The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1878-01-23
LOCAL MATTERS:


LOCAL. MATTERS.
TTgE coMskoN COUNCIL.
SpECIAL MEETING LAST ETESING-OPIN'
ION OF THE CITY ATTORNEY ON TILE
SECURITY OF THE CITY AND REPAIR
BoNps-A PROPOSITION TO LOAN THE
CANAL COMPANY $4,000. IN SHIPPER.
CENT. BONDS AGAIN DEFEATED-oTHER
BUSINESS.
A special meeting OF the Common Coun-
ell was held yesterday Afternoon in response
to the following call:
''RICHNoSD, January 81, 1878.
.:E. c. Hovard, Esq. city Clerk:
Dear Sir,-You will please summon the
Common Council to meet in the Council
chamber tomorrow (Tuesday) evening at 5
o'clock to consider the application for an
appropriation to the James River and
Kanawha Company.
..Iour obedent servant,
s.GE0RGg L. CHRISTIAN, President.
Mr.. Christian {president) occupied the
chair. Present at roll-call MeSsrs. Adams,
Campbell, Curtis, Davis, Elicit, Foster,
GUY, Hargrove, Haxall, Higgins, King,
Starke, Skinker, Timberlake, Vandervall,
Whitlock, and Wood.
The Chair stated that the resolutions pro-
posing to advance to the James River and
kauawha Company 5000 to aid in repair
iug the damages to the canal had been re-
ferred to the City Attorney for his opinion
as 10 the validity and sutticiency OF the Sc
curity contemplated in the resolutions, and
as to the question whether any other salts
factory security can be given by the COM
pany.
OPINION OF THE CITY ATTORNEY.
The Chair then laid before the Council
the opinion OF the City Attorney upon the
resolution referred to him rs to the power
OF the James River and hanaW ha Company
TO pledge the future net revenues Of the
company for the payment OF principal and
interest OF n proposed issue OF bonds for
the repair OF the canal, so that the holders,
or the city OF Richmond, rs guarantor OF
the said bonds, would be adequately Sc
cured. Assuming that legislation author
izing such an issue can be obtained, the At
tornev says the question in effect is whether
the future net revenues Of the company can
be now set apart to secure new and newly
authorized issue Of bonds for the repair Of
the Improvement. Pri,na fncie it is quite
clear that no such power exists. The char
ter OF the company contains no authority to
issue bonds and pledge the resources OF the
company therefor for any purpose; and there
are already three recorded deeds OF trust,
each Of which, in terms, pledges these very
revenues to secure existing or authorized
Indebtedness Of tue company, amounting to
S1,G50, 600, executed by virtue Of special
acts OF Assembly; as to al OF which the in
terest is in default and the principal not
due. On well-known principles the lien OF
each OF these deeds is subordinate to that OF
its superior in point Of time, and all are
paramount to any subsequent one; and as
the revenues are inadequate to discharge
the interest on these, or any OF them, it is
manifest that as long as these priorities are
recognized the revenues would be yalueless
IS a security for a new loan. 1t is con-
tended, however, that rs the proposed
bonds are to raise money for indispensable
repairs, and for that alone, they have pri-
ority in point OF Importance which more
than balances their inferiority in time, and
that as the money is necessary to maintain
the canal "as going concern" all its
creditors are so yitally interested in rails
ing and so applying it that the debt to be
created may Justly be held to be for their
common benefit, and on that account to be
OF superior dignity and value and obligation
10 all. The argument is plausible, but in
the Judgment OF the City Attorney cannot
be maintained without fatal results to the
very securities it is invoked to support.
The earliest subsisting mortgage on this
canal-that of May l, 1S67-whereby, among
other and all its property, its culture net
revenues were pledged as security for the
principal and interest OF an issue OF $780,
O00-aH still unpaid-1caS specified on It's
face to be in part for repairs. The bonds
thus and then issued were no less "repair.
bonds" than those now proposed to be is
sued, and the same revenues We're then sol
emnIy pledged for their payment. So, also
1t Is we'll known that the 100000 loaned
by this city to the canal was for the purpose
of repairing the damage done by the food
of 1870, and were asked for that purpose
1t is possible that the right Of those wht
then loaned their money to the company Il
have the net revenues applied to the pay
ment OF their interest may now be summa
rily DESTROYED, without compensation tx
them, in favor Of other lenders of clever
years later. II this be true every emer
gency Of any company will justify the ISSUE
Of new repair-bonds, each OF which vii
defeat the lien Of all its predecessors, ant
be itself destroyed by the first succession
which any real or supposed security OF tn
company may induce the Assembly to au
thorize. And il it may be done for repairs
why not for equipment and stock, for thes
are as indispensable to the profitable con
duet Of certain improvements as the road
way? Why not for extensions OF the i'm
-pfnYement, which may be IS vital to th
profitable operation ei the work as re
pairs !! Now, If all or any OF -thes
needs justify the issue OF bond
> whose security shall override eyistiul
:. liens on the same subiect-matter, it is eyi
dent that the security OF the latter Is a
Worthless as that OF the former, for as
defeats SO in turn may it be defeated; an,
.,on.this ground am OF opinion that the cit
would be without g adequate security" ]
the general principle which Yalidates lien
in the, order Of their reeordation he applica
bile, the net revenues OF this company can
pot tsJnade available for. new debt Unit
prior secured debts are satisfied.
The City Attorney next refers to til
!. Chesapeake and Ohio Canal case, but say
the case here is totally different.
Tor the reasons given the Attorney says
am respectfully Of .opini0n that pledg
OF the future revenues Of the James Rive
and Kanawh2 Company, ip the present cor
ditipp or the bonded debt OF tiiat corpora
ton, would be Hnavaiiing as security 10
the Fopesed issue OF bonds certainly not q
valuable as the pledge already given by tk
company TO secure The Se0o.0a8 loaned b
fhs city 70 repair The dafnaig 81 the food g
1870. Nor do ] think that the company cal