134 U.S. 22
STATE OF NORTH CAROLINA et al.
March 3, 1890
This suit was commenced in the circuit court of the United States for the eastern district of North Carolina by bill in equity filed by Alfred H. Temple, a citizen of North Carolina, on behalf of himself and other bondholders in like interest, against the state of North Carolina and William P. Roberts, the auditor of said state. The object of the bill is to compel said state and its officials, including the auditor, to execute and carry into effect a certain statute of the state, passed January 29, 1869, which provided for raising taxes to pay the interest on certain bonds of the state, called 'special tax bonds of the state of North Carolina,' issued under the provisions of said act, and held by the plaintiff and others. In other words, it is a suit, in the nature of a bill for a specific performance of a contract, brought to compel the state of North Carolina to raise a tax for the payment of the arrears of interest due on the state bonds held by the plaintiff and others. The act referred to authorized a subscription on the part of the state of $4,000, 000 of the capital stock of the Wilmington, Charlotte & Rutherford Railroad Company, and the issue of state bonds for the payment thereof, payable 30 years after date, with interest at 6 per cent. per annum, payable semi-annually, to be represented by coupons. The subscription was made, and 3,000 of the bonds, for $1,000 each, [134 U.S. 22, 23] were issued, of which the bonds of the plaintiff, which constitute the ground of the present suit, are a part. By the sixth section of the act it was provided as follows: 'Sec. 6. For the purpose of providing for the payment of the interest upon the bonds hereby authorized and the principal at its maturity, an annual tax of one-eighth of one per cent. is hereby imposed upon all the taxable property of the state, which shall be levied, collected, and paid into the state treasury as other public taxes, and the surplus, after paying the interest, shall be invested in securities of the United States or other safe securities, and kept as a sinking fund for the payment of the principal money at maturity.' The bill alleges that the plaintiff is the bona fide holder of 10 of said bonds, (giving their numbers,) and that the overdue coupons attached thereto, unpaid, amount to $ 9,900; that in the year 1869 the collection of the special tax was duly made, and a portion of the coupons was paid; but that in the month of January, 1870, and while large amounts of money arising from the collection of the special tax aforesaid remained in the hands of the state treasurer, applicable to the payment of said coupons, the state of North Carolina, in violation of the constitution of the United States, did by legislative resolution direct the appropriation of the said moneys then in the hands of the treasurer to other purposes; and that after all of said 3, 000 bonds had been issued according to law the saw the state of North Carolina undertook to impair the obligation of the contract, and to that end, on the 20th of January, 1870, formally enacted the following resolution: 'Resolved, that the treasurer be instructed and directed not to pay any more interest on the special tax bonds until authorized and directed so to do by this general assembly.' That to the same end, upon the 8th of March, 1870, the state also passed an act declaring as follows: 'Section 1. The general assembly of North Carolina do enact that all acts passed at the last session of this legislature making appropriations to railroad companies be, and the same are hereby, repealed; that all bonds of the state which [134 U.S. 22, 24] have been issued under the said acts now in the hands of any president or other officers of the corporation be immediately returned to the treasurer. Sec. 2. The moneys in the state treasury which were levie and collected under the provisions of the acts mentioned in section one of this act are hereby appropriated to the use of the state government, and shall be credited to the counties of the state upon the tax to be assessed for the year one thousand eight hundred and seventy, in proportion to the amounts collected from them, respectively.' That with the same view, upon the 23d of November, 1874, the general assembly passed an act containing the following provisions: 'Sec. 2. That the treasurer shall not pay or discharge any claim for interest upon any portion of the bonded debt of this state, except as hereinafter provided for by law. Sec. 3. That the auditorshall not audit or recognize any claim for principal or interest upon any portion of the bonded debt of this state heretofore made or pretended to be made by authority of this state, except as hereafter provided for by law. Sec. 4. That any money in or which may be paid into the treasury on account of special taxes heretofore levied for the payment of interest on bonds or pretended bonds of this state is hereby transferred and appropriated to the general fund.' That in like connection, on the 3d day of November, 1880, the following constitutional amendment was adopted by the state: 'Nor shall the general assembly assume or pay or authorize the collection of any tax to pay, either directly or indirectly, expressed or implied, any debt or bond incurred or issued by authority of the convention of the year 1868, or any debt or bond incurred or issued by the legislature of the year 1868, at its special session of 1868 and at its regular session of 1868 and 1869 and 1870, except the bonds issued to fund the interest of the public debt, unless the purposing to pay the same shall have been submitted to the people or by them ratified, by the vote [134 U.S. 22, 25] of a majority of qualified voters of the state at a regular election held for that purpose.'
