Sec. 6. Be it further enacted, that should any of said railroad companies fail or refuse to comply with the provisions of the fifth section of this act, it shall be the duty of the governor forthwith to notify the attorney general of the district in which is situated the place of business of said company failing or refusing as aforesaid, of the fact; and thereupon the attorney general shall immediately proceed against said company to collect said sinking fund, in the manner prescribed in the sixth section of an act entitled 'An act to establish a system of internal improvements in this state,' passed February 11, 1852."

By another act, passed March 20, 1860, the same provisions were further amended as follows:

"Section 1. Be it enacted by the general assembly of Tennessee, that the money or bonds that have heretofore or may be paid by the cities or railroad companies in this state to the sinking fund commissioners by the first of January, 1860, together with the accruing interest thereon to that date, shall be passed directly to the credit of the party having so paid the same, and be a release to said party for that amount on the debt due by them to the state of Tennessee.

"Sec. 2. Said bonds shall be all canceled by said commissioners, and if indorsed bonds of any railroad company shall be canceled as hereinafter provided for the cancellation of state bonds, and shall be delivered over to said company or corporation, taking the president's of said company or the officer's of said company receipt for the same, which receipt shall be filed and the copy of the same placed upon a book, which the said commissioners shall keep for that purpose. 'If state bonds, they shall be canceled and filed in the office of the secretary of state as hereinafter provided.

"Sec. 3. That after the first day of January, 1860, all railroad companies or city corporations who have or may hereafter receive the bonds of the state, or its indorsement of their own bonds under the general internal improvement law of this state, or any other law, shall be required to pay two and onehalf per cent. per annum as a sinking fund on the amount of the bonds so issued or indorsed by the state for said company or corporation, to be paid in equal installments on the first days of April and October, five years after the date of said bonds, and annually thereafter.

"Sec. 4. All bonds issued during any one year shall be dated on the first day of January of that year.

"Sec. 5. Said companies or corporations may pay said sinking fund in cash or in the like character of bonds that may have been issued or indorsed by the state for said company at their face or par value.

"Sec. 6. If paid in money, the commissioners shall invest it immediately in the bonds of the state, and shall have the same canceled and filed as heretofore provided. Such bonds are to be of the same character as those issued to such company or corporation.

"Sec. 7. The sinking fund, when paid, in all cases shall be passed directly to the credit of said company or corporation, and be a release to said company or corporation from that amount due by them to the state. The commissioners shall issue a receipt to each company or corporation for such payment, retaining a duplicate in a well-bound book kept for that purpose.

"Sec. 8. Each and every railroad company or city corporation shall provide the interest semi-annually, as now provided by law, on the amount of bonds unpaid at the time said interest falls due, and not on the original amount issued to or indorsed by the state for said company as heretofore provided.

"Sec. 9. The comptroller of the state shall keep a regular account against each company or corporation, charging them with the amount of bonds orig. inally issued to or indorsed for said company or corporation by the state, and* crediting them by the amount of sinking fund paid, and shall furnish the treasurer of state a statement of the amount due by each company or corpo

*676

ration on the first of June and December of each year, that he may know how much interest each company or corporation has to pay.

"Sec. 10. The commissioners of the sinking fund shall cancel all bonds of the state, as soon as paid in or purchased, by cutting out the governor's and secretary of state's names, and so defacing each coupon that it cannot by possibility be used or circulated, and shall file the same in the secretary of state's office.

"Sec. 11. This law shall be in full force from and after its passage, and shall repeal all laws in conflict with it, but shall not be so construed as otherwise to affect any law on the subject of the sinking fund or the payment of interest due on state or indorsed bonds."

Under these statutes state bonds were from time to time issued to the several enumerated railroad companies in the following form:

"$1,000.

UNITED STATES OF AMERICA.

day of

་

$1,000.

No.

"No. "Know all men by these presents: That the state of Tennessee acknowledges to owe to or order, one thousand dollars of the lawful money of the United States of America, which the said state promises to pay in the city of New York, on the , 18-, with interest thereon, at the rate of six per cent. per annum, according to the tenor, and upon the presentation, of the coupons hereunto attached. For the payments of said sums of money, and the interest thereon, at the times and places, and in the manner aforesaid, the faith of the said state of Tennessee is irrevocably pledged, this bond being issued in pursuance and by authority of an act of the general assembly of said state, passed February 11, 1852, to establish a system of inCernal improvements in said state.

"In testimony whereof, and in pursuance of the acts aforesaid, I, governor of the state of Tennessee, have hereunto subscribed my name officially, and caused the same to be countersigned by the secretary of state, with the great seal of the state affixed.

"[-] Done at the executive department in the city of Nashville, this day of

18-."

To which was attached the following form of coupon.

'30.

THE TREASURER

OF THE

STATE OF
TENNESSEE

30.

"Will pay the bearer THIRTY DOLLARS, in the city of New York, on the irst day of January, 1877, being the semi-annual interest then falling due on bond No. J. C. SUTTRELL, 30. "Comptroller."

