Virginia, With the provisions of the Constitution of West Virginia, which Mr. Justice Field here quotes, the reader is familiar, and they need not be again set forth. Thereafter, the learned Justice continues, showing the reason which prompted Virginia, and the first measure taken to extinguish this very indebtedness. Thus : Financial But notwithstanding these constitutional requirements and various efforts measures made to adjust the liabilities of West Virginia, nothing was accomplished up to taken by March 30, 1871, and it is stated by counsel that nothing has been accomplished since. 1871-92. As might have been expected, the position of Virginia was not a pleasant one, being charged with the whole indebtedness which accrued before the formation out of her territory of a new State, and entitled to, without being able to obtain, a contribution from the new State of a part of it, corresponding proportionately to her extent and population. She, therefore, undertook to effect a separate adjustment with her creditors, and for that purpose, on the 30th of March, 1871, passed an act known as the 'Funding Act' of the State. After setting forth the constitutional obligation of West Virginia, and assuming it at approximately one-third, the act provided for the issue of bonds bearing interest at the rate of six per cent. for two-thirds of this indebtedness, to be issued to the bond-holders thereof; and for one-third of the indebtedness certificates, as distinct from bonds, were issued, stating that West Virginia was responsible for it, and that Virginia held in trust the bonds of this indebtedness for the benefit of the holders, to be satisfied when an arrangement had been had with West Virginia. These bonds were for the debt and interest accrued to July 1, 1871, and the new bonds, bearing the same rate of interest, receivable for all taxes and demands due, were issued to the amount of $12,703,451.79. A second refunding act was passed May 28, 1879, authorizing the issue of bonds at a reduced interest, providing that the acceptance of the certificates for West Virginia's share should release Virginia from liability on this account, and that Virginia would negotiate or aid in negotiating for a settlement of West Virginia's indebtedness. Few, however, of these certificates were accepted. On February 14, 1882, a third statute was passed to effectuate the same purpose, inasmuch as the burden was felt to be very great upon Virginia at a time when it was only slowly recovering from the effects of the Civil War. The certificates for balances, not represented by bonds, stated that the balance was 'to be accounted for by the State of West Virginia without recourse upon this Commonwealth'. This issue, however, appears to have been without success. Finally, the act of February 20, 1892, was passed, which seems to have effected a final settlement. It appears that there were twenty-eight million dollars of debt outstanding and which had not been funded, and the act provided for the issue of bonds for $19,000,000 in exchange for the $28,000,000 outstanding, that the new bonds should bear interest at 2 per cent. for the first ten years and 3 per cent. for ninety years, and certificates, similar in form to those issued under the act of 1882, for the third of West Virginia's indebtedness. On March 6, 1894, a joint resolution of the Virginia legislature was passed which, after reciting the provisions of the above acts and the satisfactory adjustment of two-thirds of the outstanding indebtedness, appointed a committee to negotiate with West Virginia, provided a majority of the certificate-holders desired such negotiation, and would accept the amount to be paid by West Virginia in full assumed, without expense to the State. And on March 6, 1900, an act of the State of Virginia was passed, authorizing the commission to receive and to take on deposit the certificates, on condition that the holders thereof would accept the amount realized from West Virginia in full settlement of all their claims thereunder. Under this act, as under the joint resolution, the State of Virginia was not to be subjected to expense. From the report of the commission dated January 9, 1906, it appeared that, leaving out of question certificates held by the State, and therefore not entering into the report, the commission held certificates for $10,851,294.09, issued under the act of 1871 previously referred to, and $2,322,141.32 of other certificates issued in the amount of $2,778,239.80. It is to be noted that, in all these transactions on the part of Virginia, that State only assumed two-thirds of the indebtedness contracted before January 1, 1861, and that the acceptance of the bonds for Virginia's share freed that State from liability for the unpaid third of West Virginia's indebtedness, evidenced by the certificates issued in accordance with the various refunding acts.1 tion that Virginia had no longer a real On this state of affairs counsel for West Virginia opposed what might be con- Objecsidered as a third objection, that, inasmuch as Virginia had thus freed itself from liability for the third