The record-union., 1895-07-01
THE STAMFORD ESTATE.
Judge Ross Decides That 1t Is Not
Liable for Debt
Of the Central Pacific Railroad Conn
pany-Probable End of
the Case.

! III the sum OF SO, 800, OU0 Tor debt OF the
Central Pacific Railroad to the United
States on bonds issued 10 it as an aided
road.
It is understood that the sustaining Of
the demurrer practically settles the only
issue III the case OF any moment, and
though leave is given to amend the com
plant, II is not believed that any amend
| nont viii be made that will remove the
/ fatal defect discovered by the demurrer.
But 1t Is likely, say the attorneys. that
the decision on the demurrer will be
tested on appeal.
The RECORD UNION presents a succinct
synopsis of the decision:
The Central Pacific Railroad Company
was Incorporated, says the court in June,
1901, under the laws Of California, 10
build railroad. July, ISG3, Congress
chartered the Union Pacific Railroad
Company and granted it rights Of way
and certain lands to be patented to II
under certain conditions. AS the road
was constructed in sections the l. United
States issued its bonds to the company
payable In thirty years at 8 per cent. in-
terest, the bonds to constitute first mort
gage on the road and all its property. ON
default the United States was 70 take the
road TO satisfy the bonds so issued. But
the Act applied to no part of the road then
constructed.
The condition Ofthe grant and issuance
was the operation Of the road, its repair,
the transport of troops, mails, ETC., the
compensation therefor to be applied to
payment of the bonds. BY Section of
the same Act the Central Pacific Railroad,
a Incorporation under the laws OfCalitornia,
was authorized to build to the east line OF
California on the same terms and condl-
tiOns applying TO the Union Pacific Rail
road. And If it filed its assent TO the Act
and completed the line within specified
time, was given power after completing
its line to unite with the Union Pacific
Railroad i'll building any of its line un-
constructed and on the terms before re-
terred to. The Cnion Pacific Railroad
was chartered to build to the west line Of
the State OF Nevada.
Another section provided additional
ala for the Central Pacific Railroad for the
more mountainous stretches of the line.
If the companies failed to comply with
| the provisions of the Act or did not COM
plete the lines within a reasonable time
or h eep them IN repair and operate them,
Congress reserved the power 10 do the
work and devote the income Of the roads
to the use OF the | nited States Twenty
five per cent. of the bonds guaranteed
w 6Io W D0 ICHGI f0N uulll llAC COIll DlGtIO1
of the road west OF the Sierra Nevadas and
10 per cent. for the completion OF the
whole road. Then followed The regulation
clause. April, 1864. the Legislature of
California passed an Act authorizing and
empowering the Central Pacific railroad
to take and operate under the Congress
siOnal prOVisOs.
December /, 1862 the Western Pacific
Railroad was incorporated under the
laws Of ifalIfOrnjo lnlU 1894 (NnnoroEa
by Act increased the land grants OF the
companies and authorized them to issue
first mortgage bonds, not in excess of the
bonds the United States isaued to the
roads, and making the lien OF the / nited
States subordlnatot TO such company bonds.
The Central Pacific Railroad filed its ac-
ceptance OF these terms, ana by consent
of the Legislature filed amended articles
OF incorporation increasing its capital
stock. BY consent of Congress the West
ern Pacific Railroad Company became
! entitled TO the game benefits and DriVi-
| leges with the other roads under the
Acts of July, 1862, and July, 1864, and
thereafter the company was amaigamated
with the Central Pacific Railroad.
In all the California corporations Le
| land Stanford was a StoCkholder. The
| bonds provided for in the laws re.orred to
were issued and delivered. The bill Of
the complainant alleges that on the same
an Indebtedness has accrued and that il
has not been paid to the United States;
and that when it is all payable it viii
amount to 500, ,000,U 900 with all credits
given; that the Central Pacific railroad is
insolvent; that the claim OF the United
States has been presented to the execu-
triX of the will of Leland Stanford and
has been disajlOwed.
The demurrer OF Mrs. Stanford to this
statement of the complaint is that the
complaint does not state facts sufficient
to constitute a cause Of action. Tho
court holds it to be its duty TO con-
strue the contract regardless of Subse-
Quent events. 1t is to be interpreted in
its own light and that OF the statutes ap-
pertaining to it. The question of the
| wealth of decedent or the devotion of that
wealth TO certain purposes cuts no figure
| in the Interpretation OF The contract. The
simple question is, "W hat liabilities were
assumed by Leland Stanford? Did he
! assume an individual liability tor the re-
payment of the bonds loaned by the
! United States TO the companies in which
! he was ii stock holder? But, if he as
sume An individual liability, is it barred
| by the lapse OF timer" Under the Con-
stitutiou, when the Central Pacific Rail-
road was formed stockholders were liable
personally tor their share of the debts Of
the corporation, and the same under the
law for all contracted prior to his ceaslng
to be q StockhOlder.
Leland Stanford and others were tie
moving spirits III the construction of the
road and the State Legislature was aid
ing all it could in the movement to have
a transcontinental road built and urging
Congress 10 lend its aid TO such con-
struCtI0n.
Now. all the Acts OF Congress recited.
the acceptance OF the roads, tie cOnstruc-
ton unuer the Acts and the notifications
OF the grants made, and all the legiSla-
ton had, cons tiLute the contract between
the parties, and the Government cannot
change or alter il eXcep. III the mode re-
served TO it by the law. This is an ele
menIary principle and cannol be sue
cessfuny dispute /. All the Acts concern
ing the grants OF aid, the declaration as
to the bonds being preferred mortgage
lion. the PROVISIONS as 20 construction,
operation, repair, transpnr:ati1n of coy
ernment troops and supplies, consLl.u ute
contract that cOntempla'es repayment 10
the Government. But now! DIu the
companies receiving the benefit of the
bonds become ind0blet to the United
States, in the ordinary sense of that term,
in the amount OF the principal OF the
bonds and such interest as the Govern
ment might thereafter pay thereon, to
/ pay which their property was liable, or
WAS the obligation assumed by the COM
/ panies for tue repay ment OF the principal
and interest OF the bonds TO be performed
in certain defined and specified ways?
| This question was not involved, and,
! therefore, not decided IN any OF the cases
/ cited by counsel in which the Pacific
! railroad Acts have been under consider
alton by the supreme Court. 1t is di
rectiy involved in the present case, for it
! is obvious that unless there was an abso-
! lutte, unqualified promise to repay the
! bonds on the part or the corporations in
which the deceased Stanford was holder
OF stock, there was no personal Obligation
on his part TO repay them
The laws embodying tue contract were
| drawn with great care but they are not