# Hope & Co. v. Board of Liquidation

> Supreme Court of Louisiana · July 1, 1902 · 108 La. 315

URL: https://www.frixlaw.com/law-library/cases/7163897

## Case

- **Full name:** Hope and Company v. The Board of Liquidation of the State Debt
- **Court:** Supreme Court of Louisiana
- **Decided:** July 1, 1902
- **Citations:** 108 La. 315
- **Precedential status:** Published
- **Opinion:** Opinion of the court by Blanchard
- **Judges:** Adheres, Blanchard, Breaux, Nicholls, Original, Reasons
- **Cited by:** 1 later opinions in the Frix Law Library

## Citator (automated)

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## Opinion text

Statement of the Case.
The opinion of the court was delivered by
Blanchard, J.
Under the Act of 1836 the State of Louisiana issued its bonds to the extent of $7,000,000.00 in aid ot£ the Citizens’ Bank of Louisiana.
Of this amount of bonds, there were, on the first of January, 1874, outstanding $4,018,626.48, represented by 9,042 bonds, each for the sum of $444:44.
*316 By Act approved January 24, 1874, the State enacted the Funding Lav? and created the Board of Liquidation of the State Debt.
This act authorized the issue of bonds to be known as “consolidated bonds of the State of Louisiana,” and directed the Board of Liquidation to exchange such bonds for valid, outstanding bonds of the State and valid warrants of the State at the rate of sixty cents in consolidated bonds for one dollar in outstanding ¡bonds and warrants.
It seems that some years following the enactment of the Funding Act it was thought doubtful that bonds such as those issued in aid of the Citizens’ Bank were fundable under the terms of the Act, and those of the supplemental law of May'17, 1875.
Finally, certain decisions were rendered by this court holding that bonds of a similar character were entitled to the benefits of the funding scheme.
Whereupon, Hope & Co., of Amsterdam, representing themselves to be the holders and owners of the 9,042 bonds still outstanding of the bonds issued to the Citizens’ Bank, applied to the Board of Liquidation to fund the same under the Act of 1874.
The Board rejected this application.
Thereupon, Hope and Company brought suit in the Civil District Court of the Parish of Orleans to compel the Board to ¡fund the bonds they held, and included in their demand to fund the coupons of the bonds remaining unpaid.
They prayed that the Board be condemned to receive the bonds and the coupons thereof, and to issue and deliver to them in exchange therefor consolidated bonds to. the amount of $2,411,175.88.
The District Court held that the State’s obligation upon the ¡bonds was that of surety, not that of principal, or co-debtor, with the Citizens’ Bank to the holders thereof; that the bonds were contingent liabilities of the State and, for that reason, excluded from the provisions of the Funding Act; that the holders of the bonds, Hope & Co., had discharged the principal obligor, the Citizens’ Bank, and this act operated, likewise, the discharge of the State.
From this judgment Hope & Co. prosecuted an appeal to this court and in May, 1891 ( 43 La. Ann. 738 ), the court handed down its decision, reversing .the judgment appealed from and decreeing the bonds valid obligations oif the State entitled to the benefits of the funding scheme, but that the State was entitled to large credits (itemizing and detailing the same), to be applied in reduction of the *317 aggregate sum of the bonds held by Hope & Go., and that only the balance left due should he funded.
The Board of Liquidation was ordered to settle and liquidate the claim of the plaintiffs upon the principles and in accordance with the direction of the opinion of the court, and, on surrender of the bonds held by the plaintiffs, to issue to them consolidated bonds for the resulting balance, without the coupons attached thereto prior to the date of funding, which coupons were ordered to be cut off and canceled.
In a second opinion, denying the rehearing that had been applied for, the court, stating that since the rendition of the original decree a suggestion had been made by the Attorney General that some of the bonds declared on by Hope & Co. were the property of the Citizens’ Bank, reserved whatever right the State had, iif any, to refuse to fund such bonds so held.
