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Bier v. McGehee

Supreme Court of the United States

Submitted February 6, 1893. ; March 13, 1893, Decided

No. 1254.

Opinion

 [*139]   [**580]   [***398]  MR. JUSTICE BROWN, after stating the case, delivered the opinion of the court.

Plaintiff in error invokes the jurisdiction of this court upon the ground that [****4]  ] article 233 of the constitution of the State of Louisiana, which declared that the consolidated bonds of the State, held for the Agricultural and Mechanical College and the Louisiana Seminary fund, were null and void, was repugnant to section 10, Article I, of the Constitution of the United States, prohibiting States from passing laws impairing the obligation of contracts.

The article in question declares the debt due by the State to the agricultural and mechanical fund to be $ 182,313.03, being the proceeds of the sales of lands and land scrip granted by the United States to the State for the use of a college for the benefit of agriculture and the mechanical arts; directs that said amounts shall be placed to the credit of said fund on the books of the auditor and treasurer as a perpetual loan; that the State shall pay an annual interest of five per cent on said amount from January 1, 1880, for the use of said college; and that the consolidated  [**581]  bonds of the State, then held by the State for the use of said fund, were to be null and void after January 1, 1880, "and the general assembly shall never make any provision for their payment, and  [*140]  they shall be destroyed [****5]  in such manner as the General Assembly may direct."

That the constitution of a State is a law of the State within the meaning of the Constitution of the United States, prohibiting States from passing laws impairing the obligation of contracts, is not denied, and the plaintiff in error assumed the position that it is beyond the power of the State to annul or cancel bonds outstanding and presumably in the hands of bona fide purchasers.  If Bier had been a holder for value of this bond when the constitution of 1879 was adopted, it would evidently be beyond the power of the State, by act of the legislature, or by an amendment to its constitution, to nullify such bond in his hands. But if, when the constitutional amendment was adopted, the bond was still in the possession of the State, there was then no contract with Bier upon which such amendment could operate, and hence no contract subject to impairment. New Orleans v. New Orleans Water Works Co., 142 U.S. 79. There was no objection to the State declaring bonds still in its possession to be null and void. The amendment was practically an inhibition against issuing bonds of the State for a certain purpose.

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148 U.S. 137 *; 13 S. Ct. 580 **; 37 L. Ed. 397 ***; 1893 U.S. LEXIS 2214 ****

BIER v. McGEHEE.

Prior History:  [****1]  ERROR TO THE COURT OF APPEALS FOR THE PARISH OF ORLEANS AND STATE OF LOUISIANA.

THIS was a motion to dismiss a writ of error upon the ground that no Federal question was involved.

Suit was begun by a petition filed by McGehee in the civil district court of the parish of Orleans, December 10, 1889, setting forth that in May, 1888, petitioner had purchased of defendant Bier a certain state bond numbered 788, "denominated and represented to be a consolidated bond of the State of Louisiana," for the sum of $1000, issued January 1, 1874, under authority of act number 3 of the state legislature of 1874. That after the purchase of said bond and payment therefor, it was claimed by the State of Louisiana, through the attorney general, as its property, and that it had been stolen by one Burke from the state treasurer, and the return of said bond with $60 received in payment of the coupons attached thereto was demanded by the attorney general. The petitioner further averred that the bond was purchased by him under the full belief that Bier was the lawful owner thereof, but that he was not at the time of the sale by him, or since, the owner thereof, and that he had good reason to believe [****2]  and so charged that the bond was then the lawful property of the State of Louisiana, and part of the Mechanical and Agricultural College fund held by the State; that said bond was worthless in his hands; that the defendant refused to repay the purchase price. He prayed for a judgment rescinding the sale of the bond, and that the defendant be condemned to take back the same, and return the amount paid therefor.

Defendant, in his supplemental answer, denied that he was ever the holder of the bond, or that he had ever sold the same to the plaintiff; and averred that he had never purchased or acquired any such bond that was not acquired in good faith, in open market, before maturity, in the due and regular course of trade, as commercial paper; and that any law of the State of Louisiana supposed to affect or alter the contract contained in the consolidated bonds of the State, issued under the act of 1874, was repugnant to the Constitution of the United States.

Upon the trial it was proved, and not denied by Bier, that he had purchased the bond after the adoption of the constitution of the State in 1879. The state treasurer's report of 1879 was put in evidence to show that the State [****3]  was the owner of the bond at that time. The court decreed that the sale of the bond be rescinded, and that the defendant Bier be compelled to take back the bond, with the coupons attached, and the sum of $60, received for the coupons paid in error, etc. Defendant appealed to the Court of Appeals of the Parish of Orleans, which affirmed the judgment, and thereupon he sued out a writ of error from this court, which defendant in error, McGehee, moved to dismiss.

CORE TERMS

bonds, null and void, Agricultural, circulation, holders

Constitutional Law, Congressional Duties & Powers, Contracts Clause, General Overview, Governments, State & Territorial Governments, Finance