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agreement was concluded by Mr. Merry and Mr. Sanson, Nicaraguan minister for foreign affairs, under which it was arranged that the money demanded by Nicaragua should be deposited in the British consulate pending the decision of the controversy. Meanwhile the Nicaraguan authorities were to raise the embargo which they had previously placed on certain merchandise in order to compel the owners to comply with their demands." This arrangement was approved by the United States,' and the British consul accepted the trust. The amount in dispute, which was claimed from five American firms, was $19,673.33, Nicaraguan currency.c

Subsequently the Department of State received the sworn statements of the American merchants, which apparently showed (1) that they were not in any wise accomplices in the Reyes movement; (2) that during the period of February 3-23 the merchants did not pay current dues in cash, but gave bonds for them, and that the money actually paid was the amount due on bonds which then matured for duties levied in December, 1898, and January, 1899, the payments being made to the agent of the titular government, who held the bonds and who was continued in office by General Reyes; (3) that the bonds bore a penalty of 5 per cent a month for nonpayment, and that payment was demanded under threat of suspension of importations; and (4) that from February 3 to February 25 General Reyes was in full control and exercise of all governmental agencies, civil and military, in the district. Under these circumstances the United States expressed the opinion that to exact a second payment would be "an act of international injustice," and asked the assent of the Nicaraguan Government to the return of the money by the British consul to the depositors.d

Subsequently the Nicaraguan Government sought to bring the mater before its judicial tribunals, and to require the merchants to estab: lish before those tribunals their "excuse" for their "unwarranted payments." To this course the United States objected, on the ground that the question had become a diplomatic one. The two Governments failed to agree on the question whether the payments were made under compulsion to a de facto authority, but the money was at length returned to the American merchants with the assent of Nicaragua."

a For. Rel. 1899, 571, 576-578.

Mr. Hay, Secretary of State, to Mr. Merry, telegram, May 6, 1899, For. Rel. 1899, 579.

For. Rel. 1899, 580-581.

d Mr. Hay, Secretary of State, to Mr. Merry, minister to Nicaragua, July 26, 1899, For. Rel. 1900, 803.

e For. Rel. 1900, 803–824. See also President McKinley's annual message, December 3, 1900.

effects and limitations.

(3) THE CONFEDERATE STATES.

$ 22.

"It is very certain that the Confederate government was never acknowledged by the United States as a de facto govDe facto supremacy; ernment in this sense [i. e., as 'a government de facto in the most absolute sense,' such as that of England under the Commonwealth, first by Parliament, and afterwards by Cromwell as Protector]. Nor was it acknowledged as such by other powers. No treaty was made by it with any civilized state. No obligations of a national character were created by it, binding after its dissolution, on the States which it represented, or on the national government. From a very early period of the civil war to its close, it was regarded as simply the military representative of the insurrection against the authority of the United States.

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"The central government established for the insurgent States differed from the temporary governments at Castine and Tampico in the circumstance that its authority did not originate in lawful acts of regular war; but it was not, on that account, less actual or less supreme. we think that it must be classed among the governments of which these are examples. It is to be observed that the rights and obligations of a belligerent were conceded to it, in its military character, very soon after the war began, from motives of humanity and expediency by the United States. The whole territory controlled by it was thereafter held to be the enemies' territory, and the inhabitants of that territory were held, in most respects, for enemies. To the extent, then, of actual supremacy, however unlawfully gained, in all matters of government within its military lines, the power of the insurgent government can not be questioned. That supremacy did not justify acts of hostility to the United States. How far it should excuse them must be left to the lawful government upon the reestablishment of its authority. But it made obedience to its authority, in civil and local matters, not only a necessity but a duty. Without such obedience, civil order was impossible. It was by this government, exercising its power throughout an immense territory, that the Confederate notes were issued early in the war, and these notes in a short time became almost exclusively the currency of the insurgent States. *They must be regarded, therefore, as a currency imposed on the community by irresistible force. It seems to follow as a necessary consequence from the actual supremacy of the insurgent government, as a belligerent, within the territory where it circulated, and from the necessity of civil obedience on the part of all who remained in it, that

