Court Opinion

ID: 8310982
Source: CourtListenerOpinion
Date Created: 2022-10-17 13:48:17.019323+00
Date Added: 2024-06-11T16:44:43.175314
License: Public Domain

Sawyer, Circuit Judge,
(concurring.) I fully concur in the reasoning 'of the circuit justice, and the conclusions reached,’ but I deem it proper to present some further views in support of our decision.
It is necessary to understand the exact legal relation of the Central Pacific Railroad Company to the United States, in order to, correctly, appreciate the constitutional powers of congress, and of the commission acting under its authority, over it. The Central Pacific Railroad Company is a private corporation, created, and existing under the laws of the state of California. It derived none of its corporate faculties, or franchises, from the United Stales. It is in no way subject to the control, or laws, of the United States, except so far as it is subject to regulation, as an instrument of foreign, or interstate commerce, or their authority to establish post-roads, or their war powers, in pursuance of the constitutional provisions on the subject, or such regulation, as is authorized by the terms of the contract found in the acts of congress of 1862 and 1864, accepted by the railroad coinpany as a contract. The Central Pacific Railroad Company is, simply, an artificial person, created with certain faculties by the state of California, and, it stands in relation to the United States, within the scope of its faculties, in precisely the same situation, as a natural person under like circumstances. The United States have no more, and no less, power over it, than they would have over a natural person in the same situation. The contract might as well have *260been made with a natural person, as with a corporation. Had the grantee under the acts of congress been a natural person, instead of the Central Pacific Railroad Company, accepting the terms of the contract tendered by the act, and constructing the road, and performing the conditions of the contract, the rights of the United States would have been precisely such as they are, now, with respect to the Central Pacific Railroad Company, — no more, and no less. Since all the conditions of the contract on the part of the Central Pacific Railroad Company have been fully performed, in all respects, so far as they are required to be performed for that purpose, the title to the lands granted has fully vested, and the government bonds, having been delivered, the Central Pacific Railroad Company has become the absolute owner of the road, and all its appurtenances, together with the lands granted, and bonds issued, subject, only, to the mortgage to secure the payment of the bonds, issued by itself, and the lien of the government to secure its advances, in all respects in the same manner, and to the same extent, as if it were a natural person, similarly situated. The United States have no further control over, or interest in, said lands, or bonds. The United States, in sections 5 and 6 of the act of 1862, and section 5 of the act of 1864, tendered the railroad companies a contract, and, when accepted, there was a contract between the parties upon the terms specified, obligatory upon both, and which could not be changed by either, without the consent of the other. Says the supreme court, in U. S. v. Railroad Co., 118 U. S. 238, 6 Sup. Ct. Rep. 1038, after quoting these provisions:
“These sections, taken together, constitute the contract between the United States and the appellee. U. S. v. Railroad Co., 91 U. S. 72; Sinking Fund Cases, 99 U. S. 700-718; Railroad Co. v. U. SA, 104 U. S. 662. This contract is binding on the United States, and they cannot, without the consent of the company, change its terms by any subsequent legislation. Sinking Fund Cases, supra.”
Being the owner, with the title fully vested in it, the company could dispose of the lands and bonds, at its own will, and pleasure, in the same manner, and to the same extent, and with the same effect, as if the contract had been between two natural persons, without being liable to render any other account to the United States, than it could be called upon to render, had the United States been an association of an equal number of natural persons.
' It is, consequently, a matter of no legal concern to the United States, what disposition the company made of the lands, or bonds, and they have no right to inquire into the matter of their disposition, in any other mode, or under any other circumstances, than they could have been inquired into had the corporation and the United States been two natural persons.
The relation of the Central Pacific Railroad Company to the United States, therefore, under the contract, as a contract, is now, simply, that of debtor, and creditor, with certain covenants for services on its completed road, still to be performed by the latter, with thedebt, and performance of those covenants secured by certain specific liens upon portions of the prop*261erty of the debtor. They stand upon an equal footing as contractors, and upon the same footing, as debtor and creditor, as if the indebtedness, obligations, and securities existed between two natural persons. This is, clearly, the result, as established by the supreme court in the Sinking Fund Canes, which has,- by a divided court, extended the power of congress further in that direction than any other case, and, as it seems to us, to the utmost admissible limit. In those cases the chief justice, who announced the opinion of the majority of the court, in speaking of the Union Pacific Company, which is a corporation created by congress itself, said:
“The United States occupy towards this corporation a twofold relation,— that of sovereign, and that of creditor. U. S. v. Railroad Co., 98 U. S. 569. Their rights as a sovereign are not crippled because they are creditors, and their privileges as creditors are not enlarged by the charter because of their sovereignty. They cannot, as creditors, demand payment of what is due them, before the time limited by the contract. Neither can they, as sovereign, or creditors, require the company to pay the other debts it owes, before they mature.” 99 U. S. 724.
