 584Brown v. Crenshaw (1875)
Attachment. Allegation. A simple apprehension and belief that the defendant is about fraudulently to dispose of his property, is not sufficient ground for an attachment. The law requires the allegation of an act accomplished or about to be accomplished, as a matter of fact, and not as matter of mere apprehension. Code cited: sec. 3455, sub. sec. 6. Cases cited: Jaelcson v. Burlce, 4 Heis., 610; Lester v. Omnmings, 8 Hum., ■385.
64 Tenn. 586Richardson v. McLemore (1875)
EROM WILLIAMSON. Appeal from Circuit Court. ¥m. P. Martin, J.
64 Tenn. 592Easley v. Tarkington (1875)
1. Trust Estate. Rents and profits. Where the deed makes no stipulation in regard to the rents and profits, and contains no waiver of the right of redemption in the event of sale by the trustee, and the maker remains in possession, he, and not the trustee, is entitled to the-rents and profits until foreclosure. Cases cited: Burk v. Bonner, 3 Head, 687; Freeland v. Harris, 3 Sneed, 264. Code cited: Secs. 2124, 2135. 2. Supbeme Court. Decree. Matters not adjudicated. Mistake. Where the decree of the Supreme Court contains an adjudication of a question neither involved in the litigation- nor discussed in the opinion, that court will treat so much of the decree as a mistake apparent on the face of the record, and at any time after final judgment it may be corrected or expunged. Such a decree was not binding on the Chancery Court. Code cited: Sec. 2878.
64 Tenn. 595Connell v. Scott (1875)
1. Attachment. Levy. It is necessary, to constitute a valid levy, both, in the case of an attachment and an execution, that the property levied upon must he present and ivithin the control of the officer at the time of making the levy. Hence, where a levy of an attachment was made from a list of the property, and from information given by the debtor, but none of the property was present or within sight; Held, there was no valid levy of the attachment. 2. Same. Delivery bond. Tie surety upon a delivery bond executed several days after the supposed levy, being led to sign the bond by the representation of the officer that a levy had been made, when, in fact, none was made, is not bound thereby. Code cited: Secs. 3498, 3509, 774.
64 Tenn. 600Ballow v. Motheral (1875)
Unlawful Detainee.. Remedy. The maker of a deed of trust remaining in possession of the land up to the sale, and not disavowing the right of the trustee to possession, nor holding adversely to the trustee, does not become the quasi tenant of the purchaser, and this action does not lie in favor of such purchaser and against the tenant of the maker of the deed. Case cited: Lane v. Marshall, M. & Y., 255. Code cited: Sec. 3344.
64 Tenn. 603Anderson v. J. S. Lithgo & Co. (1875)
S.TAYOB. Where a stayor could have'saved himself by paying the debt • on expiration of the stay, and taking judgment over against his-principal, but failed to do so, he is not discharged from liability as-stayor, because the plaintiff failed to issue execution against the principal in time, though it was at the stayor’s suggestion that he do so.
64 Tenn. 604O'Neal v. Breecheen (1875)
1. Guardian and Ward. Phidence, parol. The subsequent declarations oí the intestate are incompetent to show a rescission of the gift or advancement. He is not then the owner of the thing given or advanced, having parted with his title and possession. He, as any other stranger, cannot by parol declarations relieve the donee of a charge for advancement. ■2. Witness. Competency of. Children and heirs at law of a decedent are competent, under our statute, to prove the declarations of their ancestor at the time of placing them in possession of the property or estate with which they are sought to be charged as advancements. 3. Same. Duty of courts. It is the absolute duty of courts to proceed cautiously in the construction of the statute allowing parties in interest to be witnesses in their own behalf. 4. Ancestor and Heir. Parol gift to child of land. The parol gift of a father to child is void, but to so much of the land as was held and occupied by actual enclosure, and claimed adversely in the lifetime of the father under such gift, and for a period of seven years before the commencement of the suit, the child has acquired a possessory right, and will account for it at the value put upon it at the time of advancement. Case cited: Bowers v. Douglass, 2 Head, 376.
