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1924 028 787

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COMPLIMENTS OF.
ABE A. LILLY,
ATTORNEY GENERAL.

t

 

 

Supreme Court of the United States

OCTOBER TERM, 1913

No. 2 Original

COMMONWEALTH OF VIRGINIA
Ve. { In Equity
STATE OF WEST VIRGINIA

SUPPLEMENTAL ANSWER OF WEST VIRGINIA; Oral
Argument of John H. Holt, Esq., Associate Counsel for West
Virginia, in Support Thereof and in Opposition to Interest ;
Closing Argument on Behalf of West Virginia Made. Upon
These Subjects by A. A. Lilly, Esq., Attorney General for
West Virginia, and Opinions of the United States Supreme
Court so far Rendered in Cause.

 

 

TAIBUNE PRINTING O0., CHARLESTON, W, VA.

 
 
A: 246236,

b

S21

NOTICE.

Charleston, W. 'Va., March 10, 1914.
To tHE HonorasLe Jno. Gartanp Ponuarp,
Attorney General of Virginia,
Richmond, Virginia:

Please take notice that, in the suit of the Common-
wealth of Virginia against the State of West Virginia,
No. 2 Original, pending in the Supreme Court of the

United States at Washington, D. C., the State of West
' Virginia will, on Monday, the 23rd day of March, 1914,
move the said Court for leave to file, on or before the
thirteenth day of April, 1914, a supplemental answer to
the original bill of complaint filed in said Court by the
Commonwealth of Virginia against said State.

A copy of said motion, as well as of the grounds
therefor, and of the proposed supplemental answer, are
hereto appended for your information.

Respectfully,

STATE OF WEST VIRGINIA,
cs . By A. A. Litty,
[ Attorney General for West Virginia.
A.296 22k
IN THE

Supreme Court of the United States
OCTOBER TERM, 1913.

No. 2 ORIGINAL.

COMMONWEALTH OF VIRGINIA
vs. In Equity.
STATE OF WEST VIRGINIA.

MOTION FOR LEAVE TO FILE A SUPPLEMEN-
TAL ANSWER.

TO THE HONORABLE CHIEF JUSTICE,
AND ASSOCIATE JUSTICES OF THE SU-
PREME COURT OF THE UNITED STATES:

Now, comes the defendant, the State of West Vir-
ginia, by A. A. Lilly, her Attorney General, and moves
the Court for leave to file, on or before the thirteenth
day of April, 1914, a supplemental answer to the bill of
complaint of the Commonwealth of Virginia filed herein
against her.

The notice of this motion, together with the service
thereof and the grounds of said motion, as well as a copy
of the proposed supplemental answer, are presented
herewith.
4 Motion oF DEFENDANT.

 

STATEMENT OF FACTS.

By its opinion of March 6, 1911, in this cause, this
Court held that the State of West Virginia, in conse-
quence of Section 8 of her Constitution of 1861, the Act
of the Legislature of the restored State of Virginia pass-
ed May 13, 1862, consenting to the erection of the new
State under the provisions of said Constitution, and the
Act of Congress of December 31, 1862, giving sanction to
its creation, became obligated to pay an equitable pro-
portion of the public debt of Virginia existing prior to
the first day of January, 1861, and by said opinion ascer-
tained the total indebtedness as of that date to be appor-
tioned between the two State to be $30,563,861.56.

Virginia v. West Virginia, 220 U. S., 1.

It was also there held that, in consequence of the rela-
tive resources of the two debtor populations, exclusive of
slaves, 7614% of said debt should be apportioned to Vir-
ginia, and 2314% thereof to West Virginia, and, upon
this basis, West Virginia’s proportion of the principal
of the debt was fixed at $7,182,507.46. No decree, how-
ever, was entered against her for that amount, but a con-
ference was suggested between the two States looking
to an amicable settlement of the matters in difference.

In the same opinion, and while discussing a division
of the assets of the old Commonwealth in the purchase
of which her debt had been incurred, it was stated that
“at does not appear that there are any stocks of value
on hand,’’ and, as a necessary consequence, as the record
then stood, there were no credits applicable to the reduc-
tion of West Virginia’s ascertained proportion of the
principal of the debt, and it remained as fixed.

Subsequently, however, and in willing obedience to
the suggestion of this Honorable Court, the Governor of
West Virginia, after the passage of a joint resolution by
the Legislature of the State authorizing him so to do,
Morton or DrrENnpDANT. 5

 

appointed a Commission to treat with the State of Vir-
ginia, and this Commission, during the course of its
labors, after the filing of the original answer herein,
-and after the delivery of the opinion aforesaid of March
6, 1911, discovered the live assets set forth in the accom-
panying proposed supplemental answer, which had been
purchased with the common funds of the two States
prior to the first day of January, 1861, and retained,
sold or given away by the Commonwealth of Virginia
after the twentieth day of June, 1863, without account-
ing to West Virginia for any part thereof, and amount-
ing, in the aggregate, as it is alleged, to $20,810,357.98.

West Virginia, feeling that she was entitled to a just
proportion of these assets, and believing that, if they
had been presented by the record at the time of the opin-
ion of March 6, 1911, this Court would have given her
eredit for 2314% thereof, proposed to the State of Vir-
ginia at a joint conference held at Washington on the
fourth day of March, 1914, that she allow 231% of the
value of said assets as of the first day of January, 1861,
as a credit upon West Virginia’s portion of the principal
of said debt as fixed by this Court, and that she would
cause to be paid unto Virginia the balance, after making
said deduction, or the sum of $2,327,195.27, in full settle-
ment of principal and interest of West 'Virginia’s equit-
able proportion of said debt.

Interest was to be omitted for the reasons given and
the facts enumerated in the proposition, and now more
in detail alleged in the proposed supplemental answer.

Virginia declined the proposition, expressing an
unwillingness even to discuss the question of principal,
because the same, according to her view, had been irre-
vocably fixed by this Court, and, upon the question of
interest, although she considered that still open, con-
tented herself with ignoring the reason given by West
Virginia why no interest should be charged.
6 Motion or Derenpant.

 

Here the negotiations ended, and the present motion
follows.

OBJECTS OF THE MOTION.

One of the objects of the motion is to obtain leave to
file a supplemental answer, presenting assets purchased
with the common funds prior to January 1, 1861, and
appropriated thereafter by the State of ‘Virginia to
her exclusive use, and to 2314% of which West Virginia,
according to the basis of liability fixed by this Court, is
entitled as .a credit upon her equitable proportion of the
principal of the Virginia debt; and the other is by said
supplemental answer to present certain facts why West
Virginia should not be charged with interest upon what-
ever proportion of the principal of said debt may be
decreed against her.

GROUNDS OF MOTION.

It is respectfully submitted that said supplemental
answer should be permitted to be filed for the following
reasons and upon the following grounds:

I. Because the value and disposition of the assets set
up in the supplemental answer, purchased with common
funds prior to January 1, 1861, disposed of after June
20, 1863, and appropriated by Virginia to her exclusive
use, were discovered mostly by the defendant, if not
wholly, since the last continuance;

IJ. Because the evidence of the existence, value and
disposition of said assets was in the possession of the
State of ‘Virginia, and she did not volunteer the dis-
closure thereof, although the object of this suit, insti-
tuted by her, was the ascertainment of West Virginia’s
equitable proportion of the Virginia debt;

III. Because, while greater diligence might be
required of individuals to ascertain the evidence gov-
Morton or DEFENDANT. 7

 

erning their rights, when in controversy, yet, in the case
of a State, no such requirement can obtain, for the rea-
son that it is represented by officials whose tenures of
office are frequently of short duration, and whose chief
executive may not, under its Constitution, as in the case
of the defendant, succeed himself, thereby breaking the
chain of knowledge of public affairs, especially when it
relates to the records of other States, and destroying the
continuity of information that must be passed from one
administration to another;

IV. Because the decree of reference executed in this
case did not specifically, if at all, call for the discovery
of the assets now disclosed and presented for the first
time (see decree, Virginia v. West Virginia, 209 U. S.,
514) ;

V. Because the right of West Virginia to be cred-
ited with 2314% of the value of the assets by the pur-
chase of which the debt was created constitutes an equity
just as ‘‘deep seated’’ as the obligation to pay 2314% of
the debt so created. The one is the exact measure of the
other ;

VI. Because an examination of the said supplemen-
tal answer discloses a large amount of bonds, stocks and
other securities applicable to the discharge of the entire
debt created by the Commonwealth of Virginia prior to
January 1, 1861, and were designed to be so applied by the
Constitution of Virginia, adopted in 1851, and which
Constitution was the organic law of Virginia at the time
West Virginia adopted her first Constitution in 1861,
and when the Commonwealth of Virginia passed the Act
of legislation in May, 1862, giving her consent to the
formation of West Virginia as one of the States of the
Union, and the law of ‘Virginia became the law of West
Virginia, and so remained the law of said last named
8 Motion or DEFENDANT.

 

State, not altered or repealed by West Virginia after her
admission into the Union; and the provisions of the Con-
stitution of Virginia making the said stocks, bonds and
other securities available for the payment of the said
debt governed and controlled their application to the
payment of this debt before and at the time of the admis-
sion of West Virginia into the Union as one of the States.
thereof, and,

VII. Because, in addition to the grounds already
stated, the proposed supplemental answer alleges new
facts and presents new reasons. why interest should not
be charged against West Virginia. These are money
received by Virginia derived from the common invest-
ment and common assets appropriated by her, which are
not embraced in those assets out of which credits are
claimed upon the principal of the debt. They are set
off against interest alone, and amount to many millions
of dollars. Such is the item of $5,782,240.09, represent-
ing dividends upon stocks not otherwise accounted
for, and such are the public buildings constructed
and equipped out of the common funds, and retained
by Virginia, as well as much personal property, con,
sisting of libraries, arms and munitions of war.

A. A. LILLY,
Attorney General for West Virginia.

V. B. ARCHER,
CHAS. E. HOGG,

JOHN H. HOLT,
Associate Counsel for West Virginia.
Supplemental Answer
IN THE

Supreme Court of the United States
OCTOBER TERM, 1913.
No. 2 ORIGINAL.

COMMONWEALTH OF VIRGINIA
vs. In Equity.

STATE OF WEST VIRGINIA.

THE SUPPLEMENTAL ANSWER OF THE
STATE OF WEST VIRGINIA TO THE BILL OF
COMPLAINT EXHIBITED AGAINST HER HEREIN
BY THE COMMONWEALTH OF VIRGINIA:

Now comes the defendant, the State of West Virginia,
by A. A. Lilly, her Attorney General, and, by leave of
Court first had and obtained, files this her supplemental
answer to the bill of complaint of the plaintiff filed
herein against her, and alleges:

FIRST: That, prior to the establishment of the State
of West Virginia out of the territory of the Common-
wealth of Virginia on the twentieth day of June, 1863,
and prior to the first day of January, 1861 (West Vir-
ginia, by her Constitution, having assumed an equitable
proportion of the public debt of the Commonwealth of
12 SuPpPLEMENTAL ANSWER.

 

Virginia existing prior to the latter date), the Common-
wealth of Virginia purchased with the bonds that evi-
denced her public debt existing prior to the first day of
January, 1861, or out of the proceeds of the sale thereof,
certain stocks, bonds, securities and other properties,
and made loans to various persons and companies, and
was. the owner and holder of said stocks, bonds, securi-
ties and other properties on the first day of January,
1861, as well as upon the twentieth day of June, 1863,
and, after said last named date, has continued until the
present time to hold, own and enjoy the fruits of a por-
tion of said securities and properties; has sold certain
other portions thereof for many millions of dollars; col-
lected said loans, and given away the residue of said
securities, without the knowledge or consent of this
defendant, except as hereinafter stated;

That that portion of said securities so retained by the
Commonwealth of Virginia consisted of stock in the
Richmond, Fredericksburg & Potomac Railroad Com-
pany, amounting to $275,200.00, and certain bank stocks
owned by the State of ‘Virginia, amounting to $3,710,-
020.00, and had, as this defendant is now informed, an
actual commercial and market value, both on the first
day of January, 1861, and the twentieth day of June,
18638, of at least $3,985,220.00;

That the securities aforesaid sold by her after the
twentieth day of June, 1863, except as hereinafter set
out, consisted of stock owned in various railroad com-
panies, which was subsequently sold by her to the Atlan-
tic, Mississippi & Ohio Railroad Company at the price
of $4,000,000.00, and stocks in and loans to various other
railroad and canal companies, including a loan to the
Government of the United States and a claim against
Selden-Withers Company, which stock she sold and loans
collected, and received therefor the sum of $6,313,532.47,
which securities and loans had, as this defendant is now
SUPPLEMENTAL ANSWER. 13

 

informed, an actual value, both upon the first day of
January, 1861, and the twentieth day of June, 1863, of
$10,313,532.47 ;

That the residue of the securities so sold by her con-
sisted of stock in the Manassas Gap Railroad Company,
Roanoke Valley Railroad Company, and certain other
railroad companies hereinafter described, and stock in
certain navigation and canal companies, likewise here-
inafter described, with an aggregate par value of $3,885,-
076.68, which said stocks, as this defendant is now
informed and believes, had an actual value, both on the
first day of January, 1861, and the twentieth day of
June, 1863, of twenty-five per cent. of their par, or $971,-
269.17;

That the securities and property so given away by her
subsequent to the twentieth day of June, 1863, consisted
of 104,000 shares of stock in the James River and Kan-
awha Company, with a par value of $10,400,000.00,
which stock, as this defendant is now informed and
believes, had an actual value, both on the first day of
January, 1861, and the twentieth day of June, 1863, of
twenty-five per cent. of its par, or $2,600,000.00;

That, after the foregoing securities had been pur-
chased and loans made, there accrued dividends upon the
one and interest upon the other prior to January 1, 1861,
which were collected by the Commonwealth of Virginia
after that date, and mostly after the twentieth day of

‘June, 1863, amounting in the aggregate to $1,835,409.28 ;

That, as this defendant is now informed, the State of
Virginia, after the division of the old Commonwealth
into two States (June 20, 1863), collected large amounts
of money from several Counties then and now located in
the State of West Virginia, aggregating the sum of
$225,078.06 ;

That, in addition to the foregoing securities and prop-
erties so retained or disposed of as aforesaid, and the
14 SUPPLEMENTAL ANSWER.

 

collections made as aforesaid, by the Commonwealth of
Virginia, she had in her treasury on the first day of Jan-
uary, 1861, cash amounting to $1,104,927.06;

That the total of said assets on the first day of Jan-
uary, 1861, and the twentieth day of June, 1863, exclud-
ing the sum of $225,078.06, collected from West Virginia
Counties as aforesaid, had a reasonable value of $20,-
810,357.98 ;

That these assets were available for the discharge of
the debt of the Commonwealth of Virginia existing prior
to the first day of January, 1861, and, if they had been so
applied, would have greatly diminished the same; but
that, instead of so applying them, the plaintiff, the Com-
monwealth of ‘Virginia, has, as aforesaid, retained a por-
tion thereof, and devoted the same to her own exclusive
use, without the knowledge or consent of this defendant;
sold other portions thereof without the knowledge or
consent of this defendant, and appropriated the pro-
ceeds thereof to her individual use, and, without such
knowledge or consent, has made certain collections as
aforesaid, and given away the residue of said assets,
except as hereinafter stated, and has neither reported
to this defendant any of said transactions nor has
accounted unto her, either in whole or in part, for the
value of the assets so retained or given away, or for the
proceeds of such as were sold or collected by her;

That this defendant was interested in said assets to the
extent of her just proportion of the value thereof as of
the first day of January, 1861, and was the equitable
owner of, and entitled to receive out of the proceeds
thereof, according to the basis of liability fixed by this
Honorable Court, 2314% of the sum of $20,810,357.98,
and the whole of $225,078.06, collected by Virginia from
West Virginia Counties, as aforesaid, making an aggre-
gate of $5,115,512.19 ;

That out of the assets neither sold nor given away,
SUPPLEMENTAL ANSWER. 15

 

but retained by the Commonwealth of Virginia, as afore-
said, she did turn over to the State of West Virginia a
part of her stock in the Northwestern Bank, amounting
to $210,200.00, and the whole of her stock in the Fair-
mont Bank, amounting to $50,000.00, making an aggre-
gate of $260,200.00, which, when deducted from the afore-
said sum of $5,115,512.19, would leave a balance of $4,-
855,312.19, representing West Virginia’s equitable pro-
portion of said assets so retained, sold, collected or given
away by the Commonwealth of Virginia, which said sum
should be applied as a credit upon and deducted from
the sum of $7,182,507.46, allotted by this Honorable Court
as West Virginia’s equitable proportion of the principal
of the ‘Virginia debt, which would reduce said principal
to the sum of $2,327,195.27.

The names and descriptions of said stocks, bonds,
securities and other properties, as well as the time and
manner of their acquisition by the Commonwealth of
Virginia, the time and manner of their disposition by —
said State, and the amounts of money received therefor
and appropriated by the Commonwealth of Virginia are
hereinafter set out in detail in paragraph six of this sup-
plemental answer.

SECOND: That this defendant, both at the time of
the filing of its original answer herein and at the date of
the fixing by this Honorable Court of the basis of liabil-
ity and the share of the principal of the debt of Virginia
that West Virginia assumed, was ignorant of the value
of the stocks, bonds, securities and property aforesaid,
and did not then know that the same had been sold by
the Commonwealth of Virginia, and large, or any, sums
of money derived therefrom; that the knowledge of
these facts was peculiarly within the possession of the
plaintiff, the State of Virginia, and that said State never
at any time informed this defendant of the value of
said properties, or any of them, or reported to her that
16 SUPPLEMENTAL ANSWER.

 

moneys had been derived therefrom and appropriated,
either wholly or in part, to the exclusive use of the State
‘of Virginia. ;

She further says that she did not discover the value
and disposition of these securities until after the
appointment of a Commission by her Governor on the
19th day of April, 1913, pursuant to a joint resolution
passed by the two Houses of her Legislature on the 21st
day of February, 1913, for the purpose of attempting,
in accordance with the suggestion of this Honorable
Court, an amicable adjustment of the matters here in
controversy with a like Commission from the State of
Virginia, and that her said Commission has, since the
filing of the original answer herein and the opinion of
the Court hereinbefore referred to of March 6, 1911,
discovered the matters hereinbefore and hereinafter set
out in this her supplemental answer;

THIRD: That, after the Commissions of the two
States had met in joint conference in the City of Wash-
ington on the 25th day of July, 1913, and had adjourned
to meet at a later day, the West Virginia Commission
met at Charleston on the 12th day of August, 1913, and
appointed a sub-committee out of its own membership,
for the purpose of making a complete examination into
all the matters involved in this controversy, with the
view of submitting a proposition to the Virginia Com-
mission, which said sub-committee entered promptly
upon its work, and diligently pursued its investigations
until on or about the 27th day of February, 1914, at
which time it completed its labors and reported the result
thereof to the full West Virginia Commission;

That, during the investigations made by the sub-com-
mittee aforesaid, it discovered the matters and things
hereinbefore and hereinafter alleged with respect to the
value and disposition of the stocks, bonds and other
securities and property owned by the Commonwealth of
SiuPPLEMENTAL ANSWER. 17:

 

Virginia on the first day of January, 1861, and retained
or disposed of by her after the twentieth day of June,
1863, and embodied the same in its report on the 27th
day of February, 1914, to the West Virginia Commission,
and, at the same time, formulated and reported a propo-
sition of settlement based thereon, with the recommen-
dation that the same be made by the West Virginia to
the Virginia Commission.

The substance of the proposition so formulated was
that, if the ‘Virginia Commission would allow to the
State of West Virginia 2314% of the value as of the first
day of January, 1861, of the stocks, bonds, securities and
other properties owned by her on that day, and subse~
quently disposed of by her, hereinbefore referred to and
hereinafter described in detail, as well as the whole
amount of moneys ($225,078.06) collected by Virginia
from West 'Virginia Counties after the separation of the
two States, after deducting the amount of bank stocks
($260,200.00) theretofore turned over by Virginia to
West Virginia; that is to say, the sum of $4,855,312.19,
as a credit upon the sum of $7,182,507.46, ascertained,
as aforesaid, by this Honorable Court to be the part of
the principal of the Virginia debt assumed by the State
of West Virginia, and accept the balance so ascertained
in full settlement, both principal and interest, of West
Virginia’s equitable proportion of the Virginia debt,
then, and in that event, the West Virginia Commission
would at once report that fact to the Governor of the
State of West Virginia, with the request and recom-
mendation that he immediately convene in extraordinary
session the Legislature of that State, for the purpose of
adopting or rejecting the recommendation of the West
Virginia Commission, and for the further purpose, in the
event of its adoption, of providing the means, without
further delay, of paying unto the State of Virginia, as
Trustee for her bondholders, the sum of $2,327,195.27,
40

is SUPPLEMENTAL ANSWER.

 

in full settlement of that portion of the Virginia debt
assumed by the State of West ‘Virginia.

The West Virginia Commission, upon receiving the
report of ‘said sub-committee, and after an examination
and discussion thereof, approved and adopted the same;
and, thereupon, a joint conference of the Virginia and
West Virginia Debt Commissions was called to meet at
the City of Washington on the fourth day of March,
1914. The two Commissions convened at the time and
place designated, and the West Virginia Commission
made, in writing, to the Virginia Commission its propo-
sition of settlement aforesaid, and accompanied the
same, as a part thereof, with a tabulated statement of
the stocks, bonds securities and other properties 2314%
of the value of which she claimed as a credit upon her
ascertained proportion of the principal of the Virginia
debt assumed by her. This proposition, however, was
rejected by the Virginia Commission, and, thereupon,
the conference ended, as well as the negotiations between
the two Commissions. .\ true copy of said proposition,
together with a true copy of the tabulated statement of
the stocks, bonds, securities and other property therein
referred to and thereto appended, as well as a copy of
the letter of the Chairman of the West ‘Virginia Com-
mission transmitting the same to the Virginia Commis-
sion, are herewith filed as a part of this supplemental
answer, and marked ‘‘Iixhibit A’’. A true copy of the
reply of the Virginia Commission thereto, as well as a
copy of the letter of the Chairman of said Commission
transmitting the same, are likewise exhibited herewith
as a part hereof, and marked ‘‘Exhibit B’’. .\ true copy
of the rejoinder of the West Virginia Commission to the
ceply of the Virginia Commission is also exhibited here-
with as a part hereof, and marked ‘‘Exhibit C’’.

FOURTH: This defendant further alleges that,
ander the provisions of Sections 28, 29 and 30 of the
SUPPLEMENTAL ANSWER. 19

 

Constitution of Virginia of 1851, in force January 1,
1861 (Code of Virginia, 1860, page 47), she became, and
was, entitled, under her Constitution adopted and in
force on June 20, 1863, to an equitable proportion of
and interest in the stocks, bonds and other securities,
credit and settlement for which she now seeks to obtain
by her supplemental answer ;

That, under the provisions of Section 29 of said Con-
stitution, a sinking fund was created; that, under the
provisions of Section 30 of said Constitution, it was pro-
vided that the General Assembly may, at any time, direct
a sale of the stocks held by the Commonwealth in inter-
nal improvement and other companies, but the proceeds
of such sale, if made before the payment of the public
debt, should constitute a part of the sinking fund, and be
applied in like manner.

This defendant claims that, under these provisions of
the Constitution, the Commonwealth of Virginia held,
owned and was entitled to possess and sell the securities
which she had acquired by the issue and sale of the
bonds constituting the common debt, and that West 'Vir-
ginia, by her contract (See. 8, Art. VIII. of her Consti-
tution), while assuming an equitable proportion of the
Virginia debt, nevertheless acquired a proportional
interest in these securities belonging to the sinking fund,
measured by her equitable proportion of the debt, and
that she had a vested interest in these securities which
could not be divested by any subsequent constitutional
provision adopted by the Commonwealth of Virginia, or
by any legislative enactment other than authorized by
the said sections of the Constitution of 1851.

FIFTH: ‘This defendant, further answering, savs
that, as will appear from the Acts of the Legislature of
the two States, both States contemplated a fair division
of the property belonging to Virginia upon the settle-
ment of the controversy between the two States with
20 SUPPLEMENTAL ANSWER.

 

reference to the said debt and the proportion thereof
assumed by West Virginia in which West Virginia was
interested before she became an independent State, and
that both States declared for a fair division of the prop-
erty, always, however, in connection with the ascertain-
ment and adjustment of the equitable proportion of the
debt assumed by West Virginia under her Constitution.
And this defendant avers that she is advised and believes,
and, upon such advice and belief, avers, that the prop-
erty referred to evidently meant the stocks, bonds and
other securities in the possession of ‘Virginia possessing
a commercial value, and available as assets for the dis-
charge of the said debt, and that too without any impedi-
ment to or interference with the ordinary operations of
the State government; and the defendant avers that it
has always been the policy of Virginia to apply these
assets to the payment of the said debt, and, in support
thereof, this defendant avers that, in the Constitution of
Virginia adopted in 1864, as shown by the ‘‘ Acts of the
General Assembly of Virginia, 1861-1865’’, on pages 15
and 16 thereof, the following provision with reference
to the public debt appears:

“The General Assembly may at any time
direct the sale of the stocks held by the Com-
monwealth in internal improvement and other
companies located within the limits of this
Commonwealth, but the proceeds of such sale,
if made before the payment of the public debt,
shall be appropriated to the payment there-
of.”’

On the twenty-eighth day of February, 1866, a joint
resolution bearing upon the adjustment of the debt
hetween the two States, appearing in the Acts of Assem-
bly of ‘Virginia of 1865-6, at page 453, was adopted, the
third paragraph of which reads as follows:
SUPPLEMENTAL ANSWER. 21

 

‘‘The commissioners appointed under the
foregoing resolution are also empowered and
directed to treat with the authorities of West
Virginia upon the subject of the proper adjust-
ment of the public debt of Virginia due or
incurred previous to the dismemberment of
the State, and of a fair division of the public
property; subject, however, to the approval or
disapproval of this General Assembly.’’

This resolution was adopted within less than three
years after the State of West Virginia was admitted
to the Union, and is expressive of the attitude of Vir-
ginia relating to the equities of West Virginia in the
assets of the former State applicable to the discharge of
the public debt.

On February 18, 1870, an Act of the General Assembly
of Virginia was passed, appearing on page 8 of the Acts
of the General Assembly of Virginia for 1869-1870, with
reference to the adjustment of the public debt, the first
section of which is as follows:

‘Be it enacted by the General Assembly
that three commissioners, resident citizens of
this State, be appointed by the Governor to
treat with the authorities of West Virginia
upon the subject of a proper adjustment of the
public debt of the State of Virginia due or
incurred previous to the dismemberment of
the State, and a fair division of the public
property; provided, however, that the action
of the said commissioners shall be subject to
the approval or disapproval of this General
Assembly.”’

SIXTH: This defendant, further answering, says
that the history of the purchase, ownership, value and
final disposition by the State of Virginia of the stocks,
bonds and other securities and properties hereinbefore
DD SUPPLEMENTAL ANSWER.

 

referred to in the first paragraph of this supplemental
answer is as follows:

SECURITIES RETAINED BY VIRGINIA.

1. Under and by virtue of two Acts of the General
Assembly of ‘Virginia, the one passed on January 23,
1835, and the other on March 23, 1836, the Common-
wealth of Virginia purchased 2,752 shares of stock, of
the par value of $100 each, in the Richmond, Fredericks-
burg & Potomac Railroad Company, and paid therefor
the sum of $275,200.00, which purchase money was
derived either from taxation or from the proceeds of
the sales of a portion of the bonds that evidenced the
debt in controversy here, and constituted a common
fund, 2314% of which was owned by this defendant, and
7614% thereof by the State of Virginia. The stock so
purchased was never disposed of by the Commonwealth
of Virginia, and was owned by her on the first day of
January, 1861, and is still so owned and held. Said
stock, this defendant is now informed, and, upon such
information, alleges, was dividend paying on the first
day of January, 1861, and on that date, as well as on
the twentieth day of June, 1863, was worth in the mar-
ket, at the very least, the sum of $275,200.00.

This defendant is further informed, and, upon such
information, alleges, that said stock has continued to
pay dividends from January 1, 1861, to the present time,
and that, during that period, has not only paid to the
State of Virginia in cash dividends the sum of $1,282,-
198.74, but that she has received, in addition thereto, on
account of said stock, and in the form of stock dividends,
the sum of $319,615, which dividend stock bears the same
rate of dividend as the original stock.

2. Prior to the first day of January, 1861, the Com-
monwealth of Virginia purchased, and paid for out of
SUPPLEMENTAL ANSWER. 23

 

the eommon funds of the plaintiff, and the defendant,
stock in the following banks, of the par value as herein
set out; that is to say:

Farmer’s Bank of Virginia.... . .$962,600.00
Dank: OF \V Wey 226.45 o244s4aes 963,620.00
Bank of the Valley. ... ........ 483,900.00 ¢
Eixchange Bank ..... Lowes 875,500.00
Northwestern Bank . ......... 374,400.00
Fairmont Bank ......... .... . 90,000.00
Total ....... .............$63,710,020.00

This defendant is informed, and upon such informa-
tion alleges, that the foregoing bank stocks were, at the
least, worth par on the first day of January, 1861, and
continued to be worth par, or more, from that date until
long after this defendant was separated from the Com-
monwealth of Virginia on June 20, 1863. It further
says, upon information and belief, that said bank
stocks, both upon the first day of January, 1861, and
upon the twentieth day of June, 1863, and for sometime
thereafter, were regularly paying dividends of froin
seven to eight per cent. per annum.

This defendant further says that the Commonwealth
of Virginia appropriated the whole of said stock unto
her own exclusive use, except $210,200 of the stock hela
and owned by her in the Northwestern Bank, and her
stock in the Fairmont Bank, amounting to $50,000.00,
which stocks were turned, over by her to this defendant.

SECURITIES PURCHASED BY VIRGINIA PRIOR
TO JANUARY 1, 1861, AND SOLD
AFTER JUNE 20, 1863.

1. Prior to January 1, 1861, the State of Virginia,
with the common funds of the two States, bought stocks
Od SUPPLEMENTAL ANSWER.

 

of and made loans to each of the following railroad com-
panies:
Virginia and "Tennessee Railroad Company,
Southside Railroad Company,
Virginia & Kentucky Railroad Company,
Norfolk & Petersburg Railroad Company,
and from time to time sold portions of said stock, until
she had left on hand a residue of stocks therein and
loans thereto that cost her:
Virginia & Tennessee Railroad Company,

 

DWC ccuseureteeenss J. 82,300,000.00
Southside Railroad Company, Stock. ee 803,500.00
GAH: fri4aiaes ities TORI OF
Virginia and Rentucks Haikcoad C ompany,
“Stock ..... ao as i 82,000.61
Norfolk & Petersburg Railr aad (Company,
DER a4 55a ae ak. Aoorann acer . 1,139,970.00
“'Toans ... .. ci eae 134,975.51
POA, Sins <3 ch. ae ees .. .$5,168,548.46,

which residuary stocks and loans she subsequently, that
is to say, on the twentieth day of December, 1870, sold
to the Atlantic, Mississippi & Ohio Railroad Company
for the sum of $4,000,000.00. The purchase price was to
be paid in instalments, and a second mortgage was taken
upon the property of the Atlantic, Mississippi & Ohio
Railroad Company to secure the payment of the same.
This sale was made and this security taken without the
knowledge or consent of this defendant; and finally, after
the lapse of many years, first mortgage on the prop-
erty of the Railroad Company was foreclosed, and
the property embraced therein sold, but did not bring
enough to satisfy the second mortgage and pay the $4,-
000,000.00 debt to the State of Virginia. Notwithstand-
ing that fact, the Atlantic, Mississippi & Ohio Railroad
SUPPLEMENTAL ANSWER. 25

 

Company was subsequently reorganized, and, on the
first day of March, 1882, paid into the treasury of the
State of Virginia the sum of $500,000.00 for her interest
in said second mortgage.

This defendant further says that she is informed, and
upon such information charges, that the stocks so pur-
chased in said railroads, as aforesaid, and the loans so
made to them, were of the market value of $4,000,000.00,
or more, not only as of the first day of January, 1861, but
as of the twentieth day of June, 1863.

2. Virginia also, prior to the first day of January,
1861, purchased with the common funds of the two States
shares of stock in the following railroad companies, and
out of said funds made loans to said railroads, and sub-
sequently collected the principal of said loans and sold
said stocks, and likewise collected a claim against the
Government of the United States, and another against
Selden-Withers Company, and realized therefrom the
amounts hereinafter next set out, and has never
accounted unto this defendant for its proportionate part
thereof; that is to say:

Orange & Alexandria Railroad Company,

Stock and loan.......... 0.0.00 cee ee eee $1,156,210.98
Richmond & Danville Railroad Company,

Stock and loan...............0 0c eee ee 1,653,423.04
Richmond & Petersburg Railroad Com-

Gany, SlOGk ep iiesutsA dene eenaess sate 578,404.13
Virginia Central Railroad Company, Stock

and: IOANG ce ecdncdsan daw berets ean ss 321,458.17
Blue Ridge Railroad Company, (Built by

State-O) VirSitla) tesa ose eusereteae as 705,280.82
Alexandria, Loudoun & Hampshire R. R.

oe rocks puss oa eenhone bagetsen ans 68,044.51

Winchester & Potomac Railroad Company,
Loan reduced by annuity............... 83,333.33
26 SUPPLEMENTAL .ANSWER.

 

Virginia & Tennessee Railroad Company,
Loan ...

992,030.32

Southside Railroad Company, Loan..... 91,897.66
Norfolk & Petersburg Railroad Company,

AOAUNE X52. Fader Rasa eacealts est aneeta une 165,024.49
Roanoke Navigation Company, Stock...... 3,832.00:
Alexandria Canal Company, Stock......... 816.00
Upper Appomattox Company, Stock.... 16,144.26.
Dismal Swamp Canal Company, Stock... 24,839.98
Loan to Washington College.............. 2,000.00:
Richmond Academy, Bonds............... 400.00:
Claim against United States Government.. 298,369.74
Claim against Selden-Withers Company. 152,023.04

Metal beak sack oh a arash nee Raha qe eee Waa $6,313,532.47

RESIDUE OF SECURITIES PURCHASED BY VIR-
GINIA PRIOR TO JANUARY 1, 1861, AND
SOLD AFTER JUNE 20, 1863.

The residue of the securities purchased by the State
of ‘Virginia with common funds prior to January 1, 1861,
and disposed of by her subsequent to that time in one
way and another, and not hereinbefore recapitulated,
consisted of stocks in the following railroad, navigation
and canal companies, the actual value of which, as of the
first day of January, 1861, and of the 20th day of June,
1863, in consequence of the lapse of time and the conse-
quent obscurity of the evidence relating to such value, is
unknown to this defendant, but the par value of which is
set opposite the name of each company as follows, to-
wit:

Manassas Gap Railroad.
Roanoke Valley Railroad .........

