Satement of Facts. N.H. v. Louisiana, 108 U.S. 76 (1883)

Sect ion 1. Whenever any citizen of the State shall be the owner of any claim against any of the United States of America, arising upon a written obligation to pay money issued by such State, which obligation shall be past due and unpaid, such citizen holding such claim may assign the same to the State of New Hampshire, and deposit the assignment thereof, duly p. 77executed and acknowledged in the form and manner provided for the execution and acknowledgment of deeds of real estate by the laws of this State, together with all the evidence necessary to substantiate such claim, with the attorney-general of the State.

“ Sect ion 1. Any citizen of this State, being the owner and holder of any valid claim against any of the United States of p. 79America, arising upon a written obligation to pay money, made, executed, and delivered by such State, which obligation shall be past due and unpaid, may assign the same to the State of New York, and deliver the assignment thereof to the attorney-general of the State. Such assignment shall be in writing, and shall be duly acknowledged before an officer authorized to take the acknowledgment of deeds, and the certificate of such acknowledgment shall be duly indorsed upon such assignment before the delivery thereof. Every such assignment shall contain a guaranty, on the part of the assignor, to be approved by the attorney-general, of the expenses of the collection of such claim, and it shall be the duty of the attorney-general, on receiving such assignment, to require on behalf such assignor, such security for said guaranty as he shall deem adequate.

J/r. Wheeler H. Peckham for the State of New Hampshire. —I. The controversy is one arising on a contract. This species of controversy is within the jurisdiction of the court.— II. The particular contracts are negotiable instruments of which the State by assignment is legal owner, and in the suit is the real party in interest, whether the transfer was an p. 81actual sale or merely colorable. Sheridan v. The Mayor, 68 N. Y. 30; Mercer County v. Hackett, 1 Wall. 83 ; Nat. Bank n . Texas, 20 Wall. 72; Edwards on Bills, 130-132; Hays v. Hathorn, 74 N. Y. 468.—III. The remedy is not sought against the State, but against other defendants to restrain them from diversion of funds. If the State cannot be made a party, a court of equity will proceed without it. Board of Liquidators v. McComb, 92 U. S. 531. New Hampshire seeks only the relief which would be granted in a suit between individuals in a circuit court. Louisiana had power to issue these bonds; New Hampshire power to acquire them. United States n . Bank, 15 Pet. 377; Union Branch Bailroad Company n . Hast Tennessee, dec., Bailroad Company, 14 Geo. 327. The creditor State is entitled here to the same remedies against the debtor State, which one individual would have against another in a circuit court.—IV. The fact that the ownership is acquired under a statute does not oust the jurisdiction. No citizen of one country can sue in the courts of his own country any other State or sovereignty, nor can he sue such other State in its own courts. He must resort to his sovereign (i. e. New Hampshire), for redress ; and under the federative system this court, in a controversy between States, takes the place of the last resort of independent nations. Bhode Island n .' Massachusetts, 12 Peters, 657.—V. This jurisdiction extends even to political questions between States, when a judicial question arises for their settlement. Bhode Island v. Massachusetts, ubi sup.; Virginia v. West Virginia, 11 Wall. 39. Mr. Peckham also discussed some provisions of the Constitution of Louisiana, and the peremptory remedies sought for.

