Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1870-12-15


sued to the Henderson and Evansville
Railroad Company. -
This road lies beyond the limits Of this
State, and wholly within the territorial
limits of Kentucky; and the proceeds of
said bonds were exclusively applied to its
construction. For this singular appropri-
alton of the bonds of the State, the Edge
field Company insists that it cannot be
made liable.
1t further appears that to the Edeefeld
and Kentucky road, and to the Memphis.
GAINESVILLE and Louisville road. and per.
laps to other roads, after they were placed
in the hands of Receivers. bonds of the
state, to very large amount, were issued
and delivered to said Receivers, which, it
is alleged, were disposed of greatly under
par; and II Is now claimed By said comps
mes that they are not properly liable to
be charged With the bonds thus issued;
but that, if held liable at all, it should not
be for greater amount than was actually
realized from their sale.
II is manifest that in regard to the issu-
snce Of bonds to some of the roads, and
the reckless disposition of them and gene
raj management Of the roads by some of
the Receivers, heavy responsibility rests
somewhere; but upon whom it should fall,
1t is not within the province Of the Com
missioners to determine.
II need scarcely be stated that the fore
going and other questions raised by said
companies must be adjudicated before the
amounts due from them, respectively, can
be accurately stated; and it is apparent
that this should be done before a sale of
the States interest is made.
Another question Of importance, and in
regard to which there is some diversity of
opinion, Is. What interest will vest in the
purchaser of the States interest in the
road? What rights will be acquired, and
what Liabilities incurred by HIM? VIII ne,
IN all respects, stand in the shoes of the
State, as q mere assignee of the States in
terest in the road? And in case the COM
pany, in the future, should find itself able
to pay its arrearages Of interest on its
bonds 10 the purchaser, will such company
as against him lin like manner as 1t would
against the State if no sale had taken
place. still be entitled to be restored to
the possession of its road, as provided by
act of 1882, sec. or
which there is also a wide difference of
opinion, is, Have the holders of the bonds,
issued TO particular railroad company, a
ier upon the road and property of that
company, as security for the payment of
such bonds at maturity? or have they no
other pledge than the faith Of the State.
In regard to some of the roads this fur
Their question arises: After bonds to a
large amount had been issued to
certain companies by the State, said
companies were empowered, by act
of the General Assembly, to issue
second mortgage company bonds: large
amounts of which were actually is
sued, and passed into the hands of bona
fide holders; and subsequently to the issu-
ance of such company bonds, e second is
sue of bonds of the State was made to said
companies.
Now, upon this state of facts, the ques-
ton is to be determined, whether the lien
of the State, provided for by the act Of
1852, shall, as regards the second issue of
bonds, be preferred over the lien of the
intermediate holders of the company
bonds, or be postponed TO it
The foregoing general questions in
matters, which it would be tedious to de-
tail; and which, for the present purpose,
need not be noticed, as enough has been
stated, perhaps, to enforce the absolute ne
cessity for such further legislation as shall
seem best adapted to disembarrass the pro-
posed sale.
The Commissioners further state that.
an effort seems TO have been made in
some quarters, to prejudice the proposed
sale CT the States interest in the roads, on
the alleged ground Of want of legal power
IN the State, under the act of 1852, to
mske any sale of the same, except on
default Of the companies to meet the final
payment Of their bonds at maturity.
This objection. in the opinion of the
Commissioners, has no foundation. The
legal power of the State to assign and
transfer its interest in q railroad (whether
the company be in default or not, in the
proposed mode of sale, can admit of no
doubt. II cannot be held that the State,
in this respect, is notpossessed of, at least,
equal power with every private individual
mortgagee And certainly, in view of the
very comprehensive and cogent provisions
Of the 18th section of the act of 1852, this
of power, on the part of the State, toward
the companies that have for g series of
years, failed to perform the obligations Of
their contract with the State, created by
the act of 1852, in negieeting to meet the
accruing interest on their bonds, semi-sn-
nually, and to provide a sinking fund. The
spirit and reason Of the act referred TO,
would, perhaps, sanction much stronger
measure of redress.
Il might, with plausibili.y be maintained,
that the palpable violation on the part Of
the delinquent companies, of the funds-
mental terms of their charter, on the faith
OF which the credit of the State was loaned
to them, amounted to a forfeiture Of the
entire benefit of their contract so as to JUS
tify a sale, out and ont, of the corpus of
he property, without right of redemption.
These companies cannot be heard to say,
that they may persist in neglecting to pay
the interest on their bonds, and in pro-
yiding q sinking fund; aad that the State
though reduced to the verge ofiusolven-
CIV by their neglect-must silently stand
by, for period Of twenty years, more or
less until their bonds shall finally mature
1t is obvious that the remedy adopted,
of placing the roads in the hands of Re-
ceivsEs, is ilusOry, as the experience of
the past few years has sufficiently
demonstrated. This expedient, so
far from furnishing the Treasury
with the means of meeting the
accruing interest on the bonds of the de-
Hnquent companies, and providing a sink
ing fund, has resulted, In most instances,
in a heavy loss to the State; and has like
wise proved to be q fruitful source Of
fraud and corruption.
Better for the State to abandon its In
terest in the roads at once, than to attempt
their further management through the
agency of Receivers at such ruinous loss,
In conclusion, the undersigned would
respectfully urge the speedy ado option Of
such measures as your honorable body
may deem most e1pediens 10 relieve the
credit of the State, and to arrest the rapid
accumulation of the public debt, which is
estimated 10 be, at present, not short o.
81, 500 90 per day.
d. W. G. SENTER,
Francis B. FoGG,
A. WRIGHT, BY Z. K. FoGG,
T. Il BUTLER,
ED. r. PENNEBAKER,
Z. J. MCKINNEY.
An act 10 amend the act of 1870, CHI. 70, for tn
sale OF the interest of the State in delinquen
railroad companies, passed July !, 1870.
Whereas, In the recent attempt to sci