Case Name: Consolidated Bank v. The State of Louisiana
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1850-01
Citations: 5 La. 44
Docket Number: 
Parties: Consolidated Bank v. The State of Louisiana.
Judges: 
Reporter: Louisiana Annual Reports
Volume: 5
Pages: 44–61

Head Matter:
Consolidated Bank v. The State of Louisiana.
The provision in the ,7th section of the act amending the act for the incorporation of the Consolidated Association of the Planters of Louisiana, approved 19th of February, 1828, declaring “'That the State shall be and'is hereby acknowledged to be a stockholder to the amount of one million of dollars as a bonus," did not make the State liable for contributions and losses of .the bank as ordinary stockholders were.
A bonusKs a premium or consideration given to a grantor for what isreceived. It implies an advantage, a benefit given in return for the benefit received, or an inducement to the grantor for conferring that benefit. If the State be made liable as other stockholders, no advantage was given to the State and consequently no bonus. 'But the act expressly gives a bonus to the State.
A partnership may be formed, which will be valid between .the parties inter se., where,one of the partners is exempted from losses, provided the exemption be .based upon a fair and just equivalent given to the associates by the partner in whoso fav.or .the exemption is stipulated.
APPEAL by defendant from .the Fifth District.Court of New Orleans, Buchanan, J.
Benjamin and Micou, for appellee,
contended : -Only two questions arise for decision : 1st. Is the State of Louisiana a stockholder in the .Consolidated Association of Planters of Louisiana? 2d. Does the charter of the association, or any subsequent modification of it, make any distinction between the rights and obligations of the State as a stockholder and those of the other stockholders ?
Although some suggestion to the contrary was made in the court below, we can hardly think that on the first point any serious argument will be attempted for the defence. The very words of the 6th section of the act of 1828, are, “ that the State shall be acknowledged to be a stockholder to the amount of one million of dollars.” The concluding words of the section are, “that the divi deads arising from the said one million of dollar's of stock shall be paid to the State treasurer, in the same portions and at the same times as those accruing to other stockholders.”
In the act of 1830, the State orders a payment to be made out of the monies that shall accrue to the State at the expiration of the charter, in its capacity of stockholder, in the sum of one million of dollars.
The statement of facts shows that the State was credited with dividends for a long series of years as a stockholder; and it was in that capacity that by the act of 1828 it was allowed to appoint one-half of the board of directors ; although owning only one-fourth of the stock.
But it is the second point that is most strenuously urged by the defence, viz: that there is a distinction made in the charter between the State and the other stockholders, and that whilst the latter were exposed to all the chances of loss, as well as entitled to their share of profits, yet that the State was only to take a fourth part of the profits if any were made, but was not to incur any risk of loss. It is this pretension that we propose to examine with the respect due to the party from which it emanates, however slight we may deem the foundation on which it rests.
The only passage to be found either in the charter or the amendments to it, on which the pretensions of the defendant are based, is the 7th section of the act of 1828. “ The State shall be acknowledged to be a stockholder to the amount of one million of dollars, as a bonus, on condition, however, that the State shall only enjoy a credit equal to the sum of $250,000, without defalcation and during all the term of the charter, and that whenever the State shall use the said credit, or any part thereof, interest shall be paid thereon.” Itis insisted that the words “ as a bonus," indicate that an advantage is accorded to the State; that something is given to it for the grant of its guarantee, and that the true meaning is, that one-fourth of the profits of the institution are allowed to it as a bonus for the charter; a gift or advantage, it is urged, which precludes the idea that the State was ever to be exposed to loss.
Let us first examine this sentence according to its grammatical construction ; we will afterwards discuss its true interpretation, and endeavor to show the real spirit and intent of the parties to the contract.
“The State shall be acknowledged to be a stockholder to the amount of $1,0.00,000, as a bonus." What, is the bonus here secured to the State? Its admission as a stockholder. Observe the terms. It is a privilege, in the view of the author of the section, to be a stockholder in this institution. Profits are to be realized. Loans on stock are to be at the call of every stockholder on demand. If you, the State, will help us by your credit we will give you a bonus. What bonus ? You shall be acknowledged to be a stockholder for one million of dollars. As such, you shall enjoy a credit of a quarter of a million on call; as such, you shall share profits. The only difference pointed out, is as to the amount of the loan to be allowed on your stock. The other stockholders shall have loans equal to half their stock; but they are obliged to make annual payments on their loans, so ns to meet the different series of bonds as they fall due. You, the State, shall borrow only to the amount of one-fourth of your stock; but you may borrow this amount “ without defalcation and during all the term of the charter.”
The French text is equally explicit. “L’état sera reconnu actionaire pour une somme d’un million de piastres, á títere de bonus." The idea is the same, the acknowledgment or admission, or concession, that the State shall be a stockholder for a million of dollars, is the bonus ; and the fact that such was the view taken by the legislature, is apparent from what we have said in the statement of facts, showing that the opponents of the bill objected that the faith of the State ought not to be granted for carrying out a project, in whose profits the State would have ho share, and that this section was introduced into the bill on the very day of its passage, by one of its supporters, and clearly, as en expedient to' get rid of the objection.
But, abandoning the mere grammatical construction of the phrase, let us take a broader and fuller view of the subject. At the time of the passage of this law, the Louisiana Code was in full force. The articles 2783 and 2784 of that code declare: 1st. That a participation in the profits of partnership carries with it a liability to contribute, between the parties to the expenses and losses. But the proportion, like that of the profits, may be regulated by the stipulation of the parties, and where they make none, is provided for by law. 2d. That a stipula tion that one of the contacting parties shall participate in the profits of a partnership but shall'not contribute to losses, is void, both as it regards the partners thú'd persons.
Such was the law of the land, well known and understood, when this partnership was made between the State and a class of its citizens. Nor was there any thing novel in this legislation. It was only a formal and express sanction given by the law maker to those eternal principles of justice which form the pure fountains whence the civil law is derived. A contract, by which one partner takes a share of the profits and is to bear no part of the losses, is branded as a leonine partnership by civilians, from the well known fable of the lion who hunted in partnership with the smaller beasts, and appropriated the whole product of the chase to himself. It is treated by all the writers on the subject as being contrary to good faith. Pothiersays: “Une telle convention ne serait pas un contrat de société, et elle serait nulle comme manifestment injuste. Pothier Cont. de Soc. § 12.
The original text is to be found in the Pandects. Cassius respondit societatem talem coiri non posse: ut alter lucrum, alter damnum sentiret, hanc societatem leoninam, solitum appellare ; et nos consentimus, iniquum enim genus societatis est, ex qua quis damnum non etiam lucrum spectet. L. 29, § 2, f£. pro socio.
Now may we not say with confidence, that even if the construction of the law were doubtful, the court would seize eagerly upon any possible interpretation which would enable it to avoid imputing to the State the desire of making a contract of a character so infamous, in the estimation of the wise and just of all ages, and which, by its own solemn enactment, it had declared to be so opposed to all notions of equity and fair dealing as to be utterly null and void, even when expressly consented to by individuals.