64 Tenn. 607Brooks v. State (1875)
~RThIINAL LAW. lndietrneot. Proof of ownersh~p. In an indictment for receiving stolen goods, there must be proof showing a property, either general or special, in the person charged in the indictmei~t to be the owner.
64 Tenn. 609Arrington v. Cary (1875)
Agent’s Commissions. Usage. When a broker or agent is employed to' sell real estate, and produces a person who ultimately becomes a purchaser, he is entitled to his commissions, although the trade may he effected by the owner o£ the property; and such commissions should he reasonable, and such as, for similar services, real estate agents in. the particular locality are by usage and custom entitled.
64 Tenn. 612Davis v. State (1875)
CRIMinai Law. AKU. The often repeated rule in regard to alibi is a sound one, and should be given to the jury in direct and unequivocal language, especially when a prisoner is upon trial for his life. Where the proof against the prisoner is wholly circumstantial, it is important that the question of alibi should he fairly left to the jury.
64 Tenn. 613Franklin v. State (1875)
'‘CRESinrAi. Law. Vemie. Where a homicide was proven to have been committed seventy-five yards or more from the place of the prisoner’s arrest, and the county of arrest is proven; held, the proof of venue was insufficient. The proof of venue must not be left to inference or construction. -Case cited: Maples v. The State, 3 Heis.
64 Tenn. 615Hagan v. State (1875)
1. Cbimtnai. Law. Evidence. Hereditory Inscmity. The question of the prisoner’s insanity being before the court, it was error to refuse to permit an enquiry into the mental condition of any of his immediate family. 2. Same. Statement of expected proof. Where the materiality of the proof proposed to he made was evident, it is not required to state the purport of the answer of the witness to show its materiality. Case cited: Turner v. The State, MS. at Knoxville, 18V2- 3.. Same. Witness. The court having refused to permit a question to he answered hy the first witness examined, it was not necessary, and would have been improper, for the counsel to have asked the question of any other witness.
64 Tenn. 619Stokes v. State (1875)
1. CRIMINAL Law. Evidence. Footpnnts. 'Where the State brought a pan of' mud into the court and placed it immediately in front of the jury,, and proved by a witness that the mud was about as soft as the mud in the branch where he saw the track, and the prisoner was then called on by the Attorner General to,put his foot in the mud; held, the bringing in of the pan of mud and the request of the Attorney General were improper, and should not have been permitted by the court. 2. Same. Same. Withdrawing illegal testimony. The practice of permitting incompetent and illegal testimony to be placed before the jury, and afterwards, at the close of the case, withdrawing it and telling the jury not to be influenced thereby is deprecated. Such testimony should be promptly rejected, and not permitted to go to the jury at all.
64 Tenn. 622Washington v. Ryan (1875)
Deed of Assignment to Secure Creditors. Allegation of fraud. Burden of proof. Where there was no evidence in the record to show that the deed of the debtor was made to hinder or delay his creditors, or of any fraudulent purpose to secure the benefit to himself; upon an allegation of fraud as to the indebtedness to the grantor’s wife provided for by the deed, and an explicit denial of such allegation by the answer of the wife, there being no evidence to impeach such debt of the wife; held, that the burden of. proving the fictitious and fraudulent character of such debt is upon the complainants. ■Same. Presumption of acceptance. The complainants not alleging that the beneficiaries in the deed had not accepted, or had renounced, its provisions in their favor, and there being no evidence upon the subject of acceptance or renunciation, except that raised by the presumption that the beneficiaries accepted the provisions for their benefit.; held, that the presumption of law is that they did accept; and that fact presumed and uncontradicted, is sufficiently proved. Same. Same. Evidence rebutting. The filing of a bill by an outside creditor, attaching the conveyed property, by which it is sought to deprive the trust deed creditors of all the security they have for their debts, does not furnish any evidence rebutting the presumption of acceptance. 'The authorities reviewed and discussed at length.
