Delafield v. State

After advisement, opinions were delivered by Mr. Justice Bronson, and by Senator Verplanck. The opinion of the former will be found in 2 Hill 161, et sequitur; the opinion of the latter is as follows:

By Senator Verplanck.

Several questions, wholly distinct from each other, and all of very great importance, have presented themselves on the argument and examination of this cause.

I. Has any court of a state of this union jurisdiction of a cause like this between one of her own citizens and another state 1

The constitution of the United States has declared, that the “ judicial power of the United States shall extend to all controversies between a state and citizens of another state)” and has farther provided, that “ in all cases in which a state shall be a party, the supreme court shall haye original jurisdiction.” Do or do not these words vest the whole and exclusive jurisdiction of such cases in the supreme court of the United States, without leaving a concurrent jurisdiction in the state courts at the option of the plaintiff state 1

It was the avowed intent and plan of our federal constitution to preserve the state sovereignties unimpaired, except so far as the concession of certain specific powers was necessary to the creation of the federative government and the due exercise of its authority. It was accordingly held from the very origin of our present form of government, that the several states must retain all those rights of sovereignty which they or any of them had before the adoption of the United States constitution, or which were not by that constitution exclusively delegated to the union. To use the language of Chief Justice Marshall, “ The powers of the states remained, after the adoption of the constitution, except so far as abridged by that instrument. Mere grants of power to congress do not imply a prohibition to the states, to exercise the same power,” Sturges v. Crowninshield, 4 Wheaton, R. 193. A general rule of construction founded upon this principle, was laid down by the great cotemporaneous expounders and defenders of the constitution, in the ec The Federalist.” This has since been repeatedly cited by Marshall and has been employed as the foundation and authority for many decisions in the courts of this state, and of the United States; so that it may be now regarded as having become an authoritative canon of constitutional interpretation. Federalist No. 33. 4 Wheat. R. 193, 5 Id. 1. 9 Johns. R. 507. The abrogation of state authority, it was there said, results only in. three cases: where the constitution in express terms grants an exclusive authority to the union; where it grants an authority to the union, and in another instance prohibits the states from exercising the like authority; and where it grants an authority to the union, to which a similar authority in the states would be absolutely and totally contradictory and repugnant. In applying this rule of construction, the supreme court of the United States, which has never shrunk from asserting the direct powers of the general government, has yet refrained from denying to the states any power attendant on sovereignty, which did not come into direct and immediate collision with the federal legislation. They have held that even where the constitution expressly delegated powers to the union, such as the state had previously possessed, these powers, if not prohibited to the states by the constitution, still remain subordinate to the paramount power of congress acting upon the same subject. When that power is exercised, the authority of the states to exercise the same is at an end. But so long as it remains dormant; or, if in partially exercising it, an express permission be given by congress to the states, they might continue to exercise a concurrent authority. u It is not,” said Chief Justice Marshall, “ the existence of the power, but its exercise, which is inconsistent with the exercise of the same power in the states.” See his opinion in Sturges v. Crowninshield, 4 Wheat. R. 193, and those of Judges Washington and Story, in Houston v. Moore, 5 Wheat. R. 5. Also the perspicuous summary of the whole doctrine and argument of the concurrent powers of the union and the states in the 18th lecture of Kent’s Commentaries. These principles and rules of construction were laid down by these high authorities, primarily in respect to the conflicting powers of congress, and the state legislature; but they are equally applicable as to their reasons' (as many of the authorities are in their express language) to any other apparent contest or division of power between the state authorities, and any branch of the general government, or any of the laws framed to carry its powers into effect. They have therefore been cited and argued from, by distinguished statemen, lawyers, judges and commentators, in discussing the various questions that have arisen, touching the judicial cognizance of the state courts, and those created by or under the constitution of the United States. Let us, then, apply, these principles of constitutional construction to the question before us.

