Knoxville daily chronicle. [volume] (Knoxville, Tenn.) 1870-1882, 1880-04-17


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law under which the bond was issued Is the
contract, or rather the evidence of the con-
tract.
Now, it 10 too clear for argument that
under the act of February 18th, 1852, the
| railroad companies receiving bonds from
the state were the real payers of the bonds
received. One railroad company. was mot
bound for the payment of bonds issued to
other roads, but each was bound
| to it. By the fifth section OF the
act each road was required TO deposit In
the state bank. at Nashville, at least fifteen
days before the interest was due, an amount
sufficient to pay the interest, inc uding ex-
change and necessary commissions, or
furnish satisfactory evidence that the in
terest % Z been paid OF proyided Tor, AZ
case tne company failed to 90 either, the
comptroller reported the fset to the gov
ernor, and, On receipt OF this report. the
governor placed The roads in the hands OF
receiver, Ihe receiver was to hold the
ROAD until ne reailzed sufhclent sum out
OF tne rents, issues, profits and dividends to
pay on ethol unpaid interest. The money
Whtcn came 70 the hands or the receiver
was 10 pe applied by him, under the direc-
ton OF the governor, TO the liquidation Of
| the unpaid interest. The fact Will be noted
that the bonds Were payable at such places
a. the PRESIDENT O. the road might select
Ihis was inconsistent with The idea that the
state was the Payer. Then again the road
must oeposu the money, including, with
tne interest," the exchange and necessary
commissions, thus throwing the whole
| 9uroen on the rosos. And, In ad.
dillon TINS the roads had
Sne option 10 pay the interest due on their
oonos, or 70 provide for Its payment in
som olnef way tnan that OF deposit OF
tne money IN the state bank; Under this
provision OF the law, the roads. as the real
payers, mad the right 70 make any separate
| or Independents contract with the bond
holders mat would protect the state and
| save her from liability. All these things,
which the road might do, fix the fact be-
yond doubt that each road. was the psyor
OF its own bonds. The state loaned its
| credit to the railroads and issued her bonds
| and delivered them to the roads, as the
end, and In the law made the roads liable
for the same, and appropriated the net in
| come of each road to the payment of the
debt, principal and interest and provided
the most summary and effective means TO
secure the payment of the interest as il
| fell due and the ultimate payment OF the
principal. Under the law the money de-
posted by each road in the state bank, or
| in case the road went into the hands of a
| receiver, the money paid over to such re-
| ceiver, was trust fund. . The road paving
the money had legal right 10 have Il
applied to the payment OF the interest due
4 on the bonds issued to it, and the parties
4 holding the bonds issued to the road had a
! legal right to have it SO applied, and on
application of either party, the courts Of
the country would have compelled the stat,
4 officials to have so applied it. This, WI
think, is too clear for argument, and WI
shall not cumber this paper with a citation
of authority in support of this proposition.
The second section of the act provides fol-
the payment of the principal by the differ
ent roads receiving bonds, and need not be
noticed further than to call attention to the
fact that in case the roads fail to provide
and set apart the amount required for the
sinking fund, then all the provisions of the
1 fifth section applied, and the governor was
authorized to take charge OF the road: and
appropriate the rents issues and profits OF
the road to the SINKING iund, until the
me treasury IN tne Donds OF the state.
One provision In the section seems
to nave been overlooked ~ Mr.. stokes
and others who take the position that the
bondholder has no nights which he can en-
force against the roads. l take 1t that the
law has recognized the nights OF the bond
holder, and protects his rights IN providing
for the cancellation OF all bonds which
were Issued to particular road, and re-
purchased by that road and paid into the
treasury, and furtner providing That 10
cas- the roads purchased bonds not Issued
to them, then the bonds should not be cam
celled, and the road should only be en-
titled to Q credit for the same as against the
state now, IL the ROADS were liable TO no
one but the state. and not liable to the par
ties who held bonds issued to the road pay
ing the bonds in, why was this provision
inserted to give the road credit as against
either fools, or this is clear recognition
of the rights OF the bondholder against the
roads and reservation OF those rights.
the courts OF the country Will have no
orfnculty IN setting THIS question when tits
properly presented for adjudication.
| Much has been said aud written
about the reserved lien of the state
in the several acts appropriating bonds to
railroads. The view / take of the case
| a discussion of this question At this time il
| prem allure. The lien was, by the Bird sec.
| ton, made to cover the principal and in
| terest of .he loan, but no provision wss
made for enforcing the lien to pay interest
"a it accrued. The lien extended to the
| rosd bed, right of way, grading, bridges
and masonry, and for all the stock SUBJ
scribed for In the company, and upon the
materials to be purchased with the bonds
| issued TO the roads. but did not extend 10
the rents. issues and profits Of the road
These were set apart, under the 5th sec
ton of the act to pay the interest "a IL be-
came due, and under the 7th section, to
provide sinking fund. The roads con-
tracted that the rents, profits and issues
| should be applied to the payment OF the
interest, and to the sinking fund for the