the name of Furness, Ash & Co., consisting of James T. Furness, Joshua P. Ash, and William H. Ash, to continue the same business at the same stand. as successors of Furness, Brinley & Co. This new firm existed only till the fifteenth of March following, when it failed. During its continuance it obtained large discounts of its paper at the Penn National Bank, and from other parties, and the money derived from them was used by it, among other purposes, to pay the installments of $5,000 each month to Edward L. Brinley, the retired partner. Of the amount agreed upon, $20,000 were thus paid. On the retirement of Edward L. Brinley from the old firm and the formation of the new firm, the insolvent condition of the old firm was unknown to its members; but upon an examination of their books after the failure of the new firm, it appeared that the old firm was in fact insolvent on the first of July, 1877, and on the first day of January, 1878. The bill in the present case charges that this agreement for the retirement of Brinley, and the payment to him of $25,000, was made with knowledge of the insolvency of the old firm and upon a corrupt conspiracy between the parties to enable Brinley to fraudulently withdraw his capital from the firm, and escape liability for its debts. It also charges that the discounts of the paper of the new firm were promoted by false statements, on the part of Edward L. Brinley, to influence parties who discounted the paper, and that they were made to carry out the corrupt scheme mentioned. All the allegations of fraud and conspiracy are explicitly and emphatically denied in the answers of the defendants, and they are wholly unsustained by the proofs. Although the business of the old firm for the last years of its existence was loosely conducted, there is not the slightest evidence that any of its members, except perhaps James G. Furness, had a suspicion of its insolvent condition. He may have suspected its condition, but, if so, he kept his suspicions to himself, in no way intimating them to the other members of the firm. He kept the accounts of the partnership, and it does not appear that any other member knew anything of them. It is clear that they believed the firm was financially sound, and not only capable of paying all its debts, but that there was a large surplus. It also appears that the plaintiff bank at the time it discounted the paper of Furness, Ash & Co. knew who composed that firm and relied entirely upon its solvency to meet its obligations.

The case, then, stands thus: Certain members of the co-partnership agreed to pay another member a fixed amount as his capital on his withdrawal from the concern, all parties believing at the time in the firm's solvent condition. The member accordingly withdraws, and a new partnership is thereupon formed between the remaining members. The new firm on its own responsibility borrows money on its notes from different parties, among others from the plaintiff, who were acquainted with its members, and pays part of the capital as agreed upon to the retiring member, and also some of the debts of the old firm. Soon afterwards the new firm fails, and the plaintiff bank now seeks to charge the old firm with the moneys thus loaned, which were used to pay its debts, and the retiring member for the amount due to him. We are clear that this cannot be done. The discount was a transaction entirely between the new firm and the plaintiff. No credit was given to the old firm or to the retired partner. It was not a matter between the bank and either of them. It is simply a common instance of credit given to an insolvent firm without knowledge by the lender of its insolvency; and in the course of business the loss is to be ascribed to overconfidence in the firm's responsibility, while in ignorance of its true condition. The old firm remains liable for its debts contracted while it was in existence and unpaid, and the retired member as a partner in that firm is liable with the other partners; and it seems from the record, that since the failure of the new firm he has himself discharged outstanding liabilities of the old firm amounting to over $37,000, exceeding by about $17,000 the sums paid to him by the new

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firm. The new firm is alone liable for the debts of its own contracting. They cannot be transferred to others with whom the plaintiff never dealt.

The case is different from those where a retiring partner draws out a portion of the capital of the concern with an agreement that the other members will pay the debts, and it turns out that the firm was at the time insolvent. There the retiring party will be held to restore the capital, so far as may be necessary to pay the debts of the concern existing at the time, and this, too, whether there was any fraud designed in the transaction or not. He cannot be permitted to remove any portion of the capital of the insolvent concern beyond the reach of its existing creditors, if necessary to satisfy their demands, nor, if there be any scheme of future fraud in the removal, beyond the reach of its future creditors. Here the defendant Brinley has paid, as already mentioned in the discharge of the debts of the old firm, several thousand do. lars more than he received as his capital in that concern from the new firm. There has been no attempt at any time on his part to avoid the liabilities falling upon him as one of the partners in that firm.

