The citation for this case is 27 Fed. Cas. 1162, Case No. 16,335. It’s from the Circuit Court of the Eastern District of Virginia, decided August 2, 1877 by Federal Judge Robert W. Hughes.
Around April 2, 1865, the government of Virginia borrowed several thousand dollars in gold from a Richmond bank and used it to pay the salaries of eleven officials. Along with Governor William [Extra Billy] Smith, who received $5,000, the officials and amounts were: George W. Mumford, $2,000; John O. Chiles, $1,000; Edward H. Fitzhugh, $1,000; P. F. Howard, $500; Henry W. Thomas, $500; Shelton C. Davis, $300; John L. Shackleford, $100; Daniel Denoon, $100; S. L. Moncure, $100; and A. A. Lorents, $100. The United States brought suit to recover that money. This is also known as the Virginia Gold Cases. Because only Smith’s case reached the threshold level for hearing by the supreme court, his case was heard first, with the others stayed until Smith’s case was decided.
Judge Hughes wrote, “The allegations of the declaration are these: (1) That the defendant was indebted to the insurgent government of Virginia in the sum of $5000 on the 2d day of April, 1865; (2) that he promised the said government to pay the said indebtedness; (3) that the said insurgent government was, on the 9th April, 1865, overthrown by the United States by force of arms, and the lawful authority of the United States re-established, in the state; and, (4) that the defendant, after the said 9th day of April, 1865, in consideration of the premises, undertook and promised to pay to the United States the said sum of $5000. The demurrer admits these allegations to be true; yet denies that they constitute a case of indebtedness by the defendant to the United States, and prays judgment, etc.” [27 Fed. Cas. 1162] According to Judge Hughes, what needed to be decided was, “whether the United States acquired by conquest of, and succession to, the insurgent government of Virginia, on the 9th April, 1865, such a right to the money which was then due from the defendant to the insurgent state government as was valid and sufficient to raise the assumpsit set forth in the fourth clause of the declaration. Stating the case differently, the question before me is, whether the United States succeeded by conquest and succession to the rights of action, as well as the property, of the insurgent state government, which was overthrown on the 9th April, 1865. If so, the law will adjudge that the defendant promised to pay to the United States the money which he thus owed to that government, and the court will render judgment against him accordingly.” [27 Fed. Cas. 1162, 1162-1163]
Judge Hughes said it was the United States, not any state, which triumphed in the Civil War. “Therefore, whatever rights, of property or of action ordinarily result under the law of nations and of war from conquest, resulted to the United States, on the 9th April, 1865, and did not result to what was called the Alexandria government of Virginia.” [27 Fed. Cas. 1162, 1163] “And, therefore,” he wrote, “the particular question for decision in this case is, whether the right of action, which the demurrer admits that the insurgent state government of Virginia had against the defendant on the 2d to the 8th April, 1865. for $5000, passed by conquest, and, after the peace following complete conquest, to the United States, on or after the 9th April, 1865. Does succession, after complete conquest and peace, give to the conquering power the right of enforcing, by civil action, the payment of debts due, at the date of conquest, to the conquered power?”
In looking at the legal authorities bearing on the question, Judge Hughes found, “Speaking of what passes by conquest to the conquering power, the supreme court of the United States says, in U. S. v. Lyon, 16 “Wall. [83 U. S.] 435, the conqueror’s ‘rights are no longer limited to the mere occupation of what he has taken into his actual possession, but they extend to all the property and rights of a conquered state, including even debts as well as personal and real property.’ Mr. Justice Clifford, in delivering this opinion of the court, and using the language thus quoted, simply gives expression to the settled principle of the law of nations.” [27 Fed. Cas. 1162, 1163]
In dealing with one facet of the defendant’s case, Judge Hughes said, “The objection of defendant’s counsel, that assumpsit will not lie for an obligation arising by implication from a debtor of a conquered state to the conquering government after conquest, because promises do not arise from acts of violence, is not tenable. It is not denied, it is admitted by demurrer, that the defendant by receiving from the state government before its overthrow, $5,000 not due to him, became indebted to that government It is settled law, as already shown, that a conquering power after the conquest, succeeds to the debts which were due to the conquered power. If, therefore, by the law of nations, which is part of the law of England and America, such a debt becomes due from a citizen to the conquering power, then the law of England and America, even the common law of the two countries, implies an assumpsit, a promise on the part of that citizen to pay the debt. The citizen owes the debt to someone. The money he owes does not belong to himself. He is bound in conscience to pay it to the rightful owner, who is entitled ex equo et bono to receive it. And the law of nations, as well as of England and America, declares that the conquering power is that rightful owner. There is no violence between the debtor, as such, and the conquering power. The violence was between the two governments. The debt, as a debt, becomes due to the conquering power, irrespective of the consideration whether the debtor was a combatant or a non-combatant.” [27 Fed. Cas. 1162, 1163-1164]
He dismisses other objections by the defense, and then comes to the final objection: “As to the proposition of defendant’s counsel, that the war of the United States was not against the insurgent government of Virginia, and that the overthrow of that government was not a conquest, but only the setting aside of one government and the assumption of its functions by another, it can hardly find acceptance in view of the facts of history. The event happened at the close of a frightful war, and was directly produced by arms, and by armies in the field. The power of the United States was directed against the insurgent state governments, even more than against their confederated authorities. The war was conducted for the overthrow of those governments. When they were crushed, the war ceased, and the historical fact of conquest cannot be changed or obliterated by the employment of theoretic paraphrases in speaking of it. As to the insurgent state governments, it was a conquest, and was followed by the legal results of conquest. This debt is due. It is due to some rightful claimant, and I think the law makes it sufficiently apparent who that claimant is.” [27 Fed. Cas. 1162, 1164-1165]
He decided in favor of the United States, and that ruling controlled the disposition of the other ten cases.
This case showed debts owed to confederate governments were taken over by the United States government. They weren’t forgiven and they didn’t extinguish on the defeat of the confederacy. This is in contrast to debts the confederate governments owed, which were repudiated during Reconstruction.