Following this judgment and in obedience to its mandate, the Board of Liquidation met in October 1891 and proceeded to recast the account of Hope & Co. upon 'the basis of the opinion of the court, as follows:—
“Amount in capital (of bonds).........$4,018,626 48
Less 40 per cent, under Act 3 of 1874.. 1,607,450 60
Leaving ..............................$2,411,175 88
7 per cent, interest for 5% years...... 928,302 71
2 per cent, for 5 years.................. 241,117 58
4 per cent, for 6 years and 5 months. ... 618,868 45
1 month’s interest at 4 per cent........ 8,037 25 — $4,207,501 87
Less payments — credits allowed by the
court.............................$2,060,466 35
Less payments — credits allowed by the
court ............................ 722,451 03
Less payments — credits allowed by thd
court ............................ 300,000 00
Less payments — credits allowed by the
court ............................ 885,000 00
$3,967,917 38
1 month’s interest at 5 per cent, on $2,-
060,466.35 ....................... 8,585 27 — $3)976,"502 65
Thus showing a balance of.............
as the amount of consolidated bonds due.”
$230,999 22
*318 The Board then declared it appeared that of the bonds held by Hope & Ga. and presented by them for funding, 665 belonged to the Citizens’ Bank, the principal obligor, and for which the State is only surety, and that the fundable amount due on these 665 .bonds exceeded the balance of $230,999.22 due’ as aforesaid.
So holding, and considering the bonds belonging to the Bank not entitled to be funded because extinguished by confusion, the Board refused to fund the 665 bonds, or .any part of them, or the $230,999.22 found to be the fundable balance due on all the bonds as aforesaid.
Whereupon the present suit was instituted to compel the Board to issue consolidated bonds for the balance of $230,999.22 ifound to be due under the judgment of the court in the former suit.
After reciting the history of the issue of bonds by -the State in aid of the Citizens’ Bank, the petition represents in substance:—
That Hope & Co. were and still are the holders of the 9,042 bonds under an agreement between them and various persons, owners of the bonds, -by the terms of which the bonds were delivered to them (Hope & Co.) in trust for the purpose of securing unity of action on the part of all the holders of the bonds through them, and with full -power in them (the petitioners) to institute any and all such actions at law and to take any and all such proceedings as they might deem proper and expedient for the purpose of securing the payment or refunding cf the bonds, or otherwise realizing upon the same.
That whenever the owners of the bonds deposited the same with petitioners, the latter (Hope & Co.) gave receipts negotiable in form to the depositors of the bonds, acknowledging the deposit of the same, ¡but that they (petitioners) never gave any such receipts to the Citizens’ Bank of Louisiana, and were ignorant at the time of the institution of the first suit that the Citizens’ Bank was the owner of any of the negotiable certificates or receipts which had been issued by petitioners to the owners of bonds who had -placed the same on deposit with them as aforesaid; were ignorant'that the Bank had thus acquired a beneficial interest in and to any of the bonds so deposited, except that petitioners were informed that the Banking Department of the Citizens’ Bank of Louisiana had some right or title in and to the certificates representing 45 of the said bonds.
That petitioners have, since the institution of the suit for funding the bonds, learned that the Banking Department of the Citizens’ Bank *319 is or was the owner of certificates or receipts representing 665 of said bonds, but that petitioners are unable to state the numbers or series of the bonds in which the said Banking Department had a beneficial interest, nor are they able to state whether or not the Bank is still the owner of such certificates.
It is then averred that the fact that any of said bonds belong to the Banking Department of the Bank is wholly unimportant and in no manner affects the obligations of the State in the premises.
As showing this, the familiar history of the rise and career of the Bank is recited.
The main contentions of the petition are:—
That the effect of the legislation of the years 1852 and 1853, together with the Articles of Agreement of 1853, was to constitute the Citizens’ Bank of Louisiana either a dual corporation, or as one corporation with two entirely distinct and independent departments, neither cf which participated in the profits, nor was bound for the liabilities of the other.
That the legislative acts and the compact formed &■ contract between the cash stockholders and the State, with agreement upon part of the latter that she would never look to the cash stockholders for payment of the State bonds, and 'that said Cash Stock Department should conduct a purely banking concern without apprehension arising from the antecedent liabilities of the Bank.
That the State, by its legislative acts aforesaid, did induce many persons, in no manner interested in, nor bound for the obligations of the Citizens’ Bank, to subscribe for and pay in full at par shares of the capital stock oif. the Banking Department of the Bank; that said shares had for forty years been dealt in and passed from hand to hand in the markets as shares in a corporation in no manner bound for the antecedent liabilities of the Bank or its Mortgage Stock Department; and that said legislation, as construed by subsequent Legislatures and by this court, constitutes a contract between the State and the Banking Department of the Citizens’ Bank, which is protected from impairment by the provisions of both the Federal Constitution and the State Constitutions.
