Court Opinion

ID: 7195440
Source: CourtListenerOpinion
Date Created: 2022-07-24 17:02:07.821938+00
Date Added: 2024-06-11T16:16:18.997309
License: Public Domain

Concurring Opinion.
Fbnnbr, J.
The case presents two questions, viz.:
1. Are the bonds in controversy valid and subsisting obligations of the State of Louisiana? If so, plaintiff has received all that she bought, or intended to buy, and has nothing to complain of.
,2. Even if. said bonds are invalid, are the defendants bound to reimburse the price they received for.-them?
*221I.
It is shown that four of the bonds are consolidated bonds of the State, which, on and prior to the first day of January, 1880, were held by the State “for the use of the Agricultural and Mechanical College Fund.” As to these bonds, the Constitution of the State, Art. 233, declares: “ The consolidated bonds of the State now held by the State for the use of said fund shall be null and void after the first day of January, 1880, and the General Assembly shall never make any provision for their payment, and they shall be destroyed in such manner as the General Assembly may direct.”
The remaining bond in controversy is a consolidated bond which had been surrendered to the State in exchange for a constitutional bond, in pursuance of the provisions of the State debt ordinance, which, by virtue of its ratification by the people, became a part of the Constitution.
At its first session after the adoption of the Constitution, the General Assembly passed an act providing for the cancellation and destruction of the bonds so surrendered and exchanged.. Act 121 of 1883.
Instead of retaining, canceling and destroying these bonds which had thus been conclusively extinguished and rendered null and void by the mandate of the Constitution, it appears that the then Treasurer of the State fraudulently abstracted them from the treasury of the State and placed them on the market.
The proposition that such fraudulent act could have effect to revise the extinguished obligation of the State upon these bonds, or could confer upon the existing government of the State any right or power to make provision for their payment in the teeth of the positive prohibition of the Constitution, seems, to me at least, to involve the assertion of nothing less than an extravagant impossibility.
What function or power has this court, except to administer and apply the Constitution and laws of the State? We have quoted the provisions of the Constitution and laws bearing on this case. Are they ambiguous? No. Are they beyond the legislative authority which adopted them? No. ,! Then whencó can this or any court ■derive the power to nullify them?
We might rest our conclusion with absolute security upon two prior decisions of this court rendered in cases absolutely analogous *222to the instant one in every feature, save that in those cases there was no intended fraud, but that the bonds had been emitted in virtue of authority conferred by an act of the Legislature, regularly passed, but which the court held to be unconstitutional; and surely no one could contend that the illegal act of an executive officer could have greater effect in defeating the constitutional rights of the State than a like act of the General Assembly approved by the Governor.
In the cases referred to, as in this, the bonds were originally valid bonds of the State; they belonged to a series of bonds of which many were still rightfully outstanding and from which they were undistinguishable in any respect except as to the numbers which they bore; they were negotiable in form and were held by purchasers in open market and before maturity, and with no other notice “ than would result from their presumed knowledge of the acts and proceedings of the State and its officials.”
The same arguments, based upon the law of negotiable instruments, were addressed to the court then as now; but the court, after reciting the constitutional and legal provisions which prohibited the emission of those particular bonds, said: “These laws, to all intents and purposes took these bonds out of commerce. They were placed in the special and joint custody of the Secretary of State and Treasurer, who were required to execute duplicate receipts therefor, and to be and remain a perpetual fund inviolably appropriated to support of public schools. They ceased to be negotiable by virtue of these positive declarations of legislative will, and the usages and laws of commerce relative to negotiable paper are superseded by these positive enactments, and are inapplicable to the ease. We follow the commercial law only when it does not conflict with statute laws of the State, but no further. It is within the power of the State to destroy the negotiability of all paper, and to withdraw from commerce such things as it may deem proper.” Sun. Mut. Ins. Co. vs. Board, 31 An. 175: State ex rel. Durant vs. Board, 29 An. 77.
These decisions are, for us, the highest of all judicial authority, as to the subject matter of which they treat — higher even than that of the Supreme Court of the United States, unless it can be shown that they involve some federal question on which we acknowledge the paramount authority of that high tribunal.
*223We can discover no federal question in those cases or in this. Nobody would seriously question the power of the State to modify, repeal or abrogate the law merchant, except, at least, in so far as such action might impair contract rights existing at the date of such legislation; and, inasmuch as the rights here involved necessarily arose after the date of the legislation, and after the facts which gave effect thereto, this possible exception can not apply.
