MR. JUSTICE MILLER, dissenting.

In the case of Bronson v. Rhodes I expressed my dissent on the ground that a contract for gold dollars, in terms, was in no respect different, in legal effect, from a contract for dollars without the qualifying words, specie or gold, and that the legal tender statutes had, therefore, the same effect in both cases.

I adhere to that opinion, and dissent from the one just delivered by the court.

SECTION VI.—BILLS OF CREDIT.

BRISCOE v. THE PRESIDENT AND DIRECTORS OF THE BANK OF THE COMMONWEALTH OF KENTUCKY.

11 Peters, 257; 12 Curtis, 418. 1837.

M'LEAN, J., delivered the opinion of the court.

This case is brought before this court, by a writ of error from the Court of Appeals of the State of Kentucky, under the 25th section of the Judiciary Act of 1789. 1 Stats. at Large, 85.

An action was commenced by the Bank of the Commonwealth of Kentucky, against the plaintiffs in error, in the Mercer Circuit Court of Kentucky, on a note for $2,048.37, payable to the president and directors of the bank; and the defendants filed two special pleas, in the first of which oyer was prayed of the note on which suit was brought, and they say that the plaintiff ought not to have, &c., because the note was given on the renewal of a like note, given to the said bank, and they refer to the act establishing the bank, and allege that it never received any part of the capital stock specified in the act; that the bank was authorized to issue bills of credit, on the faith of the State, in violation of the Constitution of the United States. That by various statutes the notes issued were made receivable in discharge of executions, and if not so received, the collection of the money should be delayed, &c.; and the defendants aver that the note was given to the bank on a loan of its bills, and that the consideration, being illegal, was void.

The second plea presents, substantially, the same facts. To both the pleas a general demurrer was filed, and the court sustained the demurrer, and gave judgment in favor of the bank. This judgment was removed, by appeal, to the Court of Appeals, which is the highest court of judicature in the State, where the judgment of the Circuit Court was affirmed, and being brought before this court by writ of error, the question is presented whether the notes issued by the

bank are bills of credit, emitted by the State, in violation of the Constitution of the United States.

The terms "bills of credit," in their mercantile sense, comprehend a great variety of evidences of debt, which circulate in a commercial country. In the early history of banks it seems their notes were generally denominated bills of credit; but in modern times they have lost that designation, and are now called either bank-bills, or bank-notes.

But the inhibition of the Constitution applies to bills of credit, in a more limited sense.

It would be difficult to classify the bills of credit which were issued in the early history of this country. They were all designed to circulate as money, being issued under the laws of the respective colonies; but the forms were various in the different colonies, and often in the same colony.

In some cases they were payable with interest, in others without interest. Funds arising from certain sources of taxation were pledged for their redemption, in some instances; in others they were issued without such a pledge. They were sometimes made a legal tender; at others, not. In some instances a refusal to receive them operated as a discharge of the debt; in others, a postponement of it. They were sometimes payable on demand; at other times, at some future period. At all times the bills were receivable for taxes, and in payment of debts due to the public, except, perhaps, in some instances, where they had become so depreciated as to be of little or no value.

These bills were frequently issued by committees, and sometimes by an officer of the government, or an individual designated for that

purpose.

The bills of credit emitted by the States during the Revolution, and prior to the adoption of the Constitution, were not very dissimilar from those which the colonies had been in the practice of issuing. There were some characteristics which were common to all these bills. They were issued by the colony or State, and on its credit. For in cases where funds were pledged, the bills were to be redeemed at a future period, and gradually as the means of redemption should accumulate. In some instances, Congress guaranteed the payment of bills emitted by a State.

They were, perhaps, never convertible into gold and silver, immediately on their emission; as they were issued to supply the pressing pecuniary wants of the government, their circulating as money was indispensable. The necessity which required their emission precluded the possibility of their immediate redemption.

In the case of Craig et al. v. The State of Missouri, 4 Pet. 410, this court was called upon, for the first time, to determine what constituted a bill of credit, within the meaning of the Constitution. A

majority of the judges in that case, in the language of the Chief Justice, say, that "bills of credit signify a paper medium, intended to circulate between individuals, and between government and individuals, for the ordinary purposes of society."

A definition so general as this would certainly embrace every description of paper which circulates as money.

Two of the dissenting judges, on that occasion, gave a more definite, though, perhaps, a less accurate meaning, of the terms "bills of credit."

By one of them it was said, "a bill of credit may, therefore, be considered a bill drawn and resting merely on the credit of the drawer, as contradistinguished from a fund constituted or pledged for the payment of the bill." And in the opinion of the other, it is said, “to constitute a bill of credit, within the meaning of the Constitution, it must be issued by a State, and its circulation as money, enforced by statutory provisions. It must contain a promise of payment by the State generally, when no fund has been appropriated to enable the holder to convert it into money. It must be circulated on the credit of the State; not that it will be paid on presentation, but that the State, at some future period, on a time fixed or resting in its own discretion, will provide for the payment."

