Year: 1869

Bill for Aid to the Allegheny Valley


Railroad Company, and 10 Provide for


the Construction of Low-grade Rail-


road through Northwestern Pennsyi-


vania.


Mr.. WALLACE. Mr.. Speaker, the
act of 1858 authorized the Sunbury
and Erie Railroad Company to mort
gage its road TO the Commonwealth
for SO 500, 900, furnished to it by the
State TO aid in its completion. Thir
ty.five bonds of 100000 each were
issued by the company and passed tC
the State as the evidences of the debt
secured by the mortgage. These
bonds commence TO mature on the
first day Of January, 1875, and bear
interest at the rate Of five per cent
from May 10, 1858.


The act of 1861 changed the form ol
the security of the State for this debt
and authorized the Philadelphia and
Erie Railroad Company, the successor
of the Sunbury and Erie Railroad
Company, TO give its mortgage foi
$4,000, 900, with four bonds of 81 600,
600 each, bearing interest at the rate
Of six per cent, maturing in April
1901, as collateral security for the
original debt of the Sunbury and Erie
Railroad Company. The interest upon
these begins TO run on the first day oI
January, A. D. 1872.


This is the only security held by
the State for the Indebtedness of the
Philadelphia and Eric Railroad Com
pany, and all the previous arrange
ments eliminate in the simple propo
sition Of payment Of this mortgage in
forty years from its date, for the orig
iDaI mortgage was given up when this
one was taken. The proyiso in the
4th section of the act Of 1861, that the
whole of the principal and interest oI
the original debt should be paid by
the Company is in direct conflict with
the Immediately preceding provisions
OF tho same section, and the actual
fact exists that the only security nou
held by rs IS the -four million mortgage.
The clause of covenant in the mort
gage, referred to by the Senator from
Potter, is not lien on the road, nor is
it made such by its terms, and it can
only be collected by suit on the GOV.
enant, which suit cannot be brought
until the maturity of the whole of the
debt thirty-two years hence, and when
it does become due she will find her
self met by the positive provisions oI
the 4th section that the four million
mortgage shall be full satisfaction o.
her debt.


Mr.. OLMSTED. Does not the Sen
ator believe that the Railway Compa
ny is liable TO pay the full amount o.
the bonds for three million five hun
dred thousand dollarsl


Mr.. WALLACE. If / concede foI
the sake OF argument, the truth of the
question propounded by the Senator
from Potter, let us see what will be
the effect. When can that covenant
be enforced z Not until the forty
wears shall have expired There car
be no suit brought, by the very terms
OF the proviso, until the forty year:
have expired. When that time is up
you will still be met by the question
of whether you can or cannot collect
the amount. True, sir, there is al
express covenant in the mortgage, by
which the Philadelphia and Erie Rail
way Company agree to pay the differ
ence between the four million mort
gage and the three millions five hun
drcd thousand dollars at the time the
whole shall mature. But for that We
have no security. There is not a dol
lar Of security for that; and il you
take the report Of the Philadelphia
and Erie Railway Company aud exam
inc its condition, you will learn that
after its floating debt, its funded debl
and the three million five hundred
thousand dollars mortgage are paid
the covenant TO pay is valueless and
the debt lost. So much for the propo
silion that the Senator from Potter
(Mr. Olmsted) makes TO me in refer
ence TO the proviso in the bill and tho
ultimate liability Of the Company
Now / will answer him with my opin
ion ms to what the decision Of the court
would be upon the naked legal ques
iion of the liability Of the Company tC
pay anything more than the four mil
lion mortgage and its interest.


| do not believe there could be {
recovery upon the covenant, for it il
| in direct conflict with the express
terms OF the act under which th,
mortgage was taken, and in pursuance
of that law the original mortgage val
given up.


Ii seems TO me that any business
man looking at the condition Of oui
security, will understand that we hav'
an insolvent debtor and that this is 1
proposition TO us TO make our deb
good. 1t is an offer Of three millions
/ five hundred thousand dollars, th,
payment to commence on the first o
! April, 1875, with interest from 1872
to be secured by the Philadelphia anC
Erie Railroad guarantee, the Pennsyl
vania Central Railroad guarantee, anC
the Northern Central Railroad guar
anteo. 1t is an absolute, unqualified
guarantee Of the debt to us tmakot
our debt good beyond peradventure
For doing this they ask nm abatement
of $500, 600 on the debt, and reduc
ton Of the interest from six per cent
to FIVE per cent The payment Of the
money is secured and it is to CONT
into the treasury of the Common
wealth thirty years sooner than !
would otherwise come. To such al
offer what would a business man say


/ now come to the main question il
the case. The only security VIC hav'
for our debt is the $4,000, 900 mort
gage. The interest on that begins L
run in 1872, and there is not dollal
of the principal 10 be paid until 1901
Now suppose the first instalment o
interest is not paid, we fore-close tb'
mortgage, we obtain decree Of sale
we advertise the road, and then wba