The record-union. [volume] (Sacramento, Calif.) 1891-1903, 1895-10-14

SAN FRANCISCO, Oct. 13.-The United
States Circuit Court of Appeals yesterday
decided in favor of Mrs. Stanford. Inc
decision is given on the appeal taken
from the previous order of Judge Koss
sustaining the demurrer of Mrs. Stanford
to the suit brought against her to recover
SIS, 3S7, 900 alleged to be due the Govern
ment from her husbands estate on &C.
count Of Central Pacific bonds.
The decision which is handed down Is
signed by Circuit Judge Gilbert and
United States District Judges Morrow
and Hawley. It is. as already indicated,
an affirmation of the correctness OF the
position already taken by Judge Ross
that there is no relief TO be obtained In
the premises through suit in equity. 1t
Is held that if the liability exists IL Is
purely creature of statute" the ques-
tionbefore the court being pur ely one OF
the interpretations of the law.
The usual privileges for the amend
menI of the complaint and the rearguing
of the case were offered the representa-
tives of the Government, but they Will
not be taken advantage Of.
An audience of about hundred law
yers, young and old, was in the court
room at II o'clock yesterday morning
when the three black-gowned Judges
Gilbert, Hawley and Morrow-ascended
the bench. Judge Gilbert delivered the
opinion of the court. The Judges took
the ground that the Central Pacific and
Union Pacific Railroads were built on
the same terms; that the Government
rightfully had no more claim on the
stockholders of one than 1t had on those
of the other; that the Union Pacific stock
holders were exempt from personal la
bility, as no such law as that which ap-
piled 10 California corporations governed
them, and that consequently the central
Pacific stock holders should be entitled to
the same exemption.
After reviewing the Acts of Congress
relative to the building OF the roads, the
court said:
Upon these statutes, so constituting
the contract relation between the United
States and the Central Pacific Railroad
Company, the question arlses whether or
not 1t was the intention OF the l nited
States to hold the ockholders of that
corporation individually liable for the de-
fault of the railroad company III case OF
its failure to pay Its debt 10 the I nlted
States when due, and whether or not the
provisions of these statutes and the course
of dealing of the United States with the
as 10 justify the stockholders OF the Cen
trail Pacific Railroad Company Ia bellev-
ing, at the time they became stockhoId-
ers in said company, or in either OF the
companies subsequently consolidated
therein, and at the time the debt 10 the
Government was incurred, that they were
as tree from Individual ability for such
debt as were the stock holders OF the MON
Pacific Railroad Company. or the stock
holders of the other corporations, which
were aided in like manner.
Upon the one hand, it is urged that
while the Union Pacific Railroad Com
pany received its corporate franchises
from the United States, and was, there
FORE to some extent under the control OF
the Government, which was its soyer-
eign, the Central Pacific Railroad Com
pany received none OF its corporate priv
lIeges or immunitieS from the l nited
States, but took its lie and attributes
from the State OF California, and that the
rights and privileges which 1t acquired
from the Government were taken by con-
tract and not otherwise, and that when
it's representatives went from the State
OF California TO Congress, and there asked
aid from the Government 10 construct Its
road, il sent with said representatives and
submitted to Congress the provisions of
its charter from the State Of its creation,
portion of which charter was the con-
stitutionaI provision OF the State. declar-
ing that stock holders should be indi-
vidually liable for all the debts OF the
corporation"
The court said that the Government
had a strong motive for hurrying the
construction OF the transconiinentaI line.
The War OF the Rebellion was going on,
and the Government wished to protect It's
Pacific possessions. The opinion con-
tinued:
aside from the scope of the internal
improvements which were contem plated
and the emergency which iinpelled their
inception, there Is much IN the language
OF the Acts to indicate that in treating
with the Central Pacific, as well as the
other railroad companies mentioned IN
the contracts, the United States were pur-
suing q general scheme o. internal i'm
provement, and. in so doing. was dealing
with all the aided companies upon terms
of liberality aud equality. No discrimi-
nation is made in favor OF either the cor
poration created by Act OF Congress or
the corporations existing under the laws
of the States which were the beneticiaries
OF the Act. In Incorporating the Union
Pacific Railroad Company, Congress was
silent upon the subject OF the individual
liability-of its stock holders.
'rhese stockholders, therefore, cannot
be individually held for the payments of
the debts Of that corporation, since the
individual liability OF stockholders is a
creation of statute law, and must afiirma-
lively appear by the provisions OF the
law controlling the corporation when the
debt was incurred. The other corpora
tions mentioned IN the Act, with the ex-
ception of those OF the State of California.
were organized under the laws or States
which imposed upon the stock holders of
railroad corporations no individual liza
bility for corporate debts.
''Since the United States had the same
National benefits in view in creating the
one company and in endowing all the
companies with the same grants and
franchises. 1t must be presumed that
there was imposed upon the Union Pa
cific Company ana its stock holders every
duty and obligation then deemed neces-
sary for the public interest"
The court quoted from the Acts of Com
gress TO show that al the railroads were
to be on the same footing towards the
Government, ana went on:
but perhaps the provision OF the Act
most clearly indicative OF the invitation
of Congress to owners of private capital
TO invest the same in the stock of these
corporations upon terms OF equaiity and
upon the understanding that there should
be to all alike freedom from indivIdua
responsibility, is that which authorizes
the consolidation of said corporation or
any two or more thereof for the building
of the whole or any portion OF the road
III the Union Pacific Railroad Company
had. in pursuance of this permission,
consolidated with the Central Pacific.
either before or after the construction of
the roads, il is obvious that the Govern
ment would now have no recourse TO the
individual liability of any stock older in
such consolidated corporation. 1t would
be impossible for a portion OF the stock