Year: 1859

has not received the consideration of the loan
Of credit, and that in case of default in the
construction of the roads to the extent required
by the Proviso, that the consideration must
fail.


This simple proposition is not answered, but
merely evaded. Your argument would con.
strue the proviso to mean nothing. You seem
to consider that the form of the Bond, or its
peculiar provisions, in other respects, affects
this question. believe it to be well settled
in law and equity, that whatever may be the
form or tenor of an instrument, the consaera-
tion thereof may always be inquired into, and
that the failure of consideration alcays con-
stituted an equitable defense.


The question then is simply: "What was
the consideration of the loan of credit p


The answer is found in the express terms
of the Proviso, which states: 'That in con-
6 'sideration of the loan of State credit herein
provided, that the Company or Companies
(which may accept the bonds Of the State in
" the manner herein specified, shall, as con-
aition thereof, each complete not less than
" fifty miles of its road on or before the expi-
"ration of the year 1861, and not less than
" "one hundred miles before the year 1864, and
" complete four -fifths of the entire length of
{" its road before the year 1885," &c.


Now, if the Companies do not comply with
this condition, which accompanies the Bonds,
and is the consideration OF their issue as ex-
pressed in the amendment-the "considera-
ton" of the Bonds fails, and the obligation is
CANCELLED


1t is true, that the time for the perform
ance of this condition" has not arrived, but
foreclosure upon the Companies will rem
der the default inevitable, for they cannot COM
ply with the "condition" after their roads and
franchises have been swept away by fore
closure


You attempt to answer this as follows
"The condition in the proviso is a measure of
precaution between the State and the Railroad
Companies, and the consequences of a viola
ton of that condition are not to be a failure of
the State to pay the bonds and the interest
thereon, or to repudiate them, or to resort to
the dodge suggested by Mr.. Banning, but
merely forfeiture to the State Of all the right
title and interest in the lands and franchises
not pertaining to the portion of the roads con-
structed and nothing more"


You must be satisfied, that this forfeiture
of funconstructed road is no indemnity to the
State from whence it was derived, and by
which it would have to be regranted to anoth-
er Company for the purpose of fulfilling the
object of the land Grant


The State, in the first instance, grants the
land for the construction of the roads.


In the second place, she loans her Bonds,
on condition" that the Companies shall COM
plete 80 much road.


Now, the forfeiture of the unconstructed
road to the State upon noncompliance of the
condition." is plainly inserted for the
purpose Of rcinvesting the State, so that the
roads may be finished by new companies to
whom the State would again grant them: the
State, therefore, cannot indemnify herself out
of these lands for the Bonds she has issued,
nor could such an absurd purpose have been
contemplated so that this is no answer to the
question of the failure of consideration" for
the issue of Bonds.


1t is somewhat amusing argument to con-
tend, that the lands which the State granted
for the purpose of building Railroads, and
which, we will say, have been returned to the
State because the roads were not built, should
be considered as ample indemnity for So, 500
900 loaned by the State in Bonds for which
she has not received one dollar
With respect to the question of notice to
third parties" do not see the force of your
argument.


The case is analogous to the obligation of an
individual, in the hands of third party with
notice of a defense.


The fact, that the obligor promises to pay
certain sum, on a certain day, does not pre-.
clude him from showing, that such obligation
was without consideration and that the
party who holds it had "notice of the fact
and, therefore, cannot shut out his defence.


Now, these bonds on their face, give " no.
tice" of the conditions accompanying
them, and the d" consideration to be receiv.
ed, from the fact, that all this appears in the
Constitutional Amendment under which they
purport to have been issued while the name
of the Company in whose favor they may be
drawn, is sufficient to put the holder on in
quiry, to see, that the condition" has beer
or will be complied with.


am sure, that in determining the character
of the obligations Of the State, we should lool
into their legal and equitable character as VIZ
would examine like transactions between indi
oidudls. admit the State should be mag
unanimous and just in settling claims agains
her, and look into the equities of the case ant
consider the benefits received with the dam
ages sustained. But, sir, is it Policy or Jus
tice to her citizens to suffer herself quietly t.
be defrauded, when she has just and honor
able defence l feel l am as sincere il
wishing to see the honor and credit of thu
State sustained as any one, but do not thinl
that such a sentiment precludes her from dis
putting an unjust or fraudulent claim, or in
sisting upon Justice being rendered to her,
If this be Reputation, make the most of it
Your Obedient Servant.
w. L. BANNING.
The Speakership.


It is understood that if Sherman can ge