Savannah morning news. [volume] (Savannah) 1868-1887, 1885-05-05
In THE SUPREME COURT.
A DECISION IN THE TENNESSEE
BOND GASES.

ON HhShl-MOfS virginia IhN COupoh
Lore.
WASHINGTON, May AIN the United
States Supreme Court to-day an opinion
was rendered in the cases known as the
Tennessee bond cases, in all of which
Calvin AmOry Stevens ct al. are the ap-
pellants, to witt No. AZ, against the Mem
phis and Charleston railroad company ct
al; No. 43, Memphis, Clarksvlle and
Louisville railroad company; No. "A,
Louisville, Nashville and Great Southern
railroad company; No. 1853, Chicago, st.
Louis and New Orleans railroad compa-
ny; No. 1874, Mississippi and Tennessee
railroad company; No. 1865, Mobile and
Ohio railroad company, appeals from the
Circuit Court of the United States for the
Western district Of Tennessee; No. 40,
against the Louisville, Nashville and
Great Southern railroad company; No. 40,
Nashville and Northwestern rail
road company; No. AZ, Nashville
and Decatur railroad company; No. 4S,
Nashville and Decatur railroad company;
No. 40, McMinnville and Manchester rail-
road company; No. 80, Nashville and Chat
tanOOga railroad company; No. 81, Win
chester and Alabama railroad company,
appeals from the Circuit Court of the
United States for the Middle District of
Tennessee. No. SO, Cincinnati, Cumber-
land Gap and Charleston railroad compa-
NY; No. 80, Knoxville and kentucky rail-
road company ct al; Nos. 81 and 55, East
Tennessee, Virginia and Georgia railroad
company, appeals from the Circuit
Court of the United States for the Eastern
District of Tennessee.
NATURE OF THE SUITS.
These are suits brought by the holders
of unpaid bonds of the State of Tennessee
issued to various railroad companies
under the act of Feb. IL, 1852 (Which pro-
Vided for the establishment OF a system
of internal improvements to enforce a
lien which was vested in the State by
that act on the property of the companies
respectively as security for the payment
of bonds and accepting interest thereon.
Justice Waite delivered the opinion of
the court.
In this opinion the court states the
question which lies at the foundation of
all these suits TO be: Whether a statutory
lien with which the State was invested
upon the issue of its bonds to
railroad companies bound the prop
erty of the company to which
the issue was made for the payment of
bonds 30 issued and interest thereon to the
several holders thereof or only to the
State. 1t holds that the liability of the
companies to the bOndholders, If any there
be, rests alone ON the statute which con-
templated loans 10y the State of its own
bonds to several companies in aid
of public works they were respectively
engaged in constructing.
THE POINT AT ISSUE.
"The point to be determined" ;" says the
court, ''frOm an examination of the stat
ute, is whether the State, when lending it's
own bonds and taking back security for
their payment, intended to protect those
who might afterwards become holders OF
bonds against the consequences of its own
reputation or inability to pay, or only to
indemnify itself against loss by reason Of
the loan of its credit to those who were
engaged in constructing its great work of
internal Improvement. To say
the least, the strong presump-
tion is that in such transac-
tion the purpose OF the State would
be to protect itself. and not TO secure its
own pledge of faith to b0ndholders by
mortgage from those to whom its credit
was loaned"
The court takes up the question: What
was the payment which the State in
tended TO secure by the statutory lien
with which 1t was TO be invested? And
on this point they say: "That it was the
purpose OF the statute TO secure the per.
formance of the obligation on the part of
the company to pay the bonds TO the
State is shown by the fact that, from
the moment Of the delivery OF the first
bond to the company, and before the
bond could be negotiated by sale or
transfer TO a third person, lien was
vested in the State by the very act Of de-
livery upon all the property Of the COM
H1 mr. fharaa 20. Ba
acquired, superior to any other lien or
encumbrance which could be created by
the company afterwards. ES
PURPOSE OF THE PROVISION.
''The evident purpose Of the whole pro-
vision was TO vest in the State lien 70 Sc
cure an obligation which the company as
sumed in consideration OF the State bonds
issued TO IL In aid of the works Of internal
improvement TO be constructed for the
benefit of the public. If that obligation
was 10 pay bonds 20 several persons who
might become holders thereof, then secu-
rity would run with the bonds; but II
the obligation was 10 pay the
State for the bonds, the security
would inure only 10 the benefit
OF the State and be subject 10 the control
OF the State without regard 10 the bond
holder. At that time no one but the State
could lie interested In the security, and at
that time clearly the lien operated only
as security for the payment OF the loan OF
the bonds. This could be made by the re-
turn Of the bonds themselves, or In any
other way provided in the statute. Tie
return OF the bonds 10 the State would
not technically pay the bonds, but IL
wOild pay the loan and thus cancel the
obligation Of the company 10 the State
and discharge the llen."
PROVISION FOR OTHER PAYMENT.
Coming 10 the inquiry whether pro-
vision was made In the statute for the
payment by the company In some other
way than by taking up the bonds from
the several holders thereof. the court
finds that, under the statute, payment by
the company into the Bank Oi Tennessee
Of a sufficient amount Of money % enable
the State 20 meet It's accruing interest,
and intended by the Legislature % be not
only payment Of the interest on the
bonds by the company, but the payment
and the only payment Of the Interest. The
lien created by the statute was intended
10 secure, and as 10 the payment OF the
principal, that this was provided for Ia
three ways--by the establishment Of q
sinking fund, by the foreclosure OF the
company falling 10 pay the bonds at ma
turity, and by foreclosure and proceeding
against guilty stockholders before
maturity, III an issue OF bonds was
obtained by fraud or contrary 10 the pro-
vision OF the act. IL finds that under the
sinking-lund provision the company was
rQaiIired make payment 10 the State