But, we are asked, what bonus the State really received for the grant of its faith in aid of the loan to the association ; and we are told that it is a derision to speak of the privilege of becoming a stockholder as being a bonus, at the very time that we are seeking to make the stockholder pay money to meet losses. To this we reply, that in order to ascertain the real intention of the parties to the contract, we are to look at the state of affairs, not as they exist at the present time, but as they existed twenty yeai-s ago, when the charter was framed. That all the parties who took an interest in procuring the passage of the charter believed that it would be profitable, is self-evident. On the passage of the first act they took the whole stock for themselves. When the second act was passed they again reserved the whole stock for themselves, and it was not till the moment that the final vote was about to be taken, that becoming alarmed for its success and desirous of disarming opposition, they consented to “ acknowledge the State to be a stockholder for a million of dollars as a bonus.” Nothing is said in any part of the act of the State’s bearing any share of the losses, because none were anticipated. The sanguine character of the human mind is such, that in all enterprises of this kind profit alone is anticipated. Possible losses are never considered. The only question between the parties is always, how are we to divide profit? This is so familiar that it is laid down by the authors as one of the leading principles of the law of partnership. As long ago as the time of Vinnius, we find it stated in the broadest terms, “ De damno nihil adjici, quia lucrum tanlum sperant spectant que socii: damnum prater volum eorum accidit.” Vinn. Com. lib. 3, tit. 6. Now,- in the present case, was this anticipation unfounded? For eleven years after the passage of the charter the business was prosperous, and the State accumulated profits amounting to a hundred and twenty-five thousand dollars. The stock was at a premium of twenty-five per cent, and the stock of the State would have commanded an advance of a quarter of a million. During this long series of years, if a discussion had arisen between the supporters and opponents of the law, can it be doubted that these advantages accruing to the State as a stockholder, would have formed a triumphant answer for the former, against all the evil prognostications of the latter? And what justice can be found in the pretension that the State is to withdraw unharmed, and throw the entire loss on its co-partners, so soon as fortune has changed, when she was ready and willing to acknowledge herself a partner and to claim her rights as such during the period of prosperity.
There is nothing forced or stained in the construction which we give to the charter, when we say that the bonus consisted in admitting the State as a partner for one-fourth in the contemplated institution. Such contacts are by no means rare. It is matter of daily occurrence for an individual to pay a premium in order to be admitted as a partner in an enterprise promising profits. Fora number of years scarcely was a bank or insurance company incorporated, ere the demand for stock became so great as to cause the shares to command heavy premiums ere the company commenced business. All these cases are the same in principle. In the case before the court, the State furnished its credit and became a partner for one fourth. This is one of the most familial contracts of partnership, and is cited as such by the elementary writers, nor has it ever before been pretended that such partner is exonerated from his share of loss if the enterprize should cause loss instead of profit.
It is easy to establish this construction by reference to legislative action on similar charters. Two other property banks have been established by the State, the Union and Citizens. To both the State lent its faith; in neither did it take stock. From both it required a bonus. But the language was vei-y different, and the share of the profits required from each, as a bonus, was far less than it is now claimed to have been in the Consolidated Bank.
In the case of the Union Bank, the State granted its guarantee for ' nearly three times the amount of the capital of the Consolidated Bank. It bound itself for seven millions of dollars. Instead of taking any of the stock, the 17th section of the charter of 2d April, 1832, declares “that in consideration of the bonds made by the State, in favor of this bank, the State shall be entitled to one-sixth of the whole profits of the bank.”
The proportion of profits is half less, for a guarantee three times as great as in the case of the Consolidated Bank, and the terms clear and precise.
In the case of the Citizens’ Bank, the fourth section of the amended charter of 30th January, 1836, provides “that the State shall be entitled to the same interest in the profits of the Citizens’ Bank, as in the Union Bank, to wit, one-sixth if twelve millions of bonds are taken ; one-twelfth if six millions are taken, one-twenty-fourth if only three millions are taken.”
Here then we have the declaration of the legislative intention to increase the ratio of the State bonus in proportion to the increased amount of its liability, and this bonus is fixed at one twenty-fourth for the State guarantee to three millions. Yet we are told that this bonus was intended to be six times as great for the same guarantee for $2,500,000 in the Consolidated Bank.
It is plain, that in the case of the Citizens’ Bank, the small proportion of the profits Ibr a guarantee of three millions, was considered sufficient where the State was not involved as a partner in the chances of the business ; but in the Consolidated Bank it became partner for one-fourth, subjecting itself to the chances of loss, with the view of securing a larger proportion of the confidently expected profits.
An idea, however, seems to be entertained by our opponents, that the construction given to this clause must vary from that which would be given to it if made between individuals, because the State, the sovereignty, is a party to it. This is not the first time that such pretentions have been advanced in the courts of justice, and we will quote the language of Chief Justice Marshal in meeting a similar argument, in the case of the United States Bank v. The Planters' Bank of Georgia, 9 Wheaton, 904. “It is, we think, a sound principle, that when a government becomes a partner in any trading company, it divests itself, so fa as concerns the transactions of that company, of its sovereign character, and takes that of a private citizen. Instead of communicating to the company its privileges and its prerogatives, it descends to a level with those with whom it associates itself and takes the character which belongs to its associates and to the business which is to be transacted.”
There is another consideration, which will not be without its weight in the mind of the court, in coming to a conclusion on the subject of the present controversy. The State of Louisiana has been a stockholder in a number of her banks, and within the last few years has realised over one million of dollars of profits from that source. Can it be possible that she shall evade the loss of one-sixth of that sum in the only institution which has been unfortunate ?
Tho whole argument of the plaintiff is condensed into the following propositions : 1st. The State is a stockholder of stock of some kind or nature. 2d. If this stock is not of the same kind and nature as all the other shares, and if it does not impose on the State the same responsibilities as are imposed on individual subscribers, defendant must show that fact; must prove their exemption. 3d. No express distinction is made by the charter between the State stock and the rest of the shares. 4th. Defendant shows no implied exemption from liability, except as derived from the expression “ as a bonus but this implication is not a necessary one. It is perfectly natural to imply that it was an admission into the partnership that constituted the bonus. The tenor of the phrase rather implies this last idea than any other. 5th. The plaintiffs having shown that the State is a stockholder, and that the stockholders are legally called on to contribute, have made out their case. If the attempt to escape contribution is not clearly made out, if it be left only doubtful, plaintiffs must succeed on the general principles of the law of partnership.
W. A. Elmore, Attorney General, and I. T. Preston, for appellant,
contended : The Consolidated Association of Planters were incorporated by an act of the Legislature, passed in the year1827. Power was given to the corporation, to borrow two million of dollars on their bonds, for the purposes of the act; but their charter was subject to the disposition of the Legislature, if' they did not go into operation by the 1st of January, 1828. Act of the 16th March, 1827; sec. 16, p. 110.
They failed to negotiate their bonds to borrow the money, and their charter being a dead letter, they applied to the Legislature to loan the- credit of the State for $2,500,000, to be secured by the bonds aud mortgages of the stockholders for $3,000,000. The original act was accordingly revised and amended.
By an act passed the 19th of February, 1828, the Legislature authorized the corporation to borrow $2,500,000, and by the second section to increase the stock to $3,000,000, to be divided into shares of $500 each on 6,000 shares.
