rants issued in payment therefor be not satis. | against the rights created by the contribution. fied out of the assessment collections at the If the City, as assessee, owed this fund seven end of the year, they may be exchanged for hundred thousand dollars, it may rightfully city bonds." The work progresses, and war- answer to any demand of the contractor, or rants are issued and exchanged for city bonds, its assignees, that it pay such amount into which have passed into the markets of the the fund, "I have already paid it," and it is world and remain the undisputed obligations no reply to that answer to say, "When you of the City, and to an amount far in excess paid it you did not declare that you paid it of all the assessments charged against the in discharge of that indebtedness." It is City. In other words, the City, as assessee, enough that the City paid it, and paid it owing the drainage fund a certain debt, puts without other consideration than the disinto that fund twice the amount of the debt. charge of its indebtedness. We think this Can any creditors of that fund thereafter contention of the appellant must also fail. equitably charge the City as debtor to that The remaining proposition is that, under fund, because when it put its moneys into the authority of the Act of February 24, that fund it did not in express language say, 1876, the City purchased from the canal com"I put these in in discharge of my indebted-pany and its transferee all rights, franchises ness?" It will be borne in mind that no new and privileges possessed, and all tools, consideration passed from the contractor for machinery and apparatus belonging to said [360] this contribution of the City to the drainage company or its transferee; that having made fund. No Legislative Act contemplated such purchase, it abandoned the work then direct obligation on the part of the City. incomplete; and that the failure to complete From first to last all meant local improve- the work left large portions of the realty ment, to be paid by special assessments; and within the drainage districts of compara the contractor, all these years, had only tively no value, and thus rendered impossible legislative authority to look to the special the collection of the assessments. One satis. assessments for payment. Its contract was factory answer to this is, that the testimony entered into and performed, with knowledge indicates that if the work contemplated had that the only legal right it had for payment been completed the property would have still consisted in these assessments. Without remained in its valueless condition of swamp further consideration, the City put into this and overflowed lands, without other and fund these bonds, and they were accepted by further work. It would, to say the least, be the contractor. It is doubtless true that the ignoring the significance of a large amount motive of the City was to anticipate the of testimony, to hold that, if the work as collection of the assessments, and to put into contemplated had been finished, the lands the hands of the contractor available assets would have been drained and made valuable; to insure speedy performance of the work, but we do not base our decision upon the but the obligation of the contractor was to results of a completion of the contemplated do the work, and it gave no new obligation, work; we rather place it upon the other [359] no new consideration, to the City or any other ground-that a municipality which abandons party, for these bonds. To say after this a contemplated and intended work of public contribution of the City to this fund, a con- improvements assumes thereby no obligation tribution without consideration except in to any parties who have invested on the faith discharge of its debt to the fund, that because and expectation of benefit from the comple. it was not expressed that the contribution tion of the work. When a city or State was to be taken as in discharge of the in- contracts with an individual or company for debtedness, a court of equity will permit the the doing of certain work, the right remains contractor or its assignees to treat the contri- to the contracting parties, at any time, to bution as a donation and charge the contrib- abandon that work; no obligation arises to utor as a debtor, would be a mockery of third parties, who become interested in one justice and an insult to equity. It must be way or another in the completion of the borne in mind that a city is not like a pri- work; there is no guaranty that the contractvate individual, with absolute freedom of ing parties may not at any time abandon it; contract and donation. It is simply the or abandoning it, that any contingent, furrepresentative of the citizens and taxpayers, ther and speculative liability will arise in a trustee for their interests; it has no general favor of such third parties. When the City powers of donation, and its contribution to bought out the contractor, it did not assume a fund can never be considered as a donation his debts. A municipality may, with the when there is an indebtedness to that fund to consent of its contractor, at any time abandon be discharged. Indeed, if there were no in- contracted work. Such abandonment does debtedness, the contribution, as a whole, not make the city liable for the debts of the might well be considered as ultra vires, and contractor. So when the city purchases from if, by the issue of negotiable securities to the contractor his property invested and his that fund, an indefeasible obligation had rights existing in the contract, such purchase been assumed by the City, it might in equity creates no assumption of his debts. Having hold that fund as debtor to it for such amount. purchased, it may abandon the work; and Much stress is placed by counsel for appellant creditors of the contractor cannot charge it on this point, and large reliance is placed as debtor on the theory that if the work had on the fact that in these bond transactions been completed their claims would have bethere was no declaration of an intent to ap- come of value. Into every contract between propriate them to the payment of the City's a municipality and an individual there enindebtedness, as assessee, but, as we have ters, as between a contract between two pri- [361] indicated, such omission does not militate vate individuals, the right of determination

