Virginia v. West Virginia (1911)
Encyclopedia
Virginia v. West Virginia, 220 U.S. 1 (1911), is a 9-to-0 ruling by the Supreme Court of the United States
which held that the state
of West Virginia
was bound by its constitution to pay one-third of the outstanding debt of the state of Virginia
as of January 1, 1861. In its ruling, the Supreme Court concluded that the geographic narrowness of the port and road improvements made by Virginia (most of which occurred outside West Virginia's current borders) were incurred by the people of the entire state, and did not discharge West Virginia's duty to pay. The Court also held that Virginia's attempts to discharge its debts while its negotiations with West Virginia continued did not absolve West Virginia of its duty to pay. Although both states had already agreed on the amount to be paid, the Court ordered them to negotiate over interest computation.
, Virginia attempted to secede
from the United States in 1861 over the issue of slavery. But many of the northwestern counties of Virginia were decidedly pro-union. At a convention duly called by the governor and authorized by the legislature, delegates voted on April 17, 1861, to approve Virginia's secession from the United States. Although the resolution required approval from voters (at an election scheduled for May 23, 1861), Virginia's governor entered into a treaty of alliance with the Confederate States of America
on April 24, elected delegates to the Confederate Congress on April 29, and formally entered the Confederacy on May 7.
Unionist sentiment was so high in the northwestern counties that civil government began to disintegrate, and the Wheeling Intelligencer
newspaper called for a convention of delegates to meet in the city of Wheeling
to consider secession from the state of Virginia. Delegates duly assembled, and at the First Wheeling Convention
(also known as the May Convention), held May 13 to 15, the delegates voted to hold off on secession from Virginia until Virginia formally seceded from the United States. Concerned that the irregular nature of the First Wheeling Convention might not democratically represent the will of the people, elections were scheduled for June 4 to formally elect delegates to a second convention, if necessary. Virginians voted to approve secession on May 23. On June 4, elections were held and delegates to a Second Wheeling Convention
elected. These elections were irregular as well: Some were held under military pressure, some counties sent no delegates, some delegates never appeared, and voter turnout varied significantly. On June 19, the Second Wheeling Convention declared the offices of all government officials who had voted for secession vacant, and reconstituted the executive and legislative branches of the Virginia government from their own ranks. The Second Wheeling Convention adjourned on June 25 with the intent of reconvening on August 6.
The new Reorganized Governor, Francis Harrison Pierpont, asked President Abraham Lincoln
for military assistance, and Lincoln recognized the new government. The region elected new U.S. Senators
and its two existing Representatives
took their old seats in the House
, effectively giving Congressional recognition to the Reorganized Government as well.
After reconvening on August 6, the Second Wheeling Convention again debated secession from Virginia. The delegates adopted a resolution authorizing the secession of 39 counties, with additional counties to be added if their voters approved, and authorizing any contiguous counties with these to join the new state if they so voted as well. On October 24, 1861, voters in 41 counties approved seceding from the state of Virginia. The ballot also allowed voters to choose delegates to a constitutional convention, which met from November 26, 1861, to February 18, 1862. The constitutional convention chose the name "West Virginia" for the new state, and agreed to include a provision in the state constitution which provided for the new state to assume "an equitable portion" of the debt incurred by Virginia in developing and improving the counties which now formed the new state. The constitution required the state legislature to establish a sinking fund
to repay the debt "as soon as practicable" but within at least 34 years (including interest). Article 8, §8 of the constitution read:
The convention adopted the new constitution on February 18, 1862, and the constitution was approved by voters about two months later on April 4.
Reorganized Governor Pierpont recalled the Reorganized state legislature, which voted on May 13 to approve the secession. After much debate over whether Virginia had truly given its consent to the formation of the new state, the United States Congress adopted a statehood bill on July 14, 1862. President Lincoln was unsure of the bill's constitutionality, but pressed by Northern senators he signed the legislation on December 31, 1862. Luckily, the West Virginia constitutional convention had not adjourned sine die
, and was called back into session on February 12, 1863, to amend the state's constitution to bring it in line with changes required by the federal statehood bill. The convention amended the state's constitution on February 17 and adjourned sine die on February 20. The state's voters ratified the amended constitution on March 26, 1863. On April 20, President Lincoln announced that West Virginia would become a state in 60 days.
