
    *Miller & Franklin v. The City of Lynchburg.
    March Term, 1871,
    Richmond.
    Joynes, J., Absent.
    
    1. Statute — Temporary.—The act of March 29, 1862, to provide a currency of notes of less than five dollars, was intended to be temporary in its operation.
    2. Municipal Corporations — Issuance of Notes. — The city of L. on the 8th of May, 1882, passed an ordinance for the issue of $120,000 of small notes, and directed its treasurer to exchange them for coin or currency, which should be held or invested for the redemption of the notes. Prom May 8, to October, $72,418 was received in currency in exchange for the notes, of which $68,000 was invested in Confederate bonds, and the balance was held in hand. The notes were directed to express, and did express, on their face — received in payment for city taxes and all other city dues. The city did not levy a tax for the redemption of the note. Hele :
    1. Same — Same—Confederate Currency. — The notes were issued and received with reference to Confederate currency as a standard of value.
    2. Same — Same—Limitation of Redemption. — By the act, the notes were reauired to be redeemed within the period prescribed by the act.
    3. Same —Same—Same—Statute—Effect.—The city of L. having provided for the issue of her notes, under the act of March 29, the act of May 15, extending the time of redemption, does not apply to the notes issued by that city.
    4. Same — Same—Redemption—Unnecessary to Levy a Tax. — The city of L. haying provided ample funds for the redemption of her notes, she was not reauired to levy a tax for their redemption.
    5. Same — Same — Effect of Non-Presentment for Redemption within the Prescribed Period. — Some of these notes not having been presented for redemption within the time prescribed by the act of March 29, the holders of them are not entitled, after the war, to set them off against taxes due from them to the city; and the fund which *had been proyidéd and held ready for their payment, having perished, without fault of the city, the city of D. is not under any obligation in law or equity, to redeem them.
    On the 29th of March, 1862, the General Assembly of Virginia passed an act “To provide a currency of notes of less denortii-nation than five dollars,” by which all the Cities and towns of the State having a population of over two thousand, were authorized to issue notes as currency, of a less denomination than five dollars, to an amount double the amount of State taxes assessed on property, real and personal, within such city or town, for one year; and the banks were authorized to receive and pay out the same. The fifth section of this act provides that, for redeeming the notes issued by the counties, cities and towns of the Commonwealth, under the provisions of this act, the courts of such counties, cities and towns are required, at their annual levy, to levy, upon the subjects of taxation mentioned in the 5th section of ch. 53 of the Code, an amount sufficient to redeem thirty-three and one-third of the amount of such notes in circulation at the time of such levy in 1862 and 1863; and in 1864 shall levy on the same subjects an amount sufficient to redeem all such notes as may be then in circulation ; such redemption to be made in such funds as are receivable in payment of dues to the Commonwealth.
    Bjr an act passed on the 15th of May, 1862, this fifth section was amended, by providing that the levy in 1863 should be sufficient to redeem sixteen and two-thirds per cent, of the amount of the notes in circulation at the time; and so of each successive year until the entire amount issued is redeemed; provided that the redemption of the entire issue shall not be postponed for a longer time than six years from the levy courts of 1863. Such redemption to be made in such funds as are receivable in payment of dues to the Commonwealth. *On the 8th of May, 1862, prior to the passage of the last act, the council of the city of Lynchburg passed an ordinance for the issue of notes under the denomination of one dollar, to the amount of $120,000; and the notes were to be in tenor and effect following:
    Received in payment of city taxes, and all other city dues. Issued by authority of an act of the General Assembly of the State of Virginia.
    Lynchburg, April 1st, 1862.
    The city of Lynchburg will pay the bearer, in current funds, when demanded in sums of one or more dollars
    No. President.
    The notes were directed to be delivered, as completed, to the treasurer of the city, who was directed to keep an- account of all the notes received, and also all redeemed by him, so as to shew at all times the amount and denomination in circulation. The notes were to be issued by the treasurer, and only by him, in exchange for coin or current bankable funds; and the amount so received was to be entered in his books to the credit of “small note account,” as a fund appropriated, and to be so held or invested, and to be held exclusively for the redemption of the notes so issued.. And for all notes issued under this ordinance, the faith of the city of Lynchburg was' thereby inviolably pledged to redeem, in-current bankable funds, when presented in sums of one or more dollars, agreeably to the provisions and requirements of the act of the General Assembly of the State of Virginia, authorizing the issue of small notes passed the 29th of March, 1862.
    The ordinance further provided, that any of the notes so redeemed might be reissued: and further, that *the treasurer should report at their regular meeting in December next, and annually thereafter, the amount of each denomination of notes issued by him, and also the amount redeemed on the 15th of the same month, and the amount of the funds held for the redemption of such notes as may be in circulation on that day.
    Between the 6th of May and the 1st of October, 1862, there was delivered to the treasurer, $72,418 60 of the notes authorized by the aforesaid ordinance; and the whole amount was paid out to everybody who applied for them between these dates; and the currency of that date, which was Confederate currency, was received for the same, and duly deposited in bank to the credit of the “small note account,” to the full amount of $72,418 60. And within- the above dates $67,000 of the amount was invested in Confederate States bonds, for the redemption of the notes so issued; and the balance remained in bank until it was deposited in the Citizens’ Savings Bank of Lynchburg in'1864, where it still remains. The $67,000 invested fund was increased to $68,100, by changing some of the convertible bonds into others of another class; but that fund in Confederate States bonds is still in the hands of the treasurer, for the redemption of the small notes. The small notes were delivered to all applicants for .he same amount in Confederate notes.
    In 1867, Miller & Franklin, brokers in the city of Lynchburg, were assessed upon their business with a city tax of $1,125; and, when called upon for payment by the collector, they refused to pay the same in the currency of the United States, and tendered to him in payment of and as an offset to said tax, the small notes of the city, issued as aforesaid, to an amount equal to the tax. These the collector refused to receive, and levied upon their office furniture and iron safes. And Miller & Franklin thereupon applied to the judge of the Circuit court of the city of .Lynchburg *for an injunction to restrain the officer from selling the property under the levy; which was granted.
    The bill sets out the issue of the notes as hereinbefore stated, the tax upon the plaintiffs, and that, at the time the tax was assessed, and when it was levied, they were 'the bona fide holders, for value, of a large amount of these small notes, which, upon their face, were made receivable for city taxes and all other city dues: That they, had' offered to pay the tax by these notes,. which had been refused; and their property had been levied upon by the collector'. The’ prayer of the bill was for an injunction, and that they may be permitted to pay the tax by these notes.
    The city of Lynchburg demurred to the bill, and also answered; and insisted, among other grounds, that the power of taxation, whether State or municipal, was purely legislative, and whilst acting within their constitutional authority, no court' could prescribe to the legislative body what they shall or shall not receive in payment of taxes; nor could they be compelled to allow offsets or discounts to their tax bills. It was insisted further that the notes were issued to aid the rebellion, and were therefore forbidden to be paid by the laws of the United States, and the present constitution of Virginia.
    On the 1st of July, 1868, the cause came on to be heard, when the court dissolved the injunction, and dismissed the bill. Miller & Franklin, thereupon, applied for and obtained an appeal to the District Court of Appeals at Lynchburg; where the decree of the Circuit court was affirmed. And they then applied for and obtained an appeal to the Supreme Court of Appeals.
    The case was argued by Kirkpatrick and Kean, for the appellants, • and by Wm. Daniel and H. C. Cabell, for the appel-lee.
    