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this currency must be considered in courts of law in the same light as if it had been issued by a foreign government temporarily occupying a part of the territory of the United States. Contracts stipulating for payments in this currency can not be regarded for that reason only as made in aid of the foreign invasion in the one case, or of the domestic insurrection in the other. They have no necessary relations to the hostile government, whether invading or insurgent. They are transactions in the ordinary course of civil society, and though they may indirectly and remotely promote the ends of the unlawful government, are without blame, except when proved to have been entered into with actual intent to further invasion or insurrection. We can not doubt that such contracts should be enforced in the courts of the United States, after the restoration of peace, to the extent of their just obligations."

Thorington v. Smith (1868), 8 Wall. 1, 9-11, holding that a contract for the payment of Confederate States treasury notes, made during the civil war, between persons residing within those States, could be enforced in the United States courts, the contract having been made on a sale of property in the usual course of business, and not for the purpose of giving currency to the notes or otherwise aiding the Confederate cause.

In the case of Hanauer v. Woodruff, 15 Wall. 448, the court, referring to the case of Thorington . Smith, said: "It would have been a cruel and oppressive judgment if all the transactions of the many millions of people composing the inhabitants of the insurrectionary States for the several years of the war, had been held tainted because of the use of this forced currency [Confederate notes], when those transactions were not made with reference to the insurrectionary government." This is quoted in Baldy v. Hunter, 171 U. S. 388, 397, from the opinion of the court in the Confederate Note Case, 19 Wall. 548, in which parol evidence was held to be admissible to prove that the word “dollars" in a contract made during the civil war in fact meant Confederate notes.

A decree, or a judgment, when rendered upon a contract payable in Confederate treasury notes, should be for a sum equal to the value of those notes, not in the gold coin, but in the legal tender currency of the United States at the time when and place where they were payable. (Bissell v. Heyward, 96 U. S. 580.)

"In Delmas v. Insurance Co., 14 Wall. 661, 665, upon writ of error to the supreme court of Louisiana, one of the questions presented was whether a judgment, which was otherwise conceded to be a valid prior lien for the party in whose favor it was rendered, was void because the consideration of the contract on which the judgment was rendered was Confederate money. This court said: "This court has decided, in the case of Thorington . Smith, 8 Wall. 1, that a contract was not void because payable in Confederate money, and notwithstanding the apparent division of opinion on this question in the case of Hanauer v. Woodruff, 10 Wall. 482, we are of the opinion that on the general principle announced in Thorington v. Smith, the notes of the Confederacy actually circulating as money at the time the contract was made may constitute a valid consideration for such contract.' So, in Planters' Bank . Union Bank, 16 Wall. 483, 499, it was a question whether Confederate treasury notes had and received by defendants for the use of the plaintiffs were a sufficient

consideration for a promise, expressed or implied, to pay anything, and it was held upon the authority of Thorington v. Smith, above cited, that 'a promise to pay in Confederate notes, in consideration of the receipt of such notes and of drafts payable by them, can not be considered a nudum pactum or an illegal contract."" (Baldy v. Hunter (1898), 171 U. S. 388, 395.)

"We admit that the acts of the several States in their individual capacities, and of their different departments of government, executive, judicial, and legislative, during

Confederate and

State governments. the war, so far as they did not impair or tend to

impair the supremacy of the national authority, or the just rights of citizens under the Constitution, are, in general, to be treated as valid and binding. The existence of a state of insurrection and war did not loosen the bonds of society, or do away with civil government, or the regular administration of the laws. Order was to be preserved, police regulations maintained, crime prosecuted, property protected, contracts enforced, marriages celebrated, estates settled, and the transfer and descent of property regulated precisely as in time of peace. No one that we are aware of seriously questions the validity of judicial or legislative acts in the insurrectionary States touching these and kindred subjects, where they were not hostile in their purpose or mode of enforcement to the authority of the National Government, and did not impair the rights of citizens under the Constitution."

