The act
of the legislature of the state of Arkansas approved May 8
1899, entitled, 'An act to fund the debt of Arkansas and
for other purposes, ' contains the following provisions:
'Section
1. That the state debt board is hereby authorized and
directed to fund the valid bonded indebtedness of the state
of Arkansas, excepting the one hundred and sixty (160)
bonds of the series of 1870, now owned and held by the
United States, and to call in the outstanding script and
treasurer's certificates of this state.'
'Sec
3. Each bond at the time of its delivery or exchange shall
be signed by the governor and sealed with the great seal of
the state, be countersigned by the treasurer and registered
by the auditor of state, and the date of each registration
shall be endorsed on the bond and signed by the auditor.
The signature required above shall be in the personal
handwriting of the official making the same. The coupon
attached to each bond may be signed by the treasurer alone,
which signature may be engraved thereon at time of
preparation of the blank bonds by the printer.'
'Sec.
5. Immediately after the passage of this act the state debt
board, by its president, shall publish for sixty days, in
each, in a daily paper in Little
Rock and New York City, a notice to all private holders of
valid bonds of this state, to present same for exchange for
new bonds provided for by this act. The basis of exchange
shall be an amount of new bonds equal to the aggregate
amount of old bonds and matured coupons thereon
attached.'
On the
4th day of May, 1900, the plaintiff in this case presented to
the state debt board its petition requesting the board to
issue to it, under the act quoted, funding bonds in lieu of
certain state bonds which it alleged belonged to it, and had
by mistake been burned by the burning board of the state on
December 11, 1896. The state debt board, upon consideration
of the plaintiff's petition and the evidence presented in
support thereof, made the following finding of facts:
'And
upon consideration of the recitals thereof, and the matter
and question arising thereon, in connection with the
evidence offered in support thereof, and an examination and
inspection by the board of the records in the office of the
auditor and treasurer relating thereto, the board reached
the conclusions, and made and hereby declares the following
finding of the facts, as the same exist and relate to the
said matter, namely:
'(1)
That the said Farmers' National Bank and its
predecessor in interest, the Farmers' Bank of Hudson,
New York, became the owner prior to June 14, 1839, of the
following described non-Holford Real-Estate Bank bonds of
the said state of Arkansas, issued under authority of the
act of legislature of said state to aid in establishing
what was known as the 'Real-Estate Bank',
together with coupons thereto, the numbers of said bonds
being Nos. 482, 487, 488, 489, 490, 491, 492, 493, 494,
495, 496, 497, 498, 499, 657, 658, 676, and 698, being
eighteen bonds; that said bank remained continuously the
owner of said bonds until September 12, 1871.
'(2)
That on the 12th day of September, 1871, the officers of
said bank caused the said described bonds and coupons and
others owned by it to be surrendered to the financial
agent of the state of Arkansas, at the office of the
Union Trust Company in the city of New York, to be
exchanged for new funding bonds under the provisions of
the act of April 6, 1869, which authorized and directed
such exchange.
'(3)
That in exchange for said Real-Estate Bank bonds and
others, and by way of funding same in manner provided for
in said act of 1869, said funding agents of the state of
Arkansas wrongfully caused to be delivered to said
Farmers' National Bank, either fraudulently or
through mistake, the following described pretended bonds
of said state, namely, Nos. 1,451 to 1,480, both
inclusive, 1,496 to 1,508, both inclusive, 1,511 to
1,512, 1,753, 1,794, 1,795, 1,809, and 1,810, being fifth
bonds, and equivalent in amount of the aggregate sum of
bonds and coupons so surrendered by said band for
exchange.
'(4)
That the said fifty bonds were of the date and denomination
of bonds issued by said funding agents to F. W. Caper, as
attorney for Holford, on the 22d day of September, 1869,
and the delivery thereof in exchange for the non-Holford
bonds described in finding No. 1, on the 12th day of
September, 1871, was either a mistake or a fraud upon the
rights of the Farmers' National Bank.
'(5)
That there appears upon the record of detailed receipts
kept by said funding agents an entry purporting to have
been made on January 31, 1872, reciting the fact that on
said date the bonds described in finding No. 1 were
presented by one W. P. Denkla for funding into new bonds
under said act of 1869, and on said day the said funding
agent awarded in exchange for said bonds the following
described funding bonds of the series of 1869, and of these
Nos. 796, 797, 798, 799, 800, 801, 802, 803, 804, 805, 806,
807, 808, 809, 810, 811, 812, 813, 814, 815, 816, 817, 818,
819, 820, 821, 822, 823, 824, twenty-nine bonds, each of
said bonds bearing interest at the rate of 6 per cent. per
annum, and having coupons attached for same from January 1,
1872; that, notwithstanding the said twenty-nine bonds were
so ordered to be issued in exchange for the said twelve
non-Holford bonds and the coupons thereon, only four
thereof, namely, Nos. 796, 805, 823, 824, were in fact
issued, and the same have been duly redeemed and paid, and
that, therefore, no claims, legal or equitable, exist
against the state of Arkansas for said four bonds.
'(6)
That the remaining twenty-five bonds, and all coupons
aforesaid thereto
attached, although duly prepared and signed and registered,
were never in fact delivered to said W. P. Denkla, or to
any one else, but apparently remained continuously in the
hands of the funding agents until 1896, when the same were
taken into possession of the treasurer of Arkansas, and on
the 11th day of December, 1896, listed, and destroyed by
burning, by the tribunal known as the 'Burning Board of
the State of Arkansas,' and that at the same time, and
under the same circumstances, the aid twelve original
non-Holford Real-Estate Bank bonds surrendered by the said
Farmers' National Bank for funding and exchange as
aforesaid were received from said funding agent by said
treasurer and likewise burned.'
'(8)
That the said twenty-five bonds so coming into the
possession of said state treasurer, and destroyed as
aforesaid, were not the property, legal or equitable, of
the said W. P. Denkla or the state of Arkansas, but
belonged in fact to the Farmers' National Bank.
'(9)
That said Farmers' National Bank has offered to
surrender to this board the Holford bonds described in
finding No. 3, disclaiming any right thereto.
'(10)
That this board, notwithstanding it concedes to the said
Farmers' Bank the ownership of the claim and debt
represented by the twenty-five (25) funding bonds and
coupons destroyed on December 11, 1896, declines to issue
and deliver to said bank in exchange therefor the bonds of
the state of Arkansas under the funding act of 1899, for
the reason that in the judgment of the board the authority
conferred by said act limits its powers to the funding and
exchange of bonds and coupons in existence and capable of
an actual manual delivery and exchange, and does not extend
to or include claims based on bonds and coupons destroyed,
even if the same was done erroneously.
'Because
of the ground stated in this paragraph, the board now
declines to fund the claim of the said Farmers'
National Bank.
'Dan
W. Jones, Governor. 'Alex C. Hull, Secretary of State.
'Thos. E. Little, Treasurer of State.'
Upon
the refusal of the state debt board to issue refunding bonds
to the plaintiff for the bonds so burned, this bill in equity
was filed, setting out, at length and in detail, the facts
found by the state debt board, and concluding with these
prayers: 'Wherefore the said complainant prays that the
said official defendants may be held to be estopped to insist
upon an actual tangible presentation of the bonds and coupons
belonging to the defendant, in the face of the admitted fact
that the same were destroyed by the officers of the state
when there was no claim that the same belonged to the said
state of Arkansas, but the record showed that they belonged
to the owners of the bonds that they were directed to be
exchanged for. (2) But, if complainant shall be mistaken as
to its right to relief of this character under the facts
stated, it prays that, under the language of the statute
authorizing and directing the defendants composing the state
debt board to fund the valid bonded indebtedness of the
state, be held to include the power to fund as such bonded
indebtedness the destroyed bonds and coupons of this
complainant burned by the officers of said state, treating
the said bonds and coupons as still in existence, in
furtherance of justice and to accomplish the plain equities
of this complaint, and to prevent the officers of the state
from taking advantage of their unauthorized act in burning
bonds and coupons which did not belong to the state at the
time of the destruction thereof, it being a fact that the
funding board could not lawfully destroy the property of any
person under its powers. (3) If complainant should be
mistaken as to its rights to relief in either aspect stated
then it prays that the said defendants re-execute the said
bonds and coupons so destroyed, and when so re-executed, or
treated as so re-executed, that the said defendants...
