New Orleans Republican. [volume] (New Orleans, La) 1867-1878, 1876-02-18
of which he is entitled to re-

S:v
THE only question which the court is
now called to decide is thit: Inc cry OF
New Orleans having collected s anu sos
apart as required BY the act , OF ioSS : s .uao
to nav interest on the consolidated Donde,
csr he civ be eni ,ined from appropri
ating said fund to any Other purposes In
NV Judgment there is NO doubt that this
ted in holding that the tax collected and
deposited under the act OF 1867 to pay the
interest on the consonuated Donos 10
trust fund in the HANDS OF tne city au.nor-
ties to be applied to that purpose, and NO
other"
so far as the consolidated bonds
are concerned, that the holders can
not be forced by the city or. State
to accept the terms of this bill, and
that the city will be compelled to levy and
and pro rata of principal Of the "a, 444, Ooo
of consolidated bonds in full.
In regard to all other bonds included I'M
der the provisions Of the act, the said bonds
being beyond question in dispute and their
legality and validity doubtful. your COM
mittee find that the passage of this act
would give to them q legislative indorse-
m. mt. and thus legalize them to some ex
tent. or, at any rate, give the value ana
weight Of legislative recognition to series
of bonds now in dispute. The city, after
accepting the provisions of the act, could
not we'll object to funding these doubtful
bonds, and the result would be that the
taxpayers would be saddled with debt
that they may now contest with some
show of success. The bill contains no pro-
visions enabling or permitting or directing
any person to contest these various issues y
provision, in the judgment OF your CON-
mittee, absolutely necessary. In fact, as
we have shown, the city could not well do
it, and the only parties who could do SO
with advantage, viz: the holders of
consolidated bOnde, would find that
in their favor. and not in contrasting the
issue of otner bonds, tor the reason that
under the present rulings by the United
States Circuit Court, they are assured OF
their interest in principal; and the passage
of this bill will merely leave ample funds
in the hands of the city to pay them, they
being preference creditors.
For instance, if this bill becomes law.
the consolidated bOndholders relying upon
their contract and the decision of the
United States Circuit Court sustaining it,
will call on the city for almost 81 ,OO0, 900
yearly, which must be paid to them; and
after that it il OF course no interest to them
whether the city pays the illegal bonds or
II will therefore be at once conceded
that the city not being able to compel tie
consolidated bondholder to participate in
the premium bond scheme, will be COM
PEELED to discriminate between them and
the holders of other bonds, paying them
their full pound Of flesh, and giving to the
remainder an ounce of premium bonds.
If, on the ground of poverty, the city
seeks authority to compromise with her
creditors, she should IN justice treat all
alike, and place all her just debts on the
same footing.
It is urged, however, that because of the
doubt as to the legality of certain bonds,
the holders will now compromise on easy
terms. Your committee believe that the
doubt should be definitely settled before
any compromise or payment whatever.
The usual pea of innocent third parties
ought not to I've considered, as the Supreme
Court of the United States have decided Us
Wallace, page 566) in q similar case that
the ordinary rule would not apply. 1t is
also urged that the adoption of this scheme
will relieve the city from immediate pree-
sure. If this were true your committee Can
not find in it sny justification or even ex.
planatiO tor recommending The passage OF
this bill and the silencing Of legal and CT n
stitutional objections. No plea of necessity
will Justify an aban lOnment of equity and
violation Of law. Either q portion of the
debt is illegal or it is not; if it is, let it be
so declared by the courts before it is too
late, and the taxpayers be relieved from
the burden. If not, let it be otherwise de-
termined, sni then converted into lncOn-
testable eviden 20 of Indebtedness. If an
illegal debt, il should not be paid at all; it
valid debt (fOr it is admitted that the city
must compromise eve n on valid debit, let
the CITY and her creditors then come to
terms.
Your committee can not see that bank
rupt by paying sixty CT nts on the dollar
on IN alleged debt for which there is No
claim in law or equity, does better
than by refusing to pay at all. If this
bill becomes . law, long before the
QUESTION of The legality of these bends
is finally determined by judicial authority
large sums will have been paid and re-
deemed and interest paid in full, and even
bonus or prize attached to them. Of what
avail the judicial verdict, then, so far as the
bonds paid and preniumed are concerned!
Uoder the premium bond plan it is claimed
that 1907 500 will pay the interest and re-
demp,iOn for one year. What about the
yearly payment that must be made of six
per cent on $4,444,0OO Of the consolidated
bOndsl
pay the illegal debt and compromising on
the admitted legal and just obligation.
The act seeks to impair the obligation of
contract Ia contract declared by the
United States Circuit Court to exist, and
is, therefore, open to the charge of uncOnsti-
tutionality.
Briefly summing up the objections to the
passage of this bill, We remark:
l. The uncpnstitutionality of the act it.
self.
T. That all bonds of the city, including
I those whose legality is questioned, are
placed on common footing.
3 That as to certain bonds, viz CONSOLE
dated bonds, they are by Judicial decree re-
moved beyond the pale OF this law, except
by consent OF the holders.
D. The bill fails to place the questionable
debt beyond the operation of the scheme
until the status of said questionable debt is
judicially determined.
5. The bill would tend to secure to one
class of bonds pay ment of principal and in
terest in full out of funds specially intended
for other p lrpOses.
6. The bill would give legislative recog-
milton to III bonds now questioned as to
their legality, and would secure pay ment of
principal, interest and, possibly, q premium
to bonds that M ght afterward be declared
worthless.
7. Would settle on the Taxpayers the full l
amount of the principal of the present debt.
8. Would still leave bondholders lrefus-
ing to participate in the scheme) with their
legal recourse against the city to compel
full payment of interest and principal Of
their bonds
In conclusion, your committee would re-
mark that tn. y have confined themselves to
the consideration of Objec'ioos against the
bill as a whole. and The legal objections
thereto: and while thoroughly convinced
that legislative enactments to facilitate the
relief Of the city Of New Orleans from
financial embarrassment are an imperative
6tf h1 hat