WILLIS and Wife v. MILLER, Treasurer, eto., and others.1
k. D. Virginia.
GINIA ACT OF MARCH 80, 1871, AND OF MARCH 15, 1884-SCHOOL TAX. .'j'he act of the Virginia legislature of March 30, 1871, commonly called the "Ftmding Act," providing that the coupons on bonds issued under that act should be receivable for all Ilublic taxes and dues. is not invalidated or reno dered unconstitutional by the fact that. the legislature subsequently. by the act of March 15, 1884, altered the method of collecting the school tax and the mode of its distribution, and segregated that tax from the gross tax collected. 2 SAME-VrnGINIA ACT OF MARCH 15, 1884. So far as the act of the Virginia legislature of March 15, 1884, forbids the receipt of tax receivable coupons for any state tax, it is an act impairing the ob· ligation of contracts, and is void under the constitution of the United States. VrnGINIA TAX-RECEIVABLE CouPoNs.,..--RIGl;rr OF TAx-PAYER TO STAN'DON TENDER of COUPONS- VmGINIA ACTS OF JANUARY 14,1882, AND MARCH 15, 1884. A tax-payer in Virginia is under no obligation to pay state in money, and to surrender his tax-receivable COUPOllS for identification and verincation, as provided by the act of January 14, 1882. He has a right to stand upon tender of the coupons. ' TAX COLLECTOR A TRESPASSER - TAX-RECEIVABLE COUPONSMEASURE OF DAMAGES. Upon the tender of tax-receivable coupons by a tax-payer of Virginia for the due the whether coupons are received or not, the taxes are "paid, and any levy by a county treasurer upon the property of the ·tax-payer after such tender is a trespass; and In an action· for dama&,es for .sueh levy, where, at the time it :was made, the officer knew that it was Illegal, punitive damages may be recovered. . , SAME-JOINT TRESPASSERS-STATE OFFICERS ADVISING ILLEGAL TAX LEVY -VmGINIA ACT FEBRUARY 24, 1886.' ."" The members of the Virginia '''illdemnity board, " Greated by the act of February 24, 1886, are jointly liable with a county treasurer for a trespass committed by hiW in making a levY for non-paYlDent of a state ,tax after tender by the 'tax-payer. of tax-reeeivablecoupons, where they advised such levy, and legal assistance and indemnity the case of the treasurer being mulcted lD d a m a g e s . , ' DAMAGES--'ltLEGAL LEVY OF TAX-MALICE. ' , Malice in law is notnecessllriIy personal hate or ill will of the trespasser towards the person injured. but it is that state of mind which is reckless of law and of the legal righteof the citizen; lind the object of exemplary damages or "smart money" Is not only to indemnify the sufferer for any loss ell-stained, but to preventllimUar on the part of the trespasser in the future. .. ' '
At Trespass. Prior to the late Civil war the state of Virginia. borrowed large sums of money upon her bonds bearing 6 per cent. interest to construot works of intet:nal improvement, such as railways, and so forth. Her bonds being in the main held outside of her own borders,-in the north and in England,-she paid no interest on them during the war and during the period of reconstruotion. During the war, oneISee Strickler v. Yager, post, 244. As to impairing the obligation of contracts, see Saginaw Gas-light Co. v. City of Sagmaw, 28 Fed. Rep. 629, and notej City of Louisville v. Weible, (Ky.) 1 S. W. Itep. 605, and note. .
WILLlS V. MILLER.
