LOUTSIAML 



567 



But may it not be In the order of the eternal flt- 

 neas of things that those who directly or indirectly 

 (unwittingly, it may bo) aided to tear down the basis 

 of our former groat prosperity should Hharo Bome of 

 the ills that liuvc s<> l<.n,' iiixl so powerfully borne up- 

 on tho onco proud and woulthy people of Louisiana f 



1 . E. KIDDj 

 Chairman of tho Committee. 



The followingmombers of tho oommitteo concur in 

 this report: ILK. Lott. Q. W. Mundav, Joseph Hcn- 



g, B. K. Forinan, Duvul John Eeid, J. M. Moore, J. 

 Vanoo, B. F. Jenkins, H. M. Favrot. 



Those who signed this majority report were 

 estimated to represent an assessed valuation of 

 $25,295,750. 



Tho minority of the committee made a very 

 ahle report, in which they gave the reasons 

 for their dissent. They say : 



Tho startling: results of the report of the committee 

 necessarily induce hesitation and reluctance in accept- 

 ing the principles which have guided the committee in 

 reaching its conclusions. Tho mind is dazed by tho 

 annulment of nearly twelve millions of bonds by a 

 stroke of the pen ; andj although in times of revolu- 

 tion, when tho imagination is superheated by political 

 excitement, such an extraordinary act may bo accepted 

 as the necessity of tho occasion, one can not witness it 

 in the midst of profound peace without grave appre- 

 hensions of its justice and propriety. Doubtless, some 

 who approve the measure are amazed at the modera- 

 tion or the committee^ but tho undersigned do not be- 

 lieve a majority of this Convention are in accord with 

 the views' expressed by the committee, or after due 

 consideration will sustain its report. 



Tho committee have found that of all the bonds is- 

 sued by tho State, outstanding on January 1, 1874, and 

 which, according to the committee's report, amounted 

 to $27,987,500, only a fraction thereof to wit, $3,436,- 

 000 is legal ; and they reiect $19,693,447.50 as of no 

 force, legal or moral. Of the amount of tho debt found 

 by the committee to be legal, to wit, $3,486,000, the 

 State is entitled to $1,829,500 to be carried to the credit 

 of tho free-school fund and the seminary fund, leaving 

 outstanding in the hands of third parties $2,156,500. 

 To whom this $-2,156,500 is to be paid cannot be ascer- 

 tained, as the bonds considered valid by the commit- 

 tee have been exchanged at 60 cents on the dollar for 

 consols, issued under the act of 1874, and tho particu- 

 lar consols thus issued in exchange for these bonds 

 can not be identified. The result is that the State owes 

 itself $1,829,500 as trustee for the purposes of educa- 

 tion, and it also owes to a nameless creditor $2,156,500. 

 How this unknown creditor is to be ferreted out puts 

 the imagination at fault, and hence all that the Legis- 

 lature can do is to advertise for him as is done in the 

 ease of unknown heirs of vacant successions, and re- 

 tain the amount of the debt in the Treasury until ho 

 appears : for it is impossible to make the exchanges 

 proposed in the ordinance reported by the committee, 

 since the bonds recognized by tho ordinance as valid 

 and exchangeable have been surrendered and canceled 

 by the owners, who have accepted consols in lieu 

 thereof. 



What strikes the mind in contemplating the plan of 

 tho committee is, that the State is ncld bound to pay 

 bonds when purchased by itself as an investment of 

 the school funds, while tho State is considered dis- 

 charged from responsibility for the same kind of bonds 

 when purchased by individuals. For instance, the 

 free-scnool fund was partially invested in railroad 

 bonds issued by the State prior to the war ; the amount 

 of railroad bonds thus purchased was $401,000, includ- 

 ing $18,000 of the bonds issued to tho Nashville Rail- 

 road Company. If third persons who invested in tho 

 same kind of bonds are to bo deprived of their rights 

 for tho reasons set forth by the committee, it seems to 

 be just that the State ana its school fund should be 

 subjected to the same heroic treatment. 



The committee in Its report completely disregard* 

 all moral and legal obligations on the part of tho State 

 to refund the consideration received uy it for any of 

 the bonds declared to be illegal. Tho difference be- 

 tween a fraudulent bond and a bond void for want of 

 power to issue it is well known, and important conse- 

 quences flow from it. If a debt be contracted in fraud, 

 and the debtor receive no consideration for it, then 

 there is no legal or moral obligation on the part of the 

 debtor to respect his contract. But if a State or cor- 

 poration issues a bond in a manner not authorized by 

 the Constitution of tho State or the law creating the 

 corporation, though the bond may be void, the obliga- 

 tion to restore the consideration received for it subsists 

 in law and in equity. 



In the case or McCracken vs. San Francisco, 16 Cali- 

 fornia Reports, p. 629, Chief Justice Field as the organ 

 of the Court held that, although the ordinance passed 

 by the Common Council authorizing the sale of the 

 real estate belonging to the city of San Francisco was 

 void, yet the obligation to restore wliat was unjustly re- 

 ceiveu was independent of the restraining clauses of 

 the city charter. The obligation to restore the price 

 of the sale made, and which had been received by tho 

 city, it was held, arose from the obligation to do jus- 

 tice, to restore what belongs to others, which rests upon 

 all persons, natural or artificial ; and, in the languag_o 

 of the Court, " it may well be doubted whether it 

 would be competent for the Legislature to exempt tho 

 city, any more than private individuals, from lia- 

 bility under circumstances of this character." The 

 same doctrine is announced by the Court of Appeals 

 of New York, in the case of the Oneida Bank vs. On- 

 tario Bank. 21 New York, 490. In that case, a bank 

 issued an illegal certificate prohibited by the banking 

 laws of New York ; yet the holder of the certificate 

 was allowed to recover back the consideration paid to 

 the bank, and the endorsee of the void certificate was 

 held entitled to recover the consideration received by 

 the bank from the payee of the certificate ; the en- 

 dorsee of the void certincato was regarded as equitable 

 assignee of the consideration given for it. 



In the light of these suggestions, it is not enough to 

 show that the bonds issued by the State are void for 

 non-compliance with constitutional provisions. It is 

 necessary to go a step further, and establish that the 

 State received no consideration for the bonds issued 

 by it. Every sentiment of honor and justice demands 

 that ho who receives what does not belong to him 

 should restore it. If the bonds are void, tho State has 

 received something for nothing. Law and justice con- 

 cur in the enforcement of the duty on the part of the 

 State to surrender that something to its true owner. 



A statement is then made in the report of 

 the amount of money received on each clasa 

 of bonds which it was proposed to repudiate. 

 From this it appears that since the war the 

 State received in cash $6,893,607 for $12,141,- 

 240 of bonds and State notes, reduced by fund- 

 ing to $7,294,744. Yet it was proposed, with 

 the exception of $500,000, to reject as void 

 these $7,294,744 of consols, for which the State 

 has received in cash $6,893,507.31, or within 

 $401,256.69 of the face value of the honds. 

 The circumstances connected with other issues 

 of bonds are then stated, and the minority fur- 

 ther say : 



The undersigned have entered into this discussion 

 merely to remove the impression which seems to have 

 taken possession of tho minds of some, that the eleven 

 and a half millions of consols now constituting tho 

 debt of the State represent no legal obligations of tho 

 State, and arc based on no valid consideration. But 

 the funding act of 1874, and tho contemporaneous con- 

 stitutional amendment, created a tribunal to determine 

 the validity of the obligations tendered in exchange 

 for consols, and authorized the creditor to appeal to 



