The record-union., 1896-01-29

Assistant AttOrney-GeneraI Dickinson
and soIicitor-GeneraI Conrad APP
pear on Behalf of the Government,
Mrs. stanford Being Represented
by Joseph III. Choate of New York
Contentious of the Opposing Coun-
sci.
WASHINGTON, Jan. 2S.-Argument
was heard to-day by the Supreme Court
of the United States in the famous
suit brought by the United States
against the estate of the late Senator
Stanford of California as a stockholder
in the Central Pacific Railroad Com
pany, to establish his liability for the
debts of that corporation to the Gov
ernment. Among the auditors was Mrs.
Stanford, to whom the determination of
the litigation means so much.
The argument was opened by Assist
ant Attorney General Dickinson, and
will be closed by Solicitor-General Con-
rad. Mrs. Stanford was represented by
Joseph H. Choate of New York.
The suit was originally begun in the
Circuit Court of the United States for
the Southern District of California, the
demand being for the sum of $15, ,237,
coo. Both in that court and in the
Circuit Court of Appeals the Govern
ment was defeated, and the case comes
to the Supreme Court of the United
States by appeal from the judgment of
the Court of Appeals against the United
States.
The Assistant Attorney General and
Solicitor General in their argument
stated that the liability sought to be en-
forced was created by the law of Cali
fcrnia, which it was insisted bound
stockholders of corporations to answer
personally for their debts in proportion
to their holdings of capital stock Mr.
Stanford was a stockholder in the Cen
tral Pacific Railroad Company and the
Western Pacific Railroad Company,
two California corporations, chartered
in 1861 and 1862, respectively, and con-
solidated by authority of California in
1870, under the name of the Central Pa
cific Railroad Company
1t was alleged that these companies
became indebted to the United States
for bonds of the United States which
were loaned to these companies under
the United States statute of July l,
1862 to aid them in building their rail-
road; that the companies became obli-
gated to pay the United States the
amount of these bonds at their matur-
| ity, together with all of the interest
upon the same, and that all of the same
was an existing Indebtedness to the
United States The bonds loaned to the
Central Pacific Railroad Company of
California amounted to $25, ,SS5, ,120. and
/ 4 ~
Railroad Company amounted to ST.
| 9T0950 All were thirty-year bonds,
bearing interest at 6 per cent.
The first four installments of the
bonds loaned to the Central Pacific
Railroad Company of California
amounting to So, ,362, 900, have matured
and have been paid by the United
States, and all of the interest which ac-
crued UP to the filing of the bill has
! likewise been paid by the United States
and no part of the principal or interest
has been repaid.
| 1t was alleged that the United States
was bound to pay, and would pay, all of
said remaining bonds and interest at
maturity; that the Indebtedness to the
! United States on account of those
/ bonds loaned to the Central Pacific
amount to $50 100000, and that on ac-
count of those loaned to the Western
Pacific RAILROAD Company to S5,4S9,-
| $50; that the said railroads were insol-
vent, were covered by a parchment
mortgage exceeding their value and
that the United tates has no remedy ex-
cept against the stockholders of said
company.
/ TLn ION nv ho Gnxya ont
was that the railroad company became
indebted to the United States in amount
of the bonds issued to them and were
personally obligated to pay the same
| with interest; that the Constitution Of
/ the State of California imposed upon
each stockholder an enforcible per-
sonal obligation for a proportion of all
debts and liabilities; that the Consti-
tuition, supplemented by Section u of
the Act of 1861, under which the com
panies in question were Incorporated,
/ fixed a definite liability; that by no act
of the United States, through either of
! its departments of Government, was an
intent or purpose manifested to alb
solve the Central Pacific Railroad Com
pany from the obligation assumed by
the companies or from liability imposed
upon their stockholders, and that moth
ing can be found in the course of deal
ing between the United States and the
| Central Pacific Company to support
the inference or justify the conclusion
that the United States in any manner
relinquished or waived the security
afforded by the personal liability of the
stockholders.
Mr. Choate. in his argument in behalf
o the defendant, Mrs. Jane Stanford,
executrix of the will of her deceased
husband, referred to the basis and mag
nitude Of the suit, saying the magni-
tude of the claim was wholly unpar-
aleIled The bill demanded S15.000,-
600 against the defendant, and in
volved the claim of an equal amount
against each of the three associates
OF the defendants testator, amount
ing to a total Of S6O,000,000 against
four individuals. solely by reason OF
their having held stock in the Central
Pacific Railroad Company and in its
constituent companies. The defense to
the suit was based upon four principal
grounds, in support of which it was
argued:
First-The successive Acts of Con-
gress relating to the Union and Central
Pacific Railroads are to be read to-
gether. and so read, they demonstrate
that Congress intended them to cover,
control and regulate the entire rela-
tions of the Government to all of the
companies with respect to the subsidy
bonds without reference to the laws
of any State; that the companies were
reSnectiyely created and adopted a.