third of her territory and population were detached, and erected into the state of West Virginia. Virginiav.West Virginia, 11 Wall. 39. In 1871 public attention had come to be attracted to the condition of Virginia's debt, and a general demand arose that some provision should be ma.de to meet it. The people of the state of Virginia took this view of the matter: They said that as West Virginia had taken .part in borrowing this money. and received her share of the bellefit of it, it was but fair that she should bear her share of the burden of it, and" as thl\ot part of the state \V hich had been detached was about one-third in respect to territory and population, it was assumed that her share of the debt. therefore. was one-third. Accordingly, the state of Virginia, on March 30,1871, passed an act which ofl'eredto all holders of her old bonds that, if they would surrender them to her, she would give them her new bonds for of the principal, and two-,thirdsof the interest overdue on the old bonds, and on this new,bond she would pay them 6 per cent. interest, and also give them a certificate, with respect to the remaining third, thatastojt, sl:Ul would turn over. to them whatever she might thereafterobtairifrom West Virginia on account of it. She proposed, furthe;!;, new b()nds should run 34 years, witb interest payableserni-apnua;lly, and that the interest promises should sented by coupons, which: should: be in payment of all taxes, de:bts,alld demands due the state. . ' '., ..' .' .. This, proP9sition to the creditors, and they at once began .When new bonds to the amount of $22,000,000 hadbeell bel;tring these tax-receivable the legislature reas'semble<l, and repealed the funding act, March 7,1872" so far as to :Corbil1 the further iBBue of' bonds bearing 'tat-receivable coupons; allowing, however, the funding to continue in all other respects the same. It also passed an act forbidding the collectors of taxes to the coupons that hltd been issued, inpaymeut of taxes. The cr.edito:t:sof tlJ6state,deemiIlg this to bean act that impaired the obl.igatlon of ,the coupon contract, at once attacked it in the oourts; and the;su:appeals of the state held it to be unc'Qnstitutional and void in the of Antoniv. Wright, 22 Grat. 833. For a number aftedhis the coupons were regularly received in payment of taxes; but in the mean time apolitical party was being formed which aimed at destroying the coupons by legislation based upon the decision of thtll'lupreme court of the United States in the case of ;I'ennessee v.,Bneed,96,U.,S. 69, by pretending to change the rtlQledy for the enforcement or the contract. This political par,ty came into control of the whole. state first in the winter of 1881-82. It at onee. proceeded to ena9t its party policy in the form of statutes. It passed,;rannary 14, 1882, an act which insubstanGe provided thl;tt nocoupc;:ms. should be received in:pStyment of taxes except under the oOl1ditionsprescdbed in that' aet; that there were manycounterfeit,forged,and spurious conpoTIsinexistence, (as a matter of fact none had ElVElr been
known to exist, and none have ever been found,) it provided that, when a tax-payer desired to pay his taxes in coupons, he should pay the amount of his tax-bill in money, and surrender his coupons to the collector at the same time, who should deliver them to the county or corporation court, where a jury should pass upon the question whether they were genuine or spurious. If the jury found them genuine his money was to be refunded to him. The creditors at once attacked this act as one impairing the obligation of their contract. It went to the supreme court of the United States, where its validity was maintained. Antoni v. Greenhaw, 107 U. S. 769; S. C. 2 Sup. Ct. Rep. 91. While maintaining the validity of the act as applied to the case where a sought to force the state actually to receive his coupons, th'e court very distinctly in.timated that there might be a wide difference between that case and the case in which a tax-payer tendered his coupons, and stood upon that tender, and refused to pay in any other medium. Cases built upon this idea were immediately brought before the supreme court. A tax-payer offered coupons, which were refused. The collector, carryingout the provisions of the state law, levied on the tax-payer's propedy, and sold it. The tax-payer sued him for a trespass. He justified his conduct by authority of the state law, which the tax-payer said was unconstitutional and void. The question coming before the supreme court of the United States, it held that a tender of the coupon pays the tax so far as to deprive the collector of all power to collect thereafter in another medium, and that any and all acts of the Virginia legislature were powerless to protect him from the consequences of his trespass in making that levy. Poindexter v. Greenhaw, 114 U. S. 270; S. C. 5 Sup. Ct. Rep. 903; Barry v. Edmttnds, 116 U. S. 550; S. C. 6 Sup. Ct. Rep. 501; Taylor v. Chaffin, 116 U. S. 567-572; S. C. 6 Sup. Ct. Rep. 518; Royall 'V; Virginia, 116 U. fl. 572; S. C. 6 Sup. Ct. Rep. 510. After the last decisions of the United States supreme court on this subject, it was very evident that the state would be forced to redeem her coupons, unless some new legal barrier could be interposed. The Jegislature of Virginia, in session at the time, determined upon the policy of resistance to the law as defined by the supreme court. ,Aceordingly, on the twenty-fourth February, 1886, it enacted the following statute:
"Be it enacted by the general assemOJY or VIrginia, that upon the application of any officer charged with the duty of collecting or settling taxes due the 'commonwealth, a board, consisting of the attorney general, secretary of the commonwealth, auditor of public accounts, second auditor,and treasurer, shall be authorized to ascertain and allow to such officer such sum or sums of money as they may deem just and proper to cover any liability and expenses incurred by, and any loss or damage accrued to, such officer, as the result of his collecting, or attempting to collect, enforce, or settle taxes due the commonwealth; and, for the amount so ascertained and allowed, the auditor shall draw his warrant in favor of such officer upon the treasurer, and
WILLIS V. MILLER.
tbe same sball be paid out of any money in the treasury not otherwise appropriated. * * * 'rhe said board may prescribe rules and regulations In rt:ference to such applications and allowances, if they shall deem proper so to do; but no such allowance shall be made unless the said board shall be satia. fled that such officer used due diligence in protecting and defending the interests of the commonwealth in the matter touching which such allowance is asked for."
