The herald., 1896-03-03

| WASHINGTON, March 2.-Attorney-CeIl-
eral Harmon today sent the following let
ter to Chairman Powers OF the house COM
mlttee on Pacific railroads:
DEPARTMENT OF JUSTICE,
WAshiNGToN, Feb. %, S96.
10 Hon. Henry Powers, Chairman Com.
mittee on Pacific Railroads, House OF
Representatives:
| StR:-I have the honor to acknowledge
the receipt of your letter of the 26th inst,
enclosing resolutions adopted by your
committee, requesting my views upon tue
questions therein put. and to submit my
answer thereto, as follows:
| First queetion-Whe,her the officers and
directors of the bond aided Pacific railroads
incurred any liability to the United States
by the unlawful issue of the stock OF said
companies?
Answer-If the officers and directors of
any company knowingly made or per-
mitted any unlawful issue of the stock
thereof, they oecome personally liable to
the company or it's lawful stockholders,
buS rot to the United States, which was
merely creditor. The rights of creditors
could be affected by the improper issue OF
stock which merely represents the property
or the company but does not dispose OF or
cucumber It,
Second question Whether the eaid
officers and directors incurred any liability
united States for the profits on contracts
MADE with themselves or persons repre-
esntIng them from the construction OF said
railroads.
aEswer-lf officers and directors made
contracts with themselves or persons rep
ressntiug them to their own profit or the
detriment Of the company, they become
liable to it unless such contracts were
knowingly authorized or ratified by ma
jority of the directors having no interest
therein. or by the stockholders; but they
did not become liable to the United States.
Third Observation-Disclosures the United
States, as creditor of said corporations.
can maintain actions in their name again
said parties for the enforcement of said lii =
bilty, if it exists, until all remedies to er-
force payment of the debts owing by said
companies to the United States has been
exhausted.
Answer-It was held in the case of this
the United States Va. the Union
Pacific Railroad company, familiarly
known a the "Credit Mohi!er" case (9S
.. S., p. $500 that such liability was to the
respective companies only. The United
States could not maintain any action
thereon against the guilty parties, but
could assert the rights of the company by
proper suit i'll equity as creditor. and
would not be bound first to exhaust other
remedies il showing were made of prob
abba loss by delay.
Fourth Observation-Disclosures, if such liza
biity exists. the United States will be
barred in any action which nigh; be
brought for the enforcement thereof by
the statute of limitations which would bar
the companies if the actions were brought
in their name and behalf. In other words,
whether the United States would be en-.
titled to maintain actions as creditors of
said corporation against its creditors and
officers which the corporations themselves
could not maintain.
| Answer-As the United States would be
merely asserting the rights of the COM
| panies' asset5 to be applied tn the pay.
| ment OF their creditors. any II lite of limi.
| tation which wodid bar the companies
would also bar the United States.
Fifth quesiion--Wnether the facts found
and stated by the Pacific railroad commits.
sioners Of 1887, in their report to the
president, are supported by evidence le.
galiy admissible in a court OF justice.
Answer-If the questions mean to ask
were the evidence before the Pacific rail
road commissioners. upon which they
found the facts stated in their report, would
be admissible i'll a suit or action by parties
in tho court, answer generally that the
statement made by any witness would be
admissible against him, but not against any
other person, and that original documents
would be admissible, or copies under the
usual rules relating to secondary evidence.
With this exception, the evidence would
not be admissible. do not understand
the question to ask for my opinion whether,
if the companies had applied legal rules of
evidence, their testimony should have been
admitted
have fully answered the questions as I
understand them, and have the honor to be-.
Very respectfully yours,
JUDSoN HARMON,
AttorneyG General.
RAILROAD LITIGATION
SAN FRANCISCO, March 2.-At the in
stance of the encouragement of the
United States. eight suits were filed in the
United States circuit court today against
the Southern and Central Pacific Railroad
companies. The suits are 10 recover val
liable mineral and school lands which were
enormously patented by the railroad COM
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