64 Tenn. 636Cooper v. Murfreesboro Savings Bank (1875)
Chancert Practice. .Advanced bid. Bight of redemption. Land which had been conveyed to a trusttee to secure a debt, and had also been mortgaged to another creditor, wa's sold under execution in favor of a prior judgment creditor, and was bought by the mortgagee, who, within twenty days, advanced his bid and credited his mortgage with such advanced bid. The creditor secured by the deed of trust, within two years tendered to the mortgagee the sum actually paid at the execution sale, with interest, and complied with the laws regulating the redemption of land, sold under judicial process, but the mortgagee demanded the amount of his advanced bid in addition. Held, that as between the trustee and the mortgagee, the latter could demand only the sum actually paid by him to the Sheriff, and could not, by advancing his bid, secure the satisfaction, in whole or in part, of a debt not fixed as a lien, to the injury of the trustee, who had a superior right. Case approved: Toombs v. Palmer, 4 Heis., 331.
64 Tenn. 640Puryear v. Puryear (1875)
1. Chancery Pbactice. Bill of review. Affidavit. A refusal by a Chancellor of leave to file a bill of review, brought upon the ground of newly discovered evidence, is not error, where no affidavit was offered to show that the new matter could not have been produced by the party claiming the benefit of it in the original cause, or that it was relevant or material. Case cited: 9 Hum., 524. 2. Same. Allegation. Upon an allegation of error apparent, a party has a right to file his bill of review without the leave of the court. 3. Doweb. Value of buildings. A widow is dowable out of the whole estate of her deceased husband; and the words “lands” and “estate,” meaning the same thing in our statutes, the value of the buildings on the lands is not to be estimated in making the assignment of dower. Case cited: Vincent v. Vincent, 1 liéis., 338-9. Code cited: Secs. 2398, 2403.
64 Tenn. 644Jones v. Reynolds (1875)
Statute oj? Limitatiojíis. Actions against personal representatives. The-general provisions of the Code applicable to the limitation of actions do not apply to actions hy persons under disability, and construed with the statute specially providing for the limitation of actions against personal representatives, a person under the disability of infancy had only one year from the 1st of January, 1867, within which to sue, where the cause of action has accrued before that date. Code cited: Sees. 2279, 2274, 2281, 2757.
64 Tenn. 649Prowell v. Fowlkes (1875)
Summary Remedy. Offieuil bond of deceased clerk. Liability of administrator with sureties upon. The summary remedies given by statute against public officers, being of purely statutory origin and in derogation of tbe common law, must be strictly pursued, and nothing can be super-added to them by judicial construction. Such statutes do not in terms extend to the personal representatives of such officers, and cannot be so extended by construction. Held, that a motion is not allowable against the administrator of a deceased clerk and the sureties upon the official bond of the clerk. Oases approved: Young v. Bare, 11 Hum., 303; Statev. Deberry, 9 Hum., 605; Park v. Walker, 2 Sneed, 509. Oase overruled: Smith v. Woods, 1 Col., 539. Code cited: Sec. 3626.
64 Tenn. 655State v. Williams (1875)
Cbimihal Law. Assault with intent to commit manslaughter. Indictment. Manslaughter being a felony in this State, an attempt to commit manslaughter is an offense, and an indictment for an assault with intent to commit manslaughter is good under sec. 4630 of the Code. Cases cited: Quarles y. The State, 1 Sneed, 407; Jones v. The State, 2 Swan, 399. Code cited: Sec. 4630.
64 Tenn. 657Summar v. Page (1875)
Liability of Clerk and Master for Moneys Loaned. Proof of good faith. A party to whom Clerk and Master loaned money without security at the time, hut afterwards took as security the partner of the borrower, and the parties soon afterward failed; Held, the circumstances make a cause requiring proof showing clearly and satisfactorily the good faith of the Clerk and Master in the transaction.