vol . cvni—6 p. 82within the jurisdiction of the court when properly brought before it.—I. A State of this Union can implead another State in this court for a money demand. Van Stophorst v. Maryland, 2 Dallas, 401; Oswald v. New York, 2 Dallas, 401, 402 and 415 ; Chishol/m n . Georgia, 2 Dallas, 419 ; Grayson v. Virginia, 3 Dallas, 320 ; Hollingsworth n . Virginia, 3 Dallas, 378; Huger n . South Carolina, 3 Dallas, 339 ; Cutting n . South Carolina, 2 Dallas, 415, note ; New York v. Connecticut, 4 Dallas, 1.—II. The assignment of the demand for the purpose of suing does not affect this right. The right and duty of every sovereign State, on behalf of its citizens, to call upon any other sovereign State for the fulfilment of its obligations to those citizens, is an established rule of international law. Our own country has acted upon it so often, that with us it is no longer an open question. Our diplomatic correspondence is full of references to it. The argument cites also Stat. 4 Hen. IV. ch. 7; Ordonance de la Marine, 1681; Grotius, B. 3 ch. 2, sec. 5 subdivision 2; Vattel, book 2, ch. 18, page 347, with Ingersoll’s notes, 1869 ; Rives’ Life of Madison, vol. 1, 564; .vol- 2, 41; Manning’s Law of Nations, 150 (Amos edition); 2 Twiss’ Law of Nations, sec. 11; 2 Phil. Int. Law, 8; The Federalist. The extent of the jurisdiction over controversies between the States, and the manner of exercising it, have been so often considered by the court, that a reference to the cases is hardly necessary. Thus the suit of New Jersey against New York, begun in 1830, appears three times in the reports, and that of Rhode Island against Massachusetts, begun in 1832, appears five times. New Jersey n . New York, 3 Pet. 461; 5 Pet. 284, where Chief Justice Marshall goes over the subject, and 6 Pet. 323; Rhode Island v. Massachusetts, 12 Pet. 657, where the jurisdiction was considered at length by Mr. Justice Baldwin; 13 Pet. 23, 14 Pet. 210,15 Pet. 233, and 4 How. 591. In Poole v. Fleeger, 11 Pet. 185, 209, Mr. Justice Story, delivering the opinion of the court, used this language respecting the rights of the States, under the law of nations, independent of the Constitution. . . . “It cannot be doubted, that it is a part of the general right of sovereignty, belonging to independent nations, to establish and fix the disputed boundaries between their p. 83respective territories ; and the boundaries so established and fixed by compact between nations, become conclusive upon all the subjects and citizens thereof, and bind their rights, and are to be treated, to all intents and purposes, as the true and real boundaries. This is a doctrine universally recognized in the law and practice of nations. It is a right equally belonging to the States of this Union, unless it has been surrendered under the Constitution of the United States. So far from there being any pretence of such a general surrender of the right, that it is expressly recognized by the Constitution, and guarded in its exercise by a single limitation or restriction requiring the consent of Congress. The Constitution declares, that ‘ No State shall, without the consent of Congress, enter into any agreement or compact with another State ; ’ thus plainly admitting that, with such consent it might be done ; and in the present instance that consent has been expressly given. The compact, then, has full validity, and all the terms and conditions of it must be equally obligatory upon the citizens of both States.”— III. Even if a suit cannot be maintained against the State, its officers can be required to apply the money in their hands to the payment of interest. KendaWs Case, 12 Pet. 527 ; the King v. Lord Commissioners, 5 Nev. and Man. 589 ; G Nev. and Man. 508.—IV. They may, also, in case the amount in their hands is insufficient for that purpose, be required to assess and collect a tax. Board Comrs. Knox County v. Aspinwall and others, 24 How. 376 ; Supervisors v. United States, 4 Wallace, 435 ; Von Hoffma/nn v. City of Quincy, 4 Wall. 535 ; City of Galena v. Amy, 5 Wall. 705 ; Walkley v. City of Muscatine, 6 Wall. 481 ; Mayor v. Lord, 9 Wall. 409 ; United States V. Boutwell, 17 Wall. 604 ; Heine v. Levee Commissioners, 19 Wall. 655 ; Loan Association v. Topeka, 20 Wall. 655 ; Board of Liquidation v. McComb, 92 U. S. 531 ; United States v. Memphis, 97 U. S. 284 ; Memphis v. United States, 97 U. S. 293 ; Memphis v. Brown, 97 U. S. 300 ; United States v. Fort Scott, 99 U. S. 152 ; County of Greene v. Da/niel, 102 U. S. 187 ; Louisiana v. New Orleans, 102 U. S. 203 ; Louisiana v. United States, 103 U. S. 289 ; Wolff v. New Orleans, 103 U. S. 358.

