board of control of the St. Mary's Falls Ship Canal, used the following language in his Admisannual report to the Governor and by him transmitted to the legislature of the State :

sion of

the trust

Since my last report, the remainder of the personal property belonging to the by MichiSaint Marys Falls Ship Canal has been sold, making a final balance in that fund gan. of $68,927.12. All business pertaining to the management of the canal on the part of the State has ceased and the moneys in the fund remain in the state treasury under act No. 17, laws of 1881, the State acting simply as trustee.1

The learned Justice next refers to the act of Michigan of 1897 authorizing the moneys of the canal fund on hand and the proceeds arising from the sale of the tools and implements belonging to it to be paid into the State treasury, on the ground that 'no claim has been made for any part of such moneys, either by any persons who paid the same into said fund or by the General Government', from which he concludes, on behalf of the court, that:

The State and its public officers thought that a trust had been created, and that the State had received the lands in trust for the purpose of carrying out the provisions of the Federal Statute. A surplus arising from the sales of lands and from the tolls, over and above all cost of construction, repairs, etc., after the formal transfer of the canal itself, belongs to the United States, and it is the proper party to recover the same.2

Mr. Justice Peckham also refers to a recognition of a very damaging character on the part of the State of Michigan, which, by joint resolution of its legislature in 1869, offered to transfer the canal and its control to the Government on the ground that improvements were required to be made which the State was either unwilling or unable to make, on the condition, as stated by the learned Justice, in summary form that

The State should be first guaranteed and secured to the satisfaction of the board against loss, by reason of its liability, on certain bonds which had been issued by it under authority of an act to provide for the repairs upon the canal, ' and to perform the trust respecting the same,' approved February 14, 1859.3

It is true that this resolution was not acted upon at the time, but in 1880 the Congress, by act approved June 14, authorized the Secretary of War to accept from Michigan, and on behalf of the United States, the canal. In pursuance of this act the State of Michigan, by its legislature, authorized the board of control of the State of Michigan to transfer the canal to the Secretary of War, and not only to convey the title but also 'At any time when they may deem it proper, to transfer all material belonging to said canal, and to pay over to the United States all moneys remaining in the canal fund . . . Provided, such transfer of material and payment of moneys shall be in consideration of the construction, by the United States, of a suitable dry dock, to be operated in connexion with the Saint Mary's Falls Ship Canal for the use of disabled vessels'. To break the force of this recognition of the trust counsel for Michigan insisted that it was upon the condition contained in the proviso and that the United States would not be entitled to the proceeds until the dry-dock should be built. But the learned Justice made short shrift of this contention, by the mere statement that if a trust existed it was not for the trustee to impose conditions upon it.

United States v. State of Michigan (190 U.S. 379, 402). ■ Ibid. (190 U.S. 379, 403). Ibid. (190 U.S. 379, 403).

Ibid. (190 U.S. 379, 404).

Defence

On the whole question, Mr. Justice Peckham thus concluded the opinion on behalf of his brethren :

We are of opinion that the bill shows a cause of action against the State of Michigan as trustee, and its liability to pay over the surplus moneys, (if any,) which upon an accounting it may appear have arisen from the sale of the granted lands, over and above all cost of the construction of the canal and the necessary work appertaining thereto, and the supervision thereof, together with the surplus moneys arising from the tolls collected, which latter sum by the demurrer is admitted to amount to $68,927.12. This sum the United States in substance (especially in the fourth paragraph of the bill) admits is all that is due from the State on account of such tolls. It is not entitled to go back of that amount and call for an accounting as to the tolls prior to the transfer of the canal to the United States. The latter is also entitled to recover the value of the tools, etc., mentioned in the bill, as of the time of the transfer of the canal.

We think there is no ground of defence arising from any alleged laches on the of laches part of the United States in bringing this suit. Assuming the existence of what would be laches in a private person, the defence that might arise therefrom is not available ordinarily against the Government. United States v. Beebe, 180 U.S. 343, 353.

negatived.

Demurrer overruled.

There must be judgment overruling the demurrer, but as the defendant may desire to set up facts which it might claim would be a defence to the complainant's bill, we grant leave to the defendant to answer up to the first day of the next term of this court. In case it refuses to plead further, the judgment will be in favor of the United States for an accounting and for the payment of the sum found due thereon.1

In accordance with the decision of Mr. Justice Peckham, counsel for Michigan filed its answer, to which the United States interposed a replication and moved to file stipulation to take testimony, which was granted, concurred in by counsel for Michigan. The Court granted the leave to take testimony and to appoint commissioners. The case, however, did not proceed further, as appears from the following entry :

The United States, Complainant, v. The State of Michigan. November 19, 1906. Dismissed, on motion of The Solicitor General for the complainant. The Attorney General for complainant. Mr. Horace M. Oren and Mr. Charles A. Blair

for defendant.2

51. State of South Dakota v. State of North Carolina.
(192 U.S. 286) 1904.

The case of Chisholm v. Georgia (2 Dallas, 419), decided in 1793, was too much for the States of that day, and their citizens who felt that in forming a more perfect union, and in subjecting the controversies between the States to judicial power, they had not broken down the barriers separating the State from the citizen to the extent of making a State as such, answerable to a citizen of another State of the Union.