of the indebtedness in question, the State of Virginia could not prosecute a suit in the Supreme Court because it had no interest in the subject matter, and that, appearing for the certificate-holders as trustee, it brought itself interest. within the rule laid down by the court in New Hampshire v. Louisiana (108 U.S. 76), decided in 1883, which negatived the claim of a State to appear in behalf of the interests of its citizens instead of in its own right as such. For the purposes of the decision, Mr. Justice Holmes, admitting this contention, which, however, he considered to be unsound, stated sound law, sound sense, and sound morality when he said: 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. If one-third of the debt were discharged 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 opinion 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 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 confining their claims for the residue to the party equitably bound. Her creditors never could have sued her if the supposed discharge had not been granted, and the discharge does not diminish her interest and right to have the whole debt paid by the help of the defendant. The suit is in Virginia's own interest, none the less that she is to turn over the proceeds. See United States v. Beebe, 127 U.S. 338, 342. United States v. Nashville, Chattanooga & St. Louis Ry. Co., 118 U.S. 120, 125, 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. Objection Lamb v. Vice, 6 M. & W. 467, 472. We may add that in all its aspects it is a suit on the overcontract, and it is most proper that the whole matter should be disposed of at once.2 'State of Virginia v. State of West Virginia (220 U.S. 1, 31–3). 2 Ibid. (220 U.S. 1, 33-4). ruled. tion laid down. Acting upon the principle which he professed, the learned Justice therefore continued: Principles It remains true then, notwithstanding all the transactions between the old of valua- Commonwealth and her bondholders, that West Virginia must bear her equitable proportion of the whole debt. With a qualification which we shall mention in a moment, we are of opinion that the nearest approach to justice that we can make is to adopt a ratio determined by the master's estimated value 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 Virginia, 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 [found by the master to be the sum represented mainly by interest bearing coupons] was to be divided, but for a correction which Virginia has made necessary. Virginia with the consent of 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 correction, is about .7651. If our figures are correct, the difference between Virginia's share, say $25,931,261.47, and the amount that the creditors were content to accept from her, say $22,598,049.21, is $3,333,212.26; subtracting the last sum from the debt leaves $30,563,861.56 as the sum to be apportioned. Taking .235 as representing the proportion of West Virginia we have $7,182,507.46 as her share of the principal debt.1 The learned Justice stated these figures subject to correction, as they necessarily would be submitted to the master for his guidance and revision if necessary in his final report. It will be observed that the valuation of slaves was omitted, although by the law of Virginia in force on January 1, 1861, slaves were property. The question, however, was political, it was not financial, and it is difficult to see how, after the Civil War and in view of all the circumstances, this item could have been allowed. It may be observed that the question of interest was untouched upon in the opinion, but the learned Justice did not overlook it, and referred to it in the closing paragraph as one for subsequent consideration, although he ventured to express an opinion against allowance of interest, which, however, was not followed in the final disposition of the case, which very properly included interest. Thus, he said: Question Whether any interest is due, and if due from what time it should be allowed of interest and at what rate it should be computed, are matters as to which there is a serious postcontroversy in the record, and concerning which there is room for a wide divergence poned. 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 surrounding 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.2 the Court for a And Mr. Justice Holmes terminates his opinion, which might without impropriety Appeal of be termed a model in view of all the circumstances, with a passage in which literature, native sense of propriety, and wide experience with the affairs of life are happily friendly joined, and in equal proportions: 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 contentiously to the end, it would be referred to a 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 patriotism, the fraternity of the Union, and mutual consideration. to bring it to an end.1 70. State of Virginia v. State of West Virginia. The third phase of the controversy between Virginia and West Virginia, decided on March 6, 1911, laid down the principle upon which the final decree