By the third section, to facilitate the company to borrow the money, the faith of the State was pledged for the reimbursement of the capital and interest; and by the fourth section, bonds of the State to the amount of $2,500,000 were issued by the State. The duration of the charter was extended to the year 1843, that is, fifteen years.
The capital was soon procured from foreign capitalists. Two million five hundred thousand dollars was thus borrowed by the State, on the pledge of her faith and on her bonds, for the use and to relieve the necessities of about one hundred planters. By the original charter all banking powers were given to the corporation, and its capital stock was exempted during the term of the charter from State, parish, or other taxes.
For such advantages the State required a bonus, as was required from all other banks for such great and exclusive privileges. It was given by the seventh section of the charter in these few and simple words: “That the State shall, and is hereby acknowledged to be a stockholder to the amount of one million of dollars, as a bonus; in French, “ A titre de bonus.” The whole controversy in this case grows out of these few words :
A bonus is accurately defined by Bouvier, in his law dictionary, to be “ a premium paid to a grantor, as the bank pays a bonus to the State for its charter, a consideration given for what is received.
The counsel of the bank contends that it was a bonus to the State, to be admitted as a stockholder to the amount of a million of dollars, with the stockholders to the amount of three millions, and share proportionally the profits of the bank; and that this partnership necessarily implied a liability to share, proportionally, the losses of the bank, and so the district court has decided. But such a partnership confers no bonus; the State simply becomes a stockholder to share profits or bear losses in proportion to its stock. The profits to be received are profits asa stockholder, and for running the risk of losses. The stockholders give nothing to the State, she receives only her proportion of their joint operations in consideration of liability to her share of the losses.
The capital is raised by the State giving her bonds to the lenders for $2,500,000, and the stockholders guarantee it, by giving their bonds to secure it. Neither pays a dollar, in money, towards the capital; but having obtained it on credit, they commence banking operations and are to share the profits, and since losses may occur, the counsel contends, are to contribute proportionally to provide for those losses; if so, they are simply partners, and the individual stockholders certainly pay no bonus to the State.
The profits received from my partnership are the result of my share of the capital, skill or industry, and not a bonus from my partners.
On the hypothesis of the plaintiff’s counsel, the State cannot, in any result that may occur, receive a bonus. If those who borrowed pay up their loans, as the State has doné, there is no loss; the individual stockholders are to pay nothing, and the State receives no bonus for granting the charter. If the bank makes great profits, which was contemplated, the individual stockholders will receive their three-fourths of it without paying a dollar; and the State its fourth, without paying a dollar. They share proportionately the profits made out of the capital raised by their joint credit, so tliat the State certainly gets no bonus, but only receives its legitimate proportion of the profits made by its partnership. If the corporation suffers losses the State gets no bonus, but pays its proportion of the losses of its partnership. So that in' every result that can occur the State gets no bonus if the position assumed by the counsel of the plaintiffs be correct. The term bonus should be stricken out of the seventh section; and, indeed, the whole object of the section, which alone, on behalf of the State, was the inducement to grant the charter, is annulled.
Indeed, instead of the grantee giving a bonus to the grantor of the charter, if the views of counsel are correct, the grantor of the charter gives a great bonus, and in many forms, to the grantees. The State borrowed the money for one hundred needy planters on her faith and bonds; she loans it to them at long terms, on low interest; she gives their corporation banking capital and the sovereign privilege of issuing paper money, making great profits by bank privileges, and gives still greater advantages to the directors and stockholders, by enabling them to obtain enormous loans and discounts; she gives the corporation three-fourths of the profit made out of her credit, furnishes all the capita], and exonerates the bank from taxation, and, according to the counsel, agrees to pay one-fourth of the loss if the bank squanders away the money. These are great bonusses given to the bank, but none are received by the State and cannot be the correct interpretation of the seventh section, because it is absurd. What, then, is the true interpretation of the section? Why, manifestly, that for these great advantages conferred on the bank, the State is to receive, ns a bonus, one-fourth of the profits of the bank. The “million of dollars” and “ stockholders” are words of description to fix the proportion of profits the State is to receive as a bonus. As between the stockholders, the million of dollars is considered settled. It is true that the million of dollars were not paid by the State, nor did the individual stockholders ever expect to pay any part of their subscriptions, and would not have had to do so if the bank had not failed. But the possibility that they might have to pay some part of their subscriptions, or even the whole, was the reason the State required, and they consented, that the State should hold its fourth as settled, and that she was acknowledged as a stockholder, without the possibility of incurring a contribution to losses, like the other stockholders, as a bonus for granting the charter privileges and exemption. If this had not been the agreement, the State would have taken the $2,500,000, raised on her credit and bonds, given its management to her own directors, and, as profits alone were contemplated, as the plaintiff's counsel contends, retained the whole of those profits for all the citizens of the State, instead of giving as a bonus three-fourths of the profits to a hundred planters. In a word, the whole controversy is, whether the State, in granting this bank charter, intended to require a fourth of the profits as a bonus to the State, or to give three-fourths of the profits to the stockholders as a bonus to them, without any consideration.
The history of the passage of the charter, given by the counsel of the bank, is probably true; the applicants for the charter, no doubt, tried to obtain it, subjecting the State to raise the capital for the bank, without a bonus, but the principles contained in the protest of many of the members were irresistible. “ 1st. That the subject matter and provisions of the said act are not within the legitimate scope of legislation, inasmuch as it is a mere contract by which the State is bound as security for a certain class or description of citizens, to enable them to borrow money for their exclusive use and benefit, without any corresponding advantage to the public, or adequate security against loss.” “2d. Because it is a useless and prodigal use of the name and credit of the State for particular advantages which name and credit might be more beneficially employed in procuring funds for general improvement, in which all portions and classes of the community might partake.” “3. Because by thus pledging the faith of the State for so large a sum in the manner and for the objects aforesaid, its means are diminished and its credit exhausted for objects not public.” “ 4th. Because the institution created by the act to which the act aforesaid is a supplement, does not, in its nature and the means provided for its administration, afford a sufficient guarantee for its ultimate compliance with the contracts it is authorized to make, or the accomplishment of the ends proposed by it. And in case of failure or misfortune the State will, in consequence of the act aforesaid, be compromised to an extent much bej’ond its means to meet, and the citizens in general involved in great distress, and exposed to great and heavy burthens, by reasons of an act in the anticipated benefit of which they were not to partake.” And “ 5th. Because the passage of the said act has, in the opinion of these protestants, a direct tendency to injure and destroy the public credit, and to embarrass it in its necessary pecuniary operations.” Thereupon, the counsel of the bank say, the friends of the measure proposed to avoid these objections. “That the State should be acknowledged to be a stockholder to the amount of one million of dollars, as a bonus, which being agreed to, the bill was passed.”
Then what is the contract so simplified that no one can misunderstand it?
The capital for the use of the stockholders was to be $2,500,000, and to be raised by issuing the bonds and pledging the faith of the State. This capital to be raised was an entirely distinct thing from the subscription to stock to secure it. The amount of stock was, by previous sections of the bill, $3,000,000, to be subscribed by individuals, and secured by their bonds and mortgages.