States and people were alike unwilling to have any doubt or uncertainty obstruct their intent. Therefore, as already stated in the course of this narrative, the Eleventh Amendment to the Constitution was proposed and adopted by virtue whereof the judicial power of the United States was not to be construed to extend to suits by Ibid. (203 U.S. 601).

1 United States v. State of Michigan (190 U.S. 379, 405).

citizens of a State of the Union, leaving, however, untouched controversies between the States, to which by the express language of the Constitution the judicial power extends.

Attempts have frequently been made, but have proved unavailing, to sue an official of the State, either in his official or individual capacity, in order to circumvent the force and effect of the amendment, but the Supreme Court has invariably held that a suit against an official or against a person who happens to be an officer of the State, is to be regarded as against the State whenever the act concerning which the suit is brought could not be done by the person as an individual, but only by that individual as a State official.

In the leading case of Hans v. Louisiana (134 U.S. 1), decided in 1889, the Supreme Court decided that the Amendment would be wounded in its spirit if a citizen of the State of Louisiana could by bringing suit in the Circuit Court of the United States reach the State of Louisiana whereof he was a citizen, although the Amendment did not in express terms apply to this situation. However, leaving aside suits brought by individuals as such, the Supreme Court held after elaborate argument and great consideration that, it should not accept jurisdiction of a suit by a State on behalf of its citizen on the ground that the controversy contemplated by the Constitution should be between States as such, acting in their own interests instead of espousing a claim of a citizen which that citizen was unable to put in suit because of the Amendment.

The question was left open whether a State to which its citizen had assigned the full right and title in and to the claim could not then appear before the Supreme Court, and summon to its Bar as a defendant the State of the Union against which its citizen possessed the claim which he could not as an individual enforce by judicial process. This question arose in the case of South Dakota v. North Carolina (192 U.S. 286), and was decided in favour of the plaintiff in 1904.

The case arose in the following manner: The holder of ten bonds of the State Action on N. Caroof North Carolina outstanding, due and unpaid, made a gift thereof to the State lina bonds of South Dakota, which apparently in anticipation of the gift, had authorized it to be accepted, and suit to be brought to collect donations made by private parties when judicial proceedings should be necessary.

presented by the

holder to S.Dakota.

facts.

To secure the payment of these bonds given for the express purpose of compelling their payment, the State of South Dakota as plaintiff began an action against the State of North Carolina as defendant in the Supreme Court of the United States. The principle in the case is simple; the facts involved are complicated. For Summary present purposes it may be said that in 1849 the State of North Carolina chartered of the the North Carolina Railroad Company, with a capital of $3,000,000, divided into 30,000 shares of $100 each, and the State itself subscribed for 20,000 of these shares. To pay the subscription, the statute authorized the borrowing of money and to pledge as a security for its repayment such stock of the railroad company as should be held by the State. In 1855 a further subscription of 10,000 shares was authorized by statute upon the same terms and with the same security. At the same session of the Legislature the Western North Carolina Railroad Company was incorporated, and the State authorized the State to subscribe for stock and to issue bonds to be secured by the stock which the State should hold in the company. In 1866 a statute

the bonds, 1866.

was passed by the Legislature of the State entitled, 'An act to enhance the value of the bonds to be issued for the completion of the Western North Carolina Railroad, and for other purposes ', which after reciting prior acts authorizing the issue of bonds and stating that a portion thereof had already been issued, authorized and directed the Treasurer, whenever it became his duty under the provisions of the acts of the sessions of 1854-5, and of 1860-1,

Issue of to issue bonds of the State to the amount of fifty thousand dollars or more, to mortgage an equal amount of the stock which the State now holds in the North Carolina Railroad, [chartered by act of 1849], as collateral security for the payment of said bonds, and executed and delivered, with each several bond, a deed of mortgage for an equal amount of stock to said North Carolina Railroad Company, said mortgage to be signed by the Treasurer and countersigned by the Comptroller, to constitute a part of said bond, and to be transferable in like manner with it, as provided in the charter of said Western North Carolina Railroad Company [incorporated by act of 1855]; and, further, that such mortgages shall have all the force and effect, in law and equity, of registered mortgages without actual registry.

Act of S. Dakota

for acceptance of

gifts,

1901.

