Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1871-04-05

j also t0Ok OIL them marriages 10 secure
these bonds, the transfer of the bond
would have amounted to a transfer to the
holder of all its securities, to-wit: its
mortgages.
The State by the face of the contract
ia the debtor, the holder of the bond is
the creditor. When the State issued these
bonds to the companies, they became the
holders and creditors of the State. Here
we have the companies occupying the po-
sition of creditors, and the other mode of
reasoning would make them both creditor
and debtor, and executing mortgage
upon their property to secure themselves,
and this relation is created at the time
the mortgage is taken 1t is assumed,
however, by the opponents of these
views that the companies are the debtors,
and that the State is the security for the
companies, and is merely q trustee of the
assets mortgaged for the benefit of the
holders of the debts. If we look to the
contract, we find the State to be the
debtor by express term, and none other.
But it may be said in reply to this that
the companies were the beneficiaries. Not
go, solely. The State has reaped to
itself the benefit of the railroad
system, an increase in the valuation of
lands, and all other taxables, and therefore
greater and better annual revenue
sufficient consideration to have induced,
heretofore, many of the States to expend
thousands of dollars. So here we have
the express obligor, and the same party
sufficiently benefited to make the consid-
Grafton valuable. Let US pass to the act
of 1852, sec. 3: "And the State, upon
the issuance of said bonds, and by virtue
of the same, shall be invested with said
lien or mortgage, without a deed from
the company, for the payment by said
company, of said bonds, with the interest
thereon, as the same become due" In
stantly, upon the issuance of the bonds,
the companies became debtors to the
State, whether they kept the bonds or
sold them, and instantly the mortgage
arose to the State, not to the bondholder,
and the act continually thereafter under
takes to preserve to the State this mort
gage, and refuses to the company the
power to give any other or further mort
gage in behalf of others, or that shall
take priority to this, the State mortgage,
and no where speaks of any other lien,
such as bondho)ders'. The interest &C.
cruing annually is ordered by the act not
to be paid to the bondholders, but to the
State, as well as the annual deposits of q
sinking fund, out of which to pay the
principal. If the companies fail to pay
these, then the State shall proceed against
the companies by bill, in its O1On name.
Would the result of this suit conclude
the bondholderl 1t certainly would, if
it was mere Trustee suit, in his behalf.
We have seen that both the annual inter
est and the sinking fund was to be paid
to the State and not the bondholder, and
BY the contract, the Estate shall use the
same for the purchase of bonds of the
State of Tennessee, which bonds the
company shall pay into the treasury of
the State, assigning them 10 the Cover
nor, =" 'and the bonds so paid in, shall be
q credit on the bonds issued to the COM
psny." This section, we submit, is
wholly inconsistent with the idea, that
the State is a mere Trustee. All bond
holders seeking to hold the companies re-
spOnsible, as shown herein before, must
do it if at all, by virtue of the act of
1852. This act is declared also to be
''public one as to all purposes of notice"
and by it the State reserves the right to
enact sal such laws hereafter as may
be deemed necessary to protect the inter
est of the State, and to secure it against
loss in consequence of the bonds issued.
Surprising the State to be Trustee,
proceeding upon this idea, what point
have we now attained2 The debtor
the companies-the creditors-the bond
holders-and the Trustee--the State
have agreed in the original contract, not
only that the Trustee might take up any
debt or bond Of the Trustee in satisfac-
ton of the debt due the bcndholder, but
the Trustee is empowered to do anything
that he may choose to do thereafter, in
order to secure himself or itself against
loss. Here is discretion, lodged in the
Trustee, that renders it almost an unim-
portant question as to who is debtor or
who creditor, or who has the lien, as the
Trustee is allowed to have it closed or
settled, with himself, by paying
him his own bonds, or in
any other manner he may choose.
All the subsequent acts of the Legislature
down TO the one authorizing this suit, pro-
ceeds upon this same idea, and are entirely
consistent All implicitly, if not ex-
pressly, admit that there are t1OO separate
and independent debts, the one due the
State from the company, the other due
the bondholder from the State. And the
original act, in which the rights of each
originate, and in which the relation of all
the parties find root, and TO which all
parties are driven, declare expressly upon
its face that the State not only may, but
shall, receive any of the bonds of the
State in satisfaction of the company's
debts 10 it; and without limitation, except
as to stockholders; may adopt any course
of legislation it chooses, in order to secure
its own interest or debt. No bondholder
can claim more than this contract gives,
and is as much bound by this act, as is either
of the other contracting parties. l there
fore conclude that the debt secured by
these mortgages is the debt due the State
from the company, and not the debt due
the bondholders from the State.
Secondly, That it is the contract-right
of the State, to receive payment in such
manner as is set out in the original con-
tract, viz: in the bonds of the State, or in
such manner as it by subsequent legisla-
tive enactments may choose to adopt; and
that therefore, the holders of the bonds
issued by the State to this road are not
necessary parties to this suit; and, so far
as the plea relates TO these, it is not suffi-
Gent.
We next come to the holders of bonds
issued by the company, with the permits
sion of the State, and to secure which, a
mortgage was executed. 1t is claimed,
frat, that these holders have lien on the
property of the company-the same pro-
perty upon which the State has a lien
this fact is admitted by the pleadings, if
not in fact. 1t is further said that this
mortgage was authorized by the State,
and that the effect of it WAS to give
precedence to it over any loans made by
the State subsequently to its execution,
and that the holders of these bonds are
necessary parties. How the question of
the rights of these parties should be set
tied and concluded, understand to be
one of the reasons influencing the Legis-
lature to order these judicial proceedings,
not only for her own benefit, but also