USA > West Virginia > Myers' history of West Virginia (1915) Volume II > Part 33
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"We are of opinion that the contract established as we have said is not modified or affected in any practical way by the preliminary suggestions of the Wheeling ordinance. Neither the ordinance nor the special mode of ascertaining a just proportion of the debt that it puts forward is mentioned in the constitution of West Virginia, or in the act of Virginia giving her consent, or in the act of Congress by which West Virginia became a State. The ordinance required that a copy of the new constitution should be laid before Congress, but said nothing about the ordinance itself. It is enough to refer to the circumstances in which the separation took place to show that Virginia is entitled to the benefit of any doubt so far as the construction of the contract is concerned. See opinion of Attorney-General Bates to President Lincoln, 10 Op. Att. Gen. 426. The mode of the Wheeling ordinance would not throw on West Virginia a proportion of the debt that would be just, as the ordinance requires, or equitable, ac- cording to the promise of the Constitution, unless upon the as- sumption that interest on the public debt should be considered as part of the ordinary expenses referred to in its terms. That we believe would put upon West Virginia a larger obligation
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than the mode that we adopt, but we are of opinion that her share would be ascertained in a different way. All the modes, however, consistent with the plain contract of West Virginia, whether under the Wheeling ordinance or the Constitution of that State, come out with surprisingly similar results.
"It was argued, to be sure, that the debt of Virginia was incurred for local improvements and that in such case, even apart from the ordinance, it should be divided according to the territory in which the money was expended. We see no suffi- cient reason for the application of such a principle to this case. In form the aid was an investment. It generally took the shape of a subscription for stock in a corporation. To make the investment a safe one the precaution was taken to require as a condition precedent that two-fifths of the stock should have been subscribed for by solvent persons fully able to pay, and that one-fourth of the subscriptions should have been paid up into the hands of the treasurer. From this point of view the venture was on behalf of the whole State.
"The parties interested in the investment were the same, wherever the sphere of corporate action might be. The whole State would have got the gain and the whole State must bear the loss, as it does not appear that there are any stocks of value on hand. If we should attempt to look farther, many of the corporations concerned were engaged in improvements that had West Virginia for their objective point, and we should be lost in futile detail if we should try to unravel in each instance the ultimate scope of the scheme. It would be unjust, how- ever, to stop with the place where the first steps were taken and not to consider the purpose with which the enterprise was begun. All the expenditures had the ultimate good of the whole State in view. Therefore we adhere to our conclusion that West Virginia's share of the debt must be ascertained in a different way. In coming to it we do but apply against West Virginia the argument pressed on her behalf to exclude her liability under the Wheeling ordinance in like cases. By the ordinance West Virginia was to be charged with all State expenditures within the limits thereof. But she vigorously protested against being charged with any sum expended in the form of a purchase of stocks.
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"But again, it was argued that if this contract should be found to be what we have said then the determination of a just proportion was left by the Constitution to the Legislature of West Virginia, and that irrespectively of the words of the in- strument it was only by legislation that a just proportion could be fixed. These arguments do not impress us. The provision in the Constitution of the State of West Virginia that the Legislature shall ascertain the proportion as soon as may be practicable was not intended to undo the contract in the pre- cedings words by making the representative and mouthpiece of one of the parties the sole tribunal for its enforcement. It was simply an exhortation and command from supreme to subor- dinate authority to perform the promise as soon as might be and an indication of the way. Apart from the language used. what is just and equitable is a judicial question similar to many that arise in private litigation, and in no wise beyond the com petence of a tribunal to decide.
