The New Orleans daily Democrat. [volume] (New Orleans, La.) 1877-1880, 1878-04-17
THE NEW ORLEANS PACIFIC RAIL-
ROAD CASE.
An Abstract Of the Arguments of TIT
Counsel for the Company and of
the Attorney General.

-
Counsel for the Company and of
the Attorney General.
In the Supreme Court yesterday, in'the above
named case, John Finnev. Bsq.. opened the ar
gument for the relator. for the issue OF a man
damus directing the Governor to issue to the
New Orleans Pacific Railway Company 100000,
being the first installment OF t9ooo.Ooo OF bonds
authorized and required to be issued In aid Of
said company by act No 1853 OF the recent Legs-
lature, by reviewing the provisions of the act
which are that these bonds shall be issued to the
company-s25o.o 900 Immediately. for the work
already done on the road. and the balance at
the rate OF SO, 600 for each mile graded bridged
and laid with rail the State to be protected
against liability on said bonds. or the interest
thereon by the deposit of frat mortgage bonds
OF the company to the extent OF Is per cent
more than the bonds issued by the 8 ate. said
mortgage bonds. with their interest coupons. to
become due before the maturity of the bonds
and coupons Of the State. and to be secured by
q first mortgage on all the property Of the COM
pany, both real and personal present and
future"
The objections of the State officers to the
issue of these bonds are:
/. That the act Is In violation of the constitu.
Nonal amendment of 1874. limiting the State
debt to sl6.OOO.oO0.
a That 1t is In violation of article III of the
constitution. In that 1t does not provide means
for the payment of the principal and interest
OF the bonds.
8. That it is using the taxing power of the
State in aid Of private enterprise.
As to the first point. Mr.. Finney proceeded to
show from the Auditors report for 1878 that the
actual bonded Indebtedness of the State (exclu-
A. II a l.
numbers. s24.ooo.ooO.
THE FUNDING ACT OF 1874
provided for the retirement of the bonded in
debtedness OF the State and the issu in ex-
change there for of consols at the rate of 60
eents on the dollar, said eonsols to constitute
Inc same Legislature prohibited the collection
OF taxes to pay any other Stale debt than that
& P bonds then outstanding The Board Of Giuui
dation declared that $4,lo7 600 were not fund
able In consvls. and their declaration has
with regard to S. 4s5 oo6 Of bonds issued to the
New Orleans. Mobile and Chattanooga and the
Mobile and Texas R.il,oad Companies, and TO
the Bayou Boeuf and Crocodile Navigation
Company. leaving. In round numbers. only
$4,000. 600 of bonds to be funded. requiring The
issue Of but SO 600 600 OF eonsos. OF which ST.
over SIS, 600 600 OF debt. including $l7.670O00 OF
old bonds. This leaves
MARGIN OF OVER s. 100000.
10 which extent the State debt may be increased
within the provisions Of the funding act and
the constiI uttOnal amendment OF 1914, and the
issue Of bonds provided for by the act Of the
last Legislature In aid Of the New Orleans
Pacific Railway Company being within. that
margin, there can be no bjection to their issue
There Is nothing else then to come In except
the Citizens Bank bonds. aud the are not a
fundable debt OF the state. They are bonds
issued to the bank under the act of 1886 and
jndorsed by the bank. which guaranteed the
bonds principal and interest and this guar
antee Is n ade secure to the State by the pledge
Cf its entire capttal-now worth seventy-fiye
cents on the dollar-and all the mortgages and
securities held by the hank. thus making the
Stat, simply the maker of accommodation
ranar secured from loss by an indemnifying
bond.
arfy makes partial payment and gives mort
rare notes for the balance. and subsequently
re.sells the property. the new purchaser assum
mo the outstanding mortgage notes. those
Inca cease 10 be an obligation OF the first pur
.hsser and cannot be- treated as debt OF his
ste reeom,se Of the original vendor being upon
M M property: and should the first purchase,
fhers.after 60 into bankruptcy such notes wonio
MT nct IA considered by the assignee n,Wlnoing
Rr Sns S Us,zsns' Bank bonds! were never In,
Aes,de1 10 be funded. and in the very nature q
shin0a would not be, as the credltnrs Would
Ssharsby Incur the less of 40 per cent OF secure
shf while the ba, X would make that amount
IN AZ we see there are but 81 goo goo OF con-
Seed8dfor taking I'D the OLD 0epf. ana as