Irrespectively of the United States Constitution, each of the several states had and still has an undoubted original right to submit any controversy she may have with a private citizen, residing out of her own jurisdiction, to the established tribunals of justice of his own domicil. It is the natural right of every sovereign, recognized as such both by positive law and by the usage and comity of nations, to waive his sovereignty, and prosecute his claims against any private citizen or subject, upon the plain grotihds of justice or equity—demanding their enforcement from- those tribunals to which that citizen or subject is ordinarily amenable. On the other hand, as it is the primal duty of every sovereign state to distribute equal justice and enforce the discharge of the obligations of its citizens towards each other, it is equally so in regard to the obligations of those citizens towards foreigners. Such a duty involves and implies the right of entertaining jurisdiction whenever another state appears, .not as a sovereign, but as a mere foreign corporation, coming as a voluntary party into its courts of justice. Thus previously to the constitution, and independently of it, are rights on both sides. There is the right of one state to prosecute its private claims and protect its pecuniary interests by. a voluntary submission to the jurisdiction of the tribunals, of another sovereignty. This is simply the right of one state to select the judges of another state in a controversy with one of their fellow citizens, .as the arbitrators of the dispute to be decided according .'to- their own laws. There is also the right, founded on its duty of administering justice, of every state to take jurisdiction and pass upon such a controversy. Such rights and duties can be denied by no civilized community which does not adopt Chinese notions of international intercourse, and regard all other people as “ outside Barbarians.” How far, then, does the constitution abridge either of there state rights—the right to appear as a suitor or the right to recognize a sovereign state as a suitor in the courts 1 There are certainly no express prohibitions in unequivocal words, either on the several states,to submit their controversies with the citizens resident in other states to the jurisdiction of any court to whose jurisdiction they may be ordinarily amenable. There is no express inhibition to the state courts to take cognizance of such a suit or controversy. There are no express terms vesting exclusive jurisdiction in the supreme court of the United States. The word exclusive, which would most naturally suggest itself, either in ordinary or in technical use, is not employed, nor is there any equivalent phrase added to the words “ original jurisdiction.” There are no negative words. It is not even said that in such cases “ the supreme court shall have the original jurisdiction.” It is merely that the court “ shall have original jurisdiction.” The bare grant of original jurisdiction to the supreme court in certain cases, does not in the ordinary use of legal or legislative language imply an exclusive jurisdiction. Our statute book affords abundant evidence to the contrary; and some similar use of language may be found, I presume, in the statutes of most of the states. Thus in our Revised Statutes, 2 R. S. 208, jurisdiction is given to the courts of common pleas in each county “ to try and determine all local actions within the several counties.” But the Revised Statutes have also given the same power in all the counties to the supreme court. Yet the act of 1828, has conferred upon the superior court of the city of New-York an original jurisdiction which no one has ever supposed to interfere with either of the others. It is empowered “ to hear, try, and determine all local actions arising in the city of New-York.” Here are three distinct grants of original jurisdiction within the city and county of New-York, yet none of these after many years’ experience, were ever maintained to be “ an exclusive jurisdiction” or even “the original jurisdiction.”

Neither is there any thing in the nature of the power granted, necessarily exclusive. The convention had good reason in forming the constitution to protect the rights and interests of the weaker states against possible frauds or injury of any citizen of other states of the confederation, who might be protected by popularity, or influence, or prejudice, or the partial laws of his own domicil. They did this effectually by erecting a common tribunal of the Union, where such influence, or prejudice, or partial laws would be powerless. But there is no apparent reason why, when no such danger exists, any state should be inhibited from choosing its own forum for the decision of its private controversies, or any other state prevented from opening its courts to adjudicate upon a state litigation thus freely submitted to them. Those permanent and general laws of each state which protect every citizen from wrong or injury from his neighbor, must be always as sure a safeguard in his own courts against the claims of a neighboring commonwealth, as he could find in the courts of the Union. There is no necessary collision between the two jurisdictions. There is no reason why both the courts of the states and United States should not exercise concurrent jurisdiction, any more than there is to deny jurisdiction to our local courts concurrent to the supreme court of the state.

