Court Opinion

ID: 7191299
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:56:57.891827+00
Date Added: 2024-06-11T16:16:11.773565
License: Public Domain

*44Concurring Opinion.
Egan, J.
I attach more importance than seems to have been accorded to it to the fact that the bonds which are sought to be funded present the very novel peculiarity of having been executed by H. C. Warmoth, Governor, in favor of H. C. Warmoth, individually, or bearer. In my opinion, this can not be treated as surplusage in so large and important a transaction and one involving the faithful discharge of a public trust. It may be that no wrong was done or intended by this. It is, however, one of those acts which come under the head of constructive fraud, and one violative of the general rule which prevails not only in America but in England, and in all enlightened countries and of which the plaintiffs could not have been ignorant when they purchased these bonds — that “a trustee is bound not to do any thing which can place him in a position inconsistent with the interests of the trust, or which has a tendency to interfere with his duty in discharging itthat an agent can not dispose of the property of the principal to himself, nor execute in his own favor obligations in the name of his principal. In like manner that all agreements or obligations which are founded upon violations of public trust and confidence or of the rules adopted by courts in furtherance of the administration of public justice are held void, and that, too, whether fraud or a violation of trust public or private actually exists in the particular case or not. That eminent jurist and writer, the late Judge Story, announces these principles with great clearness and cogency in his Equity Jurisprudence, and so do all the standard works. Such is the settled jurisprudence of this State, the obligations of which especially rest upon us as administrators of its laws. It is, however, needless to cite authority in support of maxims so well founded and of so universal recognition; and nowhere to a greater extent than in Great Britain and New York, where the plaintiffs and intervenor acquired the bonds in question. This case bears no similitude to the execution by an individual to his own order or to himself or bearer of a note or negotiable instrument designed to be put upon the market. H. C. Warmoth, Governor, and H. G. Warmoth, the individual, are not one and the same entity. H. C. Warmoth could not, as Governor, make or sign any valid or binding obligation of the State payable to himself individually.
It will be understood that the subject we are discussing has nothing to do with the particular motives for the particular act of which no evidence is before us; we are simply dealing with the law which governs all such acts, lohether well or ill intentioned, and the public policy which makes such law necessaryj As has been very properly remarked by the Chief Justice, we are now acting under and solely in obedience to a statute *45which requires us to find or adjudge the existence o£ certain facts which are made by the statute a pre-requisite to the funding of obligations of the class now under review. Among these facts are the important ones whether they were issued in accordance with law and are valid obligations of the State. With this finding it has'been well stated the rules of law which give currency and credit to ordinary negotiable instruments for ordinary purposes have nothing to do. If it did, however, who will say that even according to the strictest rules of commercial law the holder or purchaser is not to be affected by what it bears upon its face V and even were the law and public policy which dictates it less imperative is there not enough in the unusual manner in which these instruments are drawn to put any purchaser upon inquiry at least and to give as to them double force to the principle of “ caveat emptor ?” But this is not all. The act which is printed upon the back of the bonds not only provides that the bonds shall be issued to the Boeuf and Crocodile Navigation Company, by its very terms, and that only so much of them as may be necessary to carry on the work shall be put in circulation by the president and secretary, (of which fact these bonds bear no evidence whatever,) but it goes farther, and provides that all the rights, franchises, and property of the company shall he mortgaged to the State to secure the payment of the bonds issued. under it, and the re-imbursement of any amounts which the State may have to pay by reason of the issue. Now the act itself makes no provision for the making or retaining of this mortgage in any special or unusual manner; and it must therefore be interpreted to mean that this must be done in the usual way by the execution of an instrument at least in writing, if not by public act, see La. ■Civil Code, art. 3305, as no valid mortgage can under our law be otherwise executed or retained. And not only is this true, but it was beyond the power of the Legislature had it even attempted it in express terms (as it did not) to provide for the retention of a mortgage to affect third persons and to give to the State and to its paper the security contemplated by the act, without not only the writing but the recording in the proper office or offices of registry and in the proper manner of the act or instrument of mortgage. Art. 123 of the State Constitution provides that "no mortgage or privilege shall hereafter affect third parties unless recorded in the parish where the property to be affected is situated.” La. •Civil Code, arts. 3342, 3345, 3347. 3348 make similar provision.
Again, conventional mortgages can only be agreed to by those who have the power of alienating the property which they subject to them. C. C. of La. art. 3300. Again, to render a conventional mortgage valid it is necessary that the act establishing it shall state precisely the nature and situation of each of the immovables upon which the mortgage is granted. La. Civil Code, art. 3306. Do not all these provisions of the *46constitution and laws of the State, of which the Legislature was and must have been cognizant, furnish additional evidence that the Legislature contemplated the issuance of these bonds to the Company itself, which alone, through its authorized officers, could grant a mortgage upon its property, and as we have seen it must be first granted before it could be recorded, and must be recorded to affect third persons or to furnish any security to the State such as the act expressly stipulated. • The legislative act was the letter of attorney of its officers in the premises. They had no power or authority to act or bind, the State otherwise than as provided in the act. If, therefore, the Governor chose to issue these bonds to himself or to any other person or corporation than the Boeuf and Crocodile Navigation Co. he acted in so doing without authority and thereby created no valid obligation of the State. It is also true that the act does not contemplate that the State authorities shall put these bonds upon the market. That power and duty are specially confined to the President and Secretary of the Company as the work may require. Every purchaser who deals in State securities is at least required to know the law which provides for their issuance.
For these additional reasons I concur in the decree.