Fredericksburg & Gordonsville R.R.
Richmond & York River R.R.........

nee $2,105,000.00
307,402.00
132,399.00
490,999.52
SUPPLEMENTAL ANSWER. 27

 

Rappahannock Company ............ 179,500.00
Rivanna River Navigation Co.... ... 227,133.00
Smith’s River Navigation Co......... 4,083.12
Slate River: Go.ex<.<2< dees seaeni seas 21,000.00
Kempsville Canal Company.......... 13,650.00
Hazel River Navigation Co........... 63,079.58
Goose Creek & Little River Co....... 58,205.35
Diagon Swamp Navigation Co....... 1,464.00
Chesapeake & Ohio Canal Co......... 281,111.11

MO cpuceiuy eneoueusynecages $3,885,076.68

And this defendant says that she believes, and charges
upon such belief, that these securities last above enum-
erated had an actual value, both on the 1st day of Jan-
uary, 1861, and the 20th day of June, 1863, of 25% of
their par, or $971,269.17.

INTEREST ON LOANS AND DIVIDENDS ON
STOCK.

This defendant is also informed, and upon such infor-
mation alleges, that, after the Commonwealth of Vir-
ginia had, as hereinbefore set out, purchased with the
common funds of this defendant and of the plaintiff the
bank and railroad stocks hereinbefore described, and had
made unto the various railroad companies and persons
hereinbefore set out the various loans herein set forth,
she, prior to the first day of January, 1861, became enti-
tled to dividends upon said stocks and to interest upon
said loans in the aggregate sum of $1,835,409.28, and,
after the first day of January, 1861, collected the same,
but did not apply the same to the discharge of her in-
debtedness existing prior to the first day of January,
1861, and has never paid or accounted unto this defend-
ant for any part thereof.
28 SUPPLEMENTAL ANSWER.

 

The names of the various Companies and the amounts
received from each, as aforesaid, whether as dividends
upon stock or as interest upon loans, are as follows:

Orange & Alexandria Railroad Company.... $18,144.29

Richmond & Danville Railroad Company. .. 8,016.80
Richmond & Petersburg Railroad Co. ...... 43,048.00
Virginia Central Railroad Company........ 182,436.36
Winchester & Potomac Railroad Company .. 833.33
Richmond, Fredericksburg & Potomac R.R.

COMPANY” acc cwascawya dee acee ely warns ... 157,662.07
Virginia & Tennessee Railroad Comins . 211,891.82
Southside Railroad Company.............. 204,602.34
Norfolk & Petersburg Railroad Company.. 495,900.00
James River & Kanawha Company..... os 250.00
Loan to Washington College..... ........ 60.00
Richmond Academy Bond......... ........ 12.00
Claim against United States Government.. 832,451.57
The Farmers’ Bank of Virginia........... 33,691.00
Bank, of: Vira. >. 24:.002sce<ue cee eeans 33,726.70
Bank of the 'Valley.... 0. ...........2.005. 16,936.50
Exchange Bank .......0 ..... 0.0.00. 0 ee ae, 30,642.50
Northwestern Bank .. ....-............00. 13,104.00
Hairmont Bank o2ssesse0dnetesks heredo eek 1,500.00

lds Heir eh, ada: Gat a $1,835,409.28

SECURITIES AND PROPERTY GIVEN AWAY BY
VIRGINIA.

This defendant, further answering by way of supple-
ment to her original answer, says that the Common-
wealth of Virginia, pursuant to the terms and provisions
of certain Acts of her General Assembly, the first passed
upon the 16th day of March, 1832, the second upon the
14th day of February, 1834, the third upon the 24th day
of January, 1835, and the fourth upon the 23rd day of
SUPPLEMENTAL ANSWER. 29

 

March, 1860, purchased, and from time to time became
the owner of, certain shares of stock in the James River
& Kanawha Company, until the aggregate number of
shares owned by her in said Company prior to the first
day of January, 1861, amounted to 104,000 shares, with
an aggregate par value of $10,400,000.00; :

That, prior to the 23rd day of March, 1860, she had
purchased and owned shares of this stock amounting
in the aggregate, at par, to $3,000,000.00, and, under the
provisions of an Act of her General Assembly passed on
March 23, 1860, she purchased, prior to the first day of
January, 1861, $7,400,000.00 more of this stock, paying
therefor par, partly in cash, partly by the assumption
of certain debts due from the Company to others, and the
residue by the exchange of a debt owed by the Company
to the Commonwealth of Virginia for an equal amount of
the Company’s stock at par;

That the State of Virginia, by her said Act of March
23, 1860; that is to say, only a period of about nine
months prior to the first day of January, 1861, valued
said stock at par, and between said date and the first day
of January, 1861, purchased a large amount thereof for
eash at that valuation; and this defendant is informed
that nothing happened to depreciate the value of the
same between the time of the valuation so placed thereon
and the purchases thereof made by the State of Vir-
ginia at par and the first day of January, 1861; but that,
making every allowance for mistakes in the valuation so
made by the State of Virginia, and every allowance for
depreciation in the value of said stock, this defendant
believes that said stock and the property represented
by it was reasonably worth on the first day of January,
1861, as well as upon the 20th day of June, 1863, twenty-
five per cent. of its par, or the sum of $2,600,000.00 ;

That the State of Virginia, notwithstanding the fact
that the stock in this Company had been purchased with
30 SUPPLEMENTAL ANSWER.

 

the common funds of the two States, and notwithstand-
ing its value as aforesaid, pursuant to and by virtue of
two Acts of its General Assembly, the one passed on
February 27, 1879, and the other upon March 4, 1880,
donated, without consideration so far as the State of
West Virginia was concerned, all of the property of said
Company, and authorized and caused said Company to
convey the same to the Richmond & Alleghany Railroad
Company, upon consideration that the latter would pay
certain named debts of the James River & Kanawha
Company, and agree to construct and operate a railroad
along the tow-path of the canal of the James River &
Kanawha Company from Clifton Forge, in the State of
Virginia, to the City of Richmond, in said State, within
a given time, and would guarantee the performance of
its said contract by the deposit of $500,000.00 in United
States Government bonds.

The road was built by the Richmond & Alleghany
Company along the old tow-path of the James River &
Kanawha Company, the bonds deposited by the Richmond
& Alleghany Company as a guarantee for the perfor-
mance of its contract withdrawn, and a deed executed by
the James River & Kanawha Company to the Richmond &
Alleghany Railroad Company on March 4, 1880, convey-
ing the whole of the property of the James River & Kan-
awha Company described in the Act of February 27,
1879.

This defendant was entitled to 2314% of the value of
said property so given away as of the first day of Jan-
uary, 1861; but the State of Virginia has never paid the
same, or any part thereof, unto her, nor accounted to
her therefor, in whole or in part.
SUPPLEMENTAL ANSWER. dl

 

MONEYS COLLECTED BY VIRGINIA FROM WEST
VIRGINIA COUNTIES AFTER THE SEPA-
RATION OF THE TWO STATES.

This defendant is further informed and believes, and
upon such information and belief charges, that the State
of Virginia, after the division of the old Commonwealth
into two States (June 20, 1863), collected large sums of
money from several Counties then and now located with-
in the State of West Virginia, aggregating the sum of
$225,078.06, the whole of which she avers should be
allowed her as a credit upon her just proportion of the
Virginia debt.

CASH ON HAND JANUARY 1, 1861.

In addition to the foregoing assets, the Commonwealth
of Virginia, on the first day of January, 1861, had cash
on hand in her treasury in the sum of $1,104,927.06, which
sum of money was derived from assessments and levies
upon the subjects of taxation situate both in that por-
tion of the old Commonwealth of Virginia which is now
the State of West Virginia and that portion of said
Commonwealth that constitutes the State of Virginia.

The amount aforesaid was standing in the treasury of
Virginia to the credit of the following funds:

 

 

Commonwealth fund .......... Co eeee ce. $252,842.67
Literary fund ....... acca Ochs 26,876.08
Board of Public Works ae Ae Gee ican f 5,958.28
Sinking fund'...... us ae wae. eee 819,250.03

MOEA cc. ccsavue cevetesslasess wae

These moneys (or, at least, the portion thereof that
was in the sinking fund) this defendant says were appli-
cable by the Commonwealth of Virginia to the discharge
of her bonded indebtedness existing prior to the Ist day
32 SUPPLEMENTAL ANSWER.

 

of January, 1861, or to the accrued interest thereon,
and, as this defendant is informed, were in part so
applied; that is to say, the Commonwealth of ‘Vir-
ginia discharged out of these moneys during the month
of January, 1861, or shortly thereafter, the sum of $977,-
209.88 of unpaid interest that had accrued on her public
debt from the first day of July, 1860, to the 31st day of
December, 1860, but that, notwithstanding this fact, the
interest so accrued and paid has been added to and
embraced in the public debt of Virginia existing prior to
the 1st day of January, 1861, and this defendant charged
with her equitable proportion thereof, although the same
had been paid, as aforesaid.

The foregoing assets set forth in detail in this para-
graph, excluding the moneys collected from West Vir-
ginia Counties by Virginia ($225,078.06), aggregate, as
alleged in the first paragraph of this supplemental
answer, the sum of $20,810,357.98, twenty-three and one-
half per cent. of which is $4,890,434.13, from which that
portion of the bank stocks turned over by Virginia to
West Virginia, and amounting to $260,200.00, should be
deducted, leaving a balance of $4,630,234.13, to which
should be added the whole of the moneys collected by
‘Virginia from West Virginia Counties after the separa-
tion of the two States, amounting to the sum of $225,-
078.06, making a total of $4,855,312.19, to be credited to
West Virginia on account of said assets; and this last
named sum, when deducted from the sum of $¢7,182-
507.46, ascertained, as aforesaid, to be this defendant’s
equitable proportion of the Virginia debt, leaves a bal-
ance of $2,327,195.27, or the amount offered in compro-
mise hy the West Virginia Commission to the Virginia
Commission, as hereinbefore set out. /

SEVENTH: As another evidence of the value on or
about the first day of January, 1861, of the stocks, bonds
SUPPLEMENTAL ANSWER. 33

 

and other securities and property hereinbefore des-
cribed, and as a part of the information upon which this
defendant has based her allegations hereinbefore made
with respect to the value thereof, the defendant respect-
fully calls the attention of the Court to a statement con-
tained in the message of John Letcher, Esquire, Gov-
ernor of the Commonwealth of Virginia, submitted to the
Legislature of ‘Virginia on September 7, 1863, relating
to the debt of Virginia, which had been prepared with
great care, as stated by the Governor in said message,
and after consultation with the State Auditors of Vir-
ginia, and was believed by the then executive of said
State to be accurate and reliable. In this message, the
Governor says:

‘We have available stocks belonging to the
literary fund, railroad and other stocks belong-
ing to the internal improvement fund, worth
in the market, and from which may be realized
at any time the State may direct, the sum

Sec ase eer pieasenavech $16,543,055.35.”"

In this message, the Governor adds:

“Tn addition, the Commonwealth owns $2,340,-
600.00 worth of bank stock, which will readily
command in the market the sum of $3,019,-
125.00.’’

The part of Governor Letcher’s message dealing with
the public debt of Virginia will be filed herewith, mark-
ed ‘‘Exhibit D’’, and made a part of this supplemental:
answer.

EIGHTH: This defendant, further answering, says:
that she ought not to pay any interest upon any part:
of the said debt assumed by her until the amount there-.
ef has been definitely ascertained, upon the following:
grounds: :
34 SUPPLEMENTAL ANSWER.

 

By Section 8 of Article 8 of her Constitution adopted
in 1861, it is provided that—

‘An equitable proportion of the public debt
of the Commonwealth of Virginia prior to the
first day of January, 1861, 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 sink-
ing fund sufficient to pay the accruing interest
and redeem the principal within thirty-four
years.’’

And this respondent avers that, under this provision
of the Constitution, to which the plaintiff assented as
the condition of the defendant’s admission into the union,
there is no promise or obligation upon the part of this
defendant to pay any interest already accrued upon the
said debt. The obligation is simply to ascertain the
equitable proportion thereof, and provide for its pay-
ment, and the accruing interest, which means the inter-
est accruing upon that proportion of the debt which West
Virginia assumes; nor has there been any contract or
agreement upon the part of this defendant, by any of her
officers, agents or representatives, obligating her to pay
interest upon the said debt.

This defendant further says that, after her formation
as a State, she had no opportunity for ascertaining the
amount for which she was liable, because of the exist-
ence of war between the States, in which the State of
Virginia was an active participant; and, shortly after
its close, and before the rehabilitation of the State of
‘Virginia as one of the United States, she instituted suit
in the Supreme Court of the United States, claiming a
part of the territory of West Virginia, to-wit, the Coun-
ties of Jefferson and Berkeley, to which suit this defend-
ant was a party, and no decision was rendered therein
until the sixth day of March, 1871;
SUPPLEMENTAL ANSWER. 35

 

That, in the same month, to-wit, on the thirtieth day
thereof, the State of Virginia undertook, without the con-
sent and advice of the State of West Virginia, to ascer-
tain the per cent. and proportion of said debt herself
which West Virginia assumed, and fixed it at one-third
of the whole debt, the said State of Virginia declaring
that she was only liable for two-thirds ;

That thereafter the State of Virginia would not nego-
tiate a settlement so as to determine the amount which
West Virginia assumed of the said debt, except upon the
sole condition that Virginia was only liable for two-thirds

thereof, thus necessarily leaving to this defendant the
payment of the other one-third thereof to the State of
‘Virginia.

This defendant further says that she had no power or
authority to settle with the creditors of Virginia, because
Virginia had full control of the debt, and, had West
Virginia attempted a settlement with the creditors of
Virginia, whatever she might have done in the premises
would not have been binding upon the State of Virginia;
and all that was done by Virginia in fixing the one-third
of the said debt as the part assumed by West Virginia
was with the consent and co-operation of her creditors.

This defendant also says that whatever sum is obtain-
ed in this suit is not payable to Virginia for her use and
benefit, but is to be turned over to the holders of the un-
funded portion of the said debt, and that these holders
are private persons; and for this defendant to assume the
payment of any interest which has heretofore accrued
upon the said debt would be to impose upon her the bur-
den of paying interest to private persons without any
act of her own imposing such liability, either by legis-
lation or by contract entered into by any of her officers
or representatives.

In addition to the foregoing matters and things, this
defendant further says that no interest should be charg-
36 SUPPLEMENTAL ANSWER.

 

ed upon West Virginia’s portion of the Virginia debt in
consequence of the following matters and things, which
she now alleges upon information and belief to be true:

I. She is advised, and upon such advice avers, that
a large amount of the bonds evidencing the debt of Vir-
ginia created prior to the first day of January, 1861, has
been lost or destroyed, so that they will never be present-
ed for liquidation, and, to that extent, there is a further
reduction of the debt appearing to have been in existence
on the first day of January, 1861. This defendant is not
advised as to the exact amount of the bonds so lost or
destroyed, but avers that they reach a very consider-
able sum, largely in excess of one million dollars. This
appears from the report of the Debt Commission of Vir-
ginia submitted on January 14, 1892, wherein, referring
to the funding of the debt of $28,000,000.00 by the issuance
of new bonds for: $19,000,000.00 under the Act of Feb-
ruary 20, 1892, the Commission says:

‘“‘There is good reason to believe too that a
considerable amount of the old securities of the
State have been lost or destroyed, so that the
maximum of $19,000,000.00 will probably never
be reached.”’

This defendant avers that she believes that a very
large part of the $5,000,000.00 referred to in the said
Act of February 20, 1892, have been lost or destroyed,
so that there is no longer any probability whatever that
this sum will ever be presented for payment, and any
liability predicated thereon.

II. She says that the State of Virginia, as this defend-
ant is informed, has received from time to time, in ad-
dition to the amounts hereinbefore set out in paragraph
six of this supplemental answer, dividends upon the
SUPPLEMENTAL ANSWER. 37

bonds, stocks and securities hereinbefore described to an
amount equal to $5,782,240.09, and did likewise, at the
time of the separation of the two States, retain, with-
out accounting unto the State of West Virginia for any
part thereof, all of the public buildings, including the
Capitol at Richmond, the University at Charlottesville,
the penitentiary at Richmond, the State Asylum at
Staunton, and various other public buildings and insti-
tutions that had been constructed and equipped out of
the joint funds of the two States, and worth in the ag-
gregate many millions of dollars, as well as much person-
al property, consisting of libraries, arms and munitions
of war. She also says that Virginia has largely scaled
her debt, without West Virginia receiving her full pro-
portionate benefit of such sealing.

And now, having fully answered, this defendant prays
that the amount and value of the assets as of January 1,
1861, and as of June 20, 1863, hereinbefore set out, that
were acquired prior to said first named date by the
Commonwealth of Virginia with the common funds of the
two States, and were owned by her on said date, and sub-
sequently appropriated to her own use in kind, or sold,
and the proceeds of such sales so appropriated, or were
given away by her, and for which the State of Virginia
has not accounted unto the State of West Virginia, in
whole or in part, may be ascertained; that twenty-three
and one-half per cent. (2314%) of the value of said as-
sets as of the one date or of the other be likewise ascer-
tained, and that the same be applied as a credit upon
that portion of the principal of the Virginia debt assum-
ed by this defendant, as heretofore determined by this
Honorable Court, and that the balance thus found due
38 SUPPLEMENTAL ANSWER.

 

and payable by this defendant, if any, be decreed without
interest.
A. A. LILLY,
Attorney General for West Virginia.

V. B. ARCHER,

CHARLES B. HOGG,

JOHN H. HOLT,
Associate Counsel for West Virginia.
SuPpPLEMENTAL ANSWER. 39

 

STATE OF WEST VIRGINIA,
COUNTY OF KANAWHA,

This day personally appeared before me, the under-
signed Notary Public in and for the County and State
aforesaid, Henry D. Hatfield, Governor of the State of
West Virginia, and, being by me first duly sworn, says
that he has read the foregoing answer, and is familiar
with the contents thereof, and that the facts and allega-
tions therein contained are true, except so far as they
are therein stated to be on information, and that, so far
as they are therein stated to be upon information, he
believes them to be true.

HENRY D. HATFIELD,
Governor of West Virginia.

Taken, sworn to and subscribed before me this elev-
enth day of March, 1914.
My commission expires on the 26th day of April, 1923.
FRANK LIVELY,
Notary Public.
EXHIBITS
SUPPLEMENTAL ANSWER. 43

“EXHIBIT A’’,

COMMONWEALTH OF VIRGINIA vs. THE STATE
OF WEST VIRGINIA.

Washington, D. C., March 4, 1914.
HON. JOHN B. MOON,

Chairman Virginia Debt Commission,
Washington, D. C.

Dear Sir:

The West Virginia Commission has adopted a pream-
ble and resolution embodying a proposition to the Vir-
ginia Commission for the settlement of West Virginia’s
equitable proportion of the Virginia debt, and has re-
quested me to transmit the same to you, and, through
you, to the Virginia Commission, in the hope that it may
receive early attention and a favorable reply.

Your attention is called to the fact that a list and his-
tory of the credits referred to in the resolution are at-
tached to the copy thereof now presented you.

With great respect, I remain,

Very truly yours,

JOHN W. MASON,
Chairman West Virginia Commission.
Ene.
44 SUPPLEMENTAL ANSWER.

 

PREAMBLE AND RESOLUTIONS OF THE WEST
VIRGINIA DEBT COMMISSION, ADOPTED AT
A MEETING THEREOF, HELD IN CHAR- |
LESTON, WEST ‘VIRGINIA, ON THE
27TH DAY OF FEBRUARY, 1914.

WHEREAS, The Supreme Court of the United States,
by its opinion rendered on the 6th day of March, 1911,
in the case of the Commonwealth of Virginia vs. State
of West Virginia, ascertained the gross indebtedness
of the old Commonwealth of Virginia, to the payment
of which the State of West Virginia should contribute an
equitable proportion, to be $30,563,861.58 (220 U. S.,
page 1), and,

WHEREAS, in consequence of the relative resources
of the two debtor populations, Virginia’s portion of
said debt was fixed at .7651 and West Virginia’s at .235;
and,

WHEREAS, as the records of the case then stood,
there appeared to be no stocks of value on hand that
could be treated as assets, and a proper proportion there-
of applied to the reduction of the claims against West
Virginia, its equitable proportion of the principal of said
debt (subject to the correction of clerical errors) was
fixed at $7,182,507.46; and,

WHEREAS, since the announcement of the opinion
aforesaid, and since the joint conference of the Virginia
and West Virginia Debt Commissions, held at Washing-
ton on the 25th day of July, 1913, this Commission has
discovered that, prior to the establishment of the State
of West Virginia out of the territory of the Common-
wealth of Virginia on the 20th day of June, 1863, the
Commonwealth of Virginia purchased, and became the
owner of certain stocks, bonds, securities and other prop-
erty, which were paid for out of the common funds of
SUPPLEMENTAL ANSWER: 45

the two States,—in fact were purchased mainly, if not
altogether, out of the proceeds of the bonds that consti-
tute the debt of the old Commonwealth of Virginia in
question here—and was the owner and holder of said
stocks, bonds, securities and other property on the 1st
day of January, 1861, and after the 20th day of June,
1863, sold and disposed of many of said stocks, bonds
and securities, and realized in cash therefor, and appro-
priated to its own exclusive use many millions of dollars
and gave away without the consent or knowledge of the
State of West Virginia other portions of said assets and
property which were of great value, not only on the 1st
day of January, 1861, but at the time they were so giv-
en away, and has retained and still retains other portions
of said assets and property which not only have a
present value, but were of great value on the Ist day of
January, 1861, that is to say, of the aggregate value as
of the Ist day of January, 1861, of $20,810,357.98; and,

WHEREAS, according to the apportionment of the
debt made by the Supreme Court between the two States,
West Virginia is entitled in equity, as a credit upon the
part of said debt allotted to it, to .285 of the aggregate
value as of January 1, 1861, of said stocks, bonds, securi-
ties and other property, whether the same had been sold,
retained or given away by the State of ‘Virginia, that is
to say, to the sum of $4,855,312.18, including cash on hand
as of that date, and the additional sum of $225,078.06
collected bv the Commonwealth of Virginia, from West
Virginia counties after June 20, 1863, which, if deducted
from its allotment of $7,182,507.46, would leave a balance
of $2,327,195.28, principal to be paid by the State of
West Virginia; and,

WHEREAS, in consequence of the great lapse of time
and the long delay on the part of Virginia to have its
rights and the liability of West Virginia in the premises
46 SUPPLEMENTAL ANSWER.

 

judically determined, also in consequence of the fact that
Virginia has received from time to time, in addition to
the amounts heretofore set out, dividends upon the
bonds, stocks and securities hereinbefore described to
an amount equal to $5,782,240.09, and in consequence of
the further fact that a part of said bonds has been mis-
laid, lost or destroyed and will never be presented for
payment; and many of the remaining bonds were pur-
chased by the present holders thereof at nominal prices,
and in consequence of the fact that Virginia at the time
of the separation of the two States retained, without an
accounting unto the State of West ‘Virginia for any part
thereof, all of the public buildings, including the Capitol
at Richmond, the Penitentiary in that City, the State
Asylum at Staunton, the University at Charlottesville,
and various other public buildings and institutions that
had been constructed and equipped out of the joint funds
of the two States, as well as much personal property,
consisting of libraries, arms and munitions of war, etc.,
and in consequence of the further fact that Virginia has
largely scaled her debt without West Virginia receiving
her full proportionate benefit of such scaling, to say noth-
ing of the legal reasons that might be presented in op-
position to such a charge, no interest should be charged
upon West Virginia’s allotted proportion of the princi-
pal of said debt;

NOW, THEREFORE, BE IT RESOLVED AS
FOLLOWS:

I. That this Commission propose, and it does here
now propose, to the Virginia Commission that .235 of
$20,810,357.98, or the sum of $4,890,434.12 of the value
of the stocks, bonds, securities and other property here-
inbefore recited, and described in the list hereto append-
ed, be allowed by the Commonwealth of Virginia as a
credit upon, and that the same be deducted from the sum
SUPPLEMENTAL ANSWER. 47

 

of $7,182,507.46 ascertained as aforesaid, to be the equit-
able proportion of the principal of the debt of Virginia
assumed by the State of West Virginia, and that the
balance so ascertained, that is to say, the sum of $2,327,-
195.28 be accepted by the Commonwealth of Virginia in
full settlement, both principal and interest, of West Vir-
ginia’s proportion of the Virginia debt.

Il. That in the event the Virginia Commission con-
sent to the foregoing proposition, then this Commission
will at once make a report of the fact to the Governor of
the State of West Virginia, accompanied with the recom-
mendation that the State of West Virginia pay unto the
Commonwealth of Virginia the sum of $2,327,195.28, in
full settlement of the present controversy; and the Gov-
ernor of West Virginia will at once, pursuant to the
terms of the joint resolution of the Houses of the West
Virginia Legislature establishing this Commission, adopt-
ed on the 21st day of February, 1913, convene the Legis-
lature of the State of West Virginia, for the purpose of
adopting or rejecting the foregoing proposition of this
Commission, and for the purpose, in the event of its

adoption, of providing the funds without delay for the
payment of the amount so agreed upon.

IU. That this proposition is made by way of settle-
ment of the present suit and shall in no way effect the
rights, or influence the action of the State of West Vir-
ginia, in the event of its rejection and future ensuing
litigation.

IV. BEIT FURTHER RESOLVED, that the Chair-
man of this Commission at once transmit to the Virginia
Commission a copy of this resolution, with the appen-
48 SuPPLEMENTAL ANSWER.

 

dix thereto, with the request that the same be at once
considered and acted upon at an early day.

JOHN W. MASON,
WILLIAM D. ORD,

J. A, LENHART,

R. J. A. BOREMAN,
HENRY ZILLIKEN,
JOSEPH 8. MILLER,
U. G. YOUNG,

JOHN M. HAMILTON,
W. T. ICE, Jr.,

West Virginia Debt Commission.

Analysis of report of Accountants, classifying the
Credits to which the West ‘Virginia Debt Commission be-
lieves the State of West Virginia is entitled, dividing the
same into classes marked A to G, inclusive.

CLASS A.
CASH.

The credits assigned to Class A consists of cash on
hand in the treasury of the State of Virginia on the 1st
day of January, 1861, amounting to $1,104,927.06, which
sum was allotted to the following funds in the follow-
ing amounts; that is to say:

In the Commonwealth Fund ............ $252,842.67
In the Literary Fund ............... re 26,876.08
In the Board of Public Works Fund ...... 5,958.28
In the Sinking Fund .................... 819,250.03
PIL eS wk bet ay ce gt ol eae ie eee ooh $1,104,927.06:

CLASS B.

Stocks purchased by the State of Virginia with the
common funds of the two States prior to January 1, 1861,.
SUPPLEMENTAL ANSWER. 49

 

unsold, still owned and unaccounted for by the State of
Virginia.

The asset assigned to this class consists of 2,752 shares
of stock in the Richmond, Fredericksburg and Potomac
Railroad Company, of the par value of $100 each. This
stock was bought by the State of Virginia under acts
of January 23, 1835, page 87 of Accountant’s Report, and
March 23, 1836, page 95 of said report, for the cash price
of $275,200.00, and has never been disposed of by her,
but is still owned by the State of Virginia, and had a val-
uation as of the 1st day of January, 1861, of at least
$275,200.00.

SEOUL! 30. See RES Oss eS aS Bes ke wich $275,200.00

CLASS C.

Proceeds of sales of securities purchased with com-
mon funds of the two States by the State of Virginia
prior to the 1st day of January, 1861, and sold by the
State of Virginia without the knowledge or consent of
West Virginia, and without accounting therefor.

1. Orange & Alexandria Railroad Co.,

Si0ck nd loans 2. c.nk eer acewaesd $1,156,210.98
2. Richmond & Danville Railroad Co.,

stuck and Iai. o...veg are Saaasees 1,653,423.04
3. Richmond & Petersburg Railroad Co., ‘

BLOC Ge aaeterGenan eee Res ees 578,404.13
4. Virginia Central Railroad Co.,

stock and 108T 42.200 nc1 vevuws ere 321,458.17
». Blue Ridge Railroad Co.,

built by State of Virginia ....... 705,280.82
6. Alexandria, Loudoun & Hampshire

Te 0g BIO Shade oping ew eaGes 68,044.51
7. Winchester & Potomac Railroad Co., |
: loan reduced by annuity ........ 83,333.33
8 Virginia & Tennessee Railroad Co.,

IGA vase dee ae wee EARS Oe 992,030.32
 

50 SUPPLEMENTAL ANSWER,
9. Southside Railroad Co.,

LOAD. 2 Aiea ooo 91,897.66
10. Norfolk & Petersburg Railroad Co.,

10a? 4c2caninnieadeneeese neers 165,024.49
11. Roanoke Navigation Co.,

BLOCK / inva MART CONT OS owes Se 3,832.00
12. Alexandria Canal Co.,

StOCK gaxcava ceGcee eee ene ees ees 816.00
13. Upper Appomattox Co.,

SLOCK: Saws trates Gace yee te 16,144.26
14. Dismal Swamp Canal Co.,

BIOCK: ghascncen ieneecceraere sees 24,839.98
15. Loan to Washington College ....... 2,000.00
16. Richmond Academy Bonds ........ 400.00
17. Claim against U. 8S. Government ... 298,369.74
18. Claim against Seldon-Withers Co. .. 152,023.04

Old) pte eon Gass Sau eeee ete $6,313,532.47

CLASS D.

Interests on loans and dividends on stock accrued prior
to January 1, 1861, upon common investments, and col-
lected by the State of Virginia after January 1, 1861, and
still unaccounted for:

1,
he
3.

a oe

Flan

Orange & Alexandria Railroad Co. ..
Richmond & Danville Railroad Co. ...
Richmond & Petersburg Railroad Com-
pany
Virginia Central Railroad Co. .....
Winchester & Potomac Railroad Co. .
Richmond, Fredericksburg & Potomac
Railroad Coy aduasisewsany 2oeaxce
Virginia & Tennessee Railroad Co. ..
Southside Railroad Co. .............
Norfolk & Petersburg Railroad Co. ..
James River & Kanawha Co. ........

$ 18,144.29
8,516.80

43,048.00
182,436.36
833.33

157,662.07
211,891.82
204,602.34
45,900.00
250.00
SupPLEMENTAL ANSWER. ol

 

11. Loan to Washington College ....... 60.00
12. Richmond Academy Bonds .......... 12.00

13. Claim against United States Govern-
MONE ati A he eeens Che So eeesea se M4 832,451.57
14. The Farmer’s Bank of Virginia .... 33,691.00
15. Bank of Virginia ...............+-. 33,726.70
16. Bank of the Valley ....... re 16,936.50
17. Wixchange Bank «2 cccsas015 oa eave 30,642.50
18. Northwestern Bank ................ 13,104.00
10... Wairmont Bank «.edainit ieewnrews ox 1,500.00
OG <2 gn cahsee uaa tu. ata aaes $1,835,409.28

CLASS E.

Bank stock purchased by Virginia with joint funds
prior to January 1, 1861, and in her possession on that
date:

1. Farmer’s Bank of Virginia ........... $962,600.00
9, Bank of Virginia .............--.0-. 963,620.00
3. Bank of the Valley ..............---- 483,900.00
4; Wixehanee Bank .420cceh0. sees dunce 875,500.00
5. Northwestern Bank ................. 374,400.00
6. Fairmont Bank .......... ... ees 90,000.00

Be al eae uceemroiesesee eee woed $3,710,020.00

CLASS F.

Railroad stock purchased by the State of Virginia
out of the common funds of the two States in various
railroads, prior to the first day of January, 1861, and
sold by her subsequent to the 20th day of June, 1863,
without the knowledge or consent of West Virginia, and
for which she has never accounted.

Prior to January 1, 1861, the State of Virginia, with
common funds, bought stocks of and made loans to each
of the following railroad companies:
52 SUPPLEMENTAL ANSWER.

 

Virginia & Tennessee Railroad Co.

Southside Railroad Co.

Virginia & Kentucky Railroad Co.

Norfolk and Petersburg Railroad Co.,
and from time to time sold portions of said stock until
she had left on hand stock therein and residue of loans
that cost her:

Virginia & Tennessee Railroad Co.,

STOCK a saa dr tyuie acta Aub sees $2,300,000.00
Southside Railroad Co.,
SIO: 2cstneidelouses meds awe 803,500.00
WT Fase anus aaa wate dale tts aortetaare 708,102.34.
‘Virginia & Kentucky Railroad Co.,
BS LOCIG 63.513 criti te aime ane aaa n an pcecee 82,000.61
Norfolk & Petersburg Railroad Co.,
SPOS cep ave ad aan oko aera Rs 1,139,970.00
IGEN oo, Beer eae eeGeee eee y Posies 134,975.51
DOEAL: vantage Gace eee $5,168,548.46,

which residuary stocks she subsequently, that is to say,
on the 20th day of December, 1870, sold to the Atlantic,
Mississippi & Ohio Railroad Co., for the sum of $4,000,-
000.00, the purchase price to be paid in installments, and
took a second mortgage upon the property of the said
railroad company to secure the payments of the same.
This sale was made and this security taken without the
knowledge and consent of the State of West Virginia;
and finally after the lapse of many years, the first mort-
gage upon said railroad company was foreclosed and the
property covered thereby sold, but did not bring enough
to satisfy the second mortgage and pay the $4,000,000.00
purchase price agreed to be paid to Virginia for these
stocks. After the foreclosure sale, that is to say, on
the Ist day of March, 1882, the re-organization of the
Atlantic, Mississippi & Ohio Railroad Company paid
unto the State of Virginia the sum of $500,000.00 for
SuPPLEMENTAL ANSWER. o3

 

her second mortgage rights, whatever they may have
been. Virginia has never accounted to West Virginia,
either for a proportionate part of the $4,000,000.00 orig-
inal purchase price, or the $500,000.00 subsequently re-
ceived.

It will be seen that the value placed upon these stocks,
both by the State of Virginia and by the railway com-
pany purchasing them, was $4,000,000.00; and this can
be taken as their reasonable value as of January 1, 1861.

Oral, S25 cubuesecuumestuewwas $4,000,000.00

CLASS G.

Securities purchased with joint funds by the State of
Virginia prior to January 1, 1861, and subsequently giv-
en away without the knowledge or consent of West '‘Vir-
ginia, together with certain other railroad and canal se-
curities appropriated by her in one way and another, but
not hereinbefore recapitulated:

James Riyer & Kanawha Co., 104,000

SHATOS? niawes cdonucawddeudseres $10,400,000.00
Residue of Securities,
Manassas Gap Railroad ............ 2,105,000.00
Roanoke Valley Railroad ............ 307,402.00
Fredericksburg & Gordonsville R. R. . 132,399.00
Richmond & York River R. RB. ...... 490,999.52
Rappahannock Company ............ 179,500.00
Rivanna River Navigation Co, ....... 227,133.00
Smiths River Navigation Co. ........ 4,083.12
Slate River Co. ........0.0 0 cee eee ee 21,000.00
Kempsville Canal Company ....... 13,650.00
Hazel River Navigation Co. ........ 63,079.58
Goose Creek & Little River Co. ...... 58,255.35
Dragon Swamp Navigation Co. ...... 1,464.00
Chesapeaks & Ohio Canal Company .. 281,111.11

Gtal -Resheddwecegatewesaaien’ $14,285,076.68
54. SUPPLEMENTAL ANSWER.

