This week we examine the tension between legality and necessity through three constitutional and commercial law decisions—Thorington v Smith (1869), Madzimbamuto v Lardner-Burke (1969), and Ontario Bank v Lightbody (1834)—to better understand how money, payment, and legal obligations function under unrecognised or unlawful regimes.
In Thorington, the U.S. Supreme Court upheld contracts made using Confederate currency under the doctrine of necessity, even though the Confederacy was not a lawful government. In Madzimbamuto, the Privy Council declared that acts by the illegal Rhodesian regime were invalid under UK law, though such acts continued to have practical force in Rhodesia. In Ontario Bank v Lightbody, a New York court held that payment using notes from a suspended bank was not valid legal tender, even though the parties were unaware of the suspension, illustrating the fragility of confidence-based currencies.
We will explore how these decisions help clarify:
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When tax obligations, payments, or contracts made under non-recognised authorities can be legally enforced;
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The limits of legal recognition in revenue collection;
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The role of “necessity” in sustaining systems of commerce and taxation during constitutional breakdown;
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How courts approach failed or depreciated currencies in discharging legal obligations.
These cases illuminate how tax law must respond to the disjunction between de jure and de facto authority—and between currency as law and currency as confidence—an issue as relevant today as it was in the 19th and 20th centuries.
Please see below link to case materials which is assumed reading in order to participate in the discussion:
Ontario Bank v. Lightbody – CourtListener.com
Discussion led by Adrian Cartland.