Court Opinion

ID: 6689157
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:35:58.79264+00
Date Added: 2024-06-11T16:01:03.454366
License: Public Domain

PearsoN, O. J.
The fact that the State of North Carolina has been exceedingly liberal in its efforts to aid a general system of internal improvements, is admitted by all.
How far these efforts have been judicious, is a matter upon which it is not ours to decido. The question before us is confined to the parties to this action, and to the legal rights and equities growing out of the very complicated legislation in reference thereto. We can only remark from a general view of the subject, that while the State has failed to attain its purpose, the General Assembly is charged with an unwarranted exercise of power, at the instance of one of the parties to the prejudice of the other.
We do not concur in the view taken on the part of the plaintiff, to-wit: That the effect of the exchange of bonds, was simply to put the bonds of the Wilmington, Charlotte and Rutherford Railroad Company, into the possession of the State as a mere depository or pledgee, and consequently, that the General Assembly had no power to dispose of them and the act transferring a portion of them, in payment for stock of the *93Western Railroad was without authority, ultra vires and void. Thus leaving it in the power of the General Assembly after-wards by the Act of 1870, to Subordinate these bonds, so attempted to be transferred in regard to the priority of the mortgage by which they were secured., to another set of bonds, which the plaintift was by that act authorized to issue; and “ so secure the payment of the same, by a mortgage which shall have priority over any lien or claim of the State,” the idea being, that as the General Assembly had no power to dispose of these bonds and the mortgage by which they were secured, the transfer vested no title in the Western Railroad Company, and was a nullity, and of course the General Assembly in 1870, had power to subordinate them by putting them on the footing of third mortgage bonds.
On the contrary, alter a careful consideration of the many acts of the General Assembly, and of the ordinances bearing upon the question, we are of opinion that the legal effect of the exchange of bonds and of the mortgage, was to vest the ownership of the bonds in the State, secured by the mortgage.
Consequently the State had a valuable interest in their bonds and mortgage, as a fund which the General Assembly had power to dispose of in aid of any other work of internal improvement, or f©r any other purpose, subject of course, to existing equities, and the General Assembly did not, in transferring a portion of these bonds to the defendant, exceed its power as owner of the fund or act in bad faith to the plaintiff, as the act making the transfer, especially provides “ for the transfer of these bonds as second mortgage bonds of the Wilmington, Charlotte and Rutherford Railroad Company ; now held by the State, and secured by a mortgage upon all estate, both real and personal, belonging to said company, subject to the same equities the State now has, ratified February, 1867; in other words the bonds and mortgage are transferred to the defendant, with the legal rights and equities of the State, and subject to the legal rights and equities of the plaintiff, existing *94at the time of the transfer, it follows that the General Assembly had no power by the Act of 1870, to subordinate the bonds which had thus been transferred'to another set of bonds, which by the latter act, the plaintiff was authorized to issue.
Indeed the Act of 1870, by its proper construction, does not purport to do so, for it only provides that these last bonds “ shall have priority over any lien or claim of the Statef and does not attempt to give priority over the bonds and mortgage, which the State bad before transferred to the defendant.
This disposes of the case, for the gravamen of the complaint is. “ that the defendant is now endeavoring to sell the said bonds, untrvly representing them to be second mortgage bonds, and is thereby interfering with the sale by the plaintiff of the second mortgage bonds, issued under the Act of 12th March, 1870.” Whereas, as we have seen, the defendant holds the bonds in question under a prior and valid transfer of the bonds and mortgage.
The question, whether these bonds in the hands of the defendant are subject to be redeemed by the plaintiff, under section 4, Act. 1881, which provides that the plaintiff may at any time redeem from the Public Treasurer any number or portion of its bonds, “ the same then being the property of the State by paying the par value thereof, or if the bonds of tbe State are below par, by paying therefor the same price as the State bonds command in the market — is not presented by tbe pleadings; there is no offer by the plaintiff to redeem the bonds — so it is a hypothetical case, which may never he presented, and the act under which the defendant derives title, especially provides that the transfer is made subject to all equities.
This is notice to all persons wbo may take title, from tbe defendant, derived under tbe Act 1867.
The plaintiff has no standing in Court upon that ground, nor are the provisions of this section set up as a ground for asking the interference of the Court.
Error. Order reversed. This will be certified.