The case of Anderson v. Maltby, 2 Ves. Jr. 244, to which counsel of appellant refers as a beacon light for nearly a hundred years in this branch of the law, differs from the one at bar in essential particulars. There, upon the retirement of a partner in the firm of Maltby & Sons, a fictitious account was made up, showing an indebtedness to him of several thousand pounds, which was entered upon the books of the firm. This was done without any examination of the books at the time, or valuation of the property of the firm, or calculation of its debts, and no public notice was given of the retirement of the partner, except by changing the title of the firm in the books of the Bank of England, and other books, from Maltby & Sons to Maltby & Son. The other members continued the partnership and failed. On a bill filed by its assignee, an account was decreed in favor of the new partnership against the retiring partner for the moneys thus received, owing to the circumstances of fraud attending the transaction. In deciding the case the chancellor, after observing that, when partners make up an account of profits which do not exist, it is colorable, said: “If at the close of the former partnership he (the retiring partner) was bona fide entitled, all the payments were just and reasonable. If he was not bona fide entitled to any demand, but that, to the knowledge and conviction of all three, was mere color, and not a real but a nominal transaction, all the payments were made not merely without consideration, but upon a bad consideration, and such as a court of equity, and, I think, a court of law equally ought to condemn." This is nothing more than declaring that a suit will lie by the assignee of a bankrupt concern to compel a retired partner to account for moneys paid to him by the firm upon a fraudulent claim.

In the case at bar there was no fraudulent claim advanced. The amount to be paid Brinley was for the capital put by him into the firm of Furness, Brinley & Co., all the partners, except perhaps one of them, supposing at the time of his retirement that the firm was not only solvent, but in possession of a large surplus; and the plaintiff is neither the new company nor its assignee, but the bank, which lent money to that company upon its supposed solvency, and now seeks to charge the parties to whom the company paid it in discharge of its obligations. Equity does not follow money thus lent into the hands of persons to whom it has been paid in discharge of obligations to them, and with whom the lender had no relations.

Decree affirmed.

(111 T. S. 270)

POINDEXTER v. GREENHOW, Treasurer, etc.1

(April 20, 1885.)

CONSTITUTIONAL LAW-VIRGINIA BONDS-TENder of CouponS IN PAYMENT OF TAXESVIRGINIA FUNDING ACT OF MARCH 30, 1871-OBLIGATION OF CONTRACT-SUIT AGAINST STATE OFFICERS-ACTS OF JANUARY 26, 1882, AND MARCH 13, 1884, HELD VOID. In an action of detinue for personal property, distrained by the defendant for delinquent taxes, in payment of which the plaintiff had duly tendered coupons cut from bonds issued by the state of Virginia under the funding act of March 30, 1871, held:

(1) That by the terms of that act, and the issue of bonds and coupons in virtue of the same, a contract was made between every coupon-holder and the state that such coupons should "be receivable at and after maturity for all taxes, debts, dues, and demands due the state;" the right of the coupon-holder, under which, was to have his coupons received for taxes when offered, and that any act of the state which forbids the receipt of these coupons for taxes is a violation of the contract, and void as against coupon-holders.

(2) The faculty of being receivable in payment of taxes was of the essence of the right. It constituted a self-executing remedy in the hands of a tax-payer, and it became thereby the legal duty of every tax collector to receive such coupons, in payment of taxes, upon an equal footing and with equal effect, as though they were money; after a tender of such coupons, duly made for that purpose, the situation and rights of the tax-payer and coupon-holder were precisely what they would have been if he had made a like tender in money.

(3) It is well settled by many decisions of this court that, for the purpose of affecting proceedings to enforce the payment of taxes, a lawful tender of payment is equivalent to actual payment, either being sufficient to deprive the collecting offcer of all authority for further action, and making every subsequent step illegal

and void.

(4) The coupons in question are not "bills of credit," in the sense of the constitution, which forbids the states to "emit bills of credit;" because, although issued by the state of Virginia on its credit, and made receivable in payment of taxes, and negotiable, so as to pass from hand to hand by delivery merely, they were not intended to circulate as money between individuals, and between government and individuals, for the ordinary purposes of society.

(5) An action or suit brought by a tax-payer, who has duly tendered such coupons in payment of his taxes, against the person who, under color of office as tax collector, and acting in the enforcement of a void law, passed by the legislature of the state, having refused such tender of coupons, proceeds by seizure and sale of the property of the plaintiff, to enforce the collection of such taxes, is an action or suit against him personally as a wrong-doer, and not against the state, within the meaning of the eleventh amendment to the constitution of the United States.

