This case is brought before this court, by a writ of error from the court of appeals of the state of Kentucky, under the 25th section of the judiciary act of 1789. An action was commenced by the Bank of the Commonwealth of Kentucky, against the plaintiffs in error, in the Mercer circuit court of Kentucky, on a note for $2048.37, payable to the president and directors of the bank; and the defendants filed two special pleas, in the first of which oyer was prayed of the note on which suit was brought, and they say that the plaintiff ought not to be have, &c., because the note was given on the renewal of a like note, given to the said bank; and they refer to the act establishing the bank, and allege, that it never received any part of the capital stock specified in the act; that the bank was authorized to issue bills of credit, on the faith of the state, in violation of the constitution of the United States. That, by various statutes, the notes issued were made receivable in discharge of executions, and if not so received, the collection of the money should be delayed, &c.; and the defendants aver, that the note was given to the bank on a loan of its bills, and that the consideration, being illegal was void. The second plea presents, substantially, the same facts. To both the pleas, a general demurrer was filed; and the court sustained the demurrer, and gave judgment in favor of the bank. This judgment was removed, by appeal, to the court of appeals, which is the highest court of judicature in the state, where the judgment of the circuit court was affirmed; and being brought before this court by writ of error, the question is presented, whether the notes issued by the bank are bills of credit, emitted by the state, in violation of the constitution of the United States.
This cause is approached, under a full sense of its magnitude. Important as have been the great questions brought before this tribunal for investigation and decision, none have exceeded, if they have equalled, the importance of that which arises in this case. The amount of property involved in the principle, is very large; but this amount, however great, could not give to the case the deep interest which is connected with its political aspect. there is no principle on which the sensibilities of communities are so easily excited, as that which acts upon the currency; none of which states are so jealous, as that which is restrictive of the exercise of sovereign powers. These topics are, to some extent, involved in the present case. It does not belong to this court to select the subjects of their deliberations; but they cannot shrink from the performance of any duty imposed by the constitution and laws.
The definition of the terms bills of credit, as used in the constitution, is the first requisite in the investigation of this subject; and if this be not impracticable, it will be found a work of no small difficulty. Even in standard works on the exact sciences, the terms used are not always so definite as to express only the idea intended. In works on philosophy, there is, generally, still less precision of language. But in political compacts, more is often left for construction, than in most other compositions. This results, in a great degree, from the elements employed in the formation of such compacts; certain interests are to be conciliated and protected; the force of local prejudices must be met and overcome; and habits and modes of action the most opposite are to be reconciled. This was peculiarly the case, in the formation of the constitution of the United States. And instead of objecting to it, on account of the vagueness of some of its terms; its general excellence, both as it regards its principles and language, should excite our admiration.
The terms bills of credit, in their mercantile sense, comprehend a great variety of evidences of debt, which circulate in a commercial country. In the early history of banks, it seems, their notes were generally denominated bills of credit; but in modern times, they have lost that designation; and are now called, either bank-bills, or bank-notes. But the inhibition of the constitution applies to bills of credit, in a more limited sense.