 

The foregoing $10,400,000.00 attributed to the James
River & Kanawha Company was the par value of its
stock, and, although the State of Virginia by an act of
the General Assembly passed on the 23d day of March,
1860, something less than nine months before January
1st, 1861, placed a value of par thereon and made pur-
chases thereof at such valuation, yet so much time has
elapsed and the evidence of the actual value of this stock
as of that date has become so obscure, that it has been
thought best, out of a spirit of compromise, to place a
value thereon of twenty-five per cent. of its par value, or
the sum of $2,600,000.00.

The other securities embraced in this class (amount-
ing to $3,885.076.68) have been treated in the same way
for the same reason, and their value placed herein at
twenty-five per cent. of their par value, or the sum of
$971,269.17.

HIN ci heaaiacegethls oaes det ceteateed $3,571,269.17

In addition to the foregoing, the State of Virginia
after the division of the old Commonwealth into two
States, June 20, 1863, collected large amounts of money
from several counties then and now located in the State
of West Virginia, aggregating the sum of $225,078.06.

RECAPITULATION,
CW 2isuae, dieecescaudhorazend . $1,104,927.06
eS We edn twteieee, du bovedaios nunca’ 275,200.00
Class UO sine: a WER Ua  dantienade Aa Bn Gees 6,313,532.47
TAGE EY “nance ove ee ean Randle oan e 1,835,409.28
Dee th pee yee che dra ent ae ee kts 3,710,020.00
UAB AD eee Ben Suahon yn: Rea ieee 4,000,000.00
MAE esate te ea bee: cee igus Socrins ash nl 3,571,269.17

(ntall gescaan doe $48) Bete es $20,810,357.98
SUPPLEMENTAL ANSWER. oO

 

 

West Virginia Equity .235 $4,890,434.12
Less Northwestern Bank
SLOG weowanteleonaer ety eax $210,200
Fairmont Bank Stock ...... 50,000 260,200.00
Balance ............ $ 4,630,234.12
Collected from West Virginia
(HOMHEIGS: oan. Sc loya ese 225,078.06
Total Net Hquity ....s..0... $4,855,312.18
RESULT.
West Virginia’s Share of Debt ......... $7,182,507.46
Less Net Equities as above ............ 4,855,312.18
BelAnee 2.4456bsnds eure eee $2,327,195.28
NOTE.

Subsequent to the 1st day of January, 1861, the Com-
monwealth of Virginia has received as dividends and in-
terest upon the securities and loan hereinbefore listed
the sum of $5,782,240.09, as follows:

INTEREST AND DIVIDENDS RECEIVED BY
VIRGINIA IN CASH AFTER JANUARY 1, 1861,
FROM ASSETS HELD JANUARY 1, 1861, AND EX-
CLUSIVE OF ANY DIVIDEND OR INTEREST UP
TO JANUARY 1, 1861.

Interest Dividends Total
Cash Va. Bonds Cash
Orange and Alexandria R. R.
$113,459.00 $81,311.34 $66,516.09 $261.286.43

Richmond & Danville R. R.
380,497.66 281,322.35 249,605.67 911,425.68
56 SUPPLEMENTAL ANSWER.

 

Virginia Central R. R.

 

86,385.03 72,174.40 387,404.65 545,964.08
Richmond & York River R. R.

54,009.94 54,009.94
Richmond, Fredericksburg & Potomac Rh. R.

240127 xesesaewn 1,282,198.74 1,306,211.45
‘Virginia & Tennessee R. R.

ISiTOL8O gg2tasdee 138,000.00 275,762.86
Norfolk & Petersburg R. R.

69,561.41 ......... 82,800.00 152,361.41
Roanoke Navigation Co. 2,800.00 2,800.00
Upper Appomattox Co. 6,150.00 6,150.00
Richmond & Petersburg R. R.

L0ael  nsorecawe 227,504.00 229,207.81 °
‘Winchester & Potomac R. R.
4,166.67 SOO «= aS ee KS 39,351.46
Southside R. R.
ISA000Q0S -xteweweae.  ceeueeecds 192,000.00
Washington College
BAGO vague, Bigguidinans 4,140.00
Richmond Academy
RIGO: weitere Lk bohenaeees 816.00
U. S. Government

dL eaminaae 579,837.52 alee 578,837.52
Farmers Bank of Virginia

iuaeine) _ekivodwes 373,007.50 373.007.50
Bank of Virginia

MEG Ceeee . Cee 370,993.70 370,993.70
Bank of the Valley

rd ieiae wes ae 94,360.50 94,360.50
Exchange Bank

Herawonsa  cmeeketarney 348,633.75 343,633.75
Northwestern Bank

bw tier samdewdeh 42,920.00 42,920.00
Total
1,014,505.15 1,045,830.40  3,721,904.54 5,782,240.09
SUPPLEMENTAL ANSWER. ‘Ov

 

“EXHIBIT B’’.

Washington, D. C., March 4, 1914.
HON. JOHN W. MASON, Chairman,
West Virginia Commission,

Washington, D. C.
Dear Sir:

VIRGINIA vs. WEST VIRGINIA.

I beg to hand you, herewith, the resolutions adopted by
the ‘Virginia Debt Commission in response to the propo-
sition submitted to them this day by the West Virginia
Commission.

With great respect, I am,

Very truly yours,
JOHN B. MOON, Chairman,
Virginia Debt Commission.

VIRGINIA vs. WEST VIRGINIA.

Resolutions of the Virginia Debt Commission, adopted
at a meeting held in Washington, D. C., at the New Wil-
lard Hotel, Wednesday, March 4, 1914.

The ‘Virginia Debt Commission having received the
proposition submitted this day by the West Virginia
Commission, which contains statements and conclusions
to which this Commission cannot assent and concerning
which it is unwilling to engage in any discussion, adopted
the following resolutions:

WHEREAS, the Supreme Court of the United States,
in its opinion delivered at the October term, 1913, (No-
vember 10, 1913), in the suit of Virginia vs. West Vir-
ginia, on motion of Virginia to proceed to a final hear-
ing, said:
58 SUPPLEMENTAL ANSWER.

 

‘‘In March, 1911 (‘Virginia vs. West Virgin-
ia, 220 U. 8. 1) our decision was given ‘with
respect to the basis of liability and the share
of the principal of the debt of 'Virginia that West

’ Virginia assumed.’ In view, however, of the
nature of the controversy, of the consideration
due the respective States and the hope that by
agreement between them further judicial action
might be unnecessary, we postponed proceed-
ing to a final decree and left open the question
of what, if any, interest was due and the rate
thereof, as well as the right to suggest any mere
clerical error which it was deemed might have
been committed in fixing the sum found to be
due upon the basis of lability which was set-
tled,’’ and

WHEREAS, The matters left open and referred by the
Court to the respective States for consideration and ad-
justment ‘‘in the hope that by agreement between them
further judicial action might be unnecessary’’ were spe-
cifically stated to be (1) ‘‘what, if any, interest was due
and the rate thereof’’, and (2) ‘‘the right to suggest any
clerical error which it was deemed might have been com-
mitted in fixing the sum found to be due upon the basis
of liability which was settled,’’ and

WHEREAS, The proposition now submitted by the
West Virginia Commission does not embrace either of
said matters left open by the Court and referred to the
parties litigant for adjustment between them;

IT IS THEREFORE RESOLVED, That the Virginia
Debt Commission is unwilling to, and respectfully de-
clines to consider the said proposition;

IT IS FURTHER RESOLVED, That the Virginia
Debt Commission hereby expresses its regret that the
‘West ‘Virginia Commission has not seen its way to re-
SuPpPLEMENTAL ANSWER. 09

 

spond to the opinion of the Court and submit a proposi-
tion to adjust the question of interest.
JOHN B. MOON,
Chairman.

J.B. BUTTON, Secretary.
Approved:
JNO. GARLAND POLLARD,
Attorney General of Virginia.

“HXHIBIT C’’.

Washington, D. C., March 4, 1914.
HON. JOHN B. MOON,
Chairman Virginia Debt Commission,
Washington, D. C.

Dear Sir:

In response to your communication of this date declin-
ing the proposition of the West Virginia Commission
made this day looking to a settlement of the Virginia
debt, we regret to be under the necessity of calling your
attention to the fact that, although you deem the ques-
tion of interest still open, yet you have offered nothing
in reply to the reasons advanced in our proposition why
no interest should be charged, and thus close the discus-
sion upon the only point considered by you still to be
open. And, so far as the credits advanced by us are
concerned, you express an unwillingness even to discuss
them, thus leaving us, in the absence of errors therein
pointed out by you, with the conviction that they are
equitable, and under the necessity of adhering to the
terms of a proposition made in an effort to do justice to
all.

We deemed it unnecessary to indulge in any interpre-
tation or construction of the opinion of the Supreme
Court at this time further than to say that, in our opin-
60 SUPPLEMENTAL ANSWER.

 

ion, the Court ascertained West Virginia’s proportion
of the principal of Virginia’s debt to be $7,182,507.46,
only because, as the record then stood, there appeared
to be ‘‘no stocks of value on hand’’ to be applied to the
reduction of the same. These stocks are now discovered
and disclosed, and a portion of them, at least, were set
forth in the proposition you have declined.

You have, therefore, closed the door to further nego-
tiations, and it is with regret that we cease further effort
along that line.

Respectfully submitted,

JOHN W. MASON,
WILLIAM D. ORD,
J. A. LENHART,
R. J. A. BOREMAN,
HENRY ZILLIKEN,
JOSEPH 8S. MILLER,
U. G. YOUNG,
JOHN M. HAMILTON,
W. T. ICH, Jr.,

West Virginia Debt Commission.
ARGUMENT OF
JOHN H. HOLT, ESQ.,

ON
BEHALF OF WEST VIRGINIA
ARGUMENT OF JOHN H. HOLT, ESQ.

May It Please the Court:

We have two questions for discussion, first, whether
or not West Virginia shall be given permission to file
the supplemental answer tendered by her, setting up cer-
tain credits discovered by her since the last continuance
of this cause, and, secondly, whether or not she should
be charged with fatesent upon such proportion of the
principal of the Virginia debt as may be decreed against
her.

Taking these questions in their order, the motion for
leave to file the answer is based both upon the former
decision of this Court and upon the discoveries made by
the West Virginia Debt Commission acting upon a sug-
gestion embodied in that decision, and a brief history of
each, it is submitted, will show the equity and justice of
her motion.

In the first place, this Court, speaking through Mr.
Justice Holmes, on the sixth of March, 1911, held in this
case that West Virginia was obligated to pay an equitable
proportion of the Virginia debt existing prior to the first
day of January, 1861. That matter is settled, and is
finally settled by this Court, and the object of the pres-
ent motion here and our appearance is not in an effort
to disturb the same. We accept it as settled, and the
Commonwealth of ‘Virginia likewise so accepts it.

In the second place, it was held in that opinion that
the total debt of the Commonwealth of Virginia as of the
first day of January, 1861, to be apportioned between
these two sovereigns amounted to the sum of $30,563,-
861.56. That is likewise settled, and our motion is in
conformity to that finding; nor do we seek, nor have
we the temerity to suggest, any interference therewith.

Tn the third place, it was held that, taking into consid-
eration the relative resources of the two debtor popula-
tions, viz., Virginia comprising now that portion of the
old Commonwealth that lies east of the Alleghany Moun-
tains, and West Virginia that portion that is situated
64 ARGUMENT or JoHn H. Hotz, Esa.

 

west of the Mountains, the debt as ascertained should be
apportioned between them upon the following ratio;
that is to say, 7614% should be paid by the State of Vir-
ginia, ‘and 2314% thereof by the State of West Virginia;
and that is the third matter that was finally settled by
your Honors in this cause. Such was and is the basis of
settlement, and we do not seek to disturb the same.

So the Court must not be deceived by any allegation
that the present motion of West Virginia for leave to file
a supplemental answer is an effort upon her part to run
counter to the conclusions heretofore reached by this
Court. We seek, on the contrary, to act in strict con-
formity thereto.

Finally, applying this basis of settlement, this Court
ascertained that West Virginia’s equitable proportion
of the principal of the ‘Virginia debt was $7,182,507.46;
but, instead of entering a decree for that amount against
her, either with or without interest thereon, and, believ-
ing that enough had been said ‘‘for patriotism, the
fraternity of the Union and mutual consideration to
bring it to an end,’’ suggested a conference between the
two States.

Virginia had theretofore appointed a Commission
with power to act in the premises, and West Virginia, in
obedience to the suggestion, made haste, through her
Legislature and Governor, to appoint a like Commis-
sion. These Commissions first met in joint conference,
to little purpose, and, thereupon, the West Virginia
Commission appointed a sub-committee, with direction
to investigate, as speedily as possible, all matters con-
nected with the state of the account between the two
Commonwealths, and with the view of making a propo-
sition of settlement to the State of Virginia.

This sub-committee went to work, through its accoun-
tants, and overhauled the records and archives of the
State of ‘Virginia from the year 1820 to the present time,
ARGUMENT or Joun H. Hotz, Esa. 65

 

with the result that it discovered that the State of Vir-
ginia had appropriated to her own exclusive use, with-
out accounting to West Virginia for any part thereof,
assets purchased with the common funds of the two
States amounting, exclusive of public buildings, to twen-
ty odd millions of dollars; and, when this fact was
reported by it to the full Commission, the latter reached
the conclusion that West Virginia was entitled to the
same per cent. of these assets as she was charged with
- of the debt incurred in their purchase. In other words,
if she had to pay 2314% of the bonds issued for the pur-
chase of stocks and other properties, she would be
entitled as a credit thereon to 2314% of the actual value
of such stocks and properties. ‘This was thought to be
really in accordance with the opinion of this Court of
March 6, 1911, heretofore referred to; for the Court,
speaking through Mr. Justice Holmes, had said, in de-
scribing the investment of the common funds of the two
States, that—

‘“‘The whole State would have got the gain, and
the whole State must bear the loss, as it does not

appear that there are any stocks of value on
hand.”’

(220 U. S., page 30; 55 L. Ed., 358.)

In other words, as the record stood at the time of the
rendition of the opinion of March 6, 1911, no stocks,
bonds or other securities of value appeared to be on
hand, and there was no evidence of any credit that could
be applied to West Virginia’s ascertained proportion
of the principal of the debt, and the same, in conse-
quence, was permitted to stand at $7,182,507.46, without
diminution or abatement in any manner, to any extent,
or for any purpose. The indication, however, was clear
that, had any stocks, bonds or other securities of value
66 ARGUMENT or Jonn H. Hott, Esa.

been presented, they would have been considered and
allowed.

The West Virginia Commission therefore, upon the
report of its sub-committee, calculated and ascertained
2314% of what was supposed to be the actual value of
the securities appropriated by the State of Virginia, and
deducted the result from West ‘Virginia’s ascertained
proportion of the principal of the debt, viz., $7,182,-
007.46, leaving a balance chargeable to West Virginia of
$2,327,195.27. The Commissions of the two States were
then convened, and the West Virginia Commission
offered to pay the balance thus ascertained unto the
State of Virginia in full settlement of principal and
interest, but the offer was rejected by the Virginia Com-
mission; and, thereupon, and at once, the State of West
Virginia filed the present motion in this Court, praying
leave to file the supplemental answer presented with its
motion for the inspection of the Court, and wherein the
credits above described are set forth in detail.

Coming now to the question of our right to file this
supplemental answer, we are first met with the objection
that it does not contain facts discovered since the filing
of the original answer in this cause, and since the opin-
ion of this Court therein rendered on the sixth day of
March, 1911, but that all the credits therein set up and
all the purchases of securities with the common funds
of the two States therein set forth were fully known to
the State of West Virginia upon both dates, and that
they should have been sooner pleaded—indeed, our
learned friend, Attorney General Anderson, who has
just taken his seat, went so far as to say, if I understood
him, that the report of a former West Virginia Commis-
sion, known as the Bennett report, and heretofore filed i in
this cause, fully discloses the matters and things set up
in the present supplemental answer.

Our learned friend is mistaken. It is not an allega-
ArcuMENT or Joun H. Hott, Ese. 67

 

tion, as these gentlemen seem to think, of the supp!emen-
tal answer that we claim to be utterly ignorant of the
fact that Virginia had spent some of the common funds
of the two States by investing in stocks and bonds of
internal improvement companies. A knowledge of that
fact is not denied. We knew when we were a part or
her, of course, and long before the institution of this
suit, that from 1820 or 1823 clear on down to 1861, at
the breaking out of the war, she was investing her mon-
eys and our moneys from time to time in works of inter-
nal improvement; but we still deny in this supplemental
answer that we had any knowledge whatever of the dis-
position or of the value of these assets, and we claim
that the disposition thereof by the Commonwealth of
Virginia and their actual values were discovered for the
first time through the investigations of the West Vir-
ginia Commission, which was appointed after the filing
of the original answer herein at the suggestion of this
Honorable Court to imparl with our adversaries. In
other words, the discoveries since the last continuance of
this cause alleged in the supplemental answer do not
consist of the existence of ante-bellum securities, but of
post-bellum misappropriations thereof by the Common-
wealth of Virginia. At the date of our severance from
the old Commonwealth, these securities went into her
hands as trustee, and, without our knowledge or consent,
she has since appropriated them, or the proceeds from
the sale thereof, to her own exclusive use, without even
reporting such sales to the State of West Virginia, and
without accounting unto her for any portion of the pro-
ceeds thereof. We charge the misappropriation of a
trust fund, the amount and value of which we have just
discovered, and the evidence of which was confined
alone to the archives of the State of ‘Virginia.

Counsel for Virginia, for the purpose of showing prior
knowledge of the existence and history of the securities
68 Arcument or Joun H. Hott, Esa.

 

set up in the supplemental answer, refer to Exhibit B
of the Bennett report, and call attention to the mention
therein of the purchase of stocks in and loans to four
railroads, and say that the same roads, stocks and loans
are set up at page twenty-six of the supplemental
answer; but it will be observed that, while the supple-
mental answer does set up the purchase of these stocks
and the loans made to these roads prior to January 1,
1861, it does not stop there, as does the Bennett report,
but continues to give the history of these stocks and
loans in the hands of Virginia as trustee subsequent to
the creation of this State in 1863 (all of which has
recently been discovered), and it appears therefrom
that, on the 20th day of December, 1870, she had a resi-
dium of these stocks and loans on hand amounting at
par to $5,168,548.46, and that on that day, without the
knowledge or consent of the State of West Virginia, she
sold the same to the Atlantic, Mississippi & Ohio Rail-
road Company for the sum of $4,000,000, and took a sec-
ond mortgage to secure the purchase money, which was
to be paid in installments. This sale was made and this
security taken without the knowledge or consent of the
State of West Virginia, and finally, after the lapse of
many years, she collected $500,000 thereon, and covered
the same into her treasury, and has not to this hour
reported the fact. The Bennett report falls short,
because the disposition of these assets took place after
it was written, and it is only through recent discoveries
that the supplemental answer is able to set forth the per-
version of a trust fund and the destruction, in part at
least, of a sinking fund that was created for the express
purpose of discharging, or at least diminishing, the very
debt that is in controversy here, and that Virginia now
seeks to compel West Virginia to contribute to the pay-
ment of.

West Virginia should be given either 2314% of the
ARGUMENT or Joun H. Hour, Esa. 69

 

face value of these securities, or 2314% of the $4,000,-
000 value placed upon them by the State of Virginia and
the railway to which she sold them, or, at the very worst,
2314% of the $500,000 that she actually and _ finally
received for them; for, under the Constitution of Vir-
ginia of 1851, the latter amount, at least, should have
gone into the sinking fund for the diminution of the very
debt to the payment of which we are asked to contribute.
I only mention this as an illustration.

Again, as an illustration of this Bennett report, by
means of which they seek to charge us with knowledge
of all these matters, it does not mention the purchase
of the Richmond, Fredericksburg & Potomac stock by
the Commonwealth of Virginia out of the funds of the
two States, and still held by her, a dividend paying
stock; yet, in response to this motion, they say, ‘‘Oh,
well, these assets are of no value.”’

We will take that one by way of illustration, and I
shall not try the patience of the Court by going into detail
in all these matters. I shall take that one by way of illus-
tration, your Honors. Prior to 1861, and out of the com-
mon funds of these two States, out of the proceeds of
the very bonds that evidence the debt that is in contro-
versy here, Virginia purchased $275,000 of the common
stock of the Richmond, Fredericksburg & Potomac road,
and has it in her strong box today. Not worth anything?
The supplemental answer discloses that upon that $275,-
000 of common stock, in the interim, more than $1,800,000
of dividends have been declared and received. These are
simply illustrations.

Well, they say ‘‘you have the James River & Kanawha
Canal stock in here, and that is no account.’’ That may
be, but that is not what Virginia says about it. In March
1860, just one year—no, less than one year—only ten
months before the date beyond which we should not be
responsible for any indebtedness was fixed, owning $3,-
70 ArGuMENT or Joun H. Hotz, Esa.

000,000 of the stock in that Company, purchased with
the common funds, she concluded to buy $7,400,000 more,
and, by an Act of her Legislature just nine months and
ten days prior to the first day of January, 1861, took
that stock at par. Well, we are only asking a credit of
2314% of 25 per cent. of that amount. We are amazed at
our own moderation.

We were likewise told this morning that we were
claiming 2314% of more than $3,000,000 of bank stocks,
but that these stocks had subsequently become utterly
worthless. All we know about them is that they were
purchased with the common funds of the two States
prior to 1861, and that they, with a few exceptions, went
into the hands of Virginia and under her control on the
20th day of June, 1863, when West ‘Virginia was cut off
from the old Commonwealth, and that, in the month of
September of the same year (that is, after the division
of the two States), Governor Letcher reported to the
Legislature of the State of Virginia that they were worth
more than par. It is true that they may have become
worthless in the latter sixties; but, if so, it was while
in the hands of our trustee, and by reason of her own
conduct; for, however glorious the page, it was through
her conduct upon the fields of Chicamauga and Chan-
cellorsville that these bank stocks were depreciated and
destroyed. We became a State because we were
opposed to secession, and because we were unwilling to
take up arms against the government of the United
States.

Your Honors, I only went over these in detail for the
purpose of illustrating the equities that we undertake,
at least, to present in our supplemental answer. Should
we be permitted to file it? They tell us that John G.
Carlisle argued this case once. I know he did. I knew
him toward the close of his career, and I am not criti-
cising him when I undertake to supplement his work.
ARGUMENT or Joun H. Hotz, Esa. 71

 

I have nothing to say about him except to express my
great admiration for his wonderful analytical power
of statement, and to deplore his death. But we may be
permitted to say on behalf of those who represent West
Virginia now that, under the circumstances of the case,
it would be peculiar indeed if they had not learned
something more of the case in the light of subsequent
developments. We have high authority for the state-
ment that even a dwarf, standing on the shoulders of a
giant, can see farther than the giant sees.

We are further told by counsel for Virginia that, even
though we may have been ignorant of the value and dis-
position of the securities set up in the supplemental
answer, yet that we had knowledge of the existence of
these securities, and were put upon inquiry as to their
subsequent history, and were derelict in postponing
such inquiry until this late day; that all questions were
regularly referred to a master, where the cause pended
for a long time, and opportunity for full investigation
was given. In reply, we need but call the attention of
this Court to the history of this cause. The basis of set-
tlement finally adopted by this Court, through its opin-
ion of March 6, 1911, was not the basis of settlement
alleged in the bill of Virginia, and was not the basis of
settlement, as we understand it, adopted by this Court
in its decision upon the demurrer to the bill, interposed
by the defendant. The theory of both plaintiff and
defendant seems to have been (and their pleadings were
drawn in accordance therewith) that the Wheeling
Ordinance should furnish the basis of settlement between
the two States. This Ordinance did not call for an
ascertainment or disclosure of the. common assets
retained by Virginia, but provided that West Virginia’s
proportion of the Virginia debt should be ascertained
‘by charging to it all State expenditures within the lim-
its thereof, and a just proportion of the ordinary expen-
72 ARGUMENT oF Joun H. Hott, Esa.

 

ses of the State government, since any part of said debt
was contracted, and deducting therefrom the moneys
paid into the treasury of the Commonwealth from the
counties included within the said new State during the
same period.’’ From this it will be seen that West Vir-
ginia’s debit side of the account consisted only of two
items, first, all State expenditures made within her lim-
its, and, secondly, a just proportion of the ordinary
expenses of the State government since any part of said
debt was contracted; and that the credit side of her
account consisted of but one item, viz., the moneys paid
by her into the treasury of the Commonwealth from the
counties included ‘‘within the said new State during the
same period.”’

To the bill of the plaintiff, thus framed and based
upon the Wheeling Ordinance, the defendant demurred,
and, after elaborate discussion before this Court, the
demurrer was overruled. The opinion was delivered by
Mr. Chief Justice Fuller, and, with the permission of the
Court I will read a short extract from his opinion. It
is found on page 433 of what is called the West Virginia
compilation. Beginning about the fourth line from the
top thereof, he says:

‘“The Act of May 13, 1862, was not made a part
of the case stated in the bill, and its validity is
denied by counsel for Virginia; but it is unneces-
sary to go into that, for 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 pro-
vided that its legislature should ‘ascertain the
same as soon as practicable,’ it referred to the
ARGUMENT or Joun H. Hott, Esa. 73

 

method of ascertainment prescribed by the Vir-
ginia 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 ascer-
tain’ was that the Legislature should ascertain
as soon as practicable the result of the pursuit of
the method prescribed, and provide for the liqui-
dation of the amount so ascertained.”’

In consequence of this, it is respectfully submitted that
this Court held upon the demurrer that this debt was to
be apportioned between the two States upon the basis of
the Wheeling Ordinance, and we went to the Master
upon that theory, and the decree of reference entered
in 1907 was in conformity to that opinion; but, after the
Master had reported, this Court came to the conclusion
that the method prescribed by the Wheeling Ordinance
was arbitrary, and, by its opinion of March 6, 1911,
established the more equitable basis of settlement here-
inbefore set out, and, for the first time, the common
assets retained by Virginia, and West 'Virginia’s equit-
able proportion thereof, became material and important.

The Chief Justice: Do I understand you to say that
the decree of reference confined the consideration before
the Master to an adjustment under the terms of the
Wheeling Ordinance?

Mr. Holt: It provided, your Honor, for a finding in
the alternative.

The Chief Justice: Yes, that is what I thought.

Mr. Holt: But it nowhere specifically calls for an
ascertainment of the assets retained by Virginia,
although it did call for an ascertainment of the assets
received by West Virginia.

The Chief Justice: My question to you was this:
You read from the language of the Chief Justice in that
decree, which I am quite familiar with, and you said
74 ARGUMENT oF JoHN H. Hott, sa.

 

that the decree of reference to the Master conformed to
that language.

Mr. Holt: I so read it, your Honor.

The Chief Justice: Did it not go farther than that,
and confer upon the Master power to consider the case
in a broader light?

Mr. Holt: Somewhat broader, your Honor. It per-
mitted the defendant, or permitted the Master, upon the
request of counsel, to make inquiry; but, as I read and
interpret it, only along the line of the Wheelng Ordi-
nance. We will read the decree in a moment, or the alter-
native provision in it. There was more than one alter-
native in the direction, but neither of them, as I read the
decree, involved the assets retained by Virginia, or West
Virginia’s equitable proportion thereof.

The Chief Justice: Of course, it has been a long time
ago, but my recollection is that West Virginia made a
claim that the reference should be restricted to the
very subject that you now state, and that was the subject
of the discusion at the bar, and the briefs suggested that
such did not consort with or conform to the rest of West
‘Virginia’s request on that subject.

Mr. Holt: Each side presented a form of decree of
reference, and each one proceeded upon the theory that
the ascertainment of the debt was—

Mr. Justice Holmes: That does not conform to the
discussion that took place, that there being some dif-
ference of view as to what this was, it should cover all
the matters.

The Chief Justice: Yes.

Mr. Holt: Our contention is that it was not that
broad, and that the inquiry did not involve matters now
presented which were not investigated nor reported upon
at all. It is perfectly clear that, if the Wheeling Ordi-
nance was taken as the basis of settlement, the Virginia
assets were not, and could not have been, a material
ARGUMENT or Joun H. Hott, Esa. 79

 

matter for investigation. By reference to page 324 of
Volume 1 of the same compilation, we find that the
Attorney General of ‘Virginia, in the oral argument,
said—

““Now, instead of letting these questions be set-
tled upon the principles of equity and public law,
that convention prescribed this artificial and arbi-
trary basis of adjustment.’’

(He is speaking of the Wheeling Ordinance.)

‘“‘We have to concede that we cannot go behind
this; that we must accept it.’’

That seems to have been the theory, your Honors, of
counsel upon both sides, and certainly the investigation
before the Master was along that line, and none other.
Whatever may have been the theory, the fact is as I now
state it.

Returning, however, to the affirmative reasons why
West. Virginia should be permitted to file this answer,
the debt grows so under the nurturing care of ‘Virginia
that the consequences to the defendant become appal-
ling. Counsel for Virginia now tell us by their latest
brief presented for perusal by your Honors how easy it
would be, and what a.solution of this question, to dis-
charge the equitable proportion of a thirty million dollar
debt by the payment of a hundred million dollars! That
seems to be their present position, which, if I may be
permitted to say so, would bankrupt West Virginia worse
than any State in the South in reconstruction days. But
should we be permitted, as a matter of equity, to file
this answer? We should, in the first place, because the
assets appropriated by Virginia were a trust fund under
her Constitution of 1851, and, by the 29” section there-
of, a sinking fund was established, and it was provided
that that sinking fund should be devoted exclusively to
the discharge of the funded debt of Virginia, and, by the
30” section of the same Constitution, it was further pro-
vided that the Legislature might at any time sell the
76 ArGuMENT or Jonnw H. Hott, Esa.

 

stocks or bonds that she held and owned in internal
improvement or other companies; but that, in the event
of a sale, the proceeds thereof should be paid into the
sinking fund, provided the funded debt had not thereto-
fore been paid, and become applicable to the discharge
and the payment, or at least to the diminution, of that
debt, without the privilege of diversion to any other
purpose. That was the situation, your Honors, when
West Virginia was cut off.

There was a sinking fund, with all of the assets that
had been accumulated through the common funds of the
two States, and this answer shows that it is now dis-
covered, and that too since the original answer was filed
in this cause, that all of those assets, with a very few
exceptions, have been disposed of by the State of Vir-
ginia, and that she has covered millions into her treas-
ury, and has not accounted unto West Virginia for one
dollar or one dime. She sits down and arbitrarily
assumes—these are the facts, I take it—that she owes
only two-thirds of this debt—we will come to the history
of that in a moment—and that we owe one-third; and
then she proceeds further to appropriate to her own
exclusive use the whole sinking fund for the purpose of
discharging her two-thirds—either that, or diverts it to
some other purpose utterly foreign.

They say in their briefs that, coming out of the War
impoverished, they have paid over $70,000,000 on
account of this indebtedness, principal and interest, and
that West Virginia has not contributed a single dollar.
In response to that, I want your Honors to bear in mind
that they have gone off, up to date at least, with more
than twenty million dollars worth of common assets, not
one cent of the value of which they have either reported
or accounted unto West Virginia for.

It is easy enough to pay debts, provided you use the
property of other people for the purpose.
ArcumENt or Joun H. Hotr, Esa. 17

What interest did we have in it? This Court said that
we were liable for the debt in the ratio of 231% for
West Virginia, and 7614% for Virginia. Our conten-
tion is that we are entitled to just the same ratio of the
assets.

If an investment is created and is evidenced by a bond
in the purchase of a piece of property, if one of the pur-
chasers is compelled to contribute to the purchase money
at the rate of 2314%, he is entitled to receive of the value
of the thing purchased the same percentage, 2314%. In
other words, it would seem to be a prime principle, to
use the language of this Court again, that our equity to
these assets is just as ‘‘deep-seated’’ as is the equity
of Virginia, upon the other hand, to compel us to con-
tribute to the payment of the debt that was incurred in
the purchase of the assets. Therefore, I say, as a mat-
ter of equity, we should, in the second place, be permit-
ted to file this supplemental answer.

Whether the decree of reference may have been broad
or narrow, the fact is that no report of these assets was
made. The Master did not state the account upon that
line, and here we are.

In the next place, it is submitted, with all due regard
to our adversaries, who are gentlemen of honor, and
for whom I have a very high regard, that we be permit-
ted to file this supplemental answer for this reason:
Virginia. was the aggressor. She came into this Court
with the avowed purpose of bringing about an equitable
adjustment of the Virginia debt, and, although the evi-
dence was within her possession, in her archives and
her records, which gave the history of these assets, she
undertook to state the account without exposing the
credits.

You will read the bill filed in this Court in vain in an
attempt to find a single allegation that seeks anything
but money, without allowing anything by way of credit.
78 ARGUMENT or JoHn H. Hott, Esa.

There is no statement of account at all, although the
whole evidence in relation thereto was exclusively with-
in the possession of the plaintiff.

If it is an equitable adjustment that she is seeking,
and the evidence was in her possession, it became her
duty to expose the status of the account, to the end that
justice and equity might be done. She did not do it.

The next reason: I know very well that your Honors,
in proceedings of this kind, have established very few
rules for the conduct of original proceedings in equity
before this tribunal. The Court has wisely left the
thing very much at large, because the settlement of a
whole controversy at any time might become, as this
has become, not so much a question of knowledge and of
learning as a question of wisdom. For that reason, the
rules have not been promulgated, but your Honors have
prescribed rules for the conduct of equity proceedings
before the inferior federal tribunals, and I take it that
they are just. Among the new rules that have been
recently promulgated by your Honors, having taken
effect the first day of January, 1913, we find Rule 19.
Of course, I do not call your Honors’ attention to this
rule as being anything more than persuasive. It may
furnish, however, an analogy for the government of this
cause. Rule 19 reads in part as follows:

‘“The Court may at any time in furtherance of
justice, upon such terms as it may deem just, per-
mit any process, proceeding, pleading or record
to be amended, or material supplemental matter
to be set forth, in an amended or supplemental
pleading.’’

This rule does not by its terms even require diligence.
It simply requires an honest effort to get at the right,
and, of course, it is always within the hands of the Court
to prescribe terms, and such terms as would produce
cquitable results. Not only that, but we have a similar
ARGUMENT or Jonn H. Hott, Esa. 79

 

rule prescribed by your Honors for the government of
inferior tribunals. We refer to equity Rule 34, which
reads in part as follows:
‘‘Upon application of either party, the Court
or Judge may, upon reasonable notice, and such
terms as are just, permit him to file and serve a
supplemental pleading alleging material facts oc-
curring after his former pleading, or of which he
was ignorant when it was made.”’

