Lee v. Robinson

Background

Robinson, a North Carolina resident, bought land at a tax sale and sued to recover it after Lee, a South Carolina resident argued he had paid the taxes before the sale. The disputed payment included a five-dollar piece of South Carolina revenue bond scrip issued under an 1872 law that said the scrip would be receivable for taxes. The Circuit Court found the tender defective and the controversy concerned whether that scrip could lawfully be used to pay taxes.

Reasoning

The Court examined whether the scrip was issued in line with South Carolina’s 1868 constitution and whether it ran afoul of the U.S. Constitution’s ban on bills of credit. Article IX, Section 10 of the state constitution forbade issuing scrip or other evidence of state debt except in narrow, specified situations, and required public loans to follow particular forms. The Court concluded the 1868 and 1872 statutes did not fit those exceptions, that the 1872 scrip was not authorized under the state constitution, and that state provisions pledging the scrip had been repealed so the scrip was not receivable for taxes after 1873. The state supreme court had also treated the scrip as a prohibited bill of credit. For these reasons the tender was legally insufficient.

Real world impact

Because the scrip could not lawfully be used to pay taxes, the tax sale stands and Robinson keeps the land. The ruling limits the State’s ability to create or use similar tax-payment scrip that conflicts with the state constitution and affects anyone relying on such scrip to avoid tax sales.