We may safely apply to this question the language of an eminent judge, little inclined to the extension of state authority at the expense of the federal judiciary, and say with him, 66 This power originally existed in the states, and the grant of it to the United States was not necessarily exclusive, unless a concurrent power would be repugnant to the grant, and here is no repugnance in the nature of the power.” 5 Wheat. R. 5, per Story J.

The judges of the supreme court of the United States have, indeed, on some analogous questions, expressed opinions, such as by inference or implication seem to deny the constitutional right of any concurrent jurisdiction. Marbury v. Madison, 1 Cranch R. 137. But that court has never thus decided; and mere inferences from general assertions in the course of arguments directed to other ends, must he taken with great allowance. If this remark needed the support of authority, I might cite the observations of Chief Justice Marshall on this very point. Besides this, congress has by the constitution, “ power to make all laws necessary and proper to carry into effect all powers vested by the constitution in the government of the United States or in any department thereof.” Hence congress has derived the authority exercised in passing the laws erecting and regulating the “ Judiciary power.” If, then, in the judgment of congress, it was necessary and proper for carrying out the original jurisdiction of the supreme court, to declare that power exclusive of all state jurisdiction, I presume that it was competent for congress thus to enact. But congress judged otherwise. In the act of 1789, “ to establish the Judicial Courts of the^United States,” better known under the title of “ the Judiciary Act,” it is enacted as follows: “ § 13. The Supreme Court shall have exclusive jurisdiction of all controversies of a civil nature where a state is a party, except between a state and its citizens, and except also between a state and citizens of other states or aliens, in which latter case it shall have original but not exclusive jurisdiction.” This is not a transient or accidental expression as to exclusive jurisdiction, for throughout the act, and especially in this very section, the line between jurisdiction conferred “exclusively” or as “not exclusive,” is clearly and unequivocally marked. This provision of the judiciary act may be regarded in two distinct aspects. It is first, an express legislative declaration of congress that the general government does not exercise its whole power on this subject, and therefore, as in other matters, means to leave the concurrent power undisturbed, or as held by our own court in former years, “ that this exercise of power does not come practically into collision with the exercise of the power of the United States, and that therefore the state authority remains good as not contravening the provisions of the paramount law.” See the opinion of ju(jge Washington as to the militia laws, in Thurston v. More 5 Wheat. R. 5, and that of Kent, Chief Justice, in Livingston v. Van Ingen, in this court, 9 Johns. R. 576. The authority last cited does not lose its weight as to the rule of constitutional law from the reversal at Washington of the decision to which it led; since that reversal went not on the denial of the principle asserted, but upon the ground that the state legislation did, impliedly at least, contravene the provisions of the paramount law. But here the judiciary act in the name of the general government, expressly permits that exercise of state jurisdiction as being valid before the act and not now prohibited.

Still the objection to the jurisdiction goes deeper. It denies the constitutionality of this provision of the judiciary act. It must then be remarked that this act has in addition to the ordinary authority of an act of congress, that of being a cotemporaneons exposition of the constitution. It was reported, by Oliver Ellsworth, afterwards Chief Justice of the United States, and enacted by a congress filled with the framers of the constitution. This is not decisive against the possibility of some accidental oversight of a provision hostile to the letter or spirit of the constitution, (since the supreme court has otherwise decided in respect to another clause of this same act,) but it furnishes the very highest presumptive evidence and authority as to the true meaning of the constitution. It shows indisputably, as to the judicial power, what Judge Washington observed as to the militia power, “ that in the opinion of congress, a grant of jurisdiction generally, is not in itself sufficient to vest an exclusive jurisdiction.” 5 Wheat. R. 5. Under this view of the intent and meaning of the constitution, I am decidedly of opinion that our state courts have a concurrent jurisdiction with the supreme court of the United States, over controversies where another state is a party. If I doubted upon the reason of the matter, and the interpretation of the constitution itself, I should yet think that the authority of the venerable and almost cotemporaneous judiciary act, the long and unquestioned exercise of the authority in this and other states, whenever needed, together with the strong analogy of other decisions, should induce us to acquiesce in the law and usage until the ultimate constitutional tribunal shall pronounce the unconstitutionality of the provisions of the judiciary act, declaring the jurisdiction of the supreme court to be original" but not exclusive.” I hold with Judge Washington, (4 Dallas R. 14,) that " the presumption must always be in favor of the validity of any law, if the contrary is not clearly demonstrated,” and that therefore our court should say with the supreme court of the United States, in Fletcher v. Peck, 6 Cranch R. 87: " This court will not declare a law of the United States to be unconstitutional, unless the opposition between the constitution and the law be plain and clear.”