That the 665 bonds, or the certificates representing the same, pertaining to the Citizens’ Bank, were purchased by the Banking Department of the Bank since the year 1880 with funds belonging to the *320 said Banking Department, wherein the Mortgage Stock Department had no interest whatsover, and which said funds were in no manner liable to or pledged for the payment of the bonds issued by the State to the Citizens’ Bank; that the Banking Department, being a legal entity entirely distinct from the Mortgage Stock Department and not responsible for the debts of the latter or of the bank as antecedently existing, the purchase by it ot£ the said bonds or certificates did not extinguish the obligation of the State of Louisiana upon said bonds to said Banking Department 'by confusion or otherwise, and that the Banking Department is entitled to recover on said bonds in like manner as any other person.
That though the Citizens’ Bank was at the inception of 'the original litigation the owner of the certificates representing 665 bonds, and though said Bank may still own said certificates, yet the same are negotiable in form, and if it should be held that by reason of the ownership of the certificates by the Banking Department they or the bonds they represent have in any manner been affected or extinguished, then the court should compel the production of the said certificates and their cancellation, or otherwise not in any manner impair or affect the rights of petitioners to recover upon the bonds represented by said certificates still outstanding and representing an obligation of petitioners which may not be extinguished save and except contradictorily with the owner of said certificates and upon their cancellation, and that, therefore, the Citizens’ Bank should be made a party to the suit.
The prayer of the petition is for citation to the Citizens’ Bank as well as to defendants, and for judgment ordering the Board of Liquidation to settle and liquidate the claim of petitioners in accordance with the principles established by this court in its decision handed down in 1891 ( 43 La. Ann. 738 ), without omitting from said settlement and liquidation any of the bonds presented by petitioners for funding by reason of the fact that any of the said bonds are held by the Banking Department of the Citizens’ Bank.
And, further, that it be adjudged the Mortgage Stock Department of the Bank ¡has no beneficial claims or interest whatever in and to any of the 9,042 bonds tendered by petitioners for funding under the terms of the decree in the former suit; that it be decreed that none olf said bonds have been paid or extinguished by confusion, or otherwise; and *321 that, however, should the court render any decree affecting the validity of the certificates representing the bonds pertaining to the Banking Department of the Citizens’ Bank, then that the decree do further compel .the production and cancellation of the said certificates.
The Citizens’ Bank, made party defendant, appeared as such, and also as intervenor, and answered that the State of Louisiana, liable upon the bonds issued under the Act of 1836 and extant in 1852 and 1853 to >an amount approximating $10,000,000.00, payment whereof was secured by mortgage upon 'the property of the shareholders of the Bank, had an obvious interest in restoring the Bank’s charter that had been forfeited in 1842, so that by the application of the capital and .assets of the Bank as they then existed (in 1852) and under the administration of an active Bank, the said bonded indebtedness might be •discharged and the State freed from its liability therefor; but that it was thought entirely impracticable to effect this result without procuring fresh capital, and this, it was deemed, could not be obtained without the pledge of the complete immunity of the fresh capital from all liability for said bonded indebtedness.
That with this object in view of ultimately freeing itself from the bonded indebtedness, to be attained by restoring the Bank’s charter .and thereby better .assuring the administration and application of its assets and property to the discharge of said indebtedness, the State, by the legislation of 1852 and 1853 (the first ratified, and the second specially authorieedj by Art. 121 of the Constitution of 1852), restored said charter on certain terms and conditions, which the Bank complied with, and authorized the procuring of fresh capital for conducting the future banking business of the bank, and sensible that said capital could not be obtained without the fullest guaranty it should never be implicated in, or in any manner bound, for said bonded indebtedness, the State, through its legislature, authorized and directed the Board of Directors of the Bank to prescribe the terms and conditions on which the fresh capital should be obtained, and to determine 'the division of the profits thereof, and that these terms and conditions being thus fixed became then and thereafter known as “the compact” or “articles of agreement” under which the future business of the bank was conducted.
That in accordance with this legislation and the compact the Banking Department of the Bank was formed, and its stock in trade con *322 sisted of $1*000,000:00 of fresh capital and $500,000.00 in valuation of the available banking assets of the bank as the same existed in 1853— those furnishing the fresh capital being known as the cash stockholders to distinguish them from the original stockholders, and the latter remaining members of what was thereafter known as the Mortgage Stock Department.