"The ground now is clear, so far as the original contract between the two States is concerned. The effect of that is that West Virginia must bear her just and equitable propor- tion of the public debt as it was intimated in Hartman v. Greenhow, 102 U. S. 672, so long ago as 1880, that she should. It remains for us to consider such subsequent acts as may have affected the original liability or as may bear on the deter- mination of the amount to be paid. On March 30, 1871. Vir- ginia, assuming that the equitable share of West Virginia was about one-third. passed an act authorizing an exchange of the outstanding bonds, etc., and providing for the funding of two- thirds of the debt with interest accrued to July 1, 1871, by the issue of new bonds bearing the same rate of interest as the old, six per cent. There were to be issued at the same time for the other one-third, certificates of same date, setting forth the amount of the old bond that was not funded, that payment thereof with interest at the rate prescribed in the old bond would be provided for in accordance with such settlement as should be had between Virginia and West Virginia in regard to the public debt, and that Virginia held the old bonds in trust for the holder or his assignees. There were further details that need not be mentioned. The coupons of the bonds were
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History of West Virginia
receivable for all taxes and demands due to the State. Hart- man v. Greenhow, 102 U. S. 672. MeGahey v. Virginia, 135 U. S. 662. The certificates issued to the public under this statute and outstanding amount to $12,703.451.79.
"The burden under the statute of 1871 still being greater than Virginia felt able to bear, a new refunding act was passed on March 28, 1879, reducing the interest and providing that Virginia would negotiate or aid in negotiating with West Vir- ginia for the settlement of the claims of certificate holders and that the acceptance of certificates 'for West Virginia's one- third' under this act should be an absolute release of Virginia from all liability on account of the same. Few of these certi- ficates were accepted. On February 14, 1882. another attempt was made, but without sufficient success to make it necessary to set forth the contents of the statute. The certificates for balances not represented by bonds, 'constituting West Vir- ginia's share of the old debt,' stated that the balance was 'to be accounted for by the state of West Virginia without recourse upon this commonwealth.
"On February 20, 1892, a statute was passed which led to a settlement, described in the bill as final and satisfactory. This provided for the issue of bonds for nineteen million dol- lars in exchange for twenty-eight millions outstanding, not funded, the new bonds bearing three per cent for ninety years ; and certificates in form similar to that just stated, in the act of 1882. On March 6, 1894, a joint resolution of the Senate and House of Delegates was passed, reciting the passage of the four above-mentioned statutes, the provisions for certificates, and the satisfactory adjustment of the liabilities assumed by Virginia on account of two-thirds of the debt, and appointing a committee to negotiate with West Virginia, when satisfied that a majority of the certificate holders desired it and would accept the amount to be paid by West Virginia in full settle- ment of the one-third that Virginia had not assumed. The State was to be subjected to no expense. Finally an act of March 6, 1900, authorized the commission to receive and take on deposit the certificates, upon a contract that the certificate holders would accept the amount realized from West Virginia in full settlement of all their claims under the same. It also
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History of West Virginia
authorized a suit if certain proportions of the certificates should be so deposited, as since then they have been-the State, as before, to be subjected to no expense.
"On January 9, 1900, the commission reported that apart from certificates held by the State and not entering into this account, there were outstanding of the certificates of 1871 in the hands of the public $12,703,451.79. as we have said, of which the commission held $10,851,294.09, and of other certi- ficates there were in the hands of the public $2,778,239.80, of which the commission held $2,322.141.32.
"On the foregoing facts a technical argument is pressed that Virginia has discharged herself of all liability as to one- third of the debt: that, therefore, she is without interest in this suit, and cannot maintain it on her own behalf ; that she cannot maintain it as trustee for the certificate holders, New llampshire v. Louisiana, 108 U. S. 76; and that the bill is multifarious in attempting to unite claims made by the plain- tiff as such trustee with some others set up under the Wheel- ing ordinance, etc., which, in the view we take, it has not been necessary to mention or discuss. We shall assume it to be true for the purposes of our decision, although it may be open to debate, Greenhow v. Vashon, SI Va. 336, 342, 343, that the certificate holders who have turned in their certificates, being much the greater number, as has been seen, by doing so, if not before, surrendered all claims under the original bonds or otherwise against Virginia to the extent of one-third of the debt. But even on that concession the argument seems to us unsound.