Upon the issue of the bonds, receipts were executed by the companies, respectively, in the form required by the statute, in a well-bound book deposited In the oflice of the secretary of state. The bonds, after their delivery, were sold in the market by the respective companies, in conjunction with the state commissioner, and the proceeds used in the way contemplated by the statute. No complaint is now made of any default on the part of the several companies, whose roads are involved in these suits, prior to the late civil war. After the oeginning of the war, however, but few payments were made, and various expedients were resorted to, from time to time, for relieving the companies from their embarrassments. In 1866 another act was passed authorizing a further issue of state bonds, under which some of the bonds embraced in these suits were put out. In this act the provisions as to the lien for the security of the payment of the bonds was substantially the same as in the act of 1852. None of these devices, however, accomplished the purpose the state had in

view, and on the twenty-fifth of February, 1869, "An act to liquidate the state debt, contracted in aid of railroad companies in the state of Tennessee,' was passed. That act is as follows:

"Whereas, under the general internal improvement laws of the state, passed from time to time, aid has been granted to various railroad companies by the loaning of the six per cent. bonds of the state, to enable said companies to iron, equip, build, and bridge, and for other purposes, which is now secured to the state by a first mortgage or lien on the franchise, property, and fixtures of respective railroad companies; and

"Whereas, it is desirable for the general welfare of the state that the state shall be reimbursed such amounts as have been advanced to the different railroad companies, as fast as may be practicable; therefore,

Section 1. Be it enacted by the general assembly of the state of Tennessee, that the respective railroad companies, or either of them that have created indebtedness to the state, are hereby authorized to repay any amount of the principal of such indebtedness as they have respectively created in the bonds of the state, in such amount and at such times as may be practicable: provided, however, that nothing in this act shall be so construed as to release said railroad companies from any lien which the state may have on the same for any unpaid interest now due on said bonds of the state, authorized to be surrendered by this act.

"Sec. 2. Be it further enacted, that any railroad company or companies repaying any indebtedness due the state under the provision of this act, are authorized to issue bonds of equal amount and denomination with the bonds of the state paid and delivered up for cancellation, as hereinafter provided, which said railroad bonds, so issued in lieu of any equal amount of state bonds, shall be certified to by the comptroller and entered in a book to be kept for that purpose, with date, number, and amount, and shall be a lien, pro rata in amount and of equal validity and effect with the unretired part of the state indebtedness, upon such railroad, and all its property, franchises, fixtures, and material.

"Sec. 3. Be it further enacted, that in order to facilitate the railroad companies that may wish to avail themselves of the provisions of this act, in repaying the indebtedness due to the state respectively, they, or any of them, are hereby authorized to consolidate their property, in whole or in part, with other railroad companies, and issue bonds and stock as provided for in the second section of this act, and may adopt the corporate franchise of either of the roads as the stockholders may elect, and each railroad company paying its. indebtedness, and such railroad companies as may consolidate under the provisions of this act, are hereby authorized to determine, by a vote of the stockholders of said company or consolidated companies, the number of directors of such company, and elect the same under the new organization, and that the said directors, so elected, shall, according to the by-laws and rules of said corporation, elect one of their number president of said company.

"Sec. 4. Be it further enacted, that the comptroller of the state shall receive from the railroad companies, or any of them, bonds of the state in such amounts as may be presented, and cancel the same in the presence of the officer or agent of the railroad company paying them in, and execute to the said railroad company or companies duplicate receipts for the amount and number of said bonds so paid in; and it shall further be the duty of the comptroller to certify on the bonds of any railroad company or companies, repaying indebtedness due to the state, that the same has been paid, and that the so certified [bonds] are secured by first mortgage: provided, that said railroad companies shall liquidate their indebtedness prior to the maturity of the bonds that have caused said indebtedness: and be it further provided, that said bonds, when executed by the respective railroad companies, or either of them, shall be deposited with the comptroller of the state, whose duty it shall be to deliver said bonds,

629.

*680

or any number of them, to the president and directors of the company, on the deposit by said president and directors, or authorized agent, of an equal amount of the six per cent. bonds of the state of Tennessee, with unpaid coupons attached, and the company's first mortgage bonds, authorized to be issued by this act, shall have no validity or value except the comptroller's certificate is affixed on the face of each bond that said bond is executed, and issued, and by virtue of law takes the place of a bond of the state, and is the first mortgage bond.

"Sec 5. Be it further enacted, that the comptroller shall be entitled to a fee of one dollar on each thousand dollars of the bonds certified as aforesaid, to be paid by the railroad company for which the same is done; and it shall be lawful for the comptroller to discharge the duties imposed by this act, by and through an agent in the city of New York; and all the provisions of this act shall attach to and become a part of the charter of any railroad company or companies acting under it.

"Sec. 6. Be it further enacted, that by and with the consent of the board of directors of any railroad company in this state under the general improvement law passed the eleventh of February, 1852, and all the amendments thereto, that any person or corporation may, by paying the indebtedness of such railroad company to the state in the bonds of the state, as provided for by law, be, and they are hereby, substituted and entitled to all the liens against said company for the payment of said debt that the state had or has by law, and the governor and secretary of state shall give such party or parties paying such indebtedness a certificate showing the facts, which shall be evidence against said company of such indebtedness to said individuals or corporations.