II. It is next argued that, conceding that the jurisdiction is not exclusively in the court at Washington, still the complainant does not make out a case authorizing the interposition of Chancery. This objection seems to me to rest chiefly upon the character of the state securities in the hands of the appellant. If these are mere bonds subject, like other specialties of individuals in the hands of the assignees to all the equities between the original parties, then it might be sufficient to reject the contract and refuse payment beyond the amount actually received, whilst the state might recover the value of the bonds, or the amount of the contract against Delafield, if the bonds themselves cannot be reached. Thus there would be no necessity for the interference of the power of equity, since the state could not be remediless at common law. But the hands in question, though so termed in the statute and in the bill, as well as in the correspondence which forms part of the case, are not bonds in the ordinary acceptation of the term.. Mere bonds, made payable to bearer, though anomalous in the law, would fall within the constitutional inhibition upon the states to issue bills of credit. They would come within the definition of the supreme court of the United States (Briscoe v. Bank of Kentucky, 11 Peters R. 257) as “ paper issued by the authority of a state on its faith, and designed to circulate as money.” These bonds are not such, nor are they mere specialties with or without condition. They are simply transferrable certificates of stock’, they are on their face respectively “ Certificates of Illinois Internal Improvement Stock,” and of “ Illinois and Michigan Canal Stock.” They correspond with the definition given judicially by the United States supreme court, in Craig v. Bank of Missouri, 4 Peters R. 419, being “ instruments issued by or in behalf of a state, binding it to pay money at a future day for services actually rendered, or for money borrowed.” The governor in one act, and the fund commissioners in the other, are authorized to borrow the money, and to issue the bonds or certificates. The authority to borrow, to issue certificates, and to sell them, necessarily involves, unless so far as positively restricted, all “ medium powers ” for that object. I adopt the convenient and expressive phrase of the clear-headed Chief Justice Eyre, and cite his authority, 2 H. Blackstone, R. 618, “By medium powers, I mean all those necessary to be used in order to obtain the accomplishment of the principal end;” which in this case is the borrowing of money at its par value upon state security, and the pledge of the public works and lands. In the exercise of this ordinary discretion these certificates are made out thus: “Know "all men, &c. that there is due from the state of Illinois to A B, or bearer.” This is simply the requiring possession and presentation of the certificate as the sole evidence of the right to receive the interest according to the terms of the loan, and the principal when due. Similar certificates of stock or funded debt may be issued by incorporated companies or cities, or by our banking associations in this state, like these in all respects except so far as they may be positively restricted by law to a more formal mode of transfer. Thus, in our general banking law, these certificates are “ transferrable only on the books of the association;” but otherwise “ in such manner as may be agreed on in the articles of association.” Such a contract then would be legally binding on the state if it could be reached by legal judgment. They are, therefore, binding to the full amount of the certificates upon the state in faith and honor, whenever they are presented by a bona fide holder, whatever may be the original equities between the State and Delafield. The case of Kortright v. The Commercial Bank, where the decision of our supreme court was affirmed in this court, 22 Wend. R. 354, places in a strong light the effect of the transferrable character of stock certificates in conveying to the bona fide holders all the original rights of the contract, unincumbered by unknown equities affecting the party to whom they were originally issued.