In absence of any federal question it may be confidently asserted that in such a case, involving simply the interpretation and application of the Constitution and laws of the State, the Supreme Court of the United States, in accordance with its conservative and settled policy, would adopt and follow the decisions of this court.
Such, nevertheless, is my respect for that court, and my desire to maintain harmony between federal and State jurisprudence, that any clearly conflicting decisions rendered by it would arrest my grave attention. to the merits of ■ such a conflict as determining whether we should maintain or overrule the prior decisions of this court.
I fail to And anything in the federal decisions referred to which conflicts with the decisions above referred to.
The Supreme Court of the United States has emphatically repudiated the doctrine that the government can be bound by the frauds of its officers. We quote its language:
“The position that, as the frauds charged were committed by officers of the United States, the court erred in not holding their acts to be binding, and in not giving to the patents the force of valid conveyances is certainly a novel one. The government does not guarantee the integrity of its officers nor the validity of their acts. It prescribes rules for them, requires an oath for the faithful discharge of their duties, and exacts from them a bond with stringent conditions. It also provides penalties for their misconduct or fraud, but there its responsibility ends. They are but the servants of the law, and if they depart from its requirements the government is not bound. There would be a wild license to crime if their acts, in disregard of the law, were to be upheld to protect third parties, as though performed in compliance with it.” Moffatt vs. United States, 112 U. S. 24.
From this doctrine it has never deviated by a hair’s breadth save in one case, viz.: Cooke vs. U. S., 91 U. S. 389. That case, like the *224case of State vs. Wells, Fargo & Co., 15 California, 336, involved no question of constitutional prohibition and none of the power of the government to pay. Both were cases in which the government had actually paid the obligations and was seeking to recover the amount so paid to bona fide holders.
In Cooke’s case the instruments which had been illegally issued and had been actually redeemed by the United States were treasury notes, printed by the government, perfect in form, complete and ready for issue, intended to circulate and take the place of money, not differing, as ¿the court said, “ from coins of the mint when fully stamped and prepared for issue,” and made a legal tender for the payment of government dues. We can well understand the vast importance to the government of preserving the circulating money of the country from all taint of possible doubt or suspicion, and under the stress of that motive the majority of the court denied the right of the United States to recover. But even in that case Justice Miller took no part, and Justices Clifford, Field and Bradley dissented on the trenchant ground “that the United States are not liable for its paper promises fraudulently or surreptitiously put into circulation, not even if the fraudulent act was perpetrated by treasury officials.”
A like question came before the court in a later case, and reference was made to the decision in Cooke’s case, and the unanimous court there referred to the particular circumstances presented therein, and which I have recited above, and said: “We are not prepared to extend the scope of that decision.” The court then held that the District of Columbia could not be held bound to even a bona fide holder of its negotiable paper not due, which had been redeemed and canceled by the District and had thereafter been abstracted, the cancellation mark erased with detersive soap and fraudulently put in circulation. District of Columbia vs. Cornell, 130 U. S. 655.
Although, in the instant case, the fact of cancellation is wanting, I fail to perceive any distinction between a fraudulent failure to cancel when the. law required it and a cancellation so made that it could be fraudulently effaced. In both cases the instruments found .their way into circulation through the fraud or fault of the officers, and the bona fide taker was no better protected by an inefficient cancellation, the evidence of which had been destroyed, than by the absence of any cancellation at all.
*225I consider, therefore, that the decision in Cooke’s case, restrained as it is by the later decision referred to, has no application to the facts of this case, and that the last decision does apply to the facts here and confirms the decisions of oar own court.
The instant case, however, presents one feature which separates it, by an impassable gulf, from the cases of Oooke and Cornell, viz.: the fact that the Constitution of the State extinguishes these obligations and forbids the General Assembly from ever making any provision for their payment.
II.
On the question of the obligation of the defendants to refund the price received for these invalid bonds, I consider it incontestable.
1. The views above expressed and the decisions quoted hold that the bonds in question had lost the character of negotiable instruments. It follows that defendants’ obligations are governed, not by the law merchant, but by the provisions of the Civil Code regulating the contract of sale of non-negotiable incorporeal rights. A mere reference to the articles of the Code clearly shows that the vendor of such aright warrants its existence and validity. Rev. C. C. 2474,, 2475, 2476, 2500, 2520, 2646.
