The Savannah morning news., 1904-05-01
GEORGIA'S FRAUD
ULENT BONDS
EFFECT OF CAROLINA CASE.
RUMoR OF MOVEMENT TO ATTEMPT
THEIR COLLECTION.

Although DakOta-CarOlina Case Diff
fers From Any Similar Suit That
Might BE Instituted Against GeOr-
Gria, There Is Enough i'm Supreme
Court Decision to Make State Of
flciaIs Apprehensive of Trouble in
Amy Such Step.
By Fred Lewis.
Atlanta, April 3O-"The most i'm
portant and far reaching question that
has come before the United States Su-
prerne Court since the days of seces-
sion" is the opinion expressed by one
of Georgias best known lawyers and
officials of the South Dakota North
Carolina bond case, in which the court
undertakes to compel the payment of
a claim against a state, and the re-
cent decision in which is, seemingly,
but the first step in the almost dan
gerous direction toward which it points.
The discussion came up apropos of
the repudiated bonds of the state of
Georgia, known variously as the
Bullock bonds, the Henry Clews
bonds, because Clews owns
large block of them, the fraud
ulent bonds of 1870, the Brunswick and
Albany bonds, or whatever title in
conversation may best designate them.
In a recent newspaper article in At
lanta it was shown that there are evil
dences of a combination of the hold
ers of these bonds with a view to at
tempting to enforce their payment by
the state, or in the event of failure
in that direction, which is absolutely
certain, possibly to transfer them to
some state which will sue Georgia in
the Supreme Court of the United
States.
However much the Dakota-Carolina
case may differ from any similar suit
that might be instituted against Geor-
gia on this fraudulent bond issue,
there is enough in the decision of the
Supreme Court to make the state Off
Gals dread the legal trouble that might
be given should any such step be taken.
1t is not proposed here to present any
technical discussion of this important
case, but merely to indicate it's mean
ing as it may affect Georgia, only to
the extent, however, according to the
best of opinion, of giving the trouble
already suggested. And yet there are,
it would seem, possibilities in the sit
nation fraught with the gravest dan
gers
To Seize the Security.
The judgment rendered by the United
States Supreme Court against North
Carolina was on $4,000 face value of
bonds, Endorsed by that state to aid
the building of a certain railroad. of
which the total issue was something
like 100000. Previous to receiving as
gift these bonds from certain New
York brokers who held the entire issue,
that state of South Dakota passed a
law requiring the Governor to accept
any such gifts as this, the proceeds to
be devoted to certain charitable insti
tutions, and to bring suit to enforce
the payment. Evidently the state was
preparing for just such a contingency;
it would seem that it was expected.
The Supreme Court in giving judg
ment in favor of South Dakota, and
against North Carolina for upwards of
1000, including principal and inter
est on the original $4,000 of bonds, or
dered that North Carolina should sat-
tsfy this judgment by or before Jan.
l, 1905, and if the state fails to do so,
it is directed that the marshall shall
levy upon the security which consists
of the capital stock of the railroad to
aid which the bonds were issued, and
which capital stock is held within the
treasury of the state of North Caro-
lima.
And now comes the most important
part of the Supreme Courts decision,
that in which Georgia is most vitality
interested. The court states that in
the event the security levied upon is
not sufficient to satisfy this judgment.
II reserves for future consideration aid
decision the matter of judgment as to
the sum over and above the amount
realized by the sale of the security. AS
much as to say it rests within the jl;-
risdiction of the court to declare wheth-
er or not a sovereign state shall be
compelled TO pay a judgment which 1t
has for its own reasons. repudiated,
even though there be in existence no
security for it.
1t was the evident intention on the
part of the holders of the North Caro-
lima bonds to test the question through
donation of a small part of them to
another state, hoping, unquestionably,
IN the event judgment was rendered for
the full amount, to be able to compro-
mise the remainder of the claim, on
the theory that North Carolina would
prefer compromise to the payment of
the full claim which might be enforced
should all the bonds be given to some
state that had no interest in the mat
ter except to collect the money. In
spite of the fact that the Georgia
fraudulent bonds issue stands on an
that their holders contemplate just
such a movement as this. The New
York banker who wrote to Attorney
General John C. Hart, asked whether
there was any hope of Georgia's COM
promising these bonds, stating that he
preferred first to hear from the state
officials before adopting other measures
TO enforce their collection. Would 1t
not seem from this that the state is
facing what will probably be difficult
legal battle?
No Security i'm Existence.
In the case of Georgia the repudiated
bonds are similar to those of North
Carolina only in so far as they were
Endorsed by the state to aid in the
building Of a railroad-the Brunswick
and Albany. The proceeds of these
bonds were never used for that pur-
pose, the railroad was never construct
ed with the money realized on their
sale, consequently the security for
them is not in existence. and never
was 1t was for this and other rea-
sons involving evident fraud that the
bonds were repudiated by the legislat-
tive act of 1872, and subsequently by
constitutional provisions
But suppose after the sale of the
North Carolina security, and its fail
ura to realize a sufficient amount to
pay the judgment In favor OF South
Dakota the Supreme Court of the
foka ss1.4