The morning news. [volume] (Savannah, Ga.) 1887-1900, 1893-11-19
MUST PAY ITS SHARE.
The SOuthWeSteTn'S Petition for a
ReheaTilg Dismissed.

CONTACT
Not Lease The Southwestern
One Of the Principals and Not a
suretv-Even if 1t Were a Surety
It Could Claim No Liability
Against the Central Until Part
of the Indebtedness Had Been
Paid By Them.
The Southwestern railroad will have to
pay its proportionate share on the tri-
partite mortgage bonds. copy Of
Justice Jacksou's decision to that effect
was received yesterday by Messrs. Law
ton s Cunningham.
The text Of the decision sets forth first,
in brief. the grounds for the Southwest
ern's claim that the Central is first sub
iect to these bonds The first is that the
Southwestern. although on the face Of
the mortgage, is a joint obligor, is in re
atty only a surety for the Central, CO.
obliFor, upon whom rests the primary
duty to pay them.
Another of the grounds set forth is
that if the Southwestern, being such
surety, is required TO pay any part OF the
bonds, it would have the right TO be
subrogated to the lien of the trustee
under the tripartite mortgage and to be
Central railroad. In view of these re
lations it was held that the decree of the
court should be so framed as TO require
the property of the Central railroad
covered by the mortgage before the
Southwestern is sold to cover the in
debtedness or any part of 1t.
THE SOUTHWESTERN A JOINT oBLIGoR.
Justice Jackson goes right to the point,
after summing up the grounds given
ha NJ ant Ig
flcient to state the conclusions of the
court
The documentary and oral evidence
submitted, he says. fail to establish the
existence of any such relation as princi-
pal and surety between the Central and
Southwestern at the time the bonds were
issued, nor is any such relation shown to
have existed subsequently. There was
no express agreement between the compa-
MES creating any such relation, and an
agreement is required when such rela-
ton is made to exist. The bonds show
the Southwestern to be a joint obligor
and debtor. 1t elected to become joint
principal. There was nothing in its
lesser relation to the Central to prevent
its assuming such a relation. There is
nothing in the lease by the Southwestern
to the Central in 1859 inconsistent with
the former company being principal OBJ
Igor.
AL subsequent uGdlIugS dIbCI bHG tease,
says the decision, fall far short of eStab-
fishing the relation of principal and
surety The tripartite bonds were never
entered on the books as a separate debt
of the Central Railroad Company, and
the proceeds of the bonds issued partly
in making a dividend which the South
western shared in The proceeds were
used partly also in making Improvements
on the Southwestern and for other pur
poses common to the interests of both of
the companies.
THE CONTRACT NOT A LEASE.
Justice jackson says that the contract
of 1869 between the two companies diff
fers in many respects from an ordinary
lease No rental is reserved to the
Southwestern under the contract. but the
companies enter into INSTRUMENTATION
the Southwestern going underline control
of the Central. The roads pooled their
earnings in such a manner as TO give them
a community OF interest in the profits
from the joint enterprise. A semmi annual
dividend was to be paid the Southwest
ern stockholders, which was guaranteed
never to be less than per cent. IL was
the same as if the stockholders had given
up their stock in the Southwestern and
taken Central railroad stock in exchange.
II was not matter of any consequence,
it goes on TO say, whether the expendi-
lures on the Southwestern railroad went
from the proceeds of the tripartite bonds
or from the common fund of the Central
as the proceeds from those bonds went
into that common fund out of which the
money expended on the Southwestern
may have come
COULD BE NO SEGREGATION.
Even though suretyship could be
established, says Justice Jackson, there
could be no subrogation in the present
attitude under the equities or laws of
Georgia, because the Southwestern has
not yet paid the mortgage debt or any
part thereof. That is to say, when an
obligation is due before surety can lay
claim to any portion of the property of
the principal, or ask subrogation, it must
have paid part at least of the indebted
ness for which it is surety.
If the evidence adduced was sufficient
10 establish the fact of suretyship, the
question would still arise whether such
suretyship would entitle it to the relief
sought as against the Central Trust Com
pany and the holders of the bonds repre-
sented by it.
THE CENTRAL TRUST COMPANY's PRIORITY
The rights of that company had inter.
vened before the claim of suretYship was
ever asserted on the part of the South
western The decree sought, therefore,
would defeat the equity sought by the
Central Trust Company, which represents
mortgage prior to the mortgage held by
the Farmers Loan and Trust Company
or the second mortgage bondholders II
the Central were sold first for the tripar
tite mortgage the equity sought by the
trustee of the second mortgage on the
property would be defeated
The fact that consolidated bonds were
issued TO be exchanged for the tripartit5
bonds did not establish the suretyship OF
the Southwestern. After citing a mum.
Der of decisions bearing on the case, Jus
tice jackson concludes with the state
ment that in no view that can be taker
of the case is the Southwestern railroad
entitled TO the relief which it seeks it,
petition for a reheariug is dismissed, anC
the decree will stand charging it with it,
proportionate share of the tripartitt
mortgage bonds.