"The liability of West Virginia is a deep-seated equity, not discharged by changes in the form of the debt, nor split up by the unilateral attempt of Virginia to apportion specific parts to the two States. li onne-third of the debt were dis- charged in fact, to all intents, we perceive no reason, in what has happened, why West Virginia should not contribute her proportion of the remaining two-thirds. But we are of opin- ion that no part of the debt is extinguished, and further, that nothing has happened to bring the rule of New Hampshire v. Louisiana into play. For even if Virginia is not liable she has the contract of West Virginia to bear an equitable share
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History of West Virginia
of the whole debt, a contract in the performance of which the honor and credit of Virginia is concerned, and which she does not lose her right to insist upon by her creditors accepting from necessity the performance of her estimated duty as con- fining their claims for the residue to the party equitably bound. Her creditors never could have sued her if the supposed dis- charge had not been granted, and the discharge does not di- minish her interest and right to have the whole debt paid by the help of the help of the defendant. The suit is in Virginia's own interest, none the less that she is to turn over the pro- ceeds. See United States v. Beebe, 127 U. S. 338, 342. United States v. Nashville, Chattanooga & St. Louis Ry. Co., 118 U. S. 120, 126. Moreover, even in private litigation it has been held that a trustee may recover to the extent of the interest of his cestui que trust. Lloyd's v. Harper, 16 Ch. D. 290, 309, 315. Lamb v. Vice. 6 M. & W., 467, 472. We may add that in all its aspects it is a suit on the contract, and it is most proper that the whole matter should be disposed of at once ..
"It remains true then, notwithstanding all the transactions between the old Commonwealth and the bondholders, that West Virginia must bear her equitable proportion of the whole debt. With a qualification which we shall mention in a mo- ment, we are of opinion that the nearest approach to justice we can make is to adopt a ratio determined by the master's estimated valuation of the real and personal property of the two States on the date of the separation, June 20, 1863. A ratio determined by population or land area would throw a larger share on West Virginia, but the relative resources of the debtor populations are generally recognized, we think, as affording a proper measure. It seems to us plain that slaves should be excluded from the valuation. The master's figures without them are, for Virginia, $300,887,367.74, and for West Virginia $92,416,021.65. These figures are criticised by Vir- ginia, but we see no sufficient reason for going behind them, or ground for thinking that we can get nearer to justice in any other way. It seems to us that Virginia cannot complain of the result. They would give the proportion in which the $33,897,073.82 was to be divided, but for a correction which Virginia has made necessary. Virginia with the consent of
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her creditors has cut down her liability to not more than two- thirds of the debt, whereas at the ratio shown by the figures her share, subject to mathematical corrections, is about .7651. li our figures are correct, the difference between Virginia's share, say $25,931,201.47. and the amount that the creditors were content to accept from her, say $22,598,019.21, is $3,333,- 212.20: subtracting the last sum from the debt leaves $30,503. 801.56 as the sum to be apportioned. Taking .235 as repre- senting the proportion of West Virginia we have $7.182,507.40 as her share of the principal debt.
"We have given our decision with respect to the basis of liability and the share of the principal of the debt of Virginia that West Virginia assumed. In any event, before we could put our judgment in the form of a final decree there would be figures to be agreed upon or to be ascertained by reference to a master. Among other things there still remains the question of interest. Whether any interest is due, and if due from what time it should be allowed and at what rate it should be computed, are matters as to which there is a serious contro- versy in the record, and concerning which there is room for a wide divergence of opinion. There are many elements to be taken into account on the one side and on the other. The circumstances of the asserted default and the conditions sur- rounding the failure earlier to procure a determination of the principal sum payable, including the question of laches as to either party, would require to be considered. A long time has elapsed. Wherever the responsibility for the delay might ultimately be placed, or however it might be shared, it would be a severe result to capitalize charges for half a century- such a thing hardly could happen in a private case analogous to this. Statutes of limitation, if nothing else, would be likely to interpose a bar. As this is no ordinary commercial suit. but. as we have said, a quasi-international difference referred to this Court in reliance upon the honor and constitutional obligations of the States concerned rather than upon ordinary remedies, we think it best at this stage to go no farther, but to await the effect of a conference between the parties, which. whatever the outcome, must take place. If the cause should be pressed continuously to the end, it would be referred to a
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master to go over the figures that we have given provisionally, and to make such calculations as might become necessary. But this case is one that calls for forbearance upon both sides. Great States have a temper superior to that of private litigants, and it is to be hoped that enough has been decided for pat- riotism, the fraternity of the Union, and mutual consideration to bring it to an end."