"Sec. 7. Be it further enacted, that any person or persons may, with the consent and approbation of any railroad company, which is indebted to, and for which the state of Tennessee holds a lien, pay the said debt, so far as the state is concerned, in the bonds of the state, or any coupons of bonds at par, and the person or persons so paying the debt of any railroad company with the consent of such railroad company, shall, upon filing with the treasurer of this state the written assent of said railroad company, under the corporate seal of said railroad company, be entitled to have and hold all the lien or liens which the state of Tennessee had or has upon said railroad or its property, and shall have the same right to enforce the same which the state of Tennessee had; the object and intent being to place the person or persons so paying with the consent of said railroad company in the same position and with the same rights which the state of Tennessee had previous to and before the said payment, and with full power to enforce the same.

"Sec. 8. Be it further enacted, that any person or persons who may, with the consent and approbation of any railroad company, pay any part or portion of the indebtedness of such company, as provided in sec. shall have.

hold, and subrogated in all the rights, privileges, and lien or liens of the state, to the extent of, and in proportion to, the amount of such indebtedness, with the same rights and privileges the state now has, to the extent of such payment or payments: provided, the passage of this act shall not decrease the lien of the state upon any railroad of the state until the entire claim of the state is fully liquidated; or affect the interest of the present bondholders of the state: provided, that railroad companies which have issued second mortgage bonds, availing themselves of the provisions of this act, shall file with the comptroller bonds of the same series as those loaned to such company, for which the state holds a first mortgage lien: provided, the bonds to be issued by the company, under the provisions of this act, shall not have a longer time to run than the bonds of the state thus released and canceled.

"Sec. 9. Be it further enacted, that this act shall take effect from and after its passage."

At the next session of the general assembly, January 20, 1870, this act was

amended as follows:

"AN ACT FOR THE PAYMENT OF THE STATE Debt. "Section 1. Be it enacted by the general assembly of the state of Tennessee, that an act entitled 'An act to liquidate the state debt, contracted in aid of railroad companies in the state of Tennessee,' passed February 25, 1869, be, and the same is hereby, amended so as to allow any railroad company which may be indebted to the state by reason of the bonds of the state loaned to said railroad company, to pay into the state, in liquidation of the principal of said indebtedness, any of the legally issued six per cent. bonds of the state of Tennessee outstanding, without regard to series or number; and such payment shall, to the extent made, be a full and perfect discharge of the lien which the state holds upon the property of such railroad company, held by virtue of the bonds of the state issued to such railroad company, whether they be the same bonds or the same series of bonds issued to said company under the act passed February 11, 1852, and acts amendatory thereof, or not.

"Sec. 2. Be it further enacted, that railroad companies issuing their own mortgage bonds, under the provisions of the act which this is intended to amend, be allowed to fix the rate of interest which the said bonds of the railroad company are to bear, and all laws in conflict are hereby repealed: provided, that when said railroad companies owe interest already due, coupons past due shall be taken by the comptroller or treasurer in discharge of such indebtedness for interest.

"Sec. 3. Be it further enacted, that when any company, under the provisions of this act, shall pay into the treasury of the state bonds which have been issued by the state to said company, the said bonds shall be canceled; but should any company, in discharge of its own debts, pay into the treasury any bonds that were issued to other companies that may still be indebted to the state, such bonds so paid in shall not be canceled, but shall be held by the state as purchased bonds, retaining a lien for the state upon the road to which said bonds were originally issued until the debt of said road to the state shall be fully discharged when the bonds so held shall be canceled: provided, that the provisions of this act shall not be so construed as to allow the payment and satisfaction of debts created by bonds issued by the state, and upon which the state is secondarily liable, nor to the payment of the sinking fund, now required by law, of the railroad companies of this state.

"Sec. 4. Be it further enacted, that this act shall take effect from and after its passage."

Under these statutes the companies whose roads are involved in the present suits against the Memphis & Charleston Railroad Company, the Louisville, Nashville & Great Southern Railroad Company, the Nashville & Decatur Railroad *Company, the Nashville, Chattanooga & St. Louis Railroad Company, the East Tennessee, Virginia & Georgia Railroad Company, the Chicago, St. Louis & New Orleans Railroad Company, the Memphis & Tennessee Railroad Company, and the Mobile & Ohio Railroad Company, by the use of substitution bonds or otherwise, obtained from the state a discharge of the liens upon their property under the act of February 11, 1852, and the acts amendatory thereof, so far as the state had the right to execute such a discharge. In doing so, however, they used, to some extent, other state bonds than those which were issued to them originally under the provisions of the act. The bonds so issued and not returned to the state constitute the causes of action on which these suits are brought against the companies above named.

To provide for cases where the companies failed to meet their obligations to the state under the act of 1852, and did not comply with the provisions of the acts of 1869 and 1870, an act of December 21, 1870, was passed, in which,

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