These definitions cover a large class of the bills of credit issued and circulated as money, but there are classes which they do not embrace, and it is believed that no definition, short of a description of each class, would be entirely free from objection; unless it be in the general terms used by the venerable and lamented Chief Justice.

The definition, then, which does include all classes of bills of credit emitted by the colonies or States, is, a paper issued by the sovereign power, containing a pledge of its faith, and designed to circulate as money.

Having arrived at this point, the next inquiry in the case is, whether the notes of the Bank of the Commonwealth were bills of credit within the meaning of the Constitution.

A State cannot do that which the Federal Constitution declares it shall not do. It cannot coin money. Here is an act inhibited in terms so precise that they cannot be mistaken. They are susceptible of but one construction. And it is certain that a State cannot incorporate any number of individuals, and authorize them to coin money. Such an act would be as much a violation of the Constitution as if the money were coined by an officer of the State, under its authority. The act being prohibited cannot be done by a State, either directly or indirectly.

And the same rule applies as to the emission of bills of credit by a State. The terms used here are less specific than those which relate to coinage. Whilst no one can mistake the latter, there are great

differences of opinion as to the construction of the former. If the terms in each case were equally definite, and were susceptible of but one construction, there could be no more difficulty in applying the rule in the one case than in the other.

The weight of the argument is admitted, that a State cannot, by any device that may be adopted, emit bills of credit. But the question arises, what is a bill of credit within the meaning of the Constitution? On the answer of this must depend the constitutionality or unconstitutionality of the act in question.

A State can act only through its agents; and it would be absurd to say that any act was not done by a State, which was done by its authorized agents.

To constitute a bill of credit within the Constitution it must be issued by a State, on the faith of the State, and be designed to circulate as money. It must be a paper which circulates on the credit of the State; and is so received and used in the ordinary business of life.

The individual or committee who issue the bill must have the power to bind the State; they must act as agents, and, of course, do not incur any personal responsibility, nor impart, as individuals, any credit to the paper. These are the leading characteristics of a bill of credit which a State cannot emit. Were the notes of the Bank of the Commonwealth bills of credit issued by the State?

The president and directors of the bank were incorporated, and vested with all the powers usually given to banking institutions. They were authorized to make loans on personal security, and on mortgages of real estate. Provisions were made, and regulations, common to all banks; but there are other parts of the charter which, it is contended, show that the president and directors acted merely as agents of the State.

In the preamble of the act it is declared to be "expedient and beneficial to the State, and the citizens thereof, to establish a bank on the funds of the State, for the purpose of discounting paper, and making loans for longer periods than has been customary, and for the relief of the distresses of the community."

The president and directors were elected by the legislature. The capital of the bank belonged to the State, and it received the dividends. These and other parts of the charter, it is argued, show that the bank was a mere instrument of the State to issue bills; and that, if by such a device the provision of the Constitution may be evaded, it must become a nullity.

That there is much plausibility and some force in this argument cannot be denied; and it would be in vain to assert that on this head the case is clear of difficulty.

The preamble of the act to incorporate the bank shows the object of its establishment. It was intended to "relieve the distresses of the community;" and the same reason was assigned, it is truly said,

for the numerous emissions of paper money during the Revolution, and prior to that period.

To relieve the distresses of the community, or the wants of the government, has been the common reason assigned for the increase of a paper medium, at all times and in all countries. When a measure of relief is determined on, it is never difficult to find plausible reasons for its adoption. And it would seem in regard to this subject that the present generation has profited but little from the experience of past ages.

The notes of this bank, in common with the notes of all other banks in the State, and indeed throughout the Union, with some. exceptions, greatly depreciated. This arose from various causes then existing, and which, under similar circumstances, must always produce the same result.

The intention of the legislature in establishing the bank, as expressed in the preamble, must be considered in connection with every part of the act, and the question must be answered, whether the notes of the bank were bills of credit within the inhibition of the Constitution.

Were these notes issued by the State?

Upon their face they do not purport to be issued by the State, but by the president and directors of the bank. They promise to pay to bearer on demand the sums stated.

Were they issued on the faith of the State?

The notes contain no pledge of the faith of the State in any form. They purport to have been issued on the credit of the funds of the bank, and must have been so received in the community.

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.

They do not assume to act as agents, and there is no law which authorizes them to bind the State. As in, perhaps, all bank charters, they had the power to issue a certain amount of notes; but they determined the time and circumstances which should regulate these issues.

When a State emits bills of credit the amount to be issued is fixed by law, as also the fund out of which they are to be paid, if any fund be pledged for their redemption; and they are issued on the credit of the State, which, in some form, appears upon the face of the notes, or by the signature of the person who issues them.

As to the funds of the Bank of the Cominonwealth, they were, in part only, derived from the State. The capital, it is true, was to be paid by the State; but in making loans the bank was required to take good securities, and these constituted a fund to which the holders of the notes could look for payment, and which could be made legally responsible.

In this respect the notes of this bank were essentially different