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ACTS AND JOINT RESOLUTIONS OF CONGRESS
AND
DECISIONS OF THE SUPREME COURT OF THE UNITED STATES
RELATING TO THE
UNION PACIFIC, CENTRAL PACIFIC, AND
WESTERN PACIFIC RAILROADS.
WASHINGTON:
GOVERNMENT PRINTING
1897.
OFFICE.
ueiAfir
BUn2AU OF RAILWAY LCONO.ViiGSi
WASHINGTON, O. C.
TABLE OF CONTEXTS.
ACTS AND JOINT RESOLUTIONS RELATING TO THE UNION PACIFIC, CENTRAL
PACIFIC, AND WESTERN PACIFIC RAILROADS.
Page.
Act of July 1, 1862 _ _ 1
Act of July 12,1862 _. 13
Act of July 2,1864 ... 13
Amendment of March 3,1865 .. _ 25
Joint Resolution of March 3, 1865 26
Joint Resolution of May 7, 1866 . . _ _ ...... 26
Joint Resolution of May 21, 1866 i 27
Amendment of July 3, 1866 ._. . _ ... . _ _ _____ 27
Act of July 27,1866 _ 28
Act of March 2,1867 _ __ _ __ 29
Act of March 6,1868 _ 29
Act of June 25. 1868 _ 29
Act of March 3,1869 31
Joint Resolution of March 3, 1869 _ _ 32
Joint Resolution of April 10, 1869 _ _ 32
Act of May 6, 1870. _._ 33
Act of May 6, 1870 34
Acts of July 15, 1870 and March 3,1871 35
Act of February 24, 1871 35
Act of March 3, 1871 ... 36
Act of March 3, 1873 36
Act of June20,1874 ___ 38
Act of June 22,1874 69
Act of March 3, 1875 39
Act of August 15,1876 40
Act of April 30,1878 40
Act of May 7, 1878 (Thurman Act) 41
Act of June 19, 1878 47
Act of March 3,1879 49
Act of March 1, 1881 , 49
Act of March 3, 1881 . 50
Act of June 30, 1882 50
Act of March 3, 1887 _ _. 51
Act of February 1,1888__ ___ _. ___ ... 56
Act of August 7, 1888._ . .__ __ _ .__ 56
Act of August 13,1888 60
Act of October 19,1888 60
Act of July 16,1892 61
Act of July 28, 1892 __. 61
Act of March 12, 1894 62
Act of August 18,1894 62
DECISIONS OF THE SUPREME COURT OF THE UNITED STATES RELATIVE TO THE
UNION PACIFIC, CENTRAL PACIFIC, AND WESTERN PACIFIC RAILROADS.
United States v. Union Pacific Railroad Company, 63
Union Pacific Railroad Company v. Hall et al 75
United States v. Union Pacific Railroad Company 84
Union Pacific Railroad Company v. United States 116
United States v. Central Pacific Railroad Company.... 137
United States v. Kansas Pacific Railway Company. _. 140
United States v. Denver Pacific Railway Company 143
United States v. Sioux City and Pacific Railroad Company. 145
Sinking Fund cases.
Union Pacific Railroad Company v. United States 146
Central Pacific Railroad Company p. Gallatin _ _ 146
hi
IV
TABLE OF CONTENTS.
I'iifze
Union Pacific Railroad Company v. United States 181
Western Pacific Railroad Company and Another v. United States . _ _ 185
Sioux City and Pacific Railroad Company v. United States. . 188
Union Pacific Railway Company v. United States. _ 190
Union Pacific Railway Company v. United States. . . . 19:5
United States v. Union Pacific Railway Company.. _ 19:5
United States v. Central Pacific Railroad Company. _ .. 198
United States i\ Central Pacific Railroad Company.. . .. _ .... 202
United States v. Union Pacific Railway Company . 201
United States v. Union Pacific Railway Company and Western Union Tele¬
graph Company 210
SYLLABI OF OTHER DECISIONS AFFECTING THE INTERESTS OF THE
UNITED STATES.
Pacific Railroad v. United States 241
United States v. Western Union Telegraph Company and Union Pacific
Railway Company . 241
Central Pacific Railroad Company v. United States ... 242
Wardell v. Union Pacific Railroad Company . 242
Pacific Railroad Removal Cases. 242
Central Pacific Railroad Company v. California 243
Index of Laws . . . 245
Index of Decisions . . 252
ACTS ANI) JOINT RESOLUTIONS OF CONGRESS
RELATING TO THE
UNION PACIFIC, CENTRAL PACIFIC, AND WESTERN PACIFIC RAILROADS.
(Compiled to close of First Session, Fifty-fifth Congress July 24, 1897.)
ACT OF JULY 1, 1862.
AN ACT to aid in the construction of a railroad and telegraph line
from the Missouri River to the Pacific Ocean, and to secure to the 12 Stat.,489,
Government the use of the same for postal, military, and other
purposes.
Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled, That
Walter S. Burgess, William P. Blodgett, Benjamin H.
Cheever, Charles Fosdick Fletcher, of Bhode Island;
Augustus Brewster, Henry P. Haven, Cornelius S. Bush-
nell, Henry Hammond, of Connecticut; Isaac Sherman,
Dean Richmond, Royal Phelps, William H. Ferry, Henry
A. Paddock, Lewis J. Stancliff, Charles A. Secor, Samuel
R. Campbell, Alfred E. Tilton, John Anderson, Azariah
Boody, John S. Kennedy, H. Carver, Joseph Field, Benja¬
min F.Camp, Orville W. Childs, Alexander J. Bergen, Ben.
Holliday, D. N. Barney, S. De Witt Bloodgood, William H.
Grant, Thomas W. Olcott, Samuel B. Ruggles, James B.
Wilson, of Few York; Ephraim Marsh, Charles M. Harker,
of Yew Jersey; John EdgarTliompsou, Benjamin Haywood,
Joseph H. Scran ton, Joseph Harrison, George W. Cass,
John H. Bryamt, Daniel J. Morell, Thomas M. Howe, Will¬
iam F. Johnson, Robert Finney, John A. Green, E. R. Myre,
Charles F.Wells, junior, of Pennsylvania; Noah L. Wilson,
Amasa Stone, William H. Clement, S. S. L'Hommedieu,
John Brough, William Denuison, Jacob Blickihsderfer, of
Ohio; William M. McPherson, R. W. Wells, Willard P.
Hall, Armstrong Beatty, John Corby, of Missouri; S. J.
Hensley, Peter Donahue, C. P. Huntington, T. D. Judali,
James Bailey, James T. Ryan, Charles Hosmer, Charles
Marsh, D. O. Mills, Samuel Bell, Louis McLane, George W.
Mowe, Charles McLaughlin, Timothy Dame, John R. Robin¬
son, of California; John Atchison and John D. Winters, of
the Territory of Nevada; John D. Campbell, R. N. Rice,
Charles A. Trowbridge, and Ransom Gardner, Charles W.
Penny, Charles T. Gorham, William McConnell, of Michi¬
gan; William F. Coolbaugh, Lucius H. Langworthy, Hugh
T. Reid, Hoyt Sherman, Lyman Cook, Samuel R. Curtis,
Lewis A. Thomas, Piatt Smith, of Iowa; William B. Ogden,
Charles G. Hammond, Henry Farnum, Amos 0. Babcock,
W. Seldon Gale, Nehemiah Bushnell and Lorenzo Bull, of
Illinois; William H. Swift, Samuel T.Dana, John Bertram,
Franklin S. Stevens, Edward R. Tinker, of Massachusetts;
1 PAO 1
2
JULY 1, 18(512.
Franklin Gorin, Laban J. Bradford, aud Jolm T. Levis, of
Kentucky; James Dunning, John M. Wood, Edwin Xoyes,
Joseph Eaton, of Maine; Henry 11. Baxter, George W.
Collamer. Henry Keyes, Thomas 11. Cantield, of Vermont;
William S. Ladd, A. M. Berry, Benjamin F. Harding, of
Oregon; William Bunn, junior, John Catliu,Levi [Sterling,
John Thompson, Elihu L. Phillips, Walter D. McTudoe,
T. B. Stoddard, E. H. Brodhead, A. H. Virgin, of Wisconsin;
Charles Paine, Thomas A. .Morris, David C. Brauham,
{Samuel Hanna, Jonas Votaw, Jesse L. Williams, Isaac O.
Elston, of Indiana; Thomas Swan, Chauucey Brooks,
Edward Wilkins, of Maryland; Francis K. PI. Cornell,
David Blakely, A. D. Seward, Henry A. Swift, Dwight
Woodbury, John McKusick, John R. Jones, of Minnesota;
Joseph A. Gilmore, Charles W. Woodman, of Xew Hamp¬
shire; W. II. Grimes, J. C. Stone, Chester Thomas, John
Kerr, Werter R. Davis, Luther C. Challiss, Josiak Miller,
of Kansas; Gilbert C.Monell and Augustus Kountz, T. M.
Marquette, William H. Taylor, Alviu Saunders, of Xebraska;
John Evans, of Colorado; together with five commissioners
to be appointed by the Secretary of the Interior, and all
persons who shall or may be associated with them, and their
successors, are hereby created and erected into a body eor-
Nameamititif. porate and politic in deed aud in law, by the name, style,
and title of uTlie Union Pacific Railroad Company:1' and
by that name shall have perpetual succession, aud sb.ll be
able to sue and to be sued, plead and be impleaded, defend
and be defended, in all courts of law and equity within the
Cnited States, and may make and have a common seal: and
the said corporation is hereby authorized and empowered
to lay out, locate, construct,'furnish, maintain, and enjoy a
continuous railroad and telegraph, with the appurtenances.
Location, x.. from a point on the one hundredth meridian of longitude
west from Greenwich, between the south margin of the
Valley of the Republican River and the north margin of the
Valley of the Platte Piver, in the Territory of Xebraska, to
the western boundary of Xevada Territory, upon the route
and terms hereinafter provided, and is hereby vested with
all the powers, privileges, and immunities necessary to carry
Amount an.i into effect the purposes of this act as herein set forth. The
capital stock of said company shall consist of one hundred
lroin ii.tmii"thousand shares of one thousand dollars each, which shall
'1 ' be subscribed for and held in not more than two hundred
shares by any one person, and shall be transferable in such
manner as the by-laws of said corporation shall provide.
The persons hereinbefore named, together with those to be
commissioner-, appointed by the Secretary of the Interior, are hereby con-
andT<>hulii"mci't- stituted and appointed commissioners, and such body shall
ins- be called the Board of Commissioners of the Union Pacific
Railroad and Telegraph Company, aud twenty-five shall
constitute a quorum for the transaction of business. The
first meeting of said Board shall be held at Chicago at such
time as the commissioners from Illinois herein named shall
appoint, not more than three nor less than one month after
the passage of this act, notice of which shall be given by
them to the other commissioners by depositing a call thereof
JULY 1, 1862.
