Hand v. Savannah & Charleston Railroad

Haskell, A. J.

I am unable to concur in the construction given to the act of 1856. 12 Stat. 467.

The act is ambulatory in its character and passes over an extended period of time, providing for a succession of progressive events and separate transactions before it establishes the final provision which is to govern the whole as an entirety.

Section 3 is made, by the majority of the court, the key of the construction and to govern the act, but is strictly applicable only to the twenty-mile or fractional division of the road, and the bonds issued for its outfit and completion. For the section is partial in its nature, and antecedent, both in the act and in its legal bearing, to so much of Section 4 as becomes of force on the completion of the whole road, and applies to all the bonds endorsed by the state at any time, issued to effect the completion of the several divisions of the road. Section 4 was part of the contract created under Section 3, and even if, as is held, the lien had vested in the bond, upon its issue for the completion of each fractional division, it so vested subject to the provision of Section 4, and on the completion of the road passed over and vested again in the state, subject to its control under the power reserved in Section 5.

But no such difficulty arises in the view my mind is constrained to take of the act. Section 3 enacts that “ the State of' South Carolina, upon the endorsing of said bonds, and by virtue of the same, shall be invested with said lien or mortgage,” &c. It is immaterial to consider whether “ by virtue of the same,” refers to the “ endorsing ” or to the bonds thus endorsed, for, under the view taken, the result would be the same. Section 4 provides that when the whole of said road shall be completed *368the State of South Carolina shall be invested with a lien, without a deed from the company, upon the entire road,” &c.

The difference of construction arises upon the meaning of the word “constitute,” in the preceding portion of Section 3, by which it is provided “ that so soon as any such bonds shall have been endorsed as aforesaid, for the first section of the road as aforesaid, they shall constitute a lien upon said section so prepared as aforesaid,” &c.

It is held that this provision, overbearing all other language used in the act, renders the lien accessory to the bond and vests it in the subsequent holder of the bond — the purchaser.

The analogy of a judgment used in the reasoning would be satisfactory if made complete. Thus, if it be enacted that A institute an action, and that the judgment, when entered up in the name of A, shall constitute a lien, and that said lien shall be for the benefit of B, and as soon as established shall vest in B, the cases would be similar. The plain interpretation is, that the judgment held by A would be evidence of the lien, but that the lien itself would be vested in B. “ Constitute,” in its primary sense, means “ cause to stand, set up or establish •” and, in its secondary sense, “compose of, form,” which latter is the construction adopted by the majority of the court. And such would be quite admissible were it consistent with the positive language used in other portions of the act, but when it produces inconsistency, the primary meaning, which is entirely in harmony with the rest of the act, should have preference. Adopting, therefore, the word in its primary sense, Section 3 means not that the bonds shall, in themselves, compose or form a lien, but that they shall, by their execution and endorsement, establish or be evidence of a lien. In whom that lien shall be vested is thus left open, and is determined by the second provision of Section 3, so far as regards each fraction of the road, and finally as to the whole road by Section 4, whereby the said lien is invested in the state. The bonds are thus the evidence of the creation of the lien which vests according to the statute.

The view that the vesting of the lien in the state was intended as only a temporary provision, of force only so long as the bonds, after endorsement, remained in the hands of the railroadAom*369pany, is refuted by the purpose and provisions of the act, which authorizes the bonds to be endorsed in parcels proportionate with fractional divisions of the road. The plain object is, (1) to facilitate the completion of the road by sections; (2) to enforce the application of the proceeds of the bonds at the rate per mile fixed by the act; and (3) to insure the completion of the entire road down to the last fraction before the endorsement of the last batch of the bonds. To effect such purposes the bonds would be sold in the order in which the sections were completed in compliance with the act, and, consequently, would all be in the hands of purchasers before the final completion. "What, then, could be the sense of a provision like that in Section 4, to vest in the state a lien, the* title to endure only so- long as the bonds remained in the hands of the railroad company, when ex necessitate, the bonds must go out of such hands before the accrual of the period to which the provision in Section 4 relates, viz., the completion of the entire road. The other reasons advanced to aid in the construction of the act are sufficiently met by the view that the guarantee by the sovereign power is superior to any and all class of securities, so long as good faith is observed by the government ; and that it will be, is always to be presumed. From such point of view it would be a detriment rather than an advantage that bondholders should be compelled to exhaust all legal remedies before they could look to the state for the fulfillment of her pledge, and such anticipation would, in 1856, the time at which the act was passed, have diminished rather than increased the market value of the bonds.

I concur in the other points decided, so far as they do not conflict with the views herein expressed.

Decree affirmed.