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Dissenting Opinion: Harlan, J., Fuller, C. J., Lamar, J.

the bonds thus issued shall be called the new consolidated debt of New Orleans. No bonds shall be issued but by authority of the council, nor for a lower rate than ninety cents on the dollar; all issued for excavations and levees, authorized by act No. 30 of 1871, or by drainage laws previously enacted, shall be marked "Drainage Series," and all taxes collected for drainage, and not required for the payment of drainage warrants, shall be devoted to the purchase from the lowest bidder of bonds issued for drainage; no bid to be accepted above par, and the right reserved to the council to reject all unsatisfactory bids."

Proceeding under this statute, the city issued about $1,600,000 of the drainage bonds, taking up therewith warrants issued for work done. It is claimed that in issuing those bonds the city thereby paid off both its own assessed dues to the drainage fund, as well as discharged any liability it may have been under on account of its non-feasance or mis-feasance as statutory trustee of the fund. We cannot accept that view.

It seems to us clear that it was not the intention of the legislature that such should be the effect of the issue of those bonds. That intention must of course control, as it is a question of the power of the municipality to issue negotiable bonds. The section authorized a series of bonds to be issued, and directed "that the bonds thus issued shall be called the new consolidated debt of New Orleans." They were to constitute one debt, the consolidated debt, not a variety of debts, nor even two distinct debts; and the statute manifestly proceeded on the idea that this one consolidated debt is to be paid, as all city debts are paid, out of the property of the city, and that without any express declaration to that effect. United States v. New Orleans, 98 U. S. 381. The purposes for which the bonds were to be issued were: (1) for unbonded debts existing December 31, 1871, and unpaid at the time of the passage of the act, or caused by receipts of certificates of 1871; (2) "for revenues proper of 1872;" (3) "and for excavations and levees, drainage machinery and revetments authorized by law, or required for the protection of the city from

Dissenting Opinion: Harlan, J., Fuller, C. J., Lamar, J.

overflow or inundation;" one as well as the other, one no less than the other.

Now, certain of those bonds were to be marked "Drainage Bonds." What bonds, and why? The statute in words answers: "All issued for the excavations and levees authorized by act No. 30 of 1871, or by drainage laws previously enacted." No bonds could be lawfully so marked, except such as were issued "for excavations and levees;" not for drainage machinery or revetments; not even for excavations and levees. to be thereafter made, unless they were such as the statutes. named authorized; not for excavations and levees previously made, since they were already settled for by warrants, whatever such warrants might be worth; still less for the debts or liabilities of the city, however they may have been incurred. The city could not properly thus mark any bonds issued for any purposes except those expressly limited in the statutethose issued in payment for excavations and levees authorized to be made by the act of 1871, and the preceding acts. And why? For a reason entirely in harmony with the whole tendency of the entire series of statutes, and with the requirements of good faith to the contractors working under those statutes; for the purpose of expediting the work, and of giving increased value to those particular bonds.

The appellee contends that these bonds have only the force of warrants, and could only be paid out of the proceeds of the assessments already made, notwithstanding they had fifty years to run before payment could be demanded at all. Not so; they were privileged bonds in the series. And, beside the general liability of the city, the statute provided that all the proceeds of assessments not needed to pay off warrants, if any, coming in, (and in doing which the issue of that class was, pro tanto, prevented and rendered unnecessary,) should be an additional special fund with which the city should purchase said bonds before maturity at a price agreed on not exceeding par, thereby giving the bondholders, or some of them, if there were any such excess of receipts, an option to get their money before maturity. Whether a sound one or not, such was clearly the scheme, and it presupposed the continued existence

Dissenting Opinion: Harlan, J., Fuller, C. J., Lamar, J.

and the continued collection of the assessments after the issue of the bonds; and plainly excludes the idea that such issue is to extinguish the assessments, or any of them. Not an intimation is given of any difference between one class of assessments and another; those of the city and those of individuals. Therefore, the city had no power to issue such bonds for the purpose of paying the assessments. It had, perhaps, the power to issue bonds of the unmarked sort for that purpose, if Van Norden, the tran.feree of the company's rights, had consented to receive them for that purpose; but it was not claimed that this was done or tried. The question is, as to the effect of the issuing of the marked bonds.

Moreover, in issuing these bonds the city had no intention. to pay its assessments thereby; nor were they received with any such intention or understanding by the receiver of them. This is amply shown by the following facts:

(1) It was the regular custom to mark on the assessment rolls all the payments made. No such entry was made in this

case.

