State v. Wilson

Gaines, Associate Justice.

Kanmacher & Dennig entered into a contract with the State of Texas for building its penitentiary at Rusk. According to the terms of the agreement the work was to be paid for in installments as it progressed, and the payments were to be made “by the Treasurer of the State of Texas upon warrants drawn on him- by the Comptroller.” During the years 1877, 1878 and 1879 many warrants were issued to the contractors at times when there was no money in the treasury, and were discounted with the bankers in the city of Austin, to whom they were ultimately paid by the State. According to the finding of the court below, the contractors lost by having to discount their warrants at the market value something over seven thousand dollars. The claim for the sum so lost was transferred for value to the appellee, who by virtue of the authority of a special act of the Legislature brought *300 this suit to enforce its collection. (Special Laws 1887, p. 18.) It was alleged and proved that Kanmacher & Dennig were compelled to discount their warrants in order to raise money with which to complete the building and thereby comply with their contract with the State. The special act of the Legislature merely gave consent that a suit might be brought against the State in order to determine the question of its liability upon the alleged claim. The simple question is, can the holder of a warrant drawn by the Comptroller of the State upon its Treasurer, who sells his warrant at a discount because of a want of funds to méet it, hold the State legally liable for the loss he thereby sustains?

We know of no authority which supports the affirmative of the question; nor have we been enabled to conceive of any principle by which the claim of appellee can be plausibly maintained. If A agrees to pay B a certain sum of money at a given time and fails to pay, the measure of B’s damage is the money and interest. He can obtain a judgment for no more, although A’s credit may be so impaired that the judgment when obtained is worth only fifty cents on the dollar. Suppose, however, that B holds A’s written promise to pay and sells it to C at a discount, and that A pays the debt to C, what lawful demand has B upon A, however great his losses may have been in the transaction? Clearly none. Kanmacher & Dennig had no greater right against the State when their warrants were presented to the Treasurer and the Treasurer failed to pay. We are cited to no authority which sanctions the claim that they could sell their warrants at a discount and hold the State liable for the loss, and we are confident none can be found. But it is insisted that because the warrants were at a discount when issued, they are to be treated as payment in a depreciated currency and are to be credited upon the State’s debt at their real and not at their face value. But such are not the legal status and effect of the transaction. The State’s contract was to cause warrants to be issued by its Comptroller and paid by its Treasurer. The issue of the warrants was in accordance with the terms of the contract. They were not delivered as payments, but as evidences of debt and authority, to the Treasurer to make the payments. The warrants were eventually paid to the lawful holders, and the attempt here is to make the State pay a part of a debt which it has already fully discharged.

A brief consideration of the authorities cited by appellee, will show, that they do not apply to the case before us. In *301 Tyers v. United States, 5 Ct. of Claims, 509, the claimant had been awarded a sum of money against the government payable in coin. The treasurer refused to pay coin, but paid in United States treasury notes, which were then depreciated. The claimant having received the currency under protest, and having authority to. sue the government, brought his suit for the difference in value between the coin and currency and was held entitled to recover. In Walkup v. Houston, 65 North Carolina, 50, the holding was that credits in currency, indorsed on a note payable in specie, were to be deducted at the value of the currency estimated in specie. The other cases cited merely held that a payment in the bills of a broken bank (the party receiving them being ignorant of the failure) is no payment. (Ont. Bank v. Lightbody, 13 Wend., 111 ; Gilman v. Peck, 11 Vt., 516 ; Wainwright v. Webster, Id., 576 ; Fogg v. Sawyer, 9 N. H., 365; Maggee v. Cormack, 13 Ill., 289 ; Frontier Bank v. Morse, 22 Me., 88; Harley v. Thornton, 2 Hill's Ch., S. C., 509; Westfall v. Braley, 10 Ohio St., 188 .) In this case it is not claimed that the debts were not ultimately paid in full in good money.

It is held that the board of supervisors of a county, when warrants are depreciated, has no power to issue warrants in payment of a debt for a greater amount than the debt to be discharged, in order that the creditor may receive full payment. (Foster v. Coleman, 10 Cal., 278 ; Shirk v. Pulaski Co., 4 Dill., 207 ; Goym v. Ashley Co., 31 Ark., 552; Bauer v. Franklin Co., 10 Mo., 305 .) The same rule applies to municipal corporations proper (Clark v. DesMoines, 19 Iowa, 199 ), and is also clearly applicable to the obligations of the State.

The case last cited holds that the warrant of a municipal corporation upon its treasury is in legal effect a promissory note, and the State’s warrants in this case can be held to be no more. The payee, who receives and discounts them, has no claim against the State for the loss any more than a holder of a promissory note, who had discounted it after maturity, would have against the maker to recover the discount. The contractors in this case have suffered a misfortune in common with numerous other creditors of the State, who during the years of a depleted treasury, were forced to place their warrants upon the market and sell them at the best price that could be obtained. Is the State of Texas resting under an obligation to make good to all its officers, agents and contractors, who have *302 received and discounted its warrants the loss of which they have thereby sustained? There may be some moral obligation in the premises, but there is no legal one. Its warrants having "been y.-aid, its legal liability no longer exists.

There is testimony to the effect that the Governor of the State, at the time of the transaction in question, told the contractors to discount the warrants and to look to the State for the difference. But it is too clear for argument that he had no power to bind the State in such a manner. The payment of this claim is prohibited by section 44 of article 3 of the Constitution, which provides that the Legislature shall not “grant by appropriation or otherwise any money out of the treasury of the State to any individual on a claim, real or pretended, when the same shall not have been provided for by the pre-existing .law.”

It follows that we are of opinion that the judgment should be reversed and here rendered for the appellant, and it is so ■ordered.

Reversed and rendered.

Opinion delivered June 29, 1888.

[Associate Justice Walker not sitting.]