The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1895-06-30
MRS. STANFORD WINS THE $15,OO0,OOO SUIT,


porations in which the deceased Stanford
! was holder of stock, there was no per-
sonal obligation on his part to repay them.
1.-The statute embodying the contract to
be construed was drawn with great care,
yet it is not as explicit as it should have
been. In express terms it contains no I'M
qualified, nor, indeed any express coven-
ant on the part of the corporation receiv
ing the bonds to repay them. If any such
unqualified promise exists, it is by impI-
cation. But a covenant,
as held by the Supreme The Obligation
Court in Hudson Canal to Pay Was
Co. VS.. Pennsylvania Coal Only Implied.
Co., Wall. 276, cannot
be implied in the absence of language
showing that it was intended. 1t was also
there held that the fact that the non-impli
cation OF it makes the contract. in conse-
quence of events happening subsequently
to its being made, quite unilateral in its
advantages, is not a sufficient ground to
imply covenant which would tend to
balance advantages thus preponderating.
1.-The provision of the contract in respect
to the repayment of the bonds was that
they should be repaid
Conditions Upon as hereinafter provid-
Which the Bonds ed and to secure such
We're Issued repayment the issue
and delivery of the
bonds was by the contract made to constr
tute ipso facto first mortgage on the
whole line of railroad and telegraph. The
contract further declared that all of the
grants were made upon condition not
only that the company would pay the
bonds at maturity but also should keep
the railroad and telegraph line in repair
and use, and at all times transmit dis
patches over the telegraph line, and trans
port mails, troops and munitions of war,
supplies and public stores, upon the rail-
road for the Government, and that
the Government should at all times
have the preference in the use of the
same for all of those purposes, at
fair and reasonable rates of compensate ion
not to exceed the amounts paid by private
parties for the same kind of service. And
it was further provided that in case any
company or companies accepting the pro-
visions of the act should fail to comply
with the terms and condi-
tons thereof by not COM Congress Could
plotting said line of rail- appropriate
road and telegraph and the Railroad.
branches within reason
able time, or by not keeping the same in
repair and use, Congress should have the
right to pass an act to insure the speedy
completion of the road and branches, or
put the same in repair and use, and direct
the income of the railroad and telegraph
line to be thereafter devoted to the use of
the United States.
"ln respect to the repayment to the
United States of the amount of their bonds
issued and loaned to the respective COM
panies, to aid in the con-
The Bonds Muy struction of their roads,
Be Paid IN together with the interest
Governmental thereon, the contract
Service. provided, in section of
the act of 1862, first, that
all compensation for services rendered for
the Government by the respective compa-
MES should be applied to the payment of
the bonds and interest until the whole
amount should be fully paid; that the
wholly or in part, in the same or other
bonds, treasury notes, or other evidences
of debt against the United States, to be
allowed at par, and that after the compile
ton of the road, until the bonds and inter
est are paid, at least five per centum of
the net earnings of the road should also be
annually applied to the payment thereof.
cit is earnestly insisted on the part of
the defendant that it
was not the intention Not an Absolute,
OF the act to put upon Unqualified Agree
the company receiving mea.t to Repay.
the bonds of the Gov
eminent an absolute, unqualified agreement
to repay to the United States the amount
of them, together with the interest thereon;
that such an unqualified agreement would
necessarily subject any and every road the
COMPANY might have to such repayment.
because the Central Pacific Railroad
Company of California and the Western
Pacific Railroad Company, like all of the
other railroad companies accepting the
terms and provisions of the act of July 1,
1862, and receiving bonds of the United
States Hereunder, thereby assumed an
absolute and unqualified promise to repay
the amount of them to the United States,
together with the interest thereon, does it
follow that the stockholders of the
California corporations
No Common named became person.
Ld,U Liability ally liable for the debt of
for Such Debt. those companies? Be-
yond question there is no
common law liability for such a debt. The
individual liability of stockholders in cor
poration for the payment of its debts is
always creature of statute. pollard VS..
Bailey. 20 Wall. 500
both of the California corporations
named were incorporated, as has been
seen, under and by virtue of the provisions
of the act of the Legisla-
proved May 20, 1851 (Cal bitity May Oulu
Stats. 1861, p. 500. At Be Found in
that time the provisions the California
of the constitution of Cali LaWs.
fornia in relation to the
subject in hand were sections 80 and So of
article ~ of the constitution of 1849,
already given in full. It is plain, there
fore, that whatever individual liability the
stockholders of the Central Pacific Railroad
Company of California and the Western
Pacific Railroad Company incurred is to
be found in those provisions of the consti-
tuition of 1849 and in the provisions of the
act of the Legislature of California of May
20, 1861.
I'm 1854 the Supreme Court of California,
in the case of French VS.. Teschemaker, "a
Cal, $40, fully considered and construed
sections 80 and SO of article w of the con-
stitution of 1849, and this construction of
the constitution by the highest court in
existence under it is binding on this court.
Resort must, therefore, be had to the State
statute to see what, if any, individual
liability was thereby fastened on the stock
holders of the Central Pacific Railroad
Company of California and the Western
Pacific Railroad Company for their cor
porate debts and liabilities.
1.-THE two California corporations named
| were incorporated under the State act of
May 20, 1861, in which it was declared that
each stakeholder should be individually
| liable to the creditors of such company for
his proportion; that is to say, in proper
| ton to the amount of stock by him held,
| for all the debts and liabilities of such com.
panV. except those incurred after no shop IA