was to be based, and the State of Virginia, which had been annoyed and perplexed by the case for almost half a century, was anxious that it should be disposed of in accordance with the principle laid down, and he got out of the way. settle ment. moves for a decision. arrange It therefore submitted a motion on October 10, 1911, to proceed with the Virginia further hearing and determination of the cause. The motion was overruled within the month, to be explicit, on the 30th day thereof, in an opinion rendered by speedy Mr. Justice Holmes, holding, what we all know by experience, that States move slowly, much slower than private parties. The cause of the motion was due to the suggestion contained in the opinion of Mr. Justice Holmes himself in the preceding case, that a conference be held between the parties. In order to bring this about, Unsuccessful the Virginia Debt Commission wrote to the Governor of West Virginia on April 20, attempt 1911, requesting him to take steps for a conference at an early date. It appeared of Virthat the Legislature of West Virginia was called for special session, that under the ginia to laws of that State it could only consider the business mentioned in the call convening a conferit, but as twenty-six days intervened between the call and the date set for the meeting, ence. there was, therefore, time for the Governor to issue a further proclamation on the subject of the debt, had he so desired. Apparently he did not care to do so, but in his message to the Legislature he referred to the debt, and asked whether the appointment of the Virginia Debt Commission was enough to require West Virginia 'to take the initiative', and whether a Commission of the State of West Virginia should be appointed to meet the Virginia Commission. He also stated that if a majority of the Legislature should share this opinion, he would call a special session of the Legislature for its consideration. Whether the Legislature was not anxious, or both were unwilling to take up the matter of the debt, the call was not issued, and the Legislature was left to meet at its regular session in January 1913. State of Virginia v. State of West Virginia (220 U.S. 1, 36). Motion denied. Action of the legislature to be awaited. Under these circumstances the State of Virginia believed that a conference was not likely to take place with satisfactory results, inasmuch as it wanted a Commission formally constituted and with powers corresponding to the importance of the subject to be considered. The counsel for West Virginia opposed the motion, stating that the Governor doubted his right to amend the proclamation; that no body in West Virginia except the Legislature had the power to deal with the question; that the Virginia Debt Commission lacked authority inasmuch as it could only negotiate upon the basis of Virginia's liability for two-thirds of the indebtedness, and that in any event the court should not act before the Legislature of West Virginia could convene in regular session and consider the case in the spirit anticipated by the court. Mr. Justice Holmes was not more impressed with the objections of counsel for West Virginia in this phase than he had been by the objections raised in previous phase of the case. But, he said, a State cannot be expected to move with the celerity of a private business man; it is enough if it proceeds, in the language of the English Chancery, with all deliberate speed.1 Language such as this clearly implies a belief on the part of the learned Justice and of the Court, whose unanimous opinion he delivered, that the objection was interposed for delay, as the co-operation of the Legislature did not seem necessary for a conference of this kind. Indeed he stated, 'A question like the present should be disposed of without undue delay'. He recognized the fact, only too patent to lawyer and laymen alike, that States often keep pace with the glacier, and, accepting the opinion of the counsel for West Virginia as correct, as he was perhaps obliged to do, he concluded on behalf of the Court: If the authorities of that the time has not come for granting the present motion. 71. State of Maryland v. State of West Virginia. The long-drawn-out controversy between the State of Maryland and the State of West Virginia was decided in principle in Maryland v. West Virginia (217 U.S. 577). The decree of the Court, according to that principle, was settled in Maryland v. West Virginia (217 U.S. 577), and in the case under consideration, Maryland v. West Virginia (225 U.S. 1), decided on May 27, 1912, the report was confirmed in all respects, of the Commissioners appointed to run, locate, and establish and permanently mark with suitable monuments, the said Deakins, or 'Old State Line', as the boundary line between the States of Maryland and West Virginia, from said point, [low-water mark], on the southern bank of the northern branch of the Potomac River, to the said Pennsylvania line, . . . 1 State of Virginia v. State of West Virginia (220 U.S. 1, 19–20). 2 Ibid. (220 U.S. 1, 20). For the succeeding phase of this case see State of Virginia v. State |