To induce the Stale to grant the charter, and raise the capital, it was agreed that a million of stock should be added and given to the State as a bonus. The individual stockholders then were to hold, in the $2,500,000 to be raised, six thousand shares secured by bond and mortgage at $500 a share,........6,000 The State two thousand shares, credited to her as a bonus, at $500 a share,..................................................2,000
Shares,........................8,000
As the shares of the State were given as a bonus, in the words of Bouvier, the consideration for those shares was given to the bank; or in plain language, the shares were settled for in full. They were shares of stock fully paid for, and should have been credited in the books of the bank as stock paid in full. It is true dollars were not paid, nor did the individual stockholders pay a dollar. The State then owned of the capital $2,500,000 one-fourth by agreement as a bonus settled, $625,000: the individual stockholders owned $1,875,000.
By waste and mismanagement, it is supposed there will be a loss of $500,000, or 12¿ per cent on the whole stock, or $375,000 to the individual stockholders, and $125,000 to the State. Had the State been an ordinary partner, whose stock was not paid for as a bonus, the State would have been obliged to pay this loss in money ; but the liability for her stock, being extinguished by its delivery for full consideration, this $125,000 is to be paid by the bonds and mortgages of the individual stockholders, pledged to pay it; and the payment of this $125,000 to third persons, is the bonus given for this charter, and all the privileges and exemptions of the bank. In a word, the bank gave the State an interest in its profits as a bonus, but the State is subject to loose nothing more than the bonus stipulated at the time the charter was granted.
There is no difference between the liability of the State, by this charter, and its liability by the charter of the Citizens’ Bank. The State was to share a part of the profits of the Citizens’ Bank, as a bonus for granting that charter. It is the participation in the profits of a partnership that constitutes a partner. The State is to participate in the profits of the Citizens’ Bank; and therefore, is a partner in the bank. The State must, therefore, pay the losses of the bank proportionally with the other stockholders, if the reasoning of the counsel be correct and supports the pretensions of the plaintiffs in this case. But we know the intention of the parties — that the State is liable, only, after the assets of the bank, to wit: the bonds and mortgages of the other stockholders are exhausted; because this was the regulation of liability by the contract at the time the partnership was formed.
The interest of the State in the profits of the Union Bank is a bonus, precisely similar to that in the Consolidated Association of Planters, subjecting the State to the loss of the whole capital of the bank, as to creditors, but containing a contract between the State and stockholders, that the State should lose nothing but its bonus, that is, the anticipation of profits, until all the assets of the partnership are exhausted.
The counsel of the bank says, it is iniquitous to receive profits in a partnership, without being liable to the losses. Not so, if the partner gives full consideration for exemption from the losses, and if it be fully understood and agreed upon by the contract of partnership. The State is to receive a sixth of the profits of the Union Bank, and a sixth of the profits of the Citizens’ Bank ; but it is not pretended it would be liable to the stockholders, in case of loss on their capital. This was the bonus and valuable consideration for which the charter was granted and agreed upon by the law or contract establishing the banks. I agree to give to my partner five hundred dollars to bear all the losses of the firm in case we fail. That this is a fair and legal contract no one can doubt. So, in the case before the court: the State gave full consideration for the bonus of a fourth of the profits of the bank, and, in doing so, made a lawful contract, which necessarily implied an exemption from the losses, or it would have been no bonus. Every article quoted by the counsel, from the Civil Code and other authors, show that a partnership is a commutative contract, in which the parties regulate their respective rights and liabilities, at least, between themselves, by the contract. It is true, they cannot contract simply that one shall share the profits, without being liable for the losses; because, that would be a contract without consideration. But one can legally give a full consideration to be exempted from liability to the losses, not as to third persons, but between themselves. And this is precisely what the State did by giving full consideration for a share in the profits of the Consolidated Association, and therefore, by necessary implication, exemption from the losses beyond the bonus. The State loses her stock settled in full, and nothing else. The individual stockholders lose that proportion of their stock which they are called upon to pay to. extinguish the losses of the bank.
There is nothing iniquitous or unusual in a contract by partners, as between themselves, that one should be exempted from contribution for losses.
To prove the iniquity of such a partnership, the counsel of the plaintiff relies, with great confidence, on article 2785 of our Civil Code. “A stipulation that one of the contracting parties shall participate in the profits of a partnership, but shall not contribute to losses, is void, both as regards the partners and third persons.” This is true as applied to simple partnership not qualified by contract. It would be a stipulation to receive profits without consideration, and obligate the copartner to pay those profits without consideration. In a word, it would be an obligation without a cause or consideration, and, under article 1887 of the Civil Code, could have no effect. See, also, articles 1890, 1891. But then, partnership is a commutative contract. Art. 2772. Credit may form the capital. Art. 2780. The profits are regulated by the contract. Art. 1782.
And so, also, the losses. Art. 2784. If, therefore, the parties agree, not without cause, but for full consideration settled and well understood and agreed upon by the contract, that one shall bear all the losses and the other be entirely exonerated from them, the contract is valid. And in the words of the Civil Code, “the agreements thus legally entered into, have the effects of laws upon those who have entered in them. Art. 1895.
The last clause of article 2785, relied upon more peculiarly, governs this case. “ In the case of a partnership in commendam the liability to loss may be limited to the amount of stock furnished.” The State is liable to third persons to the amount of the bonds given for the capital, but as to her partner’s, is liable only to the amount of her stock; and that they have already settled, by contract, to be a bonus from 1he corporation to the State of Louisiana.
In support of the foregoing views the court is referred to Story on partnership, pages 23, 24, 25, 26, 27, 28, 29, where the principles for which we contend are clearly elucidated and established.
Collier lays down the principle in the following language: “ It is not necessary that every party to the contract should undertake to* share the loss. A man, on entering a partnership, may stipulate to be free from all liability to loss; and such stipulation will hold good as between himself and his co-contractors. In such a case, he will still be a partnei', enjoying, in addition to the advantages of partnership, the indemnity afforded him by his companions.” See, also, paees 12, 33, 34, 27, 68, 69, 74, 75.
But, if we are mistaken, when we say that the principles embodied in articles 2784 and 2785 of the Civil Code, relied upon by the counsel for the plaintiff, are not violated by the contract between the State and the stockholders of the bank, then, we add, that the act of the Legislature of 1828, acknowledging the State to be a stockholder to the amount of one million of dollars, as a bonus, is as much the law of the land as the articles of the Civil Code just quoted. A subsequent law has excepted the operations of these articles-of the code so far as they might have been applicable to the State and the bank and the rights of the parties before the court are entirely independent of the code, and are to be determined by the law of 1828.
The same power that established the Civil -Code can alter or amend any provision of it, so far as the case before the court is concerned it has been done. The State has passed a law modifying the general principles applicable to partnership, so far as they applied to the stockholders of the Consolidated Bank and itself, but, in lieu thereof, it has said, we will agree among ourselves that we will not be bound towards each other as partners; but as regards third persons, creditors of the bank, we will establish no new rule. Can this right of the State to make such an agreement, and to pass a law in conformity with it, be for one moment doubted, even if it were admitted to be contrary to good faith and fair dealing, which is denied ? No one can gainsay the power of the State to do so. It can regulate by law its contracts when individuals cannot.