That, thus, the legislation and authorized agreements of that period resulted in the two separate and distinct departments of the Bank, one of which only, the' Mortgage Stock Department (the original debtor) -should be and remain bound for the antecedent bonded indebtedness, but was to be aided by advances and loans of money, when necessary, by the other department, which loans and advances were to ¡be reimbursed.
That the Banking Department thus formed acquired the capacity to-conduct and carry on for its own benefit a banking business and to acquire assets and property oif its own.
That, again, in the year 1880, a further agreement was entered into-between the Banking Department and the mortgage stockholders by which the non-liability of the former for the antecedent bonded indebtedness was reaffirmed, and the State, by Act 19 of 1880, authorized this agreement to be made and itself, in the act, recognized as the only debtor of the bonds the Mortgage Stock Department of the Bank.
That the distinction between the two departments and the consequent non-liability of the Cash or Banking Department for the indebtedness incurred prior to 1853 has been generally accepted by .all parties-in interest and concerned; that the Cash Department, for its advances-to the Mortgage Department, has been at all times, since the legislation and compact of 1853, deemed and treated as a creditor of the Mortgage Department for the loans so made to it; that, still further as illustrating said distinctiveness, the Mortgage Stock Department has received in the past its proportionate share of the profits oif: the Cash- Department, as owner of -one-third of the capital supplied to the latter, which-share of the profits has been applied to the payment of its (the Mortgage Stock Department’s) debts as required by the compact of 1853, and the large payments made since 1853 on the bonded indebtedness-have all been made exclusively from and out of the assets of the Mortgage Stock Department aided by advances of the Cash Department, for which it (the latter) became the creditor of the other department, *323 and all this has been done with no pretense of claim on the part of the State, or any one, of the liability of the Cash Department, or its capital or assets, for said bonded indebtedness.
That at all times since the compact the State has had in the directory of the Bank 'directors appointed by it, charged with the interest of the State in respect to the payment of the State bonds; that every Legislature for many years following 1853 appointed legislative committees charged with the duty of examining, .and who did examine into and take full cognizance of the transactions and business, of the Cash Department and of its separate rights and obligations, and with full knowledge on part of the State thus derived the State has fully acquiesced in, ratified and confirmed by its conduct the separation of the two departments of the Bank and the non-liability for the .bonded indebtedness of one of these departments.
That on the faith of these things and of the status of affairs described, large amounts of money have been invested in the shares of stock of the Banking Department; that $350,000.00 of additional capital was subscribed for this stock in 1883 and went into the Banking Department, and this department, for its shareholders, on the same faith, has made investments and acquired property and rights of great value.
That the State is now estopped, by reason of the facts stated, from asserting the liability of the Banking Department ifor the bonded indebtedness, or from disputing the aforesaid separation of the two departments.
That in the exercise of its rights -and privileges as a free and independent banking concern the Cash Department of the Bank did, in 1884, with its own funds and as an investment thereof, acquire certificates, negotiable in form, issued by Hope & Co. to depositors of bonds, left with them, said certificates representing 665 bonds of the State in the hands of Hope & Co. as custodians thereof — said agency of Hope &• Co. being required by reason oif the great number of holders of said bonds, as set forth in their petition herein filed.
Then follow averments that the legislation of 1853, the compact made in pursuance thereof, and the other acts and things going to makeup the status of the Bank towards the State and the State towards the bank and the faith given to the same upon which rights were acquired, investments made, etc., constitute a contract between the State and the *324 Cash Department of the Bank and its shareholders, and that said department and its shareholders are entitled to the full enforcement of said contract, and any attempt on part of the State to deny to said Cash Department and its shareholders the right to fund the bonds so acquired as aforesaid on the faith of said contract would be a breach of the same and an impairment of the contract, as against which protection is afforded by the guarantees af the Federal Constitution and the several State Constitutions from and inclusive of the Constitution of the year 1852 to and inclusive of that year 1879, which provisions * f the affairs of the bank by that department, the indebtedness of the State on her ¡bonds issued in raid of the bank ¡had been reduced from $6,000,000.00 in 1853 to a fundahle balance of only $230,999.22, in 1891, which amount, it was stated in argument at the ¡bar and as appears in the briefs filed on behalf ¡of the plaintiffs and intervenor, if funddd,(wo«id he all that was left of liability on part of the State growing out of her issuance in 1836 of the $7,000,000.00 of bonds in aid of the hank.