If the state can show that these certificates were illegaly, inequitably, or fraudulently obtained, it will follow that the only measure for the effectual protection of its interests, consistent with its faith and honor, is to anticipate the possession of these certificates by honest holders by obtaining what a court of equity can alone grant, an injunction to restrain their sale, transfer or hypothecation. DelafieWs letters and admissions indicate that a part at least of the bonds were in his possession or under his control when the demand for them was formally made on the part of the State, and the contract rescinded. He now indeed, states that “ none of them are now in his possession, or under his control, having been bona fide disposed of in the course of his business.” Though this may be literally true, yet it does not deny that the bonds may have been hypothecated by him, or, as suggested to be the case, are in the hands of his assignees, for the benefit of prior creditors, and remain subject to all rights, claims and equities against him. If those certificates are not equitably his, then the restraining him or his representatives from farther transfer of the certificates, and the appointment of a receiver of their proceeds or avails is the only effectual redress. This is clearly within the most usual and beneficial operation of equity powers. It is in conformity to the rule stated by Mitford, “ That the jurisdiction of a court of equity will be exercised when the principles of law by which the courts of law are governed would give a right, but the power of these courts are not sufficient to afford a competent remedy, or the modes of proceeding are inadequate to the purpose.” Mitford Ch. p. 18. The present case is similar in principle to a decision of Lord Eldon in Hood v. Aston and others, 1 Russell, R. 412. There the Chancellor granted an injunction, to restrain Hall and others from negotiating a bill of exchange held by them, and accepted by Aston, in their partnership name for his individual debt. “ The bill of exchange,” said Lord Eldon, “ if it passed by negotiation into the hands of a third person, who had no notice of the circumstances under which it came into the possession of the bankers, would be as good a bill of exchange as any one could desire to have; and from that danger and the mischief attending it, the plaintiffs have a right to be protected.” Thus it is here; it is precisely because the transferrable certificates of state indebtedness are valid and binding on the faith of the State, in the hands of subsequent bona fide holders, and would be legally binding if they were the certificates of a municipal corporation, as of New-York or Albany, instead of those of a sovereign state, and it is only because they are thus binding, that the state of Illinois has invoked the aid of chancery, and has a just claim to that aid, and a a right to be protected from that danger and mischief.” To the authority of this greatest equity lawyer of our times, I add, that of our own supreme court of the United States, speaking through Chief Justice Marshall: “ We think this a case in which a court of equity ought to interpose, and that there are several grounds on which its jurisdiction may be placed. One which appears to be ample for the purpose, is that a court will always interpose, to prevent the transfer of a specific article, which, if transferred, will be lost to the owner. Thus the holder of negotiable securities, indorsed in the usual manner, if he has acquired them fraudulently, will be enjoined from negotiating them: because, if negotiated, the maker or endorser must pay them. Thus, too, a transfer of stock will be restrained in favor of a person having the real property in the article. In these cases the injured party could have his remedy at law; and the probability that the remedy would be adequate is stronger in the cases put in the books than in this, where the sum is greatly beyond the capacity of an ordinary agent to pay. It is the province of a court of equity in such cases, to arrest the injury and prevent the wrong.” Osborn v. U. S. Bank, 9 Wh. R. 845.

III. The objection to the suit being maintained by the State in its political name, with others, to the precise name used to the authority for filing the bill, all might or might not have had weight, if originally taken before the Chancellor, where any defects of form could have been remedied by amendment, and that of proof of authority by the necessary evidence or documents. But they are now presented for the first time, too late, and are too purely formal to be allowed to present any impediment to the administration of substantial justice between the parties after appeal.

IV. The legal character and validity of the contract between Delafield and the agents of the State are next to be considered.

