Savannah morning news. [volume] (Savannah) 1868-1887, 1882-04-18

The Supreme Court Orders TabOoed
Bonds TO be Paid with Interest
The State Court Sustained in An
other Important Case.
WASHINGTON, April 17.-An important
bond decision was rendered by the Supreme
Court of the United States to-day, in the
case of the State of Louisiana in re. the
Southern Bank, plaintiff in error, vs.. Ed
ward Plllsbury, Mayor of New Orleans, ct
al, in error, to the Supreme Court of Louis
lana. This was the petition of the Southern
Bank of New Orleans for writ of man
damus to compel the municipal authorities
of that city to levee special tax for the
purpose of paying the interest and ultimate
ly the principal OF a certain series of bonds,
issued by the city under authority of an
act OF the State Legislature in 1852, aud
known as the consolidated bonds of 1852 -
There are about 81 000, 900 of these bonds
now outstanding, and of this amount the
relatoT, the Southern Bank. holds $500, 900.
The interest on these bonds was paid for
time, but in 1870 the Legislature of the
MUM bond act, !" which prohibited the levy
ing OF any tax for the payment of any other
bonds than those therein provided for, and
forbade the courts Of the State from issuing
warrants OF mandamus to enforce the collec-
t1on OF any such prohibited tax. This act
put stop to the payment of interest on the
consolidated bonds of 1852, and the South
ern Bank, large holder of these bonds, in
stituted its present action to test the consti-
fIItfnp otf ftry Of ha 20
have their consolidated bonds of 1852 de-
clared valid obligation against the city and
to enforce payment.
This court, in a long and carefully pre-
pared opinion by Mr.. Justice Field, holds
that the act of 1852 constitutes valid and
binding contract between the State and the
holder of the bonds issued under that act,
which a subsequent Legislature cannot be
permitted to annul, and that the premium
bond act" of 1876 is the most remarkable
piece Of legislation every presented to this
court for its consideration, amount.
ing as 1t does to open reputation OF the
city's faith. The Legislature of the State
thus impairing the obligation of g contract
made under It's authority is null and void,
and the courts in enforcing the contract will
pursue the same course and apply the same
remedies as though such invalid legislation
had never existed. The act of 1876 cannot
city authorities to levy the tax stipulated
by the act of 1852.
1t is the judgment of this court, therefore,
that the judgment of the Supreme Court of
Louisiana should be reversed, and that
writ OF maudamus should issue, command
ing the city of New Orleans, by it's proper
authorities, to carry out ard fulfill, as near
as may be under the altered circumstances,
the provisions of the thirty-seventh section
fhaa NJ - ~ IL al
Louisiana Of February %, 1859, an > number
ed II. Also the act of the same date num-
bered 70, In relation to the levying of a spe-
ctal tax for paying the interest and princi-
pal OF the remaining consolidated bond
authorized to be issued by the said
act-that is to say, commanding them
to raise annually, commencing imme-
diately, by special tax In the manner Gas near
as may be) prescribed by said thirty seventh
section of act No. Il, If not provided in
some other manner, the sum Of $3.50 600 to
be appropriated: First, to the payment of
the current years interest accruing on said
bonds; second, to the payment OF interest
10 arrears; aud third. after all accrued in
terest shall be fully paid, then to the
purchase as from the lowest bidder of
such bonds, issued under said acts and
still outstanding, as have the shortest pc
Rod to run.
A question which involves another branch
Of the funding operations of the State of
Louisiana was also decided by the court In
the case of the New York Guaranty and In
demnityCompany against the Board of Liqui-
dation Of the State of Louisiana, in error to
the Supreme Court of that State Under and
by authority of act No. 116 of the Legisla-
ture Of Louisiana of 1869, bonds of the
State to the amount of $480,000 were
I'd to ID -,
Mississippi and Mexican Gulf Ship Canal.
On the 24th of January, 1874, the Legisla-
-ure passed act No. 3 OF 1874 commonly
known as the Funding bill," by which was
constituted board of liquidation author
z9d TO fund the outstanding obligations of
-he State by exchanging new bonds for old
1T the rate Of sixty cents for dollar. On
The nth of March, 1875, another act was
passed mo. II of 1879 to prohibit this
board OF liquidation from funding under
act No, 3 Of 1874 questionable and doubtful
bonds OF the State until such bonds should
oy the final decision Of the Supreme Court
1f the State have been declared legal and |
valid obligations.
In May, 1877, the New York Guaranty
ard Indemnity Company, which held $780, |
100 OF bonds, issued Ia aid of the ship canal, |
brought the present suit, in accordance |
With the provisions of the act of March IL, |
-875, for the purpose of having said bonds |
declared constitutional, regular, valid and |
The Supreme Court of Louisi- |
ina, however, refused to declare the bonds |
n question fundable, and held that in |
IN action of this kind intended to settle the |
question whether certain bonds were funda- |
lie or not, the petitioner occupied no better |
position as bona fide holder than he would |
lave occupied as first taker. From his de- |
ision the petitioner appealed.
This court holds that the judgment of |
he Supreme Court Of Louisiana was cor
ect, because the State had perfect right, |
Vhen it proposed scheme for q COM
promise of its debts, to say what creditors |
hould be included. The exclusion of the
petitioner does not deprive him of any of |
lis rights. No obligation of original cor
ract has been impaired. Every right, which /
be original takers of the bonds acquired
vhen the bond was issued, still re-
main. The Guaranty Company may
nforce those rights now In any appropriate |
manner. All that the court below has said,
5 that as between the State and the first |
akers the bonds were not valid obliga-
ions. and that consequently they were not
ntitled to the privileges of the funding
aw. The obligations of the State to pay |
he bonds In money to bona fide holders in |
ccordance with its original promise still |
emains, and the judgment of the court be-
ow Is no bar to any proper proceeding on
N the part Of the petitioners to enforce
payment. The judgment of the Supreme
court of Louisiana is therefore affirmed, /
With costs. Opinion by Chief Justice Waite