The Kootenai herald. [volume] (Kootenai, Idaho) 1891-1904, 1895-07-06
Leland Stanford's Heirs Saved
Fifteen Millions.
JUDGE ROSS MAKESA DECISION
Central Pacific Railroad COMPANY Never
Really Promised TO PAY Back
Borrowed Money.

Stanford against the suit OF the gov
eminent to recover SIS, 900, 900 from the
estate of her late husband. The de-
murrer was sustained. Judge Ross al
lowed the government to amend it's
former complaint and re-argue it's case
! If 1t so desired. 1t was intimated, how
ever, that this step would not affect
the case, the law as construed by Judge
Ross not favoring the case of the United
States.
The sustaining Of the demurrer was
a surprise, the attorneys generally ex-
pecting a contrary decision.
The court began by reading and ex-
planning the acts and statutes, both
state and federal, which had any bear
ing on the construction of the Central
Pacific railroad and it's branches. All
railroads west of the Missouri river
were, he said, constructed under the
same acts, so if one railroad was liable
| to the government, all were liable. In
nearly all of the corporations Leland
Stanford was a stakeholder Together
with G. P. Huntington and other in
| corporators, he owned 1S0,SS0 shares of
stock The government, according to
It's contract, issued bonds to aid in the
construction of this road. Though the
road was built under that contract, K
was Incorporated under the laws of this
state. Therefore, it became in a way
amenable to the laws of California. The
laws of California providing that stock
holders of corporations are individually
responsible for debts contracted By
their companies, he held, did not affect
! Stanford, as the government claimed,
for the reason that the stakeholder
liability acts were passed after the gov
arr aor,k I
the Central Pacific. If those laws had
been passed before the government
bonded the Central Pacific, however, it
would have made no difference, as tie
governments intention was not mani
fest of making the stockholders of rail-
roads it bonded personally responsible
for the debts contracted by the COM
pany.
HAD A NATIONAL TONE
The Central Pacific, the court con-
tinues, had something of national
tone to 1t. When it was contemplated
the country was in a state of turmoil,
the government wanted quick commun-
ication between the Atlantic and the
Pacific oceans. At that time the build
ing of the railroad was a great under
taking-an undertaking too vast for
private enterprise, so the government,
in order to assist in the work, issued
the bonds and in this way made the
railroad builders practically agents of
the United States.
1t was very plain that in case the
railroad did not pay the bonds upon
maturity that the secretary Of the treas
ury has the power to take possession of
the roads. The bonds are Identical with
a first mortgage.
did the company who became in
debted to the United States promise
to repay the money!" asked the court.
THE statute on this point is not very
explicit, which is to be very much re-
GREETED" said the judge. "A promise
is only implied. There was no explicit
or unqualified agreement between the
corporation and the government 1t
is to be observed that the lands and
bonds were not to be delivered to the
company until the road was euuipped.
Here is found a promise, but it is an
unqualified promise to repay the money.
The government had no intention of
making these men individually respon-
sible," said Judge Ross. THAT question
never entered into the CONTRACT. The
covenant did not stipulate that the
stockholders should repay the bonds.
The acceptance of the bonds was an
implied act of the stockholders to pay
them. The stockholders accepted the
assistance of the government with the
agreement that they should pay for it.
that was all.
"There are no common law liabilities.
The state law fixes the liability OF
stockholders in proportion to the
amount of stock they possess. That
. law, however, can not be held to apply
in this case, as 1t was passed subsequent
to the making of the government con-
tract with the Central Pacific company.
The real question involved is whether
there was a contract between the de-
PENDANT and plaintiff and whether there
was a liability proviso. Reverting to
provisions in the laws of the United
States there can be found no sucl.
agreement. The statutes do not hold
the defendants liable. There is abso-
lutely nothing to establish this fact
and I sustain the demurrer and give
the plaintiff the power to amend" con-
cluded Judge Ross.
Stanford University, Cal, June o.
There was great rejoicing at the STAN
ford university when the news was re-
ceived that Judge Ross had sustained
the demurrer in the case OF the govern
ment against the Stanford estate.
Dr. Jordan, when interviewed, said: 'I
think the decision virtually settles the
liability OF the property which Mr.. and
Mrs. Stanford designed for the university.
While the case may be appealed. 1t is not
likely that the decision OF Judge Ross
will be reversed"
Supreme Court Decisions.
| 10 TstIxr II, he