Arkansas true Democrat., 1860-07-14

do khis, and could afterwards resort to the lands included in the stock-m ortgages and indemnify herself. But all will admit 1t to be impolitic and improper to raise by taxation an amount sufficient to pay these bonds, and the interest due on them if the lands mortgaged to the bank for stock are sufficient, and are available for the purpose. Let us now see if such is the fact.
 By the original charter of incorporation granted by the legislature on the 26th October, 1886, the Real Estate Bank was declared corporation and body polite for the term of twenty five years from the grant of the charter, with an original cash capi- tai of S2,000, ,000 to be raised by bonds or negotiations, on the security of real prop ertv, at its cash value, with the guaranty of the credit of the State. Subscriptions for stock. to the sum of S2,250, ,000, divided into shares of $l00 each, with restrlc- tion of each stockholder to not more than 300 shares, were to be taken, being in tended to secure the loan of the $2,0O0,- 900. These subscriptions were required to be guaranteed and secured by mortgages and bonds, erecuted to tie Bunk, to be in all cases at least equal to the amount of stock subscribed, the mortgages to be conditioned for the payment of all monies received from the bank on account of subscriptions, for stock, and for the final payment of Me bonds of he State and he interest thereon, subject to the rules and regulations of the charter; and these mortgages were to form the basis of, and stand as full security for the loan or loans and interests thereon, which the bank was authorized to make, designated in the first section Of the charter as forming it's capital; and for the guaranty of the bonds to be emitted by the State Tn favor of the Bank, and of the interest thereof, and forwhi oh the State pledged her faith and credit, al the bonds acith ue priuileged mortgoges executed by the stockholders to the Bank Sor stock, acere Mereby (by the 14th section of the charter, tranyerred to Hte State, and to Me Holders of Me bonds which migM 6e issued by the State in virtue of tie act: and the Governor should only emit the bonds after he had been satisfied bv proof. that the mortgages had been exc cuted by the stockholders in conformity with, and according to the true interest and meaning of the charter, for at least one eighth more than the bonds required.
 It may also be noticed that the Bank was required by the 1lth section of the charter to pay both the principal and in- terest of the bonds issued to her by the State, as the same should become due and payable.
 From these provisions of the charter it is clear that the lands mortgaged for stock are ultimately liable for the amount of prin- cipal and interest on the State bonds, which the Bank fails to pay; that as be- tween tue State and Mese lands, the latter must indemnify the former. But as beween the Jondholders and Me State the former have the right to look to the latter alone, she being the maker of the bonds, and the bank only the indorser, for payment of them. It will be remembered that by the charter of the Bank all the stock bonds and mort gages were tansferred to the State, and to Me holders of he bonds cf Me State. This, we think, goes very far to show that the leg islature intended the bondholders should have their election whether to look to the State or to the mortgaged lands. But how ever this may be, 1t is very evident, that when the bonds of the State become due and payable, and are not fully paid, the stock mortgages become forfeited, and the right to foreclose them vests. This right, we contend, vests in the bondholders at Neir election, and in the State necessarily- because, as before stated, the bond-holders may look to the State alone if they choose, but the State, besides being bound in the first instance to pay the bonds, IS the trustee for the bondholders, and is bound to foreclose for their benefit. It can not affect the right of the State to proceed to foreclosure of the mortgages that she has not taken up her bonds, because, ii she has not, when the mortgages are foreclosed and the lands sold, she will hold the pro- ceeds as trustee for the bondholders, to be paid to them upon surrender of the bonds; if she has taken them up the proceeds will go toher in her own right; so, in either event, it can make no difference to the bondbold- CTS or to the owner of the stock-lands, whether these bonds be taken up by the State before she forecloses the mortgages, or not. The amount for which the mort gagged lands are liable on account of the bonds will necessarily have to be ascer- tained before any decree of foreclosure can be had, and as the State is the trustee, and also the maker of the bonds, it is not to be presumed she will pay over this amount till her bonds are delivered up.
 But again, the chief object of these stock mortga!tes was to save the State harmless in respect of the bonds she issued the Bank. These bonds, it is we'll known, were issued for the accommodation and 5ene6 ofhe Bank, and the State, as regards them, occupies the position of surety, or accommodation maker for he Rank. Then, according to