(6) Such a defendant, sued as a wrong-doer, who seeks to substitute the state in his place, or to justify by the authority of the state, or to defend on the ground that the state has adopted his act and exonerated him, cannot rest on the bare assertion of his defense, but is bound to establish it; and, as the state is a political corporate body, which can act only through agents, and command only by laws, in order to complete his defense, he must produce a valid law of the state, which constitutes his commission as its agent, and a warrant for his act.

(7) The act of the general assembly of Virginia of January 26, 1882, "to provide for the more efficient collection of the revenue to support government, maintain the public schools, and to pay interest on the public debt," requiring tax collectors to receive in discharge of the taxes, license taxes, and other dues, gold, silver, United States treasury notes, national bank currency, and nothing else, and thereby forbidding the receipt of coupons issued under the act of March 30, 1871, in payment therefor, although it is a legislative act of the government of Virginia, is not a law of the state of Virginia, because it impairs the obligation of its contract, and is annulled by the constitution of the United States.

(8) The state has passed no such law, for it cannot; and what it cannot do, in contemplation of law, it has not done. The constitution of the United States, and its own contract, both irrepealable by any act on its part, are the law of Virginia, and that law made it the duty of the defendant to receive the coupons tendered in

'See dissenting opinion, post, 962.

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payment of taxes, and declared every step to enforce the tax thereafter taken to be without warrant of law, and therefore a wrong. This strips the defendant of his official character, and convicts him of a personal violation of the plaintiff's rights, for which he must personally answer.

(9) It is no objection to the remedy in such cases, that the statute, the applica tion of which in the particular case is sought to be prevented, is not void on its face, but is complained of only because its operation in the particular instance works a violation of a constitutional right, for the cases are numerous where the tax laws of a state, which in their general and proper application are perfectly valid, have been held to become void in particular cases, either as unconstitutional regulations of commerce, or as violations of contracts prohibited by the constitution, or because in some other way they operate to deprive the party complaining of a right secured to him by the constitution of the United States.

(10) In cases of detinue the action is purely defensive on the part of the plaintiff. Its object is merely to resist an attempted wrong and to restore the status in quo as it was when the right to be vindicated was invaded. It is analogous to the preventive remedy of injunction in equity when that jurisdiction is invoked, of which frequent examples occur in cases to prevent the illegal taxation of national banks by state authorities.

(11) The suit authorized by the act of the general assembly of Virginia of January 26, 1882, against the collector of taxes, refusing to accept a tender of coupons, to recover back the amount paid under protest, is no remedy at all for the breach of the contract, which required him to receive the coupons in payment. The taxpayer and coupon-holder has a right to say he will not pay the amount a second time, and, insisting upon his tender as equivalent to payment, to resist the further exaction, and treat as a wrong-doer the officer who seizes his property to enforce it. (12) Neither can it be considered an adequate remedy, in view of the supposed necessity for summary proceedings in matters of revenue, and the convenience of the state, which requires that the prompt collection of taxes should not be hindered or embarrassed; for the revenue system must yield to the contract which the state has lawfully made, and the obligation of which, by the constitution, it is forbidden to impair.

(13) The right to pay in coupons cannot be treated as a mere right of set-off, which is part of the remedy merely, when given by the general law, and therefore subject to modification or repeal, because the law which gave it is also a contract, and therefore cannot be changed without mutual consent.

(14) The acts of the general assembly of Virginia of January 26, 1882, and the amendatory act of March 13, 1884, are unconstitutional and void, because they impair the obligation of the contract of the state with the coupon-holder under the act of March 30, 1871; and that being the main object of the two acts, the vice which invalidates them pervades them throughout, and in all their provisions. It is not practicable to separate those parts which repeal and abolish the actions of trespass, and trespass on the case, and other particular forms of action, as remedies for the tax-payer, who has tendered his coupons in payment of taxes, from the main object of the acts, which that prohibition was intended to effectuate; and it follows that the whole of these and similar statutes must be declared to be unconstitutional, null, and void. It also follows that these statutes cannot be regarded in the courts of the United States as laws of the state, to be obeyed as rules of decision in trials at common law, under section 721, Rev. St., nor as regulating the practice of those courts, under section 914, Rev. St.