at any time by agreement of parties, and such | Counsel for the appellee contend that it did
abandonment creates, as to third parties, no not, and in support of that position rely upon
other or higher rights as against either the several propositions, the first of which only
contracting parties than existed at the time demands notice.
of the mutually agreed-upon abandonment.
This contention, also, of complainant must
fail.

It is contended that as the City of New Orleans and the Parish of Jefferson were not by the Acts of 1858, 1859 and 1861 expressly declared liable, or given anything to do with the execution of theworks inquestion, -which works were of the kind usually constructed at the expense of the individuals benefited, -the Legislature did not intend that the City and parish should be numbered among the contributors, and that as a general rule such assessments are not construed to include public property..

We have given this case long consideration.
The multitude of facts presented, the large
interests involved and the learned and cogent
arguments of counsel have compelled such
consideration. We appreciate fully the ap-
peal made by the distinguished counsel for
complainant in closing his argument with
this quotation from the opinion of three of
the justices of this court in Meriwether v.
Garrett, 102 U. S. 472, 520 [26: 197, 207]:
"It is certainly of the highest importance to
the people of every State that it should make
provision, not merely for the payment of its
own indebtedness, but for the payment of
the indebtedness of its different municipali-ery, a fact to be kept steadily in view when
ties. Hesitation to do this is weakness; re-
fusal to do it is dishonor. Infidelity to en-
gagements causes loss of character to the
individual; it entails reproach upon the
State."
And we trust that this court will
never falter in its duty of brushing away all
false pretenses, and holding every munic-
ipality obedient to the spirit as well as the
letter of all its contract obligations. At the
same time it is equally the duty of this
court, as of all others, to see to it that no
burden is cast upon taxpayers, citizens of a
municipality, which does not spring from
that which is justly and equitably a debt of
the municipality; and when a contract for
local improvements is entered into the con-
tractor must look to the special assessments,
and to them alone, for his compensation, and
if they fail, without dereliction or wrong
on the part of the city, neither justice nor
equity will tolerate that it be charged as
debtor therefor

The decree will be affirmed.

The conclusions above stated compel an affirmance of the judgment in the case between the same parties numbered 459, and by stipulation cases numbered 41 and 460 are to be controlled by this decision, and the same orders will therefore be entered in them.

Mr. Justice Brown did not hear the arguments in these cases, and takes no part in their decision.

Mr. Justice Harlan, dissenting:

The Chief Justice, Mr. Justice Lamar and myself are unable to assent to the opinion of the [362] court in this cause, and I will state as briefly as possible the view we take of the three controlling questions involved: Whether the City became debtor to the drainage fund for the assessments on the streets and other public places; whether it is liable as trustee for the individual assessments uncollected, and whether its debt and liability, if any, have been discharged either directly by payment or indirectly by an equitable set-off.

Did the City of New Orleans become debtor to the drainage fund for the assessments upon the streets, squares and other públic areas?

