The San Francisco call., 1896-04-03
He Surprises the Courtroom by
Questioning His Colleagues
Logic.
LIMIT OF CORPORATE POWER.
Creation of the Central Pacific
as California Body Ex-
clusively.

Attorney-General fitzgerald completed
his verv able argument in the railroad case
yesterday at a quarter before P. NJ, after
which recess was taken until 2 O'Clock.
In opening his argument in the after
noon Dir. Pillsbury paid a high compli-
ment 10 Attorney General Fitzgerald and
his conduct OF the case on behalf of the
State. He spoke of the fairness, ability
and courtesy which characterized that
argument
1.-The people OF California may be con-
graduated" he said, that they have in
their Attorney-General gentleman pos
sessing the necessary qualifications for
that high position to a degree which
makes him the equal of any one in the
United States filling that position. He
has shown In a conclusive manner that
the most earnest legal strife may go hand
in hand with the highest courtesy"
The first point in the Attorney Generals
argument ia ken up by Mr.. Pillsbury was
the content ion of the Attorney-Gsneral
that the lease of the Central Pacific and
other roads was void because it was made
without the consent of Congress. The
position of the speaker was that the Cen
trail Pacific is and always was California
and not a Federal corporation. There
was nothing in the law, he argued, to pre-
vent a corporation from being two sep
arate entities.
The incorporation of the Baltimore and
Ohio Railroad by the legislative body of
Maryland. and afterward by that of Vir-
ginia and by Congress, was the first theme
discussed. In that case it was decid ed
hat no orr-lo
ton; that the laws passed by Virginia and
Congress were merely enabling acts; that
it never ceased to be unity, and that it
exercised its authority in foreign State
by permission of that foreign State. 1t
was well settled that corporation may
exercise its faculties in any State so far as
that State may permit.
In the case of the Pennsylvania Rail-
road Company against the st. Louis,
Alton and Terre Haute Railroad Com
pany it was held that the mere grant to il
by State of privileges and powers would
not transform. it into citizen of tha;
State. Congress granted to the Central
Pacific road certain rights and privileges
hut these were conferred on the company
as California corporation. The fact that
1t had received certain privileges from
Congress did not make it Federal cor
porston and did not take away its char.
acter as California corporation.
Upon this point the speaker quoted a
large number of authorities. 'The gift of
new powers, said the Supreme Court oi
the United States, ''to corporation has
never been thought to destroy its identity,
much less to change it into being. II
does not. confer corporate existence, but ii
assumes corporate life already existing
Another decision says that it is an unbend.
ing rule that a grant of corporation is
never implied.
The act of Congress of July l, 1862, re
fers TO the Central Pacific Railroad Com
pany of California as a corporation ex-
listing under the laws of the State of Cali
fornia. The act of July 2, 1864, refers to
that company as Californian company.
From these facts Mr.. Pillsbury argued
that the Central Pacific Company had a
right to lease its road and franchise to the
Southern Pacific Company. The United
States Railway Com missioner in his re
port for 1885 said that the lease by the
Central Pacific Railroad Company to the
Southern Pacific of Kentucky "does mo-
cific Railroad Company to the Govern
ment."
This lease is mentioned in the Commits
sioner's reports of succeeding years, ano
as these reports were forwarded to the
Secretary of the Interior the Federal Gov
ernment must have been aware of ths
lease.
Judge Hayne asked Mr. Pillsbury
whether the act of 1864 was not a mere
enabling act and Mr.. Pillsbury replied
that it purported to be such. 1t gave it,
consent that the Central Pacific might ex
ercise its powers in conformity with tn,
laws of the State of California. By thes,
reports 1t was presumed. he argued, tha
Congress had knowledge of the exact stu
alton between the Government and th,
Central Pacific Railroad Company con
cerning the lease to the Southern Pacific
1t was recognition bv Congress of th
right of the Central Pacific to make tha
lease under the laws of the State of Cali
fornia. The fact of this lease had beer
. directly reported 10 Congress.
Judge McKenna remarked that the Sec
retary of the Interior in his report to Con
gress embodied those items in his report
Mr.. Hayne asked whether the Govern
ment's having knowledge of the lease
would amonnt to a ratification.
Mr.. Pillsbury replied that the Govern
ment imposed direct obligations and pen.
alties upon the company by the act, and
that 1t made it obligatory to comply with
the provisions of that act.
"f." asked Mr.. Pillsbury, "the Inter
state Commerce Commission had required
anything of the Southern Pacific, could
The company say that it had not lega
and recognized lease, and therefore could
not be required to carry out the provi
sions of that act? Certainly not. This
corporation has right, under the laws
OF the State of California, to make this
lease, and the Government has impIiedIy
given Its assent, which is recognition Of
the right to lease this road"
''Our position is" said Attorney-Gen-
eral Fitzgerald, that the general corpor
alton law is repealed"
MIR. Pillsbury went on: at is a well.
settled rule that where parties having con-
tract relations carry on business under
that contract, giving it certain con.