Memphis daily appeal. [volume] (Memphis, Tenn.) 1847-1886, 1875-06-23

usury had been set up in the pleading or
claimed on the trial Of the case, the ma
iOrity Of the court would have considered
the matter and possibly have agreed
with Justices Field and Bradley,
who as minority still insisted
that the city OF Memphis had
no authority to sell lis bonds
for less than par value. II the bonds of
the city are or were worth but fifty cents
on the dollar to the holder, il is difficult
TO see why the holder should be per-
mitted to collect more than that price
from the city. The rule recognized to be
lust and equitable with private citizens
should be equally so to the city. The
question OF reputation has nothing to
do with determining the sOundness of
the argument or the Justice OF the rule.
AS there can be no doubt that the city
has no authority to part with its bonds
for less than their par value, it follows
that where the bonds have been sold fOr
less, either the bonds so sold are void, or
they are worth only the actual price paid
for them by the holder, or the sum real
lied for them by the city, with six per
cent. on that sum added, and worth not
one cent more. Reputation is refusal
to pay debt legally made, and extOr-
ton is to be made to pay debt illegally
contracted. 1t is fashionable in certain
quarters, in dealing with cities, counties,
ETC., for the holders Of claims Of indebt-
edness to cover up WrOng-dOing by con-
verting their claims into bonds. But a
bond having thirty years to run, and
bearing interest, is no better evidence Of
debt than q note having thirty days to
run, and both must be judged
by the came rule of right and
law. The doctrine Of innocent
holder or purchaser in due course OF
ade can afford III Tennessee no prOtec-
ton or defense TO the application to the
rule of right and law above referred to;
for es far back as 1917 the supreme court
Of Tennessee decided in the case Of Hole
man and others against HObsOh and
others, that where q note or bond was
purchased at discount it will be held
to have been negotiated in the way OF
trade only TO the amount advanced by
the purchaser. In the application Of this
doctrine OF actual vslIe of the note or
security, l can see nc good reason for
excluding the city Of Memphis, and
hence [ shall do my utmost to have the
question determined by the courts Of the
country. The only protection that tax
payers can have against eXtOrtiOn and
usury is to enforce the rule, and, per-
haps, it may be added, that the enforce
ment of the rule is the only way to save
the city from bankruptcy and ruin.
Very respectfully,
JOHN LOAGUE, Mayor.
MEMPHIS, May g. 1874,
Which was received and published
with the proceedings OF the meeting.
We find that the common council
seemed to doubt the proposed policy Of
the mayor, and by resolution asked the
city attorney for his opinion on the mat
ter, and we herewith append the city at
torney's reply, and, also, another ask
ing for counsel to assist him as to the
cases, in which he mentions the names
of lawyers desired, and states that the
mentioned attorneys are in accord with
the policy.
Proceedings of the General Council, Mem
phls, Monday, July 8, 1874
The following communication was re-
ceived from the city attorney, g. A.
Hanson:
MEMPHIS, TENN, July 8, 1874,
Honorable Mayor and City Council:
NEUTRALITY-SUSPICIOUS. time since you,
by resolution, requested me to give in
writing the points and authorities upon
which [ expected to defend the city
against what is known as the "bOnd
suts.n In the then peculiar attitude of
these cases l considered it my duty to
request you to Tesciud that resolution,
which ] believe was done. Since then
I have msde my defense in open court,
and there is now no reason why l should
not infOrm you what it IS. Il may be
proper 10 state that had nothing to do
with the inception % this litigation, or
the raising of the questions upon
which it must turn. They were
all pTecipiiated by the b0ndholders,
who, Notwithstanding our Impoverished
condition, would not wait TO give Us q
moment for TecGp Grafton, evidently in
tending by their action to compound
their interest, by obtaining judgments.
In order 10 save the city from oppression
and wrong, I have raised the following
questions - to the validity of the bonds:
First, the authority granted by the legis-
IRtur6 to ahe bonds provided that the
bonds should not be Issued until the
ordinance providing for the issue should
be submitted to vote Of the people,
and majority Of those voting should
vote in favor of issuing the bonds. No
election was ever held by shy COmpe-
tent authority. 1t appears from the re- |
cords that the sergeant alarms, G., F. !
Smith, appointed judges, clerks and |
to hold an election, and |
did open the polls in four Of the ten |
wards in the city, at which 1898 votes |
ale reported to lave been cast, mostly |
''for bonds" This election | hold to be |
L., -
arms had no power to appoint or quail |
" judges, clerks and sheriff5, or to hold !
he election; and secondly, because the |
polls were not opened in all the wards, |
IS required by law, when it was q mis- |
ward in which the voter resided. |
could not give to the sergeant at-arms |
such authority. In the second place, If |
he authority ever existed to issue the |
ponds, it was limited to $1,000, 900 of
unding and 100000 of paving bonds.
There was only q small portion OF each |
Kind issued for the purposes intended, !
lut q large amount were manufactured |
" the city officers and sold in the
market for what they would bring; |
others were prepared ana deposited as
collateral for loans, and were forfeited or
old by the holders for non-payment of
he notes for which they had been de-
)Osited as security; and for this reason
hold that the city is not bound for
hem. 1t is to be borne in mind that
hese bonds were naked promises to
Jay, or certificates of Indebtedness.
They do not show upon their face any
for their Issuance, and the au-
hOTitjeS settled it, that all takers are |
therefore, put upon inquiry as to the
-aliditY and the manner of issuance,
nd dispOsing of these bonds being q
natter Of record open to the inspection
f everyone, no person can claim to be
n innocent holder. 1t is therefore seen
hat as the bond does not show
pOn its face the authority upon
Which it was issued, and the election
eing void because it was not held ac-
Ording to law, nor by anyone having
over to hold it, and the bOndhOlders
eng put upon inquiry, are confronted
y these defects st the first step, and
ave taken the bonds at their peril, and
snnot recover upon them as innocent
older5. Upon these defenses l make |
be fight. Some of the points are new,
nd should be pressed with great care
nd ability. II this is done, feel quite
ertain that the city will sustain itself in
ne defense OF these suits, and save to
le Taxpayers over one million, and |
rObabIy two and half million dollars.
success and the hearty cO-ODe-
alton OF each of you in this vast under
king, am, most respectfully, yours,
&C., Signed G. A. HANSON,
City Attorney"