On February 21, 1913, the following preamble and resolu- tions were adopted by the Legislature :
WHEREAS, The commonwealth of Virginia instituted a suit in the supreme court of the United States against the state of West Virginia, to have the state of West Virginia's proportion of the public debt of Virginia as it stood before one thousand eight hundred and sixty-one, ascertained and satis- fied : and,
WHEREAS, At the October term, one thousand nine hundred and ten, the supreme court of the United States made a finding that the share of the principal debt of the original commonwealth of Virginia to be borne by the state of West Virginia, was seven million one hundred and eighty-two thousand six hundred and seven dollars and forty-six cents ; and,
WHEREAS, Said court did not fully and finally decide the question involved, but suggested that such proceedings and negotiations should be had between the states upon all questions involved in said litigation, as might lead to a settle- ment of the same; therefore, be it
RESOLVED by the Senate of West Virginia, the House of Delegates concurring therein :
That a commission of eleven members, known as the Vir- ginia debt commission, is hereby created. The members of said commission shall be appointed by the governor, two of whom shall be chosen from each 'congressional district of the state, and one at large, not more than six of whom shall be- long to any one political party, and all resignations or vacan- cies in the said commission as they occur shall be filled by the appointment of the governor.
Said commission is authorized and directed to negotiate with the commonwealth of Virginia, or with any person or
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committee owing or holding any part of the said indebtedness for a settlement of West Virginia's proportion of the debt of the original commonwealth of Virginia proper, to be borne by the state of West Virginia.
The commission is hereby directed to ascertain and report upon and give the utmost publicity to all the facts in relation to the pending suit instituted against the state of West Vir- ginia by the commonwealth of Virginia and to ascertain and report upon and give like publicity to all of the facts and con- ditions under which the West Virginia certificates are heldl or owned, together with the names and residences of the persons having the legal or equitable right to receive from West Vir- ginia whatever may be ascertained to be payable thereon.
To ascertain and report as to any part of the Virginia debt claimed against the state of West Virginia, which is owned or held or claimed to be due, at law or in equity, by the common- wealth of Virginia in her own right; and having made the investigation required hereby, said commission is authorized and directed to negotiate with the commonwealth of Virginia for a settlement of West Virginia's proportion of the debt of the original commonwealth of Virginia proper, to be borne by the state of West Virginia.
A majority of said commission shall have authority to act. The commission shall choose its chairman and appoint its secretary and other necessary officers.
The expense properly incurred by the commission and its individual members, including compensation of said members at the rate of ten dollars per day for the time actually em- ployed, shall be paid by the state out of the moneys appro- priated for said purpose.
The commission shall make a report to the governor as soon as practicable, and upon receipt of said report the gover- nor shall convene the legislature for the consideration of the same.
The commission is hereby authorized to sit within or with- out the state and to send for papers and records and to examine witnesses under oath.
At the same session the Legislature appropriated $10,000 "to pay the per diem, traveling expenses, clerk hire, and other
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History of West Virginia
current and contingent expenses of the Virginia debt commis- sion, or so much thereof as may be necessary for such pur- poses."
In conformity with the above act, the Governor appointed the following gentlemen as members of the Virginia Debt Commission :
First District.
Hon. Henry Zilliken Wellsburg Hon. John W. Mason .. Fairmont
Second District.
Hon. J. A. Lenhart. Kingwood
Hon. William T. Ice, Jr. Philippi
Third District.
Hon. U. G. Young. Buckhannon
Hon. Joseph E. Chilton. Charleston
Fourth District.
Hon. R. J. A. Boreman.
Parkersburg
Hon. John M. Hamilton Grantsville Fifth District.
