We do not perceive that there is any difference between the right to recover for the amount issued to the bank in bonds and for that credited on the books of the city. If the debt was legally created, the holder had the right to recover the amount of the bills held by him. If it derived a new validity from the surrender of an old debt of a disputed character, it is to be observed that all of the debt was equally given up. New bonds were issued for a portion, but all of the debt was surrendered. It was the surrender of what was claimed to be a legal debt, and the creating a new obligation thereby, that is said to create the liability. If a city has power to bind itself by substituting a new liability for a cancelled one, it may do so by any instrument of acknowledgment which affords sufficient evidence of a debt. We are of opinion that the two classes of obligations are governed by the same rule.
The statutes of Arkansas upon the subject of notes issued for the purposes of currency are complicated and hard to be understood.
On the 25th of November, 1837, was passed the first act to which we are referred, entitled 'An Act to prevent the circulation of private notes in the State,' prohibiting the circulation of all money or bank-notes by persons unauthorized by law, and of notes of a less denomination than five dollars.
On the 14th of February, 1838, was passed the act entitled 'An Act to compel the payment of change tickets,' which provided that the holder of any change ticket, bill, or small note should have the right to sue the issuer or indorser thereof before any justice of the peace, and recover the amount held by him, and providing that the act first above mentioned should take effect from the first day of March, 1838.
The effect of the two statutes would appear to be that the general circulation of private notes was prohibited by law, but the holder of notes thus illegally circulated was authorized to recover the amount from the party issuing or indorsing the same, and to have execution without appeal or delay.
On the 8th of January, 1855, was passed 'An Act to restrain the circulation of change tickets,' prohibiting the circulation by any person or persons of notes or bills of less denomination than five dollars, to pass as currency, whether first issued within this State or not, punishable by fine and imprisonment.
On the 8th of February, 1859, was passed 'An Act to prevent the people from being defrauded with bank paper,' and on the 18th of November, 1861, 'An Act to repeal all State laws that prohibit the circulation of bank-bills of any denomination.' The last act is in these words: 'All acts or parts of acts prohibiting the circulation of bank-bills of any denomination or amount and fixing a penalty for such circulation be, and the same are hereby, repealed; but nothing herein contained shall be construed so as to authorize the issuance of shin-plasters, change notes, or other irresponsible paper by individuals, corporations, or others.'
'Shin-plasters and change notes' we may assume to be paper-money of a less denomination than one dollar, intended to take the place of small pieces of coin. But what is 'other irresponsible paper'?
It would seem that shin-plasters and change notes are irresponsible paper, as not only are they expressly required not to exist, but they are condemned in the company of 'other irresponsible paper.'
Nor can we treat this subject as paper or notes issued by those who are not solvent in their pecuniary affairs, or not able to respond to the consequences of their actions.
There is no standard known to the law to determine where responsibility or irresponsibility exists.
We apprehend this expression may have been intended to apply to fractional paper, which in its form, character, and nature was considered as a debased and unhealthy circulating medium.
By an act approved Dec. 14, 1875, it was enacted 'that all city warrants, scrip acceptances, or money shall be receivable for any city purposes except for interest tax, and for all debts due the municipal corporation, by whom the same were issued, without regard to the time or date of issuance of such warrant, scrip acceptance, or money, or the purpose for which they were issued.'
Upon this state of the law the judge at the circuit was of the opinion that the original issue of its notes by the city of Little Rock was illegal. It is not necessary that we concur in this view, or that we should dissent from it. We have referred to the statutes that the actual position of the parties towards each other might be understood, and the point on which the decision in favor of the bank was made be appreciated.