The Portland daily press., 1883-02-01
BANGOR & prsoArAouIs RAILROAD.
Objections to the Scheme OF waiyinR
Bangor's First Mortgage.

The city Of Bangor was authorized by two
acts of the Legislature. passed in 1868 and 1871,
to issue its bonds to aid in the construction of
the Bangor & Piscataquis Railroad to the
amount of 1925. 900, 100000 bearing interest
at the rate of six per cent, and S325. 900 with
interest at the rate Of seven per cent. The
loan acts provided the city should have as
security first mortgage Of the railroad and all
the property OF the company, and FIRST lien
upon the same until all said bonds and coupons
| should be paid by the company. There is now
| secured by said mortgage the principal Of the
loan. 1926. 900, and coupons unpaid about $780,
600, and the coupons which msy become due
hereafter, about $4,000 a year. These loan
acts and the mortgages given in pursuance
thereof constitute solemn contract and secure
vested rights TO every property holder in the city
and to every holder Of the bonds issued by the
city and secured by the mortgages, and which
cannot be legally changed or impaired either
with or without legislation.
In the year 1877 constitutional amendment
was adopted which provides as follows:-"No
citysor town shall hereafter create any debt or
liability which, singly or in the aggregate
shall exceed five per centum of the last regular
valuation of said city or town, provided, how
ever, that the adoption OF this article shall not
| Dc construed as applying 10 any lu1Q received
in trust by said city or town, nor to any loan
| for sbe purpose of renewing existing loans, or
for war, or TO temporary loss TO be paid out Of
mosey raised by taxation during the years in
which they are made" The valuation of the
city is about S9C00000, its indebtedness is
about 81, 100000 about thirty per cent. of its
valuation. The city cannot legally issue other
bonds; but an ingenious scheme is proposed,
TO discharge the mortgages of the city upop
the railroad to the extent OF $4,000 and allow
- o. ID
to issue bouds to that amount secured by
first mortgage of the railroad, its appurtenances
and equipment
A bare statement of the facts would seem
Eufi1cient to satisfy any one that it is unlawful;
first. because it is not only indirectly but di-
reetly in violation of the constitutional amend.
ment of 1877. Second, because it violates
| contract. The constitution Of the United
States forbids "any State to pass a law impair
| ing the obligation of contracts" The Legisla-
ture is asked to change, amend, alter and re-
peal the loan acts of 1868 and 1871 and the
mortgages to the city given in pursuance there
of. Those loan acts aud mortgages provide
that the city shall have and hold as a security
for the bonds issued under them first mort
gsge and lien upon the railroad and property
of the company until all said bonds and cou-
pons are paid by the railroad company. AS
before stated, these mortgages constitute sol
emn contract, and confer vested rights, and
every man or woman holding property in Ban
gor, or a bond secured by the mortgages, is eD-
titled to the full benefit of that contract and
these vested rights, and the Legislature cannot
deprive them of those rights or impair that
contract.
If the Legislature can thus discharge the
first mortgages on the B. g. p. r.. r., to the
extent of 100000, it can discharge them en-
tirely; they can in the same manner discharge
the mortgage to the city of $1,OO0,0O0, ON the
E. & N A. Railroad. If they can do this then
the constitutional amendment of 1877 is worth
less; if they can do this then solemn contracts
and vested rights may be impaired and de-
stroyed bv the ill-advised action OF the City
Council and bare majority of voters.
1t is proposed that $4,000 of this money be
used not for building the road from its present
terminus at Blanchard to the Lake, but for the
purchase of second mortgage bonds. The Ban
gor and Pscatsquis r. r. company is now ia
default to the city on its first mortgage OF
$325 900 Of something over 100000 on interest
account TO the city. The city subscribed and
paid for $1,000 of stock over twelve years
ago, besides the large amount OF interest paid
on its first mortgage of $925, ,0C0. Should the
inerest on the stock be added to the defaulted
interest account on the first mortgage we find
that the tax payers of this city have already
suffered to the extent of something over seven
hundred thousand dollars, over and above this
first mortgage of $925, 900. But II is said bysthe
friends of this scheme that the city will make
money by this operation, This to us seems ir-
relevant. We believe that every citizen of
this State is, or should be, interested in iis
question, for it goes to the very foundation
and tears up by the ROOFS the we'll established
principle, that holders of all kinds of first
mortgages cannot he displaced by allowing a
second mortgage to come IN and take the place
of the first, without the consent of all of the
parties interested. We trnst that the Lsgisla
turs will not consider this merely as a local
question, but as one affecting the interests of
every m municipality in the State OF Maine, as
well as of all her citizens who hold bonds issu-
ed by authority of the Legislature, as well as
the holders of all kinds of mortgsged property.