The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1902-11-08
SOUTH DAKOTA SUIT
Bonds Were not Sold as was
Directed by Law,
tx-GoW Russell's Testimony Indicates That ss
Governor he Knew of the Emb,yoSuit,
Afterwards Represented Il.

There was 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 depositions taken here yesterday.
TO make this plain to the reader. who
has not kept up with the case, brief
recapitulaton of some points in the
case bearing upon yesterdays depOsl
tions is presented,
In 1867, the State of North Carolina,
through its Board of Internal Improve
ments, authorized the State Treasurer,
Kemp p. Battle, to receive sealed pro
posals for the purchase of certain bonds
of the State, the returns from which
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 $1,000 of State bonds
and they were to be sold at not less
than par.
The bonds were sold, but in 1879 the
States finances were such thai COM
promises were effected on its indebted
ness, except on certain bonds as are at
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
State, could bring suit against an
other State. The par value of the bonds
held by South Dakota is $4,000, but the
41-s-- l.,,a~t
$50 0OO, and the entire amount of bonds
of this nature outst siding exceed a
million dollars. In case the Supreme
Court should decide that the bonds are
| valid and the state of South Dakota is
awarded its claim. this would cause
| other claimants to demand the payment
of similar bonds which they hold.
The case is now before the Supreme
Court OF the United States and both
plaintiff aud defendant are taking de-
positions, Some have been taken in
South Kakota and day before yesterday
two wero taken here. The depositiOns
yesterday were those of DR.. }. ]. Mott,
of Statesville, president of the Western
Ncrth Carolina Railroad in 1857; Mr.. H.
c. Cowes, of Statesville, secretary and
treasurer of the road in 1867; ex-GOv-
crnor Russell and Governor Ayock.
These depositions were on behalf of
the State, which by them is endeavoring
mainly to prove that the bonds were not
sold as the law directed, and that in
their very issue and sale that they were
! invalid.
The purpose of the depositions OF DR..
Mott and Mr.. Cowles was to show that
the bonds issued under the act of De
cembcr 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 depositions
! showed that in place of sealed proposals
being received the bonds were sold in
the open market and in place of par
value at least being required, as pro-
vidcd in the act, the bonds were sold
at prices ranging between % and 65
cents on the dollar. Both of these, it
will be noted, were in violation of the
distinct requirements for sealed bids and
for a sale at not less than par.
Fx-GovernOr Russell was examined
also for the State, and while he stated
his connection with the matter most
CAREFUL, there was evidence in his tcsti-
monv tending to show that 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 he was employed to rep
Ylo Of no
gage 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 suit was to be broughtby
/ 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 inti-
| nation he had of it was when he saw 1t
| 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 depositions taken
Yesterday, the session before Commis-
| sioner Ed. S. Battle lasting from 10:45
to about 2:G0. The hearing was then
adjourned till December 3rd, when ii will
| be resumed here in the offie Of the
Attorney General.
For the State Attorney-Gcneral Gil
mcr is assisted by Hon. Geo. Rountrce,
Judge James f. Shepherd and Judge
Mcrrimon. For the private bondholder
and the State of South Dakota the at
| torncy are cx-Governor Russell and Col.
j. c. l.. Harris.