Virginia v. West Virginia, 238 U.S. 202 (1915)

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Virginia v. West Virginia

No. 2, Original

Argued April 27, 28, 29, 1915
Decided June 14, 1915
238 U.S. 202

IN EQUITY

Syllabus

This controversy being one between states, referred to this Court in reliance upon the honor and constitutional obligations of the parties, it has been determined only after the amplest opportunity for hearing and with full recognition of every existing equity.

West Virginia is entitled to have the assets in the Virginia sinking fund and those specifically appropriated for payment of the debt applied in reduction of her share of the debt in the same proportion (23 1/2%) as she is liable therefor.

The proper date for the division of the assets in the sinking fund and the taking account of the indebtedness to be divided between Virginia and West Virginia is January l, 1861, as fixed by the contract.

In proving market value, accredited price-currents, lists, and market reports, including those published in trade journals and newspapers which are considered trustworthy are admissible in evidence.

Shares of stock represent the proportionate interest of the shareholders in the corporate enterprise, and a rule that this interest should, in the absence of supporting testimony, be taken as actually worth the par of the shares would be artificial, and not justified by any exigency in the administration of justice.

An asset consisting of a debt due in a Confederate state which was paid in full in Confederate money should not for that reason be valued in adjusting accounts as of 1861 at less than the face value.

In estimating the value of bank stocks at book value, an allowance of five percent for liquidation and realization is proper.

After considering all the exceptions to the Master’s second report in this case, held that there should be deducted from West Virginia’s share (23 1/2%) of the principal debt of Virginia on January 1, 1861, already fixed, 220 U.S. 1, 35 at $7,182,507.46, the same proportionate part of the value of the assets in the sinking fund on that date and retained by Virginia amounting to $2,966,885.18, so that West Virginia’s net share of the debt is now fixed at $4,215,622.28 exclusive of interest.

A contract is to be interpreted according to its true intent although varied conditions may have during the lapse of years varied the form of fulfillment; in this case there are no equities which destroy the contract claim.

In a contract between sovereign states, the questions of whether the debtor party is liable for interest on ascertainment of the amount due and rate of interest and period from which it should be computed are to be determined by the fair intendment of the contract itself.

It is not in derogation of its sovereignty that a state be charged with interest if the agreement so provides.

A contract on the part of a state to assume an equitable proportion of an interest-bearing debt means the taking over of the liability for interest, as well as principal.

In determining what rate of interest West Virginia should pay on the proportion of the debt of Virginia assumed, the action of Virginia in regard to interest on the debt should be considered, and, under all the circumstances of the case, held, in fixing the equitable proportion of West Virginia, that her part of the principal should be placed on a three percent basis as of July 1, 1891, with three percent per annum interest from that date, and with four percent per annum interest from July 1, 1861, to July 1, 1891, making a total of interest to July 1, 1915, of $8,178,307.22, and the total of the debt $12,393,929.50.

The decree shall provide for interest on five percent per annum on the total amount awarded by the decree from the date of entry.

The facts, which involve the final adjustment between Virginia and the West Virginia and the determination of the equitable proportion of the debt of Virginia which the West Virginia agreed to assume and the liability of the latter for interest thereon, are stated in the opinion.