White Water Valley Canal Company v. Vallette - 62 U.S. 414 (1858)
U.S. Supreme Court
White Water Valley Canal Company v. Vallette, 62 U.S. 21 How. 414 414 (1858)
White Water Valley Canal Company v. Vallette
62 U.S. (21 How.) 414
Bonds issued by a canal company, pledging the real and personal property of the company for the payment of the debt and interest and containing other corresponding stipulations, will be treated by a court of equity as a mortgage, and enforced according to the intention of the contracting parties.
Bonds issued in payment for the completion of the canal were not usurious by the laws of Indiana, although they purport to be for a loan and although the sum for which they were issued was largely greater than the estimated cost of the work.
The power to issue these bonds is derived from the charter of the company. Moreover, the contract was sanctioned by a special law of the state. And if the contract had been originally illegal, this law of the state would have prevented either party from setting up the illegality as a defense.
The decree of the circuit court appointing a receiver &c. is therefore affirmed.
This was a bill filed on the equity side of the court by Vallette, a citizen of Ohio, against the White Water Valley Canal Company, a corporation created by a law of the State of Indiana. The whole suit was conducted according to the rules of a court of chancery. After the decree, the company prayed an appeal in open court, filed a bill of exceptions, which was allowed and signed by the district judge, and upon this a writ of error was sued out.
The nature of the contract and form of the bonds are set forth in the opinion of the court.
The heading of the bonds was as follows, viz.,
"UNITED STATES OF AMERICA,"
"State of Indiana"
"$1,000 No. 18"
"The White Water Valley Canal Company"
"Canal Loan. Seven percent bond under the act of the General Assembly of the State of Indiana, entitled 'An act to incorporate the White Water Valley Canal Company,' January 20, 1842."
"Know all men by these presents, that there is due from 'the White Water Valley Canal Company' to Henry Vallette, or bearer, the sum of &c. "