J/r. J. C. Egan, Attorney-General of Louisiana, and Ur. John A. Campbell for the State of Louisiana.—I. The judicial power of the United States does not extend to suits against a State.—II. An agreement by a State with an individual creates no juridical obligation and no juridical relation between the parties. Federalist, No. 81; 6 Webster’s Works, 537; 1 Calhoun’s Works, 260. The clause in the Constitution forbidding a State to impair the obligation of a contract has no application to such agreements. The term “ contract ” is narrower than the term “agreement.” A contract is an agreement which raises an obligation that can be enforced at law. Anson on Contracts, sec. 9 ; Pollock on Contracts, 6; Austin on Jurisprudence, 1016, 17. This distinction was known to the framers of the Constitution, and they used language applicable to perfect obligations, which could be enforced at law, and which had no application to those imperfect obligations which men owe to themselves or their families, or their neighbors, but which cannot be enforced at law. This distinction is recognized in the English courts, Crouch v. Credit Fonder, L. R. 8 Q. B. at page 384; and by French jurists, 42 Dalloz, Jurisp. Gen. Tresor public, No. 1105 ; and by this court, Bank of United States n . United States, 5 How. 382. He also cited 15 Laurent, No. 424, p. 477; 1 Picot, Code Civ. p. 162-3; Larombiere des Obligations, 360-364; ib. 58-59; 1 Bentham’s Works, 148; Sturges v. Crovoninshield, 4 Wheat. 122, 208; Dartmouth College v. Woodward, 4 Wheat. 518 ; Ogden v. Saunders, 12 Wheat. 213, 332.—III. The United States enjoy immunity from suits as matter of right. United States n . Clarke, 8 Pet. 436 ; Briscoe n . Bank, 11 Pet. 257; United States n . UcLemore, 4 How. 286; The Siren, 7 Wall. 152; The Davis, 10 Wall. 15; Carr n . United States, 98 U. S. 433 ; United States v. Thompson, ib. 486. An obligation to pay the debts contracted before the Constitution was inserted in article VI. It was part of the supreme law. But the creditors had no vinculum juris. Theirs were pacta qucc non hdbent causam dvilem. This is a case strictly analogous to the case stated in the bill.—IV. This is not a controversy between States. It is a vicarious controversy between individuals. Controversies between States have little p. 85resemblance to those between individuals. They arise out of public relations and intercourse, and involve political rights.—V. Courts of chancery discourage suits that are artificially produced, and do not arise on the relations of the parties. The merchandise consisting merely of a faculty to come into court, is not allowed.—VI. The rule of chancery is that the immediate parties to a contract, or their successors, are necessary parties to a suit for its enforcement. In this case the State is the only party indebted, or charged to be indebted. The object of the bill is to estabfish a debt against her, to be paid out of money belonging to her. Shields v. Barrow^ 17 How. 130 ; Coiron n . Millauden'A^ How. 113; Pomeroy on Contracts, 546, 484-5, 491.—VII. In the New York case an argument of a wider scope is presented; that the State of New York, having been a sovereign, and with powers to make war, issue letters of marque and reprisal, and otherwise to act in a belligerent way, resigned these powers into the control of the United States, to be held in trust, and therefore this court must make decrees in the cases in favor of the plaintiff, for judgment, making declaration of the default of Louisiana, and to subject her collecting agencies and accounting officers to the demands of the bill, and to compel the collection of taxes, to pay all the holders of coupons and bonds within the State of New York their interest and principal, from year to year, till the debt becomes due in a . d . 1914. No precedent of such a suit has been cited, and it must be admitted the present has the merit of originality and invention. It is opposed to the general practice of nations, and the testimony of the leading bankers of Great Britain and of the leading financiers of Europe is a dissent and contradiction to any policy or- right to use governmental power in such cases. Mr. Campbell reviewed the acts of government in such cases, and closed with an argument upon the constitutions of Louisiana.

On the 19th of February, 1793, the judgment of the court was announced, and the jurisdiction sustained, four of the justices being in favor of granting the motion and one against it. All the justices who heard the case filed opinions, some of which were very elaborate, and it is evident the subject p. 87received the most careful consideration. Mr. Justice Wilson in his opinion uses this language, p. 465 :

Prior to this decision the public discussions had been confined p. 88to the power of the court, under the Constitution, to entertain a suit in favor of a citizen against a State; many of the leading members of the convention arguing, with great force, against it. As soon as the decision was announced, steps were taken to obtain an amendment of the Constitution withdrawing jurisdiction. About the time the judgment was rendered, another suit was begun against Massachusetts, and process served on John Hancock, the governor. This led to the convening of the general court of that commonwealth, which passed resolutions instructing the senators and requesting the members of the House of Representatives from the State “ to adopt the most speedy and effectual measures in their power to obtain such amendments in the Constitution of the United States as will remove any clause or articles of the said Constitution, which can be construed to imply or justify a decision that a State is compellable to answer in any suit by an individual or individuals in any courts of the United States.” Other States also took active measures in the same direction, and, soon after the next Congress came together, the eleventh amendment to the Constitution was proposed, and afterwards ratified by the requisite number of States, so as to go into effect on the 8th of January, 1798. That amendment is as follows :