Now, out of analogy to either of these rules, it is re-
spectfully submitted that this supplemental answer
should be received. There is, however, another reason:
When we come to reflect upon the character of this case;
when we come to reflect upon the reasons why jurisdiction
has been given to this tribunal under the Constitution ;
when we remember that it is a sovereign State impleaded
at the bar of this Court, the practice should not be gov-
erned by the same strict rules that govern controversies
between and rights of individual citizens, and I have
but to remind this Court of its own language in this
cause. I refer to the opinion of March 6, 1911, where
this Court, speaking through Mr. Justice Holmes, said,
in substance at least, if not in words, that this contro-
versy should be approached and should be proceeded
with in the untechnical spirit that is appropriate to the
settlement of quasi-international controversies, remem-
bering all the while that there is no municipal code upon
the subject; and it is in that same spirit and upon that
same authority, and upon the faith of these credits
—hbecause the object is to ascertain the rights of the
people—that this motion is made.

It might be answered by our friends upon the other
side that, if we were permitted to file this supplemental
answer it would only be a short while until we would come
back with another motion for something else of like kind,
and that we would be thereby permitted to turn this pro-
80 ArcuMENT or Joun H. Hott, Esa.

 

ceeding into an endless chain of litigation. It is enough
to say by way of reply to this suggestion that it should
be borne in mind that your Honors hold the matter in
your own hands. It is always within the control and
discretion of the Court, with the power to impose terms,
and to impose such terms upon this motion, or any other
motion that might be made, as would produce equitable
results.

I may mention in passing too that they seem to think
we are very rich—although, of course, it has nothing to
do with the logic of the situation or the justice of our
cause. They have us up now, I believe, to a billion or
two of values, and by Fall perhaps will add a billion
more. They contrast this with a much smaller valuation.
in the State of Virginia; but the worthlessness of all
comparison between assessed values is easily illus-
trated. I have seen the same railroad in our jurisdic-
tion, based upon assessed valuation, jump in twenty-
four hours from an appraisement of nine millions to
twenty-five millions. ‘That, of course, is getting rich
very rapidly.

As a brace-root to their contention, and in the hope
that they may have our just credits disregarded, they
further suggest that the internal improvement compan-
ies in which the common funds of the two States were
invested started West Virginia on the road to progress,
and contributed largely to her development—in other
words, that she has already received a consideration for
her subscriptions to these works. Nothing could be
more fallacious, or with less foundation in fact. To
one familiar with the history of the two States, such @
contention does nothing more than to provoke a smile.
West Virginia never had an opportunity to develop.
She was not permitted to develop, and made no progress
along that line at all until after she had been cut loose
from Virginia. This was the real cause lying back of
ARGUMENT or Jonn H. Hotz, Esa. 8L

 

the separation, and secession and rebellion furnished
the opportunity.

Mr. Conrad: The cause of the separation was indi-
cated and openly expressed in the convention—

The Chief Justice: Do not interrupt counsel.

Mr. Holt: It has been expressed by a great many
people in a great many different ways.

It has been Virginia’s boast that she sent West Vir-
ginia forth, a daughter without a dowery. That is true.
She sent this daughter out with empty pockets, and with
bare hands, to the conquering of a forest primeval,
and she has done it. They say that these old internal
improvement companies were the cause of our prosper-
ity, whatever it may be. The answer shows, and I do
not transgress the record when I make the statement,
that it was West Virginia’s own sons and daughters,
beginning twenty years after she had been cut adrift
from the Tidewater Counties, who sent men into can-
vons, for the construction of trunk line railways, so:
deep and rugged that they had to be suspended in mid-
air while they did their work, and built railways costing
a gold dollar for every inch of the way. ‘This resulted
in prosperity. Why, we had but a single railway—we
had a wilderness. So, when they make these claims, we
must be pardoned if we lose our patience in reply; and
I, for one, must say that I lack for a word to euphemis-
tically express the impression that it makes upon my
mind.

Your Honors, so much for the answer. We ask it in
the name of equity.

The West Virginia Commission made a proposition
that was refused. It may be that the Virginians thought
it was not enough; but we laid our hand upon the table.
In these days of omniverous politics, States are hard to
manage. The object was to make a proposition that
would be paid without cavil and without contention, and -
82 ArcuMEnT or Joun H. Hotz, Esa.

without ever dreaming of putting this Court to the
necessity of devising ways and means to enforce its
decrees against a sovereign State.

West Virginia is not a repudiationist. But they
rejected our offer. We laid all these credits on the table
before them. The answer shows that. Here they are.
Did they tell us that we were mistaken? Did they tell
us that the Richmond, Fredericksburg & Potomac stock
was worthless? Did they deny that they had sold many
of these securities, and had covered the cash into their
treasury, and diverted it from the sinking fund, in vio-
lation of the Constitution? No, they denied nothing.
We would have been only too glad to have stood cor-
rected if any of these credits had been wrong; because,
had they given us the truth, if they were informed, we
would not have bothered your Honors with it any more.
They simply repulsed our proposition without discus-
tion, and we could reach but one conclusion, and that
was an implied admission of the correctness of the cred-
its prayed.

INTEREST.

Now, your Honors, a few words upon the subject of
interest, and then I am done. I know I have tried the
patience of the Court too long, but, with your indulgence,
will take but a few moments on this subject.

Counsel for Virginia cite in their brief the case of
Higginbotham v. The Commonwealth, 25 Gratt., and say
that that case established the rule that in Virginia you
could sue the Commonwealth, and that the Common-
wealth was chargeable with interest just like an individ-
ual; that her law was our law, and that it should be ap-
plied to West Virginia in this case.

They further call our attention to the fact that, in the
very first Constitution we adopted, by See. 8, ‘Article 11,
we said that the common and statutory law of the Com-
9

ARGUMENT or Jonun H. Hott, Esa. . 83

 

monwealth of Virginia should continue to be the common
and statutory law of West Virginia, unless it be in con-
flict with the Constitution then proposed, and until it
should be repealed by the Legislature; therefore, that
Virginia law and West Virginia law upon the subject of
interest were the same; and the case of Higginbotham v.
the Commonwealth is cited for the purpose of showing
what the Virginia law was at the time the first West
Virginia Constitution was adopted. Not only that, but,
in their last brief, they say—

“The framers of the Wheeling Ordinance must
be presumed to have drawn that instrument with
reference to the principle of equity and justice
which had then and long before that time been
embodied in the laws of Virginia by the repeated
decisions of her highest Court.’’

The truth of the business is this, that the 25” Gratt., a
Virginia report, was not published, or a single case in it
decided, until thirteen years after West Virginia had
been established and erected into a separate State. The
last Virginia report containing cases decided before the
separation of the two States is the 14” Grattan, eleven
volumes earlier than the 25th.

When you get back to the other Virginia cases decided
before we were cut off, you will find that they, one and
all, so far as I could find, certainly so wherever the point
was raised, refused to allow interest in any controversy
against the State, and such seems to have been the fixed
law of 'Virginia at the time we were cut off, and at the
time of the adoption of our Constitution, in which the
article to which I have referred appears.

The Chief Justice: Leaving aside that fact entirely,
and approaching it from a broader view—I do not mean
to criticise, but, at the same time, what do you say, what
have you to say, on the question of interest?

Mr. Holt: That I am coming to, sir.
84 ARGUMENT or Jonn H. Horr, Esa.

 

The Chief Justice: I am looking at it now, irrespect-
ive of the point you have made.

Mr. Holt: I only refer to the technical position for this
reason; because I had thought so little of it that I did
not mention it at all in my brief; but, when I came to
read the brief for Virginia, I found much said about it
there, and | did not feel warranted in passing it by with-
out any reference to it at all.

With your permission, sir, before coming to answer
your question, I would like to give the Court upon that
point the case of Commonwealth v. Lilly, 1st Leigh, page
020. There is something peculiar about that case too.
It is recorded in the report as if interest had been
allowed against the Commonwealth, but the Court of
Appeals of Virginia subsequently, in 3rd Leigh, say that
is a misprint. I will give vou that case.

Mr. Justice Holmes: That is in the brief of West
Virginia in opposition to interest?

Mr. Holt: Yes.

Mr. Justice Holmes: Will you give me that refer-
ence? What is the first page?

My. Holt: The Commonwealth v. Lilly, 1 Leigh 525.
The other is Auditor of Public Accounts v. Dugger &
Foley, 3 Leigh, page 241. Those are the cases that laid
down the law so far as the awarding of interest against
the Commonwealth of Virginia was concerned at the
time we were a part of her; that interest will not run
against a sovereign in the absence of legislative consent
or some contract giving such consent made by her pub-
lic officials thereunto duly authorized; and such we take
to be the position of your Honors in more than one ease.

Mr. Justice Day: TPlave you anywhere dealt with the
question as though it were between sovereigns?

Mr. Holt: Yes, your Honor. One of these cases is
South Dakota v. North Carolina. There they were both
sovereigns. The cases to which I refer of this Court
ARGUMENT or Joun H. Hour, Esa. 85

 

are in the brief in opposition to interest, and the first is
the United States v. North Carolina, Your Honors are
so familiar with that that it is not worth while for me to
make a comment upon it.

The second is South Dakota v. North Carolina, like-
wise appearing upon the brief. Then you have the case
of the United States ex rel. McCloud v. John Sherman,
Secretary. Then you have likewise the case of—

Mr. Justice Holmes: These are all in your brief?

Mr. Holt: Yes, your Honor, at page two of the brief
on behalf of West Virginia in opposition to interest.
There it is held, your Honors, that there must be legis-
lative consent or contractual consent in order to fasten
interest upon a sovereign, of course the theory being
that the sovereign is always ready to pay the principal,
thus obviating the interest.

‘There is no legislative enactment in the present case.
We shall have to look to the contract to ascertain
whether or not we have consented to the payment of
interest, and I think that brings us right down to the
hinge of the question, the turning or pivotal point. This
Court held that our contract was composed, first, of Sec-
tion Hight, Article Fight, of our Constitution of 1861—
not the Wheeling Ordinance, but the Constitution; sec-.
ondly, the Act of 1862 of the restored government of Vir-
ginia, consenting to the erection of our State upon the
faith of the Constitution proposed, and, third, the Act
of Congress of December 31, 1862, admitting us into the
Union upon the faith of both. There is the contract, and
we must admit that it makes a perfect one.

Now, then, we must turn to this eighth section of Arti-
cle eight of the Constitution in order to see whether we
have promised to pay interest. If your Honors will turn
to the third page of the brief in opposition to interest,
filed on behalf of West Virginia, you will find this eighth
section of the Constitution set out. It reads:
86 ARGUMENT oF JoHn H. Hott, Esa.

 

‘‘An equitable proportion of the public debt
of the Commonwealth of Virginia prior to the
1st 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 pro-
vide for the liquidation thereof by a sinking fund
sufficient to pay the accruing interest, and redeem
the principal within thirty-four vears.’’

Mr. Justice Lurton: That public debt, an equitable
proportion of which West Virginia assumed, was an in-
terest bearing debt, known to be such to all the parties at
the time, and these bonds being scattered over the world
—if that is so—did not that assume, in equity, an as-
sumption of interest upon that proportion of the debt?

Mr. Holt: That is the point I am just going to address
myself to, your Honor. We shall have to determine that
from this article, I think. That is the question in this
case.

Now, going back to the constitutional provision, it is
our object, your Honor, to meet that provision of the
Constitution as frankly as we can, because we know that
by it we must stand or fall. That constitutional pro-
vision contains two promises—there is no question about
that. The first is: West Virginia promised to pay an
equitable proportion of the debt—we do not. deny that.
The second promise made by her is that she will estab-
lish a sinking fund sufficient to meet the accruing interest
thereon, and discharge the principal within thirty-four
years. That is her promise number two. It will be ob-
served, however, your Honors, that both of these prom-
ises, or each of these promises, had a qualification at-
tached to it. The qualifications are these: In the first
place, upon the promise to pay an equitable proportion
of the debt, our promise was modified hy the statement
that it must be in existence prior to the first day of Janu-
ary, 1861. We fixed that as a barrier, as the date beyond
ARGUMENT or Joun H. Hott, Esa. 87

 

which Virginia should contract no debt to the payment
of which we would contribute. That is the first limita-
tion.

Now, if that debt on the first day of January, 1861, had
had a lot of overdue and unpaid interest, I will grant
you that it could have been added in as a part of the
principal, and that we would be compelled to contribute
our equitable proportion to the same with it added in;
and, as I understand the decision of March 6, 1911, this
Honorable Court took that very course. There was some
interest of that character, and it was treated as princi-
pal,—well, very properly so—but not so with any inter-
est accruing after the first day of January, 1861.

What is the qualification of the second promise? Our
second promise was to establish a sinking fund for the
discharge of our equitable proportion of the principal
and the accruing interest thereon within thirty-four
years; but that promise was necessarily conditioned upon
the fact that our equitable proportion of the debt must
have first been ascertained. How would it be possible
for the State of West Virginia to establish a sinking
fund without the debt to be discharged thereby having
been first ascertained? Such a sinking fund would neces-
sarily be built up through levies, and the amount of the
levy could only be known by first knowing the amount
of the debt.

The Chief Justice: Does not that bring the interest
argument right back to the argument that was made on
the Wheeling Ordinance, that it must be fixed by the Leg-
islature; that the Legislature did not fix it, and, there-
fore, nothing was due?

Mr. Holt: No, sir. This Court exploded that theory,
and I am glad they did.

The Chief Justice: But that theory was advanced at
this bar?

Mr. Holt: There is no doubt about that.
88 ArcuMENT or Joun H. Hott, Esq.

 

The Chief Justice: That West Virginia was to fix it,
and that she never had fixed it, and, therefore, she did
not owe anything?

Mr. Holt: That was Mr. Carlisle’s argument.

The Chief Justice: Oh, I did not say who.

Mr. Holt: And the argument of our side, of course.

Mr. Justice Pitney: That was your Legislature?

Mr. Holt: Yes, that was our Legislature. The Legis-
lature could not have fixed it. ‘This Court exploded that
theory, because you would not sit by and permit us to
be judge in our own case, nor, upon the other hand,
would you permit the Commonwealth of 'Virginia to arbi-
trarily fix it, as she undertook to do, assuming unto her-
self two-thirds, and assigning and allotting unto us one-
third.

The Chief Justice: That is the proportion that was
fixed—not the interest-bearing date.

Mr. Holt: I am speaking of the action of Virginia—
her funding Acts of 1871.

The Chief Justice: In fixing the proportion—she did
not fix the interest.

Mr. Holt: No, she did not fix the interest. I am com-
ing, though, to the point that it does not bring us back
to West Virginia’s Legislature, for this reason: Our
position is this, that West Virginia, acting through her
Legislature, standing alone, could never have fixed it;
neither could the State of Virginia have liquidated and
ascertained this amount through her Legislature, and
the two States, through the whole flight of years, have
never indulged in any joint action; and that this amount,
West Virginia’s equitable proportion, has, in conse-
quence, remained unfixed, unascertained and unliquidat-
ed to this hour, unless it was fixed and ascertained on
the sixth of March, 1911; and, if it were fixed at that
time, if the supplemental answer should be admitted and
its credits applied to that principal, interest would begin
ARGUMENT or Joun H. Hott, Esa. 89

 

to run only upon the balance, and that too after the bal-
ance shall have been ascertained.

Mr. Justice Pitney: Is not the reference to the inter-
est that shall thereafter accrue? Does it not refer to
the interest running all the time?

Mr. Holt: Our contention is that the debt must be
ascertained in some way before the creation of a sinking
fund, and that the failure to ascertain it has, as we shall
later see, not been the fault of West Virginia.

Mr. Justice Pitney: I do not see what there is in that
principle that stops the running of interest during the
time while you are waiting to ascertain the amount.

Mr. Holt: It is in keeping with the doctrine of this
Court and of other Courts, that unliquidated sums are
not interest-bearing amounts.

Mr, Justice Holmes: Then you would have this Court
put it into your hands to delay the beginning of any lia-
bility for interest so long as your ingenuity could keep
the case undecided in this Court?

Mr. Holt: No, I would not take that position,—it
would not be equitable, and, when applied to this case,
would not fit the facts. A reference to the record will
show that West Virginia has not passively been at fault;
neither has she actively prevented, by her ingenuity or
otherwise, the ascertainment of her equitable proportion
of this debt. She could not act alone through her legis-
lative or any other department of government, or all
departments combined. She could not act as judge in
her own controversy. The concurrence of the State of
Virginia was necessary, and the joint action of the two
States was required. They failed to agree, and we as-
sert that West Virginia was not at fault, and cannot be
punished for the delinquency of another. I venture the
assertion that I can cover every hour of the time from
1861 until now, and demonstrate that West Virginia was
not at fault, notwithstanding all the Commissions that
these gentlemen say they have appointed to treat with
90 ArcuMENT or Joun H. Hott, Esa.

 

us. It is the simplest matter in the world. I say that
we can cover the entire period of time. Let us see. The
whole thing began on January 1, 1861. Certainly we did
nothing to put us in the wrong, or to prevent, actively or
in any other way, the ascertainment of this debt from
the first day of January, 1861, down to the twentieth day
of June, 1863, Why? We have covered that much of
the period of time because we were not a State during
that time. We had not been admitted into the Union.
We were nobody from the first day of January, 1861,
down to the twentieth day of June, 1863—therefore, I
say that period of time must logically be eliminated from
the controversy.

The other propositions are equally plain, if we will
just take them and eliminate them.

The next period is from June, 1863, until early in
1866, or the latter part of 1865, I do not recall which.
During this time, the two States were at war, and it
would have been treason to have negotiated. Therefore,
we have covered the period from January 1, 1861, down
to 1866.

How is the next period covered? On December 1,
1866, Virginia instituted a suit in this very Court against
us, attacking the integrity of our territory, and claiming
jurisdiction over the Counties of Berkeley, Jefferson and
Frederick—F rederick she still has, of course—and in the
other two Counties, if my memory serves me, pretty
nearly fifteen per cent. of the entire wealth of West Vir-
ginia was then located. We could not negotiate with her
while that question pended here, because we did not know
what we were. In order to apply the very basis of set-
tlement that your Honors have fixed, that is, the relative
resources of the two debtor populations, as a condition
precedent thereto, you would have had to ascertain what
the debtor populations were, and it could not be done
with that suit pending. That suit continued to pend here
ARGUMENT or Joun H. Hott, Esa. gL

 

until the year 1871. Therefore, we have covered the
whole period from 1861 down to 1871; and, within nine
days after this Court announced its opinion in the terri-
torial case, we sent a commission—I believe I have my
dates right—to the Commonwealth of Virginia to nego-
tiate a settlement of this debt; and they refused to ne-
gotiate with us. They had suggested a commission
before that time, but when we got over there they had
repealed the Act, and they had nobody to negotiate with
us, and there we became stationary again. This state of
affairs continued until the funding Acts began on the
part of Virginia, and they took place on the thirtieth
day of March, 1871, the same year.

What did they do? They said: ‘‘Well, we only owe
two-thirds of this debt. We allot one-third of it to you.”’
Then they appointed a commission to negotiate with us
on that basis. In other words, they settled the subject-
matter of the negotiation before the negotiation began.

Mr. Justice Pitney: What was the date of that prop-
osition of theirs?

Mr. Holt: The funding Act was the 30th of March,
1871. ‘That is the time they arbitrarily settled, as we
contend, that they only owed two-thirds, and the matter
practically remained in that condition until just before
the institution of this suit,

Mr. Justice Pitney: This is the point that troubles
me: I see by your argument that you agreed to pay an
equitable proportion of this debt, when ascertained?

Mr. Holt: Yes.

Mr. Justice Pitney: That obligation did not become
ascertained definitely until the equitable proportion was
ascertained. If you postpone that determination twenty
or thirty years, and the interest is in the meantime run-
ning against Virginia and being paid, does not that pay-
ment of interest by her have some bearing on the equita-
ble proportion?
92 ARGUMENT or JoHn H. Hotz, Esa.

 

Ae

Mr. Holt: It might be so had 'Virginia not prevented
the ascertainment herself. She put the matter, by her
conduct, in such a fix that we could not negotiate a set-
tlement with her.

Of course, these gentlemen will tell the Court that Vir-
ginia appointed commission after commission. She did,
but their hands were always tied; and, when you come
to the record, you will find every moment of time ac-
counted for in the way I have heretofore suggested. It
is idle to multiply words about it. And, in addition to
this, even if we were to admit that Virginia was condi-
tioned so she could properly negotiate, and West Vir-
ginia was stubborn and unwilling to meet her, she had
her remedy; for there never was a time during the last
forty years that Virginia could not have appealed to this
Court—not a single hour; and, by her neglect and failure
so to do, our contention is that she has caused the very
flight of time on account of which she now seeks to charge
us interest. .

Mr. Justice Pitney: Was it not the obligation of the
debtor to come forth and make payment?

Mr. Holt: It has recently been held by one of our
Courts of last resort that it is the business of the cred-
itor to vex his debtor until he paid.

Mr. Justice Pitney: That is a new legal obligation.

Mr. Holt: It may not be applicable to sovereigns, but
it is the obligation out of which springs the doctrine of
laches and the statute of limitations; and it may be that
laches will be attributable even to the Crown, where it
does not act in its own right, but in a fiduciary capacity,
or as a trustee, like the State of Virginia in the present
case.

One word more: If the somewhat technical doctrine
that interest is not to be charged against a sovereign is
not to obtain, and the question here for decision is to be
determined upon broader lines, then, and in that event,
ARGUMENT or Jonn H. Hotz, Esa. 93

 

the fact should not be lost sight of that the credits
claimed by the supplemental answer embrace only a cer-
tain per cent. of the actual value of the common assets,
and do not take into consideration the fact that Virginia
has had these assets, or their proceeds, in her exclusive
possession ever since West Virginia was created, and
has exclusively enjoyed the fruits thereof, including the
whole of the interest thereon. In other words, she has
not only kept the 7614% of the assets that belonged to
her, and enjoyed the income derivable therefrom, but has
likewise appropriated West Virginia’s 2314% thereof,
together with the interest thereon, or the income there-
from, from the twentieth of June, 1863, until the present
time. In addition to this, no account has been taken nor
any credit claimed in consequence of the many public
buildings owned by ‘Virginia and constructed in part out
of West Virginia funds, except that it has been asked
that, if West Virginia is to be charged with interest upon
any portion of this debt, it should be offset by an appli-
cation thereto of the amount contributed by her to the
construction of these public buildings, together with the
interest thereon from the time that they have been ex-
clusively enjoyed by the State of Virginia.

If technical rules are not to apply in the decision of
the question of interest, because thought to be too nar-
row, and the broader principles of equity are to be in-
voked, they should be invoked for the benefit of the
defendant, as well as for the benefit of the plaintiff.

Finally, it may not be without equitable influence to
say that it appears from the record in this cause that
Virginia has very little, if any, financial interest in this
controversy. The holders of that portion of the Vir-
ginia bonds that was arbitrarily allotted by Virginia, in
the absence of any settlement, and without the consent
of West Virginia, as West Virginia’s part of the debt,
could not enforce the same in the Courts, either State or
94. ARGUMENT oF JoHN H. Hott, Esa.

National, against the State of West Virginia. They
could not sue her in this Court under the Constitution
of the United States; neither could they institute pro-
ceedings against her in the West Virginia Courts, in con-
sequence of the West Virginia Constitution. Virginia
alone could implead her fellow sovereign, and these bond-
holders and the State of Virginia, both recognizing this
fact, came to terms, the bondholders agreeing to accept
from the State of Virginia in lieu of her bonds held by
them the so-called West Virginia certificates issued by
Virginia, agreeing to free Virginia from any liability
thereon, and be satisfied with anything that might be
collected against the State of West Virginia in a suit to
be instituted by Virginia against her. In other words,
Virginia escapes liability, upon a part of these bonds at
least, by lending her name for the purposes of suit to the
holders thereof. She has sold her sovereign birthright
for a mess of pottage.
ARGUMENT OF
A. A. LILLY, ESQ.,
Attorney General for West Virginia
ARGUMENT OF A. A. LILLY, ESQ.

Mr. Litty: If your Honor please, as my associate
counsel has covered this case so fully and ably from the
standpoint of the defendant, I must necessarily be a
gleaner in Boaz’s field, but in my gleaning I shall try as
far as I can to separate the chaff from the wheat and
the grain from the tares.

In the outset, I desire to make some reference to the
arguments of counsel on behalf of the plaintiff and bond-
holders and in doing so must depart from the order that
I had expected to follow. I shall attempt to answer that
which counsel for plaintiff and bondholders seem to con-
sider important and essential.

First, with reference to what West Virginia is worth
to-day. This was alluded to with emphasis by the first
and the last speakers. As a matter of fact I do not see in
what way this can be relevant. This court said on March
6, 1911, that West Virginia’s equitable share of the debt
was based upon the relative resources of the two debtor
populations, not as of 1914, but as of June 20, 1863, when
West Virginia became a separate sovereign state. The
argument that West Virginia is worth little or much to-
day is not pertinent to the controversy. It has no legal
significance in this case—is immaterial and without
merit. If West Virginia was. torn asunder from the
mother state by stress and strain of war because she
liked the Stars and Stripes, because she was loyal to the
Constitution and the Union, and went into the wilder-
ness and worked out her own destiny with willing hands
and honest heart, and to-day is an Empire within her-
self, this does not argue that West Virginia shall pay
something that she is not legally bound to pay.
98 ArcuMENT or A. A. Lituy, Esa.

 

It has been said that in 1867 West Virginia was assess-
ed at $126,000,000.00, and in 1908 she was assessed at
$937,000,000.00. What does assessed values have to do
with the actual value of property? West ‘Virginia has
the highest assessment relatively speaking, of all the
States in the Union. She bases the value of her proper-
ty on the ‘‘true and actual value’’, not the price that you
might sell at a forced sale, but what it is worth. Virgin-
ia says she has only increased 84 per cent, from $354,-
000,000.00 to $661,000,000.00. It might be truthfully said
that the City of Richmond is larger than six of our big-
gest towns, and that the City of Norfolk is larger than
three, the City of Lynchburg larger than two.

If, by dint of energy, by honest endeavor, West Vir-
ginia has accumulated some wealth she is entitled to it.
Her present wealth has no bearing on the question of her
lability to Virginia. West Virginia was never able to
obtain wealth while the border counties, the seaboard
counties, had her tied to them. We were throttled and
held down, and never prospered, while we were regarded
and treated as an outlying province, and would not be
prosperous to-day if we were bound to Virginia. Why?
Because we had inequitable assessments ; inequitable rep-
resentation, unfair and discriminatory treatment. Neith-
er capital nor labor was encouraged, and the Trans-Alle-
gheny Counties were placed in a state of coma because
of the undesirable policies of Virginia. The great bene-
fits that ought to have been derived from this debt did
not come to West Virginia, as the records will show.

Second, the main argument of the opposing counsel is
that we are guilty of negligence in not bringing these
equitable defenses and off-sets into the record sooner.
Sometimes counsel say the off-sets were in, and then
again they say if they were not in they should have been
in, because we must have known of them. If our proposed
supplemental answer is true, do not the allegations, as
Argument oF A. A. Litty, Esa. 99

 

therein set forth, constitute live, existing equities, that
this Court can never settle unless they are taken into
consideration? Were the arguments made on behalf of
the plaintiff based on the broad equities and merits of
the case as to our assets, or were they made because, for-
sooth, some counsel misapprehended the defense, or, for
some technical reason?

Counsel for Virginia make special reference in
their brief to the report of the Commission of 1871, known
as the ‘‘Bennett Commission’’, at page 474 of the com-
piled record, Vol. 1. With the permission of the Court,
I will refer to that to see if what is alleged in our pro-
posed supplemental answer is true. I want to state this
once and for all, that West Virginia does not claim now,
does not pretend to claim, in her supplemental answer,
that she did not know that there had been investments
made. She knew that, but she alleges that the value and
disposition thereof were not known to her. Why, of
course, she knew investments had been made; because
while she was poor, while she was treated like ‘‘a country
cousin’? from across the mountains, she was contribut-
ing in unjust proportions toward these very invest-
ments.

Now I refer you to Statement B. on page 474, volume
1 of the West Virginia compilation of record, showing
the character of the investments made, the items compos-
ing the investments, aggregating $42,870,182.88. Does
that say what they were worth January 1, 1861, or June
90, 1863? It does not purport to do so; but merely says
that there had been $42,870,182.88 in internal improve-
ments invested by Virginia prior to January 1, 1861. But
as to what these investments were worth, whether they
were worth anything or not, it does not say. It could not
have said at the date of the report of that commission,
because it was predicated on Governor Walker’s message
of March 8, 1870, and the facts are that a material part
100 Arcument or A. A. Litty, Ese.

of this property was disposed of, if the Court please,
after the year 1870. "These investments were either dis-
posed of or retained to the value of more than $14,000,-
000.00 after that date, so that the report could not have
referred to the value and disposition of the common
assets.

Opposing counsel say that we play on the figures, and
sometimes add them one way and sometimes another
way. We will come to the schedules in the proposed
supplemental answer and then show you they are mis-
taken. The Bennett report nowhere shows to whom these
investments were disposed, or how, or for what. It dis-
closes in part merely the investments, prior to a certain
fixed date.

Now, referring to Schedule G in the same compilation,
at page 487 is found a statement of the value of the pub-
lic buildings of Virginia. We do not seek in this suit to
have our equitable share in them as a direct set-off, al-
though there are those of us of counsel of whom I am
one, who believe that in equity and good conscience we
are entitled to our direct equities therein, but as this was
indirectly before the Court, and not wishing to belabor

the Court in opposition to its views as already expressed, « « <

we do not ask for our equities in them as a direct credit,
but we only ask for this feature to be considered on the
question of interest. So this part of that report does
not come in conflict with our contention.

The next Schedule, H of the same report, refers
to the bank stock as of 1840. Did it say what part had
been disposed of, or what it was worth, as of 1861 or
1863? Itis silent as to these vital matters. So that part
is not in conflict and out of harmony with our proposed
supplemental pleading in this case.

There were several statements made with reference to
page 1054 of the record in this case in an attempt to
discredit our proposed supplemental answer. I refer the
Argument or A. A. Linuy, Esa. 101

 

Court now to pages 1053 and 1054, and ask where, in a
line of that record, does it show the value of that prop-
erty as of the date of the contract, or where it shows the
disposition thereof. It merely summarized the invest-
ments which had been made prior to the Ist day of Jan-
uary, 1861. And why was this done? Because under
the theory of the Wheeling Ordinance we were charge-
able with all the money expended in West Virginia. It
was necessary to see what was expended in entire Virgi-
nia, not for the purpose of her accounting for the invest-
ments, not for the purpose of ascertaining their value or
disposition, but to know what the initial investment was,
and knowing the whole investment, we are better able
to say with what West Virginia was chargeable under
the Wheeling Ordinance. That was the only purpose as
shown by the entire record.

Mr. Justice Pitney: Mr. Attorney General, may I or
not infer from what you have just said that all of the
underlying facts out of which your new defense arose,
or whatever you choose to call it—all the underlying facts,
—appear to have been known and to have been recogniz-
ed as having some force and effect at the time the testi-
mony was taken before the commission in this case?

Mr. Lilly: I hardly think that is true.

Mr. Justice Pitney: You are now making to us, then,
a different argument? All the facts from which your
argument arises seem to have been known then.

Mr. Lilly: The facts are these, that in a general way
we knew there were investments of a great amount of
money, but we did not know what had been done with
them. We did not know what they were worth. The
records did not disclose it.

Mr. Justice Pitney: You knew that something had
been done or would be done with them, and you knew
they were worth something.

Mr. Lilly: But under the defense of the case, accord-
102 Argument or A. A. Linty, Ese.

ing to our theory as shown by the pleadings and as decid-
ed upon by this Court, in 206 U. S., these facts were not
material. I shall come to that a little further on, but
suppose these facts were known to previous associate
counsel, what effect should that have? Should that, be-
fore final decree, estop West Virginia in her plain
rights?

Mr. Justice Pitney: The facts were all made public,
and West Virginia was a party to the transaction.

Mr. Lilly: We were a party to the transaction until
the debt was incurred, but none of the property had been
disposed of until we separated. Then we had our ar-
chives of government at Charleston and at Wheeling, and
Virginia had hers at Richmond, and war ensued. No
investigation was then made, or accounting had. This
theory of the case was not germane to the questions rais-
ed by the pleadings which were based upon settlement as
provided for in the Wheeling Ordinance, and not know-
ing all the facts—that is the facts as to the distribution
and value, they were not, taken into consideration in the
earlier stages of this case.

Mr. Justice Pitney: Those facts go to show how
much the State of Virginia realized.

Mr. Lilly: There are no such facts except in a limited
way in the record.

Mr. Justice Pitney: The facts that you say were not
in mind at that time have to do with the amount realized
by Virginia?

Mr. Lilly: Yes. Also value as of Jan. 1, 1861.

Mr. Justice Pitney: But everybody must have known
that they had a value in Virginia’s hands, and that some-
thing would be realized from them.

Mr. Lilly: According to the complainant’s bill they
did not have a value. Their value is not disclosed there-
in. We claim they did have value, and this became mate-
Argument oF A. A. Litty, Esa. 103

 

rial for the first time after the decision of this Court of
March 6, 1911.

Now, another question which is raised appears on page
1059 of the record, Schedule 4, and upon an examination
thereof you will see what expenditures on account of
banks and public internal improvements were made.
That shows the expenditures, the amount invested; not
the value of the property, or the disposition thereof;
and very little, if any, of it was disposed of, as I said a
moment ago, until after 1863. There was no necessity
for, nor were we in a position, to know of these facts. A
little later, as I will show you, by the law of ‘Virginia
these assets constituted a trust fund, and it was ‘Virgin-
ia’s duty to account to us therefor, and to show the value
and disposition of all investments as to which she con-
stituted herself the trustee. Plaintiff’s counsel refers
to pages 900 to 980 with reference to the various acts of
Virginia. That is true; there were acts authorizing in-
vestments in property, but referring to the original prop-
osition, these acts do not show the value of the property
as of the date of the contract or subsequent thereto, or
the disposition thereof.

Then referring to pages 867 to 900 of the same record
with reference to the value of the James River & Kana-
wha Canal, you will find that record was not directed as
to the value of the stock held by Virginia, was not direct-
ed as to the physical value of the canal proper, but was
directed primarily and alone to the nature of the im-
provements that were made along the great Kanawha
River, which consisted of a few tortuous shoots con-
structed to help navigation; and mind you, only three
per cent of the money therefor was expended in West
Virginia. Nowhere was it attempted to ascertain the
physical value of the canal as of January 1, 1861 or any
other time. I shall a little later show that this canal
had a subsisting value, as of the date of the contract, as
104 Argument or A. A. Litiy, Esa.

 

well as the date when it was bartered away without our
knowledge and consent, and without accounting to us
therefor.

