The Mitchell capital. (Mitchell, Dakota [S.D.]) 1879-1918, 1909-02-25
NORTH CAROLINA BONDS

WONIU OSSNO1oNN OOUD0
Effort to Refund Money Again Tn
Observation-Disclosures Fight Fore
casted for 1911 Session.
Pierre, Feb. 19.-The defeat in
the South Dakota legislature of
Senator billions bill to return to
North Carolina $22,416 adds another
chapter to the famous bond case. 1t
1T likely, however, that the fight will
be re-opened at the next session.
The manner in which this fund
got into the state treasury of South
Dakota is one which dates back to
the days before the war. In 1859
the state of North Carolina issued
bonds to assist in the construction
of a railroad in that state. The
state took stock in the road and
turned the bonds over to the promo
tiers of the road to sell for the pur-
pose of raising funds for the con-
Y VI lhC 1Odu, dIlu ltlu III
stock in the treasury.
In 1867 it was desired to increase
the efficiency of this road, and the
Western North Carolina Railroad
company was organized, and bonds
issued, backed by stock in the origi-
nal road. for the desired extension.
About this time the carpet bags"
legislature of North Carolina was in
session, composed of a large majority
of negroes, and they issued bonds
without limit, and without any con-
s%ideration whatever. Practically all
of these securities were later repu-
dated by the state. and others were
compromised by the payment of 25
cents on the face value.
Among the holders of North Caro-
lima securities were New York par
ties, who held $25O,OUO of the bonds
issued to build the Western North
Carolina road, and they refused to
compromise. The bonds ran along
until a few years ago., when suit was
brought upon one of the bonds in
the United State supreme court by
South Dakota, and a judgment Sc
cured.
The n of the possession of
this bond by South Dakota goes back
to the legislative session of 1901.
At that session a law was passed,
which became chapter 134 of the
laws OF that session, in which the
governor of the state Is authorized
to accept any grants gifts, or dona-
lions of bonds, securities or other
property given to the state, and the
state Is given the right to bring suit
to recover upon any such gift, the
payment for attorney services to be
q contingent fee out of the proceeds
of any such suit.
Shortly after the passage of this
law there was rendered to Gov. Her.
reid one bond Of the Western North
Carolina railroad to the amount Of
$4,000. with accrued interest
amounting to $4,000. This was ac-
cepted, and r. w. Stewart, who was
q member Of the senate which en-
acted the law. was employed as an
attorney by the state to prosecute
the suit by n state against another
he sui by one safe against another
bling the only manner Of getting in
to court with these bonds, as the
state of North Carolina does not
have q statute which allows a pri-
vate, citizen to bring suit against the
state.
The real purpose back. Of this suit
IL alleged to have been to. establish
the validity of the bonds held by the
NewaY6rk syndicate, which was rep
resented by Simon Shaffer, who do
mated the bond to South Dakota. The
court. while. holding Cid snjlarticular
bond saaela,sbyt South Dakota to be
valid. spoiled. the intent Of the suit
by holding that each one of the
bondasswAaatla separate contract, and
that separate suit must ~, brought
on each bond. Under this ruling,
while judgment was on the bond, the
others In the same condition as
at the beginning ana the New York
syndicate had secured nothing but
experience.
The supreme court gave this state
Its judgment asked for, and the
state a given the right to ~foreclose
on stock on which the bond was is.
sued. but the state of North Carolina
had the. option Of paying the judg.
mont instead Of allowing the fore,
closure proceeding. and took the op.
ton. paying the amount due, out o
which about $1,000 attorneys fee.
were taken, and the balance turned
owe to the state. which has held II
unappropriated since. although the
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