The Forrest City times., 1895-07-05
FOR THE DEFENDANT.
inc Fifteen Million Dollar Suit Against
the Stanford Estate Decided I'm Favor OF
the Defendant-Ths Decision of the
Court Regarded by the Federal Omcials


SAN FRANCISCO, June s0.-Judpe
Ross yesterday morning rendered his
verdict on the demurrer in the SIS.
ooO, 600 suit of the government against
the Stanford estate to recover the
share due from Stanford as a share.
holder of the Southern Pacific. The
court reviewed the national legisla.
tlon by which the construction of the
Union Pacific and Central Pacific rail.
ways was authorized and provisions
Tor issuance of bonds and for their
redemption. Section was particu.
larly referred to, as it provided
that the Union Pacific and Cen.
trail Pacific should equip their
roads and perform certain func.
tions for the government and
In case of failure to meet their fnan-
cial obligations to the government or
to complete the roads within the spec
flied time, all of their improvements
should revert to the government.
On April 4, 1864, the California lepis.
lature passed an act of aid to the Gen.
trail Pacific, which vested in it all the
rights given it by the legislation OF
congress. The Western Pacific in 1870
merged with the Central Pacific and
the combined property came under the
legislation affecting the Central Pa
cific and Union Pacific.
All other consultations were SINH.
larly affected between the Missouri
river and the Pacific coast.
The Central Pacific accepted the
terms offered. In all the corporations
affected in this state Stanford was a
stakeholder. holding 100, $50 shares in
total of $4,000 shares paid in. He
owned 10, 500 shares of the Western Pa.
cific railroad when it received aid. It
was charged that no part of the money
due the government had been paid,
and that it now amounted to more
than SIS, 200, 900. which the property of
the company. if seized, would be in
adequate to cover.
The court said it could not be in
fuenced by any event which occurred
subsequent to the contract with the
government. The only question was
what was Stanford's liability as to the
payment OF the debt to the govern
ment. The court said that the only
legislation with bearing on this case
was section IL of the act of 1861, which
provided that when any stakeholder
should cease to be such, his response
bility for portion of it's debts should
cease except as to debts incurred prior
to his having become stakeholder.
There was no doubt that though
Stanford and his three partners held
portion of the stock they were the
moving spirits.
The court referred to decisions
which showed that the government
grants were made under peculiar cir
cumstances, which made them, in a
sense, national enterprises. The
grants, however, constituted contracts
from which the companies could not
arbitrarily recede. The principle in
volved in this was elementary. The
contract contemplated a repayment of
the bonds. The only question was,
how it would have to be decided
whether there was any direct promise
from these stockholders to repay the
bonds. He found that no such prom
Use existed by implication; and it has
been settled that an implied promise
In such cases was not entered.
The acceptance of the bonds was an
implied promise of stockholders to re-
pay them-in fact their acceptance I'M
der the language of the status was an
absolute and unqualified agreement to
pay to the government. The stock
holders accepted the assistance with
an agreement as to how it should be
repaid-if the acceptance was unquali-
fed, which it was, it could but be ac-
cepted as a total acceptance. While
there was no statement as to this in
the clause providing for the forfeiture,
if considered in connection with the
context of the law no other construc-
ton was possible. There was no
doubt that the company had accepted
all the responsibilities of the loan.
The question remained as to whether
the responsibility rested with the
stockholders. Beyond any doubt there
was no common law liability. 1t re-
verified by the application of the state
constitution and subsequent state
statutes as to such liabilities 1t has
been held that the state statutes did
not fix any definite liability. But the
court said he did not believe the state
legislation material, as the contract be.
tween the company and the government
would have to be relied upon-he was
satisfied that the government did not
intend that the stockholders should be
individually responsible for the debt.
1t had extended its aid in way which
showed that it was an extraordinary
occasion, and that it made the stock