The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1879-10-21
Important Decision by the United
States Supreme Court
SUSTAINING THE THURMAN ACT.
Payment of the Government Obligations
To Be Provided For

pany, appellant VS.. The United States-Appeal from
the Court of Claims; and No. 972. OF 1878. Inc
Central Pacific railroad Comany ct al, appellants
VS.. Albert Gallatin-Appeal from the Circuit
Court of tho United States for the Dis
trict of California.-These cases, both Oh
which involve the consttutioraiity Oh the
Pacific Railroad act of May Z, 1878, known
as the Thurman act. were decided and the decisions
announced on the last Monday of last term. but
owing to a great pressure of business neither the
majority OF the Court the Justices who dssented
were able to prepare written opinions in time to be
delivered when the decisions were rendered. Opin-
ions have since, no viewer, been prepared and were
delivered this afternoon. Chief Justice Waite read
the opinion of the majority of the Court sustaining
the consttutionaty Of the act in question: and dis
seuting opinions delivered by Associate JUS
tees Bradley. Strong and Field.
THE SINKING FUND PROVIDED
The opinion of the Chief Justice. which deals es-
pecially with the of the Union Pacific, is in
brief outline, follows:-The precise point to be
determined. in the opinion of the Court is whether
q statute which requires the company in the man
agement of its affairs. to set aside portion OF its
income as a sinking fund to meet its subsidy bonds
and other mortgage debts when they mature. de-
prves the company Of it's property without due
process of law, or in any other way i'm
properly interferes with vested rights" The
Court holds that the railroad company is sub
ject to legislative control so far us its
business affects the public interests: that by the
contained the chartering acts of 1862
and 1864 Congress retains full power to make such
alterations and amendments Of the charter as como
within the just scope of legislative power. In so
doing it cannot undo what has already been done
unmake contracts which have already been
made, but it may provide for what shall be done IN
the future and may direct what preparation may be
made for the due performance or contracts already
entered into In less than twenty years from
he
Union Pacific Company about OOO, secured by
first and subsidy mortgages, besides the capital
stock representing $50 o $1,000 more. With the
cepton OF the land grant little, IL anything except
the earnings of the company. can be depended on to
meet these obligations when they mature These
earnings the company after paying the interest
its bonds, has been dividing from time to time
among the stockholders. without laying by anything
to meet the enormous debt which Is so soon to be-
come due. Thus the stockholders OF the present
time are receiving in the shape OF dividends that
which those of the future may be compelled to
lose. The United States occupy toward this corpora
ton twofoid reation-that or sovereign and that
Of creditor In their relation of sovereign 1t is their
duty to to it that the current stockholders do
not appropriate to their own use that which in
equity belongs others. A legislative regulation
which does no more than require them to submit to
their just contribution toward the payment of
bonded debt cannot Ill any sense be SAID to deprive
them OF their property without due process Of law.
The Court holds, therefore, that the legislation COM
planned of may be sustained as reasonable
regulation Of the affairs of tho corporation ana CO.
promoIve OF the interests OF the public aud the cor
porators. 1t is also warranted under the authority
rights, privileges and immunites granted by the
charter The Judgment Of the lower court is
affirmed.
JUSTICE sTRoSa's DISSENTING OPINION.
r From this decision Justices Strong, Bradley and
Field dissent in long and carefully prepared opin-
ions. Justice Strong maintains that the Thur
man act is plain transgression OF legsla-
tive power; that the government. in its
contract with the railroad companies, laid
aside its sovereignty. and that the contract is
part of the charter of the Union Pacific Company or
of the acts OF 1862 and 1864. 1t was subsequent
iran md he ted q
it. not in its sovereign character but Us civil cor
poration. with the same rights and obligations rs
private person and no more But what does the act
of May 1873, attempt to do? 1t does not purport
be repeal of the charter All its provisions have
in view the imposition OF additional obligations upon
the railroad Its leading purpose is take
control the property of the debtor and sequester
1t for the security of u debt which. by the terms
of the contract is not duo and payable for years to
come To claim such power Is to claim the right
to disregard the contract entirely and substitute tor
it o different without the consent OF the debtor.
II the United States exact now oncuarter OF the
earnings of each of these companies and place it
in their Treasury they can, by the same power and
with the exact the whole of the earnings,
or any other property equal to the amount OF the
debt. Such Legislative power as this is not only not
conferred by the constitution, but in effect Is ex-
pressly denied in those clauses OF the NTH amend
ment which provide that no person shall be deprived
OF lire liberty property without due process or
law and that private property shall not be taken for
public without just compensation. Further
more it may well be doubted whether the act OF 1878
is even an attempted exercise OF Legislative
power. A statute undertaking to take the prop
OF A and transfer IL 10 u is not leSls-
la.ion. 1t would not be law: 1T would
be decree sentence. the right TO declare
which, ii it exists at all, is i'll the Judicial depart
ment of the government. Congress would in such
:ase be trying perform the functions OF court.
by the under consideration the creditor becomes
the custodian the debtors properly. and acquires
Alright to hold aud manage 1t If it were his
1t is absurd to that this Is not practically rad-
cal change in the relations between the parties
established by the contract, and it is equally i'm
possible to maintain that 1t Is not depriving the
debtors of their property without due process OF
1akr Itrett Gtr..nsf nns1n fln
net of 1878 IS not only unauthorized 10y any power
existing i'll Congress. but is an infraction OF the
the constitution.
JUSTICE FiEIp CONDEMNS GOVERNMENT.
The dissenting opinion OF Justice Field begins as
ii also dissent from the Judgment of tho Court in
these The doctrines announced VIII. i'll my
opinion, create great insecurity in the title to
porate property in the country With many asser-
lions to the contrary, they i'll effect declare that the
general government is under no legal obligation
10 fulfil its contracts. and whether 1t shall
do so in any or not is question OF policy and
not OF duty They also recognize its right to appro-
pirate by legislative decree, the earnings OF corr
pora.on with which IL deals, without judicial in
curry and determination as to its claim to such earn
inrs thus sanctionng the exercise of judicial func
lions in its own cases. and finally they assert SUI
premacy OF the federal over the State govern
ment in the control of tho corporations of
the latter utterly subversive of the rights
of the State" After recting the organization
of the Central Pacific Railroad Company AZ
A CORPORATION of the State California, the rcser-
vations of power made by the State III the com
pany charter, the construction OF tne ROAD anu .s
full col plance all respects with its engagements
and the pas.ape of the Thurman act requiring the
establishment of sinking fund, Justice rieid con-
tinues "t il not material, III the view take OF the
subject whether the deposit III the Treasury OF tho
creditor OF this large sum be termed payment or,
by jugglery of words, be called something else IL
is the exaction from the company OF money DC
longing to It for which the original contract
did not siipulate that constitutes its oblectohaoie
feature. The act of 1878 makes complete chahgo
in the rights and liabilities OF the company. its
purpose however disguised by specious pretexts, IL
to coerce by Legislative decree the payment OF
moneys years in advance OF the time prescribed by
the original contract. That II is as unconstitutional
in its character as IL Is unjust in its operation,
have no doubt whatever. and have yet to hear any
reasons which seem to me even plausible Tor
its maintenance. l do not under.
stand or appreciate that doctrine which would
ascrbe to the federal government sovereign right
to treat IL may choose corporations with which 1t
deals, and would exempt 1t from that great law OF
aL.aaall Ill .xas.a