In 1871, Virginia enacted legislation exchanging two-thirds of its outstanding bonds for new debt, and issuing certificates for the remaining one-third of the debt (which the state assumed would be paid by West Virginia) guaranteeing payment once the state's debt dispute with West Virginia was resolved. Virginia enacted legislation in 1879 reducing the interest rate on the outstanding one-third of the debt, but was unable to discharge the debt due to bondholder resistance. A second sale in 1882 also failed, and in 1892 Virginia issued new bonds to pay off the old one-third debt. Virginia established a commission in 1894 to negotiate with West Virginia over the debt, and in 1900 authorized the commission to accept the 1871 certificates from bondholders with the promise to pay once negotiations with West Virginia concluded.
After years of negotiations over the proper amount of debt, Virginia brought suit before the U.S. Supreme Court (which, under Article Three of the United States Constitution has original jurisdiction
over suits in which a state is a party). Admitting the secession of West Virginia and the transfer of property and debt as proper, Virginia sued to recover one-third the worth of its 1861 debt (or about $33 million). For its part, West Virginia asserted that the one-third accounting was inaccurate, for it was based on the fact that West Virginia constituted one-third of the geographic size of the original state of Virginia and that most of the debt was incurred to improve areas now outside the boundaries of West Virginia. West Virginia claimed that under its constitution, only its state legislature could determine the amount of debt that was appropriate, and that Virginia's settlement with its bondholders was a bar to any suit. Furthermore, West Virginia refused to pay for the new certificates and bonds issued by Virginia or for stock purchases made by Virginia.
delivered the unanimous opinion of the court.
Justice Holmes first reviewed Virginia's claim and West Virginia's answer, as well as the ordinances and relevant state constitutional language in question. Holmes observed that a special master had found West Virginia liable for about $33.9 million in debt, which West Virginia had not disputed.
Holmes concluded that the Court was not required to apply existing law on debt, for a "state is superior to the forms that it may require of its citizens." A constitutional contract is not barred either, he said, so long as the "contemplated state" is actually created and so long as both contracting states and the United States had agreed to the terms. The ordnance of the Second Wheeling Convention which first made reference to the debt was irrelevant in the proceedings, as it is neither referred to nor included in the West Virginia constitution, the legislation of the Reorganized Government of Virginia which consented to secession, or the statehood act passed by Congress.
Holmes held against West Virginia's claim that the amount of debt should be reduced because the debt paid for improvements outside the boundaries of West Virginia. Although West Virginia was correct in observing that improvements were outside its boundaries, he wrote, the improvements were financed by state bonds and purchases of stock in corporations making the improvements. Since bond sales and stock purchases were made by the state on behalf of all citizens, all citizens shared in the risk and all citizens shared in the benefit. "...we should be lost in futile detail if we should try to unravel in each instance the ultimate scope of the scheme. ... 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," Holmes concluded. Nor was ascertaining the amount of debt to be left solely to the West Virginia legislature. Holmes pointed out the danger and inequitable nature of such a scheme, and asserted the Court's jurisdiction over the case:
Having dealt with the foregoing issues, Holmes now confronted whether West Virginia had a duty to pay for the new bonds and certificates issued by Virginia between 1871 and 1900 in its attempt to discharge the one-third debt remaining on its books. The Supreme Court had ruled on the legality of Virginia's debt substitution and duty to pay in numerous cases over the past. Citing Hartman v. Greenhow, 102 U.S. 672 (1880) and McGahey v. Virginia, 135 U.S. 662 (1890), in particular, Holmes observed that the Court had already intimated that West Virginia had a duty to pay these outstanding debts, and now he reaffirmed that duty explicitly.
West Virginia had argued that since Virginia had paid off the one-third debt, Virginia could no longer be a party to any debt suit against West Virginia. Under the criteria established in New Hampshire v. Louisiana, 108 U.S. 76 (1883), a state could not assume the private debts of its citizens and create an end-run around the Eleventh Amendment
(which prevents federal courts from hearing suits brought by the citizen of one state against another state). Holmes disagreed:
Furthermore, the contract contained in the West Virginia constitution provided additional for grounds for Virginia to be party to any suit.
Holmes expressed the Court's concern over how to compute interest on the debt, given the large amount of time (a half-century) which had passed. The majoirty concluded that the states should negotiate over the matter, and another special master appointed if the issue proved contentious.