3
in the post-office at Chicago, post-paid, to their address at
least forty days before said meeting, and also by publishing
said notice in one daily newspaper in each of the cities of
Chicago and Saint Louis. Said Board shall organize by the Tr(tas t
choice from its number of a president, secretary, and treas- give bond! etc. °
urer, and they shall require from said treasurer such bonds
as may be deemed proper, and may from time to time increase
the amount thereof as they may deem proper. It shall be
the duty of said Board of Commissioners to open books, kept°<>p.Sri! ° s.'e
or cause books to be opened, at such times and in such sec-2> 18w.
principal cities in the United States as they or a quorum
of them shall determine, to receive subscriptions to the
capital stock of said corporation, and a cash payment of ten
pei' centum on all subscriptions, and to receipt therefor. So
soon as two thousand shares shall be in good faith sub¬
scribed for, and ten dollars per share actually paid into the
treasury of the company, the said president and secretary commissioners
/i •IT'* i p •• tit • j / • 1 to call lncGtiiig ot
ot said Board ot Commissioners shall appoint a time and stockholders,
place for the first meeting of the subscribers to the stock
of said company, and shall give notice thereof in at least
one newspaper in each State in which subscription books
have been opened at least thirty days previous to the day of
meeting, and such subscribers as shall attend the meeting To elect direct-
so called, either in person or by proxy, shall then and there act'of i8(n°c'13'
elect by ballot not less than thirteen directors for said cor¬
poration; and in such election each share of said capital
shall entitle the owner thereof to one vote. The president
and secretary of the Board of Commissioners shall act as
inspectors of said election, and shall certify under their
hands the names of the directors elected at said meeting;
and the said commissioner, treasurer, and secretary shall Books ami
then deliver over to said directors all the properties, sub- Seiwered to ar
scription books, and other books in their possession, andrectors-
thereupon the duties of said commissioners and the officers
previously appointed by them shall cease and determine
forever, and thereafter the stockholders shall constitute
said body politic and corporate. At the time of the first Two directors
and each triennial election of directors by the stockholders by the President
two additional directors shall be apjiointed by the Presi- oi.t.h® u- K-
dent of the United States, who shall act with the body of seo.Ta, adTof
directors, and to be denominated directors on the part of1864-
the Government; any vacancy happening in the Govern¬
ment directors at any time may be filled by the President
of the United States. The directors to be appointed by
the President shall not be stockholders in the Union Pacific
Bailroad Company. The directors so chosen shall, as soon
as may be after their election, elect from their own number
a president and vice-president, and shall also elect a treas¬
urer and secretary. No person shall be a director in said Directors shall
company unless he shall be a bona fide owner of at least sha™™
live shares of stock in the said- company, except the two ouaiigeii
directors to be apjiointed by the President as aforesaid, ism. y' "Ll" '
Said company, at any regular meeting of the stockholtiers make
called for that purpose shall have power to make by-laws,
rules, and regulations as they shall deem needful and
proper, touching the disposition of the stock, property,
4
JULY 1, 1862.
estate, and effects of the company, not inconsistent here¬
with, the transfer of shares, the term of office, duties and
conduct of their officers and servants, and all matters what¬
soever which may appertain to the concerns of said com-
Direotors to pany; and the said board of directors shall have power to
appoint agents, appoint such engineers, agents, and subordinates as may
from time to time be necessary to carry into effect the
objects of this act, and to do all acts and things touching
the location and construction of said road and telegraph.
Directors to Said directors may require payments of subscription to the
ofiXl^r capital stock, after due notice, at such times and in such
sec.2,actoi i8«4. pr0p0rtions as they shall deem necessary to complete the
railroad and telegraph within the time in this act pre-
officera tolioid scribed. Said president, vice-president, and directors shall
f0Aiu>re'ci hold their office for three years, and until their successors
13,1864. aTe duly elected and qualified, or for such less time as the
by-laws of the corporation may prescribe; and a majority
of said directors shall constitute a quorum for the trans¬
action of business. The secretary and. treasurer shall give
such bonds, with such security, as the said board shall
from time to time require, and shall hold their office at the
will and pleasure of the directors. Annual meetings of the
stockholders of the said corporation, for the choice of offi¬
cers (when they are to be chosen) and for the transaction
of annual business, shall be holden at such time and place
and upon such notice as may be prescribed in the by-laws.
Right of way Sec. 2. And be it further enacted, That the right of way
Krs°e'sec. 3,1864. through the public lands be, and the same is hereby, granted
to said company for the construction of said railroad and
telegraph line; and the right, power, and authority is
hereby given to said company to take from the public lands
adjacent to the line of said road, earth, stone, timber, and
other materials for the construction thereof; said right of
way is granted to said railroad t» the extent of two hun¬
dred feet in width on each side of said railroad where it
may pass over the public lands, including all necessary
grounds for stations, buildings, workshops, and depots,
machine shops, switches, side tracks, turntables, and water
r. s. t<> extin-stations. The United States shall extinguish as rapidly
MM"as 111 ay the Indian titles to all lands falling under the
operation of this act .and required for the said right of way
and grants hereinafter made.
Dana grants— Sec. 3. And be it. further enacted, That there be, and is
tionsruate sec hereby, granted to the said company, for the purpose of aid¬
ing in the construction of said railroad and telegraph line,
and tosecure the safeandspeedytransportationofthemails,
troops, munitions of war, and public stores thereon, every
alternate section of public land, designated by odd num-
changeri toteri bers, to the amount of five alternate sections per mile on
tyuhanged4' toeac^ side of said railroad, on the line thereof, and within
twenty. Sec. 4, the limits of ten miles on each side of said road, not sold,
1864' reserved, or otherwise disposed of by the United States,
and to which a preemption or homestead claim may not
have been attached, at the time the line of said road is
Minerals and definitely fixed: Provided, That all mineral lands shall be
i864bt r' Sec' 4' excepted from the operation of this act; but where the same
JULY 1, 1862.
5
shall contain timber, the timber thereon is hereby granted
to said company. And all such lauds so granted by this
section, which shall not be sold or disposed of by said com¬
pany within three years after the entire road shall have
been completed, shall be subject to settlement and pre¬
emption, like other lands, at a price not exceeding one
dollar and twenty-five cents per acre,- to be paid to said
company.
SEC. -J. And he it further enacted, That whenever said ou completion
company shall have completed forty consecutive miles of£fhd™'11o
any portion of said railroad and telegraph line, ready for twenty by sec. 6,
the service contemplated by this act, and supplied with all misJioSrs'toexi
necessary drains, culverts, viaducts, crossings, sidings, amine,
bridges, turnouts, watering places, depots, equipment fur¬
niture, and all other appurtenances of a first-class railroad,
the rails and all the other iron used in the construction and
equipment of said road to be American manufacture of the
best quality, the President of the United States shall
appoint three commissioners to examine the same and
report to him in relation thereto; and if it shall appear to Patents of land
him that forty consecutive miles of said railroad and tele- piVuon6°fnforty
graph line have been completed and equipped in all respects ™ilte^'enJ;han#^i
as required by this act, then, upon certificate of said com- o"i86™ y" ec'
missioners to that effect, patents shall issue conveying the
right and title to said lands to said company, on each side
of the road as far as the same is completed, to the amount
aforesaid; and patents shall in like manner issue as each
forty miles of said railroad and telegraph line are completed,
upon certificate of said commissioners. Any vacancies vacancies in
occurring in said board of commissioners by death, resig- se™™e'c.S6°acetrof
nation, or otherwise, shall be filled by the President of the18C4-
United States: Provided, however, That no such commis¬
sioners shall be appointed by the President of the United
States unless there shall be presented to him a statement,
verified on oath by the president of said company, that
such forty miles have been completed, in the manner
required by this act, and setting forth with certainty the
points where such forty miles begin and where the same
end; which oath shall be taken before a judge of a court
record.
Seo. 5. And he it further enacted, That for the purpose Government
herein mentioned the Secretary of the Treasury shall, upon 8 ancuo,'act ism!
the certificate in writing of said commissioners of the com-^" twenty
pletion and equipment of forty consecutive miles of said Sol8' ec" '
railroad and telegraph in accordance with the provisions of
this act, issue to said company bonds of the United States gce sec u of
of one thousand dollars each, payable in thirty years after tinsact,for32,ooo
date, bearing six per centum i>er annum interest (said j^,,®48'000 per
interest payable semiannually), which interest may be paid
in United States treasury notes or any other money or
currency which the United States have or shall declare
lawful money and a legal tender, to the amount of sixteen Lien of -p s
of said bonds per mile for such section of forty miles; and s"b;
to secure the repayment to the United States, as herein- see. lwf act or
after provided, of the amount of said bonds so issued18M-
and delivered to said company, together with all interest
6
JULY 1, 1*62.
tliereom which sliall have hocn paid by the United States,
the issue of said bonds and delivery to the company shall
ipso facto constitute a first mortgage on the whole line of
the railroad and telegraph, together with the rolling stock,
fixtures and property of every kind and description, and
in consideration of which said bonds may be issued; and
on the refusal or failure of said company to redeem said
bonds, or any part of them, when required so to do by the
Secretary of the Treasury, in accordance with the pro-
see see. fo, act visions of this act, the said road, with all the rights, func-
18W- tions, immunities, and appurtenances thereunto belonging,
and also all lands granted to the said company by the
United States, which, at the time of said default, shall
remain in the ownership of the said company, may be
taken possession of by the Secretary of the Treasury, for
the use and benefit of the United States: Provided, This
section shall not apply to that part of any road now con¬
structed.
Modiiicd. see Sec. (!. And be it further enacted, That the grants afore-
^Bmuis,1 when sal'd are made upon condition that said company shall pay
and how paid, said bonds at maturity, and shall keep said railroad and
telegraph line in repair and use, and shall at all times
transmit dispatches over said telegraph line, and transport
mails, troops, and munitions of war, supplies, and public
stores upon said railroad for the Government, whenever
required to do so by any department thereof, and that the
Government shall at all times have the preference in the
use of the same for all the purposes aforesaid, (at fair and
Fair and roa- reasonable rates of compensation, not to exceed the amounts
compeLaUon3 °f Pai^ f'Y private parties for the same kind of service;) and
all compensation for services rendered for the Government
shall be applied to the payment of said bonds and interest
until the whole amount is fully paid. Said company may
Government also pay the United States, wholly or in part, in the same
halftone paid in or other bonds, treasury notes, or other evidences of debt
actofihm sec'5' aRa"18^ United States, to be allowed at par; and after
ac rive per cent said road is completed, until said bonds and interest are
net earnings. pajd., at least five per centum of the net earnings of said
road shall also be annually applied to the payment hereof.