Hon. Win. D. Ord Landgraff
Hon. John H. Holt. Huntington
At-Large. llon. W. E. Wells Newell
The above Commission at once proceeded to make a thor- ough investigation of matters involved in the Virginia Debt question, and finally, on February 27, 1914, met at Charleston, West Virginia, where certain preambles and resolutions were adopted, as hereinafter set forth, and adjourned to meet at Washington, D. C., on the 4th of the following March.
Washington, D. C., March 4, 1914.
The West Virginia Debt Commission met at 11 o'clock a. m., in the "Gridiron Room" at the New Willard Hotel, pur- suant to the last Charleston adjournment, and there were present :
Messrs. Mason ( Chairman ), Boreman. Hamilton, Zilliken, Ord, Lenhart, Ice. Young and Miller. Also, Attorney General A. A. Lilly, associate counsel Hogg, Holt and Archer, and the secretary.
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History of West Virginia
Absent: Messrs. Chilton and Wells.
At the same time the members of the Debt Commission vi Virginia were in session in Parlor 128, at the New Willard Hotel.
And, thereupon, the following correspondence was had between the two Commissions :
Proposition Submitted by West Virginia.
Commonwealth of Virginia
VS.
The State of West Virginia.
Washington, D. C., March 4. 1914. 1 Hon. John B. Moon,
Chairman Virginia Debt Commission.
Washington, D. C.
Dear Sir :
The West Virginia Commission has adopted preambles and resolutions embodying a proposition to the Virginia Com- mission for the settlement of West Virginia's equitable pro- portion of the Virginia debt, and has requested me to transmit the same to you, and, through you, to the Virginia Commis- sion, in the hope that it may receive carly attention and a favorable reply.
·
Your attention is called to the fact that a list and history of the credits referred to in the resolutions are attached to the copy thereof now presented you.
With great respect. I remain.
(Signed)
Very truly yours, JOHN W. MASON, Chairman West Virginia Commission.
Preambles and Resolutions of the West Virginia Debt Com- mission, Adopted at a Meeting Held in Charleston, West Virginia, on the 27th Day of February, 1914.
WHEREAS, the Supreme Court of the United States, by its opinion rendered on the sixth day of March. 1911. in the
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History of West Virginia
case of the Commonwealth of Virginia vs. State of West Vir- ginia, ascertained the gross indebtedness of the old Common- wealth of Virginia, to the payment of which the State of West Virginia should contribute an equitable proportion, to be $30,- 563,861.56 (220 U. S. page 1) ; and,
WHEREAS, in consequence of the relative resources of the two debtor populations, Virginia's portion of said debt was fixed at .7561 and West Virginia's at .235 ; and,
WHEREAS, as the records of the case then stood, there appeared to be NO STOCKS OF VALUE ON HAND that could be treated as assets, and a proper proportion thereof applied to the reduction of the claim against West Virginia, its equitable proportion of the principal of said debt (subject to the correction of clerical errors) was fixed at $7,182,507.46; and,
WHEREAS, since the announcement of the opinion afore- said, and since the joint conference of the Virginia and West Virginia Debt Commissions, held at Washington on the 25th day of July, 1913, this Commission has discovered that, prior to the establishment of the State of West Virginia out of the · territory of the Commonwealth of Virginia on the 20th day of June, 1863, the Commonwealth of Virginia purchased and be- came the owner of certain stocks, bonds, securities and other property, which were paid for out of the common funds of the two states- in fact were purchased mainly, if not altogether, out of the proceeds of the bonds that constitute the debt of the old Commonwealth of Virginia in question here-and was the owner and holder of said stocks, bonds, securities and other property on the Ist day of January, 1861, and after the 20th day of June, 1863, sold and disposed of many of said stocks, bonds and securities, and realized in cash therefor, and appro- priated to its own exclusive use many millions of dollars and gave away without the consent or knowledge of the State of West Virginia other portions of said assets and property which were of great value not only on the first day of January, 1861, but at the time they were so given away, and has retained and still retains other portions of said assets and property which not only have a present value, but were of great value on the first day of January, 1861, that is to say, of the aggregate
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History of West Virginia
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