In the aftermath of the U.S. CIVIL WAR, several questions about the legal status of the Southern states that had seceded from the Union remained unanswered. These questions included whether these states had, in fact, left the Union, whether the acts of the secessionist governments had legal effect after the war, and whether the imposition of military rule by the president and Congress on these states during the postwar Reconstruction meant that the states were not fully restored to the Union.
The Supreme Court addressed these issues in Texas v. White, 74 U.S. (7 Wall.) 700, 19 L. Ed. 227 (1869), which involved a dispute over the payment of U.S. bonds. In 1850 Texas had received $10 million in bonds from the United States in settlement of boundary claims. The bonds were payable to the state and redeemable after December 31, 1864. Texas law required the governor to endorse the bonds before they could be redeemed or transferred. When Texas seceded from the Union in 1862, however, the Confederate legislature repealed the gubernatorial endorsement requirement and established a military board to sell the bonds to finance the war effort.
In 1865 George White and John Chiles, among others, purchased the bonds in exchange for cotton and medicine. None of the bonds were endorsed by the governor. After the war the people of Texas convened and established a constitution under which they elected a governor in 1866. The convention also authorized the governor to seek recovery of the bonds. In 1867 Congress enacted the Reconstruction Acts, which created five military districts in Texas, each with a military commander. The military rule was imposed to ensure the restoration of civil peace in the Southern states and to protect the rights of the newly freed slaves.
Texas filed suit in the U.S. Supreme Court seeking recovery of the bonds sold to White and
Chiles and subsequently resold to citizens of many states. The state also asked that the United States be enjoined from paying the bonds because they had not been endorsed by the governor and were past due when presented for payment. White argued that Texas had no right to bring the suit and that the Supreme Court had no jurisdiction to hear the case because Texas's status as a state had changed due to its secession during the Civil War. Thus, federal law was not applicable at the time the bonds were transferred.
The Supreme Court rejected the bondholders' arguments...