It is a universal rule, that in order to bind the principal upon a contract made by an agent, the contract must be within the authority committed to that agent, and that the authority must be strictly followed. If the agent’s acts vary substantially from his authority in nature or extent, or degree, they are void as to the principal, and do not bind him. Comyn’s Digest, tit. Attorney, C. 11, 15. Story on Agency, § 165, 170. There is another rule founded on obvious reason and often applied: that when the agency is created or conferred by a written instrument, and grows wholly out of it, the nature and extent of the authority must be ascertained from the instrument itself, and cannot be varied or enlarged by usage. The courts have wisely given liberal constructions to the powers of agents authorized to deal generally in commercial matters as factors or brokers, or in any way held out to the world as having an unqualified authority to act for their principal in all matters coming within the range' of their employment. But they have never questioned the strict application of the rule where the agent is employed specially for any particular transaction. There, if the agent exceed his special and limited authority, u the principal,” according to Judge Story, “ is not bound by his acts, but they become mere nullities so far as he is concerned.” This is particularly applicable where the agency is created by a written instrument, or authority known to the party dealing with the agent as the source of his authority, and directing and regulating its object, extent and exercise. Thus in Gardner v. Bailie, 6 T. R. 591, a case decided by the king’s bench after consulting with the judges of the common pleas, and in Hogg v. Smith, 1 Taunt. R. 349, it was decided that written instruments, setting forth the power, must be strictly pursued, and cannot be enlarged by evidence of usage. Such is peculiarly the case here. The whole authority of the public officers who negotiated the loans is created, controlled and regulated by several public acts of the state of Illinois, which formed the basis of the negotiation.

In our own court of chancery, in the case of a purchase from an officer specially authorized to sell certain lands by statute, it was held by Chancellor Kent, that u a special authority must be strictly pursued, and the purchaser is presumed to know that special authority, for it is contained in the act, and if he purchases in cases in which that special authority was not pursued, he purchases at his peril.” Denning v. Smith, 2 Johns. Ch. R. 244. How much more strongly does this hold, where the knowledge of the statute is not merely presumed, but proved and admitted.

The state of Illinois contends that the express and limited authority vested in her commissioners, has been transcended by her official agents in two respects: 1st. That when authority was given merely to sell the “ bonds or certificates,” they were sold upon credit. 2d. That the stock was sold below its par value; which was an express and absolute limitation or condition of the right to sell at all. This condition, it is contended, was violated or evaded by delivering the bonds to Delafield, with an immediate commencement of the running of interest, whilst the money was to be paid by instalments, giving him the advantage of an average gain of interest for one hundred and three days in the one contract, and ten months on the other. With respect to the first point of deviation from the limited power, it is certain that the courts have often held, in commercial cases, that the authority to sell does not authorize a sale on credit, unless it be a known usage of trade that such articles should be so sold. This is the natural suggestion of common sense; for to sell, is one thing, to give credit, another, and the power to do the one does not of course imply the other, unless commercial custom has given such an understanding as to- some specific trade. This is not the ordinary usage of stock sales, and it has been accordingly held by Lord Ellenborough, in England, (1 Campbell, N. P. R. 258,) and by Judge Story, (on Agency 78,) that “ authority to sell stock does not authorize a sale on credit,” and that the owner of stock is not bound by a contract of his agent employed to sell who had sold even on a short credit. This is in close analogy with other decisions, such as that in Gueriro v. Peck et al., 3 Barn. & Ald. 616, where it was held, that where a factor had authority to sell goods, his contract to barter them, though according to the known usage of the place, and with a person ignorant of his limited powers and instructions, did not bind the principal. This is strong evidence of the commercial and legal understanding of the power to sell. But it is not necessary to rely upon legal or commercial usage or authority on this head, for I conceive that the acts of Illinois, under which this negotiation was made, clearly negative the idea of a sale upon credit. These laws first provide for a loan upon the credit of the state for certain purposes of internal improvement. Money is directed to be borrowed, and next it is added, that “ it shall be deemed a good execution of the power to borrow, to sell the bonds authorized to be made,” or in the other act, “ to cause the said Certificates of stock and state bonds to be sold.” We must take the two directions together. Money is to be borrowed, and as the means of bórrowihg, certificates of stock may be sold. Thus, though a contract to advance the sums borrowed, not at once, but by instalments, would be valid; yet, as the sale of certificates is but another form of borrowing as “ a good execution of a power,” that borrowing, it seems to me, could only be effected by a cash sale, though the certificates might be delivered and the money paid for them from time to time. Still farther: The giving a credit involves a serious risk of loss. It is a hazard of loss, always possible, and which the event has shewn, was here probable. We cannot, therefore, on mere presumption, assume that such a risk was intended to be allowed to be taken by the official agents. The presumption, in the absence of any express words, is directly the reverse. If this transgression of the delegated power to borrow money and to sell stock, be doubtful, which I think it is not, the other deviation from this express limitation of the law is still more certain.