(15) The present case is not covered by the decision in Antoni v. Greenhow, 107 U. 8. 769, 8. C. 2 SUP. Cr. REP. 91, the points now involved being expressly reserved in the judgment in that case.

In Error to the Hustings Court of the City of Richmond, State of Virginia. Wm. L. Royall, D. H. Chamberlain, Wm. M. Evarts, and Wager Swayne, for plaintiff in error. A. H. Garland, R. T. Merrick, and F. S. Blair, Atty. Gen., for defendant in error.

MATTHEWS, J. The plaintiff in error, who was also plaintiff below, brought his action in detinue on the twenty-sixth day of April, 1883, against Samuel C. Greenhow, for the recovery of specific personal property, to-wit, one office desk of the value of $30, before a police justice in the city of Richmond, who dismissed the same for want of jurisdiction. An appeal was taken by the plaintiff to the hustings court for the city of Richmond, where the facts were found by agreement of parties to be as follows: That the plaintiff was a resident of the city of Richmond, in the state of Virginia; that he owed

to the state of Virginia, for taxes on property owned by him in said city for the year 1882, $12.45, which said taxes were due and leviable for, under the laws of Virginia, on the first day of December, 1882; that the defendant, Samuel C. Greenhow, was the treasurer of the city of Richmond, and as such is charged by law with the duty of collecting taxes due to the state of Virginia by all residents of said city; that on the twenty-fifth day of April, 1883, the defendant, as such treasurer and collector of taxes, made upon the plaintiff demand for the payment of the taxes due by him to the state as aforesaid; that the plaintiff, when demand was so made for payment of his taxes, tendered to the defendant in payment thereof 45 cents in lawful money of the United States, and coupons issued by the state of Virginia under the provisions of the act of the general assembly of that state of March 30, 1871, entitled "An act to provide for the funding and payment of the public debt;" that said coupons so tendered by plaintiff were all due and past maturity, and amounted in the aggregate to $12, and were all cut from bonds issued by the said state of Virginia under the provisions of the said act of March 30, 1871; that the said coupons and money so tendered by the plaintiff amounted together to exactly the sum so due the state by the plaintiff for taxes; that the defendant refused to receive the said coupons and money so tendered in payment of the plaintiff's taxes; that the defendant, after said tender was made, ̧ as he deemed himself required to do by the acts of assembly of Virginia, entered the plaintiff's place of business in said city,*and levied upon, and took possession of the desk, the property of the plaintiff now sued for, for the purpose of selling the same to pay the taxes due from him; and that the said desk is of the value of $30, and still remains in possession of the defendant for the purpose aforesaid, he having refused to return the same to the plaintiff on demand.

The hustings court was of the opinion that the police justice erred in deciding that he had no jurisdiction, and that the issue in the action might have been tried by him, and that it should be tried by that court on the appeal; but it was also of the opinion that in tendering to the defendant, as part of the tender in payment of the plaintiff's taxes, the coupons mentioned and described, the plaintiff did not tender what the law required, nor what the defendant was, as treasurer, obliged to or should have received in payment of the plaintiff's taxes, under the provisions of the act of the general assembly of Virginia, approved January 26, 1882, entitled "An act to provide for the more efficient collection of the revenue to support government, maintain the public schools, and to pay interest on the public debt;" that the plaintiff's remedy for the failure of the defendant, as treasurer, to receive coupons in payment of taxes, was to be found in the provisions of said act of January 26, 1882; and that, therefore, the defendant does not unlawfully or wrongfully detain the plaintiff's property levied on by the defendant, as treasurer of the city of Richmond, for the plaintiff's taxes; and judgment was accordingly rendered for the defendant.

It appears from the record that there was drawn in question the validity of the said act of the general assembly of Virginia, approved January 26, 1882, and of the eighteenth section of the act of the general assembly of the state of Virginia, approved April 1, 1879, which authorizes the collection of delinquent taxes by distraint of personal property, upon the ground that these acts are repugnant to section 10 of article 1 of the constitution of the United States, which declares that no state shall pass any law impairing the obligation of contracts, the judgment of the court being in favor of the validity of said acts and against the rights claimed by the plaintiff under the constitution of the United States. The hustings court is the highest court of the state to which the said cause could be taken.

The act of January 26, 1882, the validity of which is thus questioned, is as follows: