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The act of July 27. 1861, 12 Stat., 276, and joint resolution of March S 1862, authorizing reimbursement to the States for war expenditures, provides as follows:

" That the Secretary of the Treasury be, and he is hereby, directed, out of any money in the Treasury not otherwise appropriated, to pay to the governor of any State, or his duly authorized agent, the costs charges, and expenses properly incurred by such State in enrolling subsisting, clothing, supplying. arming, equipping, paying, and transporting its troops employed in aiding to suppress the present insurrection against the United States, to be settled upon proper vouchers to be filed and passed upon by the proper accounting officers of the Treasury."

The joint resolution approved March 8, 1862, 12 Stat., 615, provides that the foregoing act shall be construed to apply to expenses incurred as well after as before the date of the approval.

The act of Congress approved February 14, 1902, directing the accounting officers of the Treasury to pay expenses for military purposes, provides as follows:

“And claims of like character (referring to the claims of States therein appropriated for) arising under the act of Congress July twenty-seven, eighteen hundred and sixty-one (Twelfth Statutes, page two hundred and seventy-sis), and the joint resolution of March eighth, eighteen hundred and sixty-two (12 Statutes, page six hundred and fifteen), as interpreted and applied by the Supreme Court of the United States in the case of the State of New York against the United States, decided January sixth, eighteen hundred and ninety-six (One Hundred and Sixty Cnited States Reports, page five hundred and ninety. eight), not heretofore allowed or heretofore disallowed by the accounting officers of the Treasury shall be reopened, examined, and allowed, and, if deemed necessary, shall be transmitted to the Court of Claims for findings of fact or determination of disputed questions of law to aid in the settlement of the claims by the accounting officers." 32 Stat., 30.

The act of the Legislature of the State of Massachusetts approved March 7). 1862, providing for the payment of the principal and interest of its bonds in coin, provides as follows:

CHAPTER 82. * SECTION 1. The interest and principal of all scríp or bonds of the Commonwealth of Massachusetts which have been or may hereafter be issued shall when due be paid in gold or silver coin.

“ SECTION 2. Whenever the interest or principal of any scrip or bonds of the Commonwealth shall become due the treasurer and receiver general shall pre('ure coin for the payment of the same, and the governor shall draw his warrant for such sum as may be found necessary to procure such coin, to be paid out of any moneys then in the treasury of the Commonwealth.

SECTION 3. This act shall take effect upon its passage."

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II.

The State of Massachusetts at the request of the United States armed and equipped its quota of Volunteers for the service of the Federal Government during the Civil War. In order to raise the money required for that purpose it was necessary for the State to borrow it. It, therefore, in pursuance of the act of its legislature approved May 21, 1861, borrowed three millions of dollars on its bonds, which bore interest at the rate of six per centum per annum from July 1, 1861. They were payable beginning July 1, 1871, and ending July 1, 1876. Under the provisions of the act of its legislature approved April 25, 1862, the State borrowed $600,000 more on its bonds for said purpose. They bore interest at the rate of five per centum per annum and were payable July 1, 1877. These bonds were all denominated “Union loan bonds."

The three million dollars of bonds issued under said act of the legislature of May 21, 1861, were sold prior to March 22, 1862. The said act of May 21, 1861, under which the bonds were issued, did not state that the bonds were payable principal or interest in coin. No part of the principal or interest of these bonds was paid prior to the legal-tender act.

III.

On the tenth day of October, 1902, the State filed an amended claim in the Treasury Department for interest and premium paid for coin with which such interest and a part of the principal of said Union loan bonds had been paid. It

also included a claim for interest, and premium paid for coin with which said interest was paid, on money borrowed by the States on its five per cent twentyvear bonds, issued under the act of its legislature of March 30, 1863, for the purpose of protecting the harbors and strengthening the fortifications on the coast. Other items of expense were also included in said claim.

The auditor for the War Department computed and allowed such interest and premium paid on $2,567,500 of the total issue of said Union loan bonds. He disallowed the interest and premium claimed on said coast defense improvement bonds.

IV.

The comptroller overruled the allowance of the auditor of premium paid on the Union loan bonds issued in 1861 and disallowed the same. He affirmed the auditor's allowance of interest claimed thereon and also on the Union loan bonds issued under the act of the legislature approved April 25, 1862, and the premium which the State had paid on said bonds of 1862 and other expense. He affirmed the auditor's disallowance of the coast-defense claim. These allowances were paid by appropriation April 27, 1904. 33 Stat., 424.

V.