2. Even were it admitted that the bonds retained the characteristics of negotiability as between the parties to dealings in them, I consider that under the law merchant the assignor warrants the genuineness, the validity and legal operation of the negotiable instruments assigned by him. Benjamin on Sales, 4 Ed., p. 695; Daniel on Neg. Inst., Secs. 730, et seq.; Tiedeman on Com. Paper, Secs. 244, et seq.; 2 Parsons on Bills, pages 37 and 42; Young vs. Cole, 3 Bing. N. C. (Eng.) 724; Westrop vs. Salomon, 8 C. B. 345.
This question also has been decisively settled by this court in a case where the assignor held in good faith a treasury note of the United States which, it subsequently appeared, had been redeemed and canceled by the United States, but had been fraudulently purloined, the cancellation erased, and put in circulation. His assignee, after discovering these facts, sued him to recover the price, and this court awarded it.
Knight vs. Lanfear, 7 Rob. 172, the court said: “It is clear that the sale must be rescinded on account of the error of the plaintiff {and we believe defendant, also) as to the substance of the object of 4he sale. * * * If the character of the note and all *226the circumstances attending its redemption, the purloining of it, and the conduct of the officers of the United States before and after the purloining had been disclosed to the plaintiff when he purchased the note, it .is clear that he would not have bought. He wished to purchase, and believed he was purchasing an unadulterated treasury-note, receivable in payment of duties, and salable at the market price — one which he could not be compelled to take back after he had sold it. He was in an error when he received the note which is the subject of the present suit. His error prevented his consent, and the absence of his consent deprived the sale of all its effects and consequences.”
The case of Otis vs. Cullom, 92 U. S. 447, which is relied upon as counter to the doctrines above enunciated, is clearly distinguishable and rests upon an entirely different principle, viz.: that “the plaintiffs in error got exactly what they intended to buy and did buy.” 'The facts showed that they bought bonds of the Oity of Topeka which had been issued under certain laws of the State of Kansas, which were subsequently decided to be unconstitutional and the bonds annulled. All the bonds issued under these laws stood in the same case; it was not a case where some were good and some bad. The plaintiff simply bought bonds issued under these laws, and he received bonds so issued and just as good as any other bonds so issued. He got what he bought and intended to buy, and could not •complain, his information as to the matter being the same as that of his assignor.
But here the bonds sold are part of the consolidated bonds of the State of Louisiana, all of which are valid and binding obligations of the State, except those which have been annulled or redeemed. ■Obviously, the plaintiff here intended to buy good bonds — not worthless similitudes which had been extinguished by constitutional mandate or by valid redemption. She did not get what she bought, and her assignor can not keep the good money which he received for bad bonds.
The Supreme Court of Nebraska has, in a forcible opinion, shown the inapplicability of Otis vs. Cullom to cases like this. Rogers vs. Walsh, 12 Neb. 28.
Yielding the utmost force that can be claimed to the equitable ■considerations which might influence the State in assuming responsibility for wrongs inflicted on third persons by the fraudulent acts of *227its own chosen officers, the stubborn fact remains that the existing government is not bound, and even lacks the power, to make any provision for the redemption of these bonds. This leaves the case within the inexorable grasp of the authority of the decision in Knight’s case, where the court went much further than we can go in this case, and said: “We have considered the defence in the most favorable view in which it can be placed for the defendants. We have assumed, for the sake of argument, that the conduct of the officers of the the Treasury Department, of the customhouse and of the bank at which the interest was paid, has been such as to entitle the fair holder of the note to demand its amount from the United States;” but even on this hypothesis, the court said the purchaser did not buy “the chance of a successful application at Washington for the reimbursement of what he advanced. He wished to purchase, and he believed he was purchasing, an unadulterated treasury note, receivable in payment of duties at the ■customhouse, and salable at the market price, one which he could not be compelled to take back after he had sold it. He was in error when he received as such the note which is the object of the present ¡suit. His error prevented his consent, and the absence of his consent deprived the sale of all its effects and consequences.”
It is apparent that plaintiff intended to buy, and defendants to sell, untainted and unquestioned bonds of the State, the redemption of which in principle and interest is provided for in the existing Constitution and laws, not bonds which the government of the State as organized under that Constitution can not and will not provide for, and which can never be recognized or redeemed by any power short of an amendment of the Constitution.
Eor these reasons, as well as for those more elaborately stated in the principal opinion, I concur in the decree, and Justices MeEnery and Breaux also concur in this opinion.