This suit is a call upon the State to contribute, proportionally with the stockholders, by subscription upon their bonds and mortgages, to pay for the capital and interest of the bonds issued by the State. But the sixth section of the act which, with the seventh, forms the contract with the State, show's conclusively that the stockholders, by subscription, agreed that the bonds of the State and interest, should be wholly paid out of the bonds and mortgages of the individual stockholders, and not by the State.
The sixth section of the charter reads as follows: “That the bonds, with privileged mortgage, for the sum of three million dollars subscribed by the stockholders of the said Consolidated Association, in order to guarantee the loan of -two million five hundred thousand dollars, shall be deposited in the office of said institution for safe keeping, and as a guarantee for the reimbursement of the principal and interest of the bonds given by the State, and, moreover, all the hypothecary obligations, of whatever nature, subscribed by individuals in favor of said Consolidated Association, shall serve as a special guarantee and security for the reimbursement of said capital of two million five hundred thousand dollars, and the interest thereof, and shall, for that purpose, be deposited in the office of said institution ; inasmuch as the said Consolidated Association is bound for the reimbursement of said bonds subscribed by the State, at their respective instalments, and to pay the semi-annual interest, until the whole amount of the principal is reimbursed.” Sec. 6, act of 1828, p. 32.
The State gives bonds to the amout of two million five hundred thousand dollars to raise the capital of the bank. The bank is now in liquidation, and the whole business is to pay' these bonds. Is a fourth of these bonds to be paid by the State, or does the sixth section of the contract provide a specific fund for their payment ? It provides, that is, it was agreed by the parties to the contract, that the bonds with privileged mortgage for the sum of $3,0.00,000 subscribed by the stockholders of the Consolidated Association to guarantee the loan of $2,500,000, “should be deposited in the office of the institution for safe keeping, as a guarantee for the reimbursement of the principal and interest of the bonds given by the State; inasmuch as the Consolidated Association is bound for the reimbursement of said bonds, subscribed by the State, at their respective instalments, and to pay the semi-annual interest, until the whole amount of the principal is reimbursed.” '
Now, since it was specially agreed that the debt of the bank for its capital should be paid by those bonds, how can the State be called upon to pay a fourth part of- that debt ? By the sixth section, provision having been made for the payment of the whole debt, so that the State could not lose any thing by becoming a stockholder, except by the bankruptcy of the stockholders, and the insufficiency of their bonds, it became necessary to offer the State some inducement to take that risk, and as a bonus for a valuable charter. The bank had nothing to offer but the profits it should make; for the stockholders had not paid a dollar. On the contrary, they were entitled to borrow, and no doubt did borrow three-fifths of the capital, by loans upon their stock to fifty per cent, that is, $ 1,500,000 out of $2,500,000. But as profits were contemplated, it was agreed that the State should have one fourth of these profits as a bonus. This is the plain simple interpretation of these two sections forming the contract, and they admit of no other construction when taken together.
Now, the bonds thus deposited to pay for the money borrowed, amounted to......................................$3,000,000 Two hundred and twenty-nine shares of stock have, by some means, been extinguished, and of course the bonds for thatstock, 119,500 There remains........................................$2,880,500 in bonds besides forty-one shares, for which the bank has, in lieu of the bonds, the property mortgaged to pay about $1,800,000 of the money borrowed. Thus there is a million surplus of the undoubted fund, specially appropriated by agreement to reimburse the money borrowed for the bank. How then can the State be called upon to pay or contribute anything? When the funds provided by agreement to pay the bonds are exhausted, then the State by its contract, or, by the law, will be bound to pay the whole unpaid balance of her bonds; but has for full consideration a contract that it shall be paid by funds jiledged for the purpose, if sufficient.
The act under which this call for contribution is made, contemplates the same thing; and could contemplate nothing else. It was approved the 6th of April, 1847. The 6th section, page 77, of the acts of that year, requires the managers to impose on the stockholders who have given stock obligations, a contribution, independently of the money borrowed by them, to pay regularly all the obligations contracted by the State for them. This law never intended to impose a contribution on the State, but on the bonds and mortgages which, by the charter or agreement, were to reimburse all the liabilities of the State for the bank, so that it was a bonus and nothing else, for which the State granted the charter, and never did enter into asimple partnership of profits and losses with the bank. And the bonus was small compared with those which the State exacted and received from other banks before, about the time of, and after the incorporation of the Consolidated Association of Planters, which affords a cotemporaneous exposition of this charter, if there was any doubt upon the sections under discussion.
The Louisiana State Bank, incorporated the 14th of March, 1818, gave a bonus in money of $100,000. The Orleans Bank forrenewing her charter with a small capital of $500,000, for twenty-four years, gave a bonus, in money, of $25,000. The City Bank gave $3,000 per annum for a charter for twenty years, with a capital of $2,000,000. The Exchange and Banking Company, for a capital of $2,000,000 and a charter for twenty years, gave a bonus of $40,000; see Acts of 1835, p. 203. The Canal and Banking Company, incorporated in 1832, with a capital of $4,000,000, gave a bonus which will probably amount to $1,000,000. The bonuses of the Carrollton Bank and Gas Light Bank was enormous. . The Citizens and Union Banks gave a sixth of their profits.
The forty-first section of the charter of the Gas Bank, presents a case being parallel to that before the court, and with regard to which, such a construction as is contended for in this case, never was thought of or pretended. James U. Caldwell was allowed five hundred shares of the stock of the Gas Light and Banking Company as paid for, although he had not paid a dollar. For the transfer to the company of privileges he had obtained from the Legislature, he was entitled to the profits of the stock, but could not be rendered liable for any losses, because his stock was considered settled. Acts of 1835, p. 109.
Whenever the State took stock in a bank, she subscribed and paid her share as in the case of the Bank of Louisiana and Mechanics and Trader’s Bank, and did not ask as a bouus that which -was the essence of the contract of partnership, to be entitled, of right, to a share of the profits, if she subjected herself to the losses.
The great distinction between good and bad governments and between the two leading parties in all governments is, that the one strive to legislate, judge and execute for individuals, in order that as many as possible may live on the public and at the most extravagant rates. The other party and good government struggle for a system of legislation, judgment and execution, that supports as few as possible at the public expense and for fair but moderate compensations, and indeed, urges all to contribute to the welfare of the State, and make sacrifices for it, not to depredate upon it. The one parly are always the friends of power and its favorites ; the other is generally the favored party of the great body of the people.
We submit to the court whether the present suit is not a mere effort of an hundred individuals to compel the State to aid in paying their debts.

Opinion:
The judgment of the court (Rost, J. recused himself, being a stockholder in the bank,) was pronounced by
Slidell, J.
The object of this suit is to recover from the States present sum of $12,000 ; and to obtain a further decree adjudging the liability of the State to "contribute as a stockholder, at all times when necessaiy, its proper proportion towards paying the debts of said bank."
For a proper consideration of the question thus presented, it is necessary to notice somewhat in detail the legislation pertinent to the subject, more particularly the original and amended charter of the corporation, and also such portions of the evidence as have been considered material by counsel.
