Court Opinion

ID: 7195256
Source: CourtListenerOpinion
Date Created: 2022-07-24 17:01:58.036165+00
Date Added: 2024-06-11T16:16:18.658838
License: Public Domain

On Rehearing.
Breaux, J.
Plaintiffs are pleased to state that we ignore the fact that all payments made on account of their claim against the State and the Citizens Bank, as co-debtors, have been made by the Citizens Bank and not by the State, and that we utterly fail to apply, or allow, the application of any part of the payments made by the Citizens Bank, or of-the assets to it belonging, to the payment of the large amount of coupons of date anterior to 1874, and which, though not provided for by the State of Louisiana in the funding act, constitute valid obligations of the State and of the Citizens Bank.
The amount paid had not been applied to the satisfaction of any debt, at the time suit was brought.
If unauthorized application of payment had been made, to the State’s prejudice, the result would not be thereby changed.
For the purposes of the trial, the following agreement was made:
“It is admitted that since the 8th of October, 1880, the Citizens Bank has paid and remitted to the bondholders, under the agreement of that date, two million sixty-four thousand four hundred and sixty-six dollars and thirty-five cents, to be imputed according to law.”
In its decree the court followed the provision requiring that the “ payment be imputed to the debt, which the debtor had at the time most interest in discharging.” .
The amount collected was not (he property of the Citizens Bank, but the proceeds of collection on mortgages, deposited as a guarantee to the State, to protect her from loss, as one of the parties to the bonds.
“ That for the guarantee of the bonds to be emitted by the State, in favor of the Citizens Bank, and of the interest thereof, and for which the State pledges its faith, all the securities granted by the act of incorporation of said bank, and especially the third and *784fourth sections of said act, to the holders of its bonds, are hereby transferred to the State and the holders of the bonds.” Act January 30, 1836.
Plaintiffs, in their petition, pray that the Board of Liquidation be ordered to receive the bonds, and to deliver to them in exchange consolidated bonds, bearing date the 1st January, 1874, with all coupons annexed from that date.
Under the terms of the law, they are to be funded as from said date.
After the funding, the collections made subsequent to that date are to be applied. Whether the funding be made fictitiously or actually makes no material difference.
It is of 1874, and the rights of parties are affected as of that date.
The plaintiffs complain of error in our decree, in that it applies assets now in the hands of the Citizens Bank to the payment of their demands, although they never have been received, and, they urge that the decree should be corrected so as to eliminate the value of these assets as a debt against plaintiffs but reserving the right of the State to exercise such recourse upon “ said assets as plaintiffs subrogee or plaintiffs themselves might exercise.”
In the agreement made for the purpose of the trial, it is admitted that there is still on hand applicable £o the payment of the aforesaid bonds, issued under Acts of 1833 and 1836, a large amount of mortgage-stock assets, etc. — “the value of said assets and property applicable to the payment of said bonds is about eight hundred thousand dollars.”
The plaintiffs would now have us change the destination of said bonds, and decree that they must be transferred to the State, and consols must issue without deducting these assets.
In the act of compromise of 1880, the plaintiffs virtually assume entire control of these assets, and the transfer to the State is treated as naught. It contains several declarations with reference to these assets.
We copy of these declarations the following: “The object p,nd purpose of the same being to obtain a precise and full statement of the property and effects which the said Citizens Bank holds or controls to be appropriated to the payment of the debt aforesaid under the acts of the General Assembly.” * * And when these shall be collected, the sum shall be appropriated to the payment of the debt of the State and of the bank.
*785The plaintiffs have not made a tender of these assets. It is certainly just and proper that the amounts “ applicable to the payment of the aforesaid bonds ” should remain where they are.
If this application of proceeds be altered, funding becomes an impossibility.
■ The State can not be made to issue her bonds to the amount of. §800,000, when plaintiffs control assets to an amount, at least, equal to this sum; nor was it ever contemplated that the State should assume the active administration of this amount.
Where can we find authority to decree that the possessing of the assets shall be with the State, and that their management thereafter shall be in her name and for her account exclusively.
This would be practically decreeing that consols be surrendered for certain assets.
If the judgment were made, to whom would these assets be delivered? Who would collect them? What officer would have the control? These questions would suggest themselves if there were no statutes and compromises to prevent such a delivery and divestiture. But the statutes and different acts preclude placing the State in the attitude of a collecting agent, to save herself from losses arising from its obligations on bonds issued for the benefit of a private financial institution.
Plaintiffs complain that the money of the Citizens Bank .is not applied to its debt for past due interest, but is exclusively applied to extinguish its principal debt, because the principal is fundable under the Funding Act, and the interest and warrants are not. “ As the payments are made by the bank, and the bank is debtor for principal and interest, why should the well established principle of imputation be departed from in this case?” is the question propounded.
The plaintiffs will have it that the interest due, prior to funding, ■should be paid from the proceeds of assets.
The question arises, What is the demand of plaintiffs?
That their bonds be funded.
It is granted from the date of the statute, 1874.
Afterward two interest accounts are presented, for settlements from collections made in 1881, and after.
Which shall be first settled?
The. State,, under the law, can indicate which is the most onerous.
Both accounts should be paid. It is an issue of priority. At this *786time the last account has the preference, for it is immediately connected with issues presented, and on the grounds heretofore mentioned the payments are applied in our decree.
It1 is also urged as error, that interest should not be calculated on amounts heretofore received.
The whole theory of the decision is inconsistent with the doctrine of imputation of payments, as invoked by plaintiffs.
The decision rests upon the restoration of the status quo of 1874, which has been disturbed by the course of conduct pursued by the plaintiffs.
If they had funded in 1874, they would have had no claim upon, and no right to collect, the pledged securities.
When they now apply to fund, their action in receiving these funds must be undone.
It is a condition precedent to their right to fund, that they must restore these collections to the State, as of the date when they were received.
This involves their repayment to the State, with legal interest during the time plaintiffs have held and used them. This is what we have required, and what plaintiffs are in law and equity bound to do.
These accountings are separate and independent of each other. If the plaintiffs had 'funded in 1874, and the State had made these collections, they would nqt have been imputablq to the interest due on the consolidated bonds issued to them on which interest is otherwise provided for.
Such imputation can not then be required.
Our conclusions have not been reached without difficulty.
The changes made at the .instance of plaintiffs have occasioned a number of issues.
They asked to fund, and a consequent settlement.
We thought it was due them.
A conclusion, facere ne possumus, would have relieved us from care and work. '
The record has been examined, scrutinized. It discloses errors on the part of .those who originally organized the banking scheme, now' the subject of litigation.
They did not foresee the ruin which afterward disturbed and destroyed values during four years of the history of this banking enterprise. They were human.
*787It is not difficult to detect errors, after the fact, that would not have-been thought of prior.
But we desire to state that in our close examination of the record we have not found any evidence of attempted wrong.
Since the rendition of our original decree it has been suggested, by the Attorney General, that some of the bonds averred by the plaintiffs are the property of the Citizens Bank, and should not be funded.
The Citizens Bank is not a party to this suit, and there is no-evidence in the record to support the suggestion, so that this court can not act upon it, but the right, if any, of the State to refuse to-fund such bonds should be and is reserved.
Rehearing refused.
Fenner, J., takes no part.