Public ledger. [volume] (Memphis, Tenn.) 1865-1893, 1878-05-04
TENNESSEE BONDS.
The Great Test Case in the United
RtRtes supreme CO0rt - Several
Millions OF Dollars Involved,

, tntes supreme OOurt = aeVera
Millions or Dollars Involved.
The case mentioned below was argued
BY Messrs. Heiskell, Humes and Baxter
Of this State, and Mr.. Southmsyde, Q
New York, on behalf of the railroad,
and by Judge Hoadley, Of Cincinnati, o.
the part Of the bondholders. We believ
it is the general opinion Of our lawyer
that the court win hold the bonds not t
be a lien on the railroads. Should thI
court decide that they are a lien on th.
ROADS, the effect would be to cause al
advance in Tennessee bonds, and NJ
doubt q decline in our railroad stocks:
Washington special to 4 Baltimore SUM-
The Tennessee bond case, the argu
ments on which we're concluded in thl
Supreme Court last week, is one OF mucI
interest, aud involves several millior
dollars. The briefs and arguments il
printed form, fled in the clerks Office
Of the Supreme Court, fill several hun
dred pages, and in addition two day
we're allowed By the court for oral argu
ments. 10 1852 the State Of Tennessee
by a general statute, agreed % lend Ger
tain railroad companies the bonds of the
State to be used in building sRd equip.
ping the roads. On issuing the bonds Of
the State, which were issued as each sec.
ton Of thirty miles was completed, the
State was expressly declared to be in,
vested with a lien and mortgage on said
section, without q deed from the CON.
pany for the payment Of said bonds aud
interest IS they may fall due. On com,
pletion of the road the lien on the whole
was expressly vested in the State and
given priority over any lien, incum.
brsncs or mortgage Of auy kind. This
act Fas afterwards several times amend.
ed as to the amount to be loaned to the
railroads. Under these different statutes
the Mobile and Ohio railroad received
from the State 81, Pcs, 900 Of bonds. The
State BY loan provided for the creation
Of q sinking fund to liQuidate the prin-
cipsl and interest OF the bonds. During
the period Of the war the RAILROADS we're
Bnsble to comply with the requirements
Of the sinking fuDd law, and this ina
bility continued after The war. In 1869
the State owed over S29, 005, 900 on its
bonds issued to railroads aud other in.
ternal improvement enterprises. Beth
the State and the railroads claimed that
they we're unable to pay the interest.
The State bad q first lien on the pro.
perry Of the railroads, and it was thought
by the transfer Of this lien to those who
would take up the State bonds a scheme
Of relief would be assured, which. while
it relieved and indemniGed the State,
would, without increasing the debt Of
the companies, yield them additional
means to pay other debts and improve
their property. The legislature there.
fore, February 25, 1868, passed an act
which authorized the liquidation Of the
Indebtedness Of the railroad companies
to the State for the amount of State
bonds which be has advanced to them. as
well as the principal not yet due as the
interest which was in arrears, by the de-
IiTery into the treasury of the bonds of
the State equal to the amount of such TO-
dsbtedness By the railroad company it.
self, and IN case the railroad company
should acquire and deliver to the State
the necessary amount Of State bonds for
the cancellation Of its indebtedness it
should be entitled to issue its own bonds
TO an equivalent amount, which should
be a first mortgage lien upon the road Of
equal validity and effect with the original
lien of the State, and to take the place
pro tanto Of the State lien.
On thd 29th Of January, 1870, tue leg.
islature passed an ~ameHdatory act re
peallng a condition 10 the FIRST act. which
provided that railroad companies avail
ing themselves Of the benefits of the act
which had issued second mortgage bonds
should file with the comptroller bonds Of
the same series as those loaned to such
company for which the State held a first
mortgage lien. Ia order to accomplish
The purposes contemplated BY the acts
the board OF directors Of the NJ bile and
Ohio railroad executed a deed of trust TO
Willism Butler Duncan, Adrian Iselin
and Richard 7. Wilson, as trustees, to
] quidate the Indebtedness Of the com.
pany TO the State BY paying in the State
bonds authorized By the above mentioned
acts. AS trustees for the parties who
we're to advance the money to procure
the State bondP, Duncan, Iselin and
Wilson were vested with the same liens
as held by the State and the same right
TO enforce them. To make provision for
reimprovementthe company made a new
issue Of its so-called FIRST mortgage sub.
slitution bonds " to the extent Of sl.685..
900, which was about the amount Of the
Indebtedness Of the company to the
State aud the State bonds for which were
paid into the State treasury By the said
trustees.
The company for q short time paid
interest upon those substitution bonds.
but then defsulted and became whollg
insolyent. There was 3 mortgage lien
upon the entire line Of the road executed
in 1853 to the amount Of S. 1000.
commonly called a first mortgage, but
the bonds issued under this deed were
expressly made secondary, as 80 claimed.
TO the lien Of the State Of Tennessee
ever that portion Of the line situated in
said State. The case az issue is pre-.
scented by certain Of the bo%ndholders
under this mortgage Of 1858. claiming to
represent $500. 600, dispuliog the valid.
NY OF the lien claimed by Duucan, Ise
lin end Wilson as trustees. The eourts
below decided that the lien of Duncan
lselia aud Wilson has priority. and from
this the appeal is made to the Supreme
Court. A decree has already been en-.
TERED in the Circuit Court Of the United
States for Alabama ordering the sale Of
the road at the instance Of the mort.
gagees Of 1853, but the sale is suspended
pending the decision OF the Supreme
Court.
a-D-n-
The Right OF Women in Germany.
The famale Socialists have been hold.
ing q meeting Rt Berlin. The orators
we're not all women, however Those