64 Tenn. 660McDougal v. State (1875)
1. Cbimtstal Law. Assault with attempt. A verdict of “guilty of an assault with attempt to commit a rape,” is sustainable under sec. 4630 of the Code. 2. Same. Excessive punishment. Verdict for ten years’ confinement, under-the section cited, was unauthorized, and judgment thereon erroneous. 3. Same. Power of revising court. When juries exceed their powers in awarding punishment, and the judge pronounces judgment approving their erroneous verdicts, the Supreme Court can only reverse and remand. Code cited: Secs. 4630, 5222.
64 Tenn. 662Wiley v. State (1875)
Cbimisax Law. Alibi. It is error in a judge to say to the jury if the proof' of alibi raised a reasonable doubt of defendant’s guilt, he must be acquitted. Where the instructions asked are sound law, and have-not been previously given, they should not be refused.
64 Tenn. 663Fowlkes v. N. & D. R. R. (1875)
1. Cause oe Action fob Injury Besulting in Death. Statute of limitations. There is no distinction made in the statutes between classes of cases where the injured party lives a time, and suit is brought in his life-time, and where death is instantaneous. Both classes of cases are put upon the same footing; and whether the action he brought by the party himself or by his representative after his death, the cause of action is the same, and is governed by the same laws as to the statute of limitations. Case cited: Thurman v. Skelton, 10 Yerg., 383. Code cited: Secs. 2291-3, 2772. 2. Same. Same. Damages. The rule introduced by some of the cases, in regard to damages, in cases where the action is brought by the representative, that is, damages for the loss of husband and father, or relative, to the widow or next of kin, might be allowed beyond what would be proper where the action is brought by the party himself, doubted. The decisions of other States, being founded on their own statutes, are not controlling.
64 Tenn. 672Hoover v. State (1875)
1. Criminal Law. Conduct of Trial. Practice. It is improper and reprehensible in counsel to ask leading questions of the witnesses, and to persist in it over the objection of the adverse party and in disregard of the rulings of the court. But this can scarcely be regarded as error constituting ground for new trial, unless thereby some illegal evidence is elicited. 2. Same. Juror. Where a juror was allowed to sit at the bar with his son’s counsel, while the son was on trial for assault and battery, to aid the counsel in that cause, in the presence of the court and the other jurors who had been elected to try the prisoner whose trial was temporarily suspended; Held, that no injury resulted to the latter from this intercourse. 3. Same. Officer of Jury. Where the officer having charge of the jury trying the felony repeatedly separated from them, and they were out of his sight and presence while they had the case under consideration; but it was not shown that the jurors ever separated or were out of their room with their officer, and no misconduct is directly imputed to the jurors themselves, but to the officer in leaving them from time to time; Held, there was no good ground for setting aside the verdict. Oases cited: McLain v. The State, 10 Yer., 241; Hines v. The State, & Hum., 596 ; Luster v. The State, 11 Hum., 174.
64 Tenn. 678Goaler v. State (1875)
Ceiminal Law. JEvidence. Where the .court, to show the animus of the prisoner, and to illustrate the merits of the plea of self-defense, admitted proof of an old feud, and the frequent and deadly threats of the prisoner to take the life of the deceased; Held, this was not error. Same. Same. Charge. The prisoner being on. trial for murder in the second degree, it was not error for the court to charge the jury as to every grade of homicide. It is perhaps safe to enlighten the jury as to all other grades of homicide, that they may the better comprehend the precise crime with which the prisoner is charged, provided it be accompanied with an admonition that he cannot be convicted of any higher grade than that upon which he is arraigned.
64 Tenn. 681Stevenson v. State (1875)
1. CbiminaIí Law. Burglary. Indictment. The Legislature did not, by the act of 1875, making petit larceny a misdemeanor, contemplate a change of the law of burglary; and an indictment charging the breaking, etc., with intent to commit^a felony, to-wit, larceny, is Held sufficient. 2. Same. Same. Two counts. The defendant, without demurring or moving to quash, having been convicted only on the first count, cannot object that the indictment contained another count for a misdemeanor upon which he has been acquitted. 3. Same. Same. Bate. The indictment charging the offense to have been committed previous to the finding of the indictment, but by mistake of the draftsman charging an impossible date, the date may be rejected. The indictment is good. Code cited: Sec. 5124. Cases cited: King v. The State, 3 Heis., 148; Scruggs v. The State, MS.
