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

case and the promptitude and unaaimity
with which it was corrected by the adop-
tion of the Eleventh Amendment. we do
not think it reasonable to suppose that
it was intended to permit States to be
sued by the simple device of joining a
state MS a CO. complainant, or by assign
inc mart of a claim, secured by mort
gage 10 another State and getting that
state to foreclose. making the individual
assigror the chief beneficiary of the suit,
a co-defcndant with the State!
A suit by) South Dakota and by, or for
tho benefit OF. Charles Salter against
North Carolina is not merely contro-
versv between two or more States. it is
In addition to that a suit by an indivi9-
nal against a State, and, so forbidden.
We 20 further; we contend that this
suit is. in purpose and effect. is sub
stantialIy. one solely by individual hold
ers of the bonds. using the name of the
State of South Dakota, against the State
of North Carolina.
In New Hampshire VS.. Louisiana, 1913,
II s rs. Chief Justice White said or
page SO:
mo one can look at the pleadings
and testimony in these cases without
being satisfied, beyond all doubt, that
tbcv were in legal effect commenced,
and arc now prosecuted, solely by
the owners of the bonds and cou-
pons."
The same may be said with greater
propriety of the present suit.
OF course the scheme is somewhat
varied. but equally transparent. In the
New Hampshire and New York cases II
was apparently thought that a contro-
versy between two States, justihable IN
this court, could be created by the in
dividual owner of repudiated State bonds
transferring the legal title to state Tor
collection: in this It appears to be
thought that the owners OF large num-
Der of State bonds, supposed to be Sc
cured by a mortgage, can collect their
bonds by assigning to a complainant
State a few of the bonds, and having that
State foreclose the mortgage for the
benefit of all; the scheme is in fact, sinl-
lar to the other, the difference being
merely that the bondholders in this hire
State to bring the suit by giving to her
small number of the bonds-a contin-
gent fee. instead Of inducing her to do sc
gratuitously.
The result to the State Of North Caro-
lima and to the bondholders is the anne -
individuals have prosecuted successfully
a suit against State contrary to our
understanding of the effect OF the New
Hampshire case, which is that, by no
scheme or contrivance, can a suit be
commenced or prosecuted, which. in
effect is suit by individuals against 2
State.
What are tho facts?
Simon Schafer and his brother own and
control practically all OF the bonds sued
on, which are claimed to be secured by a
second mortgage upon the stock of the
North Carolina Railroad Company, owned
by the State Of North Carolina-they
make several unsuccessful attempts tt
secure better terms than those upon
which the State compromised with the
vast majority Of the holders of similar
bonds-they employ numerous counsel, Of
record and otherwise, they petition the
General Assembly of North Carolina
early in 1901 uccessfully-former Sen
ator Butler, one of their counsel. induces
his friend, former Senator Pettigrew. tC
procure the passage of an act of the Leg
islature of South Dakota for accepting
and collecting donations of bonds. etc
this act Is said to have been introduced
by Colonel Stewart, who is solicitor oil
record for complainant, and Governor
Herrien say, wa probably employed al
the time the donation was made. Gov
ernor Russell, counsel for the Senator's
says that the feasibility of assigning {
portion of the bonds to some State for
the purpose of suit was discussed (Rec-
ord, p. 49, and that he understood. OIL
inferred that the purpose of the act men
toned above was to enable the State Of
South Dakota to receive a donation o.
bonds with view of bringing suit against
the State of North Carolina, CRecord p
1887 the Schafers were reluctant to make
the donation. but did so and sent witt
the bonds a letter containing the fol
lowing sentences:
Hon. Charles II. Burke.
Dear Sir: The undersigned, one o
the members of the firm of Schafer Bros.
has decided, after consultation with th'
other holders of the second mortgag,
| bonds issued by the State of North Caro-
lima, to donate ten of these bonds to Jht
State of South Dakota.
THE bonds are all now about due, be
sides of course, the coupons, which
| amount to some 10 per cent of the fac'
| OF the bonds.
1.-THE holders of these bonds have beer
advised that they can not maintain
suit against the State of North CarOlir;
on these bonds, but that such suit cal
| be maintained by a foreign State or b!
one of the United States.
Simon Schafer, the active manager o
| this business and now dead, upon a re
monstrance by his brother against tn
donation, said 'it would probably in
| sure to the benefit of the REMAINING
| bonds" (Record) p. 74)
On the other hand, Governor Herrien
record page Sc, who seems TO have ha'
little to do with the matter, it being lief
| to the Attorney General, Pyle. (who l
| dead, says that the bonds were handet
to him on September 21st, 1901. nd Their
| were present Congressman Burke, At
| torney General Pyle, and his ASSOCIATE
| counsel, Colonel Stewart and himself
an dthat he had understood from MI
| Pyle or Mr. Burke, some weeks befor
| the donation, that a suit upon thes
bonds might be necessary, and Colone
| Stewart had been employed-that non
of the authorities of South Dakota eve
made any demand upon the authorities o
North Carolina for payment or adjust
ment, and in explanation of the strang
| copduct said he sl1DpOsed the legal dc