The Charleston daily news. [volume] (Charleston, S.C.) 1865-1873, 1869-02-13

lumbia Railroad bill apply to this bill. In
deed, it's leading features are said to have ori
ginated with the Governor himself. The fol
lowing is the opinion. of Attorney Genera
Chamberlain in regard to the bill:
OFFICE OF THE ATTORNEY GEyERAL.)
J. COLUMBIA, s. c., February 6, 1869.
IL. b. Elliott, Chairman Committee on Rail
roads, House OF Representatives
EAR SIR havo the honor to submit m,
opinion, as called for by your communicated
ofthe I'd instant. In 1856 the State authorized
| the Comptroller General to endorse the guar
antee OF the State upon bonds of the Charles
ton and Savannah Railroad Company to an
amount not exceeding five thousand dollars
| per mile.
The third section of the act provides that as
soon as any such bonds shall have been en-
dorsed, as aforesaid, they shall constitute a
! lien upon road-bed and stock and equipment OF
tn the road, and the State of South Cal oiina shall
be invested with said lien mortgage for the
| payment of said bonds, with interest thereon.
The provisions OF the act we're complied
with, the bonds of the company issued, and
the guarantee Of the State endorsed thereon.
subsequently the company issued other
bonds. and to secure them executed first
mortgage deed, which was thus the second
lien on the road and property of the company.
Again, in April, 1861, the company issued
other bonds, and secured them by a second
mortgage deed, in reality the third lien.
In February, 1867, the bondholders under the
first mortgage deed foreclosed their mortgage
and sold the property. It was purcna sed by
the bondhoIders under first mortgage deed
who were subsequently Incorporated as the
Savannah and Charleston Railroad Company
1t is assumed that the proceedings in fore
closure were regular and legal, and that all
proper parties were made.
Ii tins is correct then, by the sale and pur-
chase, the Savannah and Charleston Railroad
Company took the property of the Charleston
and Savannah Railroad Company tree from all
lien or Membranes, except the statutory lien
OF mortgage to the State to secure it against
its guaran.ee of the bonds
Ihe Savannah and Charleston Railroad Com
pany nave now memOrialized the Legislature
Tor permission to issue new bonds for the COM
pletlon OF the road, and for the postponement
by the Sta'o OF Its statutory lien on the road,
SO that tho same shall work hereafter as O.
second in lieu Of first lien.
The question submitted to me for considera-
hon is: Can the State legally effect such post
ponement OF it's lien without the assent of the
State?
The statutory lien which the State holds is
it's indemnity against the liability incurred.
The contract Of indemnity is one made be-
tween the State-the surety and the debtor
the corporation; and it is clear that those who
are competent to make contract are compe-
tent. by mutual consent, to alter OF vary the
terms Of it.
Conceding, the equitable doctrine which al
lows the creditor to be subrogatel to, and to
avail himself OF, all the securities held by the
surety, (Dearing va. Earl of Winchelsea; Lead
ing Cases in Equity, 81; Wright VS.. Marley, IL
to entitle the creditor to the benefit of the Sc
curlties which tho surety holds. It is an equity
growing out of the relation Of the parties. not
right derived from contract
But the contract for indemnity ia contract
between the surety and the debtor, to which
they alone are parties; and as the surety is the
party to be protected, it is for him alone to de-
eide upon the terms and measures of his in
n 4
benefit from the indemnity, it is only inciden-
tally. and through the sur5ty, that he derives
IL. he cannot stlpulate for himself or his in
terests, but must accept that which the surety
titled, IN word, to the securities which the
surety holds, but not to determine what those
securities shall be-. Any other construction
would make the indemnity of the surety de-
pend not upon his own Judgment or his own
contract, but upon the assent Of one (the credi-
tori who was net party to the contract.
Ihe considerations above stated become
much stronger when applied to State.
To aid a work OF great public utility, the State
lndorses the bonds of the corporation. To
secure the bondholder, she pledges the faith
and credit OF the State for the punctual pay
ment Of the bond. The Endorsement Of the
State is the security, upon the faith Of which
the bond is taken.
To secure herself from loss by the indorse-
ment, the State imposes statutory lien upon
competent for the State, with the assent of the
corporation, to alter the terms of the con-
tract; or it may repeal altogether the law
creating the lien. The considerations ofpolicy
under which the lien was enacted may have
ceased to exist. due regard to the public
benefit, the protection of the State and the
interest OF the corporation may require that
the law enactlng the lien should be repealed.
These are matters of public policy, and the
consideration and determination of them be-
long solely to the Legislature, and, if they
deem it proper. the law creating the lien may
be repealed or modified. The only limitation
imposed upon the power of the Legislature to
repeal existing laws is that the repeal shall not
divest vested rights, and shall not impair the
obligation of the contract.
Does the postponement of the lien in this
AS has been already stated, the creditor has
no vested right in the security which the sure
ty holds He has merely an equity to be SUBJ
and q change Of security which the surety re-
CARDS as beneficial and aford.ng additional
indemnity cannot, in auy sense, be regarded as
lmpairlng any right which the creditor has;
and still less can 1t be considered vested
right.
Neither does postponement impair the OBJ
legation OF the contract; for the only contract
OF the bondhOlder is in the bond, and the obli-
cation OF that is not impaired, but is recog-
nized, and additional protection is sought to
be given to 1T.
The practice OF the State has also been in
conformity to the views here expressed.
ID 1850, Wnen Ruaranteelng the bonds OF the
Louisville and Cincinnati Railroad Company,
the State imposed statutory mortgage as inn
demnity, and to that lien postponed all other
debts which the company then owed
And when, in 1866. the State authorized the
Charleston and Savannah Railroad Company
to Issue new bonds for the repair aud con-
struction Of the road, she postponed her lien,
and made it a second incumbrance and this
withoutthe assent Of the bondholders being
required. .7
My opinion is that the State has the right to
postpone her lien and subordinate it TO the
mortgage to be executed to secure the bonds
authorized by the act now proposed by the
present Legislature.
Very respectfully. your obedient servant,
d. I'll. CHAMBERLAIN, Attorney-G General.
Charleston, 8. g., February 5, 1850.
-s-~~-aEee$-*
THE RA&E FOR BLONDE HAIR at the New York
theatre, having elected some lnvidous COM