An act of Congress was approved July 7, 1884, as follows:

“ That the proper accounting officers of the Treasury Department be, and they are hereby. authorized and directed to examine the claiin of the State of Massachusetts for expenses incurred and paid. at the request of the President and Secretary of State, during the war, in protecting the harbors and strengthening the fortifications on the coast, now on file with the third auditor, under the act of July twenty-seven, eighteen hundred and sixty-one (12 Stat. page two hundred and twenty-six) and report the amount to Congress.” 23 Stat., 204.

The State had made these improvements with money borrowed on its bonds issued in pursuance of the act of its legislature of March 30, 1863. The accounting officers allowed $209 885.61. This was paid by appropriations, as follows: Acts of October 19, 1888, 25 Stat., 600; act of March 2, 1889, 25 Stat., 937.

The computation made by Auditor B. F. Harper, of the amount of interest and premium paid by the State on bonds representing above allowance, was $233.885.82, which amount, as stated, was by him and the comptroller disallowed.

VI.

The State paid $979.395 94 for premium on coin to pay principal and interest on its Union loan bonds issued in 1861 and 1862 for the purpose stated in request for finding No. 2. There was refunded to the State $93 006.06. being premium thus paid on sa bonds of 1862. The amount of such premium unpaid is $886 389.68. The State paid for interest and premium on coast-defense bonds $233.885.82, which has not been refunded to it.

CONCLUSION OF LAW.

Upon the foregoing findings of fact the court decides, as a conclusion of law, that the plaintiff is entitled to recover the said sum of eight hundred eighty-six thousand three hundred eighty-nine dollars and sixty-eight cents ($886 389.68), shown in finding VI, and is not entitled to recover the said sum of $233,885.83 also shown in Finding VI, and the petition as to this item is dismissed.

OPINION.

BARNEY, Judge, delivered the opinion of the court.

This is a suit brought by the State of Massachusetts by virtue of the following jurisdictional act of Congress, which speaks for itself as to its purpose:

" That the claim of the State of Massachusetts for premium paid for coin with which it paid the interest and principal of its bonds issued in the year eighteen hundred and sixty-one for money borrowed and used to furnish troops of the State for the service of the United States during the Civil War; and also its claim for interest and premium paid for coin in payment of such interest, on

bonds issued for money borrowed and expended at the request, during said war, of the President of the United States, in protecting the harbors and fortifying the coast, which claims were rejected by the Comptroller of the Treasur Department, be, and the same are hereby referred to the Court of Claim for determination of the law and the facts, and report to Congress. The eri dence of the amount of said expenditures and of the computations of such pre miums made by the accounting officers of the Treasury on file in said department, as furnished by the State, may be considered by the court so as to relieve the State of the necessity of again filing said evidence in court."

It will be seen that this act provides for the consideration of two claims : first, the claim for the State of Massachusetts on account of premium paid for coin in payment of interest on bonus issued for money borrowed and expended to furnish troops of the State for the service of the United States during the Civil War; second, its claim for interest and premium paid for coin in payment of such interest on bonds issued for money borrowed and expended during said war in protecting the harbors and fortifying the coast.

The facts involved are all a matter of record and are in effect agreed upon by the parties. The legal aspect of the case and its history are substantially as follows:

First claim.—July 27, 1861, 12 Stats., 276, the Congress enacted the following statute:

* That the Secretary of the Treasury be, and he is hereby, directed, out of any money in the Treasury not otherwise appropriated, to pay to the governor of any State, or his duly authorized agent, the costs, charges, and expenses arming, equipping, paying, and transporting its troops employed in aiding to suppress the present insurrection against the United States, to be settled upons proper vouchers to be filed and passed upon by the proper accounting officers of the Treasury." vides that the foregoing act shall be construed to apply to expenses incurred

A joint resolution of Congress approved March 8, 1862, 12 Stats., 615, pro after as well as before the date of approval.

