Court Opinion

ID: 7191296
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:56:57.88664+00
Date Added: 2024-06-11T16:16:11.768091
License: Public Domain

The opinion of the court was delivered by
Manning, C. J.
Lord Eustace Cecil, George Montague Sandford, George Woodhouse Currie, and Sir Philip Rose, as trustees of the Foreign and Colonial Government Trust in England, purchased thirty-eight bonds, of one thousand dollars each, of the State of Louisiana, which had been issued under an act of the General Assembly of this State approved January 3 1870. Upon presenting these bonds to the Board of Liquidation to be funded, they were refused because the bonds were issued in aid of the Boeuf and Crocodile Navigation Company, and all the bonds of that issue had been declared of doubtful validity by the supplemental Funding Act. This act prohibits the Board of Liquidation from funding any bonds mentioned in this liste des proscrits until they have been declared by this court to be legal and valid obligations of this State, and that they were issued in strict conformity to law, and not in violation of the constitution of this State or of the United States, and for a valid consideration. Acts 1875 p. 110. Thereupon the plaintiffs instituted this suit for the purpose of obtaining from this court a decree affirming the legality and validity of the bonds in question.
L. B. Bimse of New York intervened, claiming ownership of .fifteen other bonds of same denomination and issue, alleging a like presentation of his bonds for funding and a like refusal, and praying a like decree. An intervention of this kind seems to be sanctioned by the act, and no objection is made to it.
The defendant answered by a general denial, and a special averment that the bonds held by plaintiffs had none of the characteristics required by the supplemental Funding Act. The answer to the intervention is the same in substance. There was judgment in favor of the plaintiffs and intervenor, and the defendant appeals.
It will be observed that the object of this and similar suits is not to obtain a judgment against the State for the amount of the bonds. The decree we are to render is assimilated to a 'special verdict of a jury, *36who have been charged to ascertain or find certain facts, i. e. do the bonds possess the requisites, enumerated in the act of 1875, which it is essential they should have in order to justify the Board of liquidation In funding them.
The General Assembly passed an act granting the aid of the State to the Bceuf and Crocodile Navigation Company, by which the Governor was authorized to issue the bonds of the State to the amount of eighty thousand dollars in favor of that company. It empowered the president and secretary of the company to sell or pledge the bonds thus issued in such quantities as they may deem necessary to raise money for the •completion of the work of making the Boeuf and Crocodile navigable. Whether the two things designated by these two words were canals, or bayous, or streamlets, or larger bodies of water nowhere appears- in the act, which provides further that all the rights and privileges of the company are pledged, hypothecated, and mortgaged to the State to secure the payment of the bonds issued in its aid, and the interest that may accrue thereon. Acts 1870 p. 21.
- The bonds have at their head the words, “ State bond in favor of the Boeuf and Crocodile Navigation Company,” and run thus, “ the State of Louisiana is indebted to Henry C. Warmoth or bearer in the sum of one thousand dollars” etc., and bear even date with the act above quoted, and are signed “ H. C. Warmoth, Governor of the State of Louisiana,” and are countersigned by the Secretary of State. It is admitted that the signer of the bonds is also the payee.
The testimony of all the plaintiffs was taken, from which it appears they bought thirty-eight of these bonds in London on the 8th of April 1870, three months after their date, and paid for them £6461 Is. lOd. a sum exceeding that at which they can now fund them in Louisiana con-sols. The intervenor’s testimony is that he paid nine hundred and twenty dollars flat for each of his fifteen bonds, in open market at New York, on the 1st of April of same year. These holders now charge that being purchasers in good faith, before maturity, and for a valuable consideration, in open market, they are protected by the undisputed rule of commercial law which shelters them from all latent equities between the maker and the payee — that they had not to look further than or behind the broad seal of the State, which assured them of the genuineness and legality and validity of the securities'thus purchased.
If this rule of commercial law is applicable without reserve to the bonds of this State, what significance are we to attach to the act of 1875 ? The Funding Act provided that all obligations of the State might be exchanged for consolidated bonds at the rate of sixty cents on the dollar, and constituted a board to liquidate these obligations, and gave to the holder of any valid bond or warrant, in case of its rejection by *37the board, the right to apply to any proper court for relief. Acts 1874, p. 39. In the following year, the supplemental Funding Act enumerated bonds, amounting to over fourteen millions of dollars, which it declared ‘ questioned and doubtful as to their legality and validity,’ and expressly and in terms prohibited the board from funding any of the bonds on that list until this court had decreed that they were valid obligations, and that they had been issued in conformity to law, and for a valid consideration.
