The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1902-11-11
SOUTH DAKOTA SUIT
Bonds Were not Sold as was
Directed by Law.
Ex-Goy. RusssIPs Testimony Indicates hat IS
Governor he Knew Of the Emb. yoSuif,
Afterwards represented it.

There wa some sensational testimony
of much value to the contention of North
Carolina, in the bond suit Of South
Dakota against this State. brought out
in the dispositions taken here yesterday
To make this plain to the reader, who
has not kept up with the case, a brief
recapitulation OF some points IN the
matter bearing upon yesterday depoSl-
tions is presented.
In 1867, the State Of North Carolina
through it's Board of Internal Improve
ments, authorized the State treasurer,
Kemp =. Battle, to receive sealed pro-
posals for the purchase of certain BONDS
of the State, the returns from "nlch
were to go towards building the West
ern North Carolina Railroad These
bonds were to be secured by bonds of
the North Carolina Railroad as col
lateral, ten to each 1000 of State bonds
and these were to be sold at not less
than par.
The bonds were sold, but in 1879 the
States finances Were such that com
promises were effected on it's indebted
ness, except on certain bonds as are at
issue in this suit. Shaffer & Co., private
individuals, holders of some OF these
bonds. could not as individuals sue the
State on the mortgage Of the North Car
olina bonds Ten shares Of the stock
issued were presented by these parties
to the State of South Dakota, which, as
a State, could bring suit against an
other State. Thc par value of the bonds
held by South Dakota is $4,000 but the
interest to this date amounts to about
$50, 900, and the entire amount OF bonds
of this nature outstanding exceed a
million dollars. In case the supreme
Court should decide that the bonds are
valid and the State of South ako IS
awarded its claim. this would cause
the sale of a sufficient amount of the
States holdings in the North Carolina
Railroad as would settle these claims,
or make it necessary for the State to
otherwise provide for their payment.
The case is now before the Supreme
Court of the United States and both
plaintiff and defendant are taking de-
positions. Some have been taken in
South Dakota. and day before yesterday
two were taken here. The dispositions
Yesterday were those Of DR.. J. j. Mott,
of Statesville, president Of the Western
North Carolina Railroad in 1857; Mr.. H.
l o leSs il CldlSoN liz "ANN
treasurer of the road in 1867; ex-Gov
ernor Russell and Governor Ayock.
These depositions were on behalf of
the State. which by them is ~endeavoring
mainly to prove that the bonds We're not
sold as the law directed, and that in
their very issue and sale that they We're
invalid.
The purpose OF the dispositions of DR..
Mott and Mr.. CoWles was to show that
the bonds issued under the act OF De
cember IA, 1866, were not issued in ac-
cordance With the provisions OF the
statutes and were placed on the market
in violation of the requirements Of the
act. These gentlemen's dispositions
showed that in place OF sealed proposals
being received the bonds We're sold in
the open market and in place of par
value at least being required, as pro
vided in the act, the bonds were sold
at prices ranging between 20 and 90
cents on the dollar. Both of these, it
Will be noted, were in violation of the
distinct requirements for scaled bids and
tor a sale at not less than par.
Ex-Governor Russell was examined
also for the State, and while he stated
his connection with the matter most
carefully, there was evidence in his testi-
mony tending to show tina while he was
Governor he knew of the prospective
suit of South Dakota. He disclaimed
having had anything to do with the suit
as an attorney until in March 1901,
after his term of office as Governor had
expired. The information brought out
was was that he had information that
the suit was likely to be brought, and
that in March, 1901. he was employed to
represent the owners Of the second
mortgage bonds.
Governor Aycock was examined, and
his deposition went to show that he
knew nothing at all Of the case until
he had seen notices in the newspapers
that such a suit was to be b~roughtby
South Dakota against the State of North
Carolina for the purpose Of recovering
any amount supposed to be due on the
bonds. He testified that no demand had
been made on him or the State before
the publication, and that the first init
nation he had of it was when he saw it
in the papers that the State of South
Dakota had filed an application in the
Supreme Court of the United States to
bring suit against the State of North
Carolina.
These were all the dispositions taken
yesterday, the session before Commits
sioner Ed. S. Battle lasting from 10:45
to about 2:30. The hearing was then
adjourned till December 3rd, when it will
be resumed here in the offie OF the
Attorney-General.
For the State Acknowledgement Gill
mer is assisted by Hon. Geo. Rountrce,
Judge James f y and Judge
Merrimon. For the private bondholdcr
and the State of South Dakota the at
torney are Ex-Governor Russell and Col.
j. G.. l.. Harris.