Page:Federal Reporter, 1st Series, Volume 8.djvu/141

 CLAPLIN V. SOUTH CABOLINA R. CO. 127 �mortgage. What I have said in respect to the other pledges is equally applicable to this. The same is true of the bonds held by the defend- ant Moise. There is no dispute as to the debt he holds, or the fact of the pledge in good faith before this suit was begun, and before the bonds were due. �The next questions presented are those connected with the guaran- tied South Carolina Eailroad bonds, issued under the act of 1865, 10 in number, and£G,000 in all. Nine, of £600 each, are held by the syn- dicale as collateral to a note of the company to E. L. Trenholm, and the other is also held by the same parties under the general arrange- ment, -which will be considered hereafter. The facts are these : In 1866 the company had in some way got to be the owner of a considerable amount of the old Louisville, Cincinnati & Charleston bonds. For these were substituted an equivalent amount of bonds guarantied by the state under the act of 1865. Ail the substituted bonds were afterwards put out by the company, so as transfer the absolute own- ership, except the nine pledged to Trenholm. These were given to him in 1870 as collateral to a loan or loans then made. The orig- inal note given for the loan was renewed from time to time, Trenholm still retaining the pledge, until it was purchased by the syndicate, by whom the note and collaterals are now held. I have no doubt that bonds guarantied by the state under the act of 1865, and actually substituted for a like amount of the issue under the act of 1837, bound the state and the company so as to carry with them the stat- utory lien, whether issued in lieu of bonds before owned by the com- pany or not. When the company got the guaranty, it could do with the new bonds what it pleased. If actually exchanged for bonds of 1838, and the old bonds taken up and cancelled, they could be nego- tiated, if they had the guaranty of the state on them, so as to carry the statutory lien which the guaranty brought into operation. The first mortgage did not of itself vacate that lien. When a first mort- gage bond was actually put out in place of the old one, the lien under the mortgage was substituted for that of the statute. Sinee the aggregate of the statutory and first mortgage liens cannot exceed £620,000 of principal debt, it is of no consequence to the second mortgagees whether the bonds ahead rank as one or the other of the acknowledged prier securities. The company was under no obliga- tions to take up the old bonds and put out the new. So long as there were no more out in the aggregate than the second mortgage eontem- plated, there could be no ground of complaint. It has been sug- gested that the first mortgage was not to be used until the holders of ��� �