City of New Orleans v. Southern Bank

31 La. 560
Supreme Court of Louisiana·Decided May 15, 1879·No. No. 7279·Published

Opinions

The opinion of the court was delivered by

Manning, C. J.

The City of New Orleans sues the Southern Bank, and Thomas Layton, and Antoine Dubuclet in solido for eight hundred and five thousand dollars of City Bonds, with all the attached coupons for twenty five years representing seven per centum per annum interest from March 1,1869; or in case that the Bonds and coupons cannot be returned, that the defendants be condemned in solido to pay the princi[561]*561pal, with seven per centum interest annually from the above date for twenty five years. The case was tried by a special jury.

A verdict having been rendered for eighty four thousand three hundred and twenty three dollars and eighty four cents against the Bank and A. Dubuclet in solido, and of one hundred and fifty dollars against Thomas Layton, judgment was rendered accordingly, and the Bank and Dubuclet have appealed.

The cause of action was this ; — that by Act of the General Assembly, approved February 27, 1869, the City of New Orleans was empowered to issue bonds to the amount of two millions of dollars, payable twenty five years after date, and bearing seven per centum per annum interest,, to enable it to fund and liquidate the balance of its floating debt, existing at that date, such as judgments, outstanding warrants, etc., which bonds, when issued, were to be deposited with the Fiscal Agent, exclusively in payment at par of debts then due by said City, other than those evidenced by Oity notes; a full and particular statement of which debts should be prepared by the Comptroller and Treasurer of the City, verified by the Mayor and the members of the Finance committees, of the Boards of Aldermen and assistant Aldermen; which statement, so verified and attested, should be furnished to the Fiscal Agent; and “it shall be the duty of the Fiscal Agent to give said bonds at par in payment of the debts of the City to the creditors mentioned in said statement, or to their heirs or assigns” — that the Southern Bank was before, and at, that date the Fiscal Agent of New Orleans, and continued to be until during October, 1869, and the bonds thus provided for were issued and deposited with that Bank, and that eight hundred and five thousand dollars of them have been illegally and wrongfully retained, disposed of, or paid out by the Bank and others in this way;—

Under the Act, approved September 14,1868, the Board of Commissioners of the Metropolitan Police apportioned and assessed against the City of New Orleans for the year ending October 1,1869, the sum of eight hundred and five thousand six hundred and thirty five dollars, to be raised by taxation, and to be paid to the State Treasurer for that Police, and the provisions of that Act were reenacted on March 8,1869. In July 1869, the Common Council of New Orleans adopted an ordinance authorizing the proper officers to issue eight hundred and five thousand dollars of the two million of bonds, to be disposed of under such rules as the Finance Committees and the Mayor might establish, provided the bonds so issued be given by the Fiscal Agent at par in payment to such creditors of the City as should be determined by those Committees and the Mayor were within the purview of the Act. On July 15,1869 these Finance Committees, contrary to the requirements of the Act of February 27,1869, determined to use a portion of the bonds deposited [562]*562with the Riscal Agent to pay the Metropolitan Police apportionment, and accordingly resolved that the Riscal Agent should pay to the State Treasurer the bonds referred to in the Ordinance of July, for the purpose of paying that apportionment, with the same proviso that was contained in the Ordinance, viz that such payment of these bonds to the State Treasurer be made at par, and no discount should be allowed on them, and with the further proviso that the receipt of the Treasurer shall stipulate that no discount on the bonds is to be made, and that none of them shall be paid to the Treasurer until he shall have been legally authorized to receive them, by resolution of the Metropolitan Police Board, in full payment of all claims it might have against the City.

This resolution was communicated to the Metropolitan Police Board, and to the Fiscal Agent, on July 16, 1869, and the Board refused to recognise the legality of the action of the Finance Committees, and refused to receive the bonds.

It is then alleged that the Fiscal Agent, despite this refusal of the Board, and contrary to the resolutions of the Finance Committees, arranged with Dubuclet, the State Treasurer, to take these bonds to New York and sell them — the Fiscal Agent making a paper transfer of the bonds to the Treasurer on July 20,1869, and taking his receipt therefor, which receipt, it is alleged, did not conform to the requirements and provisos of the Finance Committees; and immediately thereafter the bonds were taken by Thomas Layton to New York, with Dubuelet’s knowledge and consent, and were sold at a discount of twenty one and one half per centum. Mr. Layton was the President of the Southern Bank.

That with the proceeds of the sale of these bonds, Dubuclet undertook the purchase of Metropolitan Police warrants, and finally about five hundred and thirty seven thousand nine hundred and forty dollars and twenty eight cents in those warrants were paid out of those proceeds.

The plaintiff charges that the Southern Bank, as Fiscal Agent, was specially entrusted with the custody of the City Bonds, and the duty was imposed upon it of not paying them out, except for debts of the City that existed on February 27, 1869, and only for such of those as should appear in a statement of the City Comptroller and Treasurer, verified by the Mayor and the Finance Committees, and that not even for the payment of debts so stated and verified should the bonds be discounted — that in violation of its trust, the Fiscal Agent paid or gave out these bonds without haviDg the statement required, and at a loss by discount of twenty one and a half cents on the dollar, and for claims which were not, and viere not pretended to be, debts of the City of the [563]*563■class specified, the Ordinance of July not authorizing these bonds to be given in payment of the Metropolitan Police apportionment, and the Finance Committees having no power or authority to make such destination of them — that even if these bonds could have been issued to pay that apportionment, not more than $537,940.28 of Metropolitan Police warrants were actually retired by the bonds, leaving the residue, viz $276,694.72 of bonds of the City outstanding, with all their coupons, for which the City has not received any consideration whatever.

Free access — add to your briefcase to read the full text and ask questions with AI

City of New Orleans v. Southern Bank, 31 La. 560 (La. 1879).

31 La. 560 (City of New Orleans v. Southern Bank) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Edwards v. Turner
6 Rob. 382 (Supreme Court of Louisiana, 1844)