New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1881-01-30
RAILWAY INTERESTS.
THE CENTRAL PACIFIC SUIT.
POSITION OF THE COMPANY AND THE GOVERNMENT
AUDITOR.


General ON behalf of the Government Of IT, United
States AGAINST tre Central Pac1o Railroad Com
pany, in which Judge Choaie on lhHsu'S
last granted an injunction restraining 'he cur"
pany from paying the February uFl"eu''
was brought rs an aIncabe suit in accordance Win an
understanding between the Atorney-General anu tno
officers Of the company effect judicial settlement "a
the difference of opinion which had arisen between the
Government Auditor Of Railroad Accounts, MT frepcu'
and he officers OF the company. as To their TIguI W
clare and pay the dividend mentioned ABOVE l"o
Auditor claimed that. under the THU man ac 'Ae cum
pany had tat TO declare the dW'deno' vi
tho ground that tao surplus not earnings OF inc
comnonv during the last year had not been
sufficient IL the dividend were paid to meet the regular
interest expenses and 9th demands on the company
without leaving deficit it appeared that tne 'o"
pany had declared three regular seil9hnut' ui'i'e
since January 1890 and the Auditor claimed that theS
dividends ought to have earned within the eighteen
cpts ro rulv 1879 to the date Of the dividend the
payIne, ( of which Is now euomod. Tie amount Oh INC
alleged deficit has yarOusly ltcu, anu IL IS eS'
mated 10 the complaint az $737,37|
On the part OF the my IL wa heH'
that nothing ener in law or usa q required u 10 ec.e
ts dividends FROM the earning OF any particular PERIOD
but that the right or . stockholders was unquesuoh'
able to the distribution of ~ slrF US on hand wnIch
might have accumulated 7ince the organization OF tue
company No DIV ldends had been declared Tor seVe
years prior to 1873. although the net q" T.
inys Of the ;Oad had ben very large; AZ"
again. no ligiden6s had been declared Hoh'
1877 to 1890 The authority Of the Auditor, nc mas
,ny. 10 restrain the payment Of the DIVIDEND 0Ic
February l. 1884, to be :Oun IN the Thurman Sinking
Fund act which applles equally 10 the Union Faclhc
and the Central Pacific Companies. Ihe Oii' CTS OIL 'De
latter company claimed that the act Clearly "a va leiu'
by Implication. the right 10 declare the diVhchu pe
canse ION Of the prohibited either OF the ABOVE
nan ed companies from declaring dividends when
Haf.u roCD IL
due 10 the Vmtol States sinking fund or on
their first mortgage obligations" The Auditor, OH
the other hand maintained that unde" section OF ,ne
act the sinking fund o0eaiions were pau; ad ~
utorY lien upon the receipts OF the coinpai anu te
Injunction has been applied FOR Oy way Ol
relief from IN apprehension that some time IN the IutuIe
tbare might De- such default on the part Il 'uo
In II, no such default has as yet ever occurred Ihe
first mo gage interest and the payments TO the JnSl
states SINKING fund have been met promptly when 'hey
Zen due, and the credit Of the company n 81
Te.pects ia admitted 10 be excellent. 1t Thought by
the officers of tue company that the power ol ConsF
b. afx lien upon the cOmpanvs rOperty, wltnou lts
e0nsrut and aa4 protest, is contrary TO the or1z
nal contract the Government under when he CON
eynnot he successfully maintained 10 the coirts lIey
sa that II the Auditors doctrine wire tenaDs hanry,
that the payment .: dlyidcnns snoui "a, 'e 'fT
hIblt'd ID the mere Apprehension mo OF co,"p,nt
refs lit on the part 81 inc the e% nr ne
Central Pacific nor the UaOn Pacific Comp an, ccull
dec IRE dividend 80 long as any portion nn nae
they sy that the net earninss 81 tne oensS
TActJ Company since tne passage oi tnS Inv" ~ t..
h.vc than Sufficient TO meet the Ieeh[ uif
d. nd an that they viii be prepared 10 snow ms 10 pe
Court The Government Auditor, II Ia claneu on Tue
mari a. ths besides other untenaOe theOre
.trm # bookkeeping peculiar 20 himself anu nv per
sisis IN treating the Interest pad our on tue
mrnt currency bOads (which were lssupu m az % ,n
construction OF the road AID amount TO over -oOUOvo,
aa a present liability, whereas tns law all, only Tor a
r.rfan annual requirement, payable chlr1y N lIahspor-
taon aud rest IN cash which now yer, Is p gIg
until III, maturity OF the ,uireIcy Dohls' WI WI"
he h. wptr 1898 ana 1900 They say that ABOUT
~ 900 O0l In interest has been Already repaid Cy
.udt
i'nie,l St,ts aiulug fund GtcurLlatlug Tor te pay
men Of the rest, IN, Auditor ha9, leYrItl'er' lnc'nu
ed IN His cOmpl the $500 1000 II Uhitoa oLatsS
,rest remaining unpad, as If II were present nahlty,
ana seer, to establish lien up the receipts OF me
c0mpary IA security for ts payment oeyohd ana III
addition 10 that provided ~ me law anr tt ,bt
I've Aud,iur', position rs untenable, though they
ADMIT bni tie sult may be ultimately Dcn,n ~ ina "
WI! errr4.ue right " the stochh ldefS 10 tn'H
sy also hat the atttudel which the Government
Il mad" To a-,u'le by the action OI A"'tUi VIZ "a 80
sfe,r of tlr accounts Of the Union tachr company,
witch - governed by the same act ahd whlci as u
earnings ia yldcuds Ia It's storknndeS tan III Crhttd
Paurr dcvOting lrs- propo non Oh Us net
equipment ami general Improvement ot tue ehHs vi
f.. -old a. well less cent ot thcln 10 tr *
Ia no of the comp1nys itdrD,nh, - hm" s,.Ns
n.ui1 u Central POolho, which ihe company htS
itsrll shed for fhe extinction ~ H7 orO are Sa
To- amount 10 about HGJOOOUO at M pres NJ tlnr; ana
= 100000 - required to 'r pud lhO Tie I'm i'dty
I'm - tarnins- which payment claimed - VIZ
tuA y cun.rng much OF tn Company hIt Ot, de+s
No iurther steps Will bc ttArn ia tn present Jhnc-
the rrrt POINTS along ~ extended ureN' WIeh VIII
r.uir,. alderahe shgh II time. No reply Lac yet
ben put thu bui e complain 49,. -
uS b OH al -tAlt ucnt 81 Tue ItNf'u'H
and disbursements uf e." company Tor NE SIX Wonihs
ended December 81, 1850 those ioi DeoemJer Doing
partly e~ilnAteA: