This was an action upon several coupons for interest annexed to bonds issued by the late city of Carrollton, in Louisiana, to the Jefferson City Gas-light Company, a corporation created under the laws of that State, for laying gas-pipes through certain streets of the city, and introducing gas for the use of its citizens. The bonds were indorsed by the president of the company, with its guaranty, for the payment of their principal and interest. His authority to make this guaranty, so far as it relates to the interest, was denied by the company; but the Circuit Court held that the admissions and evidence in the case showed a prima facie case of liability.
The bonds were issued pursuant to an ordinance of the city, which provided for the payment of the interest thereon, but made no provision for the payment of the principal; and for this omission, and because they were issued in aid of a private corporation, their validity was questioned by the city of New Orleans, upon which the liabilities of Carrollton were cast upon its annexation to that city; and as it was contended in answer to this position that the legislature had subsequently, in the act of annexation, legalized the issue, the power of the legislature to do this was denied, but the Circuit Court held that the legislature possessed the power; and the city of New Orleans was adjudged bound to pay the bonds.
The record shows that the bonds were issued after the work had been done for which the contract was made and the gas had been introduced into the city, and that they were transferred to the plaintiff for a valuable consideration.
Two questions are presented for our determination:--
1st, Whether the Jefferson City Gas-light Company is liable on the guaranty made by its president for the interest on the bonds; and,
2d, Whether it was competent for the legislature of Louisiana to legalize the issue of the bonds, if for any cause they were originally invalid, or, more properly, to compel their payment by the city of New Orleans.
1. The ordinance which authorized the contract with the company, and the issue of the bonds of the city, in terms provided that the company should 'guarantee the said bonds and assume the payment of the principal thereof at maturity.' Their delivery to the company was made dependent upon this condition; but as the provision mentioned that the company was to assume payment of the principal, after specifying that it was to guarantee the bonds, it is argued that the guaranty of the principal only was intended. This is not, however, a just inference from the language. The guaranty of the bonds embraced both the principal and the interest. The payment of bonds, without other designation, always implies a payment of the principal sum and its incident; and a guaranty in similar terms covers both. The ordinance contemplated two undertakings by the company,-one to the bondholder, and one to the city. The guaranty was to be for the security of the bondholder; it was to be an undertaking to answer for the city's liability, and to be collateral to it. The other undertaking was to be for the security of the city, by placing the company under obligation to provide for the payment of the principal of the bonds at their maturity, an obligation which otherwise would not have existed.
The contract embraced the stipulations contained in the ordinance, and the indorsement of the guaranty of the company by its president on the bonds was a substantial compliance with both. The language used, guaranteeing 'the payment of the principal and interest,' only declared in terms what would have been impli d from a simple guaranty of the bonds. It is not denied that the president was the proper officer to execute whatever guaranty was authorized.