Page:Federal Reporter, 1st Series, Volume 3.djvu/683

 676 ■ FEDERAL bepORTBB. �did certify upon each bond that it was "secured by first mort- gage.'* �Many of the companies availed themselves of this legisla- tioii, aiid under its sanction and authority an aggregate of between $30,000,000 and $40,000,000 of sucb mortgage bonda were by the companies isaued and sold, and are now out- standing. �Othër railroad companies did not avail themselves of the provisions of the law of 1869-70. They contiriued to be in default as to the payment of interest, and as to payment an- nually întô the sinking fund required by statute. Proceed- ings by the state were therefore commenced in the state court of chancery, and decrees of foreclosure and sale obtained. �At the sale the state was purchaser. These foreclosed roads were subsequently sold by the state and new companies organized. Payment by the purchaser was made to the state in any outstanding Tennessee state bonds, at their face value, and the purchaser was invested with ail the right and title of the state. �The state, as before stated, had funded her overdue bonds and interest coupons into a new bond, under the law of 1865, and in Pebruary, 1870, another act was passed to again fund unpaid interest that had accrued on the public debt, together with the floating debt of the state, and ail that might become due up to 1874. Holdersof Tennessee bonds, including hold- ers of internai improvement bonds issued to railroad com- panies, generally accepted the provisions thus made for retir- ing overdue interest coupons, as they had done under the act of 1865. The state of Tennessee, however, again defaulted in her interest January 1, 1875, and subsequently openly repudiated her bonded debt, for the payment of which the faith and credit of the state were solemly pledged. �The internai improvement act of February 11, 1852, will alone be referred to, as it contains ail the provisions necessary to be considered. The lien is declared by the third section, which is as follows: "That so soou as the bonds of the state shall have been issued for the first section of the road as atoresaid, they shall constitute a lien upon said section so ����