The Anaconda standard. [volume] (Anaconda, Mont.) 1889-1970, 1895-06-30
THE STANFORD CASE
Judge Ross Renders a Decision on tht
Defendants Demurrer.
1T WAS A GREAT SURPRISE
II One Railroad Is Liable to the
Government All Of Them Are.
Says the Court-The Plaintiffs
Given Power to Amend.

san FRANCISCO, June -H.-lnited states
Circuit Judge Ross to-day rendered his
decision on the demurrer of Mrs. Jane
l.. Stanford against the suit Of the
government to recover sl5,O00,000 from
the estate Of her late husband. The de-
murrer was sustained. Judge Ross al
lowed the government to amend its
former complaint and reargue its 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 attor-
neys generally expecting contrary de-
cision. The court began by reading
and explaining the acts and statutes,
both state and federal, which had any
bearing on the construction of the COM
pany's railroad and its relatives. Rail-
roads west of the Mississippi river
were. he said. constructed under the
same acts, so II one road was liable to
the government. all Of them were La
BILE.
In nearly all Of the corporations Le-
land Stanford was a stockholder. To-
gether with c. p. Huntington and other
incorporators, he owned l30.SS0 shares
| of the stock. The government. accord
| ing to its contract, issued bonds to aid
in the construction Of the road. Though
the road was built under that contract.
1t was Incorporated under the laws OF
! the state. Therefore 1t became, in a
way, amenable TO the laws of Califor-
mia. The laws Of California providing
that stockholders of corporations
are individually responsible for the
debts contracted by their companies. he
held, did not affect Stanford. as the
government claimed. for the reason
that the stockholder liability acts were
passed after the government had made
its contract with the Central Pacific.
If those laws had been passed before
the government bonded the Central
Pacific. however. 1t would have made
no difference, as the government had
no intention of making the stockhold-
ers of the railroads 1t bonded person.
ally responsible for the debts con-
tracted by the company. The Central
Pacific, the court continues. had some-
thing of a national tone to 1t. When
1t was contemplated the country was
In a state Of turmoil. The government
wanted quick communication between
the Atlantic and Pacific oceans. At
that time the building Of the railroad
was a great 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. particularly. the
agents of the United States. 1t was
very plain that in case the railroad did
not pay the bonds upon maturity. the
secretary Of the treasury has the power
to take possession of the roads. The
bonds are identical with a first mort
gage.
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-
gretted," said the judge. "A promise
is only implied. There was no explicit
or unqualified agreement between the
corporation and the government. II
Is to be observed that the lands and
bonds were not to be delivered TO the
company until the road was equipped
Here is found promise but II is an
unqualified promise to repay the mon
ey The government had no intention
of making these men individually re-
sponsible. That question never enter
ed in the contract. The covenant did
not stipulate that the stockholders
should repay the bonds. The acceptance
of the bonds was an implied act .. the
stockholders TO pay them. The stock
holders accepted the assistance If the
government with the agreement that
they should pay for IL. 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. rha.
law, however, cannot be held II apply
In this case, as 1t was passed slbse-
| quent to the making of the goYernrien.
contract with the Central Pacific coII.-
pany. The real question involved is
whether there was a contract between
the defendant and plaintiff and wheth.
er there was a liability proviso. Re-
verting to the provisions in the laws ut
the United States there can be found
no such agreement. The statutes dc
not hold the defendants liable. There
is absolutely nothing to establish this
fact. and | sustain the demrrf.- and
give the plaintiff the power 10 amrrd.''