It appears from the evidence that persons not previously shareholders contributed the $1,000,000.00 of fresh capital in 1853, and $350,000.00 more in 1883, and that this capital has at all times been represented by shares of one hundred dollars each extant in the hands of holders.
It further appears that since 1853 these cash shares have been leading securities upon the stock market, traded in and bought and sold promiscuously as stock of the Banking Department, and treated and understood by the public as exempt from liability for the bonds of the State issued under the Act of 1836.
The position of counsel for the State that the Act of 1853 intended that only the then mortgage stockholders should subscribe the fresh capital of one million dollars needed to enable the bank to resume business, is not sustainable. We find nothing in the act prohibiting ¡others from subscribing. The then existing stockholders were only intended to be given preference, and if they failed to subscribe, others were not barred.
What was wanted was the fresh capital, and this was to be had by setting apart so many of the existing ¡outstanding shares and selling same to those who would buy. It was never the intention that the scheme was to fall through should the then shareholders fail or refuse to subscribe the amount needed in cash. And that seems to have been the interpretation put upon the act at the time, both ¡by those interested *334 in the bank and by this court. See Pollock vs. Bank, 12 La. Ann. 230 , ' But, in this scheme, the rights of the State, as creditor of the Mortgage Stock Department in respect to the bonds issued, were safeguarded, for it wias provided in the act that the mortgages then existing to secure the stock set apart for the sale, in order to obtain the $1,000,-000.00, should not be considered raised. This precaution was taken because of the fact that all the then existing mortgages were pledged to the State to secure the payment of its bonds.
Here was a double advantage to the State. Its debtors, the mortgage stockholders, were to contribute shares of stock held by them to be sold, or subscribed to, to raise the million dollars needed to put the bank on its legs again, so that it could go 'ahead in the work of paying off the bonded debt owed by the Mortgage Department; yet the mortgages which had ¡been previously given to secure these very shares so set apart or contributed were not to be considered raised, but were to still exist and eventually to be paid by the mortgagors, and when; paid the proceeds to go in extinguishment of the indebtedness for which the State was liable.
If a stockholder owned fifteen shares, one share was to be set apart to be sold to raise the fresh capital. For this one share so taken from him and set apart, he was not only to get nothing (unless he put up the cash for it himself), but -the mortgage he had given to secure the fifteen shares was to still exist and be exigible for the full amount represented by the fifteen shares.
It is difficult to see where advantage to the mortgage stockholders in this agreement appeared, other than that, perhaps, the foreclosure of the mortgages given to secure payment of their stock was averted, and the bank in which they were interested was made ¡again a going concern; but the advantage resulting to the State is quite apparent.
In the early part of 1857 the case of Pollock vs. Bank, supra, came before the court. It involved the construction of the Acts of 1852 and 1853 relating to the Citizens’ Bank. It was a time when this legislation was fresh in the minds of every one. The decision was by judges sitting just following -the enactments. Their view of the acts was, practically, the contemporaneous construction, and being such is entitled to the greatest weight. Contemporánea expositio esi optima et fortissimo, in lege. A statute is best explained by following the construction put upon it by judges who lived at the time it was made.
*335 In that case the court declared it was notorious the State was largely interested in the success of the hank, being bound for the payment of upwards of $6,000,000.00 of bonds negotiated for the benefit of the bank, and that the avowed object of the legislation was the assurance of the State against loss.
But, further and more important to this discussion are the declarations of the court that the corporation (the bank) “as we now find it,” says the court, is the offspring of the legislation of 1853 (Act 246) and that the act made a radical change in the constitution of the bank.
Then, after referring to the several sections of the act and giving a synopsis of their contents, and after showing that the act had been formally accepted by a majority in number and amount of the stockholders, as was required, the court go on to say:
After the acceptance of the act, which was then by its terms in force, the Board of Directors, as they were authorized and required to do by the second section, fixed, on the 26th of July, 1853, before opening books of subscription, the terms and conditions of a compact and agreement as to the manner of administering the affairs of the bank and dividing its profits between the cash stockholders and the mortgage stockholders; which compact and agreement * * * was advertised during the term of thirty days, in six different newspapers, as the basis of subscription to the cash stock. The whole of the ten thousand shares of cash stock was thereafter subscribed, and the bank went into operation under the amended charter of the 28th of April, 1858, and in the mode and upon the terms and conditions fixed by the articles of compact and agreement of the 26th of July, 1858, adopted in conformity and obedience to that statute and which are to be considered as the constitution of the corporation at the present time. (Italics ours.)