As to the Central Pacific Railroad Company, the United States do not even occupy the relation of sovereign, except so tar as its road extends through the territories, and, then, only, as to that part of the road within a territory, which is now, only, that part in the territory of Utah; and so far as its authority to regulate commerce with foreign nations, and between the states, is concerned, and these powers are merely police powers. The organization of the Central Pacific Railroad Company is under, and by virtue of, the laws of another sovereignty, and its habitat is in the state of California, beyond the jurisdiction of the United States, except so far as it is subject to the power of congress under some special grant of power, or its control is necessary to carry out some power specially granted. We look, in vain, for any power to deal with it, except the power to regulate its acts, as an instrument of interstate, or foreign commerce, or such power as congress may have over it under its authority to establish post-roads, or under its war powers. The relation of debtor and creditor arising under a contract is but a private relation. It is not a sovereign, or governmental, relation. And the power reserved in the acts of congress to repeal, or amend the act as to the Central Pacific Railroad Company could, only, extend to amendment, so far as it operated as a law, and not as a contract, and, then, not to affect the terms of the contract after it had become executed, and rights had. vested under it.
If, as said by the supreme court, the “privileges” of the United States, “ as creditors, are not enlarged by the charter, because of their sovereignty,” then no greater powers can be conferred upon the commission appointed by congress in this ease, than congress could have conferred upon them for the investigation of matters between debtors and creditors, wlio are natural persons, citizens of, and residing within states. Could "a private creditor authorize, or lawfully make, a compulsory examination of the character provided for in this act, into the private affairs of *262bis debtor? Or could congress, within a state, under its limited sovereign powers in a state, authorize a private creditor to make such an examination of his debtor’s affairs, and call upon the courts, in like manner, to compel answers? Can the government do for itself, as creditor within a state, what it cannot do for private creditors? If not, and “the privileges of the United States as creditors are not enlarged by the charter because of their sovereignty,” upon what principle can the compulsory examination attempted to be authorized by this act, be sustained? I can find none. 'This investigation, so far as the questions under consideration are concerned, is not for a sovereign, governmental purpose, but for the purpose of further securing a private debt, not yet matured, already secured by a contract, acceptable to, and accepted by, the creditor at the time it was made. And—
“ The United States cannot any more than a state interfere with private rights, except for legitimate governmental purposes. They are not included within the constitutional prohibition which prevents states from passing laws, impairing the obligation of contracts, but equally with the states they are prohibited from depriving persons or corporations of property without due.process of law. They cannot legislate back to themselves, without making compensation, the lands they have given this corporation to aid in the construction of its railroad. neither can they, by legislation compel the corporation to discharge its obligations in respect to the subsidy bonds otherwise than according .to the terms of the contract already made in that connection. The United States are as much bound by their contracts as are individuals. If they repudiate their obligations, it is as much repudiation, with all the wrong and reproach that term implies, as it would be if the repudiator had been a state, or a municipality or a citizen. No change can be made in the title created by the grant of the lands, or in the contract for the subsidy bonds, without the consent of the corporation. All this is indisputable.” The Chief Justice in the Sinking Fund Cases, 99 U. S. 718, 719.
Having ascertained the relation of the parties to each other to be, that of contractors, — that of debtor and creditor by contract, simply, in the same sense, as if both were natural persons, and private citizens, — the question arises, as to rvhat authority congress has, within a state, through commissionfers appointed by it, to investigate the private affairs of a mere contract debtor, and ascertain what he has done with his own money, or what he proposes to do with it, — whether he is making judicious investment of his money or not, — as bearing upon his probable ability to pay his debt, some years in the future, when it shall have matured?
Mr. Justice Field well said in the Sinking Fund Cases:
“When, therefore, the government of the United States entered into the contract with the Central Pacific Railroad Company, it could no more than a private corporation, or a private individual, finally construe and determine the extent of the company’s rights and liabilities. If it had cause of complaint against the company, it could not undertake itself, by legislative decree, to redress the grievances; but was compelled to seek redress, as all other civil corporations are compelled, through the judicial tribunals. If the company was wasting its property, of which no allegation is made, or impairing the security of the government, the remedy by suit was ample. To declare that one of two contracting parties is entitled, under the contract be*263tween them, to the payment of a greater sum than is admitted to be payable, or to other or greater security than that given, is not a legislative function. It is judicial action; it is the exercise of judicial power, and all such power, with respect to any transaction arising under the laws of the United States, is vested by the constitution in the courts of the country.” 99 U. S. 759, 760.