Sec. 7. And he it further enacted, That said company
Assent of com- shall file their assent to this act, under the seal of said
pany to c , company^ ju £j)e Department of the Interior, within one
year after the passage of this act, and shall complete said
railroad and telegraph from the point of beginning as
herein provided, to the western boundary of Nevada terri¬
tory before the first day of July, one thousand eight hun¬
dred and seventy-four : Provided, That within two years
Time of com- after the passage of this act said company shall designate
Eee^ecfs'iScv'1 the general route of said road, as near as may be, and shall
file a map of the same in the Department of the Interior,
whereupon the Secretary of the Interior shall cause the
Soo sec. i, act lands within fifteen miles of said designated route or routes
d8et'ignTt fng to be withdrawn from pre-emption, private entry, and sale;
route to b« filed? an(j wiieu any portion of said route shall be finally located,
the Secretary of the Interior shall cause the said lands
hereinbefore granted to be surveyed and set off as fast as
july 1, 1862. 7
may be necessary for the purposes herein named: Pro ruled, „ri^a("<I,ftc,leaiK"J
That in fixing- the point of connection of the main trunk a' 'e
with the eastern connections, it shall be fixed at the most
practicable point for the construction of the Iowa and
Missouri branches, as hereinafter provided.
Sec. 8. And be it further enacted, That the line of said
railroad and telegraph shall commence at a point on the
one hundredth meridian of longitude west from Greenwich, iwtii ">e-
• between the south margin of the valley of the Eepnblican Ia" " ma'
Eiver and the north margin of the valley of the Platte
Eiver, in the territory of Nebraska, at a point to be fixed
by the President of the United States, after actual surveys;
thence running westerly upon the most direct, central, and
practicable route, through the territories of the United ?<•« st*' - 10 "f
States, to the western boundary of the territory of Nevada, "s ao'
there to meet and connect with the line of the Central
Pacific Eailroad Company of California.
Sec. 9. Andbe it further enacted, That the Leavenworth. 'f™'
Pawnee and Western Eailroad Company of Kansas are struH road, etc?"
hereby authorized to construct a railroad and telegraph
line, from the Missouri Eiver, at the mouth of the Kansas
Eiver, on the south side thereof, so as to connect with the
Pacific Eailroad of Missouri, the aforesaid point, on the one
hundredth meridian of longitude west from Greenwich, as
herein provided, upon the same terms and conditions in all
respects as are provided in this act for the construction of
the railroad and telegraph line first mentioned, and to meet
and connect with the same at the meridian of longitude
aforesaid; and in case the general route or line of road
from the Missouri Eiver to the Eocky Mountains should be
so located as to require a departure northwardly from the
proposed line of said Kansas Eailroad before it reaches
the meridian of longitude aforesaid, the location of said
Kansas road shall be made so as to conform thereto; and
said railroad through Kansas shall be so located between
the mouth of the Kansas Eiver, as aforesaid, and the afore¬
said point, on the one hundredth meridian of longitude,
that the several railroads from Missouri and Iowa, herein
authorized to connect with the same, can make counection
withiu the limits prescribed in this act, provided the same
can be done without deviating from the general direction
of the whole line to the Pacific coast. The route in Kansas,
west of the meridian of Fort Eiley, to the aforesaid point,
on the one hundredth meridian of longitude, to be subject
to the approval of the President of the United States, and
to be determined by him on actual survey. And said Kan¬
sas company may proceed to build said railroad to the
aforesaid point, on the one hundredth meridian of longi- i
tude west from Greenwich, in the territory of Nebraska.
The Central Pacific Eailroad Company of California, a cor-
poration existing under the laws of the State of California, iv/miaf' author-
are hereby authorized to construct a railroad and telegraph I7'",1,t0™nstsr'!rf
line from the Pacific coast, at or near San Francisco, or the terms and condi-
navigable waters of the Sacramento Eiver to the eastern tion8-
boundary of California, upon the same terms and condi¬
tions, in all respects, as are contained in this act for the
8
JULY 1, 1862.
construction of said railroad and telegraph line first men¬
tioned, and to meet and connect with the first-mentioned
railroad and telegraph line on the eastern boundary of
California. Each of said companies shall file tlieir accept¬
ance of the conditions of this act in the Department of the
Interior within six months after the passage of this act.
Time of doing Sec. 10. And he it further enacted, That the said com
-ryorK etc
pany chartered by the State of Kansas shall complete one
hundred miles of their said road, commencing.at the mouth
of the Kansas River aforesaid, within two years after filing
their assent to the conditions of this act, as herein provided,
and one hundred miles per year thereafter until the whole
Changed to lir. is completed; and the said Central Pacific Railroad Com-
s^aet ik64.' pany of California shall complete fifty miles of their said
road within two years after filing their assent to the pro¬
visions of this act. as herein provided, and fifty miles per
year thereafter until the whole is completed; and after com¬
pleting their roads respectively, said companies, or either
companiesmu> of them, may unite upon equal terms with the first-named
on'eq'imi Term^ company in constructing so much of said railroad and tele-
sec 'ib otah saln' 8'ra 1''1 line and branch railroads and telegraph lines in this
sec. o ism ■ a(,£ ]ierejnap-er mentioned, through the territories from the
State of California to the Missouri River, as shall then
remain to be constructed, 011 the same terms and conditions
as provided in this act in relation to the said Union Pacific-
Railroad Company. And the Hannibal and Saint Joseph
Railroad, the Pacific Railroad Company of Missouri, and
the first-named company, or either of them, on filing their
assent to this act, as aforesaid, may unite upon erpial terms,
under this act, with the said Kansas company, in construct¬
ing said railroad and telegraph, to said meridian of longi¬
tude, with the consent of the said State of Kansas; and in
case said first-named company shall complete their line to
the eastern boundary of California before it is completed
across said State by the Central Pacific Railroad Company
of California, said first-named company is hereby authorized
to continue in constructing the same through California,
with the consent of said State, upon the terms mentioned
in this act, until said roads shall meet and connect, and
the whole line of said railroad and telegraph is completed;
Central Paciiic and the Central Pacific Railroad Company of California,
c on mi u ei °<v c!,''t 0 after completing its road across said State, is authorized
meet other road, to continue the construction of said railroad and telegraph
through the Territories of the United States* to the Mis-
Authoritvcon-souri River, including the branch roads specified in this
i6,maet act, upon the routes hereinbefore and hereinafter indicated,
clause; aisoOU the terms and conditions provided in this act in relation
to the said Union Pacific Railway Company, until said
roads shall meet and connect, and the whole line of said
railroad and branches and telegraph is completed.
Subsidy bonds Sec. 11. And he it further enacted, That for three hun-
KorkyandSmnudred miles of said road most mountainous and difficult of
Nevada Moun-construction, to wit: one hundred and fiftv miles west-
tams. '
"See section 6, act of July 2, 1864. The words "and States inter¬
vening" inserted.
JULY 1, 1802.
9
wardly from the eastern base of the Rocky Mountains, and
one hundred and fifty miles eastwardly from the western
base of the Sierra Nevada Mountains, said points to be
fixed by the President of the United States, the bonds to Modified, sec.
be issued to aid in the construction thereof shall be treble8,1864p
the number per mile hereinbefore provided, and the same
shall be issued, and the lands herein granted be set apart,
upon the construction of every twenty miles thereof, upon
the certificate of the commissioners aforesaid that twenty
consecutive miles of the same are completed; and between
the sections last named of one hundred and fifty miles
each, the bonds to be issued to aid in the construction Subsidy bonds
thereof shall be double the number per mile first men- mountains™
tioued, and the same shall be issued, and the lands herein
granted be set apart, upon the construction of every twenty
miles thereof, upon the certificate of the commissioners as
aforesaid that twenty consecutive miles of the same are
completed: Provided, That no more than fifty thousand of
said bonds shall be issued under this act to aid in con¬
structing the main line of said railroad and telegraph. ,
Sec. 12. And be it further enacted, That whenever the t5t,t').cfines "md
route of said railroad shall cross the boundary of any said meridian.
State or Territory, or said meridian of longitude, the two
companies meeting or uniting there shall agree upon its
location at that point, with reference to the most direct
and practicable through route, and in case of difference
between them as to said location the President of the
United States shall determine the said location; the com¬
panies named in each State and Territory to locate the
road across the same between the points so agreed upon,
except as herein provided. The track upon the entire line Track to be of
of railroad and branches shall be of uniform width, to be "°lform Wldth'
determined by the President of the United States, so that,
when completed, cars can be run from the Missouri Eiver
to the Pacific Coast; the grades and curves shall not
exceed the maximum grades and curves of the Baltimore J
and Ohio Railroad; the whole line of said railroad and
branches and telegraph shall be operated and used for all
purposes of communication, travel, and transportation, so
far as the public and Government are concerned, as one
connected, continuous line; and the companies herein To be used a»
named in Missouri, Kansas, and California, filing their ®™tln,l0U3 llne-
assent to the provisions of this act, shall receive and
'ransport all iron rails, chairs, spikes, ties, timber, and all
materials required for constructing and furnishing said
first-mentioned line between the aforesaid point, on the
one hundredth meridian of longitude and western boundary
of Nevada territory, whenever the same is required by
said first-named company, at cost, over that portion of the
loads of said companies constructed under the provisions
of this act.
Sec. 13. And be it further enacted, That the Hannibal h- & st. j.
and Saint Joseph Railroad Company of Missouri may tendecTetc.6 ex"
extend its roads from Saint Joseph via Atchison, to con¬
nect and unite with the road through Kansas, upon filing
its assent to the provisions of this act, upon the same terms
10
JULY 1, 1K62.
and conditions, in all respects, for one hundred miles in
length next to the Missouri River, as are provided in this
act for the construction of the railroad and telegraph line
first mentioned, and may for this purpose use any railroad
charter which has been or may bo granted by the legis¬
lature of Kansas: Provided, That if actual survey shall
render it desirable, the said company may construct their
road, with the consent of the Kansas legislature, on the
most direct and practicable route west from Saint Joseph,
Missouri, so as to connect and unite with the road leading
from the western boundary of Iowa at any point east of
the one hundredth meridian of west longitude, or with the
main trunk road at said point; but in no event shall lands
or bonds be given to said company, as herein directed, to
aid in the construction of their said road for a greater dis¬
tance than one hundred miles. And the Leavenworth,
Pawnee, and Western Railroad Company of Kansas may
construct their road from Leavenworth to unite with the
road through Kansas.
Iowa road from Sec. 14. And be it further enacted, That the said Union
rry8ofriow'a°"n' Pacific Railroad Company is hereby authorized andrequired
to construct a single lino of railroad and telegraph from a
point on the western boundary of the State of Iowa, to be
fixed by the President of the United States, upon the most
direct and practicable route, to be subject to his approval,
so as to form a connection with the line of said company at
some point on the one hundredth meridian of longitude
aforesaid, from the point of commencement on the western
boundary of the State of Iowa, upon the same terms and
conditions, in all respects, as are contained in this act for
the construction of the said railroad and telegraph first
mentioned; and the said Union Pacific Railroad Company
shall complete one hundred miles of the road and telegraph
in this section provided for, in two years after filing their
assent to the conditions of this act, as by the terms of this
act required, and at the rate of one hundred miles per year
thereafter, until the whole is completed: Provide7, That a
failure upon the part of said company to make said connec¬
tion in the time aforesaid, and to perform the obligations
imposed on said company by this section and to operate
said road in the same manner as the main line shall be
operated, shall forfeit to the Government of the United
States all the rights, privileges, and franchises granted to
and conferred upon said company by this act. And when¬
ever there shall be a line of railroad completed through
tr. p. R. R. Co. Minnesota or Iowa to Sioux City, then the said Pacific
structstouxcity Railroad Company is hereby authorized and required to
roa864Stc'17 act construct a railroad and telegraph from said Sioux City
upon the most direct aud practicable route to a point on,
and so as to connect with, the branch railroad and tele¬
graph in this section hereinbefore mentioned, or with the
said Union Pacific Railroad, said point of junction to be
fixed by the President of the United States, not further
west than the one hundredth meridian of longitude afore¬
said, and on the same terms and conditions as provided in
this act for the construction of the Union Pacific Railroad
july 1, 1x62.
