March, 1836. The State V NASHVILLE, gold and silver procured by the sale of the bonds, invests the notes of the bank with actual present value; in other words, with the attribute, which makes them a convenient currency, capable of supplying the place of gold and silver, which was the object proposed by its creation. But if the bank must pay Union Bank the bonds, twelve thougold and silver which out, every half year to the holders of For these reasons, among others, the bank contends, that the seventh section of the charter operates, in effect, as a deposite of the profits of the stock owned by the State, and the bonus, and the interest of the public moneys in the coffers of the bank for the special purpose of indemnifying the bank for her liability as assignee of the bonds, and to be applied by the bank to the payment of the interest of the bonds, as it accrues, and to the satisfaction of the bonds when they fall due. James Campbell, for defendant. After adverting to the different provisions of the charter of the Union Bank, and the other acts and proceedings of the legislature, in relation to the matters in controversy, observed, that the difficulty between the legislature on the one hand, and the Union Bank on the other, arises principally upon the construction to be given to the seventh section of the bank charter. But in fixing this construction we must necessarily look to the other parts of the act. The principal question to be considered is this, are the profits which may arise from the stock owned by the State in the Union Bank, the bonus agreed to be paid by the bank for the privileges conferred by the charter, and the interest upon the deposites of the public money, appropriated by the seventh section of the charter of the Union Bank, of the State of Tennessee? If these funds are already appropriated by the charter, and rights have been acquired under such appropriation, it will not be pretended, that the legislature could afterwards make a second appropriation of the same fund to another and a different object. It will be noticed, that by the sixth section of the charter, the State was to execute bonds of one thousand dollars each, amounting in all to five hundred thousand dollars; and these bonds were to be drawn payable to the Union Bank, or its assigns, and were to be redeemable in four instalments; and in the mean time, the interest upon the bonds was to be paid by the State, half yearly. When these bonds were given payable to the Union Bank, and delivered over to the bank, and a promise was contained therein, to pay the debt at a certain time, and to pay the interest every six months; and when the Union Bank received the bonds, and gave the State five hundred thousand dollars of her stock for them, I suppose it will be admitted by all, that the Union Bank acquired an absolute vested right to the bonds, a right to have the interest paid every six months, and the principal to be NASHVILLE, March, 1836. The State V Union Bank. March, 1836. The State V Union Bank. NASHVILLE, paid as stipulated, and as incident to all this, a right to the means of payment, if any, provided by the legislature. What was it that constituted the great value of these bonds? Undoubtedly it was that the holder would have a right to them, and that the interest and principal would be punctually paid. The bonds for five hundred thousand dollars were to be given, not in one or two sums, but in sums of one thousand dollars each. They were to be made payable in New York or Philadelphia, to the Union Bank, or its assigns. What was the object of all this? Is it not plain it was intended to give them a saleable and negotiable quality? The legislature intended they should be sent forth, with the best recommendation they could give them. They were created expressly for traffic in the markets of the eastern cities. Now can it be supposed for one moment, that such a thing ever entered into the head of any legislative body, as to give notes, pledging the faith of the State only for their redemption, payable from fifteen to thirty years after date, the interest to be paid six, twelve and eighteen months, &c. and yet make no provision whatever for the payment of either principal or interest. The State expects her bonds to sell in the eastern markets, at par, or at a premium, and yet she knows that the very first time the interest falls due upon the bonds, she is to be protested for want of funds to meet the interest. To suppose all this would be imputing an oversight, or a degree of absurdity to the legislature, too gross to be tolerated for a moment. We must suppose, that when the legislature promised to pay, they meant to pay; and if they meant to pay, there is no other way that the legislature of a State can carry this intention into effect, except by making an appropriation by law, setting apart a certain fund to be applied to the payment of the demand. The charter was adopted the 18th of October, 1832. The stock was to be subscribed by the 1st of December following. The directors were to be elected upon thirty days notice after that time. The State bonds were to be given, and the bank to be in full operation by the 1st of January, 1833, and did go into operation as expected. The Union Bank, if she retained the bonds, would expect the payment of the first half March, 1836. The State V Union Bank. yearly interest, on the 1st of July, 1833. If she offered the NASHVILLE, bonds for sale, as she was expected to do, the very first inquiry that would be made by a purchaser, would be what provision is made for the payment of interest, and the security of the principal. The legislature had all these matters before them in prospect. Now the question is again asked, did the legislature intend to make no appropriation for the payment of the bonds and the accruing interest upon them? Undoubtedly they intended to do so, and if they have not done it, it must have been an oversight, such as never before happened in any matter of a similar kind. But let us look at the charter itself, and see if the appropriation is not made in language, clear, explicit and which cannot be misunderstood. The seventh section before quoted, declares that the profits which may arise from the stock owned by the State, in the Union Bank of the State of Tennessee, after the bonds of the State shall have been paid, and also the bonus, &c. shall be and they are hereby appropriated to the use of the common schools in this State. Now here the intention of the legislature is directed to the appropriation of the fund. What do they do with it? They first direct that the bonds of the State shall be paid out of the fund, and then the balance, after paying the State bonds, shall be appropriated to the use of common schools. How were the State bonds to be paid? From the face of them, the interest was to be paid every six months, and the principal in fifteen, twenty, twenty-five and thirty years. The interest was a part of the obligation itself. The bonds were to be paid out of the funds provided in the seventh section of the act incorporating the bank. The State bound herself to pay the bonds and provided these funds for their payment. These bonds, then, by the express enactment of the seventh section of the charter, were to be a lien on the profits of the stock, and the other funds mentioned in the section, and were to remain a lien upon the profits of the stock and other funds, until the bonds were paid. This was the pledge given. The promise made by the State, at the time the bonds were directed to be issued, and when the Union Bank took the NASHVILLE, bonds, she took them with that fund pledged for their pay March, 1836. ment, both principal and interest. The State expected, The State V that when the bonds were offered for sale, as from the plain Union Bank. and obvious provisions of the charter she intended they should be, she intended that it should be told, upon her plighted faith as a State, that the profits of the stock and other funds before mentioned, were pledged for their redemption. The funds there mentioned, in the seventh section of the charter, were the very things that gave value to the bonds; at all events, there can be no doubt, they were the very things that were to give them their saleable and negotiable quality, and to cause them to circulate in the eastern markets. The paper itself was comparatively speaking of but little value, without an appropriation to meet it. The State might as well issue paper money at once, and expect it to circulate on a par with gold and silver, as to issue such bonds as these, and expect them to circulate in the eastern markets, without any means provided for their redemption. In truth, such bonds as these, without a fund for their redemption, would be nothing more nor less than the old paper money system acted over again. From the plain language of the charter, then, it is incontrovertibly established, that the State in a certain event, was to subscribe for five thousand shares of the capital stock of the bank; that the governor was to make and execute, on behalf of the State, five hundred thousand dollars, in bonds of one thousand dollars each, bearing five per cent. interest, payable in New York or Philadelphia, &c., to the Union Bank, or its assigns, redeemable in certain instalments, and the interest payable half yearly; that the State appropriated a fund and placed it in the hands of the Union Bank for the payment of these bonds; and upon this appropriation being made, the Union Bank accepted of the bonds from the State, in payment of its stock. The creation of the fund to pay the bonds before they were given, and their appropriation in the charter itself, to pay them, made it a part of the contract, on the part of the State, to pay those bonds out of these funds, and the State can no more touch the fund, than she can violate her promise. This was the bargain-the contract between the |