New Orleans Republican. [volume] (New Orleans, La) 1867-1878, 1875-11-02
COURT RECORD.
MONDAY. NOVEMBER I, 1875

j
Supreme Court.
Preseut-Justices Howell and Morgan.
Adjourned for want of q quorum.
Superior District Court.
Judge Hawkins rendered the following
decision:
State of Louisiana ex rel. Citizens
Bank OF Louisiana VS.. the Board of
Observation-Disclosures is the holder of GER
| tain bonds, sixty in number, of the second
mortgage bonds of the New Orleans, Mo.
bile and Chattanooga Railroad Company,
for $1,000 each, with coupons attached, al
legged to have been issued under authority
OF the provisions of act No. &c, approved
February II, 1869, and guaranteed by the
leges the Board of Liquidators appointed
| under the act approved January "a, 1874,
has, though requested, refused to fund.
To compel said Board of Liquidators to
| fund said bonds and forfeit the coupons is
the object of this writ of mandamus.
The Board OF Liquidators, through the
| Attorney General, who also appears for the
State as intervenor, resists the writ.
The case has been tried aud argued with
marked ability, as from its importance, not
| only in the amount but the legal questions
| involved, it deserves. Some of the issues
involved are without judicial precedent re-
| quiring careful consideration of the Ian.
guage and intent of statutes; others involve
| questions of constitutional power, never to
be lightly treated. And though examined
and to be determined under the summary
proceedings of mandamus, involve the in
| terests of the people of the State on the one
hand, and the holders OF bonds on the
| other, in principal and interest, to an ex-
| tent of over a million of dollars.
These considerations have led the court
not only to an attentive examination of the
case in its various bearings, but to guard
against hasty conclusion. The relator, the
| Citizens Bank, claims that it purchased
| the bonds for valuable consideration;
that the guarantee of the State was super.
inducing cause of their purchase. Also, in
argument, though not in the petition, that
the drawer OF the bonds-the railroad
cOmpany-is lnsolvent, and that unless
the remedy sought against the funding
| board be granted the bonds will prove a
| total loss to the relatOr.
The funding board as we'll as the State,
| on the other hand, contend that these bonds
| are Of class not intended to be embraced
in the funding act, and, moreover, were
not, for reasons specially pleaded, legally
issued, so tar, at least, as their guarantee by
| the Sta te is concerned.
The first section of the act Of February,
1869, under which it is alleged the bonds
were issued, authorized the New Orleans,
Mobile and Chattanooga Railroad Company
| "to make and issue, from time to time as
hereinafter provided, its bonds, to he known
as second mortgage bonds of the New Or
leans, Mobile and Chattanooga Railroad
Company, guaranteed by the State of Lou.
| isiana, of such denominations as the com.
pany may elect. but to an amount not ex-
ceeding in the aggregate $12,5O0 for each
and every mile in length of the main line
| of the railroad westerly from the city of
New Orleans and within the State of Lou
isiana which said company shall construct"
| Two guarantees are provided for the pay.
ment of the bonds SO issued.
The first lie provided in the third section
of the act, which declares ''that the pay
ment of the principal and interest of such
bonds shall be secured by mortgage, to be
| executed by said company to the Governor
of the State. The said mortgage shall be
a lien upon the whole of the said main line
of railroad of said company within the
State OF Louisiana and upon all right OF
way, roadbed, ETC., real and personal estate
within the State Of Louisiana. But the lien
| OF said mortgage shall be subject and sub
ordinate to a prior lien in favor of first
mortgage to the extent of $l2 500 per mile.'
| To enforce the guarantee arising from this
second mortgage, it is provided in the sixth
section "that the said mortgage to the Gov
| ernor of the State of Louisiana shall contain
further provision that in case default
i
est of said bonds, or any of them, or of the
said sinking fund, or any part thereof,
| and the same shall remain in arrear for
sixty days after becoming due and being
| demanded of the said company, the prInci
pal of all the bonds secured by said second
mortgage and then outstanding, shall upon
| the expiration of said sixty days, become
due and payable; and said mortgage shall
contain suitable provisions for the sale OF
said railroad and appurtenances, by the
| trustee, in case of default in the condition
of said mortgage"
| The provisions of this section constitute
| what may be termed the first guarantee, a
mortgage on the property of the railroad
company, the drawer OF and principal obi
| gor on the bonds
| The second and additional guarantee is
that to be furnished (under certain condi-
tions) by the State, and Authorized by the
| eighth section of the act, which provides:
| "rhat when the said second mortgage
| shall have been so delivered, approved and
recorded, and one continuous portion or
section of forty miles in length of the main
line of railroad within the State of Louis
lana shall have been constructed by the
company, and the rails laid thereon, the
| company may deliver to the Governor of
the State of Louisiana $500, 900, or fl00, 900,
of such second mortgage bonds, and the
Governor shall, thereupOn, subscribe GER
| tifcate, to be written or printed upon each
of said bonds, in the following words:
The payment of the principal of the within
bond, arhen due, and of the interest thereon
| as it accrues, is guaranteed by the State of
Louisiana, pursuant to the provisions of the
act of the General Assembly of said State,
authorizing such guarantee and shall affix
the great seal of the State of Louisiana to
such certificate, and the said seal shall be
attested by the signature OF the Secretary
of State, and the bonds shall then be deliv-
cred to the company for its general uses
and purposes authorized by its charter"
The seventh section provides for the
guarantee by the State eff additional bonds
upon the construction of each additional
section or portion of forty miles in length
of said main line Of railroad"
The guarantee of the State by the eighth
and ninth sections is condit Toned in the
actual construction of forty miles and other
sections of like extent.
By the twelfth section it Is also provided,
and made a condition precedent to the
States guarantee, that the survey and
location of said road shall be made with
in certain time and portions, and the
whole of said road ba completed within
certain limits in time. 1t declares:
"That said company shall cause the sur
vey and location of the whole of said main
line of its railroad within the State of Lou
isiana to be completed within eight months
after its acceptance of this act hereinafter
provided for, and shall cause a section of at
least forty miles thereof to be constructed
and the rails laid thereon, within twelve
months after such survey and location shall
have been made; and in case of the failure
of said company to survey, locate and con-
struct the said main line OF said railroad
within the State of louisiana in the manner