Now, with reference to the question opposing counsel
raised this morning as to the value of certain stock which
he stated the report of the master shows that West Vir-
ginia got amounting to $508,000.00, $471,000.00 of which
was bank stock. Our position is this: If we got that
much, let us account for it; but we think that we only got
$260,200.00 worth of stock, and this consisted of $210,-
200.00 in the Northwestern Bank and: $50,000.00 in the
Bank of Fairmont. If we got more, the way to ascer-
tain that fact is to refer this cause to a master.

Here is a partnership that lasted for eighty-five years,
involving liabilities of a third of $100,000,000.00. We
have our equity in the assets of that property upon which
the debt is based and yet the plaintiff says there is no
necessity for an accounting—no necessity of a reference
to a master. In other words, it is counsel’s purpose and
intention, from their arguments here, it is the substance
of their arguments, that we shall pay our equitable pro-
portion of this debt, and the plaintiff may appropriate
what the debt purchased to her own exclusive use, and to
that end she says that it is not necessary to refer this
accounting to a master or to pay any attention to these
vast and valuable assets. If this is equity, we people be-
yond the mountains have no idea of what equity is.

Mr. Justice Hughes: Just to get a matter of fact
straight, I would like to ascertain how much of this total
amount which you say should be charged against Virgin-
ia is cash actually received by Virginia on the principal
of the investments, as distinguished from interest and
dividends and also as distinguished from property with
which you seek to charge her, where there is no proof of
cash realized?
ArcuMEnNT ofr A. A. Litiy, Esa. 105

 

Mr. Lilly: It will run to about $10,000,000.00 your
Honor.

Mr. Justice Hughes: Are these figures separately
stated?

Mr. Lilly: Yes, sir.

Mr. Justice Hughes: Whereabouts?

Mr. Lilly: If the Court please, I will refer to them
a little later.

Mr. Justice Hughes: Very well, in your own time.

My. Lilly: If the Court please, I desire to refer hur-
riedly to the defendant’s theory of this case. The pro-
posed supplemental answer is a solemn pleading tender-
ed, signed by the chief law officer of West Virginia and
sworn to by its Chief Executive, and for the purpose of
this motion should be given full faith, weight and credit,
and be treated as true.

T hold in my hand the accounting which we have made
in four months, the limited time we had. It does not show
all. I think if it did show all, this Court would not have
much trouble with the question of interest. There would
be very little principal upon which the question of in-
terest could be predicated. Here is an honest prelimin-
ary accounting by Mr. Dover, the able chief accountant of
the 'Tax Commissioner’s office of West Virginia. Oppos-
ing counsel say that it would be a vain, futile and unjust
thing to try to account for the common investment, for
the value of the property as of 1861 or 1863. Well, if
that be true, whose fault is it? Was not Virginia a self
constituted trustee? We answer, we have the records,
although in the possession of Virginia, to guide us and
the accounting does not depend to a very great extent up-
on the evidence of living witnesses. Here the trustee
comes in after the lapse of fifty years and says an ac-
counting would be merely guess-work. Whose fault is
it? She had the record. She had the assets. She took
charge of them. She sold part and appropriated the
106 Arcument or A. A. Litzy, Esa.

 

proceeds thereof to her own use; gave away others and
retains a valuable residuum. Is it not the duty of the
trustee to make an accounting and say to the cestwi que
trust,—‘‘Here is the amount of our debt and here is the
value of our assets?’’

Suppose on the first day of January, 1861, or the 20th
of June, 1863, Virginia had on hand more than $42,000,-
000.00 of bonds, loans, stock and other property bought
by common funds. Suppose she could have sold those
assets and could have derived therefrom $30,563,861.56.
Would the court have directed her to pay that upon and
extinguished the debt, or would we have to pay—to help
pay—the debt, and let Virginia take the entire assets, in-
cluding our 2314% equitable interest therein? Or, in
other words, if I owe $30,000,000.00 and I have $1,000,-
000.00 applicable to payment thereon the net amount of
the debt is only $29,000,000.00. But counsel for Virginia
say that the assets were as valueless as a corner lot in
Sodom and Gomorrah after the flames had swept and
devoured it. They say they were worth nothing.

We are going to show you what they were worth in
current money, the recompense of human toil—2314 per
cent of which assets the Court says we must pay. If
we help to buy property, in common fairness, out of its
wreck and ruin, be it much or little, it is a matter of de-
gree only, we are entitled to our part of value in the resid-
uum. We allege there were assets of at least $20,810,-
000.00 in value. We so state. We show you upon what
such claim is based. The plaintiff did not deny the
amount of assets or suggest any errors in relation to them
or abatement of them, but justified herself by saying
‘‘We are unwilling to engage in any discussion’’, also
that she ‘‘respectfully declines to consider them.’’

The West Virginia Commission said, ‘‘We will take
the finding of the Court that we owe a just proportion of
the debt, that is, 2314 per cent thereof—amounting to
ArcumeEnt or A. A. Liniy, Esa. 107

 

$7,182,000.00—and then Virginia, you account to us for
our property that is a part of the very substance of the
debt, and we will pay you the rest.’’ Is that fair? That
is a statement that ought to prove itself without argu-
ment. It stands alone, four square to every wind that
blows. There can be no more equitable rule on the earth
than when you sever a partnership that you are entitled
to a just proportion of the assets.

Now, with reference to the assets claimed, I respect-
fully refer the Court to the proposed supplemental an-
swer, page 60. Therein is set forth the value of the as-
sets. If we are mistaken we will not profit by it. It
should be ascertained whether or not we are right, the
manner and mode of which is under direction of this
Court, over which it is the final arbiter. You determine
the limitations and restrictions, if any.

Does Virginia want—ought she to want—would it be
of ultimate value—a decree against West Virginia for
principal, much less a decree for interest wherein Vir-
ginia had not made an accounting for the common assets?
Virginia says ‘‘You have to help pay the entire debt’’;
and when our citizenship of a million and a half people
say to her, our neighbor beyond the mountains, ‘‘ Account
to us for what you got,’’ and she answers, ‘‘ We will not
account’’, ‘‘We will not engage in any discussion’’, ‘‘We
decline to consider’’, what would our answer be and what
ought it to be? Would mountaineers and freemen be will-
ing to volunteer to satisfy such decree?

Class A shows that Virginia had $1,104,927.06 in her
treasury on the first day of January, 1861, $819,250.03
of which was in the sinking fund which fund was estab-
lished by the constitution of 1851, to satisfy the very debt
in controversy. But my friend from New York said this
amount was expended between January, 1, 1861, and
June 20, 1863, We admit it. Our answer shows the
facts are that in making up this total indebtedness of
108 Argument or A. A. Litiy, Esa.

 

$30,563,861.56 $977,209.89 of interest accrued between
July 1, 1860, and January 1, 1861, was added to the prin-
cipal of the debt and the money in the sinking fund, to-
gether with other money, paid off that interest in the
month of January, 1861.

As we are charged with accrued interest of nearly a mil-
lion dollars and Virginia had a million dollars, in round
numbers, in the sinking fund, why do they say it makes
no difference what became of the money in that fund?
That money, under the solemn compact of the Constitu-
tion, under the statutes enacted in pursuance thereof,
should go to liquidate the principal. Virginia added the
interest, and spent the money in the sinking fund in re-
ducing the principal, in January, 1861, and yet says that
it is not equitable for us to have our proportion of the
$1,104,927.06 in said fund. Is that equity? In other
words, Virginia had a million dollars set aside in the
sinking fund to pay on this debt, and she reduced the
debt that amount from that fund and yet West Virginia
is a stranger in benefit as to that payment. It was our
money, 2314 per cent of it, and yet Virginia says ‘‘ You
shall have no part of it.’’ She says, ‘‘It is no use going
to a master to ascertain our respective rights.’’ That
was the argument of my friend from New York.

Class B embraces the much argued Richmond, Fred-
ericksburg & Potomac Railroad. I wish to state as a
sworn public official the facts in regard to this matter;
and it would be worthless—yes, less than worthless—to
make representations in this case that are out of har-
mony with the facts, because I know that I would there-
by stultify myself and my acts would be without profit,
and in the end there would be an indirect loss to our
side. Under the statutes of 1835 and 1836 $275,200.00
was expended for stock in that railroad. That railroad
is being operated to-day, Virginia being part owner. It
is the chief outlet between the cities of Washington and
Argument or A. A. Linny, Esa. 109

 

Richmond. We helped to pay for it. We allege that it
was worth at least par on January 1, 1861. But my
friend from New York in the same statement in which
we allege it was worth par on January 1, 1861, hesitated
and said ‘‘That is not material because it does not appear
what it was worth on June 20, 1863.’’ I presume his mis-
statement of fact was inadvertent, but in the same sen-

tence the answer says, ‘‘Of a like value as of June 20,
1863.’’ ;

While I am on this subject I might say that this an-
swer was predicated on the theory and on the belief that
these assets were not only worth the value alleged as of
January 1, 1861, but likewise as of June 20, 1863. Not
knowing the date that the Court will take, our idea is to
allege the value on both dates. We believe that January
1, 1861, is supported by law, and that we ought to as-
certain the value of the property as of that date. The
date as of which the liability was assumed, is the date
on which the assets ought to be applied thereon. But
whether on January 1, 1861, or June 20, 1863, the defend-
ant has a subsisting equity in those properties and we
should have our equity out of them. If our equity is a
maillion dollars, let us have it. If it is, upon a full inves-
tigation, sufficient to cover the entire amount of the debt,
let us have it. Counsel said that on a certain basis our
entire equities would be worth $5,000.00 and intimated
they might possibly account for about that amount. In
1866 a stock dividend of $319,615.00 was declared on this
stock which had the right to share and participate in
dividends, like the principal stock, and since then that
railroad has paid to Virginia $1,282,198.74 dividends, and
her interest in that road to-day is worth $2,000,000.00.
Virginia has eliminated competition and preempted the
territory, I understand, and will not even allow a com-
peting line to be built between Washington and Rich-
mond. This railroad is used as the trunk line of the var-
110 Arcument or A. A. Litty, Esa.

ious railroads; but I do not want the Court to under-
stand that we are asking for the usufruct or product of
this railroad since the date as of which our liabilities
were to be ascertained. We are not entitled to it. But
later I shall refer, and ask this court to consider it upon
the broad equitable basis that a member of this Court
referred to when he asked counsel associated with me,
«‘What do you have to say with reference to the broad
equities on interest?’’

Next is class C. and they avoided it as they would the
bubonic plague. We charge, under oath, that they re-
ceived from the proceeds of sales of securities, purchas-
ed with common funds, $6,313,000.00. Yet ‘Virginia says
there ought to be no accounting; that the lapse and flight
and mist of years has so dimmed and obscured the facts
that an accounting is not worth the while. That is a
great answer for a trustee to make to a cestut que trust.

The next is class D. Prior to January 1, 1861, divi-
dends on stock and loans made had produced $1,835,000.00
which was collected after that date. In other words, their
property and ours had earned this much money before
January 1, 1861, which was collected in the main after
West Virginia was admitted to the sisterhood of states.
Are we not entitled to our equity in this? Should not Vir-
ginia account therefor?

I shall refer the Court a little later to $5,872,000.00,
which Virginia collected in the way of income on the
common assets, but as this was after January 1, 1861,
we only ask that this be considered on the equities of
interest.

Class E. follows. We charge Virginia with $3,710,000.-
00 bank stock. Counsel for Virginia say it was Con-
federate bank stock. I believe the gentleman from New
York used that argument. If you will look at Schedule
H, page 488 of the compiled record, volume 1, you will
see whether or not Confederate bank stock was purchas-
ed. This stock was purchased back in 1812, 1817 and
ArcuMENt or A. A. Litty, Esa. 111

 

1837. If it ever become Confederate bank stock it was
after the trustee assumed control of it and destroyed it
against our will in the smoke of battle.

The former Attorney General of Virginia said this
stock was of no value. Let us see what the Master said
with reference to it. I refer the Court to the Master’s
report, page 192. They say it was worth nothing, but
when we were settling under the Wheeling Ordinance, let
us see what they said and what the master found. He
found the $50,000.00 of stock in the Fairmont Bank was
worth par. He found that the stock of the Northwestern
Bank was worth one and a quarter because it was paying
seven per cent dividends. Virginia’s bank stock was
paying the same or more, not in Confederate money, as
they say, but in the coin of the realm. The Master said,
at page 192:

‘‘Tf under these circumstances the Fairmont
Bank stock was worth par, it seems that the North-
western stock should be worth at least 1-4 more
than par, and I would be justified in applying the
same rule as to value, that I have applied to the
public service corporations, and I therefore add
1-4 to the par value and find the value of the stock
June 20, 1863, to be $427,250.00.”’

That included about $165,000.00 of Northwestern bank
stock in the bank of Jeffersonville, Virginia, of which we
never had any physical or other possession. If our bank
stock was worth one hundred and twenty-five Virginia’s
was worth at least that much. We allege that it was
worth par at least; that it was dividend paying. We in-
sist that Virginia should account for it. How can we find
out who is right, whether it was Confederate bank stock
or whether it was the stock that was originally turned
over into the hands of Virginia, and should have gone
into the sinking fund to help pay the debt?
112 Argument or A. A. Linty, Esa.

 

Mr. Justice Pitney: Where is that report? I thought
that I had it bere.

Mr. Lilly: That is the Master’s report, and I quote
from page 192.

Mr. Justice Pitney: Is it bound in with the others?
I do not seem to have it separate from the other docu-
ments.

Mr. Lilly: Yes. The statement as to the bank stock
is on page 60 in our proposed supplemental answer.

Mr. Justice Pitney: What I am trying to get is the
master’s report.

Mr. Lilly: It is in the master’s official report. I
might say that all of these schedules were shown to the
Virginia Commission by our commissioners, acting under
oath, seeking to learn and know the truth and settle this
vexatious and annoving controversy that has embroiled
the states, and now has many of our citizens wrought
up to blood heat. The West Virginia Commission said
and we say, ‘‘here they are.’? See them and say what
is wrong. Virginia attempts to brush them aside by her
mere ipse dixit.

Now we come to class F. I will admit that there is
some argument pro and con on it as an entire charge.
There were five railroad lines, aggregating five million
and some odd thousand dollars. Virginia with mailed
fist assumed charge and control thereof. She sold those
five lines forming a trunk line known as The Atlantic,
Mississippi & Ohio Railroad Company in 1892, for $4,-
000,000.00. The vendor and the vendee agreed what these
railroads, constituting class ‘‘F’’ were worth, and so the
amount agreed upon is chargeable. If ‘Virginia took in-
sufficient security without our knowledge and lost part
as she did, shall we lose it? Although she has received
$500,000.00 as a result of this sale and appropriated it
to her own use vet she tries to confess and avoid by
Arcument or A. A. Litzy, Esa. 113

saying that it was valueless and an accounting therefor
a vain and useless thing.

The last is class G. and that represents $14,285.076.68
of general assets; and I may say that Governor Letcher
in his message to the Legislature September 30, 1863,
says that the joint assets were worth $37,000,00.00. We
have asked for an accounting for less than that sum. We
make these items $14,285,076.68 because of the lapse of
time and Virginia failing to account as she should have
done only one-forth of par. We were not able to as-
certain in a satisfactory manner the value of the stocks
in this schedule, but out of a spirit of compromise and
an honest desire of settlement, we said ‘‘You can cut
these assets down to 25 per cent of their original cost,
and then give us only 2314 per cent of that amount.’’
How are you going to find out whether they are of that
value or not? We allege it; Virginia denies it. Will you
ascertain their value from the statement or veracity of
the counsel, or from the allegations made in the plead-
ings, or in the proper and orderly way by referring it to
a master?

I respectfully call your attention to what Virginia said
in regard to the James River & Kanawha Canal, and ask
if she is not estopped from denying the value thereof
as alleged. On March 23, 1860, at a time when Virginia
had $3,000,000.00 invested in it, by her legislative enact-
ment, she took stock at par—not at 25 cents on the dollar
ag we are charging her, but stock at par—by paying debts
which the canal company owed, and cancelling certain
other debts which were due her, and then she expended
$200,000.00 not Confederate money, not imaginary mon-
ey, but our money and hers—to purchase 2,000 shares of
other stock in this very company. There was nothing that
intervened in the nine months from March 23, 1860, to
January 1, 1861, to make it worth less than it was on the
date of the purchase of the $7,400,000.00 of stock. If this
114 Arcument or A. A. Liuy, Esa.

schedule was wrong, was not fair, when we were at the
New Willard Hotel trying to compromise and settle with
her, under our legislative sanction, why did not Virgi-
nia say, ‘‘It was not worth this amount?’’

Let us go a little further. I hope this Court will bear
this in mind, even not treating it as a canal proposition,
whether there was a drop of water in it or not, or wheth-
er a boat ever floated on it from 1861 to this good hour,
there was 226 miles of right of way together with valu-
able water rights of which we owned:231% per cent, there
was a graded tow path, water level, 226 miles in length,
from Clifton Forge by Lynchburg along the James to
Richmond, and without our knowledge or consent Vir-
ginia disposed of them. Can a trustee convert or destroy
property of that value in that way without any privity
with us and make no accounting and refuse to account?
We only charge ’her 25 per cent on the entire canal prop-
erty in which Virginia had invested $10,400,000.00 of
joint funds, which by her acts of legislation the same
year she treated as of par, and at $12,000.00 a mile it
would be worth that amount. You could not have bought
the rights of way and graded it, because it was practi-
cally ready for the ties and rails at that time, for $12,-
000.00 per mile. Virginia can give her 7614 per cent
away to Mr. Blaine and others, but she must account to
us for our equities therein. We have had no report of
the sale or gift yet, but she must, we believe, and in equi-
ty ought to account to us therefor.

So these classes make the item of $20,810,397.98, in
which as we have to pay 2314 per cent of the debt, we
claim a corresponding equity of 2314 per cent. This
does not include all of our equities. The Court knows
how we have been rushed for time.

Then on page 60 we give her credit for the Northwest-
ern Bank stock, $210,200.00, and for the Fairmont Bank
stock $50,000.00 making $260,200.00, leaving our remain-
ing equity at $4,630,234.12.
Argument or A. A. Litty, Esa. 115

 

Following on page 61 we charge Virginia with $225,-
078.06 for money collected from West Virginia counties.
We allege that the Confederate Government of Virgin-
ia, after June 20, 1863, came over into our counties and
collected primarily in taxes and dividends $225,078.06,
after all credits were allowed. We do not only own 2314
per cent of that amount but we own all of it. Virginia
had no equity in it.

Virginia asks, dictated to, directed and controlled by
the bondholders, that an immense debt, appalling in its
proportions, be put upon our loyal citizens of West Vir-
ginia which would make them poor and miserable in-
deed,—as poor as any state in the Southland, under the
days of reconstruction, if they shall have to pay $21,-
000,000.00 principal and interest as claimed by the bond-
holders through Virginia. Why should West Virginia
pay that enormous amount, or any other amount in ex-
cess of her offer to the Virginia Commission? Is it be-
cause we got much of the material benefits? Is it be-
cause we were loyal to the union and its flag. or is it be-
cause there is an avaricious aggregation of conscienceless
bondholders, pooled together, who bought much of the
bonds at 5c. on the dollar and now seek to extort unjust-
ly their pound of flesh?

In Mr. Robinson’s reference to page 1019 of the record,
whereby he seeks to explain in regard to the $225,078.-
06 it is quite apparent he was mistaken. This is entire-
ly a different item to that claimed by us. The report of
July 14, 1863, referred to by him shows the balance
$225,279.83 in the treasury of the restored government
of Virginia on June 19, 1863, after making certain de-
ductions. "That was striking the balance in the treasury
of the restored government of Virginia as of June 20,
1863. This $225,078.06 item claimed by us was our
money that the plaintiff took after June 20, 1863 and
we now ask her to account to us therefor. If we must
pay the Wall Street speculators, at the suit of Virginia,
116 Argument or A. A. Litzy, Esa.

 

she should pay us. Are we not entitled to every ‘‘co-
peck’’ thereof?

What was done with the assets? Virginia says that
she has a right to appropriate them to her own exclusive
use and benefit without an accounting; but her constitu-
tion of 1851, Sec. 30, says differently.

‘The general assembly may, at any time, direct
a sale of the stocks, held by the Commonwealth in
internal improvement and other companies; but
the proceeds of such sale, if made before the pay-
ment of the public debt, shall constitute a part of
the Sinking Fund, and be applied wn like manner.’”

That is, unless the debt had theretofore been paid, the
proceeds from the sale of stocks must be used in dis-
charging existing indebtedness.

Section 28 of the Constitution of the restored govern-
ment of Virginia 1864 provides:

“The general assembly may at any time direct
the sale of the stocks held by the Commonwealth
im internal improvements, and other companies.
located within the limits of this Commonwealth,
but the proceeds of such sale, if made before the
payment of the public debt, shall be appropriated
to the payment thereof.’’

The proceeds of these stocks, when sold, as specifically
provided hy law, were to go to the Sinking Fund, not
to discharge Virginia’s two-thirds of the debt, or 7644
per cent of the debt, but to the discharge of the entire
debt.

The provision of Section 8 of the Constitution of 1867
is as follows:

‘“‘The general assembly shall provide by law a.
Sinking Fund, to be applied solely to the payment
and extinguishment of the principal of the State
debt, which sinking fund shall be continued until
the extinguishment of such State debt; and every
law hereafter enacted by the general assembly
ArcuMmeEnt or A. A. Litiy, Esa. 117

creating a debt, or authorizing a loan, shall pro-
vide a sinking fund for the payment of the same.’’

This was embraced in the organic law of Virginia after

she had been restored to and in full fellowship with the
Union.

In addition to what the constitution and statutes of
Virginia provide, as to what was to be done with the
assets, I appeal to a very eminent authority, the Gover-
nor of 'Virginia, Gilbert C. Walker, who declared what
ought to be done with them, and I hope this will be borne
in mind, because, except where he differs with the Court
in one particular, that is the basis of liability, his views
support our contention exactly. Governor Walker, in
1870, in a message to the Legislature, not in 1914, when
Virginia wants to keep the proceeds of the common as-
sets without an accounting, when she wants us to pay
$21,000,000.00 for her own laches and improvident mis-
management of and destruction to our assets as I shall
show a little later—said as follows:

“After deducting from the total debt the mar-
ket or cash value of the assets or securities (bonds,
stocks, etc.) held by either state, which originally
belonged to the State of Virginia, the remainder
of the debt should be apportioned between the two
states in proportion to the population and taxable
valuations of each.’’

This Court said the debt should be apportioned,

‘With reference to the relative resources of the
two debtor populations.”’

Governor Walker continuing said:

‘Tt is a plain and simple proposition, not unlike
the closing up of a copartnership. The assets
must first be applied to the extinguishment of the
liabilities, and, if insufficient for this purpose, the
deficiency must be met by the copartners in pro-
118 Arcument or A. A. Lituy, Esa.

 

portion to the original interest of each respective-
ly in the adventure.’’

This is our contention and position. That is what
we are endeavoring to maintain here, and we have the
word of Virginia’s Governor in support of our proposi-
tion. Virginia at that time recognized our interest in
these assets. She does not do so to-day. She says they
were and are valueless and denies defendants interest
therein. But what did she say by her acts of legisla-
tion on Feb. 9, 1866—Sec. 1—page 458:

“‘Be it resolved by the General Assembly of Vir-
ginia, That the amounts required by the said Act
to be paid to the State of Virginia, shall be held
by the State in trust, subject to an adjustment
of the debt of the State and a dwision of the pub-
lic property between the States of Virginia and
West Virginia, in case the two States shall not be
remitted as one State; provided West Virginia
shall by law ratify the said Act.’’

I now quote from her Constitution of 1864, Sec. 27:

““The general assembly shall provide by law for
adjusting with the State of West Virginia the pro-
portion of the public debt of Virginia, proper to
be borne by the State of Virginia, and of West Vir-
ginia, respectively, and may authorize, in conjunc-
tion with the State of West Virginia, the sale of all
lands, and property of every description, includ-
ing all stocks and other interests owned and held
by the State of Virginia, in banks, works of inter-
nal improvement, and other companies, at the tume
of the formation of the State of West Virginia,
etc.’

Virginia said that she must cooperate with us in the
sale of the common assets. Since then she has appro-
priated them to her own use, although our credit helped
buy them, and our resources must help pay for them.
Argument or A. A. Litty, Esa. 119

 

On Feb. 28, 1866, the General Assembly of Virginia
further recognizing our equities in these assets said:

‘‘The Commissioners appointed under the fore-
going resolution are also empowered and direct-
ed to treat with the authorities of West Virginia,
upon the subjects of a proper adjustment of the
public debt of the State of Virginia, due or incur-
red previous to the dismemberment of the State,
‘and of afair division of the public property ;’ sub-
ject, however, to the approval or disapproval of
this general assembly.’’

This resolution provided for ‘‘a fair division of the
public property.’’ Are we getting a fair division there-
of if Virginia takes all of it?

In her Act of 1870, she said that this property should
be fairly and equitably divided.

‘1. Be it enacted by the General Assembly,
That three Commissioners, resident citizens of
this State, be appointed by the Governor to treat
with the authorities of West Virginia upon the
subject of a proper adjustment of the public debt
of the State of Virginia, due or incurred previous
to the dismemberment of the State, ‘and a fair
division of the public property’, provided, how-
ever, that the action of the said Commissioners
shall be subject to the approval or disapproval
of this General Assembly.”’

Mr. Justice Pitney: I do not yet understand why
West Virginia did not bring up these matters which
you now refer to, at the former hearing.

Mr. Lilly: I will come to that. I will answer it now.

Mr. Justice Pitney: Here are plain provisions of
the constitutional law in Virginia.

Mr. Lilly: I hope, and indeed I know, that I do not
intentionally run counter to the opinion of the Court
that from the date of the birth of West Virginia it was
in the mind of the founders and fathers that the Wheel-
120 Argument or A. A. Litiy, Esa.

 

ing Ordinance should control in settling the common
debt.

Mr. Justice Pitney: In whose mind?

Mr, Lilly: In the minds of the people of West Vir-
ginia, both old and young. They never heard of such a
thing as Article 8, Sec. 8 of the Constitution being a
basis of settlement.

Following further, when this suit was brought the bill
was predicated on the Wheeling Ordinance. It is true
that it quoted Section 8 of Article 8, but it did it inci-
dentally. When the demurrer was overruled in 206
United States, this Court said that the means of ascer-
taining the debt would have to be, or should be, in ac-
cordance with the Wheeling Ordinance. I am showing
you the reason why counsel overlooked the assets and
why they were not germane.

Mr. Justice Pitney: Well, but the order of reference
—the decree of reference—was made after that, was it
not?

Mr. Lilly: Yes, I am coming to that. I want to say
that the answer was in response to the bill, and it was
defending under the Wheeling Ordinance, and that the
decree of reference was primarily predicated upon it,
the last five paragraphs, certainly. The master’s re-
port made the Wheeling Ordinance the basis, the argu-
ments were made on the theory of the Wheeling Ordi-
nance, and the case was submitted on final hearing and
this, I think the record will disclose, on the theory of
the Wheeling Ordinance, and not until March 6, 1911,
did the Court say, ‘‘We are of opinion that her share
should be ascertained in a different way.’’

Mr. Justice Pitney: Counsel said yesterday fine Mr.
Conrad agreed that the Wheeling Ordinance did not
govern it.

Mr. Lilly: Yes, but the Attorney General of Virginia
and the Court took a different view when it overruled
Argument or A, A. Litty, Esa. 12]

 

the demurrer, and gave the reasons why the Ordinance
should prevail.

Mr. Justice Pitney: Was not that in the minds of
the parties, and was not that the situation at the time
of this order of reference?

Mr. Lilly: With due deference, I am hardly able to
agree that that was the decree of reference, on the con-
trary, now viewing it, I think the bill was drawn with
a view of studiously avoiding the question of assets.

Mr. Justice Pitney: I do not know. That is the rea-
son I am asking the question.

Mr. Lilly: From the decree referring the cause to the
master I read as follows:

‘“The master will make his report with all con-
venient speed and transmit therewith the evidence
on which he proceeds, and is to be at liberty to
state any special circumstances he considered of
importance, and to state such alternative accounts
as may be desired by either of the parties, subject
to the direction of the court.’’

What I understand, if the Court please, by an alter-
native account, is that there must be some primary
account on which to: base the alternative account. That
is, when the master made a certain finding if the other
side thought the facts justified another ruling, he made
an alternative statement of the facts. We say that was
the decree, we have given our reasons, and we predicate
them upon the basis as first established by this very
court itself, as well as on the statement of Mr, Ander-
son, the Attorney-General of Virginia, who said that
the Ordinance was an inequitable way, but that was the
law and they could not go around it. Then General
Anderson said that it ought to be settled on the theory
of a partnership accounting.

If through inadvertence or mistake of counsel ‘as to
the interpretation of the State’s rights and a proper
122 ArcumeEnt or A. A. Liuy, Esa.

 

defense of this suit, these equities have been left out,
what is the Court going to do about it? Is the Court,
in view of Rules Nos. 19 and 34, by way of analogy—
and you are familiar with them—going, in a cause of
original jurisdiction where sovereign states are parties
and where the same strict rules do not govern, to say
that even before any final decree is entered the defend-
ant’s rights shall be barred and her proposed supple-
mental answer shall not be filed? Rule 19 does not re-
quire any particular diligence, but we have shown dili-
gence and given the best of reasons based on the facts
why these assets were not considered before. As we
view it, we think they are sufficient. But suppose they
are not. Is this Court in a case of original jurisdiction,
unhampered and unrestrained by court rules or legal
precedent going to make us pay the debt and not get
credit for our assets relating to this debt?

If the Court please, I now come to the second division
of this case, and that is the question of interest. I make
this assertion unchallenged, that by all the decisions of
the Supreme Court of this nation, and the states of the
Union, so far as I have been able to learn, with the one
possible exception—the Higginbotham case, interest is
not chargeable against a sovereign state unless provided
for by legislative enactment or by a lawful contract of
its executive officers.

The attention of the Court has been called to the
adroit manner in which the opposing counsel has treat-
ed the Higginbotham case. Counsel for plaintiff say
that the law of Virginia became the law of West Vir-
ginia, and hence we are bound by the Higginbotham
case. That is their contention. In the Higginbotham
case the question of interest was not directly raised. It
was provided by Section 8 of Article 11 of our Consti-
tution of 1861 that the Virginia statutes and Virginia
decisions and the common law prior to June 20, 1863,
ArcuMENT oF A. A. Litty, Esa. 123

 

was to be and become our law. But this decision was
rendered in 1874 and hence it could hardly be even per-
suasive authority.

What were the Virginia decisions? In Commonwealth
v. Lilly, 1 Leigh, 525, it was held, the question being
plainly raised before the Court, as I now recall, that
no interest should be allowed. This opinion is binding
on West Virginia, and Virginia as well, because ren-
dered before June 20, 1863.

Then in the case of The Auditor of Public Accounts
vs. Duggar and Foley, 3 Leigh, 260, interest was again
refused in the case in which the Attorney General of
the State raised the issue that a State in no case should
pay interest. So that was the law of Virginia when we
were a part of her and became the law of West Vir-
ginia. Virginia’s law subsequent to that time does not
concern us. But counsel say that the contract was to
be performed in Virginia. I do not know upon what
theory. It was West Virginia that promised to pay.
But as I understand it, it makes no difference which
State, because the same rule of law, that a sovereign is
not chargeable with interest, prevailed in the entire
Commonwealth including Virginia and West Virginia.

Mr. Justice Pitney: Now suppose that rule applies
to an obligation that originated at the time of the sepa-
ration? What have you to say as to the application of
that doctrine to an obligation which originated before
that, and provided for the payment of interest? I am
speaking of it not as a new obligation but as an old obli-
gation.

Mr. Lilly: The Court has reference to Section 8 of
Article 8 of the Constitution?

Mr. Justice Pitney: I am trying to think of the real
situation.

Mr. Lilly: Opposing counsel admitted in one of the
briefs that a sovereign state is not liable for interest
124 Arcument or A. A. Litzy, Esa.

 

unless provided for by statute, or by a contract legally
made by its executive officers. And, of course, this an-
swers your honor’s question.

Now we come to See. 8 of Art. 8 of the Constitution
which the Court says is the basis of the contract, and
this debt of Virginia being an interest bearing obliga-
tion as between Virginia and her bondholders, as of
January 1, 1861, would not interest, when we assumed
to pay Virginia a part of this debt, attach by its own
force to us, and would we not be liable for interest? This
is what I understand the Court to ask. In order to
determine this we should understand the legal meaning
of the word ‘‘debt’’ as used in that section. The word
‘““debt,’’ when used in a constitution, is used in its ordi-
nary every day meaning; and being so used in the con-
stitution the word ‘‘debt,’’ in the decisions, means the
principal of the debt, and any previously accrued inter-
est thereon. So, when we interpret the word ‘‘debt,”’
as referred to in our Constitution of 1861, we must in-
terpret it in its popular, ordinary and usual significance,
and this, as the decisions say,.is the principal of the
debt and accrued interest, although the obligation is
interest bearing. The word ‘‘debt’’ does not include
after accruing interest. I desire to refer the Court—

Mr. Justice Pitney: Where are the creditors going
to get any interest from?

Mr, Lilly: They ought to get part of it from Virginia
by reason of her appropriating our assets to the pay-
ment of her debt.

Mr. Justice Pitney: That is another question en-
tirely.

Mr. Lilly: She ought to contribute to the payment
of interest, and if those who speculate on bonds at a
greatly reduced price have no legal right to collect in-
terest from a sovereign state, who has a right to com-
plain?
ArcumEnt or A. A. Litty, Ese. 125

Mr. Justice Pitney: That is another question.
Mr. Lilly: I am trying now to follow Section 8 of

Article 8. On page 9 of the record, here is what the
contract says:

‘‘An equitable proportion of the public debt.’?

We say that the ‘‘public debt”’ as used in that instance,
and as Virginia must have known, meant the accrued
interest and the principal, but not the future “aceru-
ing’’ interest.

‘“‘An equitable proportion of the public debt of
the Commonwealth of Virginia prior to the 1st day
of January, 1861.”’

Now, we are to assume an equitable proportion prior
to January 1, 1861. That is the contract. It continues:

‘‘Shall be assumed by the State.’

My friend makes the word ‘‘shall’’ mean ‘‘have’’ or
“thad.’’ But it says, ‘‘shall be.’? We did not assume
a part of this debt on the theory we should pay a part.
of an undivided debt and Virginia pay a part of an un-
divided debt, but we only assumed it as of January 1,
1861, after it should be ascertained by the legislature,
and after our part was segregated from the part owed
by Virginia.

Mr. Justice Pitney: But I do not see what you mean
by being an assumption.

Mr. Lilly: I am trying to get to that. "The main rea-
son why interest does not follow is because the law so
says. It is the common law, and so recognized by all
the courts, Federal and State, that interest is not
chargeable to a state unless agreed to by an act of leg-
islation or legal contract of its executive officers. Vir-
ginia claims that interest follows the principal as the
shadow follows the substance. This may be true as to
private parties, but not as to a state. There was no
126 Argument or A. A. Litzy, Esa.