Gift of

to S. Dakota.

Under this act of 1866 bonds were issued in the sum of $1,000 each, and upon each one of which, signed by the Treasurer and countersigned by the Comptroller of the State, was endorsed the following statement:

that ten shares of the stock in the North Carolina Railroad Company, originally subscribed for by the State, are hereby mortgaged as collateral security for the payment of this bond.

The bonds under this act issued July 1, 1867, were issued for a period of thirty years, and they therefore became due in 1897. The ten bonds in question for which suit was brought belonged to this series. It should further be said before passing from this phase of the subject, that in 1879 the State of North Carolina appointed commissioners to adjust and compromise the State debt, and all of the bonds issued under the act of 1866 had been compromised with the exception of about $250,000. Of the outstanding bonds, Simon Shafer and Samuel M. Shafer, individually or as partners, owned a large proportion, and had owned them for about thirty years.

In this state of affairs South Dakota passed on March 11, 1901, and in anticipation, it is supposed, of an impending gift, an act providing

That whenever any grant, devise, bequest, donation or gift or assignment of money, bonds or choses in action, or of any property, real or personal, shall be made to this State, the governor is hereby directed to receive and accept the same, so that the right and title to the same shall pass to this State; and all such bonds, notes or choses in action, or the proceeds thereof when collected, and all other property or thing of value, so received by the State as aforesaid shall be reported by the governor to the legislature.

Mr. Shafer gave ten of the bonds issued under the act of 1866, and accompanied it with the following letter dated New York, September 10, 1901, addressed to the Hon. Charles H. Burke, then governor of the State of South Dakota :

The undersigned, one of the members of the firm of Schafer Bros., has decided, the bonds after consultation with the other holders of the second-mortgage bonds issued by the State of North Carolina, to donate ten of these bonds to the State of South Dakota. The holders of these bonds have waited for some thirty years in the hope that the State of North Carolina would realize the justice of their claims for the payment of these bonds.

The bonds are all now about due, besides, of course, the coupons, which amount to some one hundred and seventy per cent. of the face of the bond.

The holders of these bonds have been advised that they cannot maintain a suit against the State of North Carolina on these bonds, but that such a suit can be maintained by a foreign State or by one of the United States.

The owners of these bonds are mostly, if not entirely, persons who liberally give charity to the needy, the deserving and the unfortunate.

These bonds can be used to great advantage by States or foreign governments; and the majority owners would prefer to use them in this way rather than take the trifle which is offered by the debtor.

If your State should succeed in collecting these bonds it would be the inclination of the owners of a majority of the total issue now outstanding to make additional donations to such governments as may be able to collect from the repudiating State, rather than accept the small pittance offered in settlement.

The donors of these ten bonds would be pleased if the legislature of South Dakota should apply the proceeds of these bonds to the State University or to some of its asylums or other charities.1

As already stated, South Dakota accepted the gift and brought suit in the Supreme Court against North Carolina, and joined as defendant two individuals as representatives of holders of the bonds issued under the acts of 1849, 1855, and of the acts of 1855 and 1866. As, however, the Court decided that these representatives were improperly joined and dismissed the bill as against them, taxing South Dakota with costs in this part of the proceeding, this phase of the question is omitted from further consideration.

fore

closure.

In the portion of the bill in so far as material to the present purpose, the State Bill for of South Dakota prayed in the summary thereof given in the official report, that North Carolina be required to pay the amount found due on the bonds held by the plaintiff, and that in default of payment North Carolina and all persons claiming under said State might be barred and foreclosed of all equity and right of redemption in and to the thirty thousand shares of stock held by the State, and that these shares or as many thereof as might be necessary to pay off and discharge the entire mortgage indebtedness, be sold and the proceeds after payments of costs be applied in satisfaction of the bonds and coupons secured by such mortgages; and also for a receiver and an injunction.2

The first of the individual defendants made no answer, the second admitted the allegations of the bill and asked that all the stock be sold in satisfaction of the mortgage bonds, of which he was charged to be the representative. The State of North Carolina in its answer to the bill denied both the jurisdiction of the Court and the title of the plaintiff.

There are two aspects of the case which may be put aside as immaterial, and one mentioned in passing as preliminary to the main question. One of the contentions of the State of North Carolina was that the bonds were not issued in conformity with the statute, and that the mortgages were improperly executed and were therefore null and void.

Mr. Justice Brewer, on behalf of the Court, replied that there could be 'No Judgereasonable doubt of the validity of the bonds and mortgages in controversy'.

ment of

the Court

A second contention was the joinder as defendants of individuals representing in favour

State of South Dakota v. State of North Carolina (192 U.S. 286, 289-90). 2 Ibid. (192 U.S. 286, 291).

of S. Dakota.