The New Orleans daily Democrat. [volume] (New Orleans, La.) 1877-1880, 1877-04-15
THE CITY,s DEBT.

/ THE CLTH,S DEBIT
A week or two ago, in discussing the
questions raised by the controversy
between the holders of what are known
as the consolidated bonds" issued by
the city under the act of February %,
1862, and the municipal authorities, we
ventured to say that, in our judgment,
the following points would eventually
be sustained by the courts, to wit:
1. The act Of 1859, under which the old CON-
soidated bonds were issued, created contract
| between the city and the holders Of these bonds
which no subsequent act OF the Legislature and
no action OF the city authorities could abrogate.
q, That many OF the later issues of bonds made
by the city were made ia violation Of the terms Of
the act Of 1862, and might have been prevented
by proper vigilance on the part OF the holders OF
the old consolidated bonds and of the Taxpayers
of the city.
8. That the bonds 80 issued in violation Of law,
however illegal they may have been in their
origin, have been practically validated by the act
of the Legislature endorsing and authorizing the
Premium Bond Schemes
4. That this Premium Bond scheme, while 1t is
binding upon the taxpayers and the people gen
orally. since it IL their own act enacted by their
representatives in the General Assembly, cannot
in any manner affect the rights Of the holders
of the old consolidated bonds, for the reason that
article OF the State constitution, which violates
the obligations OF contracts. can be sustained in
the Federal courts.
We therefore conclude, for reasons which we
may state more at length on some other occasion,
that the holders Of these old bonds are absolute
ly secure in their rights and may enforce them
by the appropriate remedies, namely, a suit at
law and . mandamus compelling the levy OF the
tax provided for in The contract and also that the
act authorizing the Premium Bond scheme, how
ever justly 1t may be criticised as wrong to the
taxpayer in that 1t validates bonds issued In vio
lation Of law or without sufficient consideration,
will yet be sustained by the courts as valid act
Of the Legislature OF the State.
The decision Of Judge Woods, in the
Maenhaut case, which we publish this
morning, sustains the above views in
every essential particular. The COM
plainants made very broad claim upon
the court-so broad that Its allowance
would have amounted to an assertion
by the Federal court Of the power to
absolutely control the action Of the city
authorities In their dealings with their
creditors, and to substitute its own dis
erection for that OF the city and the
Legislature in the matter Of the man.
agement of the fiscal affairs Of New Or
leans. Toquote the language Of Judge
Woods:
On this, the final hearing, il is moved that the
court decree that compartments are entitled:
4. To- specific performance OF their contract
win rs c svS in sson o. the
application to the payment Of the principal and
interest Of their bonds Of the sum Of $3.50, 600
TO be laid upon the real estate Of the city; ..
To . priority OF payment out OF the taxes raised
hSvtk t1A tt1n as
$650,000; and 4. To an Injunction restraining
the city from applying any OF Its revenues raised
or hereafter to be raised by levy on real estate to
the payment Of any other debt or demand until
mplainants' claim as bondholders have been
fully provided for and satisfied.
these demands may be enforced by an
action at law, "a suit for the recovery OF
a judgment for the full amount of their
bonds and coupons). and q writ OF man
damus commanding the levy and col
lection Of the tax required by law for
the payment Of their claims. But the
two latter demands are rejected by the
court, mainly upon the ground that, IL
the city levies and collects annually the
sum Of $3.50, 900 for the payment Of the
~ AAOApUA nAu AAUOAOot VI CAC SOAS0k7
idated bonds held by the compliments,
and should so apply that sum, its con-
tract under the act of 1862 would be
fully performed.
There is not the slightest doubt in our
mind Of the perfect soundness Of this
decision. We reached the same conclu-
sions which it embodies in reasoning
upon the matter from a purely legal
and without regard to the
views entertained on the
subject by parties personally interested
On the one side or the other, and we are
convinced that If the issues involved in
his controversy are ever brought be-
ore the Supreme Court Of the United
States, the decision of Judge Woods
will be sustained in every particular.