      
      He decided the cause in the District court of appeals.
      See the principal case cited in Omohundro v. Omohundro, 21 Gratt. 634; Meredith v. Salmon, 21 Gratt. 772; Wrightman v. Bowyer, 24 Gratt. 435; Dinwiddie Co. v. Stuart, 28 Gratt. 551, 579; Richmond v. Crenshaw, 76 Va. 940.
    
   * ANDERSON, J.

On the 8th of May, 1862, the common council of the city of Lynchburg, by authority of the act of assembly of 29th of March, 1862, passed an ordinance “that notes under the denomination of one dollar, be issued as a currency.” They were to be issued only by the treasurer, and were not to exceed $120,000.

In 1867, the plaintiffs, who were bankers and brokers in the city of Lynchburg, were in possession of a large amount of these notes, at the time they were assessed with a license tax of $1,125 by the said city. They offered to pay the tax with these notes at the scaled value of Confederate treasury notes in relation to gold, as of their date, which the3r allege is $1,687 50 of the face of the notes. They tendered that amount to the city collector, in payment of their said tax, which he refused to receive. And they being unwilling to pay in United States currency, he levied upon their property, the sale of which was in joined by the Circuit court, upon the application of the plaintiffs by bill in chancery. The injunction was afterwards dissolved and the bill dismissed by the Circuit court, and an appeal taken by the plaintiffs to the District court, which affirmed the decree of the Circuit court. And from that decree of affirmance, the plaintiffs have appealed to this court.

The case is one of great importance, not so much for the amount involved in this suit, though that is considerable, as for the principle to be decided, in which the cities, and many of the towns, of this Commonwealth, may be very largely interested. It demands, therefore, our most careful consideration.

The plaintiffs contend that they have a right to pay the tax with those notes, by virtue of the act of assembly authorizing the issue; by the ordinance under which they were issued, and by the face of the notes. The act of assembly of 29th March, 1862, authorizing *their issue, expressly provides, “that the notes issued as aforesaid shall be receivable in payment of all dues to the corporation issuing them. ” And the city ordinance directs, that the notes issued shall be inscribed on their face, “received in payment of city taxes or all other city dues.” And it is presumed that all the notes were issued with that inscription on their face.

This language imports an obligation on the part of the city to receive these notes in payment of “city taxes and all other city dues. ’ ’ But it imposes no higher obligation than is imposed by the 5th section of the ordinance, which is in these words: “All notes issued under this ordinance, the faith of the city of Lynchburg is hereby inviolably pledged to redeem, in current bankable funds, when presented in sums of one or more dollars.” I think it is clear, if the city was under an obligation to receive those notes in payment of taxes in 1867, when they were presented, it was bound to redeem them in funds which were then current and bankable. The question of obligation, in both cases, depends upon this, whether it was a promise to pay in such funds as were current and bankable at the time the notes were issued, or in such funds as were current and bankable after the war, when demand of payment was made.

The contract must be construed in reference to the provisions of the act of assembly, by authority of which the notes were issued. It must be presumed that it was the intention of the city, in issuing those notes, to comply with the terms of the law; and of the other parties in receiving them, to have received them with the understanding that they had been issued and would be redeemed in accordance with its manifest intention and object. Accordingly the plaintiffs, in their bill, very properly, do not rest their claim entirely upon the face of the notes and the ordinances of the city council, but also upon the act of assembly, * without the authority of which they could have had no validity.

If then, when the city council ordered those notes to be issued, it was understood that they were to be issued only for a temporary purpose ; that they were not to constitute a permanent currency of the country, but were intended merely to supplement the Confederate currency, and were to be redeemed and withdrawn from circulation at an early day; if this was understood to be the policy and purpose of the act of assembly, and that those issues were to constitute a small note currency merely to meet an exigency occasioned by the war, which had withdrawn specie from circulation, until some other remedy could be devised ; and that in furtherance of said policy, the Legislature had required that provision should be made annually for the redemption of 33% per cent, of the issue, so that the whole might be redeemed in the course of three years, then the pledge given by the city council must be understood to have been given with a reference to that implied understanding, that the notes were to be presented for payment in accordance with the policy and requirement of the law. Suppose that the act of assembly, having provided that the city should provide for the redemption of those issues in one, two and three years, had expressly required that the holders should present them for redemption in that period (the language, though more explicit, would not more certainly disclose the purpose and policy of the Legislature), would not the pledge to receive them in payment of city taxes, or to redeem them when presented &c., in current bankable funds, be construed to have been given with the understanding that they would be presented within the time limited, and would be redeemed with such funds as were then current and bankable?

