Year: 1870




We stated yesterday morning that the
Council would meet in committee yesterday
to consider the matter OF selling the Jackson
Railroad stock. Nothing has transpired
as to their action. The following letter eX.
plains itself:


OFFICE CITY ATTORNEY, F.,
New Orleans. Msy Is, 1870. {
Hon B. f. Flanders, Mayer of the city of New Or
DEAR SIR-At an informal meeting of the
Board OF Administrators, you directed my
attention to an act providing for the sub
scripton, by the city of New Orleans, to
the stock Of the New Orleans, jackson and
Great Northern Railroad Company, ap-
proved March Is, 1854, and inquired of me
as to the right of the city to transfer the
stock held under that authorized subscrip-
ton, and whether or not transfer would
have the effect of maturing the city bonds,
given in payment OF the stocks.
Section three OF the act of the Legisa-
ture, now under consideration, provides
that, upon the receipt OF the bonds, the
treasurer of the company shall issue to the
city of New Orleans therefor certificates of
stock for an amount equal to the amount OF
the bonds received, and the stock OF the
company thus issued to the city of New Or
leans shall remain forever pledged for the
redemption of said bonds; provided, how
ever, that any holder of said bonds, who
may desire to convert them into the capital
stock of the company shall, on application
to the Treasurer of the city, and on surren-
der to him of the bonds to be converted,
receive from said Treasurer transfer of
the stock represented by the bonds surren-
dered.


In section three 1 find ample provision
made, not only for q pledge of the stock.
but for the convertibility of the bonds into
stock, at the option OF the bondholders: but
Notwithstanding the incumbrance thus laid
upon the stock, it is nevertheless suscepti.
bic Of alienation aud transfer.


In Ducros We. Fortier, Robinson's Re
ports p. l67, the Suprem Court of Louisi-
aua held that the fact de non dlienando did
not absolutely prevent sale Of the prop
erty by the morigagor. That the latter
might transfer the property subject to the
right which such claim gave To the mort.
gagee of proceeding summary against it,
as if still belonging to the mortgagor. That
the purchaser acquired a valid title. The
rule thus enunciated has ever, SO far as my
knowledgh extends, been recognized by the
courts OF this S ate.


The pledge Of the stock and the provisions
for its convertablity can not be stronger in
their effect than the express agreement on
the part OF the mortgagor not to alienate
the hypothecated property; and If not, not
withstanding the latter, valid title to real
estate may be made by transfer. l can not
conceive, upon principle, why the city of
New Orleans may not lawfully assign her
stock in the Jackson Railroad Company.
The reason being the same, the law is the
same.


1t may be said that the certificates of
stock are negotiable, and for that reason an
assignment of the same cum Ouere can not
be effected, as in the case of a transfer of
real estate in opposition to the clause
de non Oliendnde. Admitting, for the
sake of argument, that a certificate
of stock is negOtable-a proposition con-
ceded only in the way of argument-its me-
gotiability can readily be restrained. Legal
brakes may be go applied to the certificate,
as to stop it in the hands of a transferee so
efectualIy that it can never move farther,
there to remain subject to the bOndholders'
right of pledge and coLvertibiIity to the
same extent as if still the property of the
city.


lam clearly Of the opinion, that 3 transfer
of the stock made in the manner stated, 81
as to preserve the rights of the bondholder,
is valid, and have the honor to advise you
that no legal impeachment stands in the way
of such an assignment.


Will sale of the stock have the effect of
rendering the city bonds due and exigible?
When this question first propounded to me
was prepared to answer it in the negative;
but baving been informed that nay predeces
sor, in whose Judgment l have grea.
confidence, entertained different
opinion. | preferred not to adopt
a conclusion unit! had consulted with him
in relation to the matter. Such in erview
has been had, and although / am willing to
admit the plausibility of his argument, | am
nevertheless constrained to say that to me it
brought no convincing power or effect. l
have been able to find no .precedent-no
principle of equity or law which will give
to the transfer of the stock the effect of ma
turing the bonds of the city taken in pay
nent thqoeof.


With questions Of expediency this Office
has no right to deal; upon points OF law it
is my duty, when called upon by you, to ad
wise. give you my opinion with the pos
sibility of error, but without doubt, fear,
partiality or prejudice.


| have the honor to be, your obedient
servant, = GEORGE s. LACEY,


City Attorney.