The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1895-12-11

negative this view. neeu only queue ouo VI
them, although the others are illustrative. 1t
is as follows:
Whereas, the United States, in view Of the
Indebtedness and operations OF said railroad
companies respectively, and OF the disposition
OF their respective incomes, are not, ana can.
not, without further legislation, be secure in
their interests in and concerning said respec-
tive railroad and corporations, either as NEIL
toned in said acts or otherwise.
Hence the act itself seems TO declare that 1T
is INTENDED as security. Besides, the view OF
counsel for the Commissioners is also mega
tived by every provision OF the act and the his
tory of the legislation to the railroads.
What the Government thought of the security
of what counsel calls the personal relation OF
the Government to the companies is expressed
in the legislation passed on and held Invalid
in the United States VS.. the Union Pacific Rail-
road Company. That, counsel will remember,
was an amendment to an appropriation bill to
authorize the Attorney-General TO bring suit
in equity in the name OF the United States
against the Union Pacific Railroad Company
and its stockholders, whose stock had not Deen
paid for in full in money. who may have re-
ceived as dividends or otherwise portions OF
the capital stock of SAID road, or the proceeds
or avails thereof or other property OF SAID ROAD
unlawfully and contrary to equity, and to COM
pei payment for said stock and the collection
and payment of moneys and the restoration OF
property or its value to said railroad corpo-
ton or 10 the United States, whichever shall in
equity be entitled thereto. There were also
provisions for the future government OF the
company as officers, inhibition of the issuance
the consent of Congress; also enacting that
the corporation shall be subject TO the bank
rupt law, and shall be subject to q mandamus
TO compel it to operate its road as required by
law.
BY prior decision (91 U. S., 72), it was held
that the company did not have TO pay interest
until the bonds issued by the Government
matured, except so far as the act enabled the
Government to withhold one-half the compen.
sation for transportation performed for 1T and
D per cent of the net earnings.
situation
action of the railroads grew the Thurman act,
and its cause and justification appear in the
remarks of Chief Justice Waite in the sinking
fund cases. 90 U. s., 1881
The Thurman act, however, as have said. is
self-explanatory. Section l defines net earn
ings. will not read it, as it is very long. Sec
ton 2 requires that ali the compensation
which may be due for transportation per-
formed for the Government shall be withheld.
Section establishes sinking fund. Section
provides OF what it shall be composed net
earnings aggregating % per cent. besides COM
pensation for transportation. Section RENTS
payments when income falls below suff-
cheney to pay interest, etc.-a very significant
section.
Section. 6 requires tina: no dividend shall be
paid. 1t is:
THAT no dividend shall be voted, made or
paid for any or to any stakeholder or stock
holders in either of said companies respect
lively, at any time when the said company
shall be in default in respect of the payment
OF either of the sums required as aforesaid"
and fixes the penalty for violation of the
section.
Section makes all payments liens on the
property, also very important and significant
section, showing conclusively that the act was
intended as security. Its Importance justities
its quotation In full:
Sec. g. That all sums due to- the United
States from any of said companies respectively,
whether payable presently or not, and all sums
required TO be paid to the United States or into
the treasury, or into said sinking fund under
this act. or under the acts hereinb before re-
ferred to, or otherwise, are hereby declared to
be lien upon all the property, estate, rights,
and franchises OF every description granted or
conveyed by the United States to any of said
companies respectively or jointly, and also
upon all the estate and property, real personal
and mixed, assets. and income Of the said sew
eral railroad companies respectively, from
whatever source derived, subject to any law
fully prior and paramount mortgage, lien or
claim thereon. But this section shall not be
construed 10 prevent said companies respect
lively from using and disposing OF any of their
property or assets in the ordinary, proper and
lawful course OF their current business, in good
fai tn and for valuable consideration"
Section 10 provides for suits by the Attorney
General.
may say in passing. the only part of section
IL is that which releases from technicality the
procedure OF the suits. The power OF the At
torney General 10 sue-that is, TO take steps to
protect the interest of the Government. would
be complete without the section.
Section IL provides for forfeiture.
l think the act is very plain and gives di-
rect and substantial interest TO the Govern
ment in the revenues of the road. Indeed, 1t
is only in Difference to the earnestness OF coun-
sci, and out OF respect for their opinions, that
have given 1t SO much attention.
Some reflections have been cast upon the
motives of the Government in intervening.
These, of course, are not for my consideration.
1t is conceded that the District Attorney is
only obeying instructions, and it is very clear,
if he was permitted discretion as to the man.
ner OF procedure, intervention in this suit is
less inyidious and less embarrassing, If his
action be lnvidious or embarrassing at all, than
another and original action.
But what motive can the Government have
besides regard for its interests? What help
can it give to the complainant? If it has the
right TO regulate fares and freights, as it con-
tends, and which have expressed a doubt of,
the right to urge it is not exclusive in the
Government The railroad company may urge
it, and no other issue can be changed, or the
proof OF it lightened by the Governments alb
sence from the case.
With or without it, the complainant must
prove its BILL The Government has no more
power in this court than other suitors. With
or without the aid of complainant it must
prove its bill | cannot conceive OF u case in
which the intervention of party will change
the conditions OF the case so little as the inter
ventlon OF the Government viii in this case.
Indeed, in my Judgment, it changes it so little
that deemed it more important to render a
quick decision on my first impressions than
the way | should decide.
have considered this matter from general
principles only. 1t is further bj:cted to the
Governments bin that it does noy show any
uctIlultHI uIlSIHS 10 lES government from the
regulation OF the rates. ] think this point is
well taken. How to deal exactly with il
have been somewhat puzzled. might deny
the motion without prejudice TO the right of
the Government to apply again. That, how
ever. would only have technicality to recon-
mend it, think it would be juster and better
to allow the bill to be filed, giving the Govern
ment time TO amend il, If the Government can.
and 1t is claimed that it can.
The case went over to Monday, JAN
uary 6.
United States District Attorney Foote
feels that Judge McKenna's decision has
taken from him all the stigma which, as
he thinks. has unjustly been associated
with his course in the intervention pro-
ceedings. All the intervention amounts
to, he said last night, is an attempt in the
nature of a query, as it were. on the part
of the Government as to what rights it
may have IN the matter, considering that
its interests as second MORTGAGE of the
Central Pacific are involved, and the object
of the intervention is to have its status
judicially determined. He remarked:
Congress has provided that % per cent of tn
Central Pacific income shall go to sinking
fund for the benefit of all the creditors pri-
vate parties as well as the Government Iftne
reduction of rates ordered by the Railroad
Commission, as the Southern Pacific contends
would render the company unable to place the
25 per cent with the sinking fund, then the
interests of the Government as a creditor are
threatened and what other thing can | do as