On the twenty-third March, 1886, the auditor of the state, to whom all the collectors of taxes look for instructions, issued a circular to each collector, wherein he instructed them to levy on and seize the property of any tax-payer who should offer to pay his taxes in coupons, and sell it by public auction, and the other members of the indemnity board, created by the above-recited act, indorsed this circula.r, and promised that every collector making these unlawful levies would be indemnified out of the treasury of the state. Fiftyone tax-payers, in various parts of the state, tendered coupons for their tax6sdue in the spring of 1886, and, refusing to pay with anythe collectors levied on their property, seized it, and sold suits were thereupon brought against these collectors, and this board of indemnity, in the circuit court of the United States for the Eastern district of Virginia, for damages for these trespasses. Two of them came on for trial before the Honorable H. L. BOND, the United States circuit judge, and the Honorable R. W. HUGHES, United States district judge for the Eastern district of Virginia, and a jury at Richmond, in October, 1886. The facts in the first case were as follows: Mr. and Mrs. A. M. Willis, of Rappahannock county, Virginia, tendered to W. G. Miller, the treasurer of that county, $128 of the state's coupons in payment of the taxes due upon Mrs. Willis' farm. The treasurer refused to receive them, aud levied on 3 horses and a colt, 10 head of cattle, 85 sheep, a wagon, and a buggy, all of which he advertised to sell at the door of the court-house. The levy was very excessive. The horse and colt alone would have brought more than enough to satisfy the tax. On the day of the sale he sold five head of the cattle, and returned all the other property to the plaintiffs. The plaintiffs therefore sued him for $10,000 damages. After the plaintiffs had proved the foregoing state of facts, the defendants, who offered nO testimony, moved the court to exclude that part of the plaintiffs' evidence went to prove that the plaintiffs had endeavored to pay with coupons the portion of their taxes dedicated by the state constitution to the public free schools. The ground for the motion was as follows: It was argued that the act of assembly authorizing the issue of tax-receivable coupons was repugnant to the constitution of the state, and was therefore void, for the reason that the constitution dedicates one-fourth of the revenue to the establishof the public free schools; that the act makes ment and all taxes payable in coupons, and therefore makes that portion dedicated to the· free schools payable in coupons; that it might result v.29F.no.6-16
.from this that the entire revenue might come in in the form of coupons, and thus the public free schools be closed; and they recited, in support of this view, a decision of the supreme court of appeals of Virginia, rendered in the case'of Greenhow v. Vashon, in the month of January, 1$86, (Law J. Va., May, 1886, p. 299,) wherein that court held the act to be unconstitutional, for the reasons advanced. The counsel for the plaintiffs replied that the identical question had been passed upon by the supreme court of appeals of Virginia in 1872, in the case before referred to, of Antoni v. Wright, and that court had then held that the act, in making the school money payable in coupons, was not repugnant to the constitution j that it had afterwards reaffirmed the same proposition in the case of Clarke v. Tyler, 80 Grat. 184, and Williamson v. Massey, 88 Grat. 237; and that the same question has been similarly passed upon by the supreme Murt of the United States in Hartman v. Grcenhou', 102 U. S. 672, and in Antoni v. Greenhow, 107 U. S. 769, S. C. 2 Sup. Ct. Rep. 91, and that in such cases it was the rule of the fedel!al judiciary to follow the first decision of the highest 'court of the stata,-citing Gelpcke v. Dubuque,l Wall. 175, and the many cases since that case in which the suprerne court had held .to the doctrine of it. (A new set of judges for the court of appeals had been put in by the Readjuster party when it· came into power in 1881-82, and it was this later court' that made thedecision relied on.) . They also cited the cases of iefferson Branch Bank v. Skelly, lBlack,436, N01·thwestern Unive1:s'ity v. Pcopll',99' U.,S'. 809, and a number of other decisions of the supreme court of tl:)e United Where the t]ttestion waswhetber an alleged contract of a; stl1tewas repugnant to her own'bonstitution, the federal judIciary would pass fOl'themselves on the question, without regard to any decision which, the 'courts of that state might have made; and they argued th at as his honor was free to fOfPl his own opinion, unhamveted by any decision which the supreme Q6urt of Virginia might have' made; be could have no difficultyiti coming to the conclusion, aathe court of appeals of Virginia had done in the first instance, that the act was not repugnant .to the constitution of the state, for that reafjon, o,r for any othel' reason. , The court overruled the defendants' motion to exclude this testimony, and, in doing so, the learned circuit judge delivered the following opinion. , :I Willia.m L. Royall and George Bryan, for plaintiffs. R. A. Ayers, Gen., and J. Randolph Tucker, for defendants. BOND, J. The court has listened with interest to the argument of the counsel upon the point now made that, since the act of 1884 which segregated the taxes levied by law and collected by its treasurers, the right to tender coupons in pa.yment of the state school tax was.no longer allowable. By the act of 1871 the coupons tend· ered in the case by the plaintiff in payment of his state taxes were
WILLIS 11. MILLER.
