Memphis daily appeal. [volume] (Memphis, Tenn.) 1847-1886, 1879-04-08
or the Legislature is not Accepted the
Chances are that the Railroads of
the State will he Sold to Pay
$4,000, 900 of the State
Debt-Where are the
Regulators Now.


- provement bonds of the State of Tennessee
: amounting Ill the aggregate, with accrue;
interest, TO about fifteen million dollars.
was sought Icy this sult to hold the railroads
for the benefit Of which the bonds were Is
sued, liable for their payman., notw.thstand
ing the attempt Of The State to repudiatt
them. The theory on which the suit VIA
e brought has now been fully sustained by al
Il elaborate and able opinion rendered by Mr.
II Charles O'Conor, the laadiug poiots in vghlci
are given IN an abstract which follows Ii,
& questions discussed in tins opinion accu,ra ad.
n dltlonal Interest at the present time in view
: of law passed by the State legislature O.
& tennessee few days since providing for TIE
issue OF new bonds OF the State to the hold.
. ers of those at issue il this sujt at the rate
: OF fifty per cent. Of the principal and bearing
Il interest at the rate of four per cent, but
without any guaranty of payment To sus.
tain this action Of the lie. islature a call for =
mass meeting, to be held at Nashville TO-DAY
= has been Issued. But the bondhoders cor,
; s!der the opinion Of Mr.. O'Uonor unanswer.
f able, and feel they have a right to insist upor
full payment OF their bonds
THE QUESTIONS INVOLVED.
Recently counsel for the boudholders j.
this city addressed Mr.. O'ConCr letter =;
fellows:
To Charles OConor:
SIR-On behalf of &. Amory Stevens. Of
this city, | request your opinion on the fct.
lowing case:
Here follows recital Of the legislation cf
Tennessee on the subject of internal improve
ments.-Ed. Herald
Flrst-Are the holders of Tennessee State
bonds, issued to and negotiated by the raj;
road companies under the internal improve
ment laws of 1852, entitled 70 TIE benefit IF
the hen mentioned III those laws?
Second-Are the holders OF like bonds j..
sued to and negotiated by said companies
al
amendatory OF or supplemental to the said
Internal Improvement act OF 1852, but priCr
In date to February %, 1869, entitled in Ike
manner to the benefit Of such lienP
Ihlrd-Have any of the aforementioned
dolngs or proceedings under the !eglsIafio1
Oh tennessee, adopted on or subsequently 10
the sad twenty fifth of February. 1859
worked any dlvestiture Or impairment Of the
| rights conferred upon such bondho!ders?
tourth-Iiaye the orders or DEGREES made
by, the chancery court Of Tennessee, above
referred to, any operation or effect upon ii.
| rights OF such 5ondholders?
Flfth-What is the most adyise bic rnatbcl
OF proceeding to procure for such bondb0l.i
| ers recognition and enforcement of their
rights? Yours respectfully,
Il. L. ANDREWS.
OPINION.
l. The Legislature Of Tennessee established
what Is termed "a system OF internal i'm
-
tam specified railroad Companies 70 finish AM
equip their roads. The plan was to provide
each company with the REQUISITE finds
through loans to be obtained for il on State
ponds, payable at distant periods. with IN
terest in the meantime semi-annualiy. The
principal and interest on these bonds were to
be made payable at such place, within the
United States, as the ompany's chief Officer
might designate, and the bonds were 10 he |
negotiated Tor the prescribed purpose BY III, !
company, acting IN conjunction with com |
missioner IN that behalf appointed by the |
state: Inc whole process was regulated and |
described IN and by the act adopted on FL |
ruary II, 1852, together with three sunnle- |
mental sections added on the tWenty-6rst Of |
the same month. Tennessee laws of 1870 |
chapters Isl and 1887 The loans of ber
bonds to be made by the State to each com
pany were limited and defined with the nj
most precision. Each bond was to he dpsi0
mated by officially certified dIstiTcfiSa
number, and such number, together with tha
date and amount of the bond, was to be dIIIv
recorded, with the company's recent for fbe
bond, IN book kept by the secretary of state,
Ihese forms We're all duly observed. This
pubic oifclal registry was constructive yotIo.