There is here not only a judicial recognition and declaration that the compact of July 1853 was fully authorized by the Act of April 28, 1853, but that it was adopted in obedience to that legislation. In short, that it was, as it were, a supplement to the act and necessary to carry the purpose of the act into execution.
But more than that, it was a judicial declaration ‘that the compact furnished the basis of subscription to the cash stock, and that the bank thereupon went into operation under practically a new charter and upon the terms and conditions fixed by the compact, and that this compact was, therefore, to -be considered “as the constitution of the corporation.” These are the very words of the opinion.
Everything, then, found in the compact had the sanction of law. *336 It and the act of the Legislature upon which it was based formed the new consititution of the bank. This constitution expressly exempted from liability on the antecedent debt, represented by the bonds of the State the new Banking Department created by the compact.
After the court, in the Pollock case, refused to compel the. bank lo make loans to the mortgage stockholders ion their mortgage stock according to the terms of the .original charter, the Legislature passed the Act of the 17th of March, 1858, authorizing the Citizens’ Bank to extend the time for payment of $500,000.00 of the State bonds, and to use that sum in loans on stock to such stockholders as had not obtained the loan -to which they were entitled under the bank’s original charter; and, as additional guaranty to the holders of such bonds extended, the act provides:—
That any sum or sums which the Board of Directors may have already carried or shall hereafter carry to the credit of the “reserve fund” of the banking department of said Citizens’ Bank under the compact of £6th July, 1858, between the cash and mortgage stockholders shall not be distributed until the $500,000.00 of bonds extended as aforesaid shall have been paid. (Italics ours.)
Here, then, was direct legislative recognition of the new Banking Department of the Bank and of the compact. Not only that, but in the act the State stipulated for herself a distinct benefit — that the sums carried to the credit of the “Reserve Fund” of the Banking Department shall not be distributed until the $500,000.00 ;of ibonds, to be extended under the provisions of the act, shall be paid.
In this the State demanded and accepted, and the cash stockholders made, the sacrifice for the benefit of the mortgage stockhkolders and the State. The latter will not be heard now to allege that this demand was wholly unnecessary; that not only the assets of the reserve fund, but all other assets of the banking department, were already pledged to her. If as an addition to the existing property bank, by the subscription of a specified amount of fresh cápital — the stockholders in the property bank being accorded a preference in taking stock in the new department, to a limited extent.
“In my opinion,” he continues, “the obligations of the property, or mortgage department of the bank were unaltered or unaffected thereby —neither were they diminished or increased — and the banking department never incumd any liability to the plainitiff and never 'acquired any interest in, or right to, the assets of the mortgage department.”' (Italics his.)
If the banking department never incurred any liability to the plaintiffs, neither did it to the State, for it was only as holders of the State'y bonds that plaintiffs could have asserted any liability against that department.
The compact of 1853 expressly provided for the existence of the relation of debtor and creditor between the Banking Department and the Mortgage Stock Department, and that relation could not exist if confusion was to take place simultaneously with the birth of the obligation from one department to the other.
*339 The bonds which the Banking Department bought and paid for as an investment of its separate funds were not evidences of any debt due by it.
While the price paid' for the bonds was much less than their face value, it is not pretended it was not their full market value at the time. The purchase was made in 1883, .after the funding law was passed and when the fundability of the bonds was in dispute.
Besides, if the Banking Department had the right to buy and own the bonds, it had the right to buy them at the lowest price at which it could get them. . The purchase was made for its own .account; not for that of the Mortgage Department, nor was the price paid as an “advance” to the Mortgage Department. No such “advance” was required, or could have been required, under any construction because the bonds1 were not due.
If the bonds had been decreed to be not fundable, they would have been “nothing worth” and the loss would have fallen entirely on the Banking Department.
The State has not been injured. If the purchase had not been made-the bonds would have remained outstanding in the hands of others and been asserted ¡by such others as fundable obligations of the State.
It all comes back to the same question — was the banking department a debtor of the bonds ?
If not, it was entitled to buy and own them with the same rights as-any other holder.