If the holders of these ‘questioned’ bonds, who are purchasers before maturity for a valuable consideration, are entitled to have their bonds funded because they thus purchased them, why should the General Assembly impose upon them the vain and useless formality of obtaining a decree from this court upon any quality of the bonds ? Of what avail is an inquiry touching the validity of a bond, or its issuance in conformity to law, if the fact that it is invalid and that it was not issued in conformity to law, will not affect the rights of the holder ? Clearly this rule of commercial law does not apply here. The State can be sued in her own courts only by her permission, and in the manner and for the purposes indicated by her. The supplemental funding act required parties who resort to an action against her, through the board of liquidation, to establish the good consideration, and valid issue in conformity to law, of the bonds offered for funding, and restricted this court to an ascertainment of the possession of these requisites by those bonds. It is that law therefore that must be our guide, and not the general commercial law, in actions like the present. We have a substantial inquiry to make. The holders of these ‘questioned’ bonds must shew affirmatively that they have all of the requisites recited, in the act of 1875 as necessary to obtain a decree of this court. One of these is that they must be issued in conformity to law. Were these bonds thus issued ?
The act from which they derive their existence reads, “ that the Governor is hereby authorized to issue in favor of the Boeuf and Crocodile Navigation Company, domiciled in the parish of St. Landry, State of Louisiana, the bonds of the State to the amount of eighty thousand dollars.” The bonds were not thus issued. They are payable to H. C. Warmoth or bearer. The act provides that the president and secretary of the company shall have power to sell or pledge the bonds, but neither of these officers is made the payee for the company, but they are signed by the Governor in his official capacity and are payable to him in his individual capacity.
It would be difficult to imagine a case where the parties would be more entitled to equitable relief than this. Their good faith is unquestioned. The English holders purchased for a trust fund. They *38invested in these bonds, relying upon the good faith of the State, whose seal attested their genuineness, and we are asked, not unreasonably, to assist in upholding that faith and credit. But we are not the law-making department of the State. The policy or impolicy, the good or bad faith, of an enactment such as the Funding bill of 187á is now beyond our inquiry. Too many and too grave complications would now ensue from the opening of that question. But the act of 1875 emanated from the same source, and that Act imposes upon us the duty and the necessity of ascertaining whether any of the bonds enumerated in it are wanting in any of the qualities, essential to entitle them to be funded. We think the bonds of the plaintiffs and intervenors are wanting in one of them. They were not issued in conformity to law. And th'e lack of this quality was patent.
The Act which authorized the issuance of the bonds is printed in full on the reverse of each bond. Each purchaser, when the bond was offered to him, could read for himself the conditions and form prescribed by the act. If a more minute examination was made, he would fail to discover from the terms of the Act what it was that the Legislature of Louisiana was intending to improve. The term ‘ navigation’ would certainly imply that water was the element to be operated on, but there is no indication beyond that. The Act bore on its frontlet unmistakably the warning, caveat emptor.
The judgment from which this appeal was taken was rendered by the Third District Court of this city. It is now contended on behalf of the defendant that the matter in controversy was without the jurisdiction of that court. It derives that jurisdiction from an act of the present year. Acts 1877, p. 218. The Attorney General attacks the constitutionality of that Act.
The Constitution confers upon the General Assembly the power to establish as many District courts in the parish of Orleans as the public interest may require. Until otherwise provided, seven are constituted, and to the third is given exclusive jurisdiction of appeals from, justices of the peace. These seven courts shall also have such further jurisdiction, not inconsistent herewith, as shall be conferred by law. article 83. It is not inconsistent to enlarge the jurisdiction of one of these courts. The third Court must have exclusive jurisdiction of appeals from justices of the peace, but this exclusive jurisdiction of a particular class of cases does not preclude it from having concurrent jurisdiction with other courts of another class. The division or assignment of jurisdiction made in the constitution must remain until otherwise provided, and the use of this phrase implies that another assignment may be made. The legislature has given to the third Court original concurrent jurisdic*39tion with the fourth, fifth, and sixth, in certain cases, and this is one of them.
It is therefore ordered, adjudged, and decreed that the judgment of the lower court is avoided and reversed, and it is now decreed that the bonds held by the plaintiffs and intervenor are not valid obligations of the State of Louisiana, and that they were not issued in conformity to law. It is further ordered that these parties pay the costs of both courts.
Rehearing refused.