 

substance for the shadow to follow or substantive debt
as to West Virginia until it had been ascertained by
the legislature of West Virginia, until the debt was
separated, until by the constitution the amount was
known in the manner designated, and interest would not
attach at least until that time. It might be different as
to a private individual.

Mr. Justice Pitney: What debt are you talking
about? Are you not talking about the debt of Vir-
ginia?

Mr. Lilly: Yes.

Mr, Justice Pitney: That did exist, did it not?

Mr. Lilly: Certainly, as of January 1, 1861. But it
says that West Virginia shall assume her equitable por-
tion and the same is to be ascertained by the legislature.
When? Mind you, if West Virginia had meant that she
was going to pay the accrued interest, she would have
said so. But instead of so saying she declared she
would pay the ‘‘accruing interest,’’ interest that would
accrue after the debt was ascertained. West Virginia
declared that after the debt is ascertained, after it is
segregated, after this has been done by the legislature,
then she would establish a sinking fund to pay the ‘‘ac-
cruing interest,’’ not the ‘‘accrued’’ interest. ‘‘Inter-
est’’ is used only once in Sec. 8. It says it is to pay the
‘‘accruing interest.’’ Accruing interest on what? On
the debt not as of January 1, 1861, with its accumulated
interest up to the time it is ascertained, but the interest
on the principal of the debt after it shall have been
ascertained. Not Virginia’s debt, but our debt. We
had no contract with the bondholders. We had a con-
tract with Virginia, and only by it are we bound, and
that contract does not obligate us to the payment of in-
terest, until the amount of the debt is ascertained.
Therefore, we shail pay the ‘‘accruing interest,’’ the
future iberest after the amen of the debt shall have
been ascertained.
Arcument or A. A. Litty, Esa. 127

 

May I suggest to the Court that on May 13, 1862,
more than a year after January 1, 1861, the date when
we were to assume our part of the debt, Virginia, on
the condition that we would pay the accruing interest
on the debt when ascertained, gave her consent to the
formation of West Virginia. We were not an entity
for about three years after January 1, 1861. Who was
to pay the interest in the meantime? Certainly we
could not. Therefore Virginia would have had to pay
it. Then when she entered into the contract that we
were to assume the debt as of January 1, 1861, and pro-
vide for the accruing interest in the future, why did the
contract not read ‘‘and the accrued interest between the
date of the assumption of liability and the date when
the amount thereof would be ascertained?”’

I may not have made myself plain. It is not of easy
interpretation. But I believe, and the more I study it
the more I am confirmed in that belief, that when you
read Sec. 8, Art. 8, carefully and give the proper inter-
pretation to it, it means this; that West Virginia said,
‘We will assume our part of the debt as of January 1,
1861,’ ‘‘debt’’ being used in its ordinary sense, and then
there would be created a sinking fund and we would pay
the ‘‘debt,’? and future accruing interest after the
amount of the debt had been ascertained.

The law was known to be then that interest would
not follow or be chargeable to West Virginia, that is
that the interest would not follow—unless it was so
denominated in the bond. Some one had to pay it. We
could not pay it. Virginia paid it. We could not estab-
lish a sinking fund until we knew what the amount our
part of the debt would be, because we had nothing to
base it on, ‘The only time that we could establish a
sinking fund, was after the debt was apportioned, we
were not to pay the accrued interest thereon from Janu-
ary 1, 1861, till the debt was apportioned. The lability
128 Arcument or A. A. Liuzy, Esa.

 

for interest was not to attach except for accruing inter-
est after the principal has been ascertained.

We were to begin to pay accruing interest when our
part of the debt was ascertained. It was thought that
the amount of the debt would be soon settled, and Vir-
ginia was certainly to pay up to 1863, because she had
the assets, because she had her own political entity in-
tact until after West Virginia assumed her position in
the sisterhood of states.

Counter attempts at settlement followed, and it ram
along from time to time. I desire now to discuss hur-
riedly who was to blame for the delay. That question
was asked by the Court yesterday, and quite properly
so. West Virginia was not to blame from 1861, up to
June 20, 1863. She had no political existence. From
1863, to April 2, 1866, she was not to blame, because
the only diplomatic relations between the former friends
consisted of canister, shell and the bayonet. In 1866,
what occurred? Virginia said early in that year, ‘‘We
want you to come back; or, if not, we will divide the
public property and adjust the debt.’’ Our legislature
did not meet until 1867,

In December, 1866, a suit was instituted by Virginia
attacking the integrity of West Virginia’s territory,
and because of that we could not adjust the debt; but
being anxious and willing to adjust it, as soon as the
suit was disposed of West Virginia attempted to adjust
the debt, and immediately after the termination of the
suit appointed a commission to treat with ‘Virginia as.
to its adjustment.

In 1870 Virginia sent her commission to West Vir-
ginia to treat with us. We also appointed a commission
to treat with Virginia. This is not.in our brief. That
commission consisted of members of the House and the
Senate, of the West Virginia Legislature, who treated
with the Virginia Commission, but made no _ report.
ArcumMEntT or A. A. Litty, Esa. 129

 

Then, as above referred to, in 1871, as soon as the suits
attacking our territorial integrity was dismissed which
was on March 6, 1871, in nine days thereafter, on March
15, the Bennett Commission was appointed, to treat
with Virginia. That commission went to Virginia, but:
there was no consideration shown it. They said their’
prior commission had been surperseded and had no-
authority; however, the Virginia Legislature was yeti
in session. i

In 1871, in March of that year, Virginia apportioned’
the debt, without our knowledge or consent, at the very’
time when we had a commission willing to and appoint-.
ed for the purpose of treating with her. In 1871 Vir-’
ginia arbitrarily divided the debt in a way that this
Court has declared was inequitable, and I-say advisedly
from that very hour for twenty-three years Virginia’
was as silent as the grave on the debt toward West Vir-
ginia.

In 1894 she appointed the present commission, but
said as a condition precedent, ‘‘You cannot treat, only’
on the two-thirds basis.’’ That condition prevailed, re-
gardless of the Act of 1900, up to January 25, 1905,
when a sub-committee for Virginia came over with its
hands tied in the same way, and early in the next year
this suit was brought. Virginia says the debt never
could have been settled in any other way. She had an
open forum. She has waited almost one-half a century
and now says that it will not oppress us if interest is’
added. I was born fifteen years after the War. I am’
in middle life, with gray hair; yet with compounded
interest, the accumulation of ages, Virginia comes to me
and my people to settle for a debt, from the proceeds of,
which we got only $2,811,000.00 in the way of improve-
ments, Virginia retained the assets which that money
in the main part bought, and now demands millions—
not for her own people, but for the capitalists who spec-
130 Argument or A. A. Litiy, Ese.

 

ulate upon those distressed by the misfortunes of war.

Now we come to the question of interest on the broad
equitable basis concerning which the Court asked. In
our offer of settlement to Virginia we said: ‘‘There
are other reasons why interest should not be charged.’’
The first is that Virginia turned us without dowery into
a desolate primeval wilderness, without a state institu-
tion, with only a few thousand dollars invested in a
foundation in the Weston Asylum. Virginia kept her
capital, her penitentiary, her educational and eleemosy-
nary institutions, valued by the Bennett Commission
at $3,875,000.00. We do not ask Virginia to account
therefor except as an equitable offset to interest, but if
interest is to be charged direct then as this is to be an
‘‘equitable’’ settlement, our equities in these assets
should be allowed.

Not only that, but Virginia, after the date of the divi-
sion of the state, collected $5,782,000.00 income from
common assets which is another general equity to offset
interest. We do not ask any part of this unless the
eourt should be inclined to consider interest. Why?
Because she earned this after the property went into
her hands, after we were separated. Again we say that
many of these stocks and bonds are lost, and the record
shows it, the amount of which is not known, but probably
amount to five million of dollars. We allege also al-
though it may not be a strict legal defense, yet, it is an
equitable one, and it is alleged in our supplemental an-
swer and is not denied by Virginia’s response, that
many of these bonds, and in fact most of them, were
bought on the curb, bought at small, nominal amounts,
and that therefore, when you come to consider the ques-
tion of interest, the man who paid five or ten cents on
the dollar for them is not entitled, under the conditions,
to ask for interest on bonds bought at such reduced
rates.
Argument oF A. A. Litty, Esa. 131

 

Not only this, but under the funding acts of 1871,
1879, 1882 and 1892, Virginia scaled her debt more than
$10,000,000.00 in addition to the $3,333,212.26 that was
allowed by this Court because of the scaling in 1871;
so that ‘Virginia keeps the State institutions, of the
value of January 1, 1861, of at least $3,875,000.00, she
keeps $5,872,000.00 dividends on stocks and interest on
loans; the creditors buy these stocks up practically for
nothing, she has scaled her debt both principal and in-
terest repeatedly, and after fifty years, when we think
Virginia is primarily to blame for the delay, she now
seeks to charge us with an unjust amount of the princi-
pal, and seeks to add millions of interest to it, thereby
compounding interest, which if allowed the yearly in-
terest would take more than the current revenue raised
by the state tax, and in a land where there is peace and
happiness, erected not by Virginia’s help, but created
by our own frugality, economy and industry, a debt ap-
palling in its magnitude that we did not create, a debt
that we got but little benefit of, is to be compounded and
like a black lowering cloud overhang the giant moun-
tains and fair valleys of West Virginia for generations
unborn.

Mr. Justice Pitney: Suppose that this Court had the
same jurisdiction in a suit by the bondholders, and this
action were brought by bondholders upon the obliga-
tions that preceded the separation, and which were evi-
denced by Section 3; what would be the application?

Mr. Lilly: In the first place, it is a violent assump-
tion, because they could not; and in the next place, if
they could, they could not collect interest from. us, be-
cause we limited the debt as of a certain date, and we
said we would assume it as of that date. We promised
as a sovereign state. If an individual had promised, it
might be different, the law being as to a state that unless
the contract stipulates for the payment of interest, in-
132 Argument or A. A. Linty, Esa.

 

terest would not follow the debt of its own force,
whether it is claimed as a matter of damages or as a
matter of contract. We would say to the bondholders,
although the contract was with Virginia, ‘‘Here is the
contract, which provided we would assume our equitable
portion of the debt, and the word ‘debt’ has a legal
significance, which being given its ordinary and proper
construction, means the principal and the theretofore
accrued interest?’? We would also say that as soon as
we ascertain our part of the debt and segregate it, it
would then become our individual debt and that then
we would establish a sinking fund, not to pay the ac-
erued interest, but the principal as it existed on Janu-
ary 1, 1861, and the ‘‘accruing interest.”’

Mr. Justice Pitney: That would be a repudiation of
a part of the obligation that did exist.

Mr. Lilly: I do not think so.

Mr. Justice Pitney: If the suit was brought on the
original obligation?

Mr. Lilly: Take what the obligation says. Our in-
terpretation of that constitution is that it does not im-
pose any lability to pay interest at all until after the
debt is ascertained, and then we are to pay the ‘‘accru-
ing interest’? and not the interest that has already
accrued; and I might add that Virginia, since the sepa-
ration, has had the benefit of this property, that is, the
proceeds of it, the usufruct, without an accounting, and
that while the time has been delayed as to the settlement
with her, as we view it we are not to blame, and that it
was her business to make the accounting and the settle-
ment with us. We are willing to stand on Section 8 of
Article 8. By that we are to be judged. It does not
impose interest till the principal has been ascertained.

In connection with that I desire to say that West Vir-
ginia’s part of the debt was unliquidated, and under all
authorities an unliquidated debt does not draw interest.
ArGuMENT or A. A. Linty, Esa. 133

 

But the Court may say that it was liquidated because it
was known how many bonds were outstanding and the
amount that was due the bondholders. But our obliga-
tion was not to the bondholders; it was to Virginia,
else she could not sue, and the amount of West Vir-
ginia’s habilitv to Virginia has not been liquidated to
this good hour. If the common assets are ascertained,
if the accounting we desire is had, the debt not having
been liquidated, it not having been ascertained, it could
not draw interest. So for that reason no interest could
be charged.

We say that Virginia has been guilty of laches. She
says that we have been guilty of laches. That is for the
Court to determine. We say that she has had more
than $20,810,000.00 of the joint assets that she has not
accounted for at all. We say that the debt is unliqui-
dated, and that she could not charge interest until it is
liquidated. We say that a sovereign state, unless it has
contracted to pay interest, does not have to pay interest,
and we say that we have not contracted to pay interest,
and I bespeak a patient and careful investigation, such
as I know this Court will make, of Section 8, Article 8,
and an interpretation thereof—which being interpreted
in the light of reason, by either a legal or equitable test,
no responsibility for interest will attach to us.

When you come to the words ‘‘accruing interest,’’
that does not revert back, but applies to the future, at
the time the amount of the debt is ascertained and be-
cause of our independent debt to Virginia, and not
otherwise.

We want this case settled on an equitable basis, as
determined by the fixed rules of law. Regardless of
who has spiked the wheels of progress, who has been
derelict, who has been to blame for the delay, so long as
I am Attorney General of the State of West Virginia,
there will be no disposition on my part to impede the
134 Argument or A. A. Litzy, Esa.

 

speedy and honorable settlement of this important con-
troversy. If this is referred to the master, it is done
under such conditions as the Court may prescribe. This
Court has a right to permit the filing of a supplemental
answer or other pleading at any time, in its discretion,
guided by its own enlightened sense of justice.

In view of the fact that this is a case of original juris-
diction wherein this Court is untrammeled by technical
rules of procedure, in view also of the fact that this
Court has declared that this case must be treated in the
liberal untechnical manner proper for dealing with
quasi-international controversies, those million and half
people beyond the Alleghenies, between here and where
rolls the great Ohio, believe that through the complexi-
ties and difficulties of this suit this Court will guide our
footsteps aright.
OPINIONS

Supreme Court of the United States

IN THE SUIT OF

Virginia vs. West Virginia
Opinion Overruting DemuRRER. 137

 

Opinion Overruling Demurrer to Bill.

[May 27, 1907.]

Commonwealth of Virginia

Vv

State of West Virginia.

1.

SUPREME CourRT—Original Jurisdiction—Suits Between States.

The original jurisdiction of the Supreme Court of the United
States extends to a suit by the commonwealth of Virginia
against the State of West Virginia to determine the amount due
to the former by the latter as the equitable proportion of the
public debt of the original state of Virginia which was assumed
by West Virginia at the time of its creation as a state.

SAME,

The question of the liability of the state of West Vir-
ginia for its equitable proportion of the public debt of
the commonwealth of Virginia was nut so submitted to the
West Virginia legislature as to defeat the original jurisdic-
tion of the United States of a suit between the states by the
provision of W. Va. Const. art. 8, sec. 8, that an equitable
proportion of such public debt shall be assumed by the state,
and the legislature ‘‘shall ascertain the same as soon as
may be practicable, and provide for the liquidation thereof,”
since such provision, when read in pari materia with the
Virginia ordinance of August 20, 1861, that the new state
shall take upon itself a just proportion of the public debt, to
be ascertained as therein provided, must be regarded as
meaning only 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.

Pieapinc—In Suit Between States—Questions Open on De-
murrer.

The question whether the commonwealth of Virginia has
been released from all liability on account of the public
debt evidenced by bonds of the state outstanding on January
1, 1861, will not be passed upon on a demurrer to a Dill
filed by that state against the state of West Virginia, which
seeks an adjudication of the amount due the former by the
latter as the equitable proportion of the public debt of the
original state of Virginia which was assumed by West Vir-
138

Vircinia vs. WEST ‘VIRGINIA.

ginia at the time of its creation as a state, but the considera-
tion of such question will he postponed until final hearing.

SAME.

Consideration of the objections of multifariousness, mis-
joinder of parties and of causes of action, may properly
be postponed until the final hearing on a bill filed by the
commonwealth of Virginia against the state of West Vir-
ginia, which seeks an adjudication of the amount due the
former by the latter as the equitable proportion of the public
debt of the original state of Virginia which was assumed by
West Virginia at the time of its creation as a state.”

Messrs. Wm. A. AnpERSon and Hotmes Conran, for
Plaintiff.

Messrs. Cuas. E. Hoae, C. W. May, Attorney General
of West Virginia, W. Mottonan, Geo. W. McCurntI10, and
W. G. Matruews, for Defendant.

This is a bill filed, on leave, February 26, 1906, by the
Commonwealth of Virginia against the State of West
Virginia.

The bill averred that—

“On the first day of January, 1861, complainant was in-
debted in about the sum of $33,000,000 upon obligations
and.contracts made in connection with the construction of
works of internal improvement throughout her then terri-
tory. By far the greater part of this indebtedness was
shown by her bonds and other evidences of debt, given for
the large sums of money which she from time to time had
borrowed and used for the above purpose; but a portion of
her liabilities though arising under contracts made before
that date, had not been covered by bonds issued for
their payment.

“In addition to the above liability to the general public,
there was a large indebtedness evidenced by her bonds and
other liabilities held by and due to the Commissioners of
the Sinking Fund and the Literary Fund of the State, as
created under her laws amounting, the former to $1,462,-
993.00, and the latter to $1,543,669.05 as of the same date.

“The official reports and records showing the exact char-
acter and amounts of the public debt thus contracted and how
Oprnton Overruting Demurrer. 139

 

the same was created, are referred to, and will be produced
upon a hearing of the case.

“(2.) That portion of the territory embraced in what
constitutes the present territorial limits of Virginia was
prior to that date devoted mainly to agriculture, and to some
extent to grazing and manufacturing, which afforded its
chief sources of revenue, while that portion included in what
now constitute the State of West Virginia had vast potentiali-
ties of wealth and revenue in the undeveloped stores of
mineral and timber, which had been known for many years
prior to the date named, and their prospective values, if
made accessible to the markets of the country, were under-
stood to be well nigh beyond computation. It was to hasten
and facilitate the development of these sources of wealth
and revenue by the construction of graded roads, bridges,
canals and railways, extending through the State from tide-
water towards the Ohio River, that the Commonwealth of
Virginia, in the first quarter of the Nineteenth Century,
entered upon a system of public internal improvements,
which it was contemplated should include the entire terri-
tory of the State, and embraced in its design the construc-
tion of public works adapted, not to the needs of any one
portion of the State alone, but of the entire State, as a unit
of interest. The larger part of these works were con-
structed East of the Appalachian range, as leading up to the
undeveloped territory West thereof, but a very considerable
portion of them were, at an expense of several millions of
dollars, constructed West of said range within the territory
now included in the State of West Virginia; and the com-
pletion of gome of the main lines of improvement beyond
the said range and through to the Ohio River, since the
first day of January, 1861, has increased to a very great
and material extent the values of real estate, including coal ,
and timber, in the said territory now included in West Vir-
ginia, thus carrying into effect the original scheme of im-
provement, which could not have been done had not the lines
East of said range been first constructed; and your Oratrix
believes and avers that the property values within the
limits of West Virginia have been enormously enhanced
in a large measure by reason of these improvements. The
money appropriated to the payment of the annually accruing
interest on the said debt, prior to January 1, 1861, and to
the formation of the Sinking Fund for the ultimate redemp-
tion thereof, was derived from taxes imposed upon the prop-
erty subject to taxation throughout the entire State. The
first of this indebtedbness to be contracted was a small
140

Virqinta vs. WEST ‘VIRGINIA.

amount borrowed by the State in the year 1820 and the debt
was thereafter from time to time continued and increased
by renewals and new loans until it reached the amount
above stated in 1861. y

“(3) The Commonwealth of Virginia was induced to
enter upon the construction of this general system of in-
ternal improvements, in a very large measure for. the pur-
pose of developing the aforesaid resources of the western
portion of the State, now constituting the State of West
Virginia, thereby ameliorating the condition of her citizens
residing therein; and it was with this veiw that she took
upon herself the burden of the public debt for which her
bonds were issuéd, without which debt.such imprevements
could not have been undertaken. In corroboration of. this
view it will appear from an inspection of the legislative
records of the State, where the vote carrying the appropria-
tions for such public improvements was recorded, that in
nearly every instance a majority of those members of the
House and Senate of the original State, who then represent-
such appropriations. Indeed it appears from those records
that a great majority of the Acts of the legislature of Vir-
ginia under which said indebtedness’ was created, would
have failed of their passage, had the representatives from
the counties embraced in what ig now West Virginia op-
posed their enactment, and that a very large proportion of
said indebtedness was actually contracted over the votes of
a majority of the representatives from the counties and
cities embraced in the limits of the present State of Vir-
ginia. This will be found to be true, not only in the legis-
lature for one single session, but in the legislatures for
many successive years, thus showing it to have been a fixed
policy of the people in that portion of the State now consti-
tuting West Virginia to participate in, support and carry out
this general plan of internal improvements in the State.

“4, The development of this system of public improve-
ments thus entered upon was, from its character and ex-
tent, necessarily progressive, and the same extended with the
general growth and increasing needs of the State, and was
incomplete, as above stated, in 1861, though a very consid-
erable portion of such improvements had, prior to that time,
been constructed as above stated, in the territory now con-
stituting West Virginia, in order to meet the needs of the
people of that portion of the State for their local purposes.
As early as the year 1816 a Board of Public Works was
created by law for the State, the members of which were
elected by the voters of the State at large, and this Board
Opixtoxn OversuLiIngc DEMURRER. 141

 

had in charge the construction and supervision of all the
works of public improvement in this State. The annual
reports of this Board will be referred to for information as
to the character, extent, cost and location of the public
works and internal improvements constructed in the State
prior to January ist, 1861. The amounts expended upon
the construction of these works in what is now West Vir-
ginia can only be accurately ascertained by an examination
of the numerous entries in the records of this Board ex-
tending through a number of years and showing such ex-
penditures as made from time to time.

“5. On the 17th of April, 1861, the people of Virginia,
in general convention assembled, adopted an ordinance by
which it was intended to withdraw Virginia from the Union
of the States. From this action a considerable portion of
the people of Virginia dissented, and organized a separate
government which was known and recognized by the gov-
ernment of the United States as the ‘Restored State of Vir-
ginia,’ and will be hereafter referred to in this bill as the
‘Restored State.’

“6, On the 20th day of August, 1861, the Restored State
of Virginia, in convention assembled, in the city of Wheel-
ing, Virginia, adopted an ordinance to ‘provide for the for-
mation of a new State out of the portion of the territory
of this State;’ Section 9 of which ordinance was as follows,
to-wit:

‘9. 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 by charg-
ing to it all the state expenditures within the limits thereof,
and a just proportion of the ordinary expenses of the State
government since any part of said debt was contracted, and
deducting therefrom the moneys paid into the Treasury of
the Commonwealth from the counties included within the
said new State during said period. All private rights and
interests in lands within the proposed State, derived from
the laws of Virginia prior to such separation shall remain
valid and secure under the laws of the proposed State, and
shall be determined by the laws now existing in the State
of Virginia.’

“7 On the 31st day of December, 1862, an Act was
passed by the 37th Congress of the United States providing
that the new State thus formed in pursuance of the ordi-
nances of the Wheeling convention above referred to,
should, upon certain conditions, be admitted into the Union
by the name of West Virginia, with a constitution which had
9

Vireinia vs. WEST VIRGINIA.

 

theretofore been adopted for the new State by the people
thereof, such conditions being that a change should be made
in such proposed constitution in regard to the liberation of
slaves therein; and it was provided by this Act of Congress
that whenever the President of the United States should is-
sue his proclamation stating the fact that such change had
been made and ratified, thereupon the Act admitting the new
State into the Union should take effect sixty days after the
date of such proclamation. Such proclamation declar-
ing these conditions to have been complied with was
duly made by President Lincoln on April 20th, 1863, and
West Virginia, in conformity therewith and by the operation
of said Act of Congress, was admitted into the Union as a
State on the 20th day of June, 1863; and thereupon the
State of West Virginia became fully organized, and each of
its departments of government commenced operation on the
date last named.

“8. Pending the admission of the State of West Virginia
to the Union the General Assembly of the Restored State of
Virginia passed February 3, 1863, the following <Act.:

‘That all property, real, personal and mixed, owned by,
or appertaining to this state, and being within the bound-
aries of the proposed State of West Virginia, when the same
becomes one of the United States, shall thereupon pass to,
and become the property of the State of West Virginia, and
without any other assignment, conveyance or transfer or
delivery than is herein contained, and shall include among
other things not herein specified all lands, buildings, roads,
and other internal improvements or parts thereof, situated
within said boundaries, and vested in this state, or in the
president and directors of the literary fund, or the board of
public works thereof, or in any person or persons for the use
of this state, to the extent of the interest and estate of this
state therein; and shall also include the interest of this
state, or of the said president and directors, or of the said
board of public works, in any parent bank or branch doing
business within said boundaries and all stocks of any other
company or corporation, the principal office or place of
business whereof is located within said boundaries, standing
in the name of this state, or of the said president or directors
or of the said board of public works, or of any person or
persons, for the use of this state.’

‘That if the appropriations and transfers of property,
stocks, and credits provided for by this act, take effect, the
State of West Virginia shall duly account for the same in
the settlement hereafter to be made with this state, pro-
Opinion Overruting DemurRRER. 143

 

vided that no such property, stocks and credits shall have
been obtained since the reorganization of the state govern-
ment.’ ”’

Complainant charged ‘‘that the property which was by the
operation of this Act appropriated and transferred from the
State of Virginia to the State of West Virginia, and which
was subsequently received and enjoyed by the State of West
Virginia, consisted of a number of items, and the value of it
amounted in the aggregate, to several millions of dollars,
the exact amount your Oratrix is unable at this time more
definitely to ascertain and state. That of the bank stocks
alone, which were transferred under the operation of this
Act, the State of West Virginia realized and received into
her Treasury from the sale thereof about Six Hundred
Thousand Dollars; and that no part of the property so re-
ceived by West Virginia had been obtained by Virginia since
April, 1861”

“9, And by a further act of the General Assembly of the
Restored State of Virginia passed on the next day, February
4th, 1863, it was enacted:

‘1. That the sum of One Hundred and Fifty Thousand
Dollars be, and is hereby appropriated to the State of West
Virginia out of moneys not otherwise appropriated, when the
same shall have been formed, organized and admitted as one
of the States of the United States.

‘2. That there shall be, and hereby is appropriated to the
said State of West Virginia when the same shall become one
of the United States, all balances, not otherwise appro-
priated, that may remain in the treasury, and all moneys not
otherwise appropriated, that may come into the treasury up
to the time when the said State of West Virginia shall be-
come one of the United States: provided, however, that when
the said State of West Virginia shall become one of the
United States, it shall be the duty of the auditor of this
State, to make a statement of all the moneys that up to that
time, have been paid into the treasury from counties located
outside of the boundaries of the said State of West Virginia,
and also of all moneys that up to the same time, have been
expended in such counties and the unexpended surplus of
all such moneys shall remain in the treasury and continue
to be the property of this State.’

“And this last named sum of One Hundred and Fifty
Thousand Dollars together with other sums belonging to
the State of Virginia, were turned over to and received or
collected by the new State of West Virginia after its forma-
tion as aforesaid.
144

Virernta vs. West ‘VIRGINIA.

“10. The Constitution of the State of West Virginia,
which became operative and was in force when she was
admitted into the Union, contained the following provisions:

“By Section 5 of Article VIII. of said Constitution it was
provided:

‘5. No debt shall be contracted by this State except to
meet casual deficits in the revenue, to redeem a previous
liability to the State, to suppress insurrection, repel invasion,
or defend the State in time of War.’

“And by Section 7 of Article VIII. it was provided:

‘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 liquida-
tion of the public debt, and hereafter the State shall not
become a stockholder in any bank.’

‘And by Section 8 of Article VIII. it was provided:

‘8. An equitable proportion of the public debt of the
Commonwealth of Virginia prior to the first day of January,
1861, 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 suffi-
cient to pay the accruing interest and redeem the principal
within thirty-four years.’

“At the time the Constitution containing these provisions
was adopted, West Virginia did not owe, and could not have
owed, any ‘public debt’ or ‘previous liability,’ except for her
just, contributive proportion of the public debt of the original
State of Virginia, and for the money and property of the
original State which had been transferred to and received by
her under the Acts of the General Assembly of the Restored
State of Virginia above set forth. By the provisions of
Section 8 of Article VIII., above cited, she expressly assumed
her equitable proportion of the debt of the original State as
it existed prior to the first day of January, 1861. By Sec-
tion 5 of the same Article VIII., above set forth, her Con-
stitution forbade the creation of any debt ‘except to meet
casual deficits in the revenue, to redeem a previous liability
of the State,’ &c., and there was not and could not have been
any such ‘previous liability,’ except her portion of the debt
of the original State, and her liability for the money and
property of the original State which had been transferred to
and received by her under the Acts of the General Assembly
of the Restored State. And Section 7 of the same Article
of her Constitution, above cited, authorized the sale of the
stocks owned by the State, in banks and other corporations,
the proceeds to be applied to the liquidation of the public
Opinion OvERRULING DEMURRER. 145

debt; and she had no such stocks, except those acquired, as
above stated, from the original State. This section of her
constitution also expressly required the proceeds of such
sale to be applied to her public debt, which public debt could
only have been her proportion of that of the original State
of Virginia, and her liability for the money and property of
the original State which had been transferred to her.

“11. After the year 1865 and prior to the year 1872
attempts were made at different times by the public authori-
ties of both the Commonwealth of Virginia and the State of
West Virginia, respectively, to ascertain their contributive
proportions of the common liability resting upon them for
the public debt of Virginia, contracted prior to January 1st,
1861; but all such attempts proved ineffectual and vain, and
no accounting or settlement of any kind was ever had be-
tween the two States in regard to this debt.

“12. The efforts looking to a settlement by the concur-
rent action of the two States having proved abortive and
your Oratrix being anxious to adjust the portion of the com-
mon debt which it was right that she should assume and
pay, upon terms just and equitable alike to the public credi-
tors and to West Virginia, made several efforts to effect such
a settlement.

“The first of these was made by the General Assembly
which was chosen at the close of the period of ‘destruction
and reconstruction,’ which, following closely upon the period
of disastrous war, had inflicted upon her people injuries and
losses, the harmful effects of which were then by no means
realized.

“The purpose of the representatives of the Commonwealth,
then just emerging from conditions which had impoverished
her people and paralyzed their productive energies, to as-
sume and pay to the utmost every dollar which her most
exacting creditor could demand of her, was expressed in the
Act of her General Assembly, approved March 30, 1871.

“By the terms of settlement embodied in this Act, your
Oratrix undertook to give her obligations bearing 6% in-
terest for two-thirds of the principal, and for two-thirds of
the past due interest, and also for two-thirds of the interest
on that accrued interest, which accrued interest to the ex-
tent of nearly $8,000,000, had been funded after the War
in new bonds of Virginia, thus capitalizing at 6% not only
the interest, but interest upon that interest.

“It was soon apparent that Virginia had by this measure
assumed a heavier burden than she was able to bear, and so
‘other plans for the settlement of the State debt were at-
146

VIRGINIA vs. WEST 'VIRGINIA,

 

tempted by the Acts of the General Assembly of the Com-
monwealth approved March 28, 1879, and February 14,
1882, until at length a final and satisfactory settlement of
the portion of the debt of the original State which Virginia
should assume and pay was definitely concluded by the Act
of February 20, 1892. Your Oratrix will file copies of each
of the Acts of her General Assembly herein mentioned as
exhibits to this bill, and to be read as part hereof.

“13. As farther indicating the great burden which your
Oratrix, notwithstanding the disaster and loss above referred
to, has assumed and met on account of the common debt of
the undivided State, she shows your Honors that, since
January ist, 1861, she has actually paid off, retired and dis-
charged, or assumed and given her new outstanding obliga-
tions for the aggregate sum of over Seventy-one Million
Dollars, as will more particularly appear from a statement
thereof filed as an exhibit herewith and hereinafter referred
to as Exhibit Number 7.

“It is proper in this connection to call attention to the
fact that, while your Oratrix has made this large contribution
toward the settlement of the common debt, West Virginia
has not paid one dollar thereof; and although in the early
years of her history she repeatedly conceded that there was
‘some portion of that debt which should equitably be borne
by her, her properly constituted authorities have for a num-
ber of years refused to recognize that any liability whatever
rested upon her, on that account, and have declined even to
enter into an accounting or to treat with your Oratrix in
reference thereto.

“It would seem from the above statement that Virginia
has already done as much under all the circumstances as she
could be fairly expected to do towards paying off the common
public debt of the old State. Such was the view and purpose
of the General Assembly in the several Acts above recited.

“A question may be raised as to whether such was the
effect of the language used in the Act of March 30, 1871,
with respect to the certificates issued thereunder; but the
great mass of the creditors entitled to whatever may be due
upon the unfunded obligations of the undivided State, have
in effect agreed, as will be hereinafter shown, to waive any
such question, and to accept the adjudication of this Court
in this cause against West Virginia in full discharge of all
their claims, thus giving that effect to the Act of March 30,
1871, which it was the purpose of your Oratrix that it should
have.

“14. By each of the Acts for the settlement of her debt
Opinion OvERRULING DEMURRER. 147

above recited, it was provided that the bonds of undivided
Virginia so far as not funded in the new obligations given
by your Oratrix, should be surrendered to and held by your
Oratrix, who either by the express terms of the settlement
provided for by said Acts, or as a just and equitable conse-
quence therefrom, received and holds said original bonds so
far as unfunded, in trust for the creditor who deposited the
same with her, or his assigns; and certificates to this effect
were given by your Oratrix to each creditor whose old Vir-
ginia bond was so surrendered to her.

“Having as an essential part of the contract for the adjust-
ment of the common debt of the original State entered into
this fiduciary relation in reference to these bonds, it became
her obligation of duty to the creditors who had confided their
securities to her keeping, as well as to her own people, whose
credit and fair name required that these obligations of the
old State should be fairly and honorably adjusted, to do all
in her power to bring about a determination of West Vir-
ginia’s just liability in respect thereto, and if possible the
recognition and settlement of the same by that State.

“Only after exhausting every means of amicable negotia-
tion, and having her overtures to that end repeatedly refused,
and as a last resort, has your Oratrix been constrained at
length reluctantly to apply to this, the only tribunal which
can afford relief, for an adjudication and determination of
this question, of such vast importance to your Oratrix and
to all of her people. “

“15. Allof the bonds and obligations and other evidences
of the indebtedness of the original State of Virginia out-
standing and contracted on January 1, 1861, as stated in
paragraph 1 of this bill, except a comparatively insignificant
sum, not amounting to one per cent of the aggregate of those
liabilities, have been taken up and are now actually held by
your Oratrix, and she has the right to call upon West Vir-
ginia for a settlement with respect thereto. They are too
numerous and involve too great a number of transactions
running through many years, for it to be practicable to ex-
hibit them here in detail, but the original bonds and other
evidences of indebtedness so paid off or retired and now held
by your Oratrix, will, when it shall be proper to do so, be
exhibited to the Master, who shall take the accounts herein-
after prayed for.

“16. Of the evidences of indebtedness representing prin-
cipal and interest of the liabilities of Virginia contracted be-
fore her dismemberment, those so paid off or retired by your
Oratrix and now held by her in her own right, exclusive of
148

Vircinia vs. WEST 'VIRGINIA.

