Court Opinion

ID: 7192546
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:58:52.70456+00
Date Added: 2024-06-11T16:16:13.870448
License: Public Domain

Dissenting Opinion.
Poché, J.
I cannot assent to the conclusions reached and adopted by the majority of the Court in this case.
At the time that the premium bond Act was passed, in 1876, it was announced to the world, that in view of the immense debt due by the City of New Orleans, and of the consequent depreciation of all values, the rate of taxation necessary to liquidate the debt was so exorbitant as to render the collection of the tax impossible. Hence, the scheme known as the premium bond plan was proposed by the City authorities,, and was legislated into existence by the General Assembly.
I understand this Act to be what it expressly purports to be : a solemn contract between the City, the holders of premium bonds and the taxpayers or residents of said City. Its avowed object was to provide a mode of adjusting and settling the entire bonded debt of the City. The stipulation in favor of the bondholder was the agreement to levy an annual tax of five mills, to be applied exclusively to tlio settlement of the bonded debt, until the entire extinction thereof, *149which, under the plan as detailed, was to be accomplished in fifty years.
The stipulation in favor of the taxpayer was the guarantee of a limitation of City taxation to fifteen mills for all purposes, including the tax specially set apart for the payment and settlement of the bonded debt. The City, as the common agent of the creditor and of the debtor, was charged with the faithful execution of the contract. As it was anticipated that some holders of City bonds would not accept the proposed settlement, and as it was forbidden in the Act to make any other proposition by taxation outside of the plan, for unfunded bonds, it was provided that any surplus which might remain of the product of this tax, after the payment of drawn premium bonds and premiums, and the amount realized from drawn premiums on bonds held for the City, should be used in retiring the outstanding bonds. It cannot be controverted that all those stipulations and conditions were accepted by, and are in law binding on all holders of premium bonds, who are even estopped from alleging the unconstitutionality of the odious or repudiating clauses of the Act, because such clauses are favorable to them.
Under the operation of the Act, the five mill tax has been regularly collected since 1876, and the number of bonds converted into premium bonds amounts to $13,029,303; and the evidence shows that no portion of the tax thus levied has ever been applied in any manner to the benefit of the outstanding or unfunded bonds.
Some of the holders of the excluded or neglected bonds invoked the aid of the judiciary, and exposed the unconstitutional discrimination thus made and enforced against their securities. The result of their litigation has been the annihilation as to them of the obnoxious clauses of the Act of 1876, aud the immediate consequence has been a levy by various mandates of the Federal courts of a tax, independently of the fifteen mill tax, amounting to 16ft mills.
After the adoption of the present Constitution and in obedience to its limitation to municipal taxation, the City proposed to obey its mandate, but the premium bondholder applied to the courts for the enforcement of his contract, and in the Moore case the City was coerced, and in the Saloy case the taxpayer was in his turn ruled, to the strict performance of the contract evidenced by the Act of 1876, notwithstanding the constitutional restriction interposed by the people of the State in the organic law of 1879. The practical result to the taxpayer from all this litigation has been a tax, now enforced, up to 31ft mills, with a very near prospect of an additional levy sufficient to make up $650,000 annually for tlie consolidated bondholders, under the recent decree in the Pils*150bury case, followed by another of $170,000 to meet the requirements of the Ranger case.
Feeling that the burden of taxation had almost reached the point described in the preamble of the Act of 1876; finding that the stipulations in his favor in the contract bad been violated; that the amount which he had agreed, to pay in fifty years was being exacted in twenty years, under the practical operation of the premium bond Act, which had been judicially consecrated as a binding obligation, the taxpayer, in his turn, invokes the aid of the judiciary for protection under the contract. This is the object of the present suit.
For obvious reasons, we are powerless to relieve him from the .burden of judicial taxation imposed by the mandates of the Federal courts, whose acts are beyond our reach and control. For reasons equally. potent, we are unable to relieve him of the indispensable charge of providing for the current expenses of the city government.
But on the other branch of his case we have the power, both in law ■ and in equity, to relieve him, and, in my humble opinion, it was our bounden duty not to turn a deaf ear to his complaint.
Under the provisions of the premium bond Act, and quoad the holders of the premium bonds, the taxpayer .of New Orleans is, in my opinion, assimilitated to an unfortunate debtor, unable to meet punctually the payment of an enormous debt. In his embarrassment he calls a meeting of his creditors, to whom lie exposes his condition, and from whom he obtains an agreement .postponing, on condition of stated annual or semi-annual instalments, the payment of his entire debt to fifty years. By consent the assets of the debtor are placed in the hands and.under the control of a third party, who is designated as the agent of both the debtor and the creditors, and who is clothed with . full power to realize the proceeds of the assets, and to make the payments under a plan adopted by all parties. Iu order to meet the demands of such of the creditors as could not be compelled to accept the terms of the ooncursus, the agent is instructed to set apart for them a certain portion of the proceeds annually realized from tlie assets of the debtor. But in the course of time the insolvent debtor discovers that a different use is being made of his .resources by the agent who betrays his trust, and applies all of the debtor’s resources to the payment of the claims of the contracting creditors, and that under the course pursued the latter would be paid in twenty instead of fifty years. Whereupon the deluded debtor invokes the aid of the courts for redress of liis grievances.
In this case the debtor is answered by the premium bondholder, that the only part of the contract which he recognizes is that which secures him his annual five mill tax, but that he has no concern with and that *151lie is not bound by any other condition or stipulation. The taxpayer awaits the decision of the court, and then he is answered and informed that he was not a necessary party to the contract in which his ñamó was included as a mere superfluity; and that the premium bondholder, who thus acquires a chance of being paid in full in twenty years, when the respite which was granted by the Act was intended for fifty years, is not benefitted by .the unauthorized and unforeseen mode of executing the plan.
.With all due deference to my associates, I cannot join them in such an answer.
To the argument made by counsel that a different answer from this Court would destroy values recognized by the courts, would shake, confidence in securities well established as commercial commodities; and would disturb the equanimity of commerce, I reply, that I see on the other hand an impoverished, tax-ridden and overburdened people,' willing to meet their obligations within the time agreed upon, and demanding nothing more than the legal enforcement of the contract in . its entirety.
I, therefore, dissent from the opinion and decree in the case, for the .foregoing reasons, which I hastily sketched in the short time between the adoption and the announcement of the opinion.