The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1896-03-03
Stanford Case Decided by the
Supreme Court.
AND MRS. STANFORD WINS
MANY MILLIONS WE'RE INVOLVED
IN THE LITIGATION.
An Extended Report of This Most
Important DecisiOn-The Denver
Conference POstpOned-Receive
AppOinted-Latest By Wire-LocaI
Notes.

!
in favor of Mrs. Stanford.
Justice Harlan delivered the opinion in
| the Stanford case. He held that indi-
| Vldual stockholders were not liable for
| the government debt of the Central Pa
! chic Railway company. He said the con-
gressional acts of 1S62-64 and IS regard
J ing the Pacific railroads must all be re-
! garded as one law, as the object was
the construction of one continuous line,
! the congress employing different rail-
| road companies as instruments. Secur-
! lty was given in the government mort
gage on the property of the railroad COM
| panies. 1t was, he said, not too much
/ to say that if in building the Northern
| Pacific, for instance, the stockholders
! had been made liable, the purpose of
| congress to secure national highway
would have been materially retarded and
1t was plain that no obligation was meant
| TO be put on one company that was not
! put on the other. Any other construc-
| ton would be inconsistent The decision
! Of the court below, was, therefore, af-
! firmed.
The title of the case is the United
States VS.. Jane L. Stanford, deceased.
| 1t involved the individual liability of
stockholders in the Central Pacific rail-
road company for the debt due in the
| United States on the bonds issued in aid
of the Central Pacific under the Califor-
mia constitution. Mr.. Stanford held 144,-
3S7 shares of the Central Pacific stock,
and it was claimed by the government
ment was entitled to collect SIS, 237 900
from the Stanford estate. This conten-
ton was resisted by Mrs. Stanford on
the ground that the California constttu-
ton was not self-ruling and also on the
plea that it was the intention of con-
gress in granting aid to the Central
Pacific company to put 1t on footing
different from the footing on which other
government aided roads were placed.
The case was brought originally in the
circuit court for the California district
where the decision was favorable to Mrs.
Stanford and was then appealed to the
circuit court of appeals for the nnth
circuit where the decision was also
against the government. The government
appealed to the supreme court ana as
soon as the case was docketed, moved to
have it advanced for hearing. This mo-
ton being granted, the argument was
made during January, eminent counsel
appearing on both sides. The suit has
attracted great attention from ats 1nltla-
ton because of the effect the decision
will have upon the other Central Pa
cific stockholders, and also because the
fortunes of the Stanford university Will
be determined largely upon the decision.
The opinion proceeded entirety upon
the theory that the Pacific railroads
were intended to constitute contin-
uous line and that the government was
protected by its mortgage upon the
roads It is admitted in the opinion
that the security was impaired by the
act of 1864, subordinating the govern
ment lien to the first mortgage. But,
Justice Harlan says, 'if the act OF 1867,
fairly interpreted, excludes the idea
that stockholders of the companies re
ceiving subsidy bonds were to be per-
sonally liable to the United States Tor
the principal and interest accrulng on
those bonds, the legislation of 1854
however unwise, did not have the eff
feet of imposing such liability
The fact that none of the PACING
railroad acts contain a clause imposing
personal liability, is commented upon
as important. It was competent Tor
congress to provide for such liability,
"but as it did not do So it cannot be
claimed. nor is it claimed, that the
stockholders of that corporation IN
Cured by their subscriptions of stock
any liability to the United states or
to any other creditor of the Union ia.
cific Railroad company for the depts OF
that corporation. They were bound.
of course. TO make good the amount OF
their subscriptions; but, that belng
done. their personal responsibility 70
creditors of the corporate body ceaSeu.
Congress, by it's legislation, encouraged
and invited the investment OF private
capital in the construction Oh a hlSh-
way which, at that time, was deemed
of vital Importance to the whole coun-
try" ;,,,,s
Using the Union Pacific as an Illus
+ra+ion the opinion continues; AS
the stakeholder of a corporation is not
liable beyond the amount OF MS I'M
Maid substitution for it's debts, unless
such liability is imposed by statute ana
as the acts of congress in question are
silent upon the subject, every SUD-
scriber to the stock of the Union "a
cific Railroad company must be deem
ed to have become such upon the con-
ditfon implied by law that he should
not be personally liable for the debts
of the corporation. 1t is not too much
to say if the acts of 1862 and 1864 had
made the stockholders of the corpora
tons therein named personally liable,
in proportion to their stock, for the re-
payment of the principal and interest
of the bonds issued and delivered TO
such corporation, the accomplishing or
the objects which congress had in
view would have been seriously re- !
tarded, if not wholly defeated.
'It is said, however, that these prin- |
ciples have no application to stockhold- |
ers of California corporations that |
came into existence under constitution
al and statutory provisions making a !
stockholder of a railroad corporation |
liable. in proportion to his stock, for
it's debts and obligations. This posi- |
ton cannot be sustained except upon I
the theory that congress intends to !
take larger security in respect of that |
part of the Pacific road which the !
California company undertook to con-
struct and maintain, than it took in
of the Union Pacific railroad. |
But lit cannot be inferred from the |
legislation of congress that it intended I
for the protection of the interests of |
the United States, to impose a heavier |
liability upon the stockholders of the |
Union Pacific Railroad company Why |
should it have so intended? Why |
should it be supposed that congress
would purposely make it more difficult |
to construct one part of the proposed |
national highway than another? The |
supreme end sought to be attained was
by means of private capital and gov
eminent aid, to secure the construc-
ton of the whole line for the benefit |
primarily of the United States, and |
for the use of all the people, If, in
stead of making use of the Central /
Pacific company of California, congress
had itself created a corporation with
to construct road from
San Francisco, through the territories
of the United States to meet the
Union Pacific railroad company, no one |
would suggest that the stockholders |
of such a corporation would. have been
liable for its debts, unless congress