The Court ordered West Virginia to pay its one-third portion of the debt, pending resolution of the interest computation question.
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
which held that the state
U.S. state
A U.S. state is any one of the 50 federated states of the United States of America that share sovereignty with the federal government. Because of this shared sovereignty, an American is a citizen both of the federal entity and of his or her state of domicile. Four states use the official title of...
of West Virginia
West Virginia
West Virginia is a state in the Appalachian and Southeastern regions of the United States, bordered by Virginia to the southeast, Kentucky to the southwest, Ohio to the northwest, Pennsylvania to the northeast and Maryland to the east...
was bound by its constitution to pay one-third of the outstanding debt of the state of Virginia
Virginia
The Commonwealth of Virginia , is a U.S. state on the Atlantic Coast of the Southern United States. Virginia is nicknamed the "Old Dominion" and sometimes the "Mother of Presidents" after the eight U.S. presidents born there...
as of January 1, 1861. In its ruling, the Supreme Court concluded that the geographic narrowness of the port and road improvements made by Virginia (most of which occurred outside West Virginia's current borders) were incurred by the people of the entire state, and did not discharge West Virginia's duty to pay. The Court also held that Virginia's attempts to discharge its debts while its negotiations with West Virginia continued did not absolve West Virginia of its duty to pay. Although both states had already agreed on the amount to be paid, the Court ordered them to negotiate over interest computation.
Background
At the beginning of the American Civil WarAmerican Civil War
The American Civil War was a civil war fought in the United States of America. In response to the election of Abraham Lincoln as President of the United States, 11 southern slave states declared their secession from the United States and formed the Confederate States of America ; the other 25...
, Virginia attempted to secede
Secession
Secession is the act of withdrawing from an organization, union, or especially a political entity. Threats of secession also can be a strategy for achieving more limited goals.-Secession theory:...
from the United States in 1861 over the issue of slavery. But many of the northwestern counties of Virginia were decidedly pro-union. At a convention duly called by the governor and authorized by the legislature, delegates voted on April 17, 1861, to approve Virginia's secession from the United States. Although the resolution required approval from voters (at an election scheduled for May 23, 1861), Virginia's governor entered into a treaty of alliance with the Confederate States of America
Confederate States of America
The Confederate States of America was a government set up from 1861 to 1865 by 11 Southern slave states of the United States of America that had declared their secession from the U.S...
on April 24, elected delegates to the Confederate Congress on April 29, and formally entered the Confederacy on May 7.
Unionist sentiment was so high in the northwestern counties that civil government began to disintegrate, and the Wheeling Intelligencer
The Intelligencer & Wheeling News Register
The Intelligencer and Wheeling News Register are combined daily newspapers under common ownership in Wheeling, West Virginia owned by Ogden Newspapers. The Intelligencer is published weekday mornings and Saturdays, while the News-Register is published weekday afternoons and Sundays.-References:...
newspaper called for a convention of delegates to meet in the city of Wheeling
Wheeling, West Virginia
Wheeling is a city in Ohio and Marshall counties in the U.S. state of West Virginia; it is the county seat of Ohio County. Wheeling is the principal city of the Wheeling Metropolitan Statistical Area...
to consider secession from the state of Virginia. Delegates duly assembled, and at the First Wheeling Convention
Wheeling Convention
The 1861 Wheeling Convention was a series of two meetings that ultimately repealed the Ordinance of Secession passed by Virginia, thus establishing the Restored government of Virginia, which ultimately authorized the counties that organized the convention to become West Virginia. The convention was...
(also known as the May Convention), held May 13 to 15, the delegates voted to hold off on secession from Virginia until Virginia formally seceded from the United States. Concerned that the irregular nature of the First Wheeling Convention might not democratically represent the will of the people, elections were scheduled for June 4 to formally elect delegates to a second convention, if necessary. Virginians voted to approve secession on May 23. On June 4, elections were held and delegates to a Second Wheeling Convention
Wheeling Convention
The 1861 Wheeling Convention was a series of two meetings that ultimately repealed the Ordinance of Secession passed by Virginia, thus establishing the Restored government of Virginia, which ultimately authorized the counties that organized the convention to become West Virginia. The convention was...
elected. These elections were irregular as well: Some were held under military pressure, some counties sent no delegates, some delegates never appeared, and voter turnout varied significantly. On June 19, the Second Wheeling Convention declared the offices of all government officials who had voted for secession vacant, and reconstituted the executive and legislative branches of the Virginia government from their own ranks. The Second Wheeling Convention adjourned on June 25 with the intent of reconvening on August 6.