Pursuant to this, the State of Massachusetts armed and equipped rolunteers cost, charges, and expenses incurred for that purpose. for the service of the Federal Government during the Civil War and paid the in the treasury of the State not otherwise appropriated, it became necessary for the State to raise the money required by borrowing it upon its bonds it borrowed three millions of dollars on its bonds, which bore interest at the rate of 6 per cent per annum. Therefore, in pursuance of the act of its legislature approved May 21, 1861, ending July 1, 1876. Under the provisions of the act of its legislature approved

They were payable beginning July 1, 1871, and April 25, 1862, the State borrowed $600,000 more on its bonds for the same purpose, and these bonds hore interest at the rate of 5 per cent per annum and were payable July 1, 1871. These bonds were all denominated Union loan bonds. 1862, provided that:

The act of the Legislature of the State of Massachusetts approved March 22,

" The interest and principal of all scrip or bonds of the Commonwealth of Massachusetts which have been or may hereafter be issued shall, when due. be paid in gold or silver coin." decided that that State was entitled to recover from the United States interest

The Supreme Court in the case of New York v. United States, 160 U. S. 598. upon its bonds issued to defray the expenses to be incurred in raising troops for the national defense pursuant to the act of June 27, 1861. Whereupon the several chusetts, filed claims with the Treasury Department for interest States which had paid interest for that purpose, including the State of Massa premium expended upon coin for that purpose. This premium, paid for coin The State of Massachusetts also included in her claim as a part thereof the which paid the interest on bonds issued under the act of the legislature of April 25, 1862, for the sum of $600.000, as hereinbefore stated, was paid. But the claim for premium on coin used to pay the interest on the bonds issued in July, 1861, was rejected, the same being the sum of $886,389.68, and it is for the recovery of that sum so rejected that this suit is brought, together with the second claim, which is as follows: 885.61 soon after the outbreak of the Civil War for the purpose of protecting the harbors and strengthening the fortifications on the coast and had

Second claimi.- The State of Massachusetts had expended the sum of 20. did not include in said claim any claim for interest. for said sum so expended with the accounting officers of the Government, but

There being no money

so expended.

filed a claim

July 7, 1884, Congress passed the following act:

“That the proper accounting officers of the Treasury Department be, and they are hereby, authorized and directed to examine the claim of the State of Massachusetts for expenses incurred and paid, at the request of the President and . Secretary of State, during the war, in protecting the harbors and strengthening the fortifications on the coast, now on file with the third auditor, under the act of July twenty-seven, eighteen hundred and sixty-one (12 Stat., page two hundred and twenty-six) and report the amount to Congress."

Pursuant to said act the accounting officers examined said claim and found that said sum had been expended for the purposes mentioned and reported the same to Congress, which was duly paid by appropriations for that purpose. October 10, 1902, the State filed another claim in the Treasury Department which included a claim for interest and premium paid for coin with which such interest was paid on money borrowed by the State on bonds issued under the act of its legislature of March 30, 1863, for the purpose of protecting the harbors and strengthening the fortifications on the coast, which said claim was rejected and has never been paid. This constitutes the second claim in the plaintiff's petition.

We will now proceed to examine and discuss these claims in the order in which they are stated.

The first legal-tender act was passed by Congress February 25, 1862, 12 Stat., 345. This act was declared unconstitutional by the Supreme Court in the case of Hepburn v. Griswold, 8 Wallace, 606, which decision was overruled by the Supreme Court in the case of Knox v. Lee, 12 Wallace, 457, and the law decided to be constitutional. It will thus be seen that the first issue of the war loan bonds by the State of Massachusetts was made several months before the passage of this act, at which time these bonds were only payable in coin.

The Legislature of Massachusetts passed an act March 22, 1862, making all of its bonds, both principal and interest, theretofore issued or thereafter to be issued payable in coin. This act was passed less than a month after the passage of the legal tender act by Congress, at which time the legal tender issue of curl'ency had depreciated very little in value. These historical facts are given as throwing some light upon the reason for this legislation by the State of Massachusetts. She had issued her bonds in good faith and upon the credit of the Commonwealth at a time when they were payable in coin. These bonds had been taken probably by her own citizens, but there was nothing to show that they designed to stop at home. The fair name of the Commonwealth it was assumed would give them currency in other States and in foreign lands as well, notwithstanding the only security behind them was the promise of the State to pay. Except in the case of a State holding some of the bonds and suing as such there was no legal remedy for the enforcement of the obligation by the courts. Upon the good credit of the State the bonds were taken and the money supplied and used to aid the United States. There can be no doubt that when the bonds were issued and subscribed for or purchased they were payable only in coin. By the terms of the Constitution the State could not make them payable in anything else. The State so thought that they Tere payable in coin, and the holders of the bonds had a right to think the same. The legal tender act reserved the right to pay interest on the bonds of the United States in coin, and the principal was payable in coin. If it was proper for the United States in determining what policy was best as to its obligations to declare that their bonds and the interest thereon should be payable in coin, can it be said to be improper for Massachusetts to follow so illustrious an example She had failed to express on the face of the bonds the real understanding when they were issued and purchased, namely, that they were payable in coin, but was it not proper, having regard to her own promise and her own fair name, that she should subsequently recognize her obligation by giving the assurance as solemnly as possible that her compact would he kept according to its original intention? Certainly among the duties of a State not the least of them is that the State shall be honest.