 

the amounts represented by the certificates issued under the
funding Acts aforesaid, amount in the aggregate, including
the interest to be fairly computed thereon to this date, to a
very large sum, considerably in excess of $25,000,000, by far
the greater part of it being now, of course, on account of the
interest computed thereon, at the rate of 6% per annum,
the then legal rate in both States.

“For all of these obligations taken up and payments made
on account of the common debt, your Oratrix has in her own
right, a just claim against West Virginia for contribution to
the extent of West Virginia’s equitable liability therefor.

“17. In addition to the above bonds there were out-
standing on the 1st day of January, 1861, certain obligations
of the State of Virginia as guarantor upon some of the
securities issued by internal improvement companies, which
your Oratrix was called upon to provide for and settle. They
were not comparatively of very large amount, however, and
the questions involved in connection therewith can be stated
and settled in the account hereafter prayed for to be taken
between the two states; and in such accounts your Oratrix
will also ask to have included all such items of debit against
the State of West Virginia on account of the property and
moneys of the original State which were received or appro-
priated by West Virginia which may not have been specific-
ally or accurately stated herein. These items of accounting
between the two States are so numerous and varied and
extend throughout a period cf so many years’ duration that
it is impossible from the nature of the case to state all of
them in this bill; and the account between the two States
can only be taken and settled, and the balance due your
Oratrix thereon ascertained, under the supervision of a
Court of Equity.

“18. Your Oratrix charges that the liability of the State
of West Virginia, for a just and equitable proportion of the
public debt of Virginia, as of the time when the State of
West Virginia was created, rests upon the following among
many grounds which might be indicated here:

‘First. The area of territory now known as the State of
West Virginia formed about one-third of the territory of
the Commonwealth of Virginia when this public debt was
created, and its population included about one-third of that
of the original State at the time of its dismemberment. And
the State of West Virginia did, by the acquisition and appro-
priation of such territory, with the population thereof, as-
sume therewith liability for a just and equitable proportioa
Opinion Overrutinc DEMURRER. 149

of the public debt created prior to the partition of such
territory.

‘Second. The liability of West Virginia for a just propor-
tion of the public debt of the Commonwealth of Virginia, as
it existed prior to the creation and erection of the State of
West Virginia, forms part of her very political existence,
and is an essential constituent of her fundamental law as
shown in the said ordinance adopted at Wheeling on the
20th day of August, 1861, in which the method of ascertain-
ing her liability on account of said debt is prescribed. And
this liability is imbedded in the Constitution ynder which
she was admitted as a State into the Federal Union, and was
one of the conditions under which she was created a State
and admitted into the Union.

‘Third. The State of West Virginia has further, by the
repeated enactments and joint resolutions of her legislature,
recognized her liability for a just proportion of this debt.

‘Fourth. The State of West Virginia has, since her crea-
tion as a State, received from the State of Virginia real and
personal property amounting in value to many millions of
dollars, and held and enjoyed the same, but upon express
condition that she should duly account for the same in a
settlement thereafter to be had between her and the Com-
monwealth of Virginia.

‘Fifth. While the transfer of this property, real and per-
sonal, and also certain moneys of the Commonwealth of
Virginia, purport to have been made to the State of West
Virginia by the Act of ‘The Restored Government of Vir-
ginia;’ there were in fact represented in said ‘Restored Gov-
ernment’ and in the legislature thereof no other people and
no other territory than that which then, as now, constitute
the State of West Virginia.’

“19. The General Assembly of Virginia being anxious to
effect a settlement of the portion of the common debt of the
undivided State which remained unadjusted, and if possible
to bring this about with the friendly co-operation and con-
currence of West Virginia. adopted: ‘A Joint resolution to
provide for adjusting with the State of West Virginia the
proportion of the public debt of the original State of Virginia
proper to be borne by the State of West Virginia, and for
the application of whatever may be received from the State
of West Virginia to the payment of those found to be en-
titled to the same,’ approved March 6, 1894. <A copy of this
resolution will be hereinafter shown as an exhibit to this
bill, to be read as a part thereof.

“Under this resolution a commission of seven members
150

Vireinta vs. WEST 'VIRGINIA.

 

was appointed for the purpose of carrying into effect the
objects expressed therein.

“The efforts made by this Commission, acting under the
above resolution to bring about a settlement with West Vir-
ginia having proved ineffectual, and the overture which the
Commission, with the active co-operation of the Honorable
Charles T. O’Ferral, the then governor of the Commonwealth
made to the authorities of West Virginia for the purpose of
bringing about a friendly adjustment having been declined,
the General Assembly of Virginia passed the Act approved
March 6, 1900, entitled ‘An Act to provide for the settlement
with West Virginia of the proportion of the public debt of
the original State of Virginia proper to be borne by West
Virginia, and for the protection of the Commonwealth of
Virginia in the premises,’ the purpose of which Act is suffi-
ciently set forth in its title, and a copy of the act will also
be hereinafter shown as one of the exhibits herewith filed.

“20. The Commission acting under said last mentioned
act made most earnest efforts to bring about an amicable
adjustment of the matters hereinbefore set forth with West
Virginia, but all of their efforts in that behalf proved in-
effectual and unavailing. An application to this Honorable
Court being thus left as the only alternative for Virginia,
this suit has been instituted at the request and direction of
the said Commission, and in strict conformity with the
provisions of the said Act of March 6, 1900, all of which will
be more fully and completely shown by the Report of the
said Commission dated January 6, 1906, made to the General
Assembly of Virginia now in session, a copy of which Report
and the documents accompanying the same, and referred to
therein, will be exhibited as a part of this Bill.”

21. Enumerates exhibits attached to the bill and prayed
to be regarded as part thereof.

22. The bill prayed: ‘‘Forasmuch, therefore, as your
Oratrix is remediless save in this form and forum, and to the
end that the State of West Virginia may be duly served,
through Her Governor and Attorney-General, with a copy of
this bill, your Oratrix prays that the said State of West Vir-
ginia may be made a party defendant to this bill, and re-
quired 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
Oprnion OverRuLING DemuRRER. 151

 

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 re-
quired 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 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.”

Attached to the bill were the numerous exhibits refer-
red to.

The State of West Virginia demurred and assigned
special causes as follows:

“First. That it appears by said bill that there is a mis-
joinder of parties plaintiff and a misjoinder of causes of
action. The said bill is brought by the Commonwealth of
Virginia to recover debts alleged to be due to her in her own
right from the defendant for property and money alleged to
have been transferred and delivered to the defendant under
certain acts of the legislature passed in 1863, and also, as
trustee for the owners of certain certificates mentioned and
described in said bill, to have an accounting to ascertain and
declare the amount claimed to be due from the defendant as
her just proportion of the public debt of the plaintiff prior
to the first day of January, 1861. ‘

“Second. That this court has n6é jurisdiction of either
the parties to or the subject-matter of this action, because it
appears by the said bill that the matters therein set forth do
not constitute, within the meaning of the Constitution of the
United States, such a controversy, or such controversies, be-
tween the Commonwealth of Virginia and the State of West
Virginia as can be heard and determined in this court, and
this court has no power to render or enforce any final judg-
ment or decree thereon.
152 Vireinia vs. WEST 'VIRGINIA.

 

“Third. That it appears by said bill that the plaintiff
herein sues as trustee for the benefit of a number of individ-
uals who are the alleged owners of certain certificates in the
said bill set forth and described.

“Fourth. That the said bill does not state facts sufficient
to entitle the Commonwealth of Virginia to the relief prayed
for, or to any relief, either in her own right or as trustee for
the owners of the certificates therein set forth and described.

“Fifth. That it does not appear by said bill that the
Attorney General has ever been authorized to institute and
prosecute this suit in the name of the Commonwealth of
Virginia in her own right, but only as trustee for the use
and benefit of the owners of certain certificates mentioned
in the act of March 6, 1900, which is referred to and made
part of said bill.

“Sixth. That the said bill does not sufficiently and defin-
itely set forth the claims and demands relied upon, but the
allegations thereof are so indefinite and uncertain that no
proper answer can be made thereto.

“Seventh. That the allegations in the said bill are not
sufficient to entitle the plaintiff therein, either in her own
right or as trustee, to an account or to a discovery from
this defendant.

“Highth. That the said bill does not contain any prayer
for a judgment or decree or any other final relief against
this defendant.”’

Hearing on the demurrer was had March 11, 12, 1907.

Mr. Chief Justice Futuer delivered the opinion of the
Court:

The State of West Virginia was admitted into the
Union June 20, 1863, under the proclamation of the Pres-
ident of the United States of April 20, 1863, in pursuance
of the act of Congress approved December 31, 1862, upon
the terms and conditions prescribed by the Common-
‘wealth of Virginia in ordinances adopted in convention
and in acts passed by the General Assembly of the Restor-
ed Government of the Commonwealth, giving her consent
to the formation of a new State out of her territory, with
‘a constitution adopted for the new State by the people
thereof. The ninth section of the ordinance adopted by
Opinion OvERRULING DEemMuURRER. 153

 

the people of the Restored State of Virginia in conven-
tion assembled in the city of Wheeling, Virginia, on Au-
gust 20, 1861, entitled ‘“An ordinance ty provide for the
formation of a new State out of a portion of the territory
of this State,’’ provided as follows:

‘9. The new State shall take upon itself a just
proportion of the public debt of the Common-
wealth of Virginia, prior to the first day of Jan-
uary, 1861, to be ascertained by charging to it all
State expenditures within the limits thereof, and
a just proportion of the ordinary expenses of the
State government, since any part of said debt was
contracted; and deducting therefrom the monies
paid into the treasury of the Commonwealth from
the counties included within the said new State
during the same period. All private rights and in-
terests in lands within the proposed State, derived
from the laws of Virginia prior to such separation,
shall remain valid and secure under the laws of
the proposed State, and shall be determined by
the laws now existing in the State of Virginia. . .”’

The consent of the Commonwealth of Virginia was
given to the formation of a new State on this condition.
February 3 and 4, 1863, the General Assembly of the Re-
stored State of Virginia enacted two statutes in pursu-
ance of the provision of which money and property
amounting to and. of the value of several millions of
dollars were, after the admission of the new State, paid
over and transferred to West Virginia. The Constitu-
tion of the State of West Virginia when admitted con-
tained these provisions, being sections 5, 7 and 8 of Arti-
cle VIII thereof, as follows:

‘5. No debt shall be contracted by this State,
except to meet casual deficits in the revenue, to
redeem a previous liability of the State, to sup-
press insurrection, repel invasion, or defend the
State in time of war.’’

“7, The legislature may at any time direct a
154 Vircinia vs. WEST VIRGINIA.

 

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
game as soon as may be practicable, and provide ,
for the liquidation thereof, by a sinking fund suffi-
cient to pay the accruing interest, and redeem the
principal within thirty-four years.’’

The ‘‘public debt’? and the ‘‘previous liability”’ mani-
festly referred to a portion of the original 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 after-
wards 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 con-
ditions 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 var-
ious efforts were made by Virginia through its constitut-
ed authorities to effect an adjustment and settlement
with West Virginia for an equitable proportion of the
public debt of the undivided State, proper to be borne
and paid by West Virginia, but all these efforts 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 ‘Vir-
gimia.

The original jurisdiction of this court was, therefore,
invoked by Virginia to procure a decree for an accounting
-Oprnton OverruLinc DEMURRER. 155

 

as between the two States, and, in order to a full and cor-
rect adjustment of the accounts, the adjudication and de-
termination of the amount due Virginia by West Vir-
ginia in the premises.

But it is objected that this court has no jurisdiction be-
cause the matters set forth in the bill do not constitute
such a controversy or such controversies as can be heard
and determined in this court, and because the court has
no power to enforce and therefore none to render any
final judgment or decree herein. We think these objec-
tions are disposed of by many decisions of this court.
Cohens v. Virginia, 6 Wheat. 264, 378, 406; Kansas v.
Colorado, 185 U. 8. 125; Kansas v. Colorado, May 18,
1907, 206 U.S. p. —; Missouri v. Illinois, 180 U. 8. 208;
Same case, 200 U. 8. 496; Georgia v. Copper Company,
May 13, 1907, 206 U. S. p. 3 Umted States v. Texas,
143 U.S. 621; United States v. North Carolina, 136 U. 8.
211; United States v. Michigan, 190 U.S. 379.

In Cohens v. Virginia, the Chief Justice said: ‘‘In the
second class, the jurisdiction depends entirely on the
character of the parties. In this are comprehended ‘con-
troversies between two or more States, between a State
and the citizens of another State,’ ‘and between a State
and foreign States, citizens or subjects.’ If these be the
parties, it is entirely unimportant what may be the sub-
ject of controversy. Be it what it may, these parties have
a constitutional right to come into the courts of the
Union.”’

And, referring to the Eleventh Amendment, it was
further said:

‘(It is a part of our history, that, at the adoption
of the Constitution, all the States were greatly in-
debted; and the apprehension that these debts
might be prosecuted in the Federal courts formed
a very serious objection to that instrument. Suits
were instituted; and the court maintained its jur-
isdiction. The alarm was general; and, to quiet
156 VirGinia vs. WEST 'VIRGINIA.

 

the apprehensions that were so extensively enter-
tained, this amendment was proposed in Congress,
and adopted by the State legislatures. That its mo-
tive was not to maintain the sovereignty of a State
from the degradation supposed to attend a com-
pulsory appearance before the tribunal of the
nation, may be inferred from the terms of amend-
ment. It does not comprehend controversies be-
tween two or more States, or between a State and
a foreign State. ‘The jurisdiction of the court still
extends to these cases and in these a State may
still be sued. We must ascribe the amendment,
then, to some other cause than the diginity of a
State. There is no difficulty in finding this cause.
Those who were inhibited from commencing a
suit against a State, or from prosecuting one
which might be commenced before the adoption of
the amendment, were persons who might prob-
ably be its creditors. There was not much reason
to fear that foreign or sister States would be
creditors to any considerable amount, and there
was no reason to retain the jurisdiction of the
court in those cases, because it might be essential
to the preservation of peace. The amendment,
therefore, extended to suits commenced or prose-
cuted by individuals, but not to those brought by
States.’’

By the cases cited, and there are many more, it is
established that, in the exercise of original jurisdiction
as between States, this court necessarily in such a case as
this has faviadielion:

United States v. North Carolina and United Siates v.
Michigan, supra, were controversies arising upon pecun-
lary demands, and jurisdiction was exercised in those
cases just as in those for the prevention of the flow of
polluted water from one State along the borders of anoth-
er State, or of the diminution in the natural flow of riv-.
ers by the State in which they have their sources through
and across another State or States, or of the discharge
Opinion OveRRULING DemuRRER. 157

of noxious gases from works in one State over the terri-
tory of another.

The object of the suit is a settlement with West Vir-
ginia, and to that end a determination and adjudication
of the amount due by that State to Virginia, and when
this court has ascertained and adjudged the proportion
of the debt of the original State which it would be equit-
able for West Virginia to pay, it is not to be presumed on
demurrer that West Virginia would refuse to carry out
the decree of this court. If such repudiation should be
absolutely asserted we can then consider by what means
the decree may be enforced. Consent to be sued was giv-
en when West Virginia was admitted into the Union, and
it must be assumed that the Legislature of West Virgi-
nia would in the natural course make provision for the
satisfaction of any decree that may be rendered.

It is, however, further insisted that this court cannot
proceed to judgment because of an alleged compact en-
tered into between Virginia and West Virginia, with the
consent of Congress, by which the question of the liability
of Virginia to West Virginia was submitted to the arbi-
trament and award of the Legislature of West Virginia
as the sole tribunal which could pass upon it. As we have
seen, the Constitution of West Virginia when admitted
into the Union contained the provision: ‘‘An equitable
proportion of the public debt of the Commonwealth of
Virginia prior to the first day of January, one thousand
eight hundred and sixty-one, shall be assumed by the
State, and the Legislature shall ascertain the same as
soon as may be practicable and provide for the liquida-
tion of the same by a sinking fund and redeem the prin-
cipal within thirty-four years.’’ And it is said that, on
May 13, 1862, the Legislature of Virginia passed an act
entitled ‘‘ An act giving the consent of the Legislature of
Virginia to the formation and erection of a new State
within the jurisdiction of this State,’’? by which consent
158 VirGinia vs. WEST ‘VIRGINIA.

 

was given to the creation of the proposed new State,
‘‘aecording to the boundaries and under the provisions
set forth in the Constitution for the said State of West
Virginia, and the schedule thereto annexed, proposed by
the convention which assembled at Wheeling on the
twenty-sixth day of November, 1861;’’ and that by the
act of Congress the consent of that body was given to all
those provisions which thus became a constitutional and
legal compact between the two States. The act of May
13, 1862, was not made a part of the case stated in the
bill, and its validity is denied by counsel for Virginia,
but it is unnecessary to go into that, for when Virginia,
on August 20, 1861, by ordinance provided ‘‘for the for-
mation 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 Common-
wealth 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 provid-
ed that its Legislature should ‘‘ascertain the same as
soon as practicable,’’ it referred to the method of ascer-
tainment prescribed by the Virginia convention. Read-
ing the Virginia ordinance and the West Virginia consti-
tutional 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. And it may well be inquired why, in the
forty-three years that have elapsed since the alleged com-
pact was entered into, West Virginia has never indicat-
ed 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’’ im-
Opinion Overrutinc DEemurRRER. 159

posed, and to notify Virginia that she was ready and
willing to discharge such duty.

It is also urged that Virginia had no interest in the
subject-matter of the controversy because she had been
released from all liability on account of the public debt
of the old Commonwealth, evidenced by her bonds out-
standing on the first day of January, 1861. This relates
to the acts of the General Assembly of ‘Virginia of March
30, 1871, March 28, 1879, February 14, 1882, February 20,
1892, March 6, 1894, and March 6, 1900. According to the
bill, Virginia by the act of March 30, 1871, and subsequent
acts, in an attempt to provide for the funding and pay-
ment of the public debt, having estimated that the liability
of West Virginia was for one-third of the amount of the
old bonds, provided for the issue of new bonds to the
amount of two-thirds of the total, and for the issue of cer-
tificates for the other third, which showed that Virginia
held the old bonds so far as unfunded in trust for the
holders or their assignees to be paid by the funds expect-
ed to be obtained from West Virginia as her ‘‘just and
equitable proportion of the public debt.’’? The legislation
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. We do not care to take
up and discuss this legislation. We are satisfied that as
we have jurisdiction, these questions ought not to be pass-
ed upon on demurrer. Kansas v. Colorado, 185 U. 8.
125, 144, 145. And this also furnishes sufficient ground
for not considering at length the objection of multifa-
riousness. The observations of Lord Cottenham, in
Campbell v. Mackey, 1 Mylne & Craig, 603, that it is im-
practicable to lay down any rule as to what constitutes
multifariousness, as an abstract proposition; that each
case must depend upon its own circumstances; and must
be left where the authorities leave it, to the sound discre-
tion of the court, have been often affirmed in this court.
160 VirGinia vs. WEST 'VIRGINIA.

 

Oliver v. Piatt, 3 How. 333, 411; Gaines v. Relf, 2 How.
619, 642. But we do not mean to rule that the bill is multi-
farious. It is true that the prayer contains, among other
things, the request, ‘‘that all proper accounts may be tak-
en to determine and ascertain the balance due from the
State of West Virginia to your Oratrix in her own right
and as trustee aforesaid,’’ but it also prays that the court
‘will adjudicate and determine the amount due to your
Oratrix by the State of West Virginia in the premises.’’
And we understand the reference to holding in trust to |
be in the interest of mere convenience, and that the bill
cannot properly be regarded as seeking in chief anything
more than a decree for ‘‘an equitable proportion of the
public debt of the Commonwealth of ‘Virginia on the first
day of January, 1861.’’ The objections of misjoinder of
parties and misjoinder of causes of action may be treated
as resting on matter of surplusage merely, and at all
events further consideration thereof may wisely be post-
poned to final hearing. Florida v. Georgia, 17 How. 491,
492; California v. Southern Pacific Company, 157 U. S.
249, :
The order will be—

Demurrer overruled without prejudice to any question,
and leave to answer by the first Monday of next term.
Decree Rererringc Cause to Master. 161

 

Decree Referring Cause to Master.
[Mav 4, 1908.]

Commonwealth of Virginia
v. \
State of West Virginia.

REFERENCE—In Suits Between States.

Reference to a special master decreed in a suit begun by
an original bill in equity, filed by the commonwealth of
Virginia against the state of West Virginia, which seeks an
adjudication of the amount due the former state by the lat-
ter as the equitable proportion of the public debt of the
original state of Virginia, which was assumed by the state
of West Virginia at the time of its creation as a state.

Messrs. Wm. A. Axperson, RanpotpH Harrison and
Hotmes Conran, for Plaintiff.

Messrs. Joux C. Spoonrer, JoHn G. Caruisiz, C. W.
May, Cartes E. Hacc, W. Mottonan, Gro. W. McCriv-
vic, andW. G. MarrHews, for Defendant.

This cause having been heard upon the pleadings and
accompanying exhibits, it is, on consideration, ordered
that it be referred to a special master, to be hereinafter
designated, to ascertain and report to the court:

1. The amount of the public debt of the Common-
wealth of Virginia on the first day of January, 1861, stat-
ing specifically how and in what form the same was evi-
denced, by what authority of law and for what purposes
the same was created, and the dates and nature of the
bonds or other evidence of said indebtedness.

2 The extent and valuation of the territory of Vir-

ginia and of West Virginia, June 20, 1863, and the popu-
lation thereof, with and without “lavas, separately.

3. All expenditures made by the Commonwealth of
Virginia with the territory now constituting the State
162 VirGinta vs. WEST 'VIRGINIA.

 

of West Virginia since any part of the debt was con-
tracted.

4. Such proportion of the ordinary expenses of the
government of Virginia since any of said debt was con-
tracted, as was properly assignable to the counties which
were created into the State of West Virginia on the basis
of the average total population of ‘Virginia, with and
without slaves, as shown by the census of the United
States.

5. And also on the basis of the fair estimated valua-
tion of the property, real and personal, by counties of
the State of Virginia.

6. All moneys paid into the treasury of the Common-
wealth from the counties included within the State of
West Virginia during the period prior to the admission
of the latter State into the Union.

7. The amount and value of all money, property,
stocks and credits which West Virginia received from the
Commonwealth of Virginia, not embraced in any of the
preceding items and not including any property, stocks or
eredits which were obtained or acquired by the Common-
wealth after the date of the organization of the restored
government of Virginia, together with the nature and
description thereof.

The answers to these inquiries to be without prejudice
to any question in the cause.

It is further ordered that the Commonwealth of Vir-
ginia and the State of West Virginia shall each, when re-
quired, produce before the master, upon oath, all such
records, books, papers and public documents as may be
in their possession or under their control, and which may,
in his judgment, be pertinent to the said inquiries and
accounts, or any of them.

And the master is authorized to make or cause to be,
made, such examination as he may deem desirable of the
books of account, vouchers, documents and public records
Decree Rererrine Cause to Master. 163

 

of either State relating to the inquiries he is herein di-
rected to make, and to cause copies thereof or extracts
therefrom to be made for use in making up his report.

All public records published by authority of the Com-
monwealth of ‘Virginia prior to the 17th day of April,
1861, and all papers and documents and other matter con-
stituting parts of the public files and records of Virginia
prior to the date aforesaid, which in the judgment of the
master may be relevant and pertinent to any of said in-
quiries, or copies thereof, if duly authenticated, may be
used in evidence and considered by the master, but all
such evidence shall be subjected to exceptions to its com-
petency. The public acts and records of the two States
since the admission of West Virginia into the Union shall
be evidence, if pertinent and duly authenticated, but all
such evidence tendered by either party shall be subject
to proper legal exceptions to its competency.

The master is empowered to summon any persons
whose testimony he or either party may deem to be
material, and to cause their depositions to be taken before
him, or by a notary public or other officer authorized to
take the same, after reasonable notice to the adverse
party.

The master is authorized and empowered, subject to
the approval of the Chief Justice, to employ such steno-
graphers and other clerical assistants as he may find it
desirable to employ in order to the prompt and efficient
execution of this order of reference, and to agree with
such stenographers and typewriters and clerical assis-
tants upon such compensation to he made to them as the
master may consider reasonable and just. He is author-
jzed to direct their compensation to be paid out of the
funds to be deposited to the credit of this cause.

The complainant shall cause the sum of five thousand
dolars to be deposited with the marshal of this court to
the credit of this cause, and such further sums as from
164 Vireinia vs. West ‘VIRGINIA.

 

time to time may be required, on account of the costs and
expenses of executing this decree; and the master is
authorized from time to time to draw upon the fund so
deposited by Virginia for the compensation of the steno-
graphers, typewriters and other clerical assistants whom
he may employ, and for any other costs and expenses, in-
cluding stationery and printing, which may in his judg-
ment be necessary to be incurred in executing this order
of reference.

The said marshal shall receive such commission for his
services in receiving and disbursing the funds so deposit-
ed with him as may be allowed by the court, and he will
make a report of his transactions, receipts and disburse-
ments in the premises.

Any notices to be given in connection with the execu-
tion of this decree may be given by and to the Attorney
General of the respective States.

The master will make his report with all convenient
speed and transmit therewith the evidence on which he
proceeds, and is to be at liberty to state any special cir-
cumstances he considers of importance, and to state such
alternative accounts as may be desired by either of the
parties, subject to the direction of the court.

And the court reserves the consideration of the allow-
ance of interest; of the costs of this suit, and all further
directions until after the master has made his report;
either of the parties to be at liberty to apply to the court
as they shall be advised.
ApsUDICATING PrincreuEs oF Cause. 165

 

Opinion Adjudicating Principles of Cause.
March 6, 1911.

Commonwealth of Virginia

Vv

State of West Virginia.

1.

SUPREME Court—Original Jurisdiction—Suits Between States.

A suit between the commonwealth of Virginia and the
State of West Virginia, to determine the amount due to
the former by the latter as the equitable proportion of
the public debt of the original state of Virginia, which was
assumed by West Virginia at the time of its creation as a
state, is to be considered by the Federal Supreme Court in
the untechnical spirit proper for dealing with a quasi inter-
national controversy.

SAME.

Objections as to multifariousness, laches, and the like,
except so far as they affect the merits, will not be con-
sidered by the Federal Supreme Court in a suit by the com-
monwealth of Virginia against the state of West Virginia,
to determine the amount due to the former by the latter as
the equitable proportion of the public debt of Virginia which
was assumed by West Virginia at the time of its creation asa
state.

Srates—Compacts Between—Adjustment of Public Debt Be-
tween Virginia and West Virginia.

A contract between the states of Virginia and West Vir-
ginia, under which the latter assumed the payment of
her just and equitable share of the debt of the original state
of Virginia at the time of the creation of West Virginia as
a state, whoever might be the persons to whom ultimately
the payment was to be made, was established by the pro-
visions of W. Va. Const. art 8, sec. 8, for the assumption of an
equitable proportion of the Virginia public debt existing
ed the counties now composing West Virginia, voted for
prior to January 1, 1861, and of Va. act of May 13, 1862,
consenting to the formation of the new state on those terms,
and of the sanctioning act of Congress of December 31, 1862
(12 Stat. at L. 633, chap. 6), and the contract so established
was not modified or affected in any practical way by the pre-
liminary suggestions as to the special mode of ascertaining
a just proportion of the debt, contained in the Wheeling
166

VirGiInia vs. West 'VIRGINIA.

 

ordinance of August 20, 1861, for the formation of the new
state, which is not mentioned in any of the other enact-
ments.
SAME,

The public debt of the original state of Virginia, an
equitable proportion of which was assumed by West Vir-
ginia at the time of its creation as a state, need not, be-
cause incurred for local improvements, be divided according
to the territory in which the money was expended, since in
form the debt was an investment whicn generally took the
shape of a subscription for stock in a corporation, isaking it
an adventure on behalf of the whole state, all the expenditure
having the ultimate good of the whole state in view.

SUPREME CovurRT—Original Jurisdiction—Suit Between States.

The determination of the just and equitable proportion
of the public debt of the original state of Virginia which
was assumed by West Virginia at the time of its creation as
a state is within the original jurisdiction of the Federal Su-
preme Court, although by W. Va. Const. art. 8, sec. 8, it is
provided that the legislature shall ascertain the proportion
as soon as may be practicable.

States—Compacts Between—Adjustment of Public Debt Be-
tween Virginia and West Virginia.

The liability of the State of West Virginia, assumed
at the time of its creation as a state, for an equitable pro-
portion of the public debt of the original state of Virginia,
was not discharged by changes in the form of the debt, nor
split up by the unilaterial attempts of Virginia to apportion
specific parts to the two states.

SUPREME CourT—Original Jurisdiction—Suits Between States—

Interest in Suit.

The commonwealth of Virginia has a sufficient interest
to enable it to maintain a suit in the Federal Supreme
Court against the state of West Virginia, to determine the
amount due the former state by the latter as the equitable
proportion of the public debt of the original state of Vir-
ginia, which was assumed by West Virginia at the time of
its creation as a state, although, by reason of certain trans-
actions with her creditors, Virginia may have been dis-
charged from all liability as to West Virginia’s share, other
than to turn over the proceeds of the suit. :
STATES—Compacts Between—Adijustment of Public Debt Be-

tween Virginia and West Virginia.

The valuation of the real and personal property of the
ApsupIcATING PRIncreLes or Clause. 167

 

two states of Virginia and West Virginia on the date
of their separation, excluding slaves, is the proper basis for
determining the equitable proportion of the public debt of
the original state of Virginia which was assumed by the
state of West Virginia at the time of its creation as a state,
subject to the qualification that the difference between Vir-
ginia’s share on this ratio and the amount which her credi-
tors were content to accept from her should be deducted
from the sum to be apportioned.

Messrs. Hotmgs Conrap, Samus, W. Wiutams, Attor-
ney General of ‘Virginia, Wm. A. Anprrson, Ranpo.PH
Harrison and Joun B. Moon, for Plaintiff.

Messrs. Cuas, E. Hoac, Geo. W. McCurytic, Joun C:
Spooner, Wm. G. Contry, Attorney General of West Vir:
ginia, W. Mottonan, W. G. Marrxews, and Wm. M. O.
Dawson, for Defendant.

Mr. Justice Houmes delivered the opinion of the Court.

This is a bill brought by the Commonwealth of Vir-
ginia to have the State of West Virginia’s proportion of
the public debt of Virginia as it stood before 1861 ascer-
tained and satisfied. The bill was set forth when the case
was before this Court on demurrer. 206 U. 8. 290. Noth-
ing turns on the form or contents of it. The object has
been stated. The bill alleges the existence of a debt
contracted between 1820 and 1861 in connection with in:
ternal improvements intended to develop the whole State,
but with especial view to West Virginia, and carried
through by the votes of the representatives of the West
Virginia counties. It then sets forth the proceedings for
the formation of a separate State and the material pro-
visions of the ordinance adopted for that purpose at
Wheeling on August 20, 1861, the passage of an act of
Congress for the admission of the new State under a
constitution that had been adopted, and the admission of
West Virginia into the Union, all of which, we shall show
more fully a little further on. Then follows an averment
168 Vircinta vs. WEST ‘VIRGINIA.

 

of the transfer in 1863 to West Virginia of the property
within her boundaries belonging to West Virginia, to be
accounted for in the settlement thereafter to be made with
the last named State. As West Virginia gets the benefit of
this property without an accounting, on the principles of
this decision, it needs not to be mentioned in more detail.
A further appropriation to West Virginia is alleged of
$150,000, together with unappropriated balances, subject
to accounting for the surplus on hand received from coun-
ties outside of the new State. Then follows an argumen-
tative averment of a contract in the Constitution of West
Virginia to assume an equitable proportion of the above-
mentioned public debt, as hereafter will be explained.
Attempts between 1865 and 1872 to ascertain the two
States’ proportion of the debt and their failure are aver-
red, and the subsequent legislation and action of ‘Vir-
ginia in arranging with the bondholders, that will be ex-
plained hereafter so far as needs. Substantially all the
bonds outstanding in 1861 have been taken up. It is stat-
ed-that both in area of territory and in population West
Virginia was equal to about one-third of Virginia,
that being the proportion that Virginia asserts to be the
proper one for the division of the debt, and this claim is
based upon the division of the State, upon the above-men-
tioned Wheeling ordinance and the Constitution of the
new State, upon the recognition of the liability by statute
and resolution, and upon the receipt of property as has
heen stated above. After stating further efforts to bring
about an adjustment and their failure, the bill prays for
an accounting to ascertain the balance due to Virginia in
her own right and as trustee for bondholders and an ad-
judication in accord with this result.

The answer admits a debt of about $33,000.000, but
avers that the main object of the internal improvements
in connection with which it was contracted was to afford
outlets to the Ohio River on the west and to the seaboard
ADJUDICATING PRINCIPLES OF CAUSE. 169

 

on the east for the products of the eastern part of the
State, and to develop the resources of that part, not those
of what is now West Virginia. In aid of this conclusion
it goes into some elaboration of details. It admits the
proceedings for the separation of the State and refers to
an act of May, 1862, consenting to the same, to which we
also shall refer. It denies that it received property of
more than a little value from Virginia or that West Vir-
ginia received more than belonged to her in the way of
surplus revenue on hand when she was admitted to the
Union, and denies that any liability for these items was
assumed by her Constitution. It sets forth in detail the
proceedings looking to a settlement, but as they have
no bearing upon our decision we do not dwell upon them.
It admits the transaction of Virginia with the bondholders
and sets up that they discharge the Commonwealth from
one-third of its debt and that what may have been done
as to two-thirds does not concern the defendant, since
Virginia admits that her share was not less than that. If
the bonds outstanding in 1861 have been taken up it is
only by the issue of new bonds for two-thirds and certi-
ficates to be paid by West Virginia alone for the other
third. Liability for any payments by Virginia is denied
and accountability, if any, is averred to be only on the
principle of § 9 of the Wheeling ordinance, to be stated.
Tt is set up further that under the Constitution of West
Virginia her equitable proportion can be established by
her Legislature alone, that the liquidation can be only
in the way provided by that instrument, and hence that
this suit cannot be maintained. The settlement by Vir-
ginia with her creditors also is pleaded as a bar, and that
she brings this suit solely as trustee for them.

The grounds of the claim are matters of public history.
After the Virginia ordinance of secession, citizens of the
State who dissented from that ordinance organized a
government that was recognized as the State of Vir-
170 Virernia vs. West ‘VIRGINIA.

 

ginia by the Government of the United States. Forthwith
a convention of the restored State, as it was called, held
at Wheeling, proceeded to carry out a long entertained
wish of many West Virginians by adopting an ordinance
for the formation of a new State out of the western por-
tion of the old Commonwealth. <A part of section 9 of
the ordinance was as follows: ‘‘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 Jan-
uary, 1861, to be ascertained by charging to it all state
expenditures within the limits thereof, and a just pro-
portion of the ordinary expenses of the state government,
since any part of said debt was contracted; and deducting
therefrom the monies paid into the treasury of the Com-
monwealth from the counties included within the said
new state during the same period.’’ Having previously
provided for a popular vote, a constitutional convention
&e., the ordinance in § 10 ordained that when the Gen-
eral Assembly should give its consent to the formation of
such new State, it should forward to the Congress of the
United States such consent, together with an official copy
of such constitution, with the request that the new State
might be admitted into the union of States.