11
as aforesaid, and to complete the same at the rate of one
hundred miles per year; and should said company fail to
comply with the requirements of this act in relation to the
said Sioux City railroad and telegraph, the said company
shall suffer the same forfeitures prescribed in relation to
the Iowa branch railroad and telegraph hereinbefore men¬
tioned.
SiiC. 15. And be it further enacted. That any other railroad .other eompa-
company now incorporated, or hereafter to be incorporated, rieet, etc.
shall have the right to connect their road with the road and
branches provided for by this act, at such places and upon
such just and equitable terms as the President of the
United States may prescribe. Wherever the word com- word company
pany is used in this act it shall be construed to embrace explaine'1-
the words their associates, successors, and assigns, the same
as if the words had been properly added thereto.
Sec. 16. And be it further enacted, That at any time after °j®8 ap'
the passage of this act all of the railroad companies named sona'afe. see«°c!
herein, and assenting hereto, or any two or more of them, ^•Oacsteoof
are authorized to form themselves into one consolidated this act.'
company; notice of such consolidation, in writing, shall be
filed in the Department of the Interior, and such consoli¬
dated company shall thereafter proceed to construct said
railroad and branches and telegraph line upon the terms
and conditions provided in this act.
Sec. 17. And be it further enacted, That in case said com- congress may
pany or companies shall fail to comply with the terms and "™nPpiet?on ot
conditions of this act, by not completing said road androart-
telegraph and branches within a reasonable time, or by not
keeping the same in repair and use, but shall permit the
same, for an unreasonable time, to remain unfinished, or out
of repair and unfit for use, Congress may pass any act to
insure the speedy completion of said road and branches, or
put the same in repair and use, and may direct the income
of said railroad and telegraph line to be-thereafter devoted
to the use of the United States, to repay all such expendi¬
tures caused by the default and neglect of such company
or companies: Provided, That if said roads are not com¬
pleted, so as to form a continuous line of railroad, ready
for use, from the Missouri River to the navigable waters
of the Sacramento River, in California, by the first day of
July, eighteen hundred and seventy-six, the whole of all Mamiinestobe
of said railroads before mentioned and to be constructed s^nd.7?,'
under the provisions of this act, together with all their act of lse-t.
furniture, fixtures, rolling stock, machine shops, lands,
tenements, and hereditaments, and property of every kind
and character, shall be forfeited to and be taken possession
of by the United States: Provided, That of the bonds of
the United States in this act provided to be delivered for
any and all parts of the roads to be constructed east of the
one hundredth meridian of west longitude from Greenwich,
and for any part of the road west of the west foot of the
Sierra Nevada Mountain [s], there shall be reserved of each
part and instalment, twenty-five per centum, to be and Repealed. see
remain in the United States Treasury, undelivered, until sec-7'act°n864-
said road and all parts thereof provided for in this act are
12
july 1, 1862.
entirely completed; and of all the bonds provided to be
delivered for the said road, between the two points afore¬
said, there shall be reserved out of each instalment fifteen
per centum, to be and remain in the Treasury until the
whole of the road provided for in this act is fully completed;
and if the said road or any part thereof shall fail of com
pletion at the time limited therefor in this act, then and in
that case the said part of said bonds so reserved shall be
forfeited to the United States.
Sec. 18. And be it further enacted, That whenever it ap¬
pears that the net earning of the entire road and telegraph,
including the amount allowed for services rendered for the
United States, after deducting all expenditures, including
repairs, and the furnishing, running, and managing of said,
road, shall exceed ten per centum upon its cost, exclusive
of the five per centum to be paid to the United States,
under certain Congress may reduce the rates of fare thereon, if unreason-
Congre^mayre* fble in amount, and may fix and establish the same by law.
duce rates' of And the better to accomplish the object of this act, namely,
to promote the public interest and welfare by the construc¬
tion of said railroad and telegraph line, and keeping the
same in working order, and to secure to the Government
at all times (but particularly in time of war) the use and
benefits of the same for postal, military, and other purposes,
Congress, may at any time, having due regard for the
rights of said companies named herein, add to, alter, amend,
or repeal this act.
-wmiay tei^adl Sec. 19. And be it further enacted, That the several rail-
companiesesrnowroad companies herein named are authorized to enter into
existing. ail arrangement with the Pacific Telegraph Company, the
Overland Telegraph Company, and the California State
Telegraph Company, so that the present line of telegraph
between the Missouri Eiver and San Francisco may be
see sec. is, act moved upon or along the line of said railroad and branches
°f 1804. as as sajp roa(j8 ai|(l branches are built; and if said
arrangement be entered into, and the transfer of said tele¬
graph line be made in accordance therewith to the line of
said railroad and branches, such transfer shall, for all pur¬
pose of this act, be held and considered as a fulfilment on
the part of said railroad companies of the provisions of
this act in regard to the construction of said lines of tele¬
graph. And, in case of disagreement, said telegraph com¬
panies are authorized to remove their line of telegraph
along and upon the line of railroad herein contemplated
without predjudice to the rights of said railroad companies
named herein.
Companies to Sec. 20. And be it further enacted, That the corporation
port1 ammalre hereby created and the roads connected therewith, under
ihissectionre-the provisions of this act, shall make to the Secretary of
^lud' 20 Stat" the Treasury an annual report wherein shall be set forth—
First. The names of the stockholders and their places of
residence, so far as the same can be ascertained;
Second. The names and residences of the directors, and
all other officers of the company;
Third. The amount of stock subscribed, and the amount
thereof actually paid in;
JULY 12, 1862. JULY 2, 1861.
13
Fourth. A description of the lines of road surveyed, of
the lines thereof fixed upon for the construction of the
road, and the cost of such survey.
Fifth. The amount received from passengers on the road;
Sixth. The amount received for freight thereon;
Seventh. A statement of the expense of said road and
its fixtures;
Eighth. A statement of the indebtedness of said com¬
pany, setting forth the various kinds thereof. Which
report shall be sworn to by the president of the said com¬
pany, and shall be presented to the Secretary of the Treas¬
ury on or before the first day of July in each year.
ACT OF JULY 12, 1862.
AN ACT to amend an act entitled "An act to aid in the construction 12 Stat., 538.
of a railroad and telegraph line from the Missouri River to the
Pacific Ocean, and to secure to the Government the use of the same
for postal, military, and other purposes," approved July 1, 1862.
Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled, That First meeting
/J „ , ,. ,. -L " . . , ot commissioners
the first meeting of the commissioners named in the acton Pacific raii-
entitled "An act to aid in the construction of a railroad ta0n£e ^
and telegraph line from the Missouri River to the Pacific at Chicago.
Ocean, and to secure to the Government the use of same
for postal, military, and other purposes," approved July
first, eighteen hundred and sixty-two, and of the five com¬
missioners directed by said act to be appointed by the Sec¬
retary of the Interior, shall be held at Bryan Hall, in the
city of Chicago, in the State of Illinois, on the first Tues¬
day in September next, at twelve o'clock, at noon. A
notice of said meeting, to be signed by at least ten of the Notice,
commissioners named in said act, shall be published at
least once a week during the six successive weeks com¬
mencing on the twentieth of July, one thousand eight hun¬
dred and sixty-two, in one daily newspaper in each of the
cities of Boston, Hew York, Philadelphia, Cincinnati, Chi¬
cago, and St. Louis, and no other notice of said meeting
shall be requisite.
AMENDMENT OF JULY 2, 1864.
AN ACT to amend an act entitled "An act to aid in the construction 13 Stat., 356.
of a railroad and telegraph line from the Missouri River to the
Pacific Ocean, and to secure to the Government the use of the same
for postal, military, and other purposes," approved July 1,1862.
Be it enacted by the Senate and House of Representatives shares of
of the United States of America in Congress assembled, That Kaiiroad cTom0
the capital stock of the company entitled the Union Pacific $1CQ0a0ng<^
Railroad Company, authorized by the act of which this act $100!
is amendatory, shall be in shares of one hundred dollars,
instead of one thousand dollars, each; that tlie number
of shares shall be one million, instead of one hundred
thousand; and that the number of shares which any per-
14
JULY 2, 1864.
son shall hold to entitle him to serve as a director in said
owuerahij) of company (except the five directors to be appointed by the
ot"dc see see"]"Government) shall be fifty shares instead of five shares;
act 18c::. 'and that every subscriber to said capital stock for each
share of one thousand dollars, heretofore subscribed, shall
be entitled to a certificate for ten shares for one hundred
dollars each; and that the following Avoids in section first
of said act, "Avhich shall be subscribed for and held in not
more than tAvo hundred shares by any one person," be, and
the same are hereby, repealed.
te^tlnonA cv Sec. 2. An (I be it further enacted, That the Union Pacific
eral cities. Sec Railroad Company shall cause books to be kept open to
sec. i, i8(»2. receive subscriptions to the capital stock of said company,
(until the entire capital of one hundred millions of dollars
shall be subscribed), at the general office of said company
in the city of New York, and in each of the cities of Bos¬
ton, Philadelphia, Baltimore, Chicago, Cincinnati, and Saint
Louis, at such places as may be designated by the President
of the United States, and in such other localities as may
Per cent to i.c ],e directed by him. No subscription for said stock shall be
deemed valid unless the subscriber therefor shall, at the
time of subscribing, pay or remit to the treasury of the com¬
pany an amount per share subscribed by him equal to the
amount per share previously paid by the then existing stock-
Assessments of holders. The said company shall make assessments upon
stockholders. ps stockholders of not less than live dollars per share, and
at intervals of not exceeding six months from and after the
passage of this act, until the par A'alue of all shares sub-
How paid. scribed shall be fully paid; and money only shall be receiv¬
able for any such assessment, or as an equivalent for any
portion of the capital stock hereinbefore authorized. The
Amount of cap- capital stock of said company shall not be increased beyond
ital> t he actual cost of said road. And the stock of the eom-
stock personal pany shall be deemed personal property, and shall be trans-
property. ferable on the books of the company, at the general olliee
of said company in the city of NeAY York, or at such other
transfer office as the company may establish.