The questions raised on this proposition involve the powers, capacities and liabilities of the City of New Orleans, a municipal corporation of the State of Louisiana, and consequently a part of its governmental machinquestions of the legislative power are being examined. And furthermore, the conclusions of the Supreme Court of Louisiana on those questions, even if they are different from the usual holdings (and we do not mean to imply that they are), should have great, if not controlling, weight with this court. It seems to us that this point has been settled by that tribunal. The case at bar does not present the first instance in the history of New Orleans of the experiment of drainage based on area taxation. In the year 1835 a company was incorporated for that purpose, in which the City was a stockholder. The company taxed every foot of land, including streets, etc.

Litigation ensued. The point of liability was directly raised and distinctly decided. The supreme court sustained the tax on the [363 streets, and said: "The large proportion of the expenses by which this burden is thrown upon the City for these streets meets, in some measure, that equity which has been urged upon our consideration, that as the work has been undertaken for the public good, the public ought to bear the charge of it notwithstanding the benefit to the owner of the soil." Re New Orleans Draining Co. 11 La. Ann. 343.

Indeed, what could be more just than that a local assessment, directly beneficial to all, should, in some form and to some extent, at least, be provided for by a general contribution? Why should the cost of it be defrayed by one species of property alone? And how obtain that contribution more simply than by an assessment on the public property, although such assessment may not be enforcible by a sale, and must be otherwise provided for?

The decision above quoted was made in the year 1856. Two years later the first of the Statutes now under consideration, that of 1858, was passed. It is hardly conceivable that the Legislature which passed that Act were ignorant of the decision of 1856, or of the construction placed upon the Statute of 1835. Or that, knowing it, they still intended to produce a different result in the Act of 1858, not by adopting different, but by reproducing almost the identical, terms. The latter Statute is substantially, indeed, almost literally, a reproduction of the former; and that former

1890.

PEAKE V. CITY OF NEW ORLEANS.

Statute had just been construed by the su- | formity to the Act of 1858, to be collected in
not less than ten annual installments, and to
preme court.
be applied exclusively to the payment or pur-
chase of such bonds, and the payment of the
interest thereon.

In the case of Marquez v. New Orleans, 13 La. Ann. 319, the court held that the city as the owner of the middle ground, or public promenade, running along the centre of Claiborne Street, was liable for one half of the cost of improving that street, and in the case of cross streets, was liable for the whole cost, since as to these parts there were no abutting owners. The city was treated, and the case decided, exactly as if it were an individual proprietor.

The Act of 1861 provided that copies of the assessments made as above should be filed in certain designated courts, and, after notice, approved and homologated, and that they should then constitute judgments against the property assessed and the owners thereof, on which executions might issue as on judgments rendered in the ordinary mode, and that ten So also in the cases of Correjolles v. Succes- per cent be added to pay counsel fees and cost. Under these Statutes the boards organized, sion of Foucher, 26 La. Ann. 362, and of Barber Asphalt Pav. Co. v. Gogreve, 41 La. made the assessments, caused some of them Until 1869 Ann. 251, a question arose in respect to the to be homologated, collected a portion of the [364] ownership by the city of the public places, money and did some of the work. and the same conclusion was reached. How they continued to exist and to be more or less these cases may be reconciled with that of active in discharging their duties. The sysXiques v. Bujac, 7 La. Ann. 503, cited by the tem, however, did not prove satisfactory counsel for appellee to the point that public by reason of the absence of responsibility places are not held in fee, and that the term and of unity of action on the part of the "title" is not applicable to them, or whether several boards. The Act of 1869, therefore, they overrule it and all similar questions, are consolidated the districts, abolished the immaterial inquiries. The court, in the four boards and appointed a commissioner, who cases cited, held the city to be a proprietor, was to succeed to their property, collect the in the contemplation of the laws providing assessments and levy and collect others on for local assessments, and in the absence of such parts of the district as were not included any express statutory direction on that point; in the tableaux turned over to him. The comWe missioner, however, was not to do the work. and such is the exact question here. therefore consider that question settled; es- That was to be done by a company, which pecially when considered in connection with was to receive all the collections in return the fact that these assessments have been re- for certain work. By the Act of 1871 an entirely new scheme duced to judgments and confirmed by courts of competent jurisdiction, the validity of was devised. The Mississippi and Mexican which as well as the regularity of the assess- Gulf Ship Canal Company was authorized to ments have been recognized and approved by do the work needed; the city board of adminthe Supreme Court of Louisiana. State v.istrators was empowered to locate the canals New Orleans, 27 La. Ann. 497.

