New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1886-12-10
NORTH CAROLINA BONDS.
TWO SUITS BEFORE FEDERAL COURT.
TESTING CONSTITUTIONAL AMESDNENr-CAN A
STATE BH sUFD BY HER own CiTiZENsf
tBr TELEGRAPH TO THE TRIBUNE

CONSTITUTIONAL n
STATE BH sUFD BY HER own CiTiZENsI
tBY TELEGRAPH TO THE TRIBUNE
RALEIGH, N. c., Dec. 9.-The argument in the case
OF Alfred II. Temple, citizen OF North Carolina,
against the State before Judges Bond and Seymour. of
the United States Circuit Court concluded to-
day Edward L. Andrews of New. York. and ex- Solic-
itorGenera s. F.Phillips Washington, represented
Il p plaintiff, and X. II. Battle and John W. Graham
appeared for the State. The is n novel one The
plaintih is the holder Of special tax bonds issued by
the Legislature in 1865, The State through the Legs-
lature prohibited the Auditor from collecting the
special taxes and decree is sought against the State
as hc body polite and corporate which made the COD
tract with the paintif to restr ain the State from
plying with the unconstitutional legislation seeking to
prevent the collection of the and also to compel
performance by 1t, and its executive ohicersf The
question presented by the record involves this single
point of constitutional aw-has the Circuit Court jrr
sdction protect the Federal rights of a citizen of
the United States rom the acts of his own SateI The
solution OF this ques ion depends the true meaning
of the judiciary article OF the Constitution of tho
United .taes and part cuary OF tho subject matter
clause OF that document The detenLant moved 10
dismiss because amendment forbds the suing Of
State. The answer 10 that the amendment does not
lnhibit citizens Of State from SUNG their own State
Another similar case is that of Morton, Bliss Co OF
New York, against w p Roberts, Auditor of the State
These Proceedings involve matters OF much greater
interest TO the people OF the State than rs generally
supposed. North Carolina issued these bonds in 1859
They to be used in the completion OF unfinished
railroads and in pursuance of the provisions OF tue
State constitution, they secured by special tax
The State received bonds OF the railroad companies
as counter security against loss on the special tax
bonds, and IN addition, the State became the aoso-
lutte owner stock IN the companies and had the ap-
Lointment OF majority of the boards OF directors
There separate for the ssuc to each part Gu
lar railroad, aud every statute provided that hxed
percentage all the real and personal property IN the
State should Oe collected TOR the ayment OF the inter-
est and To provioe sinking fnnd tor the princiDal
The following section OF the acts contains the securtS
P The the Of s ss nR % pn
at Its maturity annual OF oneeghth OF one per cent Is
fs ss Se % e sas p o h OF state %
I s1 aS an 9 ssD Of lie aen nsS psas % 's or or
OF or safe securities and kept as sinking und icr the pay
ment OF The principal money At maturity.
Afier this legislation the bonds were sold, prnci-
pally in New-York. Some OF the proceeds were not
properly applied by the agents OF the railroad COM
panies, which t. that extent misfortune 10 the
State She had to herself the control OF the
boards OF directors and some OF The officers dd not
properly discharge their duties. Nevertheless con-
siderable amount did actually 60 into the CONSTRUCTION
oil the roads and, of the hondhoders cod not
be held responsible for any delinquency IN that re-
spect. One instament OF the SPECIAL taxes was
actually collected and in part paid out 10 the
bondholders At this time legislation hostile 10 tne
securities eyan and the collection OF tie taxes mas
since been obsructed by various acts so that the
interest accumuating for about hIteen years
past Some years ago. when the Chief Justice OF the
United States was on circuit in Moth Carolina, he
rendered an oouIon in the Set case, in which he
held substantially that the bonds were valid. SuDse-
quently the Supreme Court OF the State Of North Caro-
I.na, in the case of the University Railroad against
Holden held thai the bonds issued in conformity
10 the constitution and laws OF the State. August
Belmont Co.. took the initial step TO enforce the COL
lection of the but by the Death Of Reyeray John-
son. their counsel the proceedings were allowed to
lapse So the matter stood some years unlll re-
Gently the Supreme Court OF the United States by ITS
decisions IN the Virginia coupon cases has placed an
entirely the entire matter of tue COL
lection of State debts During the past winter ex-
Justice Strong formerly OF the supreme Court OF the
Tn,ted states hrurshed opinion 10 Norton Bliss "
CO. holding that the collection Of the special tax
could enforced This opinion Is based In part upon
the decision in the Federal courts oil Virginia,
holding that citizen of the United States can sue his
own State to prevent its violation OF contract. Ihe
question IL not affected by the Eleventh Amendment to
the Constitution which prohibits suits against States,
except oy non Arc sluents and aliens.
Pursuant to this opinion Mr. Andrews, the attorney
brought these two suits in the United States Circuit
Court for the Eastern District Of North Carolina ono
IN the na ne of Norton Bliss & Co., and another in
that Of Alfred II. Temple. BY transactions between
the State and the railroad companies the amount si
special tax bonds has been reduced 10 about SlOOOO,
900 However, the overdue interest amounts TO
neat iy as A. the principal From this, Is to De
deducted the amounts held by the Education Fund OF
the Slate 1t is said that OF the leading hohd-
holders are willing to cut oil all the back coupons
amounting to abJut 81 600 and return toem to
the State. and accept new bond at per cent III lieu
OF their present per cent bonds.