The record-union., 1895-07-01
ROYAL BAKING POWDER.

ground to imply covenant which would
tend to balance advantages thus pre-
pondersting.
The issue and delivery of the bonds
constituted a loan and imported a promise
TO pay, and for which loan the property OF
the borrower was liable. The bonds were
to be paid ''as provided in the Act" and
constituted first mortgage on the roads.
1t was provided that if the roads were
not completed within specified tlme the
Government might complete them; that
the grants were made on condition OF the
payment of the bonds on maturity; that
II the roads were not completed in
reasonable time 50 as to make d contlnu-
Gus line from the Pacific TO the Missouri,
Congress might declare the roads forfeited
to the Government. All these things
and other prOyls0s import a promise To
repay.
But because the Central Pacific Rail
road Comyany Of California and The
Western Pacific Railroad Company, like
ali OF the other railroad companies accept
ing tile terms ana provisions Ot the ACt OF
july /, l>OZ, and receiving BONDS OF the
Dnited STATES hereunder. thereby
assumed al absolute aud unqualified
promise 10 repay the amount OF them 10
the United States, together with the in
stockholders OF the California corpora
tiOus named became personally liable Tor
the debt OF those companies? Beyond
question there is no common law liability
for such debt. The individual liability
of stock holders in IL corporation for the
payment OF its debts is always u creature
OF statute. (POIlard V. Bailey, 20 Wall,
5z0).
Both the California corporations named
were incorporated under the Act Of the
Legislature of California, May, 1861. At
that time the provisions OF the Constltu-
ton Of California in relation to the sub
ject IL hand were Sections - and 80 OF
Article ". OF the Constitution OF 1919. 1t
is plain. therefore, that whatever indlvld-
uaI liability the stock holders of the Gem
tral Pacific Railroad Company OF Cali
fornia and the Western Pacific Railroad
Company incurred is to be found IN those
provisions of the Constitution OF loi9 anu
in the provisions Of the Act of the Legis-
lature OF California of May 20, 1861.
The provisions of the Constitution as
to the liability of stockholders were not
self executing, but required legislation,
and the Supreme Court of California has
so elaborately held. That such holding
is sound is thoroughly settled. hat,
then, was the individual liability under
the statute? The two railroad companies
were incorporated under law declaring
each stockholder Individually liable for
his proportion that Is to say, i'll proper
ton to the amount OF stock by HIM held,
for all debts of such company, except
those incurred after he should cease to be
Il stock holder. The stockholders liability,
as here defined, is 'for his proportion
that is to say, i'll proportion to the amount
OF stock by him held" This statutory
provision is but little more definite than
Section 36 OF Article V. OF the Constltu-
ton Of 1919, and no more definite than
the provision contained in Section 3 of
the Act concerning corporations, passed
in 1850, which was held by the court in
French V. Teachmaker 10 be insufficient
TO give reasonable and practica BILE oper-
ton to Section 50 OF Article l v. OF the
Constitution OF l840.
Tie declaration that the stock holder
is liable for all the debts and Liabilities of
the corporation ''in proportion TO the
amount of stock by him held' does not
establish any rule by which any definite
liability can be liked. Proportion to
what? Whether to the whole amount of
tho capital stock or to the amount OF the
subscribed capital stock or any other
ascertainable proportion. Is not stated.
As to that essential element OF tho prob
lem the statute OF 1861, like the Constitu-
ton of lS49. is entirely silent. At the
time the Central Pacific Railroad
Company of California and the Western
Pacific Railroad Company accepted the
provisions of the Act of Congress OF 1867,
upon which acceptance the contract arose.
the laws of the State under which those
companies were incorporated had not
fixed upon stockholders any definite in
dividual liability for the corporate debts,
or prescrib bed any rule by which any such
definite individual liability could be
ascertained. With respect to contracts
then made the corporations stood as If
there had been no constitutional or statu-
tory provisions i'll relation to the indi-
vidual liability of stockholders for COR
porate debts and liabilities.
A contract made in the absence of such
a liability is unaffected by a subsequent
statute fixing it. But even if by the laws
OF California at the time OF the contract
the individual liability Of the stOckhold-
ers had been clearly defined, the result
must be the same; Tor this suit is depend
ent, not upon what the laws OF California
may or may not have provided in respect
to the Liabilities Of the stock holders of
corporations, but upon the contract made
between the United States and the rail-
road companies in which defendants
testator was stock holder. The grants
contained in the Pacific railroads Acts,
and constituting the contract which Is the
basis OF the suit, are Sut genertS. They
have been so characterized by the Su-
DI6l1l6 GOuIl. 4 u6 w HOiS SCO 10 anu LSuOI
OF the legislation, constituting tho con-
tract under which the line of railroad
and telegraph was constructed. IN consld-
Grafton OF which the bonds in question
were issued aud loaned to the Central
Pacific Railroad Company Of California
and the W estern Pacific Railroad COM
pany, respectively, Enthusiastically show
that no personal Liability OF the
individual stockhoiders was contenI-
plated, either by the United States on the
one side or the railroad companies aud
their stock holders on the other side.
Wherever, in it's Undertaking to secure
the building OF the road and its conuec-
tons, Congress granted aid, whether i'll
rights OF way, station grounds, lands or
bonds, To any railroad company, 1t
granted 1t upon precisely the same terms
and conditions that ii granted similar aid
10 the other companies mentioned In the
Act. Zach and every company to which
ala was extended VAS put, IN respect to
such aid, upon exactly the same footing.
Inc Act OF congress emDodylng the con-
tract ia respect to each OF the corporations
not having provided for any individual
liability on the par OF their stockholders,
none can be held 10 exist.
Lad the provisions of the Act of July
/, 1856. remained unchanged the Govern
nIent would undoubtedly nave been sure
of the repayment OF the bonds as pro-
Vidod in the Act. Bat TO speed the enter
prise and to further aid i'll the coustruc-
ton of the roads, Congress passed the
Act OF July 2. 1854, by which the grant OF
lands was doubled, provision inserted
that only oue-haif of the compensation
rendered by the railroad companies Tor
the Government should be required to be
applied 10 the payment OF the
bonds issued by the Government.
and by which the United States
waived their tirsJ lien for the repayment
OF the amount OF it's bonds with interest,
and consented that the railroad COM
panies TO which the grants applied should
issue their own bonds in like amounts,
which should be secured by lien on