OF all the loans intended to be made To fha
company section l5). All men were REQUIRED
at their peril to take notice of the CROWN.
lien; for, from the moment a singia ho.i
lett the state department the company receiv-
ing 1t was disabled from creating ANY hen
encumbrance or mortgage of any kind ,r,L;oL |
(should) have priority over or come il, CO..
nc 1lIct with the lien in question (section d I
Inc law plainly expressed all this. If the ,
mere TACT OF issuing or delivering bonds IN +
the company was to establish n debt to the | r
State equal IN amount to the bonds so issued r
the law would have been so expressed. co., .
gress so declared in the Union Pacific rail 9
road act above referred to- Most distinctly +
Inherent is the language of the Tennessee !
acts. Inc hat creating ''the lien' was that :
q, tne ponds upon beng issued should con c
tltute 1t tsectIon ), ante), and the lien was y
'Xpllcltely declared to be ''for the payment I
~ the SAID company of said bonds. with the y
interest thereon as the same becomes due !" y
n Its tlrst enunclation (section 81 the lien r,
vas extended no further than TO the first !,
hIrty miles of the companys road and en- t,
raced only the bonds issued to provide for d
nat portion. But 10y section four, as each | CT
a ae Ss section OF the road was put in ii
le deSree OF readiness prescribed, adj u,
ltlonal bonds might be loaned They 81
ere to be like bonds" and the lien was | ST
leraupon to be extended over the additional n,
roperty with declaration that it should be IN
IKE mortgage or lien as the former, tr
OF content, however, with the short, sharp th
I'd well adapted Anglo-Saxou term like ) co
lie section repeated, &c indust,,ia. the nre tr,
Sc statement that such expanded lien was to fri
Tor the payment OF the said bonds and th
e accrulng interest thereon" This verv ex
nvenlent process of extending and cons0li- on
Jung tne lien was carried forward by sec an
ms until common encumbrance was Gre tn
ed upon the whole enterprise for repavmant or.
all that might be loaned for its completion he
us lien upon the whole work would EN-. cal
ace and necessarily swallow up all those vol
eVlous!y existing. 1t was upon the stock vii
entire road, including, after an ex- hol
lded and apparently exhaustive enumera- en-
n OF particulars, ''all the property owned on,
the company as incident to or necessary sw,
It's business. And in this, the last de-
lptlon of its object. the full,grow lien .,
declared to be ''tor the payment of all of !
9onoS issued 9 70 the company as provided lro
THIS act ard for the interest accruinn on sue
bonds (sectlOn FOUR. Fifteen DAYS be- I'm
2 any sum OF interest upon the bonds Sta
led to company shall have become due all
h company was required by section san
TO furnish satisfactory evidence that Che
interest has been paid or provided for. - IN I
pam OF certain prescribed consequences. nan
alternative OF having provided for the the
,rest must, by the same reasoning. have only
templated an act OF the company. The has
sc OF the words provided for is obvious: cha
J meant deposit by the company, or a ota'
lit obtained by 1t, with an approved and noiC
'ent bank or financial agent. insuriDo paw holC
ut IN one of these money-centers, at which Gem
company chief officer must necessarily Eas
e made the interest payable (section II. thin
lar Gnls HIUn SectlOn certainly tends to | ocel
firm the preceding views as to the general vlslt
,ct, instead of tending to the contrary. ing
ess 1t furnished this evidence of its readi- pam
to pay, the company was required, at not
same point of time. e., fifteen DAYS cons
r to maturity of the interest coupons only
deposit" in the Bank of Tennessee, at clrcr
hvllle, which was the States fiscal agent, each
he interest, as the expression would have RENE
if it was due to the State, but IAN bono
unit sufficient to pay such interest, in othe
ing exchange or necessary commissions. ana
is a most explicit recognition that the in the
1t was to be paid to the bondholder, toun
not to the State. Beside, the act re- sclen
ed on the part of the company was consl
acterlzed as a deposit instead of II az
ayment as, considering that the bank read
the States fiscal agent, it would proba- Vestl
lave been called If the intel est, which the +
ompany was bound to pay, was consid- the
to be payable to the State. The rene bond
prescribed IN this fifth Sec ion
if a company should neither pay, pro.
for nor deposit in respect of the interest
red to, was Il seizure OF the cOmpany's Gil
by act in pals and the application of its this
s and dividends by the selzing agent wife,
nd the liquidation of such unpaid inter War;