The San Francisco call., 1896-05-06
Talks Exhaustively on the In
validity of the Central
Pacific Lease.
POWER OF STATE GOVERNMENT
Right of the Commissioners to Inquire
Into the Validity of the Lease
Disputed.

commissioners before Judge MCheHud
yesterday. He spoke as follows:
''The first contention to which propose
to address myself is the invalidity of the
lease of the Central Pacific to the COM
plainants. There are many cases cited to
support this ground, but think in every
such case the courts decided that when the
corporation had no power, either by
charter or by general laws constituting
their charters, the courts defined the
limit and authority to execute or rescind
lease.
"I think your Honor will find this is a
fair statement of the cases decided. In
some case the question came in an action
to enforce the lease. In others to rescind
the lease. In neither case would the court
lend its power to help either party. In
some cases the court gave as an additional
reason that the attempted lease was con-
trary to the public policy. True, in many
of these cases there are expressions which
go beyond this, but your Honor is bound
| only by those findings which were neces-
| sary to decision of the court.
GAS said before, there is given another
reason why the lease was held invalid
contrary 10 public policy. But in none of
the cases has it any other meaning than
that the sovereign has not seen fit to give
the power TO lease, and it cannot, there
fore be assumed or exercised by the Great
ure.
when the Government of the United
| States, stepping down from its high place,
contracted with and dealt with this corpo-
ration, it did so with express reference TO
the laws of California
Where there is no direct authority il was
argued the lease can be attacked in any
] collateral proceeding. In this / disagree
with Judge Hayne. He saw plainly enough
| that that principle would not avail him,
4
was an entire absence of authority. The
Central Pacific had the power by its char
ter to build this road within the State, and
! to exercise all the powers OF a railroad cor
| poration. Therefore he goes into the sub
iect of public policy. Against what public
| policy? Why is it contrary to public policy
| that corporation which nas no power TO
make a lease does make lease? What is
it more than a breach of contract2 Is
the policy of the United States different
policy from that of the State of Cali
fornia? Why should the State of Cali
fornia concern?
| Suppose that in every way the Govern
ment recognizes the law valid. Can it be
tnat everybody else can step in and object?
/ No one else can be interested The rail-
road has right to run the road according
to the laws of California. 1t owes allegi-
ance TO California. What comes in cannot
] be public policy. So far as the United
States is concerned it isn't acting as Gov
ernment which lays down laws and equit-
| les, in this Pacific railroad matter. 1t is
| acting simply as a contracting party look
ing after its own interests.
Even in the case where the lease is
against public policy in the sense in which
they use that term. the court will not dis
| turb the property. The Government OF
! the United States has recognized this
lease of the Central Pacific. By the act of
1888 the Government enacted with full
knowledge of these leases that all the roads
under these leases must run their teIe-
| Lraph wires in certain way.
1.-The Government did not simply say
| that whoever was running the roads should
be liable to certain Obligations. IL i'm
poses positive and affirmative duties upon
the lessees, recognizing them as SUCH
| Throughout that act with painstakiny
care distinction is made between the orig
inally aided persons and those running
the roads who were not the originally
aided parties. So l say that so long as the
| Government continues to treat with these
| lessees il cannot be in the mouth of some
third parties to set up the rights of the
! United States.
"What powers has this Central Pacific
Company in this State? 1t has the right to
| operate that road under the franchise
granted it by the State of California. Sup
pose Congress wiped out all acts? What
did the road get from Congress? 1t got
some bonds. II got some land, but it got
no incorporeal rights. Why cannot the
Central Pacific operate that road under its
charter from Californian
Suppose the road disincorporated under
the laws of California, where would the
title be2 Would itnot be i'll the California
successors of that corporation? How can
| the United States say to the State of Cali
fornia you cannot pass any law limiting
alienation of this road without the con-
sent of this Government when it has by
| its own act placed the entire question of
the corporate powers of the road within
the States own volition.
''I say the Commissioners have no right
to inquire into the validity of the lease.
1t would be a strange thing if the Com
missioners, in regulating the question of
| rates, could go into the various questions
of the validity of leases, ultra wires, and
public policy. The constitution says this
commission shall regulate the rates of all
railroad companies. 1t says this company
is guilty of extortion in the business 1t is
carrying on. How can the commission
| proceed one single step in fixing reason
| able rates unless they consider the entire
road?
''The constitution never gave any COM
| mission the right 10 act in rem on a par
ticular piece of road. 1t SAYS you find the
company and act on it. They can't act
on some one who ought to be running this
road but is not. That question is for an
other department of government"
At this point judge McKenna inter
rupted to ask the speaker if in such a cass
as that presented by the Southern Pacific
of Kentucky, which controlled both the
Cen tral Pacific and the Southern Pacific
of California, the company would have
right to demand consideration of both
roads as one system in the regulation of
rates.
Mr. CARRIER replied: at is a simple
question of fact. What is the whole thing?
What is the connecticut The Southern
Pacific OF California and the Southern Pa
cIfc constitute one indivisble whole.
They ioin each other and the trains of one
run over the tracks of the other"
| Continuing, be said: 'The Railroad
Commission and the laws of California
| take no account of the ownership O.. these
roads. The question they are concerned
with is the use they are making of it. 1t
! would make no difference how the prop
erty was acquired. II it was stolen the
commission mas no right to look into these
matters. Because | have got piece of