In 1827, the Consolidated Association of the Planters of Louisiana was incorporated by act of the Legislature.
Its capital was fixed at $2,000,000, to be raised by loan. The subscriptions of the stockholders, who were to be planters exclusively, were to be an amount of $2,500,000, divided into shares of $500 each, and, as the charter expresses, "were intended to secure the loan of two millions." The association was athorized to raise this capital by issuing a series of bonds payable in five, ten, and fifteen years, with five per cent interest; and to secure the capital and interest of these bonds the subscribers were required to give mortgages on immovable property for the amount of their subscriptions. The subscribers were to be entitled to a credit equal to half the amount of their shares. No dividends were to be made of the profits ; they were to be employed as they accrued, in discounts until the expiration of the charter in 1842; were to remain as a guarantee of the liabilities of the corporation, and not be actually distributed until those liabilities were fully paid. At the end of each year, however, they were to be formally credited in account to each stockholder, in the same manner as if payment were to be made immediately. The administration was to be confided to a board of seven directors, to be elected by the stockholders, and a comptroller was to be appointed biennially by the governor of the State, with powers of inspection, &c.; and whose duty it was made to furnish an annual report to the Legislature. The capital stock of the association was exempted from taxation during its charter, and the charter comprised, besides the usual franchises, the privileges of banking.
The confidence which the founders of this corporation had felt in the practicability of procuring a loan of $2,000,000 by a sale of its bonds, secured by mortgages of the property of its stockholders and their personal obligations as such, proved illusory; and hence, we find them at the ensuing session asking from the State a pledge of its faith to did them in effecting the loan.
This application appears to have encountered a very strong opposition. It was resisted, as appears from a formal protest entered upon the House journal, upon various grounds, and among others as an abuse of the name and credit of the State in favor of individual citizens for objects not of general interest, and under circumstances not assuring the State against ultimate loss. This resistance, however, was ineffectual, and the amendatory act of 1828 was passed.
By the first section of this act the capital, which the company had been authorized to borrow, was raised to $2,500,000 ; and it was also enacted " that the sum of $2,500,000, divided into shares of $500 each, to be subscribed to guarantee the reimbursement of the loan, shall be, and is, hereby increased to three millions of dollars, subject, however, to the provisions of the act of 1827." To facilitate the negotiation of the loan of $2,500,000, the faith of the State was, by the 3d section; pledged for the reimbursement of the capital and interest of that sum; and by the 4th section, the Governor was authorized to execute bonds to that amount under the seal of the State. By the 5th section it was enacted "that said bonds may be transferred by the endorsements of the president and cashier of said Consolidation Association, either to the order of any person whatever or to the bearer; and said endorsements shall mention the place where the semi-annual interest on said obligations shall be paid. Then follow two sections, to which the arguments of counsel have been particularly directed, and which it is proper to recite at length.
The 6th section of the charter reads as follows : That the bonds, with privileged mortgage, for the sum of three million dollars subscribed by the stockholders of the said Consolidated Association, in order to guarantee the loan of two million five hundred thousand dollars shall be deposited in the office of said institution for safe keeping, and as a guarantee for the reimbursement of the principal and interest of the bonds given by the State; and, moreover, all the hypothecary obligations, of whatever nature, subscribed by individuals in favor of said Consolidated Association, shall serve as a special guarantee and security for the reimbursement of said capital of two million five hundred thousand dollars, and the interest thereof, and shall, for that purpose, be deposited in the office of said institution, inasmuch as the said Consolidated Association is bound for the reimbursement of said bonds subscribed by the State, at their respective instalments, and to pay the semi-annual interest, until the whole amount of the principal is reimbursed. Section 6th, act of 1828, page 32.
The 7th section is as follows : That the State shall be, and is hereby acknowledged to be a stockholder to the amount of one million of dollars as a bonus (que l'Etat sera reconnu actionnaire pour une somme d'un million de piastres, átitre de bonus,) on condition, however, that the credit granted to the State, in consideration thereof, shall be two hundred and fifty thousand dollars, without defalcation, and during the entire duration of the charter; and that the State shall pay interest on the whole or a part of its credit, as the case may be, whenever it shall make use of the same ; and moreover, the dividend arising from the said one million of dollars stock shall be paid to the State treasurer in the same proportions, and at the same time that the dividends accruing to other stockholders are to be paid.
By the 10th section the governor was authorized to deliver these bonds to the corporation. By subsequent sections the secretary of State and the attorney general were invested with authority to examine the securities offered by stockholders, and to require additional securities if considered necessary, or else a reduction of the number of the stockholder's shares to an amount for which the security offered by him should be thought a sufficient guarantee. The number of directors was increased to twelve, of whom six were to be appointed by the governor.
Under this charter the corporation was organized, its capital being a fund of $2,500,000, borrowed upon the State bonds. Its list of stockholders, as kept by the corporation, exhibited eight thousand shares, three million as subscribed by individuals, and one million for the State. In July, 1831, a dividend was declared and credited to the different stockholders, as directed by the act of 1827. Subsequent dividends were declared in like manner. They amounted in all to twelve and a half per cent. The dividend account of the State exhibited a credit in its favor of $125,000. The State was apprised of these credits through the annual report of the comptroller. In 1830 an act was passed relative to the corporation, the 8th section of which directed that a payment of four thousand dollars should be made to the secretary of State and attorney general for services rendered, and to be tendered to the corporation; and the 9th, that the corporation should advance that sum, and be reimbursed in principal and interest "out of the monies that shall accrue to the State at the expiration of the charter, in its capacity of stockholder in the sum of one million of dollars.
On the 23d of July, 1842, the directors became satisfied that the losses suffered by the bank for several years previous, had amounted to a sum more than sufficient to absorb the profits which had been carried as dividends to the credit of the accounts of the stockholders; and a resolution was passed to annul those credits, and carry the whole amount of the previously declared dividends, making an aggregate sum of five hundred thousand dollars, to the credit of the profit and loss account. The State's dividends were annulled in the same manner as those of the individual stockholders.
The subsequent operations of the bank have disclosed the- fact that there will be a loss to the stockholders ; the assets of the bank will bo insufficient to meet its debts, including the bonds issued by the State and the accruing interest thereon; and that a contribution will be required from the stockholders, to meet the deficiency. In contemplation of this state of affairs, a law was passed providing, inter alia, that the managers of the Consolidated Association should be authorized to extend the term of payment of the bonds of the State six, nine, twelve, fifteen, and eighteen years.. ' They were also authorized to negotiate with the bondholders to procure the release of the State, upon the accomplishment of which, the stockholders were to have the exclusive management of the bank. The duty was enjoined upon its managers of applying specially the proceeds of all property sold to satisfy stock obligations, to the redemption of the bonds of the State issued for its account. It was also made their duty to require such annual or periodical payment from the stockholders, independently of their stock obligations, as would accumulate a fund sufficient to meet faithfully and regularly the obligations of the State for the account of the bank.
