7. The legislature may at any time direct a sale of the stocks owned by the State in banks and other corporations, but the proceeds of such sale shall be applied to the liquidation of the public debt; and hereafter the State shall not become a stockholder in any bank.... 8. An equitable proportion of the public debt of the Commonwealth of Virginia, prior to the first day of January, in the year one thousand eight hundred and sixty-one, shall be assumed by this State; and the legislature shall ascertain the same as soon as may be practicable, and provide for the liquidation thereof, by a sinking fund sufficient to pay the accruing interest, and redeem the principal within thirty-four years.'1 A third passage should be quoted in this connexion from the opinion of the Chief Justice, in order to make clear the sense in which public debt and previous liability are to be understood. On these points he said: The 'public debt' and the 'previous liability' manifestly referred to a portion of the public debt of the original State of Virginia and liability for the money and property of the original State, which had been received by West Virginia under the acts of the General Assembly above cited, enacted while the territory and people afterwards forming the State of West Virginia constituted a part of the Commonwealth of Virginia, though one may be involved in the other; while the provisions of sections 7 and 8 were obviously framed in compliance with the conditions on which the consent of Virginia was given to the creation of the State of West Virginia, and the money and property were transferred. From 1865 to 1905 various efforts were Refusal made by Virginia through its constituted authorities to effect an adjustment and of West settlement with West Virginia for an equitable proportion of the public debt of the Virginia undivided State, proper to be borne and paid by West Virginia, but all these efforts to pay its proved unavailing, and it is charged that West Virginia refused or failed to take any action or do anything for the purpose of bringing about a settlement or adjustment with Virginia. The original jurisdiction of this court, was, therefore, invoked by Virginia to procure a decree for an accounting as between the two States, and, in order to a full and correct adjustment of the accounts, the adjudication and determination of the amount due Virginia by West Virginia in the premises.2 By leave of the Court the State of Virginia filed its bill on February 26, 1906, setting forth elaborately and in great detail the facts constituting the controversy, and a cause of action of which the Supreme Court could properly assume jurisdiction. The State of West Virginia demurred to the jurisdiction of the Court and the demur was elaborately argued before the Court, March 11-12, 1907. On this statement of the case the facts properly pleaded in the bill of complaint were to be taken as true and admitted by the demurrer, so that the question before the Court was one of jurisdiction. That is to say, whether a controversy in the sense of the Constitution existed between the two States of which the Supreme Court could properly receive and lawfully entertain jurisdiction. Looking at it as an abstract question, the case was a money demand for which an accounting was prayed in order to determine the exact sums to which the State of Virginia would be entitled if West Virginia were taxed with liability. The Court had taken jurisdiction of a money demand in the case of the United States v. North Carolina (136 U.S. 211), decided in 1890; and of an accounting in the case of the United States v. Michigan (190 U.S. 379), decided in 1903. If the present case stood alone and was not the first of a hotly contested series, it would only be necessary to consider these two precedents which might be supple1 State of Virginia v. State of West Virginia (206 U.S. 290, 316–17). 2 Ibid. (206 U.S. 290, 317). share. Complaint of Virginia. Demurrer of West mented by others. But, as nine phases of this controversy between the same States depend upon the same cause of action and the facts constituting it, it is inadvisable to consider the case in the abstract or to divorce the question of jurisdiction from the special facts constituting the controversy, although it is not necessary in this connexion to consider the merits of the case. The principal contentions of Virginia will therefore be stated, together with the grounds of the demurrer interposed by West Virginia to the complaint. The complaint states that on January 1, 1861, Virginia was indebted approximately in the sum of $33,000,000, upon obligations and contracts made in connexion with the construction of works of internal improvement throughout its territory, then including the state of West Virginia; that the greater part of this indebtedness was evidenced by bonds for moneys borrowed and used for these purposes, and that only a portion of the liabilities arising from contracts had not been covered by bonds issued for their payment; that, in addition to these sums, there was other indebtedness, amounting approximately to $3,000,000, due to the Commissioners of the Sinking Fund and the Literary Fund for the State; that a very large portion of the above indebtedness was due to improvements in the then western portion of the State now known as West Virginia; that money and property amounting to millions of dollars were turned over by the so-called restored State of Virginia to the State of West Virginia upon its admission to the Union, June 30, 1863; that by Section 8 of Article 8 of the Constitution of West Virginia, an equitable portion of the public debt of Virginia, contracted prior to January 1, 1861, was assumed, to be ascertained by its Legislature as soon as practicable, a sinking fund to be constituted for this purpose, and the interest and principal to be paid within thirty-four years; that the State of West Virginia, failing to comply with its obligation, created by its constitution, upon the faith of which the restored State of