Additional Sec. 3. And be it further enacted, That the Union Pacific
"ranted1 Railroad Company, and all other companies provided for
sec. 2,18C2. in this act and the act to which this is an amendment, "be,
and hereby are empowered to enter upon, purchase, take,
and hold any lands or premises that may be necessary and
proper for the construction and Avorking of said road, not
exceeding in width one hundred feet on each side of its
center line, unless a greater Avidth be required for the pur¬
pose of excavation or embankment; and also any lands or
premises that may be necessary and proper for turnouts,
standing places for cars, depots, station-liouse[s| or any
other structures required in the construction and operating
of said road. And each of said companies shall have the
right to cut and remove trees or other materials that might
by falling encumber its road-bed, though standing or being
Assessment of more than one hundred feet therefrom. And in case the
damages. owner or claimant of such lands or premises and such com¬
pany can not agree as to the damages, the amount shall be
determined by the appraisal of three disinterested conimis-
JI'LY L', 1864.
15
sioiiers, who may be appointed upon application by any
party to any judge of a court of record in any of the terri¬
tories in which the lands or premises to be taken lie; and
said commissioners, in their assessments of damages, shall
appraise such premises at what would have been the value
thereof if the road had not been built; and upon return
into court of such appraisement, and upon the payment to tiyeay,"ent and
the clerk thereof of the amount so awarded by the conimis- 1 e'
siouers for the use and benefit of the owner thereof, said
premises shall be deemed to be taken by said company,
which shall thereby acquire full title to the same for the
purposes aforesaid. And either party feeling aggrieved Appeal,
by said assessment may, within thirty days, file an appeal
therefrom, and demand a jury of twelve men to estimate
the damage sustained; but such appeal shall not interfere
with the rights of said company to enter upon the premises
taken, or to do any act necessary in the construction of its
road. And said party appealing shall give bonds with g^01"18 ou ap
sufficient surety or sureties, for the payment of any costs
that may arise upon such appeal. And in case the party costs ofappeai.
appealing does not obtain a more favorable verdict, such
party shall pay the whole cost incurred by the appellee, as
well as its own. And the payment into court for the use of Title after aP-
the owner or clai mant, of a sum equal to that finally awarded T"'a'
shall be held to vest in said company the title of said land,
and the right to use and occupy the same for the construc¬
tion, maintaining, and operating of the road of said com¬
pany. And in case any of the lauds to be taken as aforesaid iu^"ltees aud
shall be held by any person residing without the territory,
or subject to any legal disability, the court may appoint a
proper person who shall give bonds with sufficient surety
or sureties, for the faithful execution of his trust, aud who
may represent in court the person disqualified or absent as
aforesaid, when the same proceedings shall be had in
reference to the appraisement of the premises to be taken,
and with the same effect as have been already described.
And the title of the company to the land taken by virtue
of this act shall not be affected nor impaired by reason of
any failure by any guardian to discharge faithfully his
trust. And in case it shall be necessary for either of the, unoccupied
• j • i j lands, how ac-
said companies to enter upon lands wnicli are unoccupied, quired,
and of which there is no apparent owner or claimant, it
may proceed to take and use the same for tfie purpose of
its said railroad, and may institute proceedings in manner
described for the purpose of ascertaining the value of, and
acquiring a title to, tfie same, and the court may determine
the kind of notice to be served on such owner or owners,
and may in its discretion appoint an agent or guardian to
represent such owner or owners in case of his or their
incapacity or non-appearance. But in case no claimant
shall appear within six years from the time of the opening
of said road across any land, all claim to damages against
said company shall be barred. It shall be competent for Damages, how
the legal guardian of any infant, or any other person under di3I",sud of-
guardianship, to agree with the proper company as to
damages sustained by reason of the taking of any lands of
16
JULY 2, 1864.
any such person under disability, as aforesaid, for the use
as aforesaid; and upon such agreement being made, and
approved by the court having supervision of the official
acts of said guardian, the said guardian shall have full
power to make and execute a conveyance thereof to the
said company which shall vest the title thereto in the said
company.
amended3' <Uuh Skc, -4. A >t(l be it further enacted, That section three of
iin™'gPran ""of said act be hereby amended by striking out the word "five,"
lantL where the same occurs in said section, and by inserting in
lieu thereof the word "ten and by striking out the word
"/ten," where the same occurs in said section, and by insert-
Sec. ?, W62, ing in lieu thereof the word "twenty." And section seven
dr.vwU)' ^and°f sai(l a<'t is hereby amended by striking out the word
from sale? " fifteen," where the same occurs in said section, and insert-
notminerais.ironinS 111 beu thereof the word "twenty-five." And the term
Certain iand»"mineral land," wherever the same occurs in this act, and
not to be granted- ac£ ^, wqjch this is an amendment, shall not be con¬
strued to include coal and iion land. And any lands
granted by this act, or the act to which this is an amend¬
ment, shall not defeat or impair any pre-emption, homestead,
swamp land, or other lawful claim, nor include any govern¬
ment reservation or mineral land, or the improvements of
any bona fide settler, or any lands returned and denomi¬
nated as mineral lands, and the timber necessary to sup¬
port his said improvement as a miner or agriculturist, to
be ascertained under such rules as have been or may be
established by the Commissioner of the General Land
Office, in conformity with the provisions of the pre-emption
laws: Provided, That the quantity tiius exempted by the
operation of this act, and the act to which this act is an
160 acres only amendment, shall not exceed one hundred and sixty acres
exempted. for settler who claims as an agriculturist, and such
quantity for each settler who claims as a miner, as the said
Commissioner may establish by genera1 regulation: Pro¬
vided, also, That the phrase, "but where the same shall
Timber to be contain timber, the timber thereon is hereby granted to
3°i862.ny 8" Se°' sai(l company," in the proviso to said section three, shall
not apply to the timber growing or being on any land farther
than ten miles from the center line of anyone of said roads
otherlandsex-or branches mentioned in said act, or in this act. And all
empted. lands shall be excluded from the operation of this act, and
of the act to which this act is an amendment, which were
located, or selected to be located, under the provisions of
an act entitled "An act donating lands to the several States
and Territories which may provide colleges for the benefit
of agriculture and the mechanic arts," approved July sec¬
ond, eighteen hundred and sixty-two, and notice thereof
given at the proper land office.
onoimearXtPsecsd ^ec. A?u/ be it further enacted, That the time for desig-
?nanda]7, 1862,' nating the general route of said railroad, and of filing the
amended. map of the same, and the time for the completion of that
part of the railroads required by the terms of said act of
Twenty-fivoeach company, be, and the same is hereby, extended one
Ranged from Tf'year ^rom the time in said act designated; and that the
ty. sec. io, 1862. Central Pacific Kailroad Company of California shall be
state iafe?rs to required to complete twenty-five miles of their said road in
JULY 2, 1864.
17
each year thereafter, and the whole to the State line within
four years, and that only one-half of the compensation for
services rendered for the Government by said companies Government to
shall be required to be applied to the payment of the services'.110^ f°r
bonds issued by the Government in aid of the construction
of said roads.
Sec. G. And be it further enacted, That the proviso to Sec. 4, is62,
section four of said act is hereby modified as follows, viz: ^"mmissioners!
And the President of the United States is hereby author- etc.
ized,at any time after the passage of this act, to appoint
for each and every of said roads three commissioners, as
provided for in the act to which this is amendatory; and Affidavit, etc.,
the verified statement of the president of the California tobeflie^inCau-'
company, required by said section four, shall be filed in the forBia.
office of the United States surveyor-geueral for the State
of California, instead of being presented to the President
i of the United States; and the said surveyor-general shall
thereupon notify the said commissioners of the filing of
such statement, and the said commissioners shall there¬
upon proceed to examine the portion of said railroad and
telegraph line so completed, and make their report thereon
to the President of the United States, as provided by the
act to which this is amendatory. And such statement may Lands patent-
be filed, and such railroad and telegraph line be examined iK62itisosec.'2i',
and reported on by the said commissioners, and the requisitethis act-
amount of bonds may be issued and the lands appertaining
thereto may be set apart, located, entered, and patented, as
provided in this act and the act to which this is amenda¬
tory, upon the construction by said railroad company of
California of any portion of not less than twenty consecu¬
tive miles of their said railroad and telegraph line, upon
the certificates ot said commissioners that such portion is
completed as required by the act to which this is amenda¬
tory. And section ten of the act of which this is amend- Sec. 10, 1862,
atory is hereby amended by inserting after the "words,imeuded'
"United States," in the last clause, the words "and States
intervening."
Sec. 7. And be it further enacted, That so much of section b0nJj|ebvation of
seventeen of said act as provides for a reservation by the i862, repealed.1'
government of a. portion of the bonds to be issued to aid
in the construction of the said railroads is hereby repealed.
And the failure of any one company to comply fully with C0^iaiJl'"'e ^t°"®
the conditions and requirements of this act, and the act to pS^oth'ers0
which this is amendatory, shall not work a forfeiture of the feerce(117, 1862' al"
rights, privileges, or franchises of any other company or
companies that shall have complied with the same.
Sec. 8. And be it further enacted, That for the purpose. Partial issue of
t? -t j. j.' i.i i -a -i i t r» it bonds on uncom-
or facilitating the work on said railroad, and ot enablmgpieted work,
the said company as early as practicable So commence the^®^*^ 1863<
grading of said railroad in the region of the mountains,
between the eastern base of the Eocky Mountains and the
western base of the Sierra Nevada Mountains, so that the
same may be finally completed within the time required by
law, it is hereby provided that whenever the chief engineer
of the said company, and said commissioners, shall certify
that a certain proportion of the work required to prepare the
2 pac
18
JULY 2, 1864.
road for tlie superstructure on any such section of twenty
miles is done (which said certificate shall be duly verified),
the Secretary of the Treasury is hereby authorized and
Two-thirds on required, upon the delivery of such certificate, to issue to
seeso'c.^'of tuis sa'd company a proportion of said bonds, not exceeding
act. two-thirds of the amount of bonds authorized to be issued
under the provisions of the act, to aid in the construction
of such section of twenty miles, nor in any case .exceeding
two-thirds of the value of the work done, the remaining
one third to remain until the said section is fully completed
and certified by the commissioners appointed by the Presi¬
dent, according to the terms and provisions of the said act;
juiiu)tRiweh°<ia 11 no ,SII<''1 bonds shall issue to the Union Pacific Railroad
tor morp than son Company for work done west of Salt Lake City under this
we«tofS"ULakesection, more than three hundred miles in advance of the
city. completed continuous line of said railroad from the point
of beginning 011 the one hundredth meridian of longitude,
bridgesUs and Sec. And be it further enacted, That to enable anyone
of said corporations to make convenient and necessary
connections with other roads, it is hereby authorized to
establish and maintain all necessary ferries upon and across
the Missouri River and other rivers which its road may
pass in its course; and authority is hereby given said cor¬
poration to construct bridges over said Missouri River and
all other rivers for the convenience of said road: Provided,
That any bridge or bridges it may construct over the Mis¬
souri River, or any other navigable river on the line of said
road, shall be constructed with suitable and proper draws
for the passage of steamboats, and shall be built, kept, and
maintained, at the expense of said company, in such man¬
ner as not to impair the usefulness of said rivers for navi¬
gation to any greater extent than such structures of the
Roads may niost approved character necessarily do: And provided, fur-
infuafpokm' °' titer, That any company authorized by this act to construct
its road and telegraph line from the Missouri River to the
initial point aforesaid, may construct its road and telegraph
line so as to connect with the Union Pacific Railroad at
any point westwardly of such initial point, in case such
company shall deem such westward connection more prac¬
ticable or desirable; and in aid of the construction of so
much of its road and telegraph line as shall be a departure
from the route hereinbefore provided for its road, such
company shall be entitled to all the benefits, and be sub-
No increasedject to all the conditions and restrictions of this act: Pro-
amount of bonds, v(ded further, however, That the bonds of the United States
shall not be issued to such company for a greater amount
than is hereinbefore provided, if the same had united with
the Union Pacific Railroad on the 100th degree of longi¬
tude; nor shall such company be entitled to receive any
greater amount of alternate sections of public lands than
are also herein provided.
