Title: W. A. Field to John A. Rawlins, 28 June 1869
Date: June 28, 1869
Source: Transcribed from digital images or a microfilm reproduction of the original item. For a description of the editorial rationale behind our treatment of the correspondence, see our statement of editorial policy.
Location: National Archives and Records Administration
Whitman Archive ID: nar.01941
Contributors to digital file: Joshua Ware, John Schwaninger, and Nima Najafi Kianfar
June 28, 1869.
Hon. John A. Rawlins,
Secretary of War.
I have the honor to acknowledge the receipt of a letter from the Secretary of War, dated October 16, 1868, transmitting to the Attorney General's office certain papers relating to the Memphis, Clarksville, and Louisville Railroad Company, and its indebtedness to the United States,—in which the Secretary of War asks the opinion of the Attorney General as to the best course for the Department of War to pursue to assert and maintain the rights of the government in the premises; Also to acknowledge the receipt of a letter from the Secretary of War addressed to the Attorney General, dated January 9, 1869, relating to the indebtedness of the State of Tennessee, and of certain railway companies, in that State, on account of railway material sold to the State and the companies by the United States—And the Secretary of War requests that the Attorney General will cause to be instituted by competent counsel the necessary legal steps for the realization of the claims, and the protection and defence of the interests of the United States against any and all proceedings which may threaten to impair the rights of the Government; also to acknowledge the receipt of your letter of May 31st ult., relating to the indebtedness of the late Wills Valley Railroad Company, of the State of Tennessee, to the United States, in which you request me to give to the proper law officers instructions to institute such legal proceedings in the premises as are best fitted to promptly protect and secure the interests of the United States.
The railroads named in these letters are the following: The Alabama and Chattanooga Railroad Company, formed by the union of the Wills Valley Railroad Company with another corporation. The indebtedness of the Wills Valley Railroad Company to the United States is about thirty-three thousand, four hundred and ninety four dollars, and nine cents, ($33,494:09,) secured by a bond given by the Railroad Company.
The Memphis, Clarksville and Louisville Railroad Company, now in bankruptcy. The indebtedness of the State of Tennessee to the United States for materials delivered to be used on this Railroad is about three hundred and thirty-six thousand, nine hundred and thirty two dollars, and thirty six cents, ($336,932:36,) secured by bonds given by the State of Tennessee.
The Edgefield and Kentucky Railroad Company. The indebtedness of the State of Tennessee to the United States, on account of materials delivered for the use of this Company, is about one hundred and fifteen thousand dollars, ($115,000,) secured by two bonds executed by the State of Tennessee.
The McMinneville and Manchester Railroad Company, which is indebted to the United States for about Forty-seven thousand dollars, ($47,000,) secured by two bonds of the Railroad Company.
The Nashville and Northwestern Railroad Company, which is indebted to the United States for about Five hundred and twenty-six thousand dollars, ($526,000,) secured by two bonds of the Railroad Company.
The conditions and stipulations of all these Bonds are substantially the same, and in all of them the conditions have been broken.
In all cases where the bond is executed by the State of Tennessee the United States can call upon the State to pay the penalty of the bond, and can probably, if thought best, sue the State in the Supreme Court of the United States. The United States can also take possession of any of the property sold, if they can find any, and proceed to enforce the lien. Probably but little of this property can now be identified, and taken possession of. Whether, when the bond is given by the State, the United States can, pursuant to one of the conditions of the bond, appoint an agent who shall take possession of and run the road, and apply its revenues in payment pro tanto of the indebtedness to the United States, is doubtful;—because it is doubtful whether the Act of the Legislature of Tennessee authorized the Governor to execute a bond with such a stipulation—and because the State of Tennessee is not the owner of the road, but is only a creditor having a statutory lien, with the right to appoint a receiver to enforce this lien;—and it is doubtful if the State, without the authority of the Railroad Company, could grant to the United States the right to take possession of the road. There appears in the papers no assent of the Company. The property sold by the United States was delivered to a receiver appointed by the State, and the bond was given by the State. If this is all, the Railroad Company does not owe The United States, and the United States would have no debt to prove against the estate in bankruptcy, of the Railroad Company.
In those cases where the bond is given by the Railroad Company, the United States can sue the Railroad Company, on the bond. If the Company is solvent, the debt can be collected. If insolvent the Company can be put into bankruptcy, and the United States are entitled to priority of payment, next after the payment of fees, costs, and expenses.—But if the Company has secured its creditors prior to the date of the bond to the United States, by mortgage of its property—or if its indebtedness to the State of Tennessee was made a lien on the property prior to the date of the bond, given to the United States, it is a question how far the debt of the United States would be entitled to priority to debts thus secured. The United States can take possession of any of the property sold, and enforce its lien, or appoint an agent to run the road, and apply its revenues in payment pro tanto of the indebtedness of the road to the United States.
It is not for this office to determine what is the best course for the Department of War to pursue in order to assert and maintain the rights of the Government in the premises; but merely to give an opinion upon the questions of law, and when the course to be pursued has been determined by the War Department,—to give the proper instructions to the law officers of the Government.
If legal proceedings are to be commenced against the State of Tennessee, or against the Railroad Companies, special counsel must be employed to assist the District Attorney.
If after having thus expressed an opinion upon the legal remedies which the United States can pursue, the Department of War will decide whether any legal proceedings shall be instituted—and, if any, what proceedings—I will then, on being informed precisely of the wishes of the Department in the premises, issue the proper instructions to the District Attorneys in Tennessee.
The papers in all these cases are herewith respectfully returned.
I have the honor to be,
Your obed't serv't,
W. A. Field,
Acting Attorney Gen'l.