Court Opinion

ID: 8630124
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:36:18.142689+00
Date Added: 2024-06-11T16:55:44.400660
License: Public Domain

WOODS, Circuit Judge.
Ir, upon the facts of the bill, the statutory mortgage was intended as an indemnity to the state to secure it against its indorsement of the bonds of the railroad company, the question raised by the demurrer has already been considered and decided by this court adversely to the case made by the complainant. See Branch v. Macon & B. It. Co. |Case No. 1,S0S],
That such was the purpose of the act of December 3, 1806, is, in my judgment, clear. The constitution of the state of Georgia, in force at the time of the passage of this act, declared, “Nor shall the credit of the state-be granted or loaned to aid any company, without a provision that the whole property of the company shall be bound for the security of the state, prior to any other debt or lien, except to laborers.” The act of December 3. I860, and the resolutions of December 4, were unquestionably framed in view of this constitutional provision. The act declares that before any indorsement of the railroad bonds is made by the governor, he shall be satisfied that the road is free from all liens, etc., which may in any manner endanger the security of the state. The state, through the legislature, provided this statutory mortgage to secure herself against her in-dorsement of the bonds of the railroad company. That was the prime and obvious intent of this legislation. Its purpose was not to put upon the state the duties of a trustee for the benefit of the holders of the bonds of the railroad company. If this view is correct, the question raised by the demurrer is settled, so far as this court is concerned, by the case above mentioned.
To say that the state, under the facts, is a trustee for the bondholders, does not change the case; because every surety who holds property for his own indemnity, may be called upon by the creditor to apply the property to the payment of his debt. The surety, however, is still a surety, and holds the property primarily for. his own protection. But concede that the legislation above referred to makes the state a trustee for the holders of the railroad bonds indorsed by the state. Does that view relieve the bill from the objection raised by the demurrer?
The state denies, as appears by the bill, the validity of its indorsement upon the bonds held by complainant. She says it is without constitutional warrant, and null and void. If this is time, then the state has assumed none of the duties of a trustee for the holders of these bonds. She denies, in ef- - feet, that she is under any obligation as trustee, or otherwise, to these bondholders. The complainant seeks to hold the state to this indorsement, and having done that to compel her to appropriate to the payment of the indorsed bonds property which she claims as her own. As remarked by Mr. Justice Bradley in the case of Branch v. Macon & B.. R.. Co., supra: “To sustain the complainant’s: case the court would be compelled to decide upon the state’s liability on its indorsement of the second issue of bonds. * * * The-court is asked to make a decree operating directly upon the rights of the state, and transferring them to the complainant and the other bondholders. It is not merely the possession of its agents, but the actual right and title of the state itself which are sought to be affected or transferred. We think this *977cannot be accomplished •without making the! state a party to the suit, and that cannot be! done.”
[NOTE. Conrnininiint appealed, and the decree dismissing the bill was affirmed by the supreme court.
(Mr. Chief Justice Waite, in delivering the principal opinion, assigned as the grounds of affirmance that the state of Georgia was an indispensable party to the controversy, and in fact the only proper defendant, and, ns the circuit court had no jurisdiction of a suit against the state, the bill was. rightfully dismissed. Cunningham v. Macon & B. It. Co., 100 U. S. 44U. 3 ¡sup. Ct. 202. OJU.]
The entire property mentioned in the bill was seized by the state as covered by the statutory mortgage. It was sold, and bought for and conveyed to the state, and the state is in possession, asserting title to all but a small part of the property. The main purpose of the bill is to dispute the title of the state to the property possessed and claimed by her, and by the decree of this court to transfer the property to the holders of a series of bonds with whom the state claims she never entered into any valid obligation whatever. That is the case made by the bill, when stripped of the plausible theories with which the genius of counsel has clothed it.
The bill is, to all intents and purposes, a suit against the state. It is mainly her prop-erfy, and not that of Alfred H. Colquitt, or J. W. Itenfroe, that is to be affected by the decree of the court. It is the title of the state that is assailed. The attack is not made against the state directly, but through her officers. This indirect way of making the state a party is just as open to objection as if Ike state had oeen named as a defendant. But there is a part of the property mentioned in the bill, and as against which relief is sought, to wit: Lots numbers one and seven, in block ten, southwest common, city of Macon, which is not now in possession of or claimed by the state of Georgia, but is held and claimed by the First National Bank of Macon, as purchaser from the state, which is made a defendant to the bill. In sustaining the demurrer of Alfred H. Col-quitt, that part of the bill relating to the property claimed by the First National Bank of Macon is left untouched. Demurrer of Alfred H. Colquitt sustained.