The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1896-12-02
Southern Pacific Leases Will Be
Attacked and an Inquiry
Started About Accounts.
HUNTINGTON MAY BE QUERIED
Officials Will Be Examined Regarding
the Alleged Eeficit for the
Year 1894

l.
information is derived from such good
authority that there is no chance to ques-
ton its entire accuracy. The effect of the de-
cision rendered Monday by Judge McKen-
ma in the United States Circuit Court was
to dissolve the Injunction. and to leave the
Railroad Commission free to act. subject
to- review by any court to which the
Southern Pacific Company may appeal
from decision concerning rates.
. The important fact having been essab-
fshed that the Railroad Commissioners
have the constitutional power to make
rates and fares for transportation COM
panies IN this State, the commission has
a, stable basis for future action. AT least
important considerations will now arise
which may be summed up as follows:
1.-The validity of the leases of the Central
Pacific Railroad Company, the Southern Pa
cific Railroad Com pany OF California the Cali
foInia Pacific Railroad Company, the South
Pacific Coast Railway Company, the Northern
California Railway Company, the Oregon and
Pacific Railroad Company OF Arizona and the
Southern Pacific Railroad Company of New
Mexico to the Sou thern.Paclfc Company Six
of these corporations, the first six hamed IN
the foregoing, have franchises from the State
OF California. Two have. both State and Fed
eral franchises, the Central Pacific Railroad
Company of California; One, the Oregon and
California Railroad Company, is an Oregon
corporation.
This matter, which was brought forward
By A ttorneyr General Fitzgerald in his ar
gumenJ in the United States Circuit
Court was not considered by Judge Nc
Kenna in his decision. But there is no
doubt that the attorneys for the Board OF
Railroad Commissioners will proceed to
determine whether the leases to the South
g ern Pacific Company are invalid. II the
court should hold that the leases are in
valid the effects of such decision would
be far reaching, amounting to the practi-
cal dismem berment of the Southern Pa
cfic COMPANY carefully constructed sys-
tenn in California and the compulsory OBJ
GRAFTON of the California railroads emu
merated as individual lines.
g. The actual truth concerning the expenses
and earnings OF. the lines of the Southern Pa
ci6c Company, upon which showing the rates
TO some extent may depend.
1t is an open secret t. at at least one OF
the attorneys for the Board of Railroad
Commissioners disbelieves shat the show
ing made up by he bookkeeping depart
ment of the Southern Pacific Company for
legal use is true. To ascertain the truth it
will be necessary. 10 have the Southern
Pacific Com pany's books and the books of
the leased lines and the Southern Pacific
Company's officials in court for examina-
ton. 1t is credibly learned that the
attorneys for the Board of Railroad Com
missioners are inclined to this course, the
idea being TO subject all figures and state
ments made in support of the Southern
Pacific's Company's alleged basis of rates
to the most thorough scrutiny and inves-
tigation.s
q 8. An investig alton into the combination of
transportation lines in California in restraint
of competition.
While the second matter, the investiga-
tion OF books, papers accounts and per-
sons, may excite more general interest
than the others, it will be conceded that
the first is of the greater Importance.
Acknowledgement Fitz erald absolutely
refused yesterday to be interviewed con-
corning he next step to be taken by coun-
sci for the Board of Railroad Commits
sioners. He would not go or record as
saying anything about the matter. At
torney- General Fitzgerald, w. w. Foote
and Robert Y. Hayne will meet to confer
together to-day with the Railroad Com
missioners. Only tine preliminary matter
was disposed of in the United States Cir
cult Court. An answer to the Southern
Pacific Company will be filed, and the
true merits of the situation will be con-
sidered, as outlined in the foregoing.
The invahdity of the leases of the Cali
fornia roads to the Southern Pacific Conn
pdUy WAS Dy AllOTHe1-0GueIdl
Fitzgerald as matter OF great port
ance before Judge McKenna. What was
then said is of interest once more, be-
cause the arguments are the basis. of the
move to have the different lines operated
separately. Attorney Fitzgerald said:
The leases from the six California corpora
tions-namely the Central Pacific Railroad
Company the Southern Pacific Railroad Com
pany of California, the Californi Pacific Rail-
road Company, the South Pacific Coast Rail-
way Company, the Northern Railway Com
pany and the Northern California Railway
Company-we shall claim are void because, az
have before said, they were executed with
out the express consent of the authority grant
ing those franchises.
The leases from the two corporations exer-
cising Federal franchises-the Central Pacific
Railroad Company and the Sou hern Pacific
Railroad Company of California-we will
claim are void, because those leases were exc
cuted without express Congressional author
ity.
The leases from the California Pacific Rail-
road Company and the South Pacific Coast
Railway Company we shall contend are void
for the following reasons: Those two leases
were executed to the com plainant prior to the
amendment to its charter, passed bv the Legis-
lature OF Kentucky in March, 1883. The act
of the Kentucky Legislature granting this
charter was originally passed ON March IL,
1884.
Before this amendment to the charter was
passed by the Kentucky Legislature these two
leases were executed by the California Pacific
Railway Company to the complainant here
The California Pacific Railroad Company's
lease was executed November l, 1886 two
years before the amendment to the charter
The South Pacific Coast Railway Company's
lease was executed on July l, 1887, near ly one
year prior to the passage of the amendment to
the charter which was originally granted by
the Legislature OF Kentucky to the COM
plainant.
In that connection, if the court please,
with reference TO those last two leases, we will
assume The position that, at the time they
were executed to the complainant, the COM
plainant had ITO power or authority to enter
into contracts of that character, or of any
other character, in the State OF California
The omnibus lease from the Southern Pacific
Railroad Company o; California, the Southern
Pacific Railroad Company OF Arizona the
Southern Pacific Railroad Company of New
Mexico, and the Two Louisiana corporations,
we will contend is void, for the reason that il
is in palpeble violation OF section 20 of article
XII of the constitution of this State.
The investigation into the books and
accounts CT the Southern Pacific Com pany
may determin whether there was an ac-
iual deficit by the operation OF the roads
of the Pacific system controlled by the
Southern Pacific Company during the
year 1895. On this point the investigation
of the statement made by G. P. Hunting