The New Orleans daily Democrat. [volume] (New Orleans, La.) 1877-1880, 1877-09-16
THE BIG SUIT.
THE CITY OF NEW ORLEANS VS.. THE
SOUTHERN BANK.
Reply Of the Commit ssiOners of the Con
sOlidated Debt 80 President
Layton's Card.

To the Public:
TO the suit recently instituted against the
Southern Bank by the city, its president has
preferred an appeal to public sympathy rather
than the usual channel of filing an answer in
court.
This appeal presents two prominent features.
First. an elaborate statement of the banks sol
vency; second. the serious charge that the ADJ
ministrators were instigated by malice in the
institution of the suit.
As to the first. the sovency of the bank has
not been questioned. and as that point Is en-
tirely ir relevant to the matter of the petition,
President Layton's financial exhibit is purely
gratuitous.
AS to the second plain narration of facts
will completely demonstrate its absurdity.
To what extent public sentiment may be held
to influence or color judicial action there is no
precise means of determining. but that 1t Is con-
sidered all potent by the bank we naturally con-
elude from the action of the president
The impression made by the demand of the
city Is in itself proof positive that the suit Is
based upon something more substantial and
tangible than mere malice
Scarcely had the Leeds administration been
installed when numbers of Metropolitan Police
Warrants we're thrust upon 1t In payment of the
license tax of 1875. This was repeated with re-
spect to the license tax of 1876 decision of the
Supreme Court having rendered unavailng the
persistent efforts OF the city to prevent it, Thus
were moneys diverted from the payment of the
city's creditors to the satisfaction of these war
rants.
During the eity's resistance to the receipt of
these Metropolitan Police Warrants careful
examination was made into all matters relating
ID d md fpr,rn anti ID
to the legality of all bonds issued. Many Of the
facts upon which the suit against the Southern
Bank is based were elected in the course of this
examination.
Ii was discovered that an issue OF 1905 600 OF
seven per cent bonds had been made for the
Metropolitan Police apportionment of 1869, with
out the sanction Of law and in violation of the
Legislative act: that the bonds had been sold at
discount; that although 1t was alleged that
$685. 200 OF bonds had been issued In full Of the
100000 of apportionment,the city was compelled
to pay several hundred thousand dollars of the
very apportionment claimed to have been set
tied and II was further discovered that the ille-
gal use of these bonds by the fiscal agent and
others had been the subject of investigation by
a Senate committee of the Legislature in 1870.
who condemned the use made of the bonds and
expressly stated that In their opinion the injury
and loss sustained should be repaired by suit.
Fully fifteen months ago the records and
papers containing these and other facts were
submitted to the City Attorney. with instruc-
tions to institute suit If sufficient grounds pre-
scented themselves.
After very thorough examination as to the
liability of the Southern Bank and others. the
duty and right Of the city was clearly manifest.
The Southern Bank has ever been regarded
as the champion of the old consolidated bond
holders. Under It's powerful protection and at
Its instigation both this and the preceding ad-
ministration have been assailed for not having
made wholesale discrimination in favor of
the bonds Of its peculiar affections.
The Southern Bank pretends that all bonds
other than the old consolidated series have
been emitted in violation of law, yet the bank
itself as fiscal agent in 1869 paid out nearly
three millions of dollars of the very bonds it
now seeks to brand as Illegal Was the bank
aware Of the status Of the bonds at that time.
and was any effort made to protect the holders
of the old consolidated bonds by preventing
this issue? It appears not. The tender solicit
tude for the favored bondholders seems to be of
m ore recent birth.
Did the Southern Bank warn those to whom
1t pa Id out these alleged illegal bonds that they
were exchanging valid obligations for worthless
agency to the utterance of the bonds of 1869?
MOL On the contrary, it lent the weight of its
powerful influence to their rapid diffusion,
Now that millions have been distributed through
Its agency, the bank assumes the extraordinary
. osition Of discrediting its own issue and g-
noring its own guarantee
The aid of the United ates Circuit Court was
invol ed by the Southern Bank to strengthen it
in its change Of base. Judge Woods decided
could have been injured by the illegal issue of
other bonds. they had the power at the time to
enioin and prevent such issue, but that after
permitting such issues to pass into the hands
of innocent third parties they became valid
and as good against the city as against CONSOLE
dated bonds
Forcible as this doctrine is as to all com
planning holders of the consolidated bonds,
how peculiarly strong it is in its application to
the Southern Bank. When IT should have
spoken it was silent. and now good faith and
consistency should render that silence per-
petual.
If any bonds have been illegally issued. those
who gave them utterance should be made to
repair the full extent of the Injury inflicted.
The honest and unsuspecting purchaser should
neither be punished for an act over which he
had no control. nor subjected to loss by
anothers violation of law.
Proceeding upon this principle the city off,
GERS have sought evidence of the wrongful is
suance of municipal obligations. and have in
vted the aid and cooperation Of one and all