Herwig v. Richardson & May , 44 La. Ann. 703 ( 1892 )

The opinion of the court was delivered by

McEnery, J.

The plaintiff alleges that he bought from the defendants, May 29, 1888, ¡ten bonds of the State of Louisiana known as consolidated bonds of the State, each bond being for the sum of $1000, bearing 4 per cent, interest; that said purchase was made through the firm of Seixas & Brown, brokers, acting for and representing the defendants; that said bonds are worthless, as they are of a number of 196 bonds issued under Act 3 of 1874 in favor of the Agricultural and Mechanical College of this State to be held in trust for said college by the treasurer of the State, but which were afterward declared null and void by Art. 223 of the State Constitution, which ordered through the Legislature the destruction of said bonds; that these bonds were stolen from the State treasury by the treasurer, E. A. Burke, and negotiated by him. The prayer of the petition is for the delivery to plaintiff of valid bonds of the State, such as he intended to purchase, and in default of such delivery that the defendants be ordered to pay him the sum of $9112.50, with 4 per cent, interest from May 29, L888. By an amended petition the prayer is altered, demanding 5 per cent, interest on the moneyed judgment asked for in the alternative.

The 'defendants in answering say that they sold, through Seixas & Brown, stock brokers, on the 28th day of May, 1888, 50,000 4 per cent, consolidated bonds, and-delivered said bonds to said brokers on the 29th day of May, 1888, and have no knowledge of the names of the purchasers of said bonds, and they deny that they ever sold any worthless bonds.

Of the 50,000 sold they have heard of no complaint, except from the plaintiff in the beginning of the year 1891; that the bonds sold by defendants through Seixas & Brown .were negotiable bonds of the State of Louisiana which passed current in the market, and were received and delivered at the Stock Exchange in this city (New Orleans), and to and by all persons, and were unquestioned; that defendants had no knowledge or suspicion that any of the bonds of the State of Louisiana were of doubtful validity, and neither defendants nor any one else even had a suspicion against the validity of said bonds until late in the season of 1888; that they were b.ona fide holders of said bonds before maturity of all the bonds delivered by them to Seixas & Brown; all of said bonds bore date in 1874, were payable in 1914, and were purchased in open market and for a valuable consideration, and defendants are not liable in any manner and under any circumstances to the plaintiff.

That said bonds were issued by the State in 1874, and were by her put in circulation, and under the commercial law, adopted and prevailing throughout the United States aud this State, there is no liability on their part to plaintiff, even if defendants had sold him the bonds as alleged in his petition; that said bonds pass daily from hand to hand without other warranty than the genuineness of the signatures to them; that as bona fide holders of said bonds for value received before maturity defendants’ rights can not be impaired without violating the Constitution and laws of the United States.

There was judgment for the plaintiff and the defendants appealed.

The record establishes by conclusive proof that the bonds described in plaintiff’s petition and offered in evidence were purchased by the plaintiff from Richardson & May. The bonds were originally consolidated bonds of the State of Louisiana and belonged to the Agricultural and Mechanical College fund, and were held by the State' and were deposited in the treasurer’s office for the use of said fund.

In the Constitution of the State, adopted in 1879, the entire debt of the State due said college was assumed by the State as a perpetual loan, which was placed to the credit of said fund, upon which 5 per cent, interest is to be perpetually paid. The consolidated bonds of the State held by the State for the use of said fund were declared to be null and void after the 1st day of January, 1880, and the State was prohibited forever from making any provision for their payment and they were ordered to be destroyed. Constitution, Art. 223.

Those bonds were not destroyed, but remained in the office of the treasurer until some time after the 1st day of January, 1880, when they were by him taken from the treasurer’s office and disposed of.

The bonds purchased by plaintiff were a part of those stolen from the treasurer’s office.

The issues in this case are identical in every respect, except as to the identity of the bonds purchased from defendants with those presented and decided in the case of Pugh vs. Moore, Hyams & Co., 44 An. We have not been convinced that there was error in the decree in that case.

We are asked by defendants to postpone our decree in this case until the final disposition of a case involving similar issues now pending in the Supreme Court of the United States; otherwise, should the decree of the United States Supreme Court be contrary to this, “ the fate of the holder of these bonds will be a matter depending upon the accident of citizenship, not upon principles of law.”

In declining to postpone our decree herein, we adopt as the reasons therefor the following part of the concurring opinion of Mr. Justice Fenner in the case of Pugh vs. Moore, Hyams & Co.:

“ 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 Mutual Insurance Company vs. Board of Liquidation, 31 An. 175; State 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. We 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.”

Defendants complained of the rate of interest allowed in the judgment for the amount ordered to be paid by defendants if they do not deliver the bonds.

The amount due plaintiff is a debt owing by the defendants if they fail to carry out the original contract and deliver to plaintiff valid consolidated bonds of the State. The judgment is, therefore, correct in allowing 5 per cent, interest. Revised Statutes, 1883.

Judgment affirmed.