The new Reorganized Governor, Francis Harrison Pierpont, asked President Abraham Lincoln
Abraham Lincoln
Abraham Lincoln was the 16th President of the United States, serving from March 1861 until his assassination in April 1865. He successfully led his country through a great constitutional, military and moral crisis – the American Civil War – preserving the Union, while ending slavery, and...
for military assistance, and Lincoln recognized the new government. The region elected new U.S. Senators
United States Senate
The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...
and its two existing Representatives
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...
took their old seats in the House
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...
, effectively giving Congressional recognition to the Reorganized Government as well.
After reconvening on August 6, the Second Wheeling Convention again debated secession from Virginia. The delegates adopted a resolution authorizing the secession of 39 counties, with additional counties to be added if their voters approved, and authorizing any contiguous counties with these to join the new state if they so voted as well. On October 24, 1861, voters in 41 counties approved seceding from the state of Virginia. The ballot also allowed voters to choose delegates to a constitutional convention, which met from November 26, 1861, to February 18, 1862. The constitutional convention chose the name "West Virginia" for the new state, and agreed to include a provision in the state constitution which provided for the new state to assume "an equitable portion" of the debt incurred by Virginia in developing and improving the counties which now formed the new state. The constitution required the state legislature to establish a sinking fund
Sinking fund
A sinking fund is a fund established by a government agency or business for the purpose of reducing debt by repaying or purchasing outstanding loans and securities held against the entity. It helps keep the borrower liquid so it can repay the bondholder....
to repay the debt "as soon as practicable" but within at least 34 years (including interest). Article 8, §8 of the constitution read:
- 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 same as soon as may be practicable, and provide for the liquidation thereof by a sinking fund sufficient to pay the accruing interest, and redeem the principal within thirty-four years.
The convention adopted the new constitution on February 18, 1862, and the constitution was approved by voters about two months later on April 4.
Reorganized Governor Pierpont recalled the Reorganized state legislature, which voted on May 13 to approve the secession. After much debate over whether Virginia had truly given its consent to the formation of the new state, the United States Congress adopted a statehood bill on July 14, 1862. President Lincoln was unsure of the bill's constitutionality, but pressed by Northern senators he signed the legislation on December 31, 1862. Luckily, the West Virginia constitutional convention had not adjourned sine die
Adjournment sine die
Adjournment sine die means "without assigning a day for a further meeting or hearing". To adjourn an assembly sine die is to adjourn it for an indefinite period...
, and was called back into session on February 12, 1863, to amend the state's constitution to bring it in line with changes required by the federal statehood bill. The convention amended the state's constitution on February 17 and adjourned sine die on February 20. The state's voters ratified the amended constitution on March 26, 1863. On April 20, President Lincoln announced that West Virginia would become a state in 60 days.
In 1871, Virginia enacted legislation exchanging two-thirds of its outstanding bonds for new debt, and issuing certificates for the remaining one-third of the debt (which the state assumed would be paid by West Virginia) guaranteeing payment once the state's debt dispute with West Virginia was resolved. Virginia enacted legislation in 1879 reducing the interest rate on the outstanding one-third of the debt, but was unable to discharge the debt due to bondholder resistance. A second sale in 1882 also failed, and in 1892 Virginia issued new bonds to pay off the old one-third debt. Virginia established a commission in 1894 to negotiate with West Virginia over the debt, and in 1900 authorized the commission to accept the 1871 certificates from bondholders with the promise to pay once negotiations with West Virginia concluded.
After years of negotiations over the proper amount of debt, Virginia brought suit before the U.S. Supreme Court (which, under Article Three of the United States Constitution has original jurisdiction
Original jurisdiction
The original jurisdiction of a court is the power to hear a case for the first time, as opposed to appellate jurisdiction, when a court has the power to review a lower court's decision.-France:...
over suits in which a state is a party). Admitting the secession of West Virginia and the transfer of property and debt as proper, Virginia sued to recover one-third the worth of its 1861 debt (or about $33 million). For its part, West Virginia asserted that the one-third accounting was inaccurate, for it was based on the fact that West Virginia constituted one-third of the geographic size of the original state of Virginia and that most of the debt was incurred to improve areas now outside the boundaries of West Virginia. West Virginia claimed that under its constitution, only its state legislature could determine the amount of debt that was appropriate, and that Virginia's settlement with its bondholders was a bar to any suit. Furthermore, West Virginia refused to pay for the new certificates and bonds issued by Virginia or for stock purchases made by Virginia.