See, also, authorities cited.
I do not understand, that this doctrine is questioned by the majority of the court. They only differed as to its applicability in that particular case. I do not understand, that the Central Pacific Railroad Company is charged with a violation of any of the terms of its contract, unless it be claimed, that it has failed to pay over the full amount of percentage required by the contract of the not earnings of the road. If it has failed in this matter, it is not a matter of any legal concern to the government, what the company has done with its own. If it has failed in this particular, and there is reason for sustaining an action, the proper mode of procedure for ascertaining the truth, and enforcing the obligation, if violated, is to institute a suit, alleging the facts, and have an investigation in due course of judicial inquiry, and obtain a judgment for any amount improperly withheld. If the full amount has not been paid over, it matters not to the government, how the balance has been expended. The company is liable like any other debtor upon a contract, and not otherwise. But if it be desirable to trace it, and subject the specific fund to the uses contemplated, and there be sufficient ground for so doing, the courts are the proper tribunals in which to effect that object. So, also, if there be a commission of waste upon the property upon which the debt is secured, the courts afford the proper remedy by a suit in equity to restrain the waste. These are the means afforded by the constitution, and laws to private parties for redressing their wrongs. And there is no different remedy provided for the government on its contracts. In such proceedings, there would be allegations, which would inform the defendant what it is called upon to meet. In the language cited by Mr. Justice Field, from a casein the supreme court of Massachusetts, “like all other matters involving a controversy concerning public duty and private lights,” it would in such proceedings “be adjusted and settled in the regular tribunals where questions of law and fact are adjudicated on fixed, established principles, and according to the forms and usages best adapted to secure the impartial administration of justice.” Sinking Fund Cases, 99 U. S. 761 A bill in equity, that seeks a discovery upon general, loose, and vague allegations, is styled a “fishing bill,” and such a bill would be, at once, dismissed on that ground. Story, Eq. Pl. § 325, and cases cited. A general, roving, offensive, inquisitorial, compulsory investigation, conducted by a commission without any allegations, upon no fixed principles, and governed by no rules of law, or of evidence, and no restrictions except its own will, or caprice, is unknown to our constitution and laws; and such an inquisition would be destructive of the rights of fhe citizen, and an intolerable tyranny. Let the power once be established, and there is no knowing, where the practice under it would end.
These principles, it appears to me, are established beyond further *264controversy in the case of Kilbourn v. Thompson, 103 U. S. 168. At the time of the failure of the bankers, Jay Cooke & Co., they were largely indebted to the United States for moneys deposited by the secretary of the navy with a branch of the house in London. It was claimed, that Jay Cooke & Co. were largely interested in a company dealing in real estate at Washington, known as the “Real-Estate Pool,” and that a considerable amount of their funds was invested in that speculation. It seems to have been claimed, also, that there was something in the nature of a trust in favor of the government in the moneys of Cooke & Co., that had gone into the pool. A committee was appointed to investigate the matter, and trace the money, with power to send for persons and papers. Kilbourn, supposed to be one of the managers of the pool, was summoned for examination. He refused to testify, on the ground that the house had no authority, in this manner, to inquire into the private affairs of the debtors of the government, and others connected with them. He was thereupon, upon proceedings for that purpose, committed by the house for contempt, and held in custody 45 days. After his release, he sued the sergeant-at-arms of the house, and the investigating committee, for false imprisonment, and recovered, on the first trial, a judgment of $60,000, and on a second trial $37,500, afterwards reduced to $20,000, on the ground that the house had no authority to make a compulsory investigation, or to commit him for contempt, for the reason, that these functions were judicial in their nature, over which the courts alone can have jurisdiction. When the case was before the supreme court it said in the course of its decision:
“If the United States is a creditor of any citizen, or of any one else, on whom process can be served, the usual, the only legal mode of enforcing payment of the debt, is by a resort to a court of justice. For this purpose, among others, congress has created courts of the United States, and officers have been appointed to prosecute the pleas of the government in these courts. ” 103 U. S. 193.
