Court Opinion

ID: 7159346
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:14:50.325234+00
Date Added: 2024-06-11T16:15:19.665019
License: Public Domain

Bullard,
delivered the opinion of the court.
in this case a re-hearing was allowed on the petition of the defendants, and we have considered and weighed the *219argument addressed us in opposition to our first judgment. We have not been able to bring our minds to the conclusion that the bank was bound by the charter or by its contract with the city, to advance the interest on its bonds, and to wait for the reimbursement of that advance until a dividend should be declared. The City of New-Orleans became a stockholder, but instead of paying its subscription in money as other stockholders were bound to do, it executed its bonds in favor of the bank, payable at the expiration of forty years, and engaged to pay to the bank or its order, interest of five per cent, semi-annually. As soon as the bonds were executed and delivered, the interest began to run. The city stock was’paid. The bank was authorized to negocíate the bonds, but any advance which they might bring above par was to be passed to the credit of the sinking fund. If the bank, from any causes, had not been able for some years to make sufficient profits to enable it to declare a dividend, the city was nevertheless bound to pay the interest on its bonds. It is true the portion of dividends which will become due to the city is first to be applied to the payment of the interest, and the balance, if any, to be carried to the credit of the sinking fund in order to provide for the ultimate redemption of the city bonds ; but we have looked in vain in the charter for any provision imposing on the bank the onerous obligation to advance the interest when no dividends are declared. The bank may be hound to do so by virtue of its endorsement on its contract with the holders of the bonds, but neither the tenor of the bonds nor the provisions of the charter require it, as between the bank and the city.
Where the corporation of NewOrJeansbe-came a stockholder, by being permitted to pay its stock in its own bonds, bearing* an interest, payable semiannually, it is bound for the payment of this interest as itbc-comes due,or to refund the bank when it advances funds for this object.
It is, therefore, ordered, adjudged and decreed, that the judgment heretofore pronounced remain undisturbed,