The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1868-07-08
The Union Pacific Railroad and tho Credit
MObiiicr.

The Union Pacific Railroad and tho Credit
An important suit was commenced in the
Supreme Court of this district on Friday last
against the Union Pacific Company and the
Credit MObhier by stakeholder in the former
to restrain the Union Pacific Company from
paying or delivering to the Credit Mobilier any
United States bonds or land grants from the
government or bonds issued by the Union
Pacific Company and to similarly restrain the
Credit Mobilier from receiving them, and ask
ing that all contracts and arrangements made
between the two corporations be declared
fraudulent and set aside and that the Credit
Moblier return to the Union Pacific Company
all securities and other property or the pro-
ceeds thereof at any time received from
the Union Pacific Company, and that
it be restrained from paying any divi-
dend or making any distribution of profits
until the liabilities OF its directors and stock
holders to the Union Pacific Company arc
determined. In support of this application il
is alleged that the directors of the Union
Pacific Company, instead Of building the road
10y their own officers or making . reasonable
contract for the work, they, for purposes of
their own, established the Credit Mobilier and
placed in its hands the construction Of the
entire railway and telegraph line. II Is fur
Their alleged that by some arrangement between
the two organizations the bonds issued to the
Union Pacific Company by the government,
the grants Of land made to il and the bonds
issued by II under acts of Congress have been
transferred to the Credit Mobilier, or that the
control and benefit of the same have been
vested in that corporation. The profits of the
Credit Mobier have been very large, and it
being q close corporation they have been
divided among those of the directors of the
Union Pacific Company who control II, while
the stockholders of the Union Pacific
Company, who ought to have reaped the
benefit of these large gains, have been left
without any dividends whatever. The plain
Tiff in this action, therefore, asks that the
Credit Mobiler be declared fraud upon the
Union Pacific Company, and that It's directors
be held to have acted as trustees for the Union
Pacific Company and made accountable for all
their transactions Upon this complaint Judge
Barnard granted an injunction, and the de-
PENDANTS will have TO show cause against II on
the 2lst inst.
A strong case seems to have been made out
against the Credit Mobilier and its directors II
the allegations referred TO are true, and .
Congressional inquiry into the matter may be
the result. The acts Of Congress authorized
the Union Pacific Company, and not the Credit
Mobilier, 10 build the road, and the profits
Of its construction should have gone
to the stockholders of the former aud
not to those Of the latter which Is wholly
distinct corporation. Thus the spirit II not
the letter, of the acts has been violated. The
extent of the profits of building the road may
be Inferred from the enormous dividends made
by the Credit Mobilier. The government has
issued TO the company bonds at the rate OF
sixteen thousand dOllars "Ar wils over prairie