Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1870-01-12
THE INTERNAL IMPROVEMENT
LAW.

To the Editors Of the Union and American:
Has the Legislature of the State Ii
power TO change, alter or amend this law
at pleasure. This law was passed Iii
February, 1852, and is the basis of ali th
laws under which bonds have been issue
to railroads in this State. This law is an
was the contract not only between tn
State and the Railroad Companies
but between the State, the Railroa
company and the BOndhOlder, and ever
bOndholder that purchased bond issue
under this law is bound by the law, an
the same is true Of every stakeholder /
every railroad company that receive
bonds issued under said law, as they hai
full notice OF every condition under which
said bonds were issued. Let US examin
and see what these conditions were:
l. By the Sd section it is provided
THAT so soon as the bonds of the Stat,
shall have been issued for the first section
of the road they shall constitute a iiei
upon said section, including road-bed
night Of way, grading, bridging and ma
sonry, the stock in said company, III,
iron, and all the equipments, aud III,
State Of Tennessee, upon the issuance o.
said bonds and by virtue Of the same, shaI
be invested with a lien or mortgage (no
the bOndhOlder) without deed from th,
company for the payment by said com
paHy Of said bonds with the interest
thereon a. the same becomes due This
section shows clearly that the State in
tended 70 secure herself, and therefore
took the lien or mortgage in her own
name and right
Sec. Provides that the interest shall
he deposited in the Bank Of Tennessee
al least fifteen days before it becomes
due, from time 20 time. Here again the
State provides for her own protection by
providing that the interest shall be paid
20 the State, (the Bank being its fiscal
agent In the event of failure of the
company 30 pay, d is provided that the
Governor shall appoint a receiver and
take possession of the road. This same
section provides that upon failure Of the
Company 20 pay the interest the State
shall pay il.
Sec. q Provides tia. upon failure to
pay the bonds at maturity the Attorney
General shall forthwith file bill against
said Company i8 the name Of tkc State,
10 fOreclOse said mortgage and sell out
said road and lis property, to pay said
bonds and interest. and TO Indemnify the
State Of TeUuCsscC against loss on &C
count Of the issuance Of said bonds. In
none Of these acts are the bOndholders
given any liens, or rights, or remedies. ex-
cept the provision made for the State 10
pay.
Sec. = Provides that after five years
from the completion of each Of the roads
receiving aid under this law, they shall
set aside one per cent per annum
on the amount of bonds issued 10
said company, and shall use the same in
the purchase OF bonds Of the State Of
Tennessee, which bonds the company
shall pay into the treasury Of the State,
after assigning them 90 the Governor. and
for which the Governor shall give said
receipt, and as between the
State and the company, the bonds so paid
IN shat be a credit on the bonds issued 10
the company. Now here is a plain pr0yi-
sion Of the original law under which these
bonds were Issued requiring the company
10 pay in one per cent Of the principal Of
these bonds 20 the State, mot the bond
holder and that too in bonds of the
State Of TENNESSEE What bonds
Any bonds Of tlc State. No par
ticulaT bonds were required.
The State had loaned her bonds TO these
Railroad Companies the bonds had no
provision on them 20 show they were
issued 10 any particular company. they
were the States bonds; they were put in
the market as the bonds of the State and
sold on its credit and not upon that Of
the Railroad Companies, and the State
only required That any of her own bonds
should be- returned to her her obligations
were all alike 10 her. She expected and
still does 90 pay them all. and She did not
intend 10 make any iHyidi0us distinctions
IL her bonds II, as commended hv some
gentlemen, the railroad companies are
bound 20 pay in The specific bonds issued
10 each, then they must give capitalists
all over the word and Wall street sharp
crs very little credit for sagaciiy, not 10
haye found this ont and acted upon
II long since; as a bond, endorsed by a
first class railroad, who is able and does
pay the interest promptly, is certainly
worth more than one endorsed by an
insolvent road that was not able and
paid neither principal or interest; yet
there never has been made in New York
or any where else one cent of difference
iu ANY Of these banjk whether issued 10
"a rich and solvent rad, or . worthless
and inSD'ycHt one Why was this, Be
cause these sharp m0nicl men in Wall
Street looked az This law, and knew they
had 90 look alone fo the State. for their
pay, and had lo recourse OF remedy,
either in law uT equity, against the com
Fluy for whose itIufii they were issued
The whole tenor uf the law shows
ihs. the State intended her credit
should stand un ifs own merits.
not un the u4ls 90 which 10 had
roru loaned, and She intended 10 hold all
'lc remedies On Her own hands 90 make
those roads pay hui after making every
provision 10 project herself that human
foresight could divine, She made one more
which was intended as q saving clause 10
which ! would invite the special attention
Of every member Of the legislature who
doubts the night of the Legislature TO
make any new provision they may think
necessary 70 project and save the State
from loss on account of the issuance Of
the bonds under the law now under con-
sidera;i0n Il is found in section u, and
is as follows THE State Of Tennessee
expressly reserves the right 20 enact by
the Legislature thereof, hereafter all such
laws as may hcdecmoi necessary TO protect
the interest OF the State. and to secure the
state from any loss in consequence Of the
issuance Of bonds under the provisions Of
this act, but I'm such manner as not 20 inn
pair the vested rights of the stockholders
of the companies"
What language could DC palmer, what
power could hU made more c0mPrehen-
siye. The h0ndhUIder is not mentioned: il i
the States rights. She reserves the right
10 legislate, 60 project. The bondholder
took these bonds with this right reserved
in the original law under which they were
issued, and they are as much bound bv it
as If they had signed a contract % that
effect. Asiu iAr Truyi-0. 10 was only intend
ed 10 protect the -foDhh0ldur and not the
bondhoid"r, 'but is upon IFS face a nulliiy
As every lawyer must admit al a glance
as the Legislature had no right to pass
any law tn impair any man vested rights.
Ii Is against all common and constitutional
law, and no such provision was necessary
10 protect the stockholders vested rights
Therefore tine provision was unnecessary.