Public ledger. [volume] (Memphis, Tenn.) 1865-1893, 1880-09-14

genera OBJECT, lnStedu Vi lonulng "
the contrary. Unless it furnished
this evidence Of its readiness to pay,
the company was required, at the
same point Of time. e.. fifteen days
prior to maturity of the interest cou.
pons-to deposit" in the Bank OF
Tennessee, at NashvilleI which was
the states fiscal agent, not the inter
est, as the expression would have
been if it was due to the state, but
IAN amount sufficient to pay such In
terest, including exchange or neces-
sary commissions. This is a most
explicit recognition that the interest
was to be paid to the bondholder, and
not to the state. Beside, the act re-
quired on the part Of the company
was characterized as a deposit" in
stead of a payment, as, considering
that the bank was the states fiscal
agent, it would probably have been
called if the interest, which the com
pany was bound to pay, was considered
to be payable to the state, The rene
dial consequences prescribed in this
fifth section, if a company should
neither pay, provide for nor deposit
in respect Of the interest referred to,
was a seizure of the company's road by
act in pals and the application of its
profits and dividends by the siezing
agent toward the liquidation of such
unpaid interest" The agent was
called u receiver, and he was directed,
realizing "a sufficient sum, ex-
elusive of the costs and expenses in
cident to said proceedings, to pay of
and discharge the interest as aforesaid
due on said bonds" The receivers
accounts were from time to time to be
audited by the comptroller, aud the
balance" was to be deposited in the
treasury of the state. This was pre-
sumably a much safer place to de
post" than the receivers breeches
Surely these provisions were
not designed to create a means Of
using the company's property to pay
the states other debts2 The section
an able effort to furnish precise
directions for official action in all the
various conditions Of each defaulting
company affairs that might exist at
the time Of its default, or might sub
sequently arise. The right of fore
the lien or mortgage in equity
was given in the usual form by the
section (ante p. 81, if the com
pany should fail to pay any Of said
when they fall due" This re-
to q final default on the princi-
pal at the end OF the credit. To such
foreclosure suit the court was TO re-
payment of the said bonds, with
interest thereon" Akin to the sug-
yestion last referred to is a denial that
.he state could have so far forgotten
is dignity as to have rendered to the
.aker OF its bonds a lien upon tangi-
Die property by way of insuring
prompt payment in addition to its
)wn plighted faith. 1t is true that in
1852, Tennessee held a high position.
certainly she might, without pre-
sumption, have claimed in the worlds
money markets the utmost confidence.
But these circumstances furnish
10 adequate reason for turr-
ng away from the plain i'm
other promise directed to univcr-
attention by this public act (sec.
THE CONTRACTING PARTIES.
The position assumed by the legis-
alton Of 1869, as before stated, is that
he only contracting parties in this
whole legislative system of 1852 were
he state on the one side and the com
,anies on the other, the actual
money lenders, to whom the bonds
we're negotiated, being, it is said, total
trangers to the arrangement. This,
is the only suitable basis for
he Interpretation Of this sinking fund
ection insisted on by the operators of
$50. With all ir~relevances elimi-
by this brief description of the
position taken, let us look directly to
he process of buying state bonds by
he debtor company, assigning them
o the governor, and paying them into
he alleged creditors treasury, as pre-
cribed in this seventh section, and
compare such prescribed action with
he theory. If the company was in
lebted to no one but the state, as al
eyed, the delivery of a state bond by
he company into the state treasury
must necessarily, co-instanti, by act
nd operation Of law, work an extinc-
ion pro tapto of the principal debt
or, on the assumed theory, the com
amy would have no more concern
With the payment or non-payment of
he outstanding state bonds which it
iad negotiated than q merchant, after
at bank his discounted note.
las with the banks circulating bills
which he had once held, but which
lad passed from his hands and were
float in unknown and undiscoverable
But what says this seventh
"And bonds so paid in, and
he interest accruing thereon from
lime to time, shall be held and used
the state as q sinking fund for the
payment ofthe bonds sued to the com
Dany." (section y. These words plainly
show that, in the conception Of the
legislature using them, the debt ere.
,ted By the negotiation of these
issued to tie company" re-
NAMED unpaid and in full force, not
outstanding any and all contributions
10 the sinking fund. They show,
also, that the action here prescribed
was only a precautionary measure to
secure its payment" Other sec
lions Of the acts show that the whole
Of this outstanding debt due to the
1ondholders remained an obligation,
the principal and interestofwhich were
still to be paid in due course to the
Dondholders by the company. The
next clause of the seventh section,
Prescribing cancellation of bonds
had been ISSUED to the com
pany," should any such be ~repurchased
by it and paid into the sinking fund,
~ A. I..t. 49,