Baltimore v. Baltimore Railroad

Messrs. W. H. Norris and G. H. Chandler, for the city, plaintiff in error: 1. The case shows that the position of the city in relation to the railroad was that of a surety. The transaction was in fact but a loan of credit for the benefit of the railroad. The bonds of the city were of a higher market value than bonds of the railroad, though of no higher real value; and so the city issues its bonds; the company stipulating that it will always pay to the register of the city, at least ten days before it becomes due, the interest on its mortgage (being the same sum exactly which the city has to pay on its bonds), so that without raising a cent by taxation the city might pay this large sum of interest; and the railroad agreeing also that when the principal is about to fall due it will put into the city treasury a month before it is actually due all principal not redeemed by the operations of the sinking fund. This is a pure loan of credit.