But the case is stronger, in view of what was in fact *the action of the city under this act of assembly. The city did not avail itself of all the time allowed by the act for the redemption of those issues. The act does not inhibit the city from making provision for an earlier redemption than the time specified. The intention of the Legislature evidently was, that the issues authorized should be redeemed at an early day, and the utmost time allowed to make provision for their redemption, was the period specified. But the city council, as we think they had a right to do, determined to do more, and made provision for their redemption pari passu with their issue, by requiring- that the very funds received for them should be specially set apart, held and invested for their redemption. And this was done in strict conformity to the requirement of the ordinance.

It is true that a subsequent act was passed on the ISth of May, extending the time for the redemption of those notes to four, five and six years. Upon a fair construction, I think that provision is applicable to issues made under the 3d section. But it only extends the privilege of the cities, towns and counties, which they might avail themselves of or not as they chose. 'The city of Lynchburg did not avail herself of that privilege. She had not, as we have seen, availed herself of the full time allowed by the first act. ' Her ordinance had been passed and notes issued under it, and direction given for the provision which should be made for their redemption,before the amend-atory act was passed. And she made no change in her action thereafter. So that it is manifest the city of Lynchburg did not avail herself of any privilege proffered by the act of assembly of ISth of May. And her ordinance having been passed, and her whole scheme for issuing and redeeming the notes in question having been adopted prior to that act, and not afterwards ^changed, cannot be regarded as having been adopted with reference to it, nor can her undertaking be construed by its provisions.

Now, was it the intention of the Legislature, by the act of March 29th, 1862, or indeed by the subsequent acts amendatory thereof, that the issues authorized to b.e made should be redeemed in funds which were current and bankable at the time of their issue, or in any other than Confederate currency? A provision that they were to be received in payment of city taxes after the war, and redeemable in such currency as was then current and bankable, it is perfectly manifest, would have defeated the very object of the law; which was to provide a currency. With such a provision, they would have been immediately withdrawn from the channels of circulation, and held as an investment, and not circulated as currency.

It was not the design of the Legislature to provide a better currency than the Confederate. It was to supplement it with a fractional currency for the accommodation of the public, as a substitute for Confederate currency, the government of the Confederacy not having authorized the issue of notes under the denomination of one dollar. These notes were undoubtedly expected to be exchanged for Confederate notes of a larger denomination than one dollar; and being no better than Confederate notes, were expected to be redeemed with them— the small notes for the large ones. When exchanged, the note-holder would have the small notes, and the city the large ones. If the Confederacy was overthrown, the large notes would go down with it, and the small notes must incur the same fate. So that it was not a matter of much importance, whether the small notes were returned to the city, and the large notes to the note-holder, before the fall or not; the consequence to both would be the same. The act of the Legislature was evidently designed for the accommodation *of the people. If, in carrying it out, the city invested the notes in Confederate bonds, it was because those bonds were readily .convertible into Confederate notes; so that she might be ever ready to redeem her notes when presented for payment. And if by such an investment she made a profit, it was perfectly legitimate, and merely incidental, and not at all in conflict with the design and policy of the law to accommodate the public. Upon the whole, therefore, I think it was not contemplated by the Legislature, in the acts authorizing these issues, that they should be redeemed in any other than Confederate currency. Certainly there is nothing in the acts to inhibit the cities from providing that they should be redeemed in such currency.

