The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1903-04-16

We submit. however, JnaI II Is not
necessary for us to show that the State
of South Dakota participated consciously
N this wicked scheme-it is sunicient
that she. being a more volunteer, became
the passive instrument of the bond
holders in carrying it out.
In Abram VS.. Cureton, "A n. G., it was
decided that the plaintiff, TO whom a
note had been endorsed under a contract
TO collect and pay over the proceeds to
the endorser after retaining compensa-
ton for services, could not recover in
mis- own name, because he was not 1.-The
real party in interest"
We respectfully insist that is true here
the state of South Dakota is not the
real party in interest. that the suit was
commenced, and is prosecuted, solely for
the benefit of private individuals who,
in the event of recovery. will be the sole
beneficiaries after deduCting the costs of
the suit, including the fee to South Da-
kota.
But whether we are right in this or not
the result of a successful termination
of the suit will certainly be to enable pri-
vate individuals to prosecute a suit
against State.
We do not believe that the prohibi-
tons of the Eleventh Amendment can be
so easily nullified.
But if we should be wrong and the
court decides that it has jurisdiction in
such cases, we contend:
First. That there is no valid mortgage
to secure complainants' bonds and
Second. That the bonds having been
disposed Of contrary to the provisions of
.Io;, not
being entitled to the rights of a bona fide
holder for value, cannot recover.
So far as the mortgage is concerned, as
we have previously said, the statute I'M
loubtedly contemplated a mortgage to
secure the bonds, but reading of the act
will also show that the Treasurer was
directed to execute mortgage upon 10
shares of stock to SECURE EACH
BOND-there was not to be a general
mortgage upon the stock to secure all
the bonds-and while the Treasurer in
lorsed upon each bond the statement that
10 shares of the stock are here
by mortgaged" he did not designate or set
apart any particular shares for any par
ticular bond, and none has yet been so
designated. The mortgage then is void
Tor uncertainty
End. The complainant is not entitled
to the rights of BONA FIDE holders for
value and cannot recover.
A reading of the charter of the Western
North Carolina Railroad Company. print
ed in the Record, will show that it was
the purpose of the State in rendering aid
to the road not so much to secure an in
vestment for idle funds as to secure the
speedy construction of a railroad con-
necting the mountain section with the
eastern seaboard, and hence it was pro-
vided that the bonds should be sold, upon
sealed proposals. at not less than par,
the premiums to be turned into the treas
ury The treasurer testifies, substan-
tally, that there were no sealed proposals
received and the bonds were not sold at
all, but were simply turned over to the
authorities of the railroad company, who
sold them at prices ranging from % to
s. per cent of their par value, thus de-
feating the main, purpose Of the statute
in imposing the restrictions
1t seems clear to us that the railroad
company could not have maintained an
action upon these bonds in any court
having jurisdiction, and, granting juris
diction, complainant cannot unless she is
entitled to the rights Of a BONA FIDE
holder for value.
Complainant admits that she receives the
bonds as a donation from Schafer after
their maturity, and as it appears that
they were issued contrary to the provis-
ions of the statute, the burden of proof
is upon her to show that one of her pre-
decessors in title was a purchaser for
value.
Stewart " Lansing 104 u. S. sos.
This burden she has not sustained.
She does not show from whom the
Schafers purchased, nor at what price
and we think We have right to pre-
sumo that they purchased from the rail-
road company at some 25 per cent. of the
face value. Schafer says he purchased
about thirty years ago. and if so there
were then at least overdue coupons at
tached to each bond; IL It were not so it
was incumbent upon the complainant,
upon whom the burden rests, to show it,.
So we have the question whether pur-
| chaser Of State bonds with several unpaid
interest coupons attached, and at small
| fraction of the face value, is a BONA
Eide purchaser for value in due course ?
We think not upon the authorities
Trask V. r. r. Co., 124 U. S. SIS, SIT.
Finally we insist that, if the court holds
that it has jurisdiction and that Schafer,
or some antecedent holder, was a BONA
Eide holder in due course, complainant
ought not to be allowed to recover be-
cause her assgnor could not do SO, and
| she, being a volunteer. cannot occupy a
better position than any of her predeces-
| sors in title.
| When these bonds were issued they were
1 not intended to be suable, AND THEY
| WE'RE NOT IN the hands of the as
| signor or complainant and it is a genera
rule Of LAW THAT THE TRANS
| FEREE MUST ABIDE THE title ant
| rights of his transferrer.
There is an exception in favor of sales
in market overt lin England and under
our recording acts and in favor of pur-
| chasers for value without notice of ne
| gotiable securities.
| Complainant comes within none Of these
| exceptions, and SO must abide the rights
| of Schafer unless the court is prepared