Again:
“What was this committee charged to do? To inquire into the nature and history of this real-estate pool. How indefinite. Wliat was the real-estate pool? Is it charged with any crime or offense? If so, the courts alone can punish the members of it. Is it charged with fraud against the government? Here, again, the courts, and they alone, can afford a remedy. Was it a corporation whose powers congress could repeal? There is no suggestion of the kind.” Id. 195.
Again:
“In looking to the preamble and resolutions under which the committee acted, before which Kilbourn refused to testify, we are of opinion that the house of representatives not only exceeded the limit of its own authority, but assumed a power which could only be properly exercised by another branch of the government because it was in its nature clearly judicial.” Id. 192.
And again, after stating some particulars to which the powers of the house to punish extends, the court added:
“Whether the power of punishment in either house, by fine or imprisonment, goes beyond this or not, we are sure that no person can be punished for contumacy as a witness before either house unless his testimony is re*265quired in a matter into which the house has jurisdiction to inquire, and we feel equally sure that neither of these bodies possesses the general power of making inquiry into the private affairs of the citizen.” Id. 190.
After a thorough discussion of the case and an elaborate examination of tlio authorities, the court announced its unanimous conclusion in the following terms:
“We are of opinion, for these reasons, that the resolution of the house oí •representativos, authorizing the investigation, was in excess of the power conferred on that body by the constitution; that the committee, therefore, had no lawful authority to require KiTbourn to testify as a witness beyond what he voluntarily chose to tell; that the orders and resolutions of the house and the warrant of the speaker, under which KiTbourn was imprisoned, are, in like manner, void, for want of jurisdiction in that body, and that his imprisonment is without any lawful authority.” Id. 196.
In my judgment the principle established here covers fully the case under consideration. It establishes the position, that the house of representatives has no authority, or jurisdiction, to make a compulsory inquiry into the disposition of the funds of a conventional debtor of the United States; to inquire what this debtor, upon a contract, has done with his money, or to inquire into the private affairs of their debtors upon contract, and those dealing with such debtors.
It is urged that the decision only goes to the point, that private parties dealing with the debtor cannot be examined by the house; that the principle does not extend to the debtor himself, and, especially, to the Central Pacific Company, which is but a corporation, and that the present investigation only extends to what disposition it has made of the bonds, and proceeds of lands received from the government, and the money arising from operating its road. But there is no such limitation in the ruling. Says the court:
“ Can the rights of the pool or of its members, or the rights of the debtor, and of the creditor of the debtor, bo determined by the report oí a committee, or by an act of congress t li they cannot, what authority has the house to enter upon this investigation into the private affairs of individuals who hold no office under the governments” Id. 195.
That the Central Pacific Railroad is a corporation in no way beholden to the United States for its corporate faculties, and franchises, and not a natural person, cannot affect the question. It is but an aggregation of natural persons, and is as much a private party, as if its constituents wore united in a more partnership, instead of a corporation. This principle was maintained in the Railroad Tax Cases, 9 Sawy. 166, and recognized by the supreme court at the argument of the same cases on appeal. The bonds issued, and the lands granted, as we have before seen, under the authorities cited, upon the completion of the road, and the specific earnings of the road, thereafter arising, were the absolute property of the Central Pacific Railroad Company, in which the United States liad no legal concern, whatever, except so far as their lien by contract covers them. There is no element of a trust, public, or otherwise, in the case, as sometimes claimed, except in such sense, as any common carrier, whether by ox team, mule team, horse team, railway ;or steam-ship, *266exercises a public trust, which is only subject to regulation under the police powers of the government, state, or national, as the case may require. That there is no element of trust in the case is ably shown by Mr. Justice Hunt, in U. S. v. Railroad Co., 11 Blatchf. 403, and his ruling on this point was affirmed on appeal in 98 U. S. 570. But if there was a trust, as claimed, the administration of the laws relating to trusts is the peculiar province of courts of equity. It is no part of the functions of congress under the constitution.
It is further urged, that the judgment of imprisonment, only, was held to be beyond the jurisdiction of the house, — that the house, or congress, may investigate, and call upon the courts when so authorized, as in the present act, to perform the judicial part of the work, by enforcing the requirement of the commissioners. But there is no such limitation in the language of the court, as will be seen by re-examining the passages quoted. On the contrary, the want of power in the house to punish is grounded on the want of power to investigate at all. It is directly said, in the case cited, that the house may punish for contempt, in certain specified cases, wherein the power is conferred by the constitution, or when necessary to the proper execution of powers expressly conferred. And the court with reference to those instances, as we have seen, says, in terms:
“Whether the power of punishment in either house by fine and imprisonment goes beyond this or not, we are sure that no person can be punished for contumacy as a witness before either house unless his testimony is required in a matter into which that house has jurisdiction to inquire, and we feel equally sure that neither of those bodies possesses the general power of making inquiry into the private affairs of the citizen.” Kilbourn v. Thompson, 103 U. S. 190.
