The morning call., 1894-06-06
THE GOVERNMENT SUES THE
SYNDICATE.

Mr.. HuntDgton's proposition to settle
with the United States by borrowing sixty
more million dollars for hundred years
at two per cent interest is now met by the
institution of suit by the Attorney Gen
eral against the estate Of ex-senator Stan
ford for S15.000.00O. being his share of the
$50, 100000 which the Central Pacific syn
dictate owes the Government. The theory
on which the suit is based is that the four
members of the syndicate. through various
agencies known as construction compa-
MES, fin ance and development companies
and corporations organized out of the
State, diverted TIE earnings O. the road to
their own use, and thus in law made them
selves trustees tor the Government, and
personally liable as such to the Govern
ment for the payment Of the subsidy
bonds and the interest thereon.
For fifteen years or more, ever since it
became apparent that the railroad corpOr-
alton would be unable to pay the subsidy
bonds at maturity. Congress has been con-
sidering what should be done about them.
But so long as the Government claim lay
In allegiance there was NO reason for haste
in deciding the matter, and Mr.. Hunting
ton was able year after year to leave
Washington with the feeling that be had
secured another Teriod OF respite. But
low the bonds are due and payable and
something must be done. What measure
Congress Will ultimately decide upon it is
impossible to fOresee. but negatively it is
quite plain that no intelligent member
will throw his political future to the GbgS
by cham pionug the preposterous jot
which the preSidentof the Southern Pacific
has the assurance TO propose.
AS a general rule the purchaser of prop
erty against which no incumbrance is re-
corded and DO lis rendens filed acquires q
good title. no matter to what extent hii
vendor may be involved or from wha
sources he got the means to buy the prop
erty. a bona fde purchaser is not re-
quired by law to investigate the ways il
which his vendor made his fortune. Blu
in this case, the members of the railroa,
syndicate acquired their millions through
.. the operations Of law. The law was there
open to all, and all were bound to tax,
cogniZance of it. The syndicate mad,
their money through the working of
statute which specified distinctly that tn,
money was to be repaid to the Govern
ment on a day set and with interest at
rate fixed. Whatever properly they &C
Quired with this money was subject TO thi
liability. and passed to third parties sub
Ject thereto. 1t was impossible for th
syndicate 10 divest il Of the incumbranc
except by paying what they owed TO th
Government. Nor was il possible 70
them TO give to repurchasers a clear title
though the umbrance was not recorded
Such renurchasers bought at their ow
risks and peris.
This is the ground upon which the q
rney-General now proposes to Sc
whether the estates of the members of tn
syndicate cannot be held for the debt. c
the four members, three are dead and on
survives. But the estates of all four al
abundantly sufficient to acquit the deb
The appraisements which have appeare
in the papers from time to time are mi
leading; there is hardly doubt that ii
four estates are worth-or were worth b
fore portions of them were sold or give
away-not less than $4,000, 600, that is
say, twice as much as they owe to I'll
Government. Even il the United Stat,
should collect the sum due for the prime
pal and interest of the subsidy bonds, eaC
of the estates would still represent one
the great fortunes of the earth.
.. J.. Mr.. Blair Of New Hampshire is in err
: when he assumes that the people of Ca
fornia are so preiudiced against the raj
road that they would be willing to destrC
the Leland Stanford University in ord
to enforce the Governments claim. 1t
a fact that the policy of the corporation
regard to fares and freights and discrim
nations has indisposed against them