In compliance with the provisions of this act, the managers of the bank, after an examination of its affairs, came to the conclusion that a sum of about $500,000, payable in seventeen years by equal instalments without interest, would be required to meet the deficiency, and a resolution was passed in June, 1847, directing six dollars to be paid as a contribution on each share of stock on the 1st June, 1849.
Application was made to the Legislature for an appropriation of $12,000, being the amount of contribution claimed by the bank as due from the State on two thousand shares, at $500 per share, and the governor recommended an appropriation. But the Legislature being divided in opinion as to the liability of the State, an act was passed by which it was enacted "That the Consolidated Association is authorized and empowered to sue the State for the purpose of testing the liability of the State to contribute as a stockholder for losses sustained by said association."
It will be observed that the clause of the charter in which the State is acknowledged to be a stockholder, and admitted to a participation in the contemplated profits of the company, is qualified by an expression to which, very properly, the argument of counsel have been earnestly directed. The State shall be, and is hereby acknowledged to be a stockholder to the amount of one million of dollars as a bonus." "L'Etat serareconnu actionnaire pour une somme d'un million de piastre, d litre de bonus." It is undoubtedly our duty in interpreting a statute, to attribute, if possible, some force and meaning to all its words. 'What then is the meaning of these expressions: " as a bonus;" "a titre de bonus." And how far do they qualify or affect the antecedent terms'?
, A bonus is defined by Bouvier, in his law dictionary, to be a premium paid to a grantor: as the bank pays a bonus to the State for its charter — a consideration given for what is received. We regard it as fairly implying an advantage, a benefit given in return for the benefit received, or an inducement to the grantor for conferring that benefit. It is a matter which pertains to the history of corporations in this country, where they have been so much multiplied, that legislatures have been disposed to take advantage of the avidity of individuals to obtain charters, specially for banking purposes, and have been in the habit of exacting a species of public compensation for the privileges and advantages conferred. Hence the term bonus has become a familiar one, and is associated in its common acceptance with the idea of some advantage, benefit, quid pro quo, stipulated for the public.
That such is the fair import of the term, may be gathered from frequent instances in our own statute book and those of other States. ,
Thus, in the 17th section of the charter of the Louisiana State Bank, the grantor says: "In consideration of the privileges and benefits conferred by this act upon the said bank, the president, directors, and the company thereof, shall pay to this State the sum of one hundred thousand dollars, in the following manner, to wit, ten thousand dollars as soon as the bank shall go into operations, and ten thousand dollars per annum during the nine next succeeding years."
In the digest of the statutes made under the authority of the legislature, this provision is noted in the margin, by the learned compiler, as the bonus to be paid by the State; and is so termed by the lawgiver himself in a subsequent act amendatory of the same charter. Moreau's Digest, vol. 1; 75, 78.
In the amendatory charter of the Carrollton Bank, sundry heavy burdens were imposed in consideration of the benefits granted; and, among others, it was obliged to pay to the Male Orphan Asylum of New Orleans, annually, the sum of five hundred dollars during the space of ten years. The foregoing bonus, said the statute, shall be considered a full consideration for any right on the part of the State to tax the company. The Canal Bank, by the stipulation (sec. 26 Acts of 1831, 56,) that at 'the expiration of thirty five years its canal, road, machines &c., shonld be vested in the State, gave a bonus which has perhaps cost that corporation a million of dollars.
The Exchange Bank, (Acts of 1835, 203,) in consideration of the exemption of its capital stock from taxation, agreed to pay into the treasury of the State $40,000.
In short, the statute books abound with these impositions of bonus, some eo nomine, others in an indirect form; some heavier, some lighter, accordingly perhaps, to the prevailing tone of the legislature, or the eagerness of the particular applicants.
It seems to us impossible to reconcile the fair and every day import of this expression with the interpretation claimed by the counsel for the plaintiff. They say it was a privilege, an advantage, a bonus to the State, to be admitted as a stockholder, on the same footing as other stockholders; to share in profits if made; to be liable, like the other stockholders if losses were incurred, to contribute towards those losses. But this cannot be said to meet the idea of a bonus, especially when we consider who were the contracting parties. The State held in its own hand, the power of granting or withholding corporate franchises; Srant"1S or w'tbholding the aid of its faith and credit. The bank was the creature; the State the creator. It seems to involve almost an absurdity in tenns>t0 construe the clause as contended for, if we bring the State and the few citizens who asked the charter, face to face, and suppose the latter saying to the former, give us the privileges and franchises of a corporation, lend us your bonds to the amount of two and a half millions to enable us to borrow money; and as a tonus for your liberality you shall have the privilege of being a stockholder, on an equal footing with us to the amount of one million; sharing our profits if we gain, but sharing our losses if we lose.
We think it has been well said by the counsel for the defendant, that upon the hypothesis of the plaintiff, when carried out to its practical consequences, the State could not in any result that might occur, receive a real tonus. If the money borrowed on the faith of the State for the bank's capital, should, at the close of her affairs, be found intact to an amount adequate to meet all liabilities, and no more, these individuals and the State would stand on precisely equal footing. Neither would be a dollar out of pocket; neither would have received a dollar of gain. The State in that case could not be said to have received a tonus.
If profits were realized, and a surplus left after discharging all liabilities, the State and the individuals would share it proportionably, and in this equality we find no tonus.
If losses were sustained, and the State is to pay an equal share of those losses, and thus stand upon an equal footing with the individuals with whom it is associated, with what propriety can it be said to have received a tonus from them?
It is, indeed, with much reason asserted on the part of the defence, that according to the plaintiff's construction, the State, instead of receiving a tonus from the stockholders, has, in reality, given them one for the privilege of engaging in the enterprise on an equal footing with them. It gave them not only the usual corporate privileges and franchises, coupled with banking powers and the exemption from taxation, but assumed, in the issue of its bonds, a responsibility for the entire capital of two and a half millions, while its associates only bound their estates and persons each for his proportion of that capital. Moreover, the State's right of discount was proportionably but one half of that allowed to individual stockholders.
But, it is said, the construction invoked by the State is at war with a principle which is consecrated by its own express legislation on the subject of partnership. . Counsel cite the articles of our Civil Code, which declare that a participation in the profits of a partnership carries with it a liability to contribute, between the parties, (associés,) to the expenses and losses; and that a stipulation that one of the contracting parties, (associés,) shall participate in the profits of a partnership, but shall not contribute to losses, is void, both as it regards the parties and third persons. If, therefore, the construction of the law be doubtful, a court, it is urged, should eagerly seize upon an interpretation which would enable it to avoid imputing to the State, the desire of malting a contract of a character so disreputable, [it is said,] in the estimation of the wise and just of all ages, and opposed to the equitable spirit of its own enactments controlling contracts between man and man.
