Daily globe. [volume] (St. Paul, Minn.) 1878-1884, 1881-12-14
DULUTH'S DODGE.
An Enslish Bondholder Who Contssts
the Change From City to village to
Escape the Dsbt-First Blood for tho
Bondholdof.
U. s. 0Jrossst Court .


U. s. OJrou1t Court.
DULUTH CITY BoNDs-DEMURRER ovERRULED.
In the case of Edward Brewis vs.. The City
of Duluth and the Village Of Duluth, to re-
cover the coupons overdue on bonds Of the
CITY of Duluth, brought by Messrs. Williams
& Davidson, solicitors for complainants.
Messrs Gilman q Clough. solicitors for the
city and village of Duluth interposed q de-
murrer to the bill, which was argued last
term and an opinion announced at the open
ing of the court yesterday.
OPINIONS BY NELsoN,J.
The complainant is the owner of the
city bonds, issued under an act
of the legislature of Minnesota, ap-
proved March 5, 1878 authorizing the City
Of Duluth to fund the debt previously incur
red for i'm proving the harbor and other pur-
poses. The bonds were payable in not less
than twenty and more than thirty years from
the date of their issue and bear interest at the
rate of per cent. per annum payable SEMI
annually in the city of New York. The COM
plant became bona fde holder Of the bonds
and coupons previous to 1875. 1t appears
that on February %, 1877 the legislature Of
the State of Minnesota created the village Of
Duluth out of a part Of the territory of the
city of Duluth under an act to create the vii
lage of Duluth. u and to aPportion the
debts OF the city of Duluth and provide for
the payment thereof. "This act carried the
village out of the city limits, taking
and embracing in the village ali
the business part Of the city and
business houses, the harbor, railroad depots
and tracks, nearly all the dwelling houses, all
the population except about 100 inhabitants
and nineteen-twentieths OF all the taxable
80 ID 60 &ha
payments of the debts of the city by the vii
lage unless creditors would accede to the
terms imposed by the legislature, as herein
after stated. 1t also appears that on February
%, 1S77, an act was passed entitled, "An act
to amend the act entitled an act to incorporate
the city of Duluth" approved March 5, 1870,
and this act declared that the service OF all
summons and process in snit against the city
of Duluth should be made on the mayor OF
the city and that service made on any other
officer should not be valid against the city.
\ 1t also provided that the term of the office of
mayor should cease on the following April,
1877, and no provision was made ior the cleo
ton of successor or for filling vacancy;
that no taxes should be levied without the
Affirmative note OF all, to-wit four aldermen
and since the passage of the act there has
been four aldermen in the city qualified to
act. Theirs is O section authorizing the levy
| the city is situated, but all taxes thus levied
and collected must be paid to the village of
Duluth.
On the facts admitted by the demurrer the
complainant is entitled to relief. The legisla-
| ture undoubtedly had the right to create the
village of Duluth out of the territory Of the
city and the village apportion the existing in
debtedness, but when the corporation which
created the debt is shorn of its population
and taxable property to such an extent that
there is no reasonable expectation of its meet
ing the present Indebtedness and it is unable
SO to do the creditors at least can enforce
a proportionate share of their OBJ
legations against the two corporations
carved out of one. Both are liable to the ex-
tent of the property set OH to each respect
lively. The debt of the city at the time the
was about four hundred thousand dollars, and
the act creating the village of Duluth author
lied an apportlonment Of the debts as follows:
Section in substance provides, That after
one year from Feb. %, 1877, the village shall
be come Jointly liable with the city on all
bonds issued prior to the passage Of this act
unless it shall within the year take up and
cancel as hereinafter provided, S218, O0O OF the
evidence of Indebtedness outstanding OF the
city; Provided, That interest to Jan. l, 1878,
on all bonds and maturing coupons shall be
treated and regarded as part Of said evidence
of outstanding indebtedness.
Section enacts that not more than one
hundred thousand dollars of village per
cent. 80 year bonds shall be issued for taking
up outstanding bonds and orders Of
the city oo Of Duluth to the amount
to January LIST, 1870. These bonds are to be
placed in the possession of the judge of the
Eleventh judicial district of the state Of Min
nesota. Section 5 enacts that persons holding
bonds, matured coupons or orders of the city
of Duluth prior to the passage OF this act
may surrender the same to the judge of the
district court for exchange for the bonds OF
| the village of Duluth, and whenever $218, 600
| has been surrendered, the judge shall issue to
village of Duluth to one-fOurth Of the amount
so surrendered, and on the delivery of the vii
| lage bonds shall cancel the amount of the city
bonds received in exchange. Other sections
provide for auexatiOn of more land from the
city limits. This statute interferes with the
| rights of creditors. The oligations of mu-
nicipal corporation are not affected although
the name may be changed and the territory
| increased or diminished, if the new 0rganiza-
| ton embraces substantially the same territory
and the same Inhabitants. It may
be be true that generally cred
itors to obtain relief must
| look exclusively to the corporation creating
the debt. but when q stat of facts exist as dis
closed here, and the old corporation is dimin-
ished in population, wealth and territory to
the extent admitted it would be mOckery OF
justice to withhold the relief asked.
Without, at this time considering more full
" the question presented, whether the second
acts of February Is, 1877, and February %,
1878, impair the obligations of contracts be.
tween the city of Duluth and it's creditors, it
is clear to my mind that the bill on its face
contains sufficient equity and calls for an
swer.
The demurrer is overruled aud the defendant
can have until January, rule day, to answer.
Note consult Q Otto, 3U7; 8 Otto, 266; 10 in
Otto, 514. 0'Connor vs.. Memphis, Is, Cen
trail Law Journal $50, Bisssll 146.
Before Judge McCrary and Nelson.]
Josiah c. Mooar VS.. Geo. W. Nisbit. Dis
missed.
R. M. Obertenffer, ct al. vs.. N. B. Harwood.
defendant, land the First National bank OF Min
neapolis, and Curtis 81. Petit, garnishee.
Leave given plaintiff tod plea supplement tai
complaint within twenty days, subject to de-
clsion Of motion to discharge garnishee and
plea to jurisdiction.
A. Anderson vs.. B. F. Scotland. Continued
by consent.
Chittendon L. Burton, ct al. vs.. Holstein-
Isaacson, ct al. Continued by consent.
Edward K. Ware vs.. The Chicago & North
western railway company. Jury trial waived.
Jocoh Kronz vs Tho Chica0o Il North.