The language of the amendment is, in effect, that the judicial power of the United States shall not extend to any suit commenced or prosecuted Jy citizens of one State against another p. 89State. No one can look at the pleadings and testimony in these cases without being satisfied, beyond all doubt, that they were in legal effect commenced, and are now prosecuted, solely by the owners of the bonds and coupons. In New Hampshire, before the attorney-general is authorized to begin a suit, the owner of the bond, must deposit with him a sum of money sufficient to pay all costs and expenses. No compromise can be effected except with the consent of the owner of the claim. No money of the State can be expended in the proceeding, but all expenses must be borne by the owner, who may associate with the attorney-general such counsel as he chooses, the State being in no way responsible for fees. All moneys collected are to be kept by the attorney-general, as special trustee, separate and apart from the other moneys of the State, and paid over by him to the owner of the claim, after deducting all expenses incurred not before that time paid by the owner. The bill, although signed by the attorney-general, is also signed, and was evidently drawn, by the same counsel who prosecuted the suits for the bondholders in Louisiana, and it is manifested in many ways that both the State and the attorney-general are only nominal actors in the proceeding. The bond owner, whoever he may be, was the promoter and is the manager of the suit. He pays the expenses, is the only one authorized to conclude a compromise, and if any money is ever collected, it must be paid to him without even passing through the form of getting into the treasury of the State.

It is contended, however, that, notwithstanding the prohibiion of the amendment, the States may prosecute the suits, because, as the “sovereign and trustee of its citizens,” a State is p. 90“ clothed with the right and faculty of making an imperative demand upon another independent State for the- payment of debts which it owes to citizens of the former.” There is no doubt but one nation may, if it sees fit, demand of another nation the payment of a debt owing by the latter to a citizen of the former. Such power is well recognized as an incident of national sovereignty, but it involves also the national powers of levying war and making treaties. As was said in the United States v. Diekelman., 92 U. S. 520, if a sovereign assumes the responsibility of presenting the claim of one of his subjects against another sovereign, the prosecution will be “as one nation proceeds against another, not by suit in the courts, as of right, but by diplomatic negotiation, or, if need be, by war.”

Whether this be in all respects true or not, it is clear that no nation ought to interfere, except under very extraordinary p. 91circumstances, if the citizens can themselves employ the identical and only remedy open to the government if it takes on itself the burden of the prosecution. Under the Constitution, as it was originally construed, a citizen of one State could sue another State in the courts of the United States for himself, and obtain the same relief his State could get for him if it should sue. Certainly, when he can sue for himself, there is no necessity for power in his State to sue in his behalf, and we cannot believe it was the intention of the framers of the Constitution to allow both remedies in such a case. Therefore, the special remedy, granted to the citizen himself, must be deemed to have been the only remedy the citizen of one State could have under the Constitution against another State for the redress of his grievances, except such as the delinquent State saw fit itself to grant. In other words, the giving of the direct remedy to the citizen himself was equivalent to taking away any indirect remedy he might otherwise have claimed, through the intervention of his State, upon any principle of the law of nations. It follows that when the amendment took away the special remedy there was no other left. Nothing was added to the Constitution by what was thus done. No power taken away by the grant of the special remedy was restored by the amendment. The effect of the amendment was simply to revoke the new right that had been given, and leave the limitations to stand as they were. In the argument of the opinions filed by the several justices in the Chisholm case, there is not even an intimation that if thé citizen could not sue, his State could sue for him. The evident purpose of the amendment, so promptly proposed and finally adopted, was to prohibit all suits against a State by or for citizens of other States, or aliens, without the consent of the State to be sued, and, in our opinion, one State cannot create a controversy with another State, within the meaning of that term as used in the judicial clauses of the Constitution, by assuming the prosecution of debts owing by the other State to its citizens. Such being the case we are satisfied t at we are prohibited, both by the letter and the spirit of the Constitution, from entertaining these suits, and