made receivable for all public taxes and dues. The supreme court of the United States has decided that this was a contract between the state and the coupon holder which no subsequent, legislation could impair, and we ca.nnot now see why the fact that the legislature has altered the method of .collecting the school tax, or the method of its distribution, or the fact that it has segregated it from ,the gross tax collected, can alter its contract to receive its own evidences of debt in payment of that tax. It is a public due. The tender of a coupon is the tender of a receipt of so much money already in the state treasury. If the money represented by the coupon is not in the treasury, it is as much the duty of the state to have there as it is to support the public schools. The one is as much a So far as it may be maintained that the sacred trust as the act of 1884 forbids the receipt of tax-receivable coupons for any state tax, to that extent it is in violation of the constitution of the United States, as has been decided again and again by the supreme court, and no device of division or segregation or distribution of any particular state tax will avoid this fatal defect. The circuit judge then delivered the following instructions to the jury: BOND, J. If the jury find from the evidence that the plaintiffs in this, action, being citizens of Virginia, were indebted to the state in the sum of $128.24 for taxes due upon the property owned by them in Rappahannock county, in that state, and that, in pu'yment thereof, ,they tendered to Miller, treasurer of the said county, entitled to receive the same, coupons of the bonds of the state of Virginia receivable for public taxes, and that said treasurer refused to receive the same in payment thereof, and that notwithstanding such tender the defendant levied upon the property of the plaintiffs, advertised and sold the same, and so collected the tax, then the said Miller was a trespasser, and is liable to tbe said plaintiffs for his trespass. And if the jury find from the evidence in the cause that the other defendants to this action, or either of them, advised and counseled the said Miller to commit the trespass above described, by advising him not to receive the said coupons, but to make the said levy, with a promise of indemnification if he WitS mulcted in damages for his conduct, promising the assistance of counsel to defend him, then the said defendants are jointly liable with the said Miller, the treasurer, for the trespass alleged; and the jury may find such of the defendants guilty or not guilty as they may find they did or did not so advise, counsel, and apet the above-mentioned trespass. . And the jury are that it is the law of the laud that upon the tender of the coupons for the payment of taxes, whether received or not, the taxes are paid, and any levy upon the Buch tender, is a trespass (any state property notwithstanding) for which damageBare recoverlaw to toe
able; and if the said levy is made with a knowledge, at th,e time, that it is illegal, while the tax-payer remonstrates that it is illegal, and claims the protection of the law of the land, then the jury may find that said levy was malicious, and are not confined to giving actual damages, but may give pu:nitive or exemplary damages, as they may find the facts to be. And the jury are instructed that the meaning of the word "malice" in law is not personal hate or ill will of one person towards another, but it refers to that state of mind which is reckless of law and of the legal rights of the citizen in a person's conduct towards that citizen; and the object of the law, in permitting the jury to give exemplary damages or smart money in cases like this, is not only to indemnify the plaintiffs for the loss sustained, but to prevent similar actions upon the part of these and other defendants in the future. The court instructs the jury that the plaintiffs were under no obligation to pay their taxes in money, and surrender their coupons for identification and verification, but they had a right, under the law, to stand upon their tender of coupons, and to refuse to pay in money and surrender their coupons for identification. The jury found a verdict for $150 damages. The counsel for the plaintiffs moved to set the verdict aside upon the ground of inadequacy, but the ch'cuit judge overruled the motion, saying that he could not tell how far the jUl'y might have been influenced by the argument respecting the decision of thcr Virginia court of appeals on the school.tax question, which it would have been legitimate for the jury to consider in mitigation of damages.
and Wife v.
Treasurer, etc., and others.
(OiJrouit Oourt, E, lJ. ViJrgillia.
CONSTITUTIONAL LAW-TAXATION-VIRGINIAOOUPONS-MEASURE OJ/' DAMAGES -MALICE,
Following Willis v. Miller, ante, 238.
At Law. Trespass. The facts in this case were the same as in the preceding one, with the exception that the tax due was nine dollars only, and there was no ':Iuestion relating to the school tax involved in the case; the plaintiffs having paid that part of the tax relating to the public schools in currency, and having tendered coupons for the other part of the revenue solely. The court gave the same instructions in this case as in the precede ing one, and the plaintiffs' counsel urgently appealed to the jury to find a verdict for punitive damages, and thus arrest these open, pro-