The morning news. [volume] (Savannah, Ga.) 1887-1900, 1891-05-10
MAY DELIVER THE BONDS
DECISION IN TEE CENTRAL'S IN
JUNCTION CASE.

Delivering of 10000 of Central
Bonds 10 the Central Trust Company
of New York Dissolved and the Il
junction Rsfused-The Facts in the
Case and the Argument - The
Grounds for the Courts Decision.
Judge Falligant rendered a decision yes
terday in the Injunction case Of Ridgeway
Smith against the Central Railroad and
Banking Company aud the Central Trust
Company to prevent the delivery of
$751; 1900 of bonds issued to the Central
Trust Company of New York, dissolvng
the temporary restraining order and re-
fusing the injunction, holding that the
Central has full powers under its charter
and amendments TO deliver the bonds.
The case briefly stated is this, the Central
is jointly and severally liable for $500, 900
per cent. bonds, which will mature Jan. l,
1898, known as Uripartite bonds OF the Gems
tral Railroad and Banking Company OF
Georgia, the Macon and Western Railroad
Company and the Southwestern Railroad
on the railroads Of the three
companies, the issue having been
authorized by a special act of the legisla-
ture, approved Aug. 20, 49,.
The Macon and Western hes since been
consolidated with the Central and the
Southwestern railroad is under lease to the
Central, so that the whole debt is virtually
debt of the Central
The Central also owes a floating debt Of
howard Of e., 000, 900, created in large part
IN ling the construction Of the Savannah
anu Western railroad, which it claims TO
have been authorized to contract under it's
powers derived from the consolidation of
the Macon and Western with it, the latter
being work Of internal Improvement au-
thoriEed by the state laws.
THE BONDS ISSUED.
The Central has issued the $4,000. 900 5
per cent. bonds, secured by deed OF trust, to
the Central Trust Company of New
York, and proposes with these bonds
or their proceeds to take up
the 100000 tripartite bonds as
they mature, and to fund the g., 600, 900
floating debt at a lower rate of interest," the
balance Of the issue, about SO, 600 900, to re-
main in the bands Of the trust company,
which shall, from time to time, certify and
deliver the amounts 10 the railroad, or its
order, as requested upon the certificate Of its
president and cashier, accompanied by
resolution of its board Of directors, reciting
that the proceeds Of the bonds are to be
used in payment either of some part Of the
present existing indebtedness of the railroad,
or of some Indebtedness hereafter con-
traeted by it. for its use.
ISSUED UNDER THE CHARTER
The petitioner admits in the argument
the power to issue mortgage bonds and that
the power can be exercised, under the char
ter, by the board of directors without ref
erence to or ratification by the stockholders.
he claims, however that by the terIs of
its charter the Central cannot at any time,
unless specially authorized, create debts
amounting to more than three times It's
capital stock actually used for banking pur-
poses; that the charter limited the amount
of stock to be used for banking purposes 70
Ss50,0O0. Consequently, the deot on that
basis could only be g., $4,000; that this
added TO the S5,0O0,000 tripartite bonds ad-
mltted to be legal makes the authorized
debt only S7.550,0O0. The inference is that
there is an overissue of So 100000
The old banking system contemplated the
issue Of bank bills and a possible dividend
on the stock used for banking purposes
apart from dividends on stock used for rail-
road purposes, and restricted the amount of
stock that could be used for banking pur-
poses until the completion OF the road to
Macon. Much of the reason of the law has
been swept away by the tide of events. In
the courts Judgment, after the completion
of the road, the entire capital stock repre-
ssntinR the property Of the company could
have been used under the charter for bank
ing purposes.
THE JUDGES OPINION.
He added: therefore. the limit claimed
passed away under the terms of the charter
upon the completion of the road Certainly
the whole capital stock Is now the basis of
the banking privileges. There is no such
thing as particular amount Of stock ap-
Piled to banking purposes. Dividends
are declared on the whole stock If
the principle prevails that the stock used for
banking purposes is the multiple of the
authorized debts, then the limit is three
times the capital stock of g. 500, 900. In
this view, the contention of petitioner fails
But. In my opinion. the power to issue these
bonds has broader foundation. 1t rests
upon The charter augmented by the act of
lo45 and the act consolidating the Macon
and Western railroad with the Central
There is no doubt that by the consolidating
act with the Macon and Western, the Cen
trail railroad acquired the right to aid the
construction OF the Savannah and w estern
as work of internal Improvement author
lied by the laws of Georgia
THE act of 1916 granted two fold set OF
powers. One set applied to the proposed
extension from Macon TO. tine Chattaho ochee,
under the entity 1.-THE new extension stock y
with limitations and liabilities expressly
confined to the projected enterprise. The
extension, it is admitted, was never con-
structed and that set of powers having
never been exercised, the liabilities and
limitations have no vitality. The other set
OF powers were directly and permanently
conferred on the Central by this amending
act, and among them as follows:
And be it further enacted by the authority
aforesaid that said company may, in its discre-
tloni issue bonds on receiving loans of money
for its use
ALREADY PASSED UPON.
This power has been passed upon in con-
nectioh with the general power to mort
gage in a case decided by Associate Justice
Bradley of the United States supreme court.
The counsel in that case is the counsel for
the petitioner in this. The validity Of
mortgage bonds issued by the Atlantic and
Gulf Railroad Company was holly assailed.
That company derived its powers in this
regard, by reference, from the then existing
chartered powers of the Central Railroad
and Banking Company, so that the power
granted by the act of 1915 was necessarily
involved in the adjudication. The whole
chartered powers of the Central railroad
Company as to bonds and mortgages, save
the aforementioned limitation, were under
investigation
Justice Bradley said: mo express power
20 borrow money was necessary, for that is
implied in the creation of all business corr
porations although, in fact. express power
was given to the Central Railroad Company
in December, 1915, to borrow money on its
bonds and fbis TNoyvar I,Nyt ba ta-You ~