Page:Federal Reporter, 1st Series, Volume 8.djvu/151

CLAFLIN l>. BOrTH CAEOLINA R. CO. 1S7 �t!ie ruie laid down by the supreme court in Ketchum v. Duncan, 96 D. S. 659. Certainly, there can be no elaim of bad faith on the part of the syndicate. In Cbarleston full as much notice was given that the coupons were bougbt as was. shown in the Ketchum Case, and while there was no such notice in New York, the payments were made in a somewhat unusaal way, and no one took the trouble to inquire why. I cannot but think that, but for a misinterpretation of the books of the syndicate, this defenoe would not have been made. ■The arrangement with the syndicate was, in every respect, fair and honorable. Ail the members of the association were directors and members of the iinance committee of the board. They were to be paid nothing for their services or the risks they assumed. So far as appears they were in no condition'to be personally beneiited by what was done; and in all the mass of testimony^not a word is to be found refleoting on their integrity in the niatter. There is hothing what- ever in the case to show that the transaction was anything else than a laudable effort on the part of the directors to tide the company over what was supposed to be but a temporary embarrassment, brought about by an unexpected falling off of business, with the hope that, upon a revival of business, a disastrous failure might be avoidod. The bondholders have lost nothing. The money they got when they gave up their coupons is certainly worth aa much as theit security under the mortgage would be to them now. �But it is still further contended that if the coupons were in faet bought, they have since been paid. This might be true, if, as bas been assumed, the coupons were charged in general account against the company, and the payments made from time to time by the com- pany applied to the satisfaction of the several items of charge in the order of their entry; but, as I have already shown, the transaction between the parties never took that form. The syndicate bought the coupons, and has never charged them in account against the com- pany. They were originally taken, and are still held, as coupons. When money was advanced the company'a note was taken, or some- thing equivalent done. No general charge in account was made. ' Aa moneys were paid by the company they were credited at large, with- out ahy specifie application. In this waj', at the end of the year, when the contract expired, a large amount stood in open credit to the company. "The parties then met and made their adjustments. The credit at large was all exhausted by its application to other pur- poses than taking up the coupons. This the parties were at liberty to do. From the books it is apparent that the application was actu- ��� �