Court Opinion

ID: 7190512
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:56:22.373625+00
Date Added: 2024-06-11T16:16:10.523857
License: Public Domain

Ludelixg, C. J.,
dissenting. This suit is instituted by the Citizens’ Bank of Louisiana to compel tho Board of Liquidators, created by act No. 3 of the General Assembly of 1874, to fund sixty bonds and coupons of the New Orleans, Mobile, and Chattanooga Railroad Company, and indorsed and guaranteed by the State of Louisiana. Tho plaintiff alleged it acquired the said bonds in good faith and for value, before maturity
The defense is “ that these bonds were not tho bonds of the State,” and, therefore, not fundable under act No. 3 of 1874; that the conditions of the act No. 26 of 1869, to be performed on tho part of tho company, in order to obligate the State to guarantee the payment of the bonds, had not been complied with ; and that, therefore, the obligation of the *256State to giro this guarantee had, in the words of the act, ceased and determined, and this before the guarantee had or could have been given ; that among the conditions wore that a section of forty miles should he completed within a specified time, and tlio whole road within a certain other specified time, and that the bonds were to be guaranteed only as each section of forty miles was completed ; that the first section of forty miles was to have been completed on or before January 18,1871 ; the whole road to the Sabine by January 18,1873, and to Houston, Texas, by July 18,1873 ; that the first section was not completed until May (April), 1871, and that no second section of forty miles was yet completed ; that the obligation of “ the State to guarantee the payment of the bonds had ceased and determined on January 18,1871, and the amendment to the constitution limiting the State debt to 525,000,000, adopted by vote of the people, November 7,1870, had supervened, and the further increase of the debt or obligation of the State was prohibited,- the constitutional limit of the State debt having already been exceeded ; that the guarantee of the payment of these bonds, after the obligation to do so had ceased and determined, was the creation of a new debt, and, being in violation of the constitution, the act of the Governor was null and was beyond his power.”
, The guarantee of the State was made by virtue of act No. 26 of the General Assembly of Louisiana, approved the seventeenth of February, 1869, entitled “an act to expedite the construction of the railroad of the New Orleans, Mobile, and Chattanooga Railroad Company.” The act provides “ that after the mortgage shall have been delivered and forty miles of road constructed, the company' may deliver to the Governor $500,000 of such second-mortgage bonds, and the Governor shall there-tipon subscribe a certificate on said bonds,-in the following words: The payment of the principal of the within bond, when due,,and the interest thereon, as it accrues,-is guaranteed by the State of Louisiana; .* * * and he shall affix the great seal of the State, and the said seal shall bo attested by the signature of the Secretary of State; and the said bonds shall then be delivered to the company for its general uses and purposes.” And the same act further declares, “that the signature of the ■Governor to the certificate of guarantee shall be conclusive evidence in favor of the holder of any bond so certified that the conditions of this act have been complied 'with on the part of the company; and that said bonds have been duly made and regularly certified and issued pursuant to the provisions of this act; and every suoli certificate of guarantee, when so subscribed, shall be a valid and binding obligation of the State of Louisiana in favor of whomsoever; * * * and the State hereby pledge s its public faith and credit to the performance of such guarantee according to its tenor.” Sections eight and ten.
*257The certificates of guarantee were duly signed by the Governor, and sealed with the great seal of the State, and attested by the Secretary of State as the law required. The evidence shows that the bonds aforesaid were acquired before maturity, in good faith, and for value.
The first objection urged against the demands of the relator is that the bonds are not the bonds of the State, and, therefore, they can not be funded. It has often been decided that “where a third person is privy to the original consideration, and, at the time the note is given, indorses an absolute undertaking on the back to pay it at maturity, he may be treated as a joint and several promissor with the party who signs on the face of the note.” 19 Wind. 202; 8 Pick. 423; 24 Wind. 456; 22 How. 341; Story on Promissory Notes, sections fifty-eight and fifty-nine. This is decided upon the principle that two instruments of the same general nature, executed at the same time, and relating to the same subject matter, are to be construed together as forming but one obligation. The State and the railroad company promise to pay the money stated on the face of the bonds and at the time specified therein. If one “put his name on the back of the note, at the time it was made, as surety for the maker and for his accommodation, to give him credit with the payee, or if he participated in the consideration for which the note was given, ho must be considered a joint maker.” 22 Howard 350; Story on Promissory Notes, sections fifty-eight, fifty-nine, and 479.
For the purpose of giving credit to the bonds intended to raise money to build a railroad within the State, the State put its name upon the back of said bonds, at the time they were executed, and thereby promised, unconditionally, to pay said bonds. Therefore, to all intents and purposes, these bonds must be deemed the bonds of the State, and within the intendment of the funding act. If valid, these bonds unquestionably form a part of the bonded debt of the State, which it was the purpose of the General Assembly of the people to fund. Are they valid obligations of the State ?
The contract from which these obligations spriDg, was made by act No. 26 of the General Assembly of 1869. At that time there was no constitutional restriction upon the power of the General Assembly to create debts; and the General Assembly had the power to enact act No. 26 aforesaid. • It has already been stated that the relator was a bona fide holder of the bonds, for a valuable consideration.
It is beyond dispute, now, that bonds like these of relator’s in this case are commercial instruments, and that the innocent holder is not affected by equities existing between the original parties. 1 Black. 386: 2 Wall. 110: 2 Black. 722; 1 Wall. 83; 3 Wall. 327.
. In the case of Mercer County vs. Hackett, the Supreme Court said, “The bonds declare on their face that the faith, credit, and property of *258the county is solemnly pledged, under authority of certain acts of the Assembly, and that in pursuance of said acts the bonds were signed by commissioners of the county. They are, on their face, compílete and per-feet, exhibiting no defect in form or substance ; and the evidence offered is to show that the recitals on the bonds are not true, and that no law exists to authorize their issue, but that the bonds are not made in pursuance of acts of Assembly authorizing them. ¥e have decided, in the-case of Commissioners of Knox County vs. Aspinwall, that when the bonds, on their face, import a compliance with the law under which they issued, the purchaser is not bound to look further.” 1 Wall. 83 ; 3 Wall. 327.
The Governor was the lawfully constituted agent of the State to sign, the certificates of guarantee, and he was vested with the discretion to decide when the conditions had happened upon which the certificates; were to bo signed, and, having signed them, the State can not repudiate-his act. 3 Wall. 93; 21 Wall. 138, 321,351. The bonds, on their face, import a compliance with the law under which they issued, and the purchaser was not bound to look further. 1 Wall. 83.
But it is said that inasmuch as the conditions precedent to signing the-certificates by the Governor had not happened before the adoption of the constitutional amendment limiting the power of the General Assembly to create debts, the power of the Legislature to create debts had ceased, because the State debts then exceeded the limit, and that the act. of the Governor in signing the certificates was a nullity.
What effect the adoption of the constitutional amendment had on the contract between the original parties it is not necessary to consider in this case, but as to bona fide third holders for value, it could have none..
As already said, the obligation of the contract sprang from the act of' the General Assembly, passed long before the adoption of the constitutional amendment, and whether the condition had then happened or not which authorized the Governor to sign the certificates could have no effect against the innocent holder, as the bonds on' their face import a compliance with the law.
I therefore dissent.