The Charleston daily news. [volume] (Charleston, S.C.) 1865-1873, 1872-07-24
THE RAILROAD CASE.
By THE hon. c. d. MEL
TON AND THE hon. 4. MAGRTTH.
Project-The Sovereignty OF State
Superior to the Bankrupt LAVA
Champion OF the People Against the
Plunderers.

FrOJeCt-The sovereignty OF State
Superior to the Bankrupt LAVA
Champion OF the People Against the
Plunderers.
The bankruptcy proceedings upon the petit
tion of Daniel E. Scanned, of New York, In re.
the Greenvllle and Columbia Railroad Compa.
ny, were continued yesterday morning in the
Bryan; Messrs. u. 7. Corbin and George D.
Bryan appearing for the petitioner, Messrs. A.
G. Magrafh and G. D. Melton and John T.
Rhett, of Columbia, for the railroad company,
and Messrs. Porter & Conner, Slmonton &
Barker and Joseph D. Pope, of Columbia, for
various creditors.
The argument on behalf OF the railroad
company and In opposition to the decree of
bankruptcy was continued by Mr.. c. D. Mel
ton, of Columbia, who began by showing the
financial condition OF the road In March, 1871,
and the legislation of that year In regard to
the road. In that month the Legislature passed
what was known as the postponement act,
poStponing the statutory lien, and making 1t
taxa rank after that OF the second mortgage.
From that action had sprung all the troubles
of the road. Its effect was to place the stat.
utory lien subject to previous encumbrance
of sl,79l, ,OO0 Since then $l,50O,0oO of the
second mortgage bonds were said to have
been Issued, but the company did not admit
the fact Of that issue, and In any case the
bonds would still have ten or fifteen years to
run. The attorney-general of the State last
June fled a complaint against the company,
praying foreclosure OF the mortgages to
the State, (for s3,O0O,00o,) and asking
for the appointment OF receiver and
the granting OF an Injunction against
suing creditors. Another suit, also prior to
the beginning OF the bankruptcy proceedings,
had been instituted by Gbbes and others, in
which it was alleged that the postponement
act was unconstitutional and void, and in
which an Injunction was granted. The court
refused to appoint receiver, but Itself as
sumed the control of the road, letting it re-
main In the hands of its present direction, for
the sake of an honest and economical admins
tration of Its affairs, and requiring reports
Jurisdiction thus taken by the State Court of
the whole property and affairs of the road, the
counsel argued that the court could
not, and would not, assume to interfere.
If the State of South Carolina had
been directly named as party to the peti-
tion, the United States Court could not, under
the constitution, take jurisdiction, and
although 1t has not been expressly named, IL
was certain that 1t would be Immediately and
dlttctly affected by the adjudication. He
could not suppose that the court would as
sumo jurisdiction that would be Idle and
futile, and If the road were adjudged a bank
fupt, its assets could not be brought into
court on q warrant of seizure. If the war.
rant should be returned unexecuted, would 1t
be attempted to enjoln the State Manifetly
that would be unconstitutional and impossi-
BILE. The State had mortgage on the entire
property of the road, and there remained
nothing to which the jurisdiction of the court
could attach. There was absolutely no
property of the company that was
outslde OF the statutory lien. It was
evident that such case was not within the
scope or intention of the bankrupt law. The
second ground of exception was that the
State Court having assumed prior Jurisdiction,
the United States Court was thereby excluded.
It was q well-known rule that In cases of two
courts having concurrent jurisdiction, which
ever first assumes the Jurisdiction excludes
the other. The State Court wes alone COM
petent to take the entire Jurisdiction of the
case, because it alone could completely adju-
dicate it, the United States Court having no
power to make the State party. There was
no part Of the estate upon which the process
of that court could attach, and therefore there
could be no jurisdiction. The creditors were
subject to the Jurisdiction of the court in
which lay the property of the company.
The United States Court was also
powerless over the property OF the
company from the very nature
of portion of that property. The property
was of two kinds: first, the franchise to the
highway and the right to use it, and second,
the material property OF the company used
In carrying on Its business as common carriers.
It was only as common carrier that 1t was
business corporation, and not as owners of a
highway. If the company, holding Its high
way under It's charter, did not engage in the
business, of transportation it could not bs held
to be business corporation, and the court
could never take Jurisdiction over it In bank
ruptcy. The court could not divide the COM
pany into two parts, but 1t could discriminate
between the property held respectively in Its
separate capacities. 1t did not follow that all
the property of a bankrupt passed into bank
ruptcy when he was decreed a bankrupt The
homestead of bankrupt was familiar
exception, bat the broad rule was that only
such property passed with him into BANK
ruptcy as was held by such a title as the court
could seize aad transfer to Its assignee. The
road of railroad company was public high.
way, located upon the lands of the citizens
taken by the company BY the right of eminent
domain. The land was not the property OF the
company, but the company had the exclusive
use of 1t, and that constituted its franchise.
That franchise abided not In the corporation,
but was the private property OF the corpora
tors, and it was held as an indivislble prop
erty, but in shares, by the corporators. 1t
could not, therefore, pass Into bankruptcy
upon an adjudication of bankruptcy against
the corporation. The United States Court,
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