That was a case, like this, wherein the house was seeking to inquire into the private affairs of the debtor, — seeking to ascertain what that debtor had done with his money, some of which he held as a depositary of the United States. The decision was not put upon the ground, that the house could not in any case punish for contempt, but, on the ground, that the house in cases like this, had no authority to make the inquiry at all, and, consequently, there could be no punishment for contempt, either by the house, or any other body or tribunal.
Under the act how in question, congress has undertaken to authorize a commission to make inquiry into the private affairs of its -creditor,— into the purpose, for which the debtor appropriated its own funds,— which the supreme court, in the case cited, says it has no power to do, and the commission is authorized to call upon the courts to aid it in its unlawful inquiry. The court is not called upon to act in any judicial proceeding, or investigation pending before it, or before any other court, in the discharge of its judicial functions, or any matter ancillary to the exercise of its judicial functions. There is no case or controversy, at all, pending before it of which the proceeding attempted to be authorized is a part, or to which it is ancillary or in any way pertinent. It does not appear to us, that it is contemplated by the act, that the court, in the investigation provided for, when called upon to aid the commission, *267shall inquire beyond the point whether the question asked is within the scope of the broad field of inquiry prescribed. And so the commissioners claim, for they have conducted their investigation on that theory; and they insist, that they are not bound by any rules of evidence, or, other principles of law observed by courts of justice, and by -which the latter are guided, and controlled, in the 'ascertainment of facts in the course of ordinary judicial proceedings. U this be the correct view, the court is expected to compel an answer irrespective of any other considerations. Even questions criminating the witness, are to bo answered, the only protection to the party being that his answer shall not be used against him in a criminal prosecution, — a protection of little avail to any party, who should disclose criminal acts upon which an indictment could be found, and should upon compulsion indicate other sources of evidence, by means of which, the acts disclosed can be proved; and such acts may also constitute offenses under the laws of the state, against which congress can afford no immunity.
As bearing upon the power of congress to compel an answer to criminating questions, or compel the production of private papers, see Boyd v. U. S., 116 U. S. 616, 6 Sup. Ct. Rep. 524. The principles therein established are equally applicable to the matter now under consideration. The court seems, therefore, to be called upon to compel, under process for contempt, an answer to any question which the commission sees lit to ask within the scope of the inquiry attempted to be authorized by the act. If this bo so, the court is, simply, made an instrument by this act, in the hands of the commission, to execute its unregulated and unrestricted will. The court is made Ihc ministerial agent of the commission to perform its behests, whenever a witness refuses to respond to a question, or produce papers within the range of the authority attempted to be given by the statute. The judicial department of the government is, simply, made, by this act, an adjunct to the legislative department in the exercise of its political and legislative functions, and powers, to execute its commands,—and that, too, in a matter into which congress, under the decision cited, has no jurisdiction whatever to inquire. I know of no power in congress, to thus render the judicial department subordinate, or ancillary to the legislative and executive departments of the government, or to either of them. If there is any one proposition immutably established, I had supposed it to be, that the judiciary department is absolutely independent of the other departments of the government, — that it cannot be called upon to act a part subordinate to any other department of the government, or to a commission armed with exasperating inquisitorial powers over private affairs, unlimited by any consideration other than its own unregulated discretion. And so I understand the authorities to be. “ The functions of the judges of the courts of the United States are strictly and exclusively judicial. They cannot, therefore, be called upon to advise the president in any interpretation of law, or to act as commissioners in cases of pensions or other like proceedings.” 2 Story, Const. § 1777, and cases cited.
*268The courts, in this instance, are called upon not to exercise their ordinary powers in the administration of justice, but to assist congress in the exercise of its deliberative, legislative, and political powers, — to aid it by irregular, and extraordinary, not to say unprecedented means, — to act as its agent in matters wholly foreign to the functions of the judiciary. In my judgment, therefore, reason and the authorities cited establish, beyond reasonable ground for controversy, the proposition, that there is no lawful authority in the commissioners to compel answers to the various questions propounded and set out in the petition, or any of them, which the respondent refused to answer, nor can the courts be lawfully required to compel answers thereto.
I concur in the order made, discharging the order to show cause.