The semi-weekly messenger. [volume] (Wilmington, N.C.) 1897-1908, 1897-04-06

settlement Of their claim for work lone.
The sole question then is, are the bonds
issued under the consolidated mortgage
entitled to be exchanged for or to rank
with the first mortgage bonds issued
under the consolidated mortgage, en-
titled to be exchanged for or to rank
with the first mortgage bonds issued
under the mortgage of 1856?
The mortgage of 1886 states expressly
the purpos for which said bonds are
issued and the limit of the issue. The
purpose is to cover the road already
constructed and to be hereafter con-
structed, and the road So constructed
and to be constructed is distinctly set
forth, the branches in no way includ-
ed. The limit Of the issue of the first
mortgage bonds was SIC, 600 per mile of
this o so constructed or to be con-
structed. Some of these bonds were
to be issued at once for the construct
ed road, others were to be issued as
the road was in process Of construction.
SO, under the terms of the mortgage,
no other first class mortgage bonds
can be issued. without impairing the
rights OF the holders Of those issued for
the purpose Of the mortgage.
The mortgage of October l, 1885, pro
vides for consolidated first mortgage
bonds was executed to retire the bonds
issued under the mortgage Of 1886. and
also for the purpose Of extending the
road.
This consolidated mortgage recOg-
niZes distinctly the priority OF the bonds
issued under the mortgage Of 1886. 1t
also recognizes the rights Of the hold
ers of these last mentioned bonds
either to exchange their bonds for con-
solidated mortgage bonds, or to require
the cash for them. 1t provides for the
retention in the hands Of the trustees
Of an amount of bonds issued under
the consolidated mortgage equal in par
value to the amour Of bonds executed
under the mortgage OF 1886, not to be
issued or sold, except to retire these
bonds Of 1886. And as the last named
bonds are exchanged or purchased,
provision is made that they shall not
be cancelled, but be held (the OupOn
excepted) for the further security Of
the bonds Of the consolidated mortgage.
If the equity of the consolidated bonds
were the same as the bonds Of 1886,
the retention Of the last named bonds
could not add to the security Of the
consolidated bonds The only purpose
of this retention Of the exchanged or
purchased bonds without cancellation
must have been this: If they had been
cancelled, every unsOld or exchanged
first mortgage bond would increase in
value, because the number and amount
OF those entitled to share in the Secur-
ity would be diminished. This might
not be Of any advantage to the junior
lien of the consolidated mortgage. But
if the bonds remained ~uncancelled the
rights of the holders of first mortgage
bonds would not be impaired and the
! trustees of the consolidated mortgage
would be s~ubrOgated or substituted to
the rights of the bonds sold or ex-
chnnpad in which a6Vant9Ca all the
consolidated bonds would share.
There is another perVisiOn OF the
consolidated mortgage which has sig
%nificance When all the first mortgage
| bonds of 1886, nave been exchanged or
purchased, then they shall all be can
celled and the lien of the first mort
| gage shall be released Evidently this
/, is the means and the only means of
giving the consolidated mortgage the
first lien.
! One other view may be taken Of this
| case. The consolidated mortgage of
| 1889, evidently c~ontemplates that the
| trustees under that mortgage can get
| possession of bonds Of the several
series, A. B. and c., only by negotiating
with and contracting and agreeing with
the holders of these bonds. To effect
this and these trustees are authorized
either to exchange the bonds or to sell
their own bonds and buy the bonds OF
| these series. In no other way is pro-
| vision made for the acquisition Of these
first mortgage bonds by them or OF the
enjoyment by them Of a share in their
lien. The trustees Of the consolidated
mortgage therefore, and his cestuisQue
trust, the bOndhOlderS under that mort
gage nave no claim whatever TO a
| share in the lien of the mortgage of
1886, except such share as represents
bonds Of 1886, held by the trustees as
orI~ on
purchased with the proceeds Of the
role Of such bOnds
The North State Improvement Com
pany the other holders Of con-
solidated mortgage bonds contend that
the provisions Of the mortgage of 1886,
| securing, in some circumstances, a role
Of the railroad property by divisions
is ultra wires and void, and that this
the first mortgage.
1t may we'll be doubted If the hold
| ers of bonds under the consolidated
mortgage can maintain this position.
They hold and have proved their bonds
and rely on their mortgage as their Sc
uritv. she egnitues they have been
seeking to enforce, are the equities OF
this mortgage. And the mortgage IN
express and u~neQuivOcable Ian. uage
recognizes the validity Of the mortgage
Of 1886, and declares that it is subject
to that mortgage. CBensOn VS.. La
Crosse Railroad Company, 2 Wallace
282; Jerome VS.. McCarter, "a u. S. 1874;
Farmers Loan and Trust Company
vs.. American Water Works, Sc U. S.,
app 572).
1t may also we'll be question if this
mortgage be ultra wires, the objection
can be taken by these bondholders, the
State remaining silent. 9th Thompson
on Corporations. Section 6O3s. and the
case of ST. LOU Drug Company VS..
Robinson. 81. Mo-. quoted by him.
What is this objection that the mort
gage is ultra wires? 1t is not that the
railroad company had no power to
mortgage it's property. That power is
expressly granted. Nor is it that in
mortgaging separate divisions of the
road, it violated the express word Of
the Act, for there are no such express
provisions in the Act. The argument
is that in mortgaging separate divi
sions, the intent n prpose, the policy
Of the Act was violated. This is a
49, ~ snr 49, oA,,rfr orA