Decision
Associate Justice Oliver Wendell Holmes, Jr.Oliver Wendell Holmes, Jr.
Oliver Wendell Holmes, Jr. was an American jurist who served as an Associate Justice of the Supreme Court of the United States from 1902 to 1932...
delivered the unanimous opinion of the court.
Justice Holmes first reviewed Virginia's claim and West Virginia's answer, as well as the ordinances and relevant state constitutional language in question. Holmes observed that a special master had found West Virginia liable for about $33.9 million in debt, which West Virginia had not disputed.
Holmes concluded that the Court was not required to apply existing law on debt, for a "state is superior to the forms that it may require of its citizens." A constitutional contract is not barred either, he said, so long as the "contemplated state" is actually created and so long as both contracting states and the United States had agreed to the terms. The ordnance of the Second Wheeling Convention which first made reference to the debt was irrelevant in the proceedings, as it is neither referred to nor included in the West Virginia constitution, the legislation of the Reorganized Government of Virginia which consented to secession, or the statehood act passed by Congress.
Holmes held against West Virginia's claim that the amount of debt should be reduced because the debt paid for improvements outside the boundaries of West Virginia. Although West Virginia was correct in observing that improvements were outside its boundaries, he wrote, the improvements were financed by state bonds and purchases of stock in corporations making the improvements. Since bond sales and stock purchases were made by the state on behalf of all citizens, all citizens shared in the risk and all citizens shared in the benefit. "...we should be lost in futile detail if we should try to unravel in each instance the ultimate scope of the scheme. ... 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," Holmes concluded. Nor was ascertaining the amount of debt to be left solely to the West Virginia legislature. Holmes pointed out the danger and inequitable nature of such a scheme, and asserted the Court's jurisdiction over the case:
- The provision in the Constitution of the State of West Virginia that the legislature shall ascertain 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 no wise beyond the competence of a tribunal to decide.
Having dealt with the foregoing issues, Holmes now confronted whether West Virginia had a duty to pay for the new bonds and certificates issued by Virginia between 1871 and 1900 in its attempt to discharge the one-third debt remaining on its books. The Supreme Court had ruled on the legality of Virginia's debt substitution and duty to pay in numerous cases over the past. Citing Hartman v. Greenhow, 102 U.S. 672 (1880) and McGahey v. Virginia, 135 U.S. 662 (1890), in particular, Holmes observed that the Court had already intimated that West Virginia had a duty to pay these outstanding debts, and now he reaffirmed that duty explicitly.
West Virginia had argued that since Virginia had paid off the one-third debt, Virginia could no longer be a party to any debt suit against West Virginia. Under the criteria established in New Hampshire v. Louisiana, 108 U.S. 76 (1883), a state could not assume the private debts of its citizens and create an end-run around the Eleventh Amendment
Eleventh Amendment to the United States Constitution
The Eleventh Amendment to the United States Constitution, which was passed by the Congress on March 4, 1794, and was ratified on February 7, 1795, deals with each state's sovereign immunity. This amendment was adopted in order to overrule the U.S. Supreme Court's decision in Chisholm v...
(which prevents federal courts from hearing suits brought by the citizen of one state against another state). Holmes disagreed:
- The liability of West Virginia is a deepseated equity, not discharged by changes in the form of the debt, nor split up by the unilateral attempt of Virginia to apportion 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 happened to bring the rule of New Hampshire v. Louisiana into play.
Furthermore, the contract contained in the West Virginia constitution provided additional for grounds for Virginia to be party to any suit.
Holmes expressed the Court's concern over how to compute interest on the debt, given the large amount of time (a half-century) which had passed. The majoirty concluded that the states should negotiate over the matter, and another special master appointed if the issue proved contentious.
The Court ordered West Virginia to pay its one-third portion of the debt, pending resolution of the interest computation question.