Virginia agreed to its admission to the Union, the State of Virginia proceeded to pay off its indebtedness, making arrangements with bondholders and giving outstanding obligations for the aggregate sum of over $71,000,000; that the State of Virginia had taken into its possession all the bonds and obligations and other evidences of indebtedness of the state, contracted and outstanding on and after January 1, 1861, except approximately one per cent. of such liabilities; that in addition to sums actually expended, the State of Virginia was liable as guarantor on securities issued by internal improvements companies, which it was obliged to provide for and to settle; that the State of West Virginia is about one-third as large, territorially, as the State of Virginia at the time of separation, and that at the same time the population of West Virginia was approximately onethird of that of the entire state; that the State of West Virginia should assume and pay one-third of the outstanding indebtedness, including therein interest due and unpaid on January 1, 1861, and that an accounting should be had of the various transactions by which the indebtedness was contracted, so that debiting and crediting each of the parties in controversy, the amount of the indebtedness of the State of Virginia be fixed and the share thereof be determined which the State of West Virginia should contribute to the State of Virginia. To this bill, West Virginia demurred, alleging among other defects misjoinder Virginia of parties in that Virginia sued in her right as trustee for bondholders who were not denying joined as plaintiffs; that the court had jurisdiction neither of the parties nor of the jurisdic tion. subject-matter, inasmuch as the matters contained in the bill did not constitute a controversy in the sense of the Constitution; that the court had no power to render or enforce a final judgement or decree in the matter, if it should assume jurisdiction; that the allegations of the bill were not sufficient to entitle the plaintiff to relief in its own right as trustee to an account or discovery from the defendant and that the bill did not contain any prayer for judgement or decree or other final relief against the State of West Virginia. This brief and necessarily imperfect summary of long, complex, difficult, and technical pleadings is nevertheless sufficient to show the origin and nature of the dispute and the general phases of settlement set forth in the complaint of Virginia against West Virginia, and the formal reasons stated by West Virginia against the jurisdiction of the court and the sufficiency of the complaint, admitting that a controversy of the kind required by the Constitution did and could exist between the two states concerning such matters. It is not necessary to examine the flaws which West Virginia picked in the bill, for the Supreme Court has repeatedly held that in suits between States it will modify, if need be, the technical rules of equity pleading, in order to do substantial justice to the parties in litigation. And it is not necessary to consider the merits of the controversy inasmuch as the demurrer admits the facts well pleaded and subsequent cases deal at length with the various phases of this question. The only matter of importance for present purposes is the question of jurisdiction, because with that settled the court was in a position to allow or to overrule the demurrer-it actually did overrule it—and to require an answer on the part of West Virginia to the complaint, which it likewise actually did, thereby raising and bringing the controversy to an issue between the States, freed from technicalities, in order that the suit should be examined upon its merits and appropriate action taken in the premises. troversy ' exists. Mr. Chief Justice Fuller, on behalf of the court, calls attention to two very important matters after the brief statement of the case which he made and which has already been quoted, to the effect that the facts stated in the bill do not constitute a controversy which could be heard and determined by the Supreme Court, and that the court should not render a final judgement or decree should it assume jurisdiction, because it could not enforce it. As an answer to the above objection, he enumerates A 'cona number of decisions of the Supreme Court in suits between States, saying that more could be cited in order to show that the facts constitute a controversy in the sense of the Constitution as interpreted by the court. And under the second heading The he makes the very appropriate and conclusive answer that it is not to be presumed on demurrer that West Virginia would refuse to carry out the decree of this court, that, if the state should repudiate the decree or judgement, the court would then consider the means by which it might be enforced, that consent to be sued was given when West Virginia was admitted to the Union, and that it must be assumed that the legislature of West Virginia would in the natural course make provision for the satisfaction of any decree that may be rendered '.1 West Virginia strenuously insisted that the court could not take jurisdiction, even if the dispute were a controversy in the sense of the Constitution, because the two States had entered into a compact, approved by Congress, and therefore binding 1 State of Virginia v. State of West Virginia (206 U.S. 290, 319). Court will presume com pliance with its decree. upon the parties, to settle the dispute in a particular way, and that the court could not make an agreement for the parties or provide another method of settlement or adjustment than that upon which they themselves had determined. The compact or agreement to which counsel for West Virginia referred was the article of the Constitution already quoted, providing for the assumption of an equitable proportion of the indebtedness of the State of Virginia, to be ascertained by the legislature of West Virginia. The court would have been more impressed with this argument if the legislature of West Virginia had attempted to ascertain the liability and had taken means to extinguish it. On this phase of the subject, Mr. Chief Justice Fuller said: When Virginia, on August 20, 1861, by ordinance provided for the formation of a new State out of the territory of this State' and declared therein that 'the new State shall take upon itself a just proportion of the public debt of the Commonwealth of Virginia prior to the first day of January, 1861,' to be ascertained as provided, it is to be supposed that the new State had this in mind when it framed its own constitution, and that when that instrument provided that its legislature should 'ascertain the same as soon as practicable', it referred to the method of ascertainment prescribed by the Virginia convention. Reading the Virginia ordinance and the West Virginia constitutional provision in pari materia, it follows that what was meant by the expression that the legislature shall ascertain' was that the legislature should ascertain as soon as practicable the result of the pursuit of the method prescribed, and provide for the liquidation of the amount so ascertained.1 And the Chief Justice, without pausing, stated only the truth and stated it fairly, when he continued, without a break, that: And it may well be inquired why, in the forty-three years that have elapsed since the alleged compact was entered into, West Virginia has never indicated that she stood upon such a compact, and, if so, why no step has ever been taken by West Virginia to enter upon the performance of the duty which such compact' imposed, and to notify Virginia that she was ready and willing to discharge such duty.2 Nor was the court impressed by the contention of counsel that Virginia had no interest in the subject-matter of the controversy, because, by means of refunding, Virginia had assumed its share of the indebtedness, had paid it off or issued new obligations therefor and that it held the old bonds which were unfunded in trust for the holders or their assignees 'to be paid by the funds expected to be obtained from West Virginia as her "just and equitable proportion of the public debt ".' The Chief Justice thereupon stated that the legislation of Virginia in the matter of the funding and paying its indebtedness resulted in the surrender of most of the old bonds to Virginia, satisfied as to two-thirds, and held as security for the creditors as to one-third,' and made the very appropriate comment that the court did not care to take up and discuss this legislation, as it felt that these questions should not be passed upon on demurrer. For the reasons which have been stated, the court likeTechnical wise refused to consider technicalities of pleading, as, for example, that the complaint objecof Virginia was multifarious, in that technicalities should not bar a just claim in a tions to the bill suit between States. And without holding that the bill could be considered multirejected. farious, the court stated that it could not properly be regarded as seeking in chief anything more than a decree for "an equitable proportion of the public debt of the State of Virginia v. State of West Virginia (206 U.S. 290, 320—1). Ibid. (206 U.S. 290, 321). 3 Ibid. (206 U.S. 290, 321). Commonwealth of Virginia on the first day of January, 1861". The court likewise 63. State of Virginia v. State of West Virginia. The demurrer interposed by the State of West Virginia in the action against it, begun by Virginia to ascertain the equitable share of the debt which the former State should assume and pay to the latter, was overruled and leave given to answer. West Virginia availed itself of the leave and filed its answer. The proceedings thereafter were in accordance with the prayer of complainant's bill, and it is therefore quoted in aid of a correct understanding of the case and of the proceedings to be had in connexion with it : without dice. Forasmuch, therefore, as your oratrix is remediless save in this form and forum, Prayer of and to the end that the State of West Virginia may be duly served, through her Virginia's Governor and Attorney-General, with a copy of this bill, your oratrix prays that bill. the said State of West Virginia may be made a party defendant to this bill, and required to answer the same; that all proper accounts may be taken to determine and ascertain the balance due from the State of West Virginia to your oratrix, in her own right and as trustee as aforesaid; that the principles upon which such accounting shall be had may be ascertained and declared, and a true and proper settlement made of the matters and things above recited and set forth; that such accounting be had and settlement made under the supervision and direction of this court by such auditor or master as may by the court be selected and empowered to that end, and that proper and full reports of such accounting and settlement may be made to this court; that the State of West Virginia may be required to produce before such auditor or master, so to be appointed, all such official entries, documents, reports and proceedings as may be among her public records or official files and may tend to show the facts and the true and actual state of accounts growing out of the matters and things above recited and set forth, in order to a full and correct settlement and adjustment of the accounts between the two States; that this court will adjudicate and determine the amount due to your oratrix by the State of West Virginia in the premises; and that all such other and further and general relief be granted unto your oratrix in the premises as the nature of her case may require or to equity may seem meet.1 Although the demurrer was overruled without prejudice, that is, saving to the defendant any advantages at the hearing which the defendant might properly claim under a demurrer, as the court was unwilling to decide the case solely upon it, the litigating States considered that, in fact if not in form, the demurrer was overruled, State of Virginia v. State of West Virginia (206 U.S. 290, 306). |