The bill further alleges that since the 20th day of January, 1870, none of the coupons belonging to said bonds, which have fallen due, have been paid, though payment of the same has been duly demanded; that the above-mentioned special taxes have not been collected, that none of the contracts performable under said act of January 29, 1869, have been performed; and that the government of the state has constantly enforced upon its officials compliance with the subsequent nullifying enactments above set forth. The bill then avers that by virtue of the provisions of the constitution of North Carolina and of the said act of the general assembly of January, 1869, and of the issue of bonds thereunder, a contract was constituted between the state and the holders of said bonds, which was in the same connection a contract executed by said state, by the levying of the tax and the committing of its collection to state taxing officials, and the direction to other state officials for the regular payment of the coupons, and the in vestment of the surplus arising from the taxes in good securities, to be kept as a sinking fund for the payment of the principal. It further avers that the statutes of North Carolina, hereinbefore set forth, which attempt to impair the contract in question, have not taken legal effect, for the reason that the said laws are violations of the constitution of the United States, both in its contract clause and in the fourteenth amendment thereto. After showing the manner of levying taxes in North Carolina, and several matters as grounds of equitable jurisdiction, the bill prays, among other things, that the respondents be perpetually enjoined from obstructing or impeding the collection and payment of the special tax in question; and that the respondent, the state of North Carolina, its executive agents and officials, and William P. Roberts, the auditor of the state, be decreed to execute the said act of January 29, 1869, and to cause the proper statutory lists to be sent to the boards of county commissioners containing provisions for the special tax above described; and for general relif . [134 U.S. 22, 26] A subpoena was issued, and served upon the governor, attorney general, and auditor of the state. The attorney general, on behalf of the state, filed a motion to dismiss the bill as against the state, alleging that the state did not consent to be a party defendant. The auditor filed a demurrer to the bill, on the ground that by the showing of the bill itself he had no personal interest in the matters complained of, and that the bill is against him in his official capacity only, and requires him as an officer of the state to act contrary to the command of the legislature of the state, in raising money by taxation. On the main question, the circuit judge and the district judge who held the court were opposed in opinion, the opinion of the former being in favor of the complainant; in pursuance of which the following decree was made, to-wit: 'This cause coming on to be heard, the parties named as defendants thereto, by their counsel, announce to the court that they will not further plead or answer thereto, but will abide, the one by its motion and the other by his demurrer; that they also waive the taking of any account in regard to the coupons alleged by the plaintiff to be by him held. Whereupon it is declared by the court that the said state of North Carolina is indebted to the said Alfred H. Temple for coupons held by him as in his bill alleged, and now by him deposited with the clerk of this court, to the amount of nine thousand nine hundred dollars, principal money, together with five thousand five hundred and forty-five dollars for interest due thereon up to the present term of this court, and also for interest upon said principal money until paid; which amounts the said state is hereby adjudged and decreed to pay to the said Temple. And it is further ordered that the said William P. Roberts, as auditor of the state of North Carolina, proceed in due course of his office to execute the provisions of the act passed by said state on the 29th of January, 1869, entitled 'An act to amend the charter of the Wilmington, Charlotte & Rutherford Railroad Company, to provide for the completion of said road, and to secure for the state a representation in this [134 U.S. 22, 27] company,' so far as such execution may be necessary to satisfy this decree.' The point on which the judges differed is stated as follows: 'It appearing to the court that the case made in the record against Roberts, as auditor, etc., was merely incidental to that against the state of North Carolina, it occurred, as a question, whether such suit could be maintained in this court against said state by the complainant, he being one of the citizens thereof. Upon which question the opinion of the judges were opposed, his honor, Judge BOND, being of opinion that it was so maintainable, and his honor, Judge SEYMOUR, being of opinion to the contrary. Whereupon the above question was during the same term stated as above, under the direction of the judges, and certified, and such certificate ordered to be entered of record.'
T. F. Davidson, R. H. Battle, and J. W. Graham, for appellants.
S. F. Phillips and
[134 U.S. 22, 30] E. L. Andrews, for appellee.
We think it perfectly clear that the suit against the auditor in this case was virtually a suit against the state of North Carolina. In this regard it comes within the principle of the cases of Louisiana v. Jumel, 107 U.S. 711 , 2 Sup. Ct. Rep. 128; Cunningham v. Railroad Co., 109 U.S. 446 , 3 Sup. Ct. Rep. 292, 609; Hagood v. Southern, 117 U.S. 52 , 6 Sup. Ct. Rep. 608; and In re Ayers, 123 U.S. 443 , 8 Sup. Ct. Rep. 164. We do not think it necessary to consider that question anew. The other point (the suability of the state) is settled by the de cision just rendered in Hans v. State, ante, 504. To the question on which the judges of the circuit court were opposed in opinion, our answer is in the negative, namely, that the suit could not be maintained in the circuitcourt against the state of North Carolina by the plaintiff, a citizen thereof. The decree of the circuit court is reversed, and the cause remanded, with instructions to dismiss the bill of complaint.
I dissent from so much of the judgment in this case as holds that this suit cannot be maintained against the auditor of [134 U.S. 22, 31] the state of North Carolina. The legislation of which complaint is here made impaired the obligation of the state's contract, and was, therefore, unconstitutional and void. It did not, in law, affect the existence or operation of the previous statutes out of which the contract in question arose. So that the court was at liberty to compel the officer of the state to perform the duties which the statutes, constituting the contract, imposed upon him. A suit against him for such a purpose is not, in my judgment, one against the state. It is a suit to compel the performance of ministerial duties, from the performance of which the state's officer was not, and could not be, relieved by unconstitutional and void legislative enactments.