Wilmington journal. [volume] (Wilmington, N.C.) 1844-1895, 1873-12-05
OUR RALEIGH LETTER,
Ehc s tscy Suit-Tts HNiStOry-lts
Present status The Efforts OF
C0unscl-FFfccts urou COnsolfdn-
tson-T'hc Treasury Injunction
fir. NlcNciII>s Resolution state
Printer,

fFIrtcr1
RALEIGH, n. c., Nov. 27, 1873.
EDrroRs JOURNAL = Yesterday a
motion of considerable Importance
was argued in the Circuit Court before
Judges Bond and Brooks. 1t being
understood that the Self suit against
the Treasurer would be called, the
Court room was well filed with mem
bers of the Legislature and others, at
tractel by curiosity and interest in
first motion Oh the docket for that day
was one made at the last term of the
Court III the Svasey suit. This suit
was instituted in 1871 by Swasey. q
bondholder, residing in New York, to
enforce lien against the States stock
in the n. G. r. r. Company In 1S49
the State, in the Act incorpor ating the
n. G. r. r. Company, subscribed for
10000 shares of stock, at par value
of two millions Of dollars, and by a
subsequent Act subscribed for 10000
additional shares, making three mil
hons i'll all. BY Section 80 of the Act
of 1S49, the Treasurer was authorized
10 borrow the money to pay the SUBJ
scriptions, and was directed to issue
the necessary certificates of debt in
sumsnot less than s., 900 each, pledging
the State for the payment of the sums
therein mentioned, with interest
thereon. And by Section Il it was
enacted ''That as security for the re-
demption of the said certificates of
debt, the public faith of the State is
hereby pledged to the holders thereof;
and in addition thereto all the stock
held by the State in the n. G. r. R.
Company, hereby created, shall be,
and is hereby, pledged for that pur-
| pose and any dividends of profit
which may from time to time be de-
as aforesaid, shall be applied to the
payment of tie interest accru-
| ing on said certificates br5
I until such dividends Of profit may be
| declared it shall be the duty of the
Treasurer to pay all such interest as
! the same may accrue ont of any mon
| eys in the Treasury not otherwise APP
| propriated.
| In 1870 dividend was, for the first
time, perhaps, declared on the n. C. r.
r. stock, and the State received her
dividend and used it for ordinary pnr-
| poses of government-or, at least, did
| not apply it to the payment of the in
terest on those bonds according to the
above provisions of the act.
Another dividend was about to be
declared in 1871, and thus this suit was
| astituted-Swasey asking the Court to
enjoin the R. r. Treasurer from pay
| ing any dividend t. the State-and to
enjoin Mr.. Jenkins, the State Treas
| urer, from receiving any such divi-
dend, and for the appointment of
receiver who should receive the divi-
| dends and pay the money over as in
terest to the bondholders. And
futher, that it appearing that the GER
tifcAte for the States stock, $4,000
shares, had never been issued by the
r. r. Company; that the same should
be issued and held by the receiver, and
that the said shares might be sold to
pay their bonds and interest. The
Court in 1871 granted all but the last
| prayer, and Mr.. Samuel F. Phillips
was appointed receiver, with directions
to receive the dividends and pay the
money out to the bondholders as in
| terest, and the r. r. Company was
! directed not to pay any dividends to
the State Treasurer.
At the last term of Court motion
was made to sell the stock to pay the
! interest due, there being about half a
! million Of dollars Of interest in arrears.
MIR. Brewster, OF Philadelphia, and
| Mr.. L. c. Badger argued the motion
| for the plaintiff. Judge Battle, Mr..
! Gatling and Mr.. Smith appeared for
! the Defendants. Mr.. Brewster made g
! capital speech. His Oratory was Of the
/ highest style, gestures perfect, enrnUi-
| alton distinct, and his ideas so clearly
/ expressed that no listener could fail to
| comprehend his meaning. In fact, his
! entire conduct as an advocate was ad-
mirable: and particularly was I
pleased TO note the marked absence of
! any disparaging reflections on the State
OR the people OF North Carolina which
would almost inevitably have fallen
from less polished lawyer.
Tho counsel for the plaintiff, argued
that the principal OF the bond carried
the interest with it ; that a pledge to
secure the principal was security for
the interest, that while this is SO gen
orally, as a matter of law, yet III this
case it is so not only as matter of law
but by the terms of the Act, the pledge
| being for the security of the certificates
of debt, which under Section SO, were
for interest as well as principal and
| which in TACT are composed OF the
body of the bond with coupons at
| CaCneIt. III oN'A
due is considered as principal. IGat
this is so particularly in cases of pledge,
because otherwise the interest not
being paid regularly, it would soon
augment the debt so much as to render
what was at first ample security, an in
sufficient security. Equity would not
require that the pledge shonld be kept
under such circumstances, but would,
on application, order it to be sold and
applied to the debt while it
was sufficient to pay the debt.
In this case the direction that the
dividends should be applied to pay
the interest was useless and super
fiuo1s provision in theAct, for pledge
of the stock gave the PLEDGES a right
to receive the dividends and apply
, them to keep the interest down. That
follows os : mater cf law. A mort
eageo is entitled to the rents-the
pledgee to the profits of the pledge
to be accounted for as interest. Hence
} no valid argument could Oe made
against the sale because, apparently,
tie stock was pledged for the redemp-
| ton OF the certificates Of debt alone.
In fact the certificates of debtincluded
, the interest.
The second question was rs to tbs
Jurisdiction of the Court. The Statl
under the 11th Amendment to the
, Court of the United States could not
be sued, but this is true only in GER
tain cases. In other cases it is no
true. Many decisions of foreign Court
we're read, in which sovereigns hat
: been made parties to suits-and the
I general rule is, that where a sovereign
throws aside her sovereignty and EN-
l barks in trade, she is suable like othel
t traders. Man y United States decis
: ions were quoted to that effect. Blu
: it is not necessary for the State to h'
!, party in this case, because the pro
/. ceeding was in reDa--is against tn
: stock and not against the State. 1t Il
: to sell pledge and the pledger neet
r not be party. The pledged propert.
: was not in the possession of the State
s the legal title to the stock was not j
xbo Cto&a etooGy bod navQr hap,