The record-union. [volume] (Sacramento, Calif.) 1891-1903, 1895-10-23
JUDGE ROSS DECISION.
Grounds On Which the Appellate
Court Sustained 1t.
The Central Pacific Should be Treated
In the Same Manner as the
Union Pacific.

the action of Judge Ross in sustaining
the demurrer of the defendant in the suit
Of the Government against the estate OF
Leland Stanford. The demurrer set forth
that the Government complaint did not
state any cause Of action. The issue was
purely one OF law, and the opinion of
Judge Ross appeared to fully cover the
ground. The main point was whether
there was any individual liability on the
part of the Central Pacific stock holders
for the debt of that corporation to the
Government. In the lower court it was
held that Congress had no Intention to
fix an individual liability upon the stock
holders at the time the contract between
the Government and the corporation WAS
created and that no such intention was
expressed or implied in the Acts relative
TO the Pacific roads.
The Appellate Court has gone more
fully into other aspects Of the question.
unanimously reaching the same conclu-
sion that was arrived at in the court be-
low. Its decision begins with q full re-
cital of the history OF the Pacific roads,
and of the Government aid extended.
The court finds that this all was freely
offered, as a matter Of national policy.
under the stress of the great dangers then
imperiling the Union. 1t points CCG that
the construction OF a railroad across the
continent was military necessity, or
was go regarded at that time. 1t finds
that the Act of Congress creating the
Union Pacific corporation was silent
upon the subject OF individual liability of
the stockholders, and that, since such
liability does not arise under common
law, it does not exist unless by express
statute. 1t is further shown that the Act
of Congress granting lands and bonds to
the Central Pacific, IN aid of construction.
provided for the same terms and condi-
tons as those expressly set forth with re-
lation to the Union Pacific. Therefore,
as the Court Of Appeals logically demon
strates, there can not be- assumed an in
tention to hold the stockholders in the
Central Pacific liable. while no such re-
sponsibility exists in relation to the
UniOn Pacific 1t is true that
the Central Pacific was not the
creation of Congress, but a corpora
ton organized under the laws of Cali
fornia. And yet ii is clearly shown that
the intention of Congress was to provide
protection and encouragement to the
stock holders, and not TO discourage
investment, as the creation of indi
vidual liability would have done. Other
wise the stockholders, IN the event OF the
failure of the enterprise, would not only
lose their Investment but would leopard
ize their private fortunes. The penalty
provided by the Act was the forfeiture of
the road in case of default of payment of
the bonds, or any part thereof. This pro-
vision was regarded as ample security for
the Government and, in the nature Of
the case, nothing more in reason could
have been exacted. The fact that Con-
gress expressly authorized either the
Central or the Union Pacific. in case of
default of the other, to build all of the
transcontinental road, is strong confir-
nation of the soundness of the view
taken by the two courts. For it is shown
that, had the Central Pacific failed to
carry on the work OF construction, the
Union Pacific could have done il all, and
yet the stockholders of that corpor-
alton would have been no more re-
sponsible than had there been
no such default. at Is impos-
sible to conceive" declares the APP
pellate Court, that, had Congress then
had in view the ultimate liability of the
stock holders of the Central Pacific Com
pany, it would not at the same time have
imposed like liability upon the stock
holders of the corporation which it call ed
into existence" that is to say, the Union
Pacific.
The Appellate Court further demon
strates that Congress did not deal with
the Central Pacific purely as California
corporation, seeing that its most inn
portsnt franchises were conferred upon
it by the National Government, and that,
hence, no narrow rule of construction
should apply. Furthermore. it is made
clear that consolidation of the two orig
inal corporations was expressly author
lied, in which event it is obvious that no
individual liability Of the ockholders of
either could have existed, for the con-
solidated corporation would have sue
ceeded to ali the immunities respectively
enjoyed by each. And finally, it Is held
that, even had individual liability of Cen
trail Pacific stockholders existed under
State laws at the time the Government
aid was extended, such liability was
waived by the Government, through its
own Acts.
This is decision that will certainly
bear the test of review by the Supreme
Court OF the nited States. An appeal
is to be taken, but that is to be regarded
as purely matter OF form. Judge Ross,
and Judges Gilbert, Morrow and HaYley
OF the Appellate Court have treated the
Stanford estate precisely as the estate Of
the most hum BILE stock holder of the Cen
Jral Pacific should be treated. The Justice
OF the decision will be the more fully APP
preciated from consideration Of the post
bility that the Central Pacific might have
been a disastrous failure instead of a sue
cess. Had the ROAD become bankrupt be-
fore completion, it would have been re-
garded as the grossest oppression on the
part of the Government to attempt to
hold individual stockholders liable, after
their personal investments had been
com pletely opliterated. The final decis-
ion of this suit in favor OF the Stan
ford estate will be the means of preserv-
lug, tor the use and benefit of the people
OF the State, millions that would other
wise be drained from the Stanford Uni-
versity aud other California institutions
News Letter.
Artificial Marble.