First-mortgage Sec. 10. And be it further enacted, That section five of said
Hen prior to gow act be so modified and amended that the Union Pacific
186™mollified*5' ';a'b-oad Company, the Central Pacific Railroad Company,
see s'.'c.11, act and any other company authorized to participate in the
°f 1865. construction of said road, may, on the completion of each
JULY 2, 1864.
19
section of said road, as provided in this act and the act to
which this act is an amendment, issue their first-mortgage
bonds on their respective railroad and telegraph lines to an
amount not exceeding the amount of the bonds of the
United States, and of even tenor and date, time of maturity,
rate and character of interest with the bonds authorized to
be issued to said railroad companies respectively. And Lien of u. s.
the lien of the United States bonds shall be subordinate to^™/^" btec3Ub"
that of the bonds of any or either of said companies hereby
auihoiized to be issued on their respective roads, property,
and equipments, except as to the provisions of the sixth
section of the act to which this act is an amendment, relat¬
ing to the transmission of dispatches and the transporta
tion of mails, troops, munitions of war, supplies, and public
stores for the Government of the United States. And said
section is further amended by striking out the word " forty," mUesTas0 in °aec.
and inserting in lieu thereof the words "on each and every 5>act of 1862-
section of not less tliau twenty."
Sec. 11. And be it further enacted, That if any of the Provision for
railroad companies entitled to bonds of the United, or to sued bylnj^com
issue their first-mortgage bonds herein provided for, has, pauies.
at the time of the approval of this act, issued, or shall
thereafter issue, any of its own bonds or securities in such
form or manner as in law or equity to entitle the same to
priority or preference of payment to the said guaranteed
bonds, or said first-mortgage bonds, the amount of such
corporate bonds outstanding and unsatisfied, or uncan¬
celled, shall be deducted from the amount of such govern¬
ment and first-mortgage bonds which the company may be
entitled to receive and issue; and such an amount only of
such government bonds and such first-mortgage bonds
shall be granted or permitted, as added to such outstand¬
ing, unsatisfied, or uncancelled bonds of the company shall
make up the whole amount per mile to which the company
would otherwise have been entitled: And provided, further, Affidavit of
That before any bonds shall be so given by the UnitedSndL'/com-
States, the company claiming them shall present to the bonds.
Secretary of the Treasury an affidavit of the president and
secretary of the company, to be sworn to before the judge
of a court of record, setting forth whether said company
has issued any such bonds or securities, and, if so, particu¬
larly describing the same, and such other evidence as the
secretary may require, so as to enable him to make the
deduction herein required; and such affidavit shall then
be filed and deposited in the office of the Secretary of the
Interior. And any person swearing falsely to any such
affidavit, shall be deemed guilty of perjury, and, on convic¬
tion thereof, shall be punished as aforesaid: Provided, also,
That no land granted by this act shall be conveyed to any No ]and or
party or jjarties, and no bonds shall be issued to any com- bonds to g0 to
pany or companies, party or parties, on account of any ro^made'prior
road or part thereof, made prior to the passage of the acttoactofi862.
to which this act is an amendment, or made subsequent
thereto under the provisions of any act or acts other than
this act, and the act amended by this act.
20
JULY 2, 1864.
an^rS™™ Sec. 12. And be it further enacted, Tliat the Leavenworth,
roads, no bonds. Pawnee and Western Railroad Company, now known as
the Union Pacific Pailrad Company, eastern division, shall
build the railroad from the mouth of Kansas liiver, by tlie
ivay of Leavenworth, or, if that be not deemed the best
route, then the said company shall, within two years, build
a railroad from the city of Leavenworth to unite with
the main stem at or near the city of Lawrence; but to aid
in the construction of said branch the said company shall
not be entitled to any bonds. And if the Union Pacific
Railroad Company shall not be proceeding in good faith
to build the said railroad through the Territories when the
Leavenworth, Pawnee, and. Western Railroad Company,
now known as the Union Pacific Railroad Company, eastern
meridiantomath^^v^s^on' s'ia" l'ave completed their road to the hundreth
"roceed"'in" di- degree of longitude, then the last named company may
fault of ij. p. e. pr0ceed to make said road westward until it meets anil
connects with the Central Pacific Railroad Company on
the same line. And the said railroad from the mouth of
Kansas River, to one hundreth meridian of longitude shall
Byway of Law-be made by the way of Lawrence and Topeka, or on the
ka"oroppositMobaiik of the Kansas River, opposite said town: Provided,
Westofliiatifne no ^,0I1('S shall be issued or lands certified by the
no bonds skaii be United States to any person or company for the construc-
issued, etc. £jon cf aily part of the main trunk line of said railroad
west of the one hundredth meridian of longitude and east
of the Rocky Mountains, until said road shall be completed
from or near Omaha, on the Missouri River, to the said
one hundreth meridian of longitude.
Directors, 15; Sec. 13. And be it further enacted, That at and after the
rectors U5entsec.nex^ election of directors, the number of directors to be
l, 1862, modified, elected by the stockholders shall be fifteen; and the num¬
ber of directors to be appointed by the President shall be
five; and the President shall appoint three additional direct¬
ors to serve until the next regular election, and thereafter
m™Aiuector on ^ive directors. At least one of said Government directors
committees. shall be placed on each of the standing committees of said
conipany and at least one on every special committee that
Government may be appointed. The Government directors shall, from
port' e'w t0 re'tiuie to time, report to the Secretary of the Interior, in
answer to any inquiries he may make of them, touching
the condition, management, and progress of the work, and
shall communicate to the Secretary of the Interior, at any
time, such information as should be in possession of the
Department. They shall, as often as may be necessary to
a full knowledge of the condition and management of the
To visit road, line, visit all portions of the line of road, whether built or
surveyed; and, while absent from his home, attending to
their duties as directors, shall be paid their actual traveling
expenses, and be allowed and paid such reasonable com¬
pensation for their time actually employed as the board of
directors may decide.
Directors, Sec. II. And be it further enacted, That the next election
where!letOTd one^or directors of said, railroad shall be held on the first
year.' Sec. i, Wednesday of October next at the office of said company
in the city of New York, between the hours of 10 o'clock
JULY 2, 1804.
21
a. m. and four o'clock p. m. of said day; and all subsequent
regular elections shall be held annually thereafter at the
same place; and the directors shall hold their office for one
year, and until their successors qualified.
Sec. 15. And be it further enacted, That the several com-ns^d0®^(mte0c^)n®
pauies authorized to construct the aforesaid roads are tin nous line, see
hereby required to operate and use said roads and tele- ^8'2; 12, act of
graph for all purposes of communication, travel, and trans¬
portation, so far as the public and the Government are
concerned, as one continuous line; and, in such operation
and use, to afford and secure to each equal advantages
and facilities as to rates, time, and transportation, with¬
out any discrimination of any kind in favor of the road or
business of any or either of said companies, or adverse to
the road or business of any or either of the others, and it
shall not be lawful for the proprietors of any line of tele- Mustteiegraph
graph, authorized by this act, or the act amended by this sTe sec. i9?actUof
act, to refuse or fail to convey for all persons requiring the 1862-
transmission of news and messages of like character, on
pain of forfeiting to the person injured for each offense,
the sum of one hundred dollars, and such other damage as
he may have suffered on account of said refusal or failure, to
be sued for and recovered in any court of the United States,
or of any State or Territory of competent jurisdiction.
Sec. 10. And be it further enacted, That any two or more ^""Xiate8 ™ee
of the companies authorized to participate in the benefits sec. ie, act of
of this act are hereby authorized at any time to unite and also sec-10>
consolidate their organizations, as the same may or shall
be, upon such terms and conditions, and in such manner as
they may agree upon, and as shall not be incompatible with
this act, or the laws of the State or States in which the
road of such companies may be, and to assume and adopt
such corporate name and style as they may agree upon,
with a capital stock not to exceed the actual cost of the
roads, so to be consolidated, and shall file a copy of such
consolidation in-the Department of the Interior; and there¬
upon such organization, so formed "and consolidated, shall
succeed to, possess, and be entitled to receive from the
Government of the United States, all and singular the
grants, benefits, immunities, guaranties, acts, and things
to be done and performed and be subject to the same terms,
conditions, restrictions, and requirements which said com¬
panies, respectively, at the time of such consolidation, are
or may be entitled or subject to under this act, in place and
substitution of said companies so consolidated respectively.
And all other provisions of this act, so far as applicable,
relating or in any manner appertaining to the companies so
consolidated, or either thereof, shall apply and be of force
as to such consolidated organization. And in case upon
the completion by such consolidated organization of the
roads, or either of them, of the companies so consolidated,
any other of the road or roads of either of the other corn-
companies authorized as aforesaid (and forming, and
intended or necessary to form, a portion of a continuous
line from each of the several points on the Missouri liiver,
hereinbefore designated, to the Pacific coast), shall not
22
JULY 2, 1864.
have constructed the number of miles of its said road
■within the time herein required, such consolidated organi¬
zation is hereby authorized to continue the construction of
Consolidated its road and telegraph in the general direction and route
imTid^portion'otuI>°n which such incomplete or unconstructed road is here-
tbe lino left uninbefore authorized to be built, until such continuation of
company!1 bya"'v the road of such consolidated organization shall reach the
constructed road and telegraph of said other company, and
at such point to connect and unite therewith; and for and
in aid thereof the said consolidated organization may do
and perform, in reference to such portion of road and tele¬
graph as shall so be in continuation of its constructed road
and telegraph, and to the construction and equipment
thereof, all and singular, the several acts and things here¬
inbefore provided, authorized, or granted to be done by
the company hereinbefore authorized to construct and equip
the same, and shall be entitled to similar and like grants,
benefits, immunities, guarantees, acts, and things to be
done and performed by the Government of the United
States, by the President of the United States, by the Sec¬
retaries of the Treasury and Interior and by commissioners
in reference to such company, and to such portion of the
road hereinbefore authorized to be constructed by it, and
upon the like and similar terms and conditions, so far as
Powersanddu-the same are applicable thereto. And said consolidated
tedViganLTtioit compa11y shall pay to said defaulting company the value to
be estimated by competent engineers of all the work done
and material furnished by said defaulting company, which
may be adopted and used by said consolidated company in
the progress of the work under the provisions of this sec¬
tion: Provided, nevertheless, That said defaulting company
may at any time before receiving pay for its said work and
material, as hereinbefore provided, 011 its own election, pay
said consolidated company the value of the work done and
material furnished by said consolidated company, to be
estimated by competent engineers, necessary for, and used
in, the construction of the road of said defaulting company,
and resume the control of its said road; and all the rights,
benefits, and privileges which shall be acquired, possessed,
or exercised, pursuant to this section,shall be to that extent
an abatement of the rights, benefits, and privileges herein¬
before granted to such other company. And in case any
company authorized thereto, shall not enter into such con¬
solidated organization, such company, upon the completion
of its road as hereinbefore provided, shall be entitled to
and is hereby authorized to, continue and extend the same
under the circumstances, and in accordance with the pro¬
visions of this section, and to have all the benefits thereof,
as fully and completely as are herein provided, touching
such consolidated organization. And in case more than
one such consolidated organization shall be made,pursuant
to this act, the terms and conditions of this act, hereinbe¬
fore recited as to one, shall apply in like manner, force,and
effect to the other: Provided, hoirerer, That rights and
interests at any time acquired by one such consolidated
organization, shall not be impaired by another thereof. It
JULY 2, 1864.
