State ex rel. Samuel Smith & Co. v. Board of Liquidators of Floating Debt of State

Taliaferro, J.

This and several other appeals came up in one record, and all involve the same question. The Legislature of the •State, in 2870, authorized the issuing of State bonds for the purpose of tailing up the floating debt of the State. These bonds were to be exchanged for debts of the State, under the direction of the Governor, the Auditor, and the President of the Citizens’ Bank of Louisiana, to constitute a board for the purposes of the act, to liquidate and redeem •all outstanding warrants of the State; 'and, by an act approved March 4, 1871, the board was authorized and required to exchange the bonds for evidences of debt, at the rate of $100 in. bonds for $70 of indebtedness. Under the authority of the statute it seems the hoard issued the following order: '

“To the Citizens’ Bank of Louisiana, Piscal Agent — We have received the following evidences of floating debt of the State of Louisiana — amounting to $359,069 67 — to he exchanged for bonds at *389seventy cents on 1lie dollar. [List of evidences of floating debt.] We hand, you herewith the above mentioned evidences of debt, for whicli yon are directed to deliver over to this board, for distribution to parties interested, @513,000 Louisiana State six per cent, bonds, known as floating debt bonds, now in your possession.

(Signed) H. C. WARMOTII, Governor.

JAMES GRAHAM, Auditor.

J. G. GAINES,

President Board of Liquidation.”

On the eighth of March, 1871, before this order was executed, Samuel Smith & Co., obtained an injunction from the Eighth District Court of the parish of Orleans forbidding the Citizens’ Bank, as the Fiscal Agent of the State, to part with or dispose of tlio bonds in its possession. On the same day the same plaintiffs and others obtained writs of mandamus against the Board of Liquidation, directed to the several members thereof, praying that they be obliged to receive from the various plaintiffs their warrants and certificates ot indebtedness, amounting to $165,000, and to deliver to them @335,000 in State bonds, known as floating debt bonds.

The ground of complaint seems to he in all these cases that the-Board of Liquidators used partiality, and were governed by favoritism in the action it was about to take in tlie matter of exchanging the bonds for warrants, there being a much larger amount of warrants and other evidences of State indebtedness presented for exchange than there were bonds to be exchanged, a strong competition arose among the holders of warrants in obtaining bonds for the State securities they held.

An exception was filed in behalf of the defendants, on the ground' that there is nothing in the proceedings complained of authorizing the plaintiffs to resort to the writ of mandamus, and on the merits denied their right to the privileges claimed by them. The court below dismissed the rale, and from that judgment the several plaintiffs have-appealed.

The act which the members of the board were required to ao was ministerial, and from its very nature involved a discretion in them in regard to the manner of doing it. It was not possible for them to> exchange bonds with all the holders of warrants. They were beset on all sides by the holders of the State securities, anxious to invest them in bonds, all clamorous to be served and importunate to obtain precedence of each other in exchanging. Before the act of the Legislature was passed authorizing the exchange on the basis of one hundred dollars in bonds for seventy dollars in warrants, it is shown that tlio president of the bank was repeatedly urged to receive warrants for large amounts in order that they might be first paid as soon as the bill *390then before the Legislature to authorize the exchange became a law. This unseemly haste certainly conferred upon those who exhibited it no right to be first served. Other competitors, who by sharp vigilance ■contrived to be first applicants after the bill became a law, would not thereby, in our judgment, be entitled to greater consideration. But the state of things engendered by the fierce competition placed the Board of Liquidators in a delicate position. They had to exchange tho bonds with some of the parties; they could not exchange with all of them. A proposition, it is argued, was made on the part of the plaintiffs to adopt the supposed equitable mode of pro rata distribution. But what right has the board to make a pro rata distribution of the State bonds? They surely would not undertake to x>roceed in the distribution of those bonds as an administrator would do in distributing the assets of an insolvent estate. Where would be the equity if such a basis were adopted in limiting the division to those only who presented securities for exchange*? Other holders, not presenting theirs, would got nothing. In short, a case was presented in which the necessity was forced upon tho members of the board to exercise a discretion in performing the duty they had to discharge.

In such a case, this court has several times held that it is without power by mandamus to direct an officer how to perform a duty. If, in the exercise of the discretion he is vested with, he acts in bad faith .and fraudulently, to the injury of parties interested, the act might be inquired into in another form of action, but we think it can not properly be done under a proceeding by mandamus.

It is therefore ordered, adjudged and decreed that the judgment of ■the district court bo affirmed, witli costs. 22 An. 318; ibidem, 611.