[365]

We now advert to the claim of the appel-
lant that the City is liable for the drainage
That liability
fund, as delinquent trustee.
is asserted on three distinct grounds: 1st,
because the City unjustly failed to collect
the assessments due the fund; 2d, because it
failed, as subrogee of the original contractor,
to continue the work of drainage, and thus
secure, under the decisions of the Louisiana
courts, the collectibility of the assessments;
3d, because she has paid out moneys belonging
to the fund for purposes not permitted by the
law. A short outline of some of the history
of these matters will be proper.

The Act of 1853 established the first, second
and third drainage districts; organized a dis-
trict board in each, with full control of the
drainage in that district; gave the board the
power to levy a uniform assessment per square
foot on the land to be drained, not to exceed
$350,000 in the aggregate, in each district;
made the assessments first liens on the lands
assessed; provided, in case of nonpayment,
that judgment therefor should be recoverable
in any court of competent jurisdiction; that
lands be sold for arrearages, costs and inter-
est; and that the respective boards might pur-
chase the same, and hold or dispose of them for
the benefit of the districts.

The Act of 1859 authorized the boards to borrow $350,000 for each district and to issue bonds therefor, and directed the boards, on issuing bonds, to make assessments in con

and levees, and required to build and run the
machines necessary to lift the water over from
the canals into the lake; the city surveyor
to furnish the company monthly estimates of
the work done, on which warrants were to be
issued by the city auditor; the city treasurer
to pay those warrants from any funds in the [366]
treasury to the credit of the company; and,
if there was not the money necessary, to in-
dorse the date of presentation, the warrant to
bear interest therefrom. To provide the nec-
essary funds, all the assets and the assess-
ments provided for by the Acts of 1858, and
the various Acts supplementary thereto, were
transferred to the City, and the City was
subrogated to all the rights, powers and
faculties thereby conferred. The City was
expressly required to collect the assessments
(which were at the same time made exigible
It was authorized to
and confirmed) in time to provide for the pay-
ment of the warrants.
assess those lands in the three original dis-
tricts, and such others included in the levees,
as had not been already assessed, the assess-
ments to be enforced as in the prior Acts.
moneys collected were to be passed to the
credit of the company, for the payment only
of the drainage of New Orleans and Carroll-
ton; and all property, not money, received,
to be held in trust, primarily for the same
purpose, and finally, if not so needed, for the
City.

All

Such were the circumstances under which the City became the administrator and trustee

139

of this important interest and fund; and such | Third, the Statutes also provided, as has been
were the duties imposed upon her by those
capacities.

What, now, were the assets committed to her administration, and for which there must manifestly be some sort of an account? They

were:

1. A balance uncollected of a

levy made in the first dis-
trict, by the original board..$500, 714 42
2. Ditto in the second district... 289,907 40
8. Levy made by the City, un-
der the Act of 1871, in the
third district..

4. Ditto in the fourth district..

Total amount charge-
able...
This sum includes the assess-
ments against the City, on
account of public places,
admitted never to have
been paid, unless by is-
suance of bonds (of which
hereafter).

627,589 95
281,416 81

$1,699,628 58

seen, that personal executions should be is-
sued against the owners for arrearages, dam-
ages and costs, and there is no showing, in
our opinion, of anything like reasonable dili-
gence in the use of this valuable right—a
right which the Supreme Court of the State,
in 1874, recognized and adjudged. We are [368]
impressed with the conviction that, although
City to press the collection of these funds at
under the Act of 1871 it was the duty of the
the rate of about $25,000 per month, yet it
did nothing more than keep an office open at
which the assessees might voluntarily pay,
or not pay, as they wished.