Horn . Lockhart, 17 Wall. 570, 580.

- In this case (Horn v. Lockhart), which was a suit against an executor for an accounting as to funds in his hands, a question was raised as to whether the defendant was entitled to credit for a certain sum in Confederate notes which, in March, 1864, he invested, under the laws of Alabama, in Confederate bonds. His accounts were approved by the proper probate court in that State, credit being given for the investment in question. The Supreme Court held that this credit could not be allowed, saying: "The validity of the action of the probate court of Alabama in the present case in the settlement of the accounts of the executor we do not question, except so far as it approves the investment of funds received by him in Confederate bonds, and directs payment to the legatees of their distributive shares in those bonds. Its action in this respect was an absolute nullity, and can afford no protection to the executor in the courts of the United States." Three of the justices dissented. See, also, Baldy v. Hunter (1898), 171 U. S. 388, 395–397, infra.

"Referring to the government established in 1862 in Texas in hostility to the United States, and which at that time was in the exercise of the ordinary functions of administration, this court, in Texas v. White, 7 Wall. 700, 773, said: 'It is not necessary to attempt any exact definitions within which the acts of such a State government must be treated as valid, or invalid. It may be said, perhaps, with sufficient accuracy, that acts necessary to peace and good order among citizens, such, for example, as acts sanctioning and protecting marriage and the domestic relations, governing the course of descents, regulating the conveyance and transfer of property, real and personal, and providing remedies for injuries to person and estate, and other similar acts, which would be valid if emanating from a

lawful government, must be regarded in general as valid when proceeding from an actual, though unlawful government; and that acts in furtherance or support of rebellion against the United States, or intended to defeat the just rights of citizens, and other acts of like nature, must, in general, be regarded as invalid and void."" (Baldy ". Hunter (1898), 171 U. S. 388, 392.)

Whether the temporary government of the Confederate States had the capacity to take and hold title to real or perCapacity to take and sonal property, and how far it is to be recognized as hold property. having been a de facto government, and if so, what consequences follow in regard to its transactions as they are to be viewed in a court of the United States, it will be time enough for us to decide when such decision becomes necessary. There is no such necessity in the present case."

Miller, J., delivering the opinion of the court, Sprott v. United States, 20 Wall. 459 (1874). Mr. Justice Field, who delivered a dissenting opinion in the case, maintained that the Confederate government had, as a de facto government, "the same right within its territorial limits to acquire and to dispose of movable personal property which a government de jure possesses." In support of this proposition, he cited Mauran v. Insurance Company, 6 Wall. 14; Thorington v. Smith, 8 Wall. 10; United States v. McRae, 8 Law Reports, Equity, 69; United States r. Prioleau, 2 Hemming & Miller's Chancery Cases, 559.

"The recognition of the existence and the validity of the acts of the so-called Confederate government, and that of the States which yielded a temporary support to that government, stand on very different grounds, and are governed by very different considerations. The latter, in most if not in all instances, merely transferred the existing State organizations to the support of a new and different national head. The same constitutions, the same laws for the protection of property and personal rights remained, and were administered by the same officers. It is only when in the use of these powers substantial aid and comfort was given or intended to be given to the rebellion, when the functions necessarily reposed in the State for the maintenance of civil society were perverted to the manifest and intentional aid of treason against the Government of the Union, that their acts are void.

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"The government of the Confederate States can receive no aid from this course of reasoning. It had no existence except as a conspiracy to overthrow lawful authority. Its foundation was treason against the existing Federal Government. Its single purpose, so long as it lasted, was to make that treason successful. When it was overthrown it perished totally. It left no laws, no statutes, no decrees, no authority which can give support to any contract, or any act done in its service, or in aid of its purpose, or which contributed to protract its existence. So far as the actual exercise of its physical power was

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