64 Tenn. 684Musgrove v. Lusk (1875)
Appeal. The pauper’s oath taken by a guardian ad litem,, does not authorize an appeal. Oases cited: Oreen y. Harrison, 3 Sneed, 131, and McCoy v. Broderick, 203.
64 Tenn. 685National Bank of Pulaski v. Winston (1875)
1. Chancery Practice. Fraudulent device to obtain jurisdiction. The defendant, a convicted felon, in the penitentiary, had previous to his conviction, pawned his watch and jewelry to a party in Louisville, Ky., and B., a resident of this State, paid the pawnee the amount due thereon, and brought them here; whereupon the plaintiff levied his attachment, subject to the amount of B.’s claim : Held, that the transfer of the property here was not such a fraudulent device to get the property within the jurisdiction of the court, as would avoid the attachment. This case distinguished from Timmons v. Qam'ison, 4 Hum. 148. 2. Pawn. Assignee. A pawn is a mere collateral security for the payment of a debt, and a pawnee may assign his interest in the pledge, and the assignee will take it under all the responsibilities of the original pawnee; or he may transfer conditionally his interest by way of pawn to another, aijd his assignee will hold the pledge until the debt of the original owner is discharged. Case cited: 11 Hum., 398-9.
64 Tenn. 690House v. Whitis (1875)
FROM WILLIAMSON. Appeal from Chancery Court. W. S. Fleming-, Ch.
64 Tenn. 693Bidwell v. Paul (1875)
.Receiver. Tie "beneficiary in a trust deed may iave a receiver appointed, and tie proceeds of tie security impounded for iis benefit, during tie litigation, after iis rigit to sale of tie property ias been adjudged. •Case cited: Hensiaw, Ward & Co. v. Wells et al., 9 Hum., 568.
64 Tenn. 695McAdoo v. Smith (1875)
Ustoy. Remedy. A remedy existing at the time a right accrued maybe taken away by a statute.
64 Tenn. 696Chaffin v. Rose (1875)
Execution. Stayor. The stayor may pay off the judgment, and have his motion against the principal debtor, or he may, upon his affidavit that if execution is stayed longer he fears he may be obliged to pay the debt, have execution issued at any time. But he has no authority to control the judgment, or direct the issuance of execution thereon, without the assent of the plaintiff, except in the mode prescribed by statute, and should the plaintiff order an execution so issued to be returned unsatisfied, it will not impair the liability of the stayor. Cases cited: Sharp v. Fagan, 3 Sneed, 542; Gh'imes v. Nokn, 3 Hum., 412. Code cited: Secs. 3067, 3063.
64 Tenn. 698Hawkins v. Davis (1875)
FROM GILES. Appeal from Circuit Court.
64 Tenn. 701Langham v. Baker (1875)
Wemds. Executor. Devastavit. Where an executor makes a general request to the creditors of his estate for delay from time to time, or simply gives an assurance that the debt is good, will not save the operation of the statute of two years, and when the requests have been such, and the statute is complete, it is a devastavit in the executor or administrator to pay such barred debt, for which he will be held liable. Cases cited: Boothe v. Allen, 4 Heis., 258; Trott v. West, Moss & Go., 9' Yer., 434; Puckett v. James, 2 Hum., 566; Bank v. Leath et al., 11 Hum., 515; Ghesmutt v. McBride, 1 Heis., 389.
64 Tenn. 704Voorhies v. Granberry (1875)
Mabbied Women. Powers of. Where the wife’s estate is not what is. technically called a “separate estate,” but is an estate conveyed to her by deed in fee simple without restriction or limitations, she may,, with her husband, convey her land in trust to secure a debt of the husband. The act of 1869-70 does not affect such a case. Case cited: Bayliss v. Williams, 6 Col., 449. Code cited: Sec. 2486 a, b, c, d, e and /.