The Founders' Blog

June 3, 1790

Opinion in favor of the resolutions of May 21st, 1790, directing that, in all cases where payment had not been already made, the debts due to the soldiers of Virginia and North Carolina, should be paid to the original claimants or their attorneys, and not to their assignees.

The accounts of the soldiers of Virginia and North Carolina, having been examined by the proper officer of government, the balances due to each individual ascertained, and a list of these balances made out, this list became known to certain persons before the soldiers themselves had information of it, and those persons, by unfair means, as is said, and for very inadequate considerations, obtained assignments from many of the soldiers of whatever sum should be due to them from the public, without specifying the amount.

The legislature, to defeat this fraud, passed resolutions on the 21st of May, 1790, directing that where payment had not been made to the original claimant in person or his representatives, it shall be made to him or them personally, or to their attorney, producing a power for that purpose, attested by two justices of the county where he resides, and specifying the certain sum he is to receive.

It has been objected to these resolutions that they annul transfers of property which were good by the laws under which they were made; that they take from the assignees their lawful property; are contrary to the principles of the constitution, which condemn retrospective laws; and are, therefore, not worthy of the President’s approbation.

I agree in an almost unlimited condemnation of retrospective laws. The few instances of wrong which they redress are so overweighed by the insecurity they draw over all property and even over life itself, and by the atrocious violations of both to which they lead that it is better to live under the evil than the remedy.

The only question I shall make is, whether these resolutions annul acts which were valid when they were done?

This question respects the laws of Virginia and North Carolina only. On the latter I am not qualified to decide, and therefore beg leave to confine myself to the former.

By the common law of England (adopted in Virginia) the conveyance of a right to a debt or other thing whereof the party is not in possession, is not only void, but severely punishable under the names of Maintenance and Champerty. The Law-merchants, however, which is permitted to have course between merchants, allows the assignment of a bill of exchange for the convenience of commerce. This, therefore, forms one exception to the general rule, that a mere right or thing in action is not assignable. A second exception has been formed by an English statute (copied into the laws of Virginia) permitting promisory notes to be assigned. The laws of Virginia have gone yet further than the statute, and have allowed, as a third exception, that a bond should be assigned, which cannot be done even at this day in England. So that, in Virginia, when a debt has been settled between the parties and put into the form of a bill of exchange, promisory note or bond, the law admits it to be transferred by assignment. In all other cases the assignment of a debt is void.

The debts from the United States to the soldiers of Virginia, not having been put into either of these forms, the assignments of them were void in law.

A creditor may give an order on his debtor in favor of another, but if the debtor does not accept it, he must be sued in the creditor’s name; which shows that the order does not transfer the property of the debts. The creditor may appoint another to be his attorney to receive and recover his debt, and he may covenant that when received the attorney may apply it to his own use. But he must sue as attorney to the original proprietor, and not in his own right.

This proves that a power of attorney, with such a covenant, does not transfer the property of the debt. A further proof in both cases is, that the original creditor may at any time before payment or acceptance revoke either his order or his power of attorney.

In that event the person in whose favor they were given has recourse to a court of equity. If he finds his transaction has been a fair one, he gives him aid. If he finds it has been otherwise, not permitting his court to be made a handmaid to fraud, he leaves him without remedy in equity as he was in law. The assignments in the present case, therefore, if unfairly obtained, as seems to be admitted, are void in equity as they are in law. And they derive their nullity from the laws under which they were made, not from the new resolutions of Congress. These are not retrospective. They only direct their treasurer not to give validity to an assignment which had it not before, by payments to the assignee until he in whom the legal property still is, shall order it in such a form as to show he is apprized of the sum he is to part with, and its readiness to be paid into his or any other hands, and that he chooses, notwithstanding, to acquiesce under the fraud which has been practised on him. In that case he had only to execute before two justices a power of attorney to the same person, expressing the specific sum of his demand, and it is to be complied with. Actual payment, in this case, is an important act. If made to the assignee, it would put the burthen of proof and process on the original owner. If made to that owner, it puts it on the assignee, who must then come forward and show that his transaction has been that of an honest man.

Government seems to be doing in this what every individual, I think, would feel himself bound to do in the case of his own debt. For, being free in the law, to pay to one or the other, he would certainly give the advantage to the party who has suffered wrong rather than to him who has committed it.

It is not honorable to embrace a salutary principle of law when a relinquishment of it is solicited only to support a fraud.

I think the resolutions, therefore, merit approbation. I have before professed my incompetence to say what are the laws of North Carolina on this subject. They, like Virginia, adopted the English laws in the gross. These laws forbid in general the buying and selling of debts, and their policy in this is so wise that I presume they had not changed it till the contrary be shown.

(Source: http://oll.libertyfund.org/)