The steamer Nuestra Señora de Regla was built in New York for the claimant, a railroad company in Cuba, created by the laws of Spain. She was delivered to an agent of the claimant on the 6th of November, 1861, and sailed for Havana in command of a Spanish master. She was a side-wheel steamer of about three hundred tons burden, built to run on a ferry p. 93between Havana and a terminus of the railroad company’s railroad, On her way down the coast she went into Port Royal, and while there the quarter-master of the United States at that post offered to purchase her for the use of the government. The master declined to sell, as he had no authority. She was then, on the 29th of November, seized by order of Gen. Thomas W. Sherman, in command of the United States forces. In communicating the fact of the seizure to the adjutant-general of the army, on the second of December, the general said:

And the said party of the second part doth agree, for and in consideration of the faithful performance of the above duty, that the said party of the first part shall receive the sum of two hundred ollars for each and every day the said boat may be kept in service, said steam ferry-boat to be kept staunch, sound and strong, p. 94and her machinery in good running order and condition, by the party of the first part.

It having been mutually agreed between the counsel for the p. 96respective parties that the said vessel, in the above decision, was immediately taken into the possession and use of the United States under a charter-party, and delivered them thereunder, and so remained without molestation from the claimants. On motion of the counsel for the vessel and with the assent of the United States attorney, it is ordered by the court that further proceedings and litigation be stayed in the above cause, to the end that all questions of damages reserved in the decision of the court in the term of June last, may be considered and adjusted by the government of the United States in the application, and with the concurrence of the government of Spain.

It is objected, however, that the executive department of the government had no power, in the absence of express legislative authority, to make such a submission. It was the duty of the United States, under the law of nations, to bring all captured vessels into a prize court for adjudication. If that had not been done in this instance, the Spanish government would have had just cause of complaint, and could have demanded reparation for the 'wrongs that had been done one of its subjects. The executive department had the right to bring the suit. In that suit it had been determined that the capture was unlawful. Necessarily, therefore, the question of damages to the owner of the captured vessel arose. Since, without the consent of the United States, no judgment for damages could be rendered against them in the pending suit that could be enforced by execution, the Spanish government had the right to assume the prosecution of the claim, and it did. Necessarily the negotiations on the part of the United States under this claim were conducted by the executive. After long delay no agreement was reached, and as a last resort for ending the controversy, it p. 103was determined to refer the whole matter to the court for judicial inquiry and determination. We see no reason why this might not be done in such a case. It is true any judgment that may be rendered cannot be judicially enforced, but the questions to be settled are judicial in their character, and are incidents to the suit which the United States were required to bring to enforce their rights as captors. It is too late now to insist that the case is not one of prize, because in the libel it is expressly alleged that the vessel was captured as lawful prize, and condemnation was asked on that account. When, therefore, the United States, through the executive of the nation, waived their right to exemption from suit, and asked the prize court to complete the adjudication of a cause which was rightfully begun in that jurisdiction, we think the government is bound by the submission, and that it is the duty of the court to proceed to the final determination of all the questions legitimately involved.

Upon the facts in this case there can be no doubt of the propriety of such an allowance for the extraordinary detention of the vessel before she was delivered up for adjudication, especially since she was detained for the express purpose of use by the United States. And as to the amount of the allowance, there is no opportunity for discussion. The United States were willing and actually contracted to pay $200 a day for her use if she was not in fact lawful prize, and that is shown to have been a reasonable price for her charter at the time. She was seized on the 29th of November, and it is fair to assume that if ue diligence had been used she might have been surrendered for adjudication by the 16th of December, when her charter began to run. She was not actually surrendered until the 9th of June a delay of 175 days beyond what was necessary. It p. 104is not disputed that her value at that time was $30,000. She cost when built $50,000, and was new when captured. As she has never been restored under the order to that effect, there can be no doubt of the liability of the United States for her value, when at their request she was delivered into their possession by the court. It is not a matter of any importance that the certificate of deposit in the treasury of the amount of her appraised value was not filed. By taking the vessel on the terms imposed by the court, the United States impliedly agreed to restore her in as good condition as she was when taken, or pay her value in money. By the surrender of the vessel for adjudication, the United States relieved themselves from any further liability for damages in the way of demurrage, and became bound for the vessel instead.