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U.S. Supreme Court

Board of Liquidation v. McComb, 92 U.S. 531 (1875)

Board of Liquidation v. McComb

92 U.S. 531


1. On the 24th of January, 1874, the Legislature of Louisiana passed "the Funding Act," which created a board of liquidation, consisting of the governor and other state officers. Its principal stipulations, aside from that which provided that prior to the year 1914, the entire state debt should never be increased beyond the sum of fifteen million dollars, are first, that the "consolidated bonds," the issue of which is thereby authorized, shall not exceed in amount fifteen million dollars, or so much thereof as may be necessary for the purpose of consolidating and reducing the floating and bonded debt of the state, amounting to twenty-five million dollars and consisting of valid outstanding bonds, and valid warrants of the auditor theretofore issued; secondly, that they shall only be used for exchange for said debt at the rate of sixty cents in consolidated bonds for one dollar in such bonds and warrants; thirdly, that a tax of five and a half mills on the dollar of the assessed value of all the real and personal property of the state shall be annually levied and collected for paying the interest and principal of the bonds and is set apart and appropriated for that purpose and no other, any surplus beyond paying interest to be used for the purchase and retirement of the bonds; fourthly that the power of the judiciary, by means of mandamus, injunction, and criminal procedure, shall be exerted to carry out the provisions of the act. An amendment of the constitution was subsequently adopted which declared that the issue of the consolidated bonds should create a valid contract between each holder thereof and the state which the latter should not impair, and directed that the tax should be levied and collected without further legislation. Thereafter, on the 2d of March, 1875, the legislature passed an act authorizing the board of liquidation to issue a portion of such consolidated bonds to the Louisiana Levee Company in liquidation of a debt claimed to be due it under a contract made in 1871. This debt was not one of those to fund which the consolidated bonds had been issued, but the act under which that contract was made provided and set apart certain taxes to be levied and collected throughout the state to meet the payments which would accrue to the company. The circuit court, upon a bill filed for that purpose by a citizen of Delaware who had surrendered his old bonds and taken sixty percent of the amount in consolidated bonds, two millions of which had then been issued, granted an injunction restraining the board from using the consolidated bonds and from issuing any other state bonds in payment of said pretended debt. Held that as the proposed funding of the levee debt at par in the consolidated bonds destroys all benefits anticipated from the funding, on which benefits those who accepted its terms had a right to rely, and makes an unjust discrimination between one class of creditors and another, the injunction, so far as it restrained the funding of said debt in consolidated bonds issued or to be issued under the Act of Jan. 24, 1874, was properly granted.

2. Although a state, without its consent, cannot be sued by an individual, nor can a court substitute its own discretion for that of executive officers in matters belonging to their proper jurisdiction, yet when a plain official

Page 92 U. S. 532

duty, requiring no exercise of discretion, is to be performed, and performance is refused, any person who will sustain personal injury by such refusal may have a mandamus to compel its performance, and when such duty is threatened to be violated by some positive official act, any person who will sustain personal injury thereby for which adequate compensation cannot be had at law may have an injunction to prevent it. In such cases, the writs of mandamus and injunction are somewhat correlative to each other. In either case, if the officer plead the authority of an unconstitutional law for the nonperformance or violation of his duty, it will not prevent the issuing of the writ. An unconstitutional law will be treated by the courts as null and void.

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