The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1879-01-28
THE PACIFIC RAILROADS.


DECISION OF THE SUPREME COURT ON THE DEBT
TO THE aovERNMENT-THE RAILROADS no PAY
IF ANYTHING LEFT AFTER PAYING INTEREST
ON MORTGAGE BONDS.
WASHINGTON. D. c.. Jan. ~. 1872
The following among the proceedings OF the
United States Supreme Court to-day:
No. 736. The Union Pacific Railroad Company, APP
pelant. The United States.--This was suit
brought by the Union Pacific Railroad Com
Pany in the Court Of Chains hn to ats
Congress of July 2, 1864 and March 3.
1871. one-half of the compensation due it Tor the
transportation of mails. troops, supplies and mu-
$4,000. AS defence to this suit the government
up counter claim under the sixth section OF the
act of July 1862 to Ave per cent of the net earnings
Of said road from the date of its completion
81, 900. This claim the Union Pacific Company
resisted on the ground that its road was not COM
is7i and that the interest upon its Indebtedness as
well as It's running expenses. should be
United States entitled to receive percentage.
trial in the Court OF Claims resulted in victory
completed in 1869 and that the government
entitled to receive the difference between half
compensation, which, it admitted due
to the railroad company and the full of
counter claim. From that decree the Union Pacific
Company appealed The questions presented to this
FIrst-when was the Union Pacific Railroad COM
Second-what should be included in the words met
earnngsy" and
Nird-How and under what conditions pay
| This Court, in long and carefully prepared
opinion, delivered by Justice Bradley holds as fol-
lows:-
Ffrst-That, although in one sense OF the word
railroad is never completed never in such way
to make further improvements or greater perfection
impossible, there is no reason why the word com
pctcd" should be construed to mean thing in the
dha nirn % If the road ws
completed in such sense as to entitlc the company
to receive land grants and subsidy bonds from the
| government it also completed in such n
to entitle the government to demand and receive five
| per cont of its net earnings.
obvious that it needs argument. The findings OF
fact in the court below show that the company.
the Court below Of both Of the several Sec
tons OF its road and its whole line prior
of these Observation-Disclosures and of renorts made bv
commissioners appointed to examine the road, it was
accepted by the President. and subsidy bonds and
| patents for land grants upon the whole completed
line duly issued to the company. The latter is thus
estopped by its own action from pleading incomple
| presented.
.Seroad-what should be included in the net earn
| ings? The Court holds in reply to this question.
| that the earnings of the road should include all
r se bS 1hs
Ss income or prost derived ro it's
lands; that in computation OF net earnings
| there should be deducted from this gross sum the
necessary expenses OF operation and all expenditures
| for ordinary improvement and repairs, but not
expenditures arising out of the companys
land department nor interest upon its bonded
| indebtedness. The latter, the Court holds,
is not properly chargcable against receipts
in computing net earnings. While thus deciding
against the Company on this point the Court is
TAird-That the net earnings thus COM
Of the annual interst upon its first mort
gage bonds, and not to the payment
Court holds this to be the legitimate effect Of the
governments waiver of its own priority. Interest
cruing the first mortgage bonds is as rightly pay
able out Of the net earnings is the five per cent
due the government. The net earnings are the fund
adequate only to the payment of one the interest
the first mortgage bonds has precedence, otherwise
the whole government debt might be paid
which is admitted to have priority. Such
| a result would be manifestly absurd. The govern
ment, hewever may claim that il there is not suf-
cient surplus of net earnings in year pay Ave
per cent due for that it may be carried to
plus thereof This position the Court holds to be
untenabe. The statute makes the application an an
the un the Ses its ave per cent?
otherwise it does not and there the account ends. 1t
| was never intended that it should be carried over
| from year to another. In conclusion the Court
directing notifications in the decree in the
Court of Claims. sums up its decision Of the princ
these notifications. it should be found that the
earnings in any one year were not more than sufi-
Gent pay interest on the
ing said year. then the company will not be decrccd
to pay portion OF said five per cent of net earnings
| for that year: but. If the net earnings more
than sufficient to pay such interest the only
will be subject far it will co. to the payment
of said Ave per cent; but the company will not be
| decreed to pay any more than said excess The de-
Of the Court of Claims III reversed. with nstruc
tons to enter decree conforming hereto
Justice Strong read O dissenting opinion for him
| self and Justice Harlan.
No. 703. United States. plaintiff in error, against
! Central Pacific Railroad Company. In error to
| the Circuit Court of the United States for
| tho district of California -Inasmuch this
| case involves the same questions the
Of the Union Pacific already decided, the Court
does not consider It necessary to repeat its opinion
1t the judgment Of the Circuit Court. with
directions to grant trial and to be governed by
| the opinion in the case above referred to-
Opinion by Judge Bradley. Judges Strong and Har-
| dissenting.
No AIS United States, plaintiff in error VS.. Kansas
| Pacific Railroad Company In to the Circuit
Court Of the United States for the district of Kan
sas.--Judgmcnt reversed for given in decs-
| ion Of Union Pacific and cause remanded for
new trial.
Opinion by Justice Bradley.
| No. 7S1. United States. appellant, vs. Denver Pacific
| Railroad and Telegraph Company.-Appcal from the
| Court Of Claims. Judgment affirmed Opinion by
| Judge Bradley.
No. 500. United States, plaintiff in error, against
| the Sioux City and Pacific Railroad Company. In
to the Circuit Court of the United States for
! the District of Iowa. Judgment affirmed Opinion
by Justice Bradley; Justice strong dissenting
NTJnNIGuT WEATHER. REpNPT