The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1894-06-07
WERE THE SUBSIDY BONDS A
PRESENT?

If Messrs. Wilson & Wilson are sound
lawyers lenders of money en- bond and
mortgage had better look out. Those gen.
tlemen say that a mortgage is not debt,
and that the holder of a mortgage has no
claim ag2ins: the debtor after be has fore
closed his mortgage. This reminds oDe of
the man in the novel who, when his cred
itor pressed him, gave him note and then
considered the debt settled in full.
Under the old English common law
mortgage was an actual transfer of the
title deeds Of the property mortgaged,
with an equity of redemption in favor of
the borrower. Under that system mort
gage was not debt. because the debt was
acquitted by the transfer of the deed But
our code recognizes deed of bond and
mortgage, which conveys nothing until
proceedings of foreclosure have been
brought to a close. 1t would seem in
equity, however it may be in law. the debt
which the mortgage vas given to secure is
live debt until the property has been
transferred by foreclosure. In order to
avoid complications the borrower on mort
gage usually attaches his note of hand to
the mortgage deed, butif the property hap
pened during the lie of the mortgage to
decline in value below the sum due, while
the mOrtgagor acquired wealth, it would
hardly be contended that the debt was
wiped out by foreclosure even though
there was no note of hand.
Mrs. Stanford's lawyers say that neither
the late ex-senator nor any one else ever
agreed TO pay the Government back for
the loan of the subsidy bonds. They take
the ground that the Government made
them present of those bonds This is
quite new ground for the railroad people
to take. 1t was not suggested when Con-
gTess agreed TO subordinate the subsidy
bonds to the first mortgage bonds, nor was
Il put in argument at the time of the pass
age OF the Thurman act. When Mr.
Huntington proposed to settle the debt by
borrowing sixty more millions from Gov
eminent at 2 per cent ne did not intimate
that MS company did notowe the first sixty
millions. Il has been understood that he
and his associates never denied their liza
billy. This new contention of Mrs. Stan
ford's lawyers is the first intimation the
public have had that the subsidy bonds
were present bestowed on the four men,
beers OF the Contract and Finance Com
pany. probably as a reward for their
patriotism aud public spirit. Mr. Hunt
1ngtOn says that he never owned over 100
shares Of the Central Pacific and that he
made no money out of that concern. 1t
may be difficult to disprove these state
ments, as the books of tile Contract and
Finance Company have disappeared like
Elijah, they were probably carried to
heaven in chariot of fire. But the presi-
dent Of the Southern Pacific will hardly
deny that he is comfortably off and that he
did not make his money in the hard ware
business.
Take the prospect altogether and it is
not without rays of comfort for the public
For thirty years the mem bers of the Pacific
railroad syndicate have had possession of
thirty millions OF public money, and have
controlled until lately all the avenues of
communication between California and
the East. The Government has found it
impossible TO make them pay interest on
the debt, and the public have found it i'm
passible to persuade them TO adopt rates
Of freight under which the State could
thrive. Meanwhile they have grown, in
diVidualy, enormously, phenomenally
wealthy. It would seem that the anomaly
calls for some measure of readiustment.
1t may be, as the lawyers say, that the
Government is in a hole. and may Just as
we'll write off the subsidy bonds as bad
debt. though the railroad pc pie are
princely millionaires; but it may do no
harm to try what can be done, and this suit
against the Stanford estate seems, there
fore. to be step in the right direction.