The herald., 1896-04-14
why THE BONDS ARE Invalid
FULL TEXT OF THE SUPREME COURT DE.
cISION ON REFUNDiNG BONDS
They are Declared to Be Invalid Because the
Principal and Interest are 7ade PAYABLE
Outside OF the State-r1uch Discussion
Among Attorneys Over the Opinion

city yesterday for filing. The opinion
is written by Justice Van Fleet, con-
CURED in by Justices Mcfarland, Car
Quite, Semple and Henshaw: Justice
Harrison also files concurring opln-
ion. Chief Justice Beatty apparently
took no part in the decision.
When it became known that the ue-
cision had arrived a number OF attor-
neys called at the office to read 1t. AFTER
a careful perusal they seemed to be OF
the opinion that, under the decision,
almost all the bond issues of not only
Los Angeles, but other California cities,
were invalid, for the reason that the
bonds and interest coupons are made
payable outside Of the state. Many at
torneys fatty stated that they did not
understand the opinion at all; that a
point had been raised that had been
passed by all the leading authorities
of the United States, the effect of which
would be simply to stop the issuance or
bonds. One attorney stated that, un-
der the decision, a municipality might
issue all the bonds it wished, but that
they could not be sold, as they could not
be taken out of the treasury vaults.
The decision has certainly created
more discussion than any other ever
handed down by the supreme court al
fecting this city, and its bond issues,
and in view of it's Importance 1t is given
in full, that attorneys generally and cit
jzens may read it, and Inquire out the
logic from their respective standpoints.
There is little doubt but that immedi-
ate steps will be taken to secure a re-
hearing. Following is the opinion:
THE OPINION.
This is an original application to this
court for a writ Of mandate to require
defendant, the president of the coun-
I'll of the city of LosAngeles,to sign Ger
tain bonds alleged to have been au-
thorized by the said council and the
voters of said city. The defendant de-
murs to the petition on the grounds
that the acts of the legislature under
which the bonds are attempted to be
issued are unconstitutional, that the
same have been repealed, and that the
proceedings prescribed by law for the
issuance Of the bonds have not been
taken by the council.
The case has not been as fully argued
as it's Importance requires, and some
points, absolutely indispensable to a
decision, have not been at all
especially to be regretted, as
the questions involved are of great
public Importance, which we ought not
to be asked to examine without the full
est assistance from counsel. We have,
nevertheless, given the matter careful
consideration and are of opinion that
the demurrer must be sustained.
The facts alleged in the petition as
amended are, in substance, these:
On February 26, 1885, the city of Los
Angeles had outstanding certain bond
cd Indebtedness amounting to $396O00,
of which $4,000 would become due Au-
gust /. 1895, and the remainder was pay
able at any time at the option of the
city. 1t does not distinctly appear
when any of these bonds were issued,
nor when any of the Indebtedness there
by represented was incurred. No sink
ing or other fund sufficient to pay the
bonds have been provided, and the
amount necessary to pay or refund
them is too large to be paid from the
ordinary annual income or revenue of
the city, the total Indebtedness of the
city is less than S2,000,000.
On February &c, 1895, the city coun-
Gil adopted an ordinance calling an
election of the qualified voters of the
city, to be held on the day therein
named, at which was to be submitted
the question whether or not refunding
bonds to the amount of $396, 900 should
be issued. The ordinance provided
that in case two-thirds of the qualified
electors voting should vote in favor of
the issuing of said bonds, the same
should be issued. The bonds were to
be serial in character, one-fortieth of
the whole amount to be paid each year,
bearing interest at four and one-half
per cent per annum (Which was less
than the rate borne by the outstanding
uOHuSJ anu DdydDle at tnc Cnemlcal
National bank in the city of New York.
A sinking fund was, by the terms of
the ordinance, provided for the pay
ment or the principal and interest. The
ordinance prescribed the manner of
conducting the election and named the
voting precinct, polling places and Of
ficers of election. 1t concluded as fol-
lows: 1.-THE city clerk shall certify to
the passage of this ordinance and cause
the same to be published for ten days
in the Los Angeles Evening Express,
and thereupon and thereafter it shall
take effect and be in force" The ordi-
nance was accordingly published for
ten days but, as the day fixed for the
election was only sixteen days from the
approval of the ordinance, the last
publication was less than ten days be-
fore the election.
The election was held and much more
than tWo-thirds of the qualified cleo
tors voting thereat voted in favor of
issuing the proposed bonds. Thereupon
further ordinance was adopted direct
ing the issue of the bonds and reuuir-
ing the same to be signed by the presi-
dent of the city council, who is defend
ant here. The defendant refused to sign
the bonds.
1t is further alleged that none of the
holders of the outstanding bonds have
refused to exchange the bonds held by
them. nor have any of them deposited
any JULIUS Will ally depository Tor re-
demption; and the city has made no eff
fort to exchange the proposed refunding
bonds for the outstanding bonds.
Assuming an election by the voters to
be necessary, the defendent contends
that the ten days notice of the election
was not given as required by law We
do not think this objection well taken.
The ordinance was. in terms, a notice of
the election, containing everything nee
essary for such notice. The fact that il
was to take effect and be in force" only
at the expiration of the ten days pub
I'D not lessen it's effect as q, no.
tice. The manifest intention of the coun-
Gil was that the election should take
place on the day named and the Ian
suage referred to, though not aptly
chosen for the purpose, does not OBJ
scure that intention. 1t is sufficient
that notice was given, and that at the
time appointed for the election there
was an ordinance in force authorizing
it.
But the really serious questions to be
determined are as to what statute gov
erns the case and as to the effect of the
provisions of the constitution on the
subject.
The first legislation on the subject is
contained in sections 4445 to 4449 of the
Political Code, enacted in 1880, and
amended in 1881. Those sections au-
thorized "the board of trustees or mu-
nicipal council of any city having an
outstanding Indebtedness on the first
day OF January, 1SS0,evidenced by bonds