It is enacted that sales of the Certificates may be made, “ Provided that said stock and bonds shall not in any event be sold for less than par value.” “ Par value” in its customary and commercial sense, with reference to exchange between different states or countries, has been well defined to be “ the equivalency of a certain amount of the currency of one country in the currency of the other.” But in this sale there is no room for the comparison of the currency of Illinois with any other. The sale is of a certificate of stock, the interest of which is made payable at New-York or Philadelphia, at the option of the holder, and the principal at the expiration of a term of years, at either of those cities, at the option of the state. The currency then, is that of New-Yorkuntil the period for the redemption of the principal arrives, in or after 1860 and 1870, when in all human probability there will be little difference between that of Philadelphia and New-York. At all events, it cannot be now a matter of calculation; and if the payment be now made to the state in New-York funds, the par value would, in the common language of the stock market, as well as the natural interpretation of the phrase, independently of usage, be the amount due on the face of the certificate. But the actual sale is made on terms which, on the $300,000 sale, gave the appellant an advantage of one hundred and three days interest, and on the $283,000 sale of above ten months. I cannot, upon any understanding of the words, consider this a sale at par value, any more than if there had been an undisguised discount at the same rate. The rate of exchange between New-York and Illinois, seems to me to have nothing to do with the matter. Still less has the price at which notes of Illinois banks were selling in the city of New-York; for that discount might have been affected by doubts as to the solvency of those banks, or of their continuance of specie payments, or by the want of any regular agency where small sums might be redeemed. In giving these double advantages of credit and of gain of interest to Delafield, I conceive that the agents exceeded their specific and limited authority, and in the latter case assumed a risk far beyond the bounds of ordinal y prudence, since it was done on the personal credit of the purchaser alone, unaccompanied by any security.

V. The only remaining inquiry is, whether any subsequent act, acquiescence, or neglect of the state of Hlinois, has ratified the contract made in her name. It is a maxim .of general jurisprudence, familiar to the civil law, and long ago incorporated into our own system, that u a ratification is equivalent to an express authority,” or in other words, that when the principal upon a full knowledge of all the circumstances of the case, deliberately ratifies the acts or contracts of an agent who has exceeded his lawful authority or usurped an unauthorized agency, the principal will be bound thereby as fully as if the agent had been expressly empowered for such purposes. “ In all such cases,” says Chief Justice Best, “ a subsequent sanction is considered the same in effect as an assent at the time.” McLean v. Drew, 4 Bingh. R. 722.

