The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1895-06-30

San Francisco, June 29.-United States
Circuit Judge Ross today rendered his
decision on the demurrer OF Mrs. Jane l..
Stanford against the suit of the govern
ment to recover $15,OOO,OGO from the estate
of her late husband, Leland Stanford.
Inc demurrer was sustained. Judge Ross
allowed the government to amend its
former complaint and reargue its case
if it so desired. 1t was intilnated, 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. attorneys generally ex-
pectlng contrary decison.
If One is All Are.
The court began by reading and ex-
planning the acts and statutes, both state
and federal, which had any bearing on
the construction Of the Central Pacific
railroad and its branches. All railroads
west of the Missouri river were, he said,
constructed under the same acts, so If
one road was liable to the government all
of them were liable. In nearly all of the
corporations Leland Stanford was a
stockholder. Together with G. p. Hunt
ington and the other incorpcrators, he
owned 30,SS0 shares of the stock. The
government, according to its contract, is
sued bonds to aid iE the construction Of
this road. Though the road was built
under that contract, 1t was Incorporated
under the laws of the state. Therefore.
it became in way amenable to the laws
Of California
Were Post FactO.
The laws of California providing that
stockholders of corporations are individu-
ally responsible for the debts contracted
by their companies, he held, did not af
feet Mr.. Stanford, as the government
claimed, for the reason that the stock
holders liability act was passed after the
government had made its contract with
the Central Pacific. If those laws had
been passed before the government bond
ed the Central Pacific, however, 1t would
have made no difference, as the govern
ment had no intention Of making the
stockholders of the railroads it bonded,
personally responsible for the debts con-
tracted by the company. The Central Pa
cific, the court continues, had something
of a national tone in it. When 1t was
contemplated the country was IN state
quick communication between the Attain
tic and the Pacific oceans. At that time
the building Of the railroad was a great
undertaking-an 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 practically agents OF the United
States.
A Promise Only Implied.
1t was very plain that in case the rail-
road did not pay the bonds upon ma
turity that the secretary of the treasury
has the power to take possession of the
roads. The bonds are identical with
first mortgage. Did the company who De
came indebted to the United States prom
Use to repay the money? asked the court.
The statute on this point is not very eX-
plicit, which is to be very much re-
GREETED, said the judge. A promise is
only implied. There was no explicit or
unqualified agreement between the cor
poration and the government. 1t 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 is it an unqualified promise
to repay the money?
Governments Intention.
1.-The government had no intention of
making these men individually respons-
IDLE" said Judge Ross. That question
never entered into the contract. The
covenant did not stipulate that the stock
holders should repay the bonds. The ac-
ceptance of the bonds was an implied
act of the stockholders to pay them. The
the government with the agreement that
they should pay for it, that was all. In
accepting them, of course, it was be-
lieved that they would repay them. The
question remains, however, whether the
liability rested with the stockholders.
There are no common liabilities. The
state law fixes the liability of stockhold-
ers in proportion to the amount of stock
they posses. That law, however, cannot
be held to apply in this case as it was
passed subsequent to the making of the
government contract with the Central
Pacific company. The real question in
between defendant and plaintiff and
whether there was a liability proviso.
Reverting to the provisions in the laws
of the United States, there can be found |
no such agreement.
1.-The statutes do not hold the defend
ants liable. There is absolutely nothing
to establish this fact, and l sustain the
demurrer and give the plaintiff the power
10 amend concluded Judge Ross.