New Orleans Republican. [volume] (New Orleans, La) 1867-1878, 1875-11-02
in an issue to be hereafter con.

And, while considering the text of the
statute, 1t may be here noticed that while
by the sixth section ON continued default
BY the company latter sixty days from
demand) in payment Of any of the interest
coupons, it is enacted that the principal of
all the bonds shall at once become payable,
| and provision is made, in such contingency
flor the sale of said railroad and appur
tenances by the trustees" vet it does not
appear from any provisions Of the act, that
even on such default by the company, the
guarantee of the State requires Of her an
immediate payment.
The various defenses pleaded by the State
| may be classed under three heads.
First-That pleaded in the supplemental
answer, that the bonds sought to have
funded were not included among the obli-
cations permitted to be funded by act No. 8
of 1874.
Seoond-That the guarantee of the bonds
by the State was null, ab initio, because
said guarantee was given after the adoption
OF the constitutional amendment limiting
the State debt to $25, 100000.
Third-That certain conditions precedent
to the granting of the guarantee by the
State, to wit: The acceptance of the grant
by the corporation within ninety days after
the passage of the act, as provided in the
fourteenth section; the survey and the loca-
ton of the road to Houston, Texas, within
eight months after the acceptance of the
conditions of the grant; the completion of
forty miles of the road in one year from the
| survey; to the Sabine within three wears,
and to Houston, Texas, within six months
thereafter, had failed; that there was no Ie
gal acceptance of the grant, nor was there
any portion of the road built within tia
specified time.
On the other hand, it is commended by the
plaintiff that these bonds fall within the
| provision of the funding act, are obligations
intended to be funded, and that all the con-
| ditiOns required of the company were fully
| complied with Also, that the relator is a
| third innocent holder for valuable consider
| attion, and as such, is unaffected by any
| failure of conditions in the original issue.
Though these are the issues presented
| and argued by the learned counsel, there
| is another question, which, as the pleadings
| stand, requires, in the opinion of the court
consideration. 1t has been seen that the
obligation OF the State, whatever it may be,
is a conditional one. The State can not be
held bound, except on default of payment
by the road. The funding act as we'll as
the copst tutional amendment regarding
| the funding of the State debt, look clearly
to such obligations as the State may
beyond all question be bound for. The
railroad company, the drawer of the bonds,
is unquestionably primarily liable. In case
| of its failure either to pay matured cou-
made by the sixth section for disposition of
the mortgaged property. The whole tenor
| of the act indicates that the State is bound
only on default Of the company to pay, in
part or whole, its obligation.
Such being the conditional liability of the
State, it appears to the court that it should
| be alleged as ground for o writ of man
damus, and established by evidence, that
demand of payment Of the matured coupons
had been made in vain on the company,
| and further that the mortgage is valueless,
and the company neither has now nor will
have means to meet the bonds. And this,
especially as by the provisions of the fund
ing act (sec. 81 these bonos, should the
mandamus be decreed, would have to be
destroyed BY this destruction the prin-
cipal obligor would be entirely released
from liability on them and in no manner
| made liable to the State for the State bonds
to be issued by the funding board in place
| thereof.
The court has looked in vain in relators
| petition for any such allegation, either of
demand on the railroad company for pay
ment or default of payment. No absolute
or partial insolvency of the company is
anywhere alleged No allegation, in fact,
| by which it would appear that the alleged
guarantee of the State has or ever will be.
come executory. 1t may be indeed true,
| but it is not so alleged, and the court es-
pecially in enforcement of summary pro
ceedings, must direct its action by the re-
cord.
True there appears in the minutes OF
testimony an admission by counsel THAT
| the New Orleans, Mobile and Chattanooga
Railroad Company is insolvent." But to
what extent, or whether beyond all future
| possible recovery, in whole or in part, the
admission does not state. What extent the
admission was intended by counsel to have
/ tnr I'd o1,nxy 81,
not appear 1t might be questioned whether
the objection could be rewaived by the At.
tOrney General.
The court is of opinion that without an
allegation of proper demand of payment of
cOupOns, and at one of the places fixed in
the second section, and in default of pay
ment, or some direct allegation of entire in
solvency, the conditional obligation of the
4 State can not be considered as accrued.
| As, however, counsel of neither side
seemed to 80 consider it, as no reference
| thereto was made either on trial or In briefs
furnished, the court has considered the
other points which are raised by the plead.
| ings.
As to the objection pleaded by the sup
Elemental answer, that these bonds are not
included among the obligations permitted
by the funding act, this question must be
determined by considering the language
| and intent of the first section of the act,
which declares it's object to be "for the pur-
pose OF consolidating and reducing the
| floating and bonded debt of the State"
| Does lhe bonded debt thus referred to in
clude a debt for which the State is only con.
ditionally liable! Ii so, doubtless the bonds
| in controversy are covered by the funding
| act. But were bonds, the payment of which
were only guaranteed by the State, not
drawn or executed by the State, SO con-
| sidered by the Legislature, or can they in a
| true sense be termed "bonds of the State"
They are not SO termed or described in
the act Of 1869, authorizing their issue. On
the contrary, they are ''the second mort
gage bonds of the New Orleans Mobile and
Chattanooga Railroad Company" and to
specially express the relation of the State
to them the expression guaranteed by the
State of Louisiana" is added.
The very condition of guarantee shows
that the real obligation is due by another;
it is an obligation of another, not OF the
guarantor. The authority to issue the bonds
is given by the Legislature exclusively to
the railroad comany. Says the statute:
THAT the New Orleans, Mobile and Chat
tanooga Railroad Company, a corporation