New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1881-01-15
Fiscal AFFAIRS IN MEMPHIS.

The Supreme Court at Washington has rem
dered decision in a case Of Merriwether
against Garrett, which will check the practice
of resOrting to the Circuit Courts for colec-
ton of city and county debts. Such applca-
tons have been. during the past ten or twelve
years, frequently made and not infreqnently
granted municipalities at the West. in par
ticular, have been subjected to such proceed
inps. The framework of the Federal Courts
allows plaintiffs residing in one State to sue
defendants residing in another in the Courts
of the United States, instead of those of the
State. Taking advantage of this rule, holders
of city or county bonds or warrants have in
numerous instances applied to the Federal
Courts to enforce payment; and those Courts
have vouchsafed somewhat stringent remedies.
They have levied executions on property OF
the iDsolvent municipalities or have issued
peremptOry commands to their officers to levy
and collect adequate taxes; or have appointed
receivers to administer affairs Of the delin-
auent city or county. Bonds issued in aid OF
railroads have been prolific source of such
suits. There was time, not many years ago,
when railroad speculation was active, and
Selectmen, Supervisors and Common Councils
all through the West were easily persuaded
to ISSUE in aid of the construction OF any
railroad to their municipalities, municipal
bonds which might be sold to raise funds fCt
the undertaking. The course OF events i'll
numerous instances was for the projectors 10 sell
the bonds, for the railroad enterprise to fail.
and then for the bondbolders residing in some
other State to sue the unfortunate municipal
corporation in Federal Court.
The case just now decided arose out of the
affairs OF the City of Memphis, Tennessee. In
former years the Legislature gave the city
authorities liberal powers to incur debts,
and those powers were freely exer-
cised; city bonds were issued in aid of rail-
roads also for erection of water works; also
for extensive street improvements. The taxes
laid and collected toward payment of these
obligations proved insufficient, and the city
became insolvent. The holders of her bonds
brought suits--several of them in the
Federal Courts; and these Courts com
menced proceedings to compel the levy
of larger taxes. With taxes uncollected.
debts maturing, numerous suits commenced
and more threatened credit gone, and the
property of citizens overburdened, the fiscal
condition of the city was nearly hopeless
Il Hc SIdOt III ucI Dtuuii ) anu, 1uBL
two years ago, repealed the City Charter, took
charge of the public property of the city, and
prescribed new system for collecting taxes
and applying them to the discharge of ii G
city debts. The day before this enactmeut--
and probably in hope to forestall it-Garrett
and other holders of city bonds brought suit
in the United States Circuit Court, upon the
theory that the city corporation held its prop
erty and its right to collect taxes in trust for
the benefit of city creditors that it had neg
lected its duty rs trustee; and that the Cir
cult Court might and should compel the duty
to be performed. Tie Circuit Court appointed
O receiver, and directed him to take possess
sion OF all assets Of the City of Memphis with
some specified exceptions of streets, public
squares, hospitals, property of the Fire and
Police Departments, etc., also of all the safes,
books, papers, Office furniture, etc., in the pub
tic offices, and also to collect taxes due to the
city, as we'll as rents and other moneys. The
validity Of this order was the prin-
cipal matter in question before the Supreme