(2) The issue of bonds, after they were authorized, was always and largely in excess of the homologated judgments against the city on its assessments.

(3) Judgments were being constantly rendered against the city on her assessments, after she had issued bonds far ahead of even her claimed liability, yet she never presented any claim for payment.

(4) The city administrator of public accounts in his report to the city council, July 1, 1872, said that the city had already issued certificates for $485,081 of the new consolidated bonds, drainage series; and he states the amount due by the city for the streets to be $763,378.69, the total amount originally assessed against the city. On the theory of payment it would have been only $258,297.69. To constitute payment, money or some other valuable thing must be delivered by the debtor to the creditor for the purpose of extinguishing the debt, and the creditor must receive it for the same purpose. Dodge v. Freedman's Sav. & Trust Co., 93 U. S. 379, 386; Ketchum v. Duncan, 96 U. S. 659; Carter v. Burr, 113 U. S.

Dissenting Opinion: Harlan, J., Fuller, C. J., Lamar, J.

737; Wood v. Guarantee Trust Co., 128 U. S. 416; Queen v. Ashwell, 16 Q. B. D. 190, 224. These views are reinforced, if they need reinforcement, by the fact that the real question of payment or no payment lies between the city in its ordinary municipal capacity on the one hand and the city in its extraordinary capacity as statutory trustee on the other. Payment is a contract implying both proposal and acceptance; and under such conditions could the city have made such a contract without a clear statutory authority? We think not. If the legislature had designed to authorize the city to extinguish its own liability in this manner, it would have said so.

The remaining point to be noticed is that of the equitable set-off. The argument of the appellee on this line is as follows: The act of 1872 was only an enabling act to terminate the power of the municipality to issue bonds of the same tenor as the warrants which were taken up; that is to say, payable out of the drainage fund if that should suffice. The case, as here regarded then, is clearly that of a trustee, who has, by error, issued securities for the advantage of the cestui que trust. Having so issued the securities, it must result, inevitably, that the city is to be credited with the amount to the extent of which she has relieved the fund.

It is obvious that the entire force of this argument rests on the proposition that the drainage bonds were to be issued, payable only out of the drainage fund, and did not import, as contemplated by the statute, any direct liability on the city; also, that there was no error in the act of issuing the bonds. We have already, in the preceding passage, analyzed the statute, and shown that, according to our view, a direct liability on the city was exactly what was intended, the provision as to the drainage fund in connection with those bonds being merely a cumulative provision for them. That view, of course, disposes of this argument, since it denies the major premise.

Outside of the statute we will mention one or two facts confirmatory of the view that it was not the intention to have the drainage bonds paid from the assessments. First, assessments in 1872 were less by or about $200,000 than the known sum needed to complete the system devised by the act of

Opinion of the Court.

1871; secondly, although the assessments were collected while the bonds were issued, so slowly and meagrely, as we have seen, that fact, overwhelming if they were to constitute the only resource for payment, seemed not to have the slightest effect on either the city or the contractor in this matter; and, finally, the fact, that the bonds were made payable fifty years after date seems of itself a sufficient contradiction of the idea that the only source for payment at that late date was these

assessments.

We are, therefore, of the opinion that the court below erred in dismissing the bill. We think an account should have been stated on the basis indicated herein in its general outlines. The city was trustee by statute, and can be called to account by any person in interest. Exactly how the decree, when rendered, and the ascertainment of liability thereby made should have been enforced, it is hardly worth while to discuss in a dissenting opinion. The usual remedy is by mandamus where a public body cannot be subjected to ordinary process. That is a matter of detail only. The fact that the public property could not be sold on execution is no reason for absolving the city altogether from liability. The city should at least have paid what it itself owed on the assessments in question.

Upon these grounds we feel constrained to withhold our assent from the opinion and judgment of the court.

MR. JUSTICE BROWN did not hear argument in this case, and takes no part in its decision.

PEAKE v. NEW ORLEANS, No. 459. Error to the Circuit Court of the United States for the Eastern District of Louisiana. PEAKE v. NEW ORLEANS, No. 41. Appeal from the Circuit Court of the United States for the Eastern District of Louisiana. UNITED STATES ex rel. PEAKE v. NEW ORLEANS, No. 460. Error to the Circuit Court of the United States for the Eastern District of Louisiana. BREWER, J. The conclusions above stated in the opinion

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