This argument rests on too broad an assumption, if it takes for granted that, under the spirit and true meaning of the code, a contract between individuals, that one partner should share the profits and be exempt from the losses, would be void under all circumstances. Equality is the spirit of the rule: and we are not prepared to say that such a stipulation would be void, as between the parties, where the exemption was based upon a fair and just equivalent given to his associate, by the partner in whose favor it was stipulated. It would be against reason to brand such a contract as infamous. With what propriety can it be argued that such a contract offends good morals, where so many juris consults have recognized, not only its reasonableness, but also its legality ? It may be laid down, says Mr. Story, as a general rule of the Common Law, that, in order to constitute a partnership, it is not essential that the partners should equally share the profits and losses. It is sufficient if they are to share in the profits of the business after a deduction of the losses; or, in other words, that they should share in the nett profits according to their respective proportions. It is therefore, he says, competent for the partners, by their stipulations, to agree that the profits shall be divided, and if there be no profits, but a loss, that the loss shall be borne by one or more of the partners exclusively, and that the others shall, inter sese, be exempted therefrom. Story on Partnership, § 23. Mr. Collyer announces the same doctrine. " It is not, however, neccessary that every party to the contract should undertake to share the loss. A man on entering a partnership may stipulate to be free from all liability to loss; and such stipulation will hold good between himself and his co-contractors. In such case he will still be a partner, enjoying, in addition to the advantages of the partnership, the indemnity afforded him by his companion." Collyer on Partnership, 9. He cites, in support of the doctrine, the opinion of Vinnius: De damno nihil adjeci, quia lucrum tantum spera.nt spectantque socies; damnum prater votum eorum accidit. Sed nee damni communio ad substantiam societatis pertinet; quippe qua etiam ita constituí potest, ut unus e sociis damni sit expers. Voet, in recognizing the validity of an agreement, ut unus ferat lueri partem, de damno non teneatur, observes: Quo casu postremo licet conventio videatur primá specie tantum lueri non vero damni communionem inducere, contra naturam societatis; non tamen itá est, eo quod isto in casu non aliud in lucro esse intelligitur, quam quod super'est pensato omni damno, ac proinde idem file, qui secundum verborum eortieem á damni onere videri poterat immunis esse, tamen interveniente hác lueri cem damno pensatione damni quoque communionem re ipsa subit. Voet, Com. Ad. Pan. lib. 17, tit. 2, §8. But whatever the proper interpretation of the provisions of our code, the argument deduced from the analogy of a partnership between individuals, fails, if the analogy itself be incomplete. The State, in the present contract, cannot be treated as a simple individual, without overlooking the relation of the contracting parties towards each other when the contract was made. The State, in virtue of its sovereign power, had the right of making the law for the particular case, and of prescribing the terms upon which it would accord its grant; and, in prescribing them, cannot be said, by the most fastidious casuist, to have forced an unconscientious bargain with it own citizens. We are not informed how many planters held the stock originally; but we may fairly assume that their number was not greater than is shown by the present list of stockholders: say one hundred planters, out of the whole population of the State. These individuals had asked, and obtained, from the State, in 1827, a bank charter. Its capital was to be raised upon the personal security of each stockholder, to the amount of his subscription only, backed by a mortgage of his real estate of estimated equivalent value. The project failed; the capital could not be raised — for what reason ? Undoubtedly, because the capitalists, from whose coffers the money was to be borrowed, distrusted; and, therefore, rejected the security. Anxious to promote their own supposed interests, these one hundred citizens ask the State to come to their aid, by pledging its own faith to the amount of two and a half million of dollars. The direct liability of the State was to go forth in the shape of its bonds; and its ultimate protection for this heavy liability was to be a security which the sagacious capitalists had already rejected. Upon whom would the loss fall, if that protection should prove inadequate ? Clearly, upon the citizens of the State at large, through the medium of taxation. There was, then, a risk to be run which put in jeopardy the interests of the mass, for the benefit of a few. There was no injustice, therefore, in stipulating some compensation for the benefit of the mass. A bonus was stipulated accordingly. The State, for the benefit of the public at large, was to share in the profits, and gave a valuable consideration for its exemption from loss. Was the bonus unreasonable and extortionate? If the result is a fair answer to this enquiry, it cannot be so considered. The profits had a temporary existence on the books of the bank and in the imagination of the projectors; but all hope of them is now abandoned, while the bonds of the State, in consideration of which the supposed bonus was given, are still unredeemed. But if we exclude from our minds the grave lessons of a later experience, and endeavor to place ourselves in the position of the lawgivers of that era, it is fair to conclude that the bargain of the State, even in their contemplation, rested upon an expectation, an emptio spei, which even a sanguine statesman, although deeming it highly advantageous, could scarcely have considered as amounting to a certainty, and which, as we have seen, a minority who were wise in advance of their age, believed to be illusory.
Turning from the language of the 7th section of the act of 1828, to other clauses of the charter, we have found little to weaken and much to fortify the conclusion, that the shares wei'e given to the State as a bonus; that those shares should be considered in the nature of shares settled for, and as fixing the proportion of profits which the State was to receive for the public benefit, as a remuneration for the privileges conferred, the assistance rendered, and the risk incurred. In the charter of 1827, the subscription of the stockholders for $2,500,000 and their mortgages "were intended to secure the loan,of two millions of dollars," the capital of the bank. In the amendatory charter of 1828, the same idea is studiously kept in view. The subscriptions of the individual stockholders to an amount of $3,000,000, are "to guarantee the reimbursement of the loan" of $2,500,000; the mortgages by the stockholders, like their personal obligations, are "to guarantee the loan of $2,500,000." These subscriptions, these mortgages, and all the hypothecary obligations of whatever nature, subscribed by individuals, are to serve, in the stringent language of the 6th section, as a special guarantee for such reimbursement, and be deposited accordingly. We are unable to understand how the State, as between itself and the individual stockholders, can be considered as having contemplated any other course than that the subscriptions- and mortgages of the individual stockholders, and all the.other assets, should be exhausted before the public treasury, which is supplied by the contributions, and is, therefore, the property of all its citizens, should be resorted to by the bondholders.
We may add, that the defence of the State is also strengthened by a reference to the charters of those corporations in which the State reserved the right of taking stock upon the footing of a stockholder in the ordinary sense. In the charter of the Louisiana State Bank, whose capital was limited to $2,000,000, divided into 20,000 shares, of $100 each, it was provided, "that a sum of $500,000 Shall be reserved to the exclusive use of the State, to be subscribed for by the State treasurer, for the use of the State, which will, immediately after the passage of this act, take .shares for at least $100,000, in order to be en.titled to appoint the six directors ,as mentioned m the subsequent section, and for the balance of said sum at such time as the legislature will deem convenient." In that case the State, as the other stockholders, was to pay money for its shares. It bargained for its bonus in another form : $10,000 as soon as the bank should go into operation, and $90,0.00 in instalments of $10,000 per annum during the nine succeeding years. Moreaus's Digest, 69, 75. So in the case of the Gas Bank it was enacted by the 5th section of the charter, that the State treasurer shall be authorized to subscribe for the State, for any number of shares not exceeding, in the whole, the sum of $100,000, for the payment of which the governor and treasurer are authorized to issue one hundred bonds, in the name of the State, each for the sum of $1,000, payable to the order of the president and directors of the said bank. This bank did not escape a bonus; for example, it was bound to furnish at its own expense, within one year, twenty lights for the use and accommodation .of the Charity Hospital. Stats, of 1835, sec. 5, 39, &c., pp. 97, 108.
It is therefore decreed that the judgment of the district court be reversed, and that there be judgment in favor of the defendant, the costs in both courts, to be paid by the plaintiff.