Public ledger. [volume] (Memphis, Tenn.) 1865-1893, 1880-09-14
TENNESSEE BONDS.
The Opinion Of Chas. O'COnOr,
the Eminent Lawyer.
n. Y. Herald, April 4, 1871
THE QUESTIONS INVOLVED.

NNa0A
SIR-0n behalf of G. Amory Stew
ems, of this city, | request your opin-
ion on the following case:
Here follows a recital of the legis-
latiOn of Tennessee on the subject OF
internal improvements.-Ed Herald.
First-Are the holders of Tennes-
see bonds, issued to and negotiated by
the railroad companies under the in
ternal improvement laws OF 1852, en-
titled to the benefit of the lien men
toned in those laws2
SecOnd-Are the holders of like
bonds issued to and negotiated by
said companies after the passage OF
Tennessee's statutes amendatory of or
supplemental to the said internal i'm
provement act of 1852, but prior in
date to February 25, 1860, entitled in
like manner to the benefit Of such
lien?
Third-Have any Of the above men
toned doings or proceedings under
the legislation of Tennessee, adopted
on or subsequently to the said twenty
fifth of Februlry, 1869, worked any
divestiture or impairment of the
rights conferred upon such bondhold-
ers?
Fourth--Have the orders or DEGREES
made by the chSncery court of Ten
nessee, above referred to, any opera
ton or effect upon the rights Of such
bondholders ?
Fifth-What is the most advisable
method of proceeding to procure for
such bondholders a recognition and
enforcement of their rights?
Yours respectfully,
Il. l.. ANDREWS.
OPINION.
l. The legislature of Tennessee es-
tablished what is termed "a system of
internal improvement" for the pur-
pose of enabling certain specified rail
road companies to finish and equip
their roads. The plan was to provide
each company with the requisite
funds, through loans to be obtained
fof it on state bonds, payable at dis
tant periods, with interest in the
meantime semi-annually. The prin-
cipal and interest on these bonds we're
to be made payable at such place,
within the United States, as the com.
pany's chief officer might designate,
and the bonds were to be negotiated
for the prescribed purpose by the
company, acting in conjunction with a
commissioner in that behalf appointed
by the state. The whole process was
regulated and described in and by the
act adopted on February IL, 1852, to-
gether with three supplemental Sec
tons added on the twenty first of the
same month. Tennessee laws of 1852,
chapters ISL and 1881 The 10 ms of
her bonds to be made by the state to
each company werelimited and defined
with the utmost precision. Each bond
was to be designated by an officially
certified distinctive number, and such
number, together with the date and
amount Of the bond, was to be duly
recorded, with the c~Ompany's receipt
for the bond, in a book kept by the
secretary of state. These forms were
all duly observed. This public Off
cial registry was constructive notice
of all the loans intended to be made
to the company (sectiOn l5). All men
were required at their peril to take
notice of the growing lien for, from
the moment a single bond left the
state department the company receiV-
ing it was disabled from creating
ANY lien, encumbrance or mortgage
Of any kind which (should) have pri
GRITTY oyer or come in conflict with the
lien in question (section ~. The law
plainly expressed all this. If the mere
fact of issuing or delivering bonds to
the company was to establish a debt
to the state equal in amount to the
bonds 50 issued, the law would have
been so expressed; congress so de-
clared in the Union Pacific railroad
act above referred TO. Mos. distinct
ly different is the language of the
Tennessee acts. The fat creating
the lien" was hal the bonds" upon
being issued should constitute it
(section 3, aDte), and the lien was ex
plicitly declared to be "for the pay
ment by the said company of said
bonds, with the interest thereon as
the same becomes due" In its enun
citation (section 3 the lien was ex-
tended no further than to the first
thirty miles of the oompany's road
and embraced only the bonds issued
to provide for that portion. But by
section 4, 90 each successive section
of the road was put in the degree of
readiness, additional bonds might be
loaned. They we're to be like
bonds" and the lien was thereupon
10 be extended over the additional
property With a declaration that it
should be "a iiko mortgage or lien"
as the former. Not content. how
ever, with the short, sharp and well
adapted Angi0-Saxon term like"
the section repeated, eE ipdustria, the
precise statement that such expanded
lien was TO be "for the payment OF
the said bonds and the %accruing in
ltlt5b butItUu. lulb NtIy tUlFEH
lent process of extending and consoli-
dating the lien was carried forward by
section, until Q common encumbrance
was created upon the whole enterprise
for repayment of all that might be
loaned for its completion. This lien
upon the whole work would embrace
and necessarily swallow up all those
previously existing. 1t was upon the
stock and entire road, Including"
after an extended and apparently ex-
haustiye enumeration OF particulars,
all the property owned by the COM
pany as incident to or necessary for its
business" And in this, the last de-
scription Of its object, the full grown
lien was declared to be for the pay
ment of all Of said bonds issued to
the company as provided in this act,
and for the interest accruing on said
bonds (section ~.
Fifteen DAYS hofOra any sum of in