(2) By a claim that the decision of the
supreme court in the Succession of Irwin, 33
La. Ann. 63, held that certain personal judg-
ments obtained by the summary processes
given by the Act of 1871 were void, and nul-
lified the homologation of the tableaux for
the entire fourth district. This decision was
not rendered until the year 1881, the City then
having had charge of this matter for ten
697,836 28 years. The decision cannot, of course, be
successfully offered as an apology for the an-
tecedent supineness of so long a period.
Prior to that, the Louisiana courts had been
enforcing the Statute of 1871, as we have
already shown. And, further, in regard to
the Irwin Case, if it was of such grave import
as to effectually prevent the collection of these
moneys, then it was probably violative of con-
tract rights, and on proper proceedings could
have been avoided. If it was not of such
import, then it is no answer to the obligation
of the City to make the collections aforesaid.
In fact, the testimony in this case would in-
dicate that the City was deliberately obstruct-
ing, not forwarding, the collection of these
funds.

-Leaving due on account
of individual assessments..$1,001,792 30
These large assets, having come to the
[367] hands of the City for the purposes of a great
public trust, it was bound to relieve itself of
the charge assumed by it in some way con-
sistent with the rule of reasonable diligence.
In view of its antecedent agency, and its co-
operative action in the creation of the trust,
and its more than willing acceptance of it,
added to the fact that it was the party to be
ultimately benefited, we are not prepared to
accept the theory that it was a compulsory,
and not a voluntary or contractual, trustee, a
failure to discharge whose obligations puts
less strain upon the moral sense than if the
obligations had been purely statutory. And
in this connection, it is well to observe that
this bill was filed for the purpose of an ac-
counting. A trustee, city or not-it is im-
material-receives large assets, of which its
own liability forms a considerable part; and
the simple question is, How shall it relieve
itself of the charge? How does the City do
so in this case? Not by collection and dis-
bursement according to the law and her duty,
for it is conceded that about $1,400,000 was
never collected; but-

In December, 1878, after having failed to
collect the taxes to pay the warrants when
due, the City adopted an ordinance allowing
the taxes to be paid in warrants, thus com-
pelling the contractor to sell at a discount
or get no money at all. After collecting only
$88,000 in three and a half years, with war-
rants falling due at the rate of $25,000 a
month, and making no effort to collect except
to keep an office, and never having issued an
execution up to January, 1875, the City then
denied the right of the warrant holders to
have execution, and resisted the mandamus
that resulted in the judgment of the supreme
(1) By a claim that the assessments were court sustaining such right. The City did
greater than the value of the lands, and, there- not make any effort, worthy of mention, to
fore, that they could not be collected from the collect the tax from the owners independent
lands. To this proposition there are several of the land. After the purchase of the plant
answers: First, as well argued by counsel for from the contractor in 1876, under the Statute
the appellee, it cannot be generally true in passed to that end, and the subrogation of
fact, since the lands are those on which the the City to all the right of such contractor,
great City of New Orleans is built, and the it deliberately abandoned the work, let the
assessments ranged from $69 to $140 per acre. canals already dug fill up and the boats and
Second, in those instances in which the assess-other appliances, for which about $300,000
ment was greater than the value of the lands,
if there were any such, then the Statute made
provision by which the lands themselves, on
failure of the owners to pay, should be sold
and bought in by the City for the fund, and
the duty of the City was to do this-in fact,
it was done by the original board of the 15th
district in the case of the asylum property.

of warrants were issued, rot unused. By
reason of that abandonment and the conse-
quent non-completion of the system the Su-
preme Court of Louisiana decided, in the
case of Davidson v. New Orleans, 34 La. Ann.
170, that the tax could not be enforced. In
1881, pending the decision of the Davidson
Case, the mayor, by direction of the coun-

[36