Sacramento daily record-union., 1882-05-06
A CASE IN POINT.

CASE IN fUlnT.
A recent decision Of the Supreme Court
of the United States possesses good deal
of interest for both the advocates and the
opponents Of municipal reputation, and
shows that "the way of the transgressor
sis hard" even when he may think that
he has "fixed things" to suit himself.
The facts of the case were as follows
The city of New Orleans was authorized
by the Legislature to issue a series of
bonds known as the consolidated Bonds
"of 1852" OF these bonds about 81 00O,.
600 are outstanding, and the Southern
Bank of New Orleans holds 5000 900 of
them. For time the city paid its interest
regularly, but in 1876 the Legislature was
persuaded to pass law known as the
premium Bond Act" which prohibited
the city from levying any tax for the pay
ment Of any other bonds than those speci.
Courts to issue writs of nandamus to en-.
force the collection of the prohibited tax.
The effect Of this legislation was to stop
the payment of interest on the "Consol-
"idated Bonds of 1852" and so the
Southern Bank of New Orleans, being
large holder of these securities, brought
suit in the State Courts to test the validity
of the Premium Bond Act" and also to
have the bonds of 1852 declared legal OBJ.
legations, and to compel the city Of New
Orleans to provide for the payment of both
interest and principal. The State Supreme
Court decided against the bank. The case
was then taken to the Supreme Court of
the United States on a writ of error, and
Mr.. Justice Field, in delivering the opinion
of the Court, expressed himself as follows
1.-THE Premium Bond Act of 1876 is the
most remarkable piece of legislation ever
presented to this Court for consideration,
amounting, as it does, to the open repu-
diation of the city's debt. Legislation
"of State, thus impairing the obligation
of contract made under its authority,
is null and void, and the Courts, in en-.
forcing 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 be
permitted to control the power of the
city 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 n,andamas
"should issue commanding the City of
New Orleans, by its proper authorities,
to carry out and fulfill, as near as may be
under the altered circumstances, the
provisions of the Act of the Legisla-
ture OF Louisiana of February %. 1852,
=" in relation to the levying of a special tax
TO pay the interest and, ultimately, the
principal, of the remaining consolidated
bonds authorized to be issued by said
"Act."
Here then we have probably the strong.
est possible kind of case in which the
Legislature had prohibited the levying of
a special tax to pay the interest, and the
issue by the State Courts of writs of man.
damus to compel the municipal authorities
to do their duty; and in which the State
Supreme Court had upheld this legisla.
tion, and refused all redress to the injured
parties But directly this bold example of
repudiation, fortified by all the powers of
the State, is brought under the jurisdiction
of the Supreme Court of the United States,
that tribunal brushes away the whole
structure of dishonesty and fraud, declares
the Act of the Legislature null and void,
reverses the judgment of the State Su-
preme Court, and orders writ of mandamus
to issue, compelling the repudiating city
to fulfil its contract in good faith, and in
accordance with the original terms.
This shows what the advocates of NUM-
cipal reputation in Sacramento would
have to expect, even if they could get the
community to indorse their dishonest
schemes. The case of Sacramento more
over presents none of the points of strength
which the Louisiana case had. We have
no law prohibiting us from levying taxes
to pay our interest. There is no legis.
lative veto upon the State Courts to pre-
vent them from issuing writs of mandamus
And there is no ground for supposing that
our State Supreme Court would indorse
any such high.handed act of reputation.
In Louisiana the whole power of the State
was put forth to enable New Orleans to
escape the payment of its debt, and the
whole power of the State proved unequal
to the task. In Sacramento no such condi.
tions exist. There is between this city and
the operation of compulsory Judicial pro.
cesses no other barrier than the good faith
Of the community constitutes. So long as
we continue to keep our engagements we
are safe. But we should not be safe if we
undertook to evade them.
A great deal of nonsense has been talked
about the city property not being liable
to execution. The remedy does not lie
in any such recourse. The remedy lies in
writ of mandamus, to compel the city
authorities to levy the tax necessary for
the payment of the interest on the debt,
and against that process we have no de-
fense whatever. The decisions OF the Su-
preme Court of the United States in the
New Orleans and many other cases show
conclusively that there is no hope for any
community that undertakes to impair the
obligations of its contracts, but that it
will be made to pay its debts, no matter
what shifts it may resort to for the pur.
pose of avoiding that necessity. Iu short,
all that can possibly come OF such expert.
ments is loss of credit and reputation, and