And the city of Lynchburg virtually did so provide. This is shown by the 4th section of the ordinance; and by the acts of the proper city authority, in its execution. By this section the council provided that the whole fund received in exchange for these notes should be entered on the treasurer’s books, to the credit of “small note account,” “as a fund appropriated, and to be so held or invested, and held exclusively for the redemption of the notes so issued. ’ ’ The treasurer was authorized to receive, in exchange for them, “bankable funds;” and he tells us that he received entirely Confederate money for them (which was bankable, and the currency of that date), which was daily deposited in bank to the credit of “small note account,” to the full amount of $72,418 60 (the whole amount of issues under the-ordinance) ; that $67,000 of the amount were invested, between the 6th of May, 1862, and the 8th of October following, in Confederate States bonds, for the redemption of those notes, and the balance remained in bank until it was deposited in the Citizens’ Savings Bank of Lynchburg, in 1864, where it still remains. The invested fund was increased to $68,100, by changing some of the convertible bonds into others of another *class. But that fund in Confederate States bonds is now in the hands of the treasurer, for the redemption of the small notes.” That these bonds were readily convertible into Confederate treasury notes is a fact of history. From the foregoing, I think the ordinance of the council, and the acts of the city authorities, do most conclusively show that the cit37 did intend, when issuing these notes, that they were to be redeemed in Confederate currency. And this intention not being in conflict, but in accord, with the language and spirit of the act of Assembly under authority of which they were issued, I think it is a fair presumption that they were received by the parties to whom they were issued with the understanding that they would be redeemed in that currency; or would be received in payment of city taxes, which were recoverable in the same currency.

Upon the whole, 1 conclude that, according to the true understanding and agreement of the parties, this contract was to be fulfilled, on the part o f the city of Uynchburg, in Confederate States treasury notes, and ■was made with a reference to such notes as a standard of value.

This was what the city undertook, and the parties to whom the notes were issued must be presumed to have accepted them with that understanding. And we have seen that the city made ample provision to redeem the notes in Confederate currency. It cannot be doubted that if the holders had presented these notes, in accordance with the obvious purpose of the act of Assembly, the-y would have been promptly redeemed. Before the notes on deposit in bank were exhausted, they could, and doubtless would, have been replenished as fast as they were needed, by converting the bonds, which were readily convertible, into currency. It seems to me that the city, when she had made provision for the redemption of these notes whenever presented, had Complied with the contract on her part. What more could she have done? It was no part of her contract to look up those notes to redeem them. She was only bound to redeem them when presented and demanded. And the holder could not maintain an action on them until demand made and refusal,, unless he could show that the city had closed doors and refused to redeem. Her contract being to redeem in Confederate currency when presented and demanded, the holder having failed to demand payment until the currency which the city had provided for their redemption, without fault on her part, had become worthless, cannot now demand payment in United States currency. Nor can he take advantage of his own laches in not demanding payment before Confederate currency became worthless, now to demand what was the value of the notes in that currency, at a time when it had any value.

An attempt was made in argument to liken this case to that of Boulware v. Newton, 18 Gratt. 708. I do not perceive the analogy. The peculiar feature of that case is, that the obligee expressly reserved the right to designate the time when payment should be made, and negatived the right of the obligor to pay at any other time ; and by the terms of the contract, payment was to be made in such funds as were current at the time of payment. The court held that it was a contract of hazard, and that one of the hazards was the contingency as to the result of the war, whether it would be adverse or favorable. It is difficult to perceive how a contract could be framed which more effectually secured to the obligee the right to postpone payment until after the termination of the war, and then to receive it in such funds as were then current, whether Confederate or United States, according to the result of the war. And it was because the evidence that such was the intention of the parties to the contract, was so clear and conclusive that the court felt impelled, in that case, *to a conclusion which bore so heavily and harshly upon the obligor. I should be indisposed to extend the principle of Boulware v. Newton in its application to other cases, and would not apply it unless required so to do by clear and conclusive evidence, in order to give effect to the intention of the contracting parties. In this case there is no such evidence of intention, but much to show the contrary.

Upon the whole, I am of opinion that the decree of the District court should be affirmed.

The other judges concurred in the opinion of Anderson, J.

Decree affirmed.  