23
is further provided that should the Central Pacific Eailroad v
Company of California complete their line to the eastern shall roach east-
line of the State of California, before the line of the Union state! niay'goon
Pacific Eailroad Company shall have been extended west- iso miles If road
ward so as to meet the line of said first named company, i86™e amended',
said first named company may extend their line of road ^|,s° 866 sec- 2-
eastward one hundred and fifty miles, on the established
route, so as to meet and connect with the line of the Union
Pacific Eoad, complying in all respects with the provisions
and restrictions of this act as to said Union Pacific Eoad,
and upon doing so, shall enjoy all the rights, privileges,
and benefits conferred by this act on said Union Pacific
Eailroad Company.
Sec. 17. And be it further enacted, That so much of sec- anfee°je(}4, as186t2,;
tion fourteen of said act as relates to a branch from Siouxsiom city
City be, and the same is hereby, amended so as to read as Branch Eoad-
follows: That whenever a line of railroad shall be com¬
pleted through the States of Iowa, or Minnesota, to Sioux
City, such company, now organized, or may hereafter be
organized, under the laws of Iowa, Minnesota, Dakota, or
Nebraska, as the President of the United States, by its
request may designate or approve for that purpose, shall
construct and operate a line of railroad and telegraph from
Sioux City, upon the most direct and practicable route to
such a point on, and so as to connect with, the Iowa branch
of the Union Pacific Eailroad from Omaha, or the Union
Pacific Eailroad, as such company may select, and on the
same terms and conditions as are provided in this act and
the act to which this is an amendment, for the construction
of the said Union Pacific Eailroad and telegraph line and
branches; and said company shall complete the same at
the rate of fifty miles per year; Provided, That the said
Union Pacific Eailroad Company shall be, and is hereby,
released from the construction of said branch. And said
company constructing said branch shall not be entitled to
receive in bonds an amount larger than the said Union
Pacific Eailroad Company would be entitled to receive if it
had constructed the branch under this act and the act to
which this is an amendment; but said company shall be
entitled to receive alternate sections of land for ten miles
in width on each side of the same along the whole length
of said branch: And provided further, That if a railroad
should not be completed to Sioux City, across Iowa or
Minnesota, within eighteen months from the date of this
act, then said company designated by the President, as
aforesaid, may commence, continue, and complete the con¬
struction of said branch as contemplated by the provisions
of this act: Provided, however, That if the said company
so designated by the President as aforesaid shall not com-
jilete the said branch from Sioux City to the Pacific Eail¬
road within ten years from the passage of this act, then,
and in that case, all the railroad which shall have been
constructed by said company shall be forfeited to, and
become the property of, the United States.
Sec. 18. And be it further enacted, That the Burlington Burlington and
and Missouri Eiver Eailroad Company, a corporation organ- extfmfroad "etc!
24
JULY '2, 1864.
ized under and by virtue of the laws of the State of Iowa,
be and hereby is, authorized to extend i[t]s road through
the Territory of Nebraska from the point where it strikes
the Missouri River south of the mouth of the Platte River,
to some point not further west than the one hundredth
meridian of west longitude, so as to connect, by the most
practicable route, with the main trunk of the Union Paciiic
Railroad, or that part of it which runs from Omaha to the
said one hundredth meridian of west longitude. And for
the purpose of enabling said Burlington and Missouri River
Railroad Company to construct that portion of their road
Right of way, herein authorized, the right of way through the public lands
etc' is hereby granted to said company for the construction of
said road. And the right, power, and authority is hereby
given to said company to take from the public lauds adja¬
cent to the line of said road, earth, stone, timber, and other
materials for the construction thereof. Said right of way
is granted to said company to the extent of two hundred
feet where it may pass over the public lands, including
all necessary grounds for stations, buildings, work-shops,
depots, machine-shops, switches, side-tracks, turn-tables,
uYs'hSindiant:ti"an(i water-stations. -A-I1(l the United States shall extin-
ties8 Sec.2^1862. guisli, as rapidly as may be consistent with public policy
and the welfare of the said Indians, the Indian titles to all
lands falling under tlieoperation of this section and required
for the said right of way and grant of land herein made.
BYXifgtoii^and SEC. 19. And be it further enacted, That for the purpose
m.K.K.Co. of aiding in the construction of said road, there be, and
hereby is, granted to the said Burlington and Missouri
River Railroad Company, every alternate section of public
land (excepting mineral lands as provided in this act)
designated by odd numbers, to the amount often alternate
sections per mile on each side of said road, on the line
thereof, and not sold, reserved, or otherwise disposed of
by the United States, and to which a pre-emption or home¬
stead claim may not have attached at the time the line of
said road is definitely fixed: Provided, That said company
shall accept this grant within one year from the passage of
this act, by filing such acceptance with the Secretary of
the Interior, and shall also establish the line of said road,
and file a map thereof with the Secretary of the Interior
within one year of the date of said acceptance, when the
said Secretary shall withdraw the lands embraced in this
grant from market.
Burlington Sec. _!(). And be it further enacted, That whenever said
fands'ew ' C°'Burlington and Missouri River Railroad Company shall
have completed twenty consecutive miles of the road men¬
tioned in the foregoing section, in the manner provided for
other roads mentioned in this act, and the act to which this
is an amendment, the President of the United States shall
appoint three commissioners to examine and report to him
in relation thereto; and if it shall appear to him that twenty
miles of said road" have been completed as required by this
act, then, upon certificate of said commissioner's] to that
effect, patents shall issue conveying the right and title to
said lands to said company on each side of said road, as far
march 3, 1865.
25
as tlie same is completed, to the amount aforesaid; and sucli
examination, report, and conveyance, by patents, shall con¬
tinue, from time to time, in like manner, until said roads
shall have been completed. And the President shall ap¬
point said commissioners, to fill vacancies in said commis¬
sion, as provided in relation to other roads mentioned in
the act to which this is an amendment. And the said com-
pany shall be entitled to all the privileges and immunities
granted to the Hannibal and Saint Joseph's ltailroad Com¬
pany by the said last-mentioned act, so far as the same may
be applicable: Provided, That no Government bonds shall Bonds,
be issued to the said Burlington and Missouri Itiver Rail¬
road Company to aid in the construction of said extension
of its road; and provided, further, that said extension shall
be completed within the period of ten years from the pas¬
sage of this act.
!sec. 21. And be it further enacted, That Before any land Lands not to be
conveved to anv
granted by this act shall be conveyed to any company or company until
party entitled thereto under this act, there shall first besur?eya&?0Ssecf
paid into the Treasury of the United States the cost of sur- 4, 1862. sec 6,"
veying, selecting, aud conveying the same, by the said com- Amended, sec.
pany or party in interest, as the titles shall be required by t act of juiy 10,
said company, which amount shall, without any further
appropriation, stand to the credit of the proper account,
to be used by the Commissioner of the General Land Office
for the prosecution of the survey of the public lands along
the line of said road, and so from year to year until the
whole shall be completed, as provided under the provisions
of this act.
Sec. 22. And he it f urther enacted, That Congress may, at See. is. 1862.
any time, alter, amend, or repeal this act.
AMENDMENT OF MARCH 3, 1865.
AN ACT to amend an act entitled "An act to aid in the construction 13 gtat. 504.
of a railroad and telegraph line from the Missouri River to the Pacific
Ocean, and to secure to the Government the use of the same for
postal, military, and other purposes," approved July first, eighteen
hundred and sixty-two, and to amend au act amendatory thereof,
approved July second, eighteen hundred and sixty-four.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled, That
section ten of said act of July second, eighteen hundred May issue bonds
and sixty-four, be so modified and amended as to allow the100 mil,pa ad-
Central Pacific Railroad Company, and the Western Pacific edniTne, Yuterest
Railroad Company, of California, the Union Pacific Rail- j"una"7
road Company, the Union Pacific Railroad Company, east- sec. 10,1804.
ern division, and all other companies provided for inthesaid
acts of the second of July, eighteen hundred aud sixty-four,
to issue their six per centum thirty years' bonds, interest
payable in any lawful money of the United States, upon
their separate roads. And the said companies are hereby
authorized to issue, respectively, their bonds to the extent
of one hundred miles in advance of a continuous completed
line of construction.
26
march 3, 1865. may 7, 1866.
Assignment Sec. 2. And be it further enacted, That the assignment
josVnud sacra" made by the Central Pacific Railroad Company of Califor-
meuto Koad. jqa |qie Western Pacific Railroad Company of said State,
of the right to construct all that portion of said railroad
and telegraph i'roin the city of San Jose to the city of
Sacramento, is hereby ratified and confirmed to the said
Western Pacific Railroad Company, with all the privileges
and benefits of the several acts of Congress relating
thereto, and subject to all the conditions thereof: Pro¬
vided, That the time within which the said Western Pacific
Railroad Company shall be required to construct the first
twenty miles of their said road, shall be one year from the
first day of July, eighteen hundred and sixty-five, and that
the entire road shall be completed from San Josd to Sacra¬
mento, connecting at the latter point with the said Central
Pacific Railroad, within four years thereafter.
JOINT RESOLUTION OP MARCH 3, 1865.
13 Stat., 573. A RESOLUTION transferring maps and other documents relating to
the surveys of the Pacilic Railroad to the Department of the Inte¬
rior.
Resolved by the Senate and House of Representatives of the
Department of United States of America in Congress assembled, That all
poMess'anmaps0 maps, profiles, and other drawings, together with estimates
etc., °f surveys and reports connected with explorations and surveys for
raid. aci ° {iul the Pacific Railroad, made under the authority of the gov¬
ernment, and all other information upon the subject of said
road in the possession of any department of the government,
be transferred to the Department of the Interior; and that
Copies to be the Secretary of the Interior be authorized to furnish copies
furnished. £]ie same; free ()f charge, to the Union Pacific Railroad
Company, so far as they may be useful in aiding said com¬
pany in determining the proper route for said road.
