STATE OF MARYLAND,.
ATTORNEY GENERAL'S OFFICE,

Baltimore, 23d Feb., 1.870.
Hon. L. Woolford, Comptroller :

DEAR SIR:—In reply to the inquiries in your letter of 19th
inst., I have the honor to state, first, as to the power of the
Chesapeake and Ohio Canal Company to fund the unpaid

coupons of the preferred and repair bonds so as to make them
bear interest, and give such funded debt priority ever the

debt due by the Company to the State of Maryland, I am

clearly of opinion that the Company has no such power. Ad-
mitting for the sake of the argument, that the repair bonds
as well as the preferred bonds, were authorized by the Act of
1844, to take priority of the State's debt, the extent of the
State's waiver was to the net revenue and tolls to pay the in-
terest and provide a fund to redeem the principal, with an
express proviso that the "State shall, in no case, be bound
or held responsible for the payment of the said bonds or of
the interest thereon." Those who took the bonds knew
well that until there accrued net revenues and tolls they

could get nothing. When such tolls are in hand they are
applicable to pay the interest in arrear. But there is no au-
thority to compound the interest to the prejudice of the State.
The bondholders got passed, chapter 359, of 1867, which re-
quired the Company to issue certificates for such funded debt,
bearing interest. But the Board of Public Works refused to
execute it, and on appeal to the Constitutional Convention,
after full debate upon this very point, the Convention declar-
ed the Act to be null and void. So unanimous was the vote
that not even a division was called, for. See memorials of
bondholders, proceedings of Convention, 1867, page 317 to
324. Beport of Corn. on Public Works, page 391, &c.,
&c., votes &c., thereon, page 688 to 703. In the case' of
Brady vs. The State, 26 Md. Reps., 300, will be found an
exposition of the Act of 1844, chapter 281, by the Court of
Appeals. It will be seen, page 300, that at the instance of
the Board of Public Works, the State got an injunction vs.
Brady, an attaching creditor, and the Company, restraining
the Company from paying any debts from net revenues to
any creditors not. entitled to claim payment in priority of the
State. And on page 308, the Court say: "The State waived
its priority only in favor of the liens created and authorized
by that Act, " viz.: 1844.

2d. As to the case now pending in this city, State of Vir-
ginia vs. The Canal Company and others, if prosecuted to