Suppose the holders of the State’s bonds, upon their own initiation, or at the instigation of the State, had, after the creation of'the Banking, Department, foreclosed the mortgages given by the Mortgage Stockholders to secure payment of the shares they had subscribed to, whick mortgages 'were held in pledge for payment ¡of the bonds, and by these’ proceedings the Mortgage Stock Department had been wiped out (for the foreclosure of all the mortgages would have had that effect), would the termination, thus, of the existence of the Mortgage Stock Depart-' ment have had the effect of destroying, too, the Banking Department of the bank ? This question must be answered in the negative. ' The Banicing Department would have continued on.
If this be so, and .after the disappearance of the Mortgage Stock Department, the Banking Department had purchased the bonds in question, would it be seriously urged that such purchase had extinguished! the .bonds by confusion? We think not.
*340 The conclusion is unavoidable (1) that the Banking Department of the Citizens’ Bank was a new creation under the Act of 1853 and the compact or articles of association of that year, adopted in pursuance --I the Act; and (2) that the legislation of 1853 and the compact formed a new constitution of the bank, in virtue of which the Banking Department never became liable for the bonded indebtedness of the State incurred in 1836 in aid of the bank.
Being a new creation for the purpose of conducting a general banking business, and not being liable for the bonds of the State, it follows that the Banking Department ¡had the capacity to purchase as an investnnent of separate funds, or in current business, tTi:# bonds in question, just as any other bank or third person could do.
This being so, the purchase did not extinguish the bonds by confusion, and the Banking Department is entitled to recover upon the bonds •or the certificates representing the same, and entitled to the benefits of the funding scheme in reference theretoj in like manner as any other person could or would.
We do not find there was any privity between the Banking Department and the State — any relation of agency on part of the former towards the latter — which precludes the Banking Department from recovering from the State anything more than the sum, with interest, which it paid for the bonds.
The compact makes it perfectly clear that, in its administration of the BanJdrtlg Department, the Board of Directors of the bank acted as exclusive agents and for the exclusive benefit of the cash stockholders, subject only to the agreement to make advances to the Mortgage Department when required, and on proper security, to aid it in meeting i+s debts, which agreement had no reference to, or connection with, the purchase of the bonds.
Besides, it is by no means clear that if the course were adopted of holding the State only for the purchase price of the bonds, with interest from date of purchase, the State would be the gainer. There is much basis for a calculation which would show a different result, while if the whole ease were reopened for a recasting of the accounts it appears certain the final outcome would be still more burthensome — largely so — to the State.
It is time to put an end to this night-mare of financial folly which for two generations has disturbed the repose of the State. The courts ¡have been wrestling with the complicated issues and difficult calculations *341 involved in this controversy for many years. They have been so complicated and difficult that judges have been hopelessly divided as to their solution.
The final decree rendered by this court in the former case, from every point of view, did full justice to the State, and we do not see our way to sustaining the present claim of the State to ¡have its execution modified or disturbed in any respect.
Fortunate, indeed, is the State to emerge from this entanglement, this labyrinthine involvement, with only the loss of the comparatively paltry sum which the former judgment of this court shows it is responsible for.
In the beginning, seven millions of indebtedness, principal, and other millions of interest to accrue; in the end less than a quarter of ia> million, principal!
For the reasons assigned, it is ordered that the judgment appealed from be annulled, avoided and reversed, and it is now adjudged and decreed that the Board of Liquidation do settle and liquidate the claim of petitioners in accordance with the principles established and the directions given by the court in its decision in cause No. 10,830 on its docket, and as of the date when the bonds should have been funded, viz: — October 27,1891, and without omitting from said settlement and liquidation any of the bonds presented by petitioners for funding by reason of the fact that certain of the bonds are held by the Banking Department of the Citizens’ Bank of Louisiana.
It is further ordered, etc., that on the delivery by the Board of Liquidation to petitioners of consolidated ¡bonds of the State of Louisiana for the balance shown to be due under the former decision of this court, to-wit: — two hundred and thirty thousand, nine hundred and ninety-nine and 22-100 dollars, with interest coupons attached from the 27th day of October 1891, petitioners (Hope & Oo.) are to deliver to the Board of Liquidation for cancellation all the outstanding bonds tendered by them for funding, viz: — 9042 bonds, amounting, in the aggregate, to the sum of four million and eighteen thousand, six hundred and twenty-six and 48-100 dollars.
It is further ordered, etc., that all the costs of both courts be paid by defendants.
Nicholls, C. J., recused.
Breaux, J., dissents for reasons assigned.
Rehearing refused.
(Breaux, J., adheres to his original dissent.)

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/7163897. Public record. Not legal advice.