[2] The purported bond sale during the civil war was thus void and the reconstructed Texas remained the legal owner.

[3] Texas had received $10 million in United States bonds in settlement of border claims as a part of the Compromise of 1850.

The case, filed on February 15, 1867, appeared on the docket as The State of Texas, Compt., v. George W. White, John Chiles, John A. Hardenburg, Samuel Wolf, George W. Stewart, the Branch of the Commercial Bank of Kentucky, Weston F. Birch, Byron Murray, Jr., and Shaw.

[8] By the time the suit was filed, the radical faction of Republicans in Congress opposed President Johnson's policy in Reconstruction.

Increasingly, Republicans were abandoning Lincoln's position that the states had never left the Union, preferring to treat the South as conquered provinces totally subject to Congressional rule.

They hoped that the Supreme Court would reject jurisdiction in the case by claiming that there was no legally recognized government in Texas.

Such a ruling would have the effect of accepting Texas as fully restored to its place in the Union and render the Military Reconstruction Act unconstitutional.

In response to an issue raised by the defendants, Texas differentiated between those acts of the legislature necessary "to preserve the social community from anarchy and to maintain order" (such as marriages and routine criminal and civil matters) and those "designed to promote the Confederacy or that were in violation of the U.S.

[13] James Mandeville Carlisle, the attorney for Hardenburg, argued that, since his client had purchased his bonds on the open market in New York, he had no way of knowing about any possible questions concerning the validity of his title.

[13] White's attorney, P. Phillips, argued that, if the bond sales were invalid, then all actions of the state government during the war were null and void.

Chief Justice Salmon Chase, a former U.S. Secretary of the Treasury under President Abraham Lincoln, first addressed a procedural issue raised in the original filings claiming that the state lacked the authority to prosecute the case.

Chase ruled that the approval by any one of the three governors of the original bill submitted to the court was sufficient to authorize the action.

[15] Chase wrote that the original Union of the colonies had been made in reaction to very real problems faced by the colonists.

It began among the Colonies, and grew out of common origin, mutual sympathies, kindred principles, similar interests, and geographical relations.

It was confirmed and strengthened by the necessities of war, and received definite form and character and sanction from the Articles of Confederation.

He rejected the notion that Texas had merely created a compact with the other states; rather, he said, it had in fact incorporated itself into an existing indissoluble political body.

These obligations were created by the Constitution in its grant of the power to suppress insurrections and the responsibility to insure for every state a republican form of government.

The latter, indeed, in the case of a rebellion which involves the government of a State and for the time excludes the National authority from its limits, seems to be a necessary complement to the former.

In previous circuit court cases, Chase had recognized the validity of legislative decisions intended solely to maintain peace and order within Southern society.

He had recognized the validity of "marriage licenses, market transactions, and other day-to-day acts legally sanctioned by the Confederate state governments."

[18] Justice Robert Grier wrote a dissent in which he stated that he disagreed "on all points raised and decided" by the majority.

Grier relied on the case Hepburn v. Ellzey (1805) in which Chief Justice John Marshall had defined a state as an entity entitled to representatives in both Congress and the Electoral College.

Justice Grier said that Texas's claim that she was not a state during the Civil War was the equivalent of making a "plea of insanity" and asking the court to now overrule all her acts "made during the disease".

[22] In December, Illinois Senator Lyman Trumbull, using the Miller–Swayne dissent as his model, introduced legislation to overcome the White decision.