The principle of such ratification is clear and unquestioned, but the nature and effect of the evidence required, when there has been no formal written or verbal acknowledgment is less obvious and has occasioned. doubt in the courts, according to the varied circumstances of different cases. It has been held, in sound reason, that it is not absolutely necessary that there should be any positive and direct sanction, but that a legitimate presumption of assent will arise from any act or conduct of the principal inconsistent with any other supposition than a previous authority or subsequent assent. The principal who with full knowledge, receives the goods bought by his factor who transgresses his limits; or who sells them on his own account; the corporation for which money has been borrowed without authority, but which pays interest and passes accounts on the debt, have, (with others falling under the same rule) been held to have ratified the unauthorized acts of their agents. Clarke’s Ex. v. Van Remsdyck, 9 Cranch R. 153. Wilkins v. Hollingworth, 6 Wheat. R. 241. Ep. Soc. v. Epis. Church, 1 Pick. R. 372. So long acquiescence in an assumed or abused agency or in any of its results, without positive acts of any sort, but with knowledge of the facts brought home to the principal, has also been considered equivalent to an absolute ratification. Prescott v. Flynn, 9 Bingh. R. 19. Upon such grounds and authorities as these, it was argued that the authority of the fund commissioners to make this contract, depended upon the construction of the several statutes of Illinois: that after 7 the contracts were made, they were approved by the governor and auditor of that state, the appropriate executive officers, and the certificates were duly authenticated and issued; that the state has not only acquiesced in the contracts, but has refused to pass a vote repudiating • them; that she has given the adjudicated evidence of assent, by receiving payment upon account of the contract and by payment of interest. It is here alone that I have had serious doubts as to this cause. But it must be observed that these rules, decisions and authorities concerning assent or ratification, as implied by acts or acquiescence, are no more than so many applications of the rules of presumptive evidence to an unknown fact.

Acts or acquiescence do not, as is sometimes carelessly said, ratify the unauthorized contract, but in the more guarded and philosophical language of the better authorities, they authorize judges and juries to presume consent or ratification. Certain conduct, according to the usual • experience of human nature, or of business, ordinarily accompanies or indicates consent or approval. They are in judicial language, “ inconsistent with any other supposition,” and thus “ the presumption may become violent and even conclusive.” Now that conduct which in a merchant dr other individual who is cognizant of his own affairs, and able to interfere at any time in disavowing ■ the abuse of his confidence, would indicate that he did not thus disavow or disapprove his agent’s conduct, is not significant in the same manner of the will of a sovereign government, which must act according to its constitution and laws, whilst the people can know the acts of its agents only through its representatives. It was well replied by the attorney-general to this part of the argument, that all the state officers together, including the governor, the auditor and the fund commissioners, could not legally make such a contract as this; and therefore they could not ratify it directly, much less indirectly by acts signifying acquiescence. The legislature, in its sovereign capacity, acted as soon as it met, and it was convened specially before the usual time for this purpose. The expression of opinion on the legality of the contract, by report or resolution, was not necessary to show non-acquiescence, and the refusal or neglect of the senate to pass certain resolutions on the matter, would by no means be conclusive of approbation, standing alone. Had the session passed off thus, without further action, acquiescence or approbation might perhaps be inferred. But we find that on the first February, 1840, an act was passed repealing the law creating the offices of the agents who negotiated the loan; and another to appoint a single fund commissioner instead, who is “ authorized and empowered to take and receive back all state bonds heretofore sold to any person, firm or corporation who has failed, or may hereafter fail to comply with the contract.” The officer was immediately appointed, who soon repaired to New-York on this business, and commenced his demands upon the appellant, and the negotiation with him to settle the controversy. The delay of a few months, which in a private citizen might either indicate approbation, or hold out his agent to others as vested with full powers, has none of . that weight of presumption in regard to the people of a whole state. If the state acted on the subject at the next session, and that session specially called out of order; if it acted in the manner deemed most prudent in order to rescind the contract and prevent loss, whilst it avoided any unqualified disclaimer of the debt in honest hands, this is all that could be expected, and all that could, well have been done, consistently with a just regard to the honor and faith of the sj:ate.

There being then no ratification by the sovereign power . alone competent to make it, I think that the decree of the Chancellor must be affirmed.

On the question being put, Shall this decree be reversed ? all the members of the court present, who had heard the argument, voted in the negative except Senators Hawkins and Peck, who voted in the affirmative.

Whereupon the decree of the Chancellor was Affirmed.