Knoxville daily chronicle. [volume] (Knoxville, Tenn.) 1870-1882, 1879-01-28

the assets thereof Said receiver is to con-
tinue in possession and manage the entire
road until a sufficient sum shall be realized,
exclusive of the costs and expenses incident
! to such proceedings, to pay off and discharge
the interest due on the bonds.
And now your orator shows that the SAID
railroad company pretends and claims that
the aforesaid lien on its property is satisfied
aud discharged without payment Of the in
t2rest or principal Of your orators bonds,
aud that it is also absolved from the obHga-
ten whic6it assumed by the acceptance and
use of your orators bonds to pay the inter
est thereon.
1t claims that the discharge Of said in
cumbrance has been effected by and through
the means Of certain legislation, enacted in
the years 1869 aud 1870, many years after
the sale of the said bonds, and while the
same were outstanding, in the hands of
bono tide purchasers thereof.
The said company pretends that by the
act Of Feb 2l, 1856, increasing the sink
ing fund to two per cent, per annum, to
commence from the date Of the issuance Of
internal improvement bonds, and providing
for reinvestment Of the accruing interest in
The sinking turd, it was intended that de-
liY5ria5 OF bonds into the sinking fund
should constitute discharge of the statu-
togv Lon on he roa3, without payment of
il .cr { or p. pal of the bonds loaned to
Tie 1ompuny. Il claims a similar effect to
be deduced from the art passed on 20th
March, 1860. Copies of the said acts are
herewith attacked, marked ExhibitD.
The said company likewise pretends
that, by means Of the acts Of February %,
1869, and Of January 2, 1870, it was en-
abled to extinguish the obligation to pay
the interest and principal of the internal
improvement bonds issued to il. by means
of the delivery to the State of any obliga-
tons Of the State, though the said obhga-
tons were not secured by statutory lien
upon the East Tennessee and Virginia
Railroad, or issued ill aid thereof The de-
fendant claims to have complied with the
provisions of said acts, and to have thereby
discharged the said incumbrance, without
payment OF the bonds for which it was
During the late civil war the railroad
did not pay the interest on the
bonds issued to them, and after the war
they still continued in great part in default
IN making the payments ofinterest on said
bonds. The State of Tennessee had like
wise been in default during the same
time. The market value OF the bonds
had meanwhile fallen very greatly, and the
securities were very much deprecated, to
about fifty per cent, or less Of their Tar
value.
Under these circumstances the officials of
the railroad companies conceived the pro.
jecs Of avoiding the liabilities Of these cor.
poca ;ons for the payment of the bonds
loalsd to them. Their project As to treat
the Lien on the railroads as the absolute
property Of the State, with regard to the
trust in favor Of he holders of the bonds
whcce moneys the companies had received.
They proposed to induce the Legislature to
proceed upon this basis, and to assign the
lien on each road, in consideration of the
re ccaipt by the State Of an amount of its
bonds from each company, without regard
d whether they were The bonds loaned 10
and Inc obligations of the company delv-
ing them, and were entitle3 20 the lien on It's
road. They applied themselves to the pro.
of such acts of the General As !
scmbly Of Tennessee IS they deemed would |
assist them in the accomplishment of their
projects.
Your orator shows that the General AS
g2mbly did pass an act on Feb. IS, 1869, a |
copy of which is is hereto attached, marked |
Exhibit +. Your orator shows that the |
said act, as passed, differed in material re
spects from the bill drafted by the agents |
Of the corporations. 1t had been amended |
in the cour5a Of its passage through the |
Assembly, so as to preserve the rights Of the
internal Improvement bondholders to their |
lens on he several railroads.
Your orator shows that the railroad COM
Danies, not being content with the said act, |
md not decming that they had thereby &C
luired even the appearance OF legislative
support FOR the project on which they de-
8. cd o entc-, procured, at the next session
IF the Legislature, the introduction of bill,
which, as amended, became the act Of Jan.
,, 1870, a copy of which is hereto attached, |
marked Exhibit L.
Your orator iur,her shows that the said |
asst mentioned act.as passed, differed in ma
erial iesPcc-s rom the bill which the Off
ia Of lo rail. 0ad corporations had pro-
cured 20 be introduced, as appears by the
insertion OF The provisions hereinafter re
erred to.
Your orator shows that about said time
he officers of some of the railroad corpora
lOll2 ODtAiiCO tlS ukJlIiiOh VI COuhaSl LudL
hey might safely embark on the venture
above described, and disregard the rights
md liens of the holders of the internal i'm
bonds. Your orator prays leave
0 bring proof Of said opinions on the trial,
and particularly the opinion of Ed. II. East
md others. Your orator shows that at the
me the officials or some Of the railroad
offered the new or 8o-called sub
3titution bonds for sale (which bonds they
,laimed had acquired the len Of your ora
or's bonds), they published an opinion Of
New York counsel seeking to show that the
State had the right to trest the liens Of the
nternal improvement bonds in the
manner above described. The said trans
action in al It's entirety was fully under
tcod by tie railroad company, and
~ tle purchasers OF the new bonds as ap
,eared from the face Of their bonds, the deed
to secure them, and the legal
opinions above mentioned. They knew that
hey were ged IN an attemptto grasp the
ecurity and property conferred by the dis
inct language OF the statute upon the holders
If the internal improvement bonds, for the
,ayment Of the interest and principal of
heir bonds.
Your orator further AYERS and shows that
he said pretenses and claims are illegal
md invalid and fraudulent. The defendants
lever had, nor have they, any right to affect
II impair the contract and lien which was
reated and entered into by and between
he holders of the internal improvement