Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1880-02-04
ANOTHER OPINION.
Shall the United States Violate It's
Contracts With the Pacific
Railroad Companies
Dissenting Opinion Of Mr.. Justice Strong,
Of the United States Su-
preme Court.
He Says that the Thurman Act is Plainly
Transgressiye of LegiSla'
tive Power.

In my opinion the Act of Congress of May I, 1873,
is plainly transgressve of legislative power As
said by Mr. Ham lton in his celebrated communica.
ton to the Senate, of January 20, 1875, When
Government enters into contract with an indi-
viduai it deposes TO the matter of the contract
its constitutional authority, and exchanges the |
character of legislator that of moral agent,
with the same rights and obligations as
an individual. Its promises may be justly con-
sidered as excepted out of its power to legislate,
unless in aid Of them. 1t is in theory impossible to
reconcile the idea Of promise which oblges with
power to make law which can vary the effect Of
it," g Hamilton's Works, 51S-l9) op mons SINH.
lar to this have often found expression in judicial
de sions. even in those of this Court If this be
sound doctrine it is as much beyond the power OF
Legislature, under any pre- tense TO alter contract
into which the Government has entered with pri-
vate individual as it is for any other party to a
tract to change its terms without the consent of the
person contracting with him. As to its contract,
the Government in all its departments has laid aside
its sovereignty, and it stands the same footing
with private contractors.
THE CONTRACTS OF THE GOVERNMENT
With the Union Pacific Railroad Company, and with
the Central Pacific, which the Act of Congress Of
1875 has in view, were not made by the Act Of
1862 the Act chartering the former company, nor
by the amending Act of 1864. They were made after
those Acts had been accepted by the companies and
after their chartered rights had been completely ac
auired There was no agreement of the companies
to repay the loan Of Government bonds made TO
them, until the bonds were issued and de
livered The companies were under no obi
CATION to accept the loan and assume
the liability resulting from its acceptance The
tracts, therefore, part of the charter of the
Union Pacific Company, and no part of the Acts of
1862 or 1864. They are subsequent to those Acts
and independent of them. II is true Congress
authorized the loan. 1t made the companies offers
to lend upon certain conditions, and when those
offers and conditions subsequently accented,
the contracts of loan made. Not until then.
Before that time there nothing but unac-
cepted offer.
What, then, was the contract when it made?
The Government lent its bonds, and, in consdera-
alton of the loan, each company assumed five obi
cations: First, to pay the bonds at their maturity
that is at the expiration of thirty years second, to
keep the railroad and telegraph lines in repair and
use third, to furnish transmission Of dispatches
and transportation for the Government at reason
able rates, allowing it preference for such pur-
poses fourth to apply to the payment Of the bonds
and interest half the compensation due it from the
Government for services rendered, until the whole
amount of the loan is fully paid and fifth, after the
completion of the railroad, to apply to the payment
OF the bonds at least five per cent. annually of its
net earnings The lender required and the Dor
rover undertook nothing more.
1t is manifest that by this contract the Govern
ment acquired vested right TO payment al the
time and in the mode specified well as to prefer
ence of transportation and transmission of dis
patches, and the company acquired vested right
to retain the consideration given for its assumption
that is,
A VESTED RIGHT TO WITHHOLD PAYMENT
Until by the terms OF the contract payment became
due. The contract implied an agreement not to
call for payment or additional security before that
time. | cannot conceive Of any rational doubt of
this There is teehnicality about vested rights.
Most of them grow out OF contracts, and no matter
how they arise, they are all equally sacred, equally
beyond the reach of legislative interior fence. A
vested right of action is property in the
in which rights to tangible things are, and is equal
" protected Whether it springs from contract or
from other rules of the common law it is not COM
petent for the Legislature to take it away. Ii we
look at what must We been the understanding of
all parties to these contracts of loan, the rights
ated and vested under them cannot be in doubt.
The Government sought to induce private adven-
turers to construct railroad and telegraph line
to the Pacific ocean, work which neces-
sarily required years and immense
penditures for its accomplishment. loan,
payable on call or within short time, would have
been no inducement. Had it been dreamed that
call could have been made at any time thereafter
designated by Congress, it is inconceivabe that the
loan proffered would have been accepted. 1t would
have furnished no reliable basis for an attempt to
build the road. The parties could not so have un.
derstood the bargain. The bonds were required to
be paid by the companies only at their maturity
cept SO half payment for governmental service,
and five per cent. of the net earnings, after the
completion of the road, might pay. The contract,
therefore, means exactly what it would have meant
had it contained the express stipulation, the Uni
ted States shall not require payment of the amount
of the bonds or any part thereof Except half COM
pensation for services and five per cent. Of net
earnings) until the expiration of thirty years from
their issue to the company, or date nor shall add
tional security be required, beyond the lien
served" Such the contract. 1t not
of the franchises granted in the charter
of the Union Pacific the Central, but
it was business transaction, differing in
nothing except parties, from what it would
have been if it had been made between two private
individuals. 1t is true Congress authorized the
loan the terms upon which it was made, but, as
have said, the contract was not made by the act of
Congress, or with Congress. 1t was a subsequent
transaction, and the United States became party
to it, not in its sovereign character but as civil
corporation, as said by Mr.. Hamilton, with the
same rights snd obg ations private person, and
no more.
NOW, WHAT HAS BEEN ATTEMPTED BY THE
ACT
OF May II, 1878? The Act was passed it'll sole ref
to this contract and all its provisions have
in view the imposition of additional obligations
upon the railroad company. 1t does not purport to
be repeal of the charter. Its leading purpose is
to take control of the property of the debtor and
sequester it for security of debt, which, by the
terms of the contract, is not due and payable for
years to come. shall not go all its provisions.
1t will be sufficient to notice some of the more
prominent ones which, if they are ruled to be OPP
erative greatly change the contract which the par
ties made when the bonds were delivered and ac
cepted, when the contract closed, and which
imposes new and oppressive obligations upon the
debtor.
BY the contract only one-half the compensation
for services rendered to the Government was re-
quired to be applied to the payment of the bonds
hut by this Act the whole amount OF the couipensa
ton which may from time to time be due for SER
vices rendered to the Government is directed to be
retained by the United States, and at the same time
the obligation to render those services is continued
By the third section of the Act sinking fund is
established in the Treasury OF the United States;
that is, in the treasury of the creditor; and the
fourth section enacts that there shall be carried
into that fund, on the first day of February in |
each year. the one-half of the compensation |