for the Eastern District of Tennessee.
May 4, 1885.
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These are suits brought by the holders of unpaid bonds of the state of Tennessee, issued to various railroad companies under the act of February 11, 1852, 'to establish a system of internal improvements,' to enforce the lien which was vested in the state by that act on the property of the companies respectively as security for the payment of the bonds, and the accruing interest thereon. The sections of the act on which the rights of the parties depend are 1, 2, 3, 4, 5, 6, 7, 10, 12, 13, and 14. These are as follows:
'Section 1. Be it enacted by the general assembly of the state of Tennessee that whenever the East Tennessee & Virginia Railroad Company shall have procured bona fide subscriptions for the capital stock in said company to an amount sufficient to grade, bridge, and prepare for the iron rails the whole extent of the main trunk line proposed to be constructed by said company, and it shall be shown by said company to
the governor of the state that said subscriptions are good and solvent, and whenever said company shall have graded, bridged, and shall have ready to put down the necessary timbers for the reception of rails, and fully prepared a section of thirty miles of said road at either terminus, in a good and substantial manner, with good materials, for putting on the iron rails and equipments, and the governor shall be notified of these facts, and that said section, or any part thereof, is not subject to any lien whatever, other than those created in favor of the state by the acts of 1851-52, by the written affidavit of the chief engineers and president of said company, together with the written affidavit of a competent engineer by him appointed, at the cost of the company, to examine said section, then said governor shall issue to said company coupon bonds of the state of Tennessee, to an amount not exceeding eight thousand dollars per mile on said section, and on no other condition, which bonds shall be payable at such place in the United States as the president of the company may designate, bearing an interest of six per centum per annum, payable semi-annually, and not having more than forty nor less than thirty years to mature.
'Sec. 2. Be it enacted, that the bonds before specified shall not be used by said company for any other purpose than for procuring the iron rails, chairs, spikes, and equipments for said section of said road, and for putting down said iron rails, and the governor shall not issue the same unless upon the affidavit of said president, and a resolution of a majority of the board of directors, for the time being, that said bonds shall not be used for any other purpose than for procuring the said iron rails, chairs, spikes, and equipments for said section, and for putting down said iron rails; and the governor shall have power to appoint a commissioner to act, under oath, in conjunction with said president, in engotiating said bonds for e purposes aforesaid, and to act in any other matters pertaining to said company where the interest of the state, in the opinion of the governor, may require it.
'Sec. 3. Be it enacted, that so soon as the bonds of the state shall have been issued for the first section of the road as
aforesaid, they shall constitute a lien upon said section so prepared as aforesaid, including the road-bed, right of way, grading, bridges, and masonry, upon all the stock subscribed for in said company, and upon said iron rails, chairs, spikes, and equipments when purchased and delivered; and the state of Tennessee, upon the issuance of said bonds, and by virtue of the same, shall be invested with said lien or mortgage without a deed from the company for the payment by said company of said bonds, with the interest thereon as the same becomes due.
'Sec. 4. Be it enacted, that when said company shall have prepared, as aforesaid, a second section, or any additional number of sections, of twenty miles each of said road, connecting with a section already completed for the iron rails, chairs, spikes, and equipments, as provided in the first section of this act, and the governor shall be notified of the facts, as before provided, he shall, in like manner, issue to said company like bonds of the state of Tennessee, to an equal amount with that before issued under the first section of this act, for each and every section of twenty miles of said road so prepared, as aforesaid, but upon the terms and conditions hereinbefore provided; and upon the issuance of the said bonds the state of Tennessee shall be invested with a like mortgage or lien, without a deed from said company, upon said stock, and upon said first and additional section or sections of said road so prepared, upon the rails and equipments put, or to be put, upon the same, for the payment of said bonds and the accruing interest thereon: provided, that if the last section of said road shall be less than twenty miles, or if the railroad proposed to be constructed by any company hereinafter specified shall be less than thirty miles in extent, bonds of the state shall be issued for such section, or such railroad, as may be less than thirty miles in extent for an amount in proportion to the distance, as provided in this act, but upon the same terms and conditions in all respects, as required in regard to the bonds to be issued for the other sections of said road. And when the whole of said road shall be completed, the state of Tennessee shall be invested with a lien, without a deed from the company, upon the entire road, including the stock, right of way, grading, bridging, masonry, iron
rails, spikes, chairs, and the whole superstructure and equipments, and all the property owned by the company as incident to or necessary for its business, and all depots and depot stations, for the payment of all of said bonds issued to the company as provided in this act, and for the interest accruing on said bonds. And after the governor shall have issued bonds for the first section of the road, it shall not be lawful for the said company to give, create, or convey to any person or persons, or body corporate whatever, any lien, incumbrance, or mortgage of any kind, which shall have priority over, or come in conflict with, the lien of the state herein secured; and any such lien, incumbrance, or mortgage shall be null and void as against said lien or mortgage of the state, and the said lien crmortgage of the state shall have priority over all other claims existing or to exist against said company.
'Sec. 5. Be it enacted, that it shall be the duty of said company to deposit in the bank of Tennessee, at Nashville, at least fifteen days before the interest becomes due, from time to time, upon said bonds issued as aforesaid, an amount sufficient to pay such interest, including exchange and necessary commissions, or satisfactory evidence that said interest has been paid or provided for; and if said company fail to deposit said interest as aforesaid, or furnish the evi ence aforesaid, it shall be the duty of the comptroller to report that fact to the governor, and the governor shall immediately appoint some suitable person or persons, at the expense of the company, to take possession and control of said railroad, and all the assets thereof, and manage the same and receive the rents, issues, profits, and dividends thereof, whose duty it shall be to give bond and security to the state of Tennessee, in such penalty as the governor may require, for the faithful discharge of his or their duty as receiver or receivers, to receive said rents, issues, profits, and dividends, and pay over the same, under the direction of the governor, towards the liquidation of such unpaid interest. And if said company fail or refuse to deliver up said road to the person or persons so appointed by the governor, the person so appointed shall report that fact to the governor, who shall forth with issue his warrant, directed to the sheriffs of the coun-
ties through which said road shall run, commanding them to take possession of said road, fixtures, and equipments, and everything pertaining thereto, and place the said receiver in full and complete possession of the same, and said receiver so appointed shall continue in the possession of said road, fixtures, and equipments, and run the same, and manage the entire road, until a sufficient sum shall be realized, exclusive of the costs and expenses incident to said proceedings, to pay off and discharge the interest as aforesaid due on said bonds, which being done, the receiver shall surrender said road and fixtures and equipments to said company. The comptroller shall from time to time settle the accounts with the receiver, and the balance shall be deposited in the treasury of the state. The comptroller is authorized, and it is made his duty, upon his warrant to draw from the treasury any sum of money necessary to meet the interest on...
