The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1895-06-30
MRS. STANFORD WINS.
Estate Not Liable for the Debts
of the Central Pacific.
DECISION BY FEDERAL COURT.
The Governments SIS, 900 900 Suit
Knocked TO Pieces-stanford
I'm No Way I4isbie.

San Francisco, June 2a.-United States
Circuit Judge Ross toay rendered MS c.
c!sson on the demurrer Of Mrs. Jane l..
Stanford against the suit OF the govern
sncnt to recover sI5.0o.0yo from the estate
OF her late husband, Senator Leland Stan
ford. The demurrer was sustained. Judge
Ross allowed the government 10 amend It's
former complaint and reargue its case II
* so desired. IL was intirnated, however,
that this step would not affect the case.
the law. as construed by JUICE Ross, not
favoring the case OF the United states.
The sustaining OF the demurrer was
surprise. attorneys generally expecting a
contrary decision
The court bnsan by reading and explain
ing the acts and statutes, both state AMI
Federal. which had any bearing on 1he
instruction Of the Central Pacific rail
road and It's branches. All the railrod' 3
west OF tbs Missouri river were, he sail,
constructed under the same acts, so IL
one road was liable TO the government all
of them were. Ia nearly all Of the cor
porattons Leland Stanford was stock
holder. Together with G. +. Huntington
and the other iDcorporators he owned
80 $50 shares Of the stock. The govern
rnens. according 20 its contract. issued
bonds 10 aid in the construction OF this
road. Though the road was built under
the laws OF the state Therefore It be-
came In a way amenable to the laws OF
California. The laws OF California pro-
viding that stockholders and corporations
are individually responsible for debts con-
trzcted by their companies. he held. Cid
not affect Mr. Stanford. as the government
c.simsd, for the reason that the stock
holders liability acts were passed after
the government had made it's contract
with the Central company. II those laws
had been passed before the government
bonded the Central Pacific. however. II
would have made no difference, as the gov
eminent had no intention of making the
Stockholders OF tho railroads IL bonded
personally responsible for the debts con-
sracfed by this company.
The Central Pacific. the court continued,
had something OF national tone TO IL.
When contemplated the country was In
q state OF turmoil. The government want
ed quick communication between the At
lantic and the Pacific oceans At that
time the building of the railroad was
great undertakiAg-an undertaking too
gast for private enterprise. so the gov
eminent IN order 10 assist m the work.
issued the bonds and in this way made
the railroad builders practically the
agents OF the United States.
Il was very plain that in case the rail-
road did not pay the bonds upon ma
turlfy the secretary OF The treasury has
the power to take possession of the road.
The bonds are Identical with a first mort
gage. Did the company who became In
debtei 10 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 regretted, said
the Judge. A promise ls only implied.
There was no explicit or unqualified
agreement between the corporation and
4 he e N he Oh haf
the lands and bonds were not to be de-
Iivered 10 the company until the road
was equipped. Here Is found a promise,
but Is Il an unqualified promise 10 repay
the money! Another condition on which
the road was built was that not only the
bonds should ne paid on maturity. but the
stockholders should keep the lines In re-
pair. II should also tMnsfer the mails
and troops at a reasonable compensa-
ton. There = no common law liability
on the part of the government.
ut was urged that, according to the
laws OF California, there was an in
dividnal liability" said Judge Ross. THE
government had no intention of making
these men individually responsible. That
question ever entered into the contract.
The covenant did rot stipulate that the
stockholders should repay the bonds.
The acceptance OF the bonds was an I'M
piled 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
I'm accepting them, OF course, IL was be-
r-ved that they would repay them. The
question remains however whether the
ilahirty rested with the stockholders.
There arc no common law liabilities
'rhe state law fixes the liabilities OF
stock holders I'm proportion 20 the amount
OF stock they possess. That law. how
4 4
as y was passed subsequent 10 the max
ir-x Of the government contract with the
Central Pacific Company. II that law
fad been I'm effect at that time the re-
sui would have been the same az this
suit is dependent on the contract. not on
the laws OF California, as the government
would have it,
Congress, on making this contract did
not mention tho liability Of the stock
holders. The rights OF way were granted
on the same terms 10 all-eaoh company
~as nut on the same footing The DOW
ers and rights granted them we're indie
pendent Of the laws or California. The
state at that time freely understood the
contract II did not object 10 it. but rati-
fed H.
The court does not believe that the
statute OF limitations would hold. as con
tended by tho plaintiff There is a wrong
Application made here which has nothing
90 do with the matter. Even II the liuni-
.atton act could be made 10 applv n Is 50
indefinite that e does not mention the
proportion for which each stookholder is
ilaMe. Tho real question involved g.
whether there was a contract hetveen
defendant and plaintiff and whether
there vas liability proviso Reverttnr
10 the provisions ia thu laws OF the
United States there can ne found no s,a.h
agreement. The statutes do rot hold tha
defendants liable. There is absolutely
nothing 10 establish this fact and s,,s-
tain the demurrer and give the platntiep
the power 10 amend" concluded Judra
Ross