Omaha daily bee., 1899-03-22
SAVING THE CITY'S CREDIT
Plans for Paying Off Claims and Reducing
Interest,
COUNCIL COMMITTEE SOLVES A PROBLEM
Waiver from Holders of Warrants
that They BE Paid in Priority
of Presentation In
Suggested.

The finance committee of the city council
has under consideration a plan which 1t
hopes win result in allowing the city treas
urer to pay out most of the cash now lying
to the credit of the city in The local banks
If this can be accomplished the city will
save per cent interest which 1t is at pres
ent paying on the warrants that can be
taken up in the event of the plan being
successful
The plan is to secure waiver from hold
ers of current warrants of all claims against
the city. In case the warrants are paid in
the order of their presentation, which would
mean that the holders of warrants issued
for current expenses would waive their
rights Of priority In view of the unsatis-
factory decisions reached in the Phillips
against Reed and the Shea cases 1t is con-
sdered very doubtful If the holders of these
warrants have any right of priority. This
view Is taken in the opinion furnished the
finance committee by Attorney Finley Burke
and which Is as follows:
In compliance with your request for my
written opinion to the law governing the
payment OF warrants issued by the city of
Council Bluffs and now outstanding, and
which Will govern the city treasurer of this
city ultimately In the payment of such war
rants and particularly with reference to the
order OF payment, l beg to report, after due
examination of the question::
First-1t is my opinion that said warrants
must be paid in the order of their presenta-
tion from the particular fund upon which
they are drawn, and that this matter, SO
far as the city Of Council Bluffs is con-
cerned, is governed by the provisions Of
22 c. A, chapter iii. In other words, what
you denominate as the 'old warrants" must
he paid first.
The opinion of the supreme court in Phil
lips against Reed do not touch the question
involved and leave the question exactly
where 1t was before that case was taken into
court. 1t follows that in dealing with the
derive no benefit whatever from the
opinion of the supreme court upon the law
governing the city of Council Bluffs, be-
cause that court, having failed to notice
that the City OF Council Bluffs was excluded
from the operation of chapter iv, % G. A, it
leaves the question as stated in the second
opinion, January rs, 1899, "an open question
to be settled hereafter"
Treating the question as an open one and
remembering that chapter iv referred to
expressly provides that this section shall
not apply to cities of the first class organ
lied since 1881 and in view of the fact that
the statutes In force when the old warrants
were issued must be treated as entering into
the contract between the city and the per-
sons to whom they are issued and that no
change of such contract could be made by
the state Legislature it logically follows
that these warrants must be paid in the Or
der of their presentation, and such Is my
opinion of the law. This view of the case
applies to all old warrants outstanding.
| Secondly the failure of the supreme
| court to consider or pass upon the question
| intended to be presented in the case of Phil
| lips against Reed, it now leaves the city
and also the city treasurer dependent upon
| the opinion of counsel, exactly to the same
extent that they were so dependent prior to
| the institution of the suit in the district
| court, for the reason that the decision of
| his honor, Judge Smith (Which is in accord
| with this view of the law), is, by the first
! opinion of the supreme court, adhered to in
/ the additional opinion, reversed, so that ii
| ceases to have any effect as an adjudication,
and yet at the same time the supreme court
| leaves the question still open for future
| settlement
While | have no doubt that the supreme
| court will, when the question Is squarely
| before it, determine 1t just as 1t was deter
mined by the district court, yet we are with
| out any authoritative decision to guide us.
I Should the treasurer undertake to pay the
| warrants in accordance with the opinion
herein expressed and with the opinion here
tofore given by the city solicitor, he would
hazard the correctness and legality of his
| acts upon these opinions and the opinion
! of Judge Smith. If the supreme court should
| ultimately determine the law adversely with
| these opinions, | do not believe that the city
| treasurer would be protected by reason of
| such opinions. While l do not apprehend
| that the supreme court will ever hold so,
| yet would not advise the city treasurer that
| he and his bondsmen are absolutely pro-
| tected in following the mere opinion of
| counsel in case where an actual contro-
versy has arisen which has not been au-
| thoritatively determined.
! OF course, If the city were in condition
| to discharge all of it's warrants there would
| ha M diflpulty in ligDOSing of this cOntrO
versy without litigation, but as its funds
| are inadequate to do this and the right OF
payments is of vital Importance to the hold
ers of the several classes of warrants, the
| city and its treasurer are certain to con-
| front the rightfulness and legality of their
payment.
| In conclusion in view of the decision of
Judge Towner in the Shea case being to
all intents and purposes adverse to the city,
Mr.. Burke suggests that there is but one
! course open TO the city for satisfactory
solution of the question and that is TO bring
new action, involving the same points as
| in the case of Phillips against Reed in the
| district court.
So far the committee has obtained waivers
| from a large portion OF the holders
OF the new warrants, but City Treas
urer Reed has, despite these waivers, not
made up his mind yet whether 1t would be
/
in the general or water funds, With re-
gard to the latter fund Attorney Burke has
been asked by the finance committee for
a separate opinion and at the city hall yes
terday it was said that this opinion was eX-
| pected today. Chairman Sayles of the
! finance committee is decidedly of the opin-
ion that the best course for the city to
pursue is to commence without further de-
lay another test suit in the district court
similar to one of Phillips against Reed, ask
ing for a ruling on the main question
whether the city shall pay the old out
standing warrants first or the warrants is
sued for current expenses.
Judge Towner's decision in the Shea case
is generally conceded to prohibit the city
from taking any steps to refund the old
outstanding warrants, as in his opinion such
action would bring the indebtedness as rep
resented by the refunding bonds within the
constitutional inhibition. In other words
the refunding of the warrants would change
the character OF the indebtedness.
Hotels and boarding houses will find II
to their advantage to buy their fresh fish
and oysters at Sullivan's, the grocer.