In this connection it may be well to call attention to what was done by the Federal Government to strengthen its credit after the close of the Civil War. While some of its bonds provided that the interest should be paid in coin, there was no specific statement as to the kind of money in which the principal should be paid. In order to keep faith with the holders of these bonds and do what it believed was the understanding of the parties at the time they were issued, Congress enacted the following law 16 Stat., 1:

* In order to remove any doubt as to the purpose of the Government to vischarge all just obligations to the public creditors, and to settle conflicting ques

tions and interpretations of the laws by virtue of which such obligations have been contracted, it is hereby provided and declared that the faith of the United States is solemnly pledged to the payment in coin or its equivalent * * *, of all the interest-bearing obligations of the United States, except in cases where the law authorizing the issue of any such obligation has expressly provided that the same may be paid in lawful money or other currency than gold and silver."

By the enactment of this law the Federal Government did almost exactly what Massachusetts did under similar circumstances; and this was done when coin was still at a high premium.

It is unthinkable that at this time any one dreamed that the State of Massachusetts would ever have to prosecute a claim against the Federal Government for the interest paid on these bonds. The State of Massachusetts never could have had any such thought in view. She simply said to her creditors, “ You loaned me money upon these bonds of the standard of gold and silver, and though I may be enabled to pay for this loan by cheaper money I will never do So, but will pay you in kind." Hence there is no room for the assumption that the State of Massachusetts in the enactment of this statute had any other object in view than that of keeping good faith with her creditors. If any motive can be ascribed to a municipal corporation we think it is a presumption amounting to a conclusion that the State of Massachusetts thereby was only doing what she believed to be proper because it was honest, and had no intent of increasing the expense to the Federal Government in the raising and equipping of these troops.

It was urged by the defendants at the trial that we are not allowed to look at this feature of the case but must apply the hard letter of the law as though this suit was between individuals. Let us briefly examine that question. By the act of July 27, 1861, 12 Stat. 276, the Federal Governmnet said to the sovereign State of Massachusetts (sovereign within certain limitations): “If you will help us in this our time of distress by advancing funds to raise and equip troops for our service we will refund to you all expense 'properly incurred' for that purpose.” In order to respond to this call it was necessary for the State of Massachusetts to pledge her credit by the issuance of bonds at that time payable only in coin. Thereafter the Federal Government enacted a law which subsequent events showed would enable the State to pay this loan in cheaper money. Within 30 days after the passage of this law and when its unfortunate history had hardly begun, was it otherwise than " proper" for Massachusetts to say to her creditors on these and other bonds, “ You loaned us coin and we promise you that we will never compel you to take cheaper money in payment."

The proper construction to be given by courts to the word "proper" as used in section 8 of Article I of the Constitution was decided in the case of United States v. Fisher, 2 Cranch, 358. The question for decision there was whether a statute making the United States a preferred creditor was constitutional. The court held that it was, and Chief Justice Marshall in his opinion said:

“In construing this clause it would be incorrect, and would produce endless difficulties, if the opinion should be maintained that no law was authorized which was not indispensably necessary to give effect to a specified power.

Where various systems might be adopted for that purpose, it might be said with respect to each that it was not necessary because the end might be obtained by other means. Congress must possess the choice of means, and must be empowered to use any means which are in fact conclusive to the exercise of a power granted by the Constitution.” Id. 396.

The same subject came before the Supreme Court in the famous case of Knox v. Lee, already referred to, and there the court said:

" It was, however, in McCulloch v. Maryland [4 Wheat., 416] that the fullest consideration was given to this clause of the Constitution granting auxiliary powers, and a construction adopted that has ever since been accepted as determining its true meaning. We shall not now go over the ground there trodden. It is familiar to the legal profession and, indeed, to the whole country. Suffice it to say in that case it was finally settled that in the gift by the Constitution to Congress of authority to enact laws 'necessary and proper' for the execution of all the powers created by it, the necessity spoken of is not to be understood as an absolute one. On the contrary, this court then held that the sound construction of the Constitution must allow to the National Legislature that discretion with respect to the means by which the powers it confers are to be carried into execution, which will enable that body to perforin the high duties assigned to it in the manner most beneficial to the people. Said Chief

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