A constitution was framed for the new State by a
constitutional convention, as provided in the ordinance,
on November 26, 1861, and was adopted. By Article 8, ¢
8, ‘‘An equitable proportion of the public debt of the
Commonwealth of Virginia, prior to the first 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
privide for the liquidation thereof, by a sinking fund
sufficient to pay the accruing interest, and redeem the
principal within thirty-four years.’’ An act of the Legis-
lature of the restored State of Virginia, passed May 13,
1862, gave the consent of that Legislature to the erection
ADJUDICATING PRINCIPLES OF CAUSE. V71

 

of the new State ‘‘under the provision set forth in the
constitution for the said State of West Virginia.’’ Fin-
ally Congress gave its sanction by an act of December 31,
1862, c. 6, 12 Stat. 633, which recited the framing and
adoption of the West Virginia constitution and the con-
sent given by the Legislature of Virginia through the last
mentioned act, as well as the request of the West
Virginia convention and of the ‘Virginia Legislature, as
the grounds for its consent. There was a provision for
the adoption of an emancipation clause before the act of
Congress should take effect, and for a proclamation by
the President, stating the fact, when the desired amend-
ment was made. Accordingly, after the amendment and
a proclamation by President Lincoln, West Virginia be-
came a State on June 20, 1863.

It was held in 1870 that the foregoing constituted an
agreement between the old State and the new, Virginia v.
West Virginia, 11 Wall. 39, and so much may be taken
practically to have been decided again upon the demur-
rer in this case, although the demurrer was overruled
without prejudice to any question. Indeed, so much is al-
most if not quite admitted in the answer. After the
answer had been filed the cause was referred to a master
by a decree made on May 4, 1908, 209 U. S. 314, 534,
which provided for the ascertainment of the facts made
the basis of apportionment by the original Wheeling or-
dinance, and also of other facts that would furnish an
alternative method if that prescribed in the Wheeling
ordinance should be followed; this again without prej-
udice to any question in the cause. The master has re-
ported, the case has been heard upon the merits, and now
is submitted to the decision of the Court.

The ease is to be considered in the untechnical spirit
proper for dealing with a quasi-international controver-
sy, remembering that there is no municipal code govern-
ing the matter, and that this Court may be called on to
172 VIRGINIA vs. WEST VIRGINIA.

 

adjust differences that cannot be dealt with by Congress
or disposed of by the legislature of either State alone.
Missouri, v. Illinois, 200 U. 8. 496, 519, 520. Kansas v.
Colorado, 206 U. S. 46, 82-84. Therefore we shall spend
no time on objections as to multifariousness, laches and
the like, except so far as they affect the merits with which
we proceed to deal. See Rhode Island v. Massachusetts,
14 Peters, 210, 257. United States v. Beebe, 127 U.S.
338.

The amount of the debt January 1, 1861, that we have
to apportion no longer is in dispute. The master’s find-
ing was accepted by West Virginia and at the argument
we understood Virginia not to press her exception that
it should be enlarged by a disputed item. It was $33,897,-
073.82, the sum being represented mainly by interest-bear-
ing bonds. The first thing to be decided is what the final
agreement was that was made between the two States.
Here again we are not to be bound by technical form. A
State is superior to the forms that it may require of its
citizens. But there would be no technical difficulty in
making a contract by a constitutive ordinance if followed
by the creation of the contemplated State. Wedding v.
Meyler, 192 U.S. 578, 583. And, on the other hand, there
is equally little difficulty in making a contract by the con-
stitution of the new State, if it be apparent that the in-
strument is not addressed solely to those who are to be
subject to its provisions, but is intended to be understood
by the parent State and by Congress as embodying a just
term which conditions the parent’s consent. There can be
no question that such was the case with West Virginia.
As has been shown, the consent of the Legislature of the
restored State was a consent to the admission of West
‘Virginia under the provisions set forth in the Constitu-
tion for the would-be State, and Congress gave its sanc-
tion only on the footing of the same Constitution and the
consent of Virginia in the last-mentioned act. These
ADJUDICATING PRINCIPLES OF CAUSE. 173

 

three documents would establish a contract without more.
We may add, with reference to an argument to which we
attach little weight, that they establish a contract of West
Virginia with Virginia. There is no reference to the
form of the debt or to its holders, and it is obvious that
Virginia had an interest that it was most important that
she should be able to protect. Therefore West Virginia
must be taken to have promised to Virginia to pay her
share, whoever might be the persons to whom ultimately
the payment was to be made.

We are of the opinion that the contract established as
we have said is not modified or affected in any practical
way by the preliminary suggestions of the Wheeling or-
dinance. Neither the ordinance nor the special mode
of ascertaining a just proportion of the debt that it puts
forward is mentioned in the Constitution of West Virgin-
ia, or in the act of Virginia giving her consent, or in
the act of Congress by which West Virginia became a
State. The ordinance required that a copy of the new
constitution should be laid before Congress, but said
nothing about the ordinance itself. It is enough to refer
to the circumstances in which the separation took place
to show that Virginia is entitled to the benefit of any
doubt so far as the construction of the contract is con-
cerned. See opinion of Attorney General Bates to Presi-
dent Lincoln, 10 Op. Att. Gen. 426. The mode of the
Wheeling ordinance would not throw on West Virginia
a proportion of the debt that would be just, as the ordi-
nance requires, or equitable, according to the promise of
the Constitution, unless upon the assumption that inter-
est on the public debt should be considered as part of the
ordinary expenses referred to in its terms. That we be-
lieve would put upon West Virginia a larger obligation
than the mode that we adopt, but we are of opinion that
her share should be ascertained in a different way. All
the modes, however, consistent with the plain contract of
174 ‘VIRGINIA vs. WEST ‘VIRGINIA.

 

West Virginia, whether under the Wheeling ordinance
or the Constitution of that State, come out with surpris-
ingly similar results.

It was argued, to be sure, that the debt of Virginia was
incurred for local improvements and that in such a ease,
even apart from the ordinance, it should be divided ac-
cording to the territory in which the money was expend-
ed. We see no sufficient reason for the application of
such a principle to this case. In form the aid was an
investment. It generally took the shape of a subscrip-
tion for stock in a corporation. To make the investment
a safe one the precaution was taken to require as a con-
dition precedent that two or three-fifths of the stock
should have been subscribed for by solvent persons fully
able to pay, and that one-fourth of the subscriptions
should have been paid up into the hands of the treasurer.
From this point of view the venture was on behalf of the
whole State. The parties interested in the investment
were the same, wherever the sphere of corporate action
might be. The whole State would have got the gain and
the whole State must hear the loss, as it does not appear
that there are any stocks of value on hand. If we should
attempt to look farther, many of the corporations con-
cerned were engaged in improvements that had West
Virginia for their objective point, and we should be lost
in futile detail if we should try to unravel in each in-
stance the ultimate scope of the scheme. It would be un-
Just, however, to stop with the place where the first steps
were taken and not to consider the purpose with which
the enterprise was begun. All the expenditures had the
ultimate good of the whole State in view. ‘Therefore we
adhere to our conclusion that West Virginia’s share of
the debt must be ascertained in a different way. In com-
ing to it we do but apply against West Virginia the argu-
ment pressed on her behalf to exclude her liability under
the Wheeling ordinance in like cases. By the ordinance
ADJUDICATING PRINCIPLES OF CAUSE. 175

 

West Virginia was to be charged with all State expendi-
tures within the limits thereof. But she vigorously pro-
tested against being charged with anv sum expended in
the form of a purchase of stocks.

But again, it was argued that if this contract should
be found to be what we have said then the determination
of a just proportion was left by the Constitution to the
Legislature of West Virginia, and that irrespectively of
the words of the instrument it was only by legislation
that a just proportion could be fixed. These arguments
do not impress us. The provision in the Constitution of
the State of West ‘Virginia that the Legislature shall as-
certain the proportion as soon as may be practicable was
not intended to undo the contract in the preceding words
by making the representative and mouthpiece of one of
the parties the sole tribunal for its enforcement. It was
simply an exhortation and command from supreme to
subordinate authority to perform the promise as soon
as might be and an indication of the way. Apart from
the language used, what is just and equitable is a judicial
question similar to many that arise in private litigation,
and in nowise beyond the competence of a tribunal to
decide.

The ground now is clear, so far as the original contract
between the two States is concerned. The effect of that is
that West Virginia must bear her just and equitable pro-
portion of the public debt as it was intimated in Hartman
v. Greenhow, 102 U. S. 672, so long ago as 1880, that she
should. It remains for us to consider such subsequent
acts as may have affected the original liability or as may
bear on the determination of the amount to be paid. On
March 30, 1871, Virginia, assuming that the equitable
share of West Virginia was about one-third, passed an
act authorizing an exchange of the outstanding bonds,
&e., and providing for the funding of two-thirds of the
debt with interest accrued to July 1, 1871, by the issue of
176 Vircinta vs. Wrst ‘VIRGINIA.

 

new bonds bearing the same rate of interest as the old,
six per cent. There were to be issued at the same time,
for the other one-third, certificates of same date, setting
forth the amount of the old bond that was not funded,
that payment thereof with interest at the rate prescrib-
ed in the old bond would be provided for in accordance
with such settlement as should be had between Virginia
and West Virginia in regard to the public debt, and that
Virginia held the old bonds in trust for the holder or his
assignees. There were further details that need not be
mentioned. The coupons of the new bonds were receiv-
able for all taxes and demands due to the State. Hart-
man v. Greenhow, 102 U. 8. 672. McGahey v. Virginia,
135 U.S. 662. The certificates issued to the public under
this statute and outstanding amount to $12,703,451.79.
The burden under the statute of 1871 still being great-
er than Virginia felt able to bear, a new refudning act was
passed on March 28, 1879, reducing the interest and pro-
viding that Virginia would negotiate or aid in negotiat-
ing with West Virginia for the settlement of the claims
of certificate holders and that the acceptance of certi-
ficates ‘for West Virginia’s one-third’ under this act
should be an absolute release of Virginia from all liabil-
ity on account of the same. Few of these certificates
were accepted. On February 14, 1882, another attempt
was made, but without sufficient success to make it neces-
sary to set forth the contents of the statute. The certi-
ficates for balances not represented by bonds, ‘‘constitut-
ing West Virginia’s share of the old debt,’’ stated that
the balance was ‘‘to be accounted for by the state of West
Virginia without recourse upon this commonwealth.’’
On February 20, 1892, a statute was passed which led
to a settlement, described in the bill as final and satis-
factory. This provided for the issue of bonds for nine-
teen million dollars in exchange for twenty-eight millions
outstanding, not funded, the new bonds bearing interest
ADJUDICATING PRINCIPLES OF CAUSE. 177

 

at two per cent for the first ten years and three per
cent for ninety years; and certificates in form similar to
that just stated, in the act of 1882. On March 6, 1894, a
joint resolution of the Senate and House of Delegates
was passed, reciting the passage of the four above men-
tioned statutes, the provisions for certificates, and the
satisfactory adjustment of the liabilities assumed by Vir-
ginia on account of two-thirds of the debt, and appoint-
ing a committee to negotiate with West Virginia, when
satisfied that a majority of the certificate holders desired
it and would accept the amount to be paid by West Vir-
ginia in full settlement of the one-third that Virginia
had not assumed. The State was to be subjected to no
expense. Finally an act of March 6, 1900, authorized the
commission to receive and take on deposit the certificates,
upon a contract that the certificate holders would accept
the amount realized from West Virginia in full settle-
ment of all their claims under the same. It also author-
ized a suit if certain proportions of the certificates should
be so deposited, as since then they have been—the State,
as before, to be subjected to no expense.

On January 9, 1906, the commission reported that.
apart from certificates held by the State and not enter-
ing into this account, there were outstanding of the cer-
tificates of 1871 in the hands of the public $12,703,451.79,
as we have said, of which the commission held $10,851,-
294.09, and of other certificates there were in the hands.
of the public $2,778,239.80, of which the commission held
$2,322,141.32.

On the foregoing facts a technical argument is press-
ed that Virginia has discharged herself of all liability
as to one-third of the debt; that, therefore, she is with-.
out interest in this suit, and cannot maintain it on her-
own behalf; that she cannot maintain it as trustee for the-
certificate holders, New Hampshire v. Louisiana, 108 U..
S. 76; and that the bill is multifarious in attempting to
178 VIRGINIA vs. WEST ‘VIRGINIA.

unite claims made by the plaintiff as such trustee with
some others set up under the Wheeling ordinance, &c.,
which, in the view we take, it has not been necessary to
mention or discuss. We shall assume it to be true for the
purposes of our decision, although it may be open to de-
bate, Greenhow v. Vashon, 81 'Va. 336, 342, 348, that the
certificate holders who have turned in their certificates,
being much the greater number, as has been seen, by do-
ing so, if not before, surrendered all claims under the
original bonds or otherwise against Virginia to the ex-
tent of one-third of the debt. But even on that conces-
sion the argument seems to us unsound.

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 appor-
tion 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 hap-
pened 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 esti-
mated 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 inter-
est 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
ADJUDICATING PRINCIPLES OF CAUSE. 179

 

v. Nashville, Chattanooga & St. Lowis 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, 315. Lamb v. Vice, 6 M. & W., 467, 472.
‘We may add that in all its aspects it is a suit on the con-
tract, and it is most proper that the whole matter should
be disposed of at once.

It remains true then, notwithstanding all the transac-
tions between the old Commonwealth and her bondhold-
ers, that West Virginia must bear her equitable propor-
tion 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 valuation
of the real and personal property of the two States on the
date of the separation, June 20, 1863. <A ratio determin-
ed by population or land area would throw a larger share
on West Virginia, but the relative resources of the debt-
or 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 mas-
ter’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 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.
Tf our figures are correct, the difference between Virgin-
jia’s share, say $25,931,261.47, and the amount that the

i
180 Vircinia vs. WEST 'VIRGINIA.

 

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 Vir-
ginia we have $7,182,507.46 as her share of the principal
debt.

We have given our decision with respect to the basis of
liability and the share of the principal of the debt of Vir-
ginia that West Virginia assumed. In any event, before
we could put our judgment in the form of a final decree
there would be figures to be agreed=upon or to be as-
certained by reference to a master. Among other things
there still remains the question of interest. Whether
any interest is due, and if due from what time it should
be allowed and at what rate it should be computed, are
matters as to which there is a serious controversy in the
record, and concerning which there is room for a wide
divergence 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 determina-
tion of the principal sum payable, including the question
of laches as to either party, would require to be consider-
ed. A long time has elapsed. Wherever the responsibili-
ty of 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. 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
ApsuDICcATING PRINCIPLES OF CAUSE. 181

 

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 de-
cided for patriotism, the fraternity of the Union, and
mutual consideration to bring it to an end.

True copy.

Test: James H. McKenney,
[Seal of Court.] Clerk Supreme Court, U.S.
182 Virainia vs. WEST VIRGINIA.

 

Opinion Overruling Motion to Proceed to Final Hearing.
October 30, 1911.

Commonwealth of Virginia
Vv.
State of West Virginia.
SUPREME CouRT—Original Jurisdiction—Suit Between States—
Mclion for Final Decree.
The disposition of the authorities of the state of West
Virginia to await the next regular session of the legislature,
convening more than one year hence, before considering
the matters left open by the Federal Supreme Court when
determining the amount which such state should pay as
its equitable share of the public debt of the original state
of Virginia, which was assumed by West Virginia at the
time of its creation as a state, does not furnish sufficient
reason for granting a motion on behalf of the state of Vir-
ginia, that the court proceed to settle and determine all
the questions left open by its decision.
Mr. Samuet W. Witutams, Attorney General of ‘Vir-
ginia, for Plaintiff.
Mr. Wm. G. Contry, Attorney General of West Vir-
gini, for Defendant.

Mr. Justice Hotmss delivered the opinion of the Court:

This is a motion on behalf of the Commonwealth of
Virginia that the Court proceed to determine all ques-
tions left open by the decision of March 6, 1911. 220 U.
S. 1. The grounds of the motion are these: On April
20, 1911, the Virginia Debt Commission wrote to the
Governor of West Virginia, referring to the suggestion
of a conference between the parties in the decision, and
requested that he would take steps that would lead to
such a conference at an early date. ‘At that time the Gov-
ernor of West Virginia had called an extra session of the
Legislature upon another matter. The constitution for-
bade the Legislature, when so convened, entering upon
any business except that stated in the call, but as there
were twenty-six days between the call and the session
Motion For Finau DecRrEE OVERRULED. 183

 

that followed it, there was time for the Governor to issue
a further proclamation on the subject of the debt. The
Governor in his message to the Legislature referred to
the matter, and put, as questions to be considered, wheth-
er the appointment of the Virginia Debt Commission was
enough to require West Virginia now ‘to take the initia-
tive,’ and whether a Commission should be appointed to
meet the Virginia Commission. He also stated that if,
without formal action of three-fifths of the body under
the Constitution, a majority should express to him the
opinion that the Legislature ought to be called into ex-
traordinary session to consider the matter, he should
deem it sufficient reason for a call. But it seems that he
did not use his power of his own motion or receive such
an expression as induced him to use it, and the Legisla-
ture does not meet in regular session until January, 1913.
The Commonwealth of Virginia concludes from these
facts that there is no likelihood of a conference with any
satisfactory results.

The Attorney General of West Virginia answered that
‘the members of the Legislature convened in May, 1911,
were elected before this cause had bene argued and under
conditions that left them uncertain as to the wishes of
their constituents; that the Governor was of opinion that
he could not constitutionally amend his proclamation so
as to embody consideration of the debt, and that there
is no one in West Virginia except the Legislature that
has power to deal with the matter. He then suggested
a doubt whether the Virginia Debt Commission was em-
powered to deal with the case in its present phase, in
view of the provision in the Resolution creating it that it
should not negotiate except upon the basis that Virginia
is bound only for the two-thirds of the debt that she had
provided for, and concluded that this Court ought not to
act before the West Virginia Legislature at its next reg-
184 VIRGINIA vs. WEST 'VIRGINIA.

 

ular session can consider the case in the spirit anticipated
by the opinion of the Court.

With regard to the doubt implied by the Governor of
West Virginia whether it now is incumbent upon that
State to take the initiative, and that suggestion by its
Attorney General whether the Virginia Debt Commission
has the necessary power, we are of opinion that neither
of them furnishes a just ground for delay. ‘The confer-
ence suggested by the Court is a conference in the cause.
The body that directed the institution of the suit has
taken the proper step on behalf of the plaintiff, and it is
for the defendant to say whether it will leave the Court
to enter a decree irrespective of its assent or will try to
reach a result that the Court will accept. The ton-
ference is not for an independent compromise out of
Court, but an attempt to settle a decree. The provision
as to negotiations, in the Virginia Resolution preceding
the Statute authorizing this suit, refers, we presume, to
a settlement out of Court and has nothing to do with the
conduct of the cause. If the parties in charge of the
suit consent, this Court is not likely to inquire very
curiously into questions of power, if, on its part, it is
satisfied that they have consented to a proper decree.

A question like the present should be disposed of with-
out undue delay. But 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. Assuming, as we do, that the
Attorney General is correct in saying that only the Leg-
islature of the defendant State can act, we are of opinion
that the time has not come for granting the present
motion. If the authorities of West Virginia see fit to
await the regular session of the Legislature, that fact is
not sufficient to prove that when the voice of the State
is heard it will proclaim unwillingness to make a rational
effort for peace.

Motion overruled without prejudice.
Morton oF PLAINTIFF OVERRULED. 185

 

Opinion Overruling Motion to Proceed to Final Hearing.

Decided November 10, 1913.

Commonwealth of Virginia
v.
State of West Virginia.

FEDERAL SUPREME CouRT—Original Jurisdiction—Suit Between

States—Motion for Final Decree,

The assurance by the attorney general of West Virginia. on
behalf of that state, that a commission appointed under a joint
resolution of the state legislature is endeavoring to effect a
settlement of the controversy, and needs further time to com-
plete its labors, requires the denial of a motion by the com-
monwealth of Virginia that the Federal Supreme Court pro-
ceed at once to settle and determine all the questions left
open by it when determining the amount which West Virginia
should pay as its equitable share of Virginia’s public debt,
which was assumed by West Virginia at the time of its crea-
tion as a state.

On motion of the Commonwealth of Virginia that the
court proceed to a final hearing of the questions left open
by its decision when determining the amount which West
Virginia should pay as its equitable share of the Vir-
ginia public debt, which was assumed by West Virginia
‘at the time of its creation as a state. Overruled and
case assigned for final hearing on April 13, 1914.

The facts are stated in the opinion.

Mr. Samvuet W. Wiuiams, Attorney General of Vir-
ginia, and Messrs. RanpotpH Harrison, Wittiam A. An-
person, and Joun B. Moon for the Commonwealth of
Virginia.

Messrs. Houmes Conrap and Sanrorp Rosinson, for
the bondholding creditors.

Mr. A. A. Lizty, Attorney General of West Virginia,
and Messrs. V. B. Arcuer, CHarues EH. Hoae, and Joun
H. Hott for the state of West Virginia.
186 Virainia vs. West ‘VIRGINIA.

 

Mr. Chief Justice Ware delivered the opinion of the
court:

In March, 1911 (Virginia v. West Virginia, 220 U. 8S.
1, 55 L. ed. 353, 31 Sup. Ct. Rep. 330), our decision was
given ‘‘with respect to the basis of liability and the share
of the principal of the debt of ‘Virginia that West Vir-
ginia assumed.’’ In view, however, of the nature of the
controversy, of the consideration due the respective
states, and the hope that by agreement between them
further judicial action might be unnecessary, we post-
poned proceeding to a final decree, and left open the ques-
tion of what, if any, interest was due, and the rate there-
of, as well as the right to suggest any mere clerical error
which 1t was deemed might have been committed in fixing
the sum found to be due upon the basis of liability which
was settled. In October, 1911, we overruled without prej-
udice a motion made by Virginia to proceed at once to a
final determination of the cause on the ground that there
was no reasonable hope of an amicable adjustment. Vir-
ginia v. West Virginia, 222 U. 8. 17, 56 L. ed. 71, 32
Sup. Ct. Rep. 4.

‘The motion on behalf of the State of Virginia now be-
fore us is virtually a reiteration of the former motion
to proceed, and is based upon the ground that certain
negotiations which have taken place between the Vir-
ginia Debt Commission representing Virginia, and a
commission representing West Virginia, appointed in
virtue of a joint resolution of the legislature of that state,
adopted in 1913, make it indubitably certain that no hope
of an adjustment exists. But without reviewing the
course of the negotiations relied upon, we think it suffices
to say that, in resisting the motion, the attorney general
of West Virginia, on behalf of that state, insists that Ve
view taken by Virginia of the negotiations is a misappre-
Motion oF PLAINTIFF OVERRULED. 187

 

hension of the purposes of West Virginia, as that state,
since the appointment of the commission on its behalf,
has been relying upon that commission ‘‘to consummate
such an adjustment and settlement of said controversy
as to commend the result of its negotiations to the favor-
able consideration of the governor and the legislative
branch of its government, and thus terminate said con-
troversy, to the satisfaction of her people and the com-
monwealth of Virginia, and upon the principles of honor
and justice to both states, and in fairness to the bond-
holders of the debt for whose benefit this controversy is
still pending.’? The attorney general further stating
that, in order to accomplish the results just mentioned,
a subcommittee of the Commission of West Virginia has
peen and is engaged in investigating the whole subject
with the purpose of preparing a proposition to be sub-
mitted to the Virginia Debt Commission, to finally settle
the whole matter, and that a period of six months’ time
is necessary to enable the committee to complete its
labors.

Having regard to these representations, we think we
ought not to grant the motion to proceed at once to con-
sider and determine the cause, but should, as near as we
ean do so consistently with justice, comply with the re-
quest made for further time to enable the commissioners
of West Virginia to complete the work which we are as-
sured they are now engaged in performing for the pur-
pose of effecting a settlement of the controversy. As,
however, the granting of six months’ delay would neces-
sitate carrying the case possibly over to the next term,
and therefore be in all probability an extension of time
of more than a year, we shall reduce somewhat the time
asked, and direct that the case be assigned for final hear-
ing on the 13th day of April next, at the head of the call
for that day.
188 ‘VIRGINIA vs. WEST ‘VIRGINIA.

 

Opinion Directing Filing of Supplemental Answer and Re-
ferring Cause to Master
Decided June 8, 1914.

SUPREME CouRT—Original Jurisdiction—Swuit Between States—Filing

Supplemental Answer.

The extraordinary nature of the suit between the commonwealth
of Virginia and the state of West Virginia, to determine the amount
due to the former by the latter as its equitable share of the public
debt of the original state of Virginia, which was assumed by West
Virginia at the time of its creation as a state, requires that, con-
trary to the ordinary rules of legal procedure, the state of West
Virginia be permitted, after the Federal Supreme Court has ad-
judged the amount due, save for clerical errors and the question
of interest, to file a supplemental answer asserting the existence
of credits which it is averred if properly considered would
materially reduce the sum so fixed, and alleging various objections
to the allowance of interest, although most of the items embraced
in such supplemental answer were contained in the master’s report, |
and all were available then for every defense now based upon them
if their consideration had been pressed in the aspect and with the
assertions of right now made.

Argued April 16, 17, 1914. Decided June 8, 1914.

Original Bill in equity, filed by the Commonwealth of
Virginia against the state of West Virginia, seeking an
adjudication of the amount due to the former as the
equitable share of the public debt of the original state of
Virginia, which was assumed by the state of West
Virginia at the time of its creation as a state. On
motion of the state of West Virginia for leave to file a
supplemental answer. Granted.

The facts are stated in the opinion.

Mr. A. A. Litty, Attorney General for West Virginia,
and Messrs. Jonn H. Hour, Cuaruus E. Hoses, and V. B.
ARCHER, in support of the motion.

Messrs. Wituiam A. Anperson, RanpotpH Harrison,
Joun B. Moon, and Mr. Joun Gartanp Poxxarp, Attor-
ney General of Virginia, opposed.

Messrs. Sanrorp Rosrnson and Hotmzs Cowrap also
opposed.
Firing SuPPLEMENTAL ANSWER. 189

 

Mr. Chief Justice Wurre delivered the opinion of the
court:

This case, which was begun in 1906, was elaborately
argued in 1907 on a demurrer, which was overruled.
206 U. S. 290, 51 L. ed. 1068, 27 Sup. Ct. Rep. 702. It
was again argued in 1908 on a motion to appoint a
master. 209 U. 8. 514, 52 L. ed. 914, 28 Sup. Ct. Rep.
614. Before that officer there was an extended hearing,
and a full report of all the matters involved was filed
in March, 1910. It was then argued on a motion to take
further testimony, and was ultimately heard in an argu-
ment which extended many days, every party in interest.
being represented, in the month of January, 1911.

Notwithstanding these facts, when in March, 1911,
the court came to decide the controversy, although it
fully reviewed and passed upon the fundamental issues,
as its obvious duty required it to do, and fixed the prin-
cipal sum due by the state of West Virginia to the
state of Virginia, in view of the consideration due to the
parties as states, and that the cause was, as then said,.
‘‘no ordinary commercial suit, but, . . . a quasi-in-
ternational difference referred to this court in reliance
upon the honor and constitutional obligations of the
states concerned rather than upon ordinary remedies,’’
the controversy was not completely and irrevocably dis-
posed of, but was left open for a time not specified, to
the end that any clerical errors that might have crept into.
the calculations of the sums due could be corrected, and
to give the states time to consider the subject of lability
for interest in the light of what had been decided, and
to agree as to the rate and period of the interest to be
paid on the principal sum which was determined. 220:
U.S. 1, 55 L. ed. 353, 31 Sup. Ct. Rep. 330.

On the convening of the court in the following Octo-
ber, 1911, a motion was made on behalf of the state of
Virginia to proceed at once to a final decree. Listening.
190 VIRGINIA vs. West VIRGINIA.

 

to the suggestion of the state of West Virginia to the
effect that it desired further time to consider the sub-
ject, and in view of the public considerations which had
prevailed when the decree was entered the motion of
Virginia was overruled. 222 U. S. 17, 56 L. ed. 71, 32
Sup. Ct. Rep. 4.

Yet further, when, in November, 1913, another motion
on the part of Virginia was made to set the case down to
be finally disposed of at once upon the statement that
no agreement between the parties was possible, again
giving heed to the request of West Virginia, through its
constituted officers, for a postponement for a stated time,
and to the statement that they were engaged in an honest
endeavor to deal with the controversy, and, if possible,
to come to an agreement as to the subjects left open,
the motion of ‘Virginia was again refused (231 U. S. 89,
ante, 29, 34 Sup. Ct. Rep. 29), and as it was possible to
give to the state of West Virginia all the time which that
state, in resisting the motion, asked, and yet secure
against the possibility of the hearing being carried over
to another term, the case was assigned for hearing on
the 13th of April of this year. When that day was
reached, the state of West Virginia, in accord with a
motion filed some days before, prayed leave to be per-
mitted to file a supplemental answer asserting the exis-
tence of credits which, if properly considered, would
materially reduce the sum fixed as due to the state of
Virginia, the said answer in addition asserting various
grounds why interest should not be allowed in favor of
Virginia and against West Virginia on the sum due.
Resisting this request, the state of Virginia insists that
the items embraced in the supplemental answer asked
to be filed had in effect already entered into the consider-
ations by which the principal sum due was fixed, and
that if not, the case should not be postponed for the pur-
pose of permitting the rights urged in the answer to be
Fining SuPPLEMENTAL ANSWER. 191

 

availed of because every item concerning such alleged
rights was proved in the case before the master, was
mentioned in his report, and was known or could have
been known by the use of ordinary diligence by those
representing West Virginia. And it is this controversy
we now come to dispose of.

Without intimating any opinion whatever as to wheth-
er the items with which the proposed supplemental an-
swer deals entered in the processes of calculation or
reasoning by which the sum due was previously fixed,
and moreover, without intimating any opinion as to
how far the items embraced in the answer could
serve as credits upon the sum previously found due,
and therefore to that extent reduce the amount, we think
it is obvious that most of the items embraced in the
answer were contained in the master’s report and in
any event all were available then for every defense now
based upon them if their consideration had been pressed
in the aspect and with the assertions of right now made.

The question then is, Under these conditions ought the
permission to file the supplemental answer be granted?
We think it must be conceded that in a case between
ordinary litigants the application of the ordinary rules
of legal procedure would render it impossible, under the
circumstances which we have stated, to grant the request.
We are of the opinion, however, that such concession
ought not to be here controlling. As we have pointed
out, in acting in this case from first to last the fact that
the suit was not an ordinary one concerning a difference
between individuals, but was a controversy between
states, involving grave questions of public law, deter-
minable by this court under the exceptional grant of
power conferred upon it by the Constitution, has been
the guide by which every step and every conclusion hith-
erto expressed has been controlled. And we are of
the opinion that this guiding principle should not
192 Vircinia vs. West VIRGINIA.

 

now be lost sight of, to the end that when the case
comes ultimately to be finally and irrevocably dis-
posed of, as come ultimately it must, in the ab-
sence of agreement between the parties, there may
be no room for the slightest inference that the more re-
stricted rules applicable to individuals have been applied
to a great public controversy, or that anything but the
largest justice after.the amplest opportunity to be heard,
has in any degree entered into the disposition of the
ease. This conclusion, which we think is required by the
duty owed to the moving state, also in our opinion oper-
ates no injustice to the opposing state, since it but
affords an additional opportunity to guard against the
possibility of error, and thus reach the result most con-
sonant with the honor and dignity of both parties to the
controversy.

Because of these convictions, we therefore make the
following order:

That the motion on the part of the state of West Vir-
ginia to file the supplemental answer be and the same
is hereby granted; and that the averments in such an-
swer be and the same shall be considered as traversed
by the state of Virginia; that the subject-matter of the
supplemental answer as traversed be at once referred
for consideration and report to Charles E. Littlefield,
Eisq., the master before whom the previous hearings
were had, with directions to hear and consider such evi-
dence and testimony as to the matters set forth in the
supplemental answer as the state of West Virginia may
deem advisable to proffer, and such counter showing on
the part of the state of Virginia as that state may deem
advisable to make. The report on the subject to embrace
the testimony so taken and the conclusions deduced there-
from, as well as the views of the master concerning the
operation and effect of the proof thus offered, if any,
upon the principal sum found to be due by the previous
Fininc SuppLeMENTAL ANSWER, 193

decree of this court. Nothing in this order to vacate or
change in any manner or in any particular the previous
decree, and the same to stand wholly unaffected by the
order now made or any action taken thereunder until
the examination and report herein provided for is made
and this court acts upon the same. It is further directed
that the proceedings before the master be so conducted
as to secure a report on or before the 2nd Monday of
October, 1914.
TABLE OF CONTENTS

Notice to Virginia............ eee eee Engen d sana are Gea ewes -
Motion to File Supplemental ANSWEYL.......... eee cece cece ee en eeee 3
Slate: -0f FP aCtS isin isuy cratue diana saa chau ied dass wie awiara das ew 4
DO1eetS Ht Monet. 2 oc. 4 wad aud aca ess coee boss see B44 swe tea4 Se 6
CRORES Oi MOUOR. yaa des 644 eee bsg eae Lede eee) eed n Res 6
Supplemental ANSWeria« sncscs seas nes sauy eos Hones ee wed ye ean ee ae 11
Securities Retained by Virginia.................- cece eee eee Be
Securities Purchased by Virginia........... 0.0.00. eee eee eee 23
Residue of Securities Purchased by Virginia................. 26
Interest on Loans and Dividends on Stock ................. 27
Securities and Property given away............eee eee ee nee 28
Moneys Collected from West Virginia Counties............. 31

Cash on Hand January 1, 1861........ 0... ce eee eee eee 31
ASHGAV Gs oe istates 45 o Maine nn Met Nha eee Sok ee ee AEA ES o HUE Es RON EE Mew 39
EX DIDIG A tah ssc enna aw tne wee pease yale Glau Oaa. FABIA Wanaud whew alan ane dewencne 43
Be eisctig cas. Rey eA ga seelg og) als pits “gga armas gatas ease Ki al gh BBa lA AMA aa Aca 57

Cig epics Hees Led Seth aoa bea Mew g a ee RS Cea oa ee peewee 59
Argument of Joho TH. Holt, Msdiccj wu seanns danke essa ows ows pice pees de 63
A. A. Lilly, Attorney General...............0.00 cease 97

Opinion of U. S. Court Overruling Demurrer to Bill................. 137
Decree Referring Cause to Master............ 161

Adjudicating Principles of Cause............ 165

Overruling Motion to Proceed to Final Hearing 182

DAM Cir Sars sgn ved a ae AHO k OE TON Geta ee RARE 185

Directing Filing of Supplemental Answer.... 188