The morning news. [volume] (Savannah, Ga.) 1887-1900, 1893-11-23

executed what is known as the Thirteen
Million First Mortgage This was executed
April 1, 1890. and was placed with the Central
Trust Company OF New York, as trustee for
1913 coo 900 of bonds secured thereby. Its lien
attaches to the main stem of the Central, 1t
does not extend in any manner to the South
western, which was no party to it. Now, did
the trustees and bondholders who took this
mortgage have actual or constructive notice
of the surety relationship above described:
To determine this we need only to look at the
face of the instrument itself. 1t recites that
said Central Railroad and Banking
Company of Georgia is jointly and
severally liable for the sum of
S4 800 900 of bonds issued under a tripartite
agreement between said Central Railroad and
Banking Company of Georgia, Macon and
Western Railroad Company and the South
western Railroad Company, secured by a
mortgage on the railroads. of said three com
panies last named said Central Railroad and
Banking Company Of Georgia having since
said bond, debt and mortgage were created,
absorbed and consolidated into itself the
said MacOn-and Western Railroad Company,
and now holding lease on said Southwestern
railroad The mortgage further provided
that one OF the purposes OF the Issue Of these
new bonds was in order to provide
for a dis charge of the above tripartite
bonded debt referred to by the above
tripartte bonds" 1t further provided as fol
lows; 1t is hereby declared. granted, agreed
and provided that all OF the bonds to the ag
gregate amount OF $1,000 900 de,
aisned to be Issued under and
gage, shall be deposited with the trustee, and
that the trustee shall reissue and set aside
"a. 1893 coo of said bonds, numbered from S002
to l3OO), inclusive, to be held by the said
party of the second part to pay off and retire
the triparUite mortgage tonds of the Central
Railroad and Banking Company OF Georgia,
the Macon and Western railroad and the
Southwestern Railroad Company now out
standing and the said S4 900 bonds shall,
from time to time, be delivered by the said
party of the second part (the truStee) 10 the
colt aa~tNT of i1n TrGf a r he
road and Banking Company of Georgia. or its
order, in exchange bond for bond, equal in
amounts, and with all unmatured coupons for
such of said now outstanding trlpartlto mort
gage bonds of the SAID above named three
railroad companies as may be exhibited to ii
duly Cancelled.
These references to the tripartite mort
gage and the Southwestern lease in the
Sl3O 600 first mortgage give constr uctive
notice to the bondhOlderS Of the terms Of the
lease, and OF the obligation OF the Central to
pay of the unmatured and future indie bted-
ness Of the Southwestern. Coupled with the
fact that this new mortgage was given on the
Central properties alone, and that S499g.OO0
Of these l onds issued by toe Central COMPANY
alone was to be set aside for the purpose OF
taking up tripartlte mortgage bonds IL was
actual as we'll as constructive notice that
the bonds secured by The tripartite mortgage
were debts of the Central which IL was given
to discharge, and thus to release the South
western from all liability thereon
1t is a familiar principle that q person
taking n mortgage takes with actual notice
of the recitals il contains. and further that
where reference is made in the instrument
itself to another instrument which Is access-
BILE that the party taking has notice OF the
terms of such other instrument He Is put
on INQUIRY as to the terms of such other in
strumenl. and is chargeable with notice of
all that such inquiry would develop. and II
follows that the trustee and bondholders had
notice, both actual and constructive, OF the
terms Of the lease, and the relation OF surety
ship above described Under that relation
ship if the Southwestern pays the tripartit9
bonds or any part OF them. it will he subro-
gated Dlo tantO to the rights of the tripar-
lite morIage against the Central, and IN
prefe renee to the claims Of the first mortgage
or Thirteen Million bOndholders, who took
with notice of said relationship
1T is sugge 5ted therefore. that under this
view the decree should be as follows;
First That the Central main stem be sold,
and il il should bring sufficient to pay OF the
tripartite mortgage tnen the Southwestern
should be relieved entirely.
Secondly IL the Central should not bring
enoagh to satisfy the tripartlte debt, the
Southwestern should be Immediately sold
TO make up the deficiency and its liability
should be limited TO the amount Of such de-
fciency: but in that event, with the right OF
subrogation against the CeItralfor whatever
amount is so paid,
There is another view Of the relative labil-
fty OF these parties, which is altogether aside
from the questions Of suretyshlp ana con
structive notice before adverted 10.
IL is always proper for court OF equity TO
carry out as far as possible the lawful pur-
poses OF contracting parties mother words,