JOINT RESOLUTION OF MAY 7, 1866.
14 Stat., 355. A RESOLUTION extending the time for the completion of the Union
Pacific Railway, Eastern Division.
Resolved by the Senate and House of Representatives of the
pining the east- United States of America in Congress assembled, That the
em division oftiinefortlie completion of the first one hundred miles of
cific n^iTay ex-railroad and telegraph line by the Leavenworth, Pawnee,
teseedacts Jul an(^ Western Railroad Company, (since called the u Union
i. *1802Pacific Railway Company, eastern division,1') mentioned in
1864- the tenth section of the charter of the Union Pacific Rail¬
road Company, of July first, one thousand eight hundred
and sixty-two, and in the fifth section of the amendment
thereof, of July second, one thousand eight hundred and
sixty-lour, be, and the same is hereby, extended until the
twenty-seventh day of June, one thousand eight hundred
MAY 21, 1866. JULY 3, 1866.
27
and sixty-six; and that the time for completing each sue- Sncceedingsec-
ceeding section of one hundred miles shall be reckoned
from the said twenty-seventh day of June in said year.
Sec. 2. And. be it further resolved, That the time for com- Northern Pa-
mencing and completing the Northern Pacific Railroad, and citic ai roa '
all its several sections, is extended for the term of two years.
JOINT RESOLUTION OF MAY 21, 1866.
A RESOLUTION to extend the time for the construction of the first 14 Stat., 356.
section of the Western Pacific Railroad.
Resolved by the Senate ami House of Representatives of the
United States of America in Congress assembled, That the Tim? for con-
time for the construction of the first twenty miles of the sect£Tot°mst-
" Western Pacific railroad" be extended to the first day%"/>aextemiaid'
of January, eighteen hundred and sixty-seven: but this npon conditions!
extension is upon the condition to be accepted by saidetc-
company, and notice of such acceptance to be given by
them to the Secretary of the Interior, that the lands known
as the lauds of the ex mission of San Jose as included in
the map and survey thereof made October, eighteen hun¬
dred and sixty-four, by E. II. Dyer, Deputy United States
Surveyor, shall not be included in the grant heretofore
made to the said Western Pacific Railroad Company.
AMENDMENT OF JULY 3, 1866.
AN ACT to amend an act entitled "An act to amend an act entitled 14 stat., 79.
'An act to aid in the construction of a railroad and telegraph line
from the Missouri River to the Pacific Ocean, and to secure to the
Government the use of the same for postal, military, and other pur¬
poses,' approved July first, eighteen hundred and sixty-two,"
approved July second, eighteen hundred and sixty-four.
Be it enacted by the Senate and House of Representatives
of the United, States of America in Congress assembled, That u. P- lis-Co.,
the Union Pacific Railway Company, eastern division, istfme"forcing
hereby authorized to designate the general route of their maP extended,
said road and to file a map thereof, as now required by law,
at any time before the first day of December, eighteen
hundred and sixty-six; and upon the filing of the said map,
showing the general route of said road, the lands along the
entire line thereof, so far as the same may be designated,
shall be reserved from sale by order of the Secretary of the
Interior: Provided, That said company shall be entitled to
oidy the same amount of bonds of the United States to aid
in the construction of their line of railroad and telegraph
as they would have been entitled to if they had connected
their said line with the Union Pacific Railroad on the one
hundredth degree of longitude as now required by law:
And provided further, That said company shall connect
their line of railroad and telegraph with the Union Pacific
28
JULY 27, 1806.
Railroad, but not at a point more than fifty miles west-
wardly from the meridian of Denver in Colorado,
rr. p. ii. p., to Sec. 2. And be it further enacted, That the Union Pacific
prooeed till meet. jjaj]roa(j Company, with the consent and approval of the
Secretary of the Interior, are hereby authorized to locate,
construct, and continue their road from Omaha, in Nebraska
Territory, westward, according to the best and most prac
ticable route, and without reference to the initial point on
the one hundredth meridian of west longitude, as now pro¬
vided by law, in a continuous completed line, until they
shall meet and connect with the Central Pacitic Railroad
Centralracific Company of California; and the Central Pacific Railroad
their7<>!!d'"ist Company of California, with the consent and approval of
word with con-the Secretary of the Interior, are hereby authorized to
sent of Secretary •> ' . o . .
of the interior locate, construct, and continue their road eastward, m a
rrTI&o; continuous completed line, until they shall meet and con-
186-2,'and s.-r. 16^ nect with the Union Pacific Railroad: Provided, That each
1864, amended. 0f tpe above named companies shall have the right, when
the nature of the work to be done, by reason of deep cuts
and tunnels, shall for the expeditious construction of the
Pacific Railroad require it, to work for an extent of not to
exceed three hundred miles in advance of their continuous
completed line.
ACT OF JULY 27, 1866.
14 Stat. 292. AN ACT granting Lands to aid in tlie Construction of a Railroad and
Telegraph Line from the States of Missouri and Arkansas to the
Pacitic Coast.
Compensation Sec. 21.* And be it further enacted, That whenever in
gineol^'wmmis any grai't of land or oilier subsidies, made or hereafter to
sinners,etc.,to lie be made, to railroads or other corporations, the United
companies^111*1 ,at^ States lias reserved the right, or shall reserve it, to appoint
directors, engineers, commissioners, or other agents to ex¬
amine said roads, or act in conjunction with other officers
of said company or companies, all the costs, charges, and
pay of said directors, engineers, commissioners, or agents,
shall be paid by the respective companies. Said directors,
engineers, commissioners, or agents shall be paid for said
Ten dollars per services the sum of ten dollars per day, for each and every
da>'^eten<t'nts day actually and necessarily employed, and ten cents per
mile for each and every mile actually and necessarily trav¬
eled, in discharging the duties required of them, which per
diem and mileage shall be in full compensation for said
ii company services. And in case any company shall refuse or neglect
sucheCpaym™ntksema'ie such payments, no more patents for land or other
patontaVorlands subsidies shall be issued to said company until these re-
not to iie issued. qUjrements are complied with.
* This section lias been incorporated in the Revised Statutes as section 5259.
march 2, 1867. march 6, 1868. june 25, 1868.
29
ACT OF MARCH 2, 1867.
AN ACT making appropriations for the legislative, executive, and 14 Stats., 457.
judicial expenses of the Government for the year ending the thir¬
tieth of June, eighteen hundred and sixty-eight, and for other
purposes.
####**#
Sec. 3. And be it further enacted, That the Secretary of Geological and
War is hereby authorized to direct a geological and topo- expionukm'1'i>e1
graphical exploration of the territory between the Rocky tween the Rocky
Mountains and the Sierra Nevada mountains, including the swraNeva-
the route or routes of the Pacific railroad: Provided, That da> if> etc.
the same can be done out of existing appropriations.
ACT OF MARCH 6, 1868.
AN ACT restoring lands to market along the line of the Pacific 15 Stats., 59.
railroads and tranches.
Beit enacted by the Senate and House of Representatives
of the United States of America in Congress assembled, That Lands on line of
nothing in the act approved July first, eighteen hundred and'hranohes1'™'!
and sixty-two, entitled "An act to aid in the construction stored to market,
of a railroad and telegraph line from the Missouri river to
the Pacific ocean, and to secure to the government the use
of the same for postal, military, and other purposes," and
the acts amendatory thereof, shall be held to authorize the
withdrawal or exclusion from settlement and entry, under
the provisions of the pre-emption or homestead laws, the
even-numbered sections along the routes of the several
roads therein mentioned which have been or may be here¬
after located: Provided, That such sections shall be rated
at two dollars and fifty cents per acre, and subject only to Price of lands,
entry under those laws; and the Secretary of the Interior
be, and is hereby, authorized and directed to restore to
homestead settlement, pre-emption, or entry, according to Homesteadand
existing laws, all the even-numbered sections of land rights6 mp lon
belonging to the government, and now withdrawn from
market, on both sides of the Pacific railroad and branches,
wherever said road and branches have been definitely
located.
ACT OF JUNE 25, 1868. (Repealed.)
an act relative to filing reports of railroad companies. 15 Stat., 79.
Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled, That {{)jj
the reports required to be made to the Secretary of the interior to be
Treasury on or before the first day of July of each year, th^flrst°day<»f
by the corporations created by or entitled to subsidies October ^teh
under the provisions of an act entitled "An act to aid in Sn^dPacfuiran-
the construction of a railroad and telegraph line from theroad companies.
Missouri Eiver to the Pacific Ocean, find to secure to the
30
june 25, 1868.
Government the use of the same for postal, military, and
other purposes," approved July first, eighteen hundred
and sixty-two, and the acts supplemental to and amenda¬
tory thereof, shall hereafter be made to the Secretary of
the Interior, on or before the first day of October of each
year. Said reports shall furnish full and specific information
upon the several points mentioned in the twentieth section
of the said act of eighteen hundred and sixty-two, and shall
be verified as therein prescribed, and on failure to make
the same as herein required, the issue of bonds or patents
to the company in default shall be suspended until the
requirements of this act shall be complied with by such
company. And the reports hitherto made to the Secretary
of the Treasury under the said act of July first, eighteen
hundred and sixty-two, shall be transferred and delivered
by him to the Secretary of the Interior to be filled by him.
northern pa seo. 2. And be it further enacted, That the corporations
anfia'pacitie,nand created by the provisions of the acts of Congress approved
southern Paritie july second, eighteen hundred and sixty-four, and July
incl'to8 report''at twenty-seventh, eighteen hundred and sixty-six, and known
rnioi^Paeitioas l^ortheni Pacific Railroad Company, the Atlantic
Kaiiroad Com-and Pacific Railroad Company, and the Southern Pacific
pany- Railroad Company, shall make reports to the Secretary of
the Interior on or before the first of October of each year,
as are required to be made by the Union Pacific Railroad
and branches, under the provisions of the first section of
this act, and on failure so to do, shall be subject to the like
suspension.
Reports of ex- sec. 3. And be it further enacted, That the reports
8ioner^t™™Uad required from the commissioners appointed to examine
fiiTin the De-an<l rePort in relation to the road of any of the corpora-
partmeut of the tions whereto reference is made in this act, shall be
interior. addressed to and filed in the Department of the Interior;
and all such reports heretofore made shall be transferred
to and filed in said Department of the Interior; and so
much of any and all acts as requires any reports from such
companies, or any officers thereof, to be made to the Secre¬
tary of the Treasury, is hereby repealed.
ofAnffi"ei8°t1o0be Sec. J- And be it further enacted, That, in addition to the
furnished amm- eight subjects referred to in section twenty of the act of
tlrVofttheSinte-^u^y> eighteen hundred and sixty-two, to be reported upon,
rior. there shall also be furnished annually to the Secretary of
the Interior all reports of engineers, superintendents, or
other officers who make annual reports to any of said rail¬
road companies.
(The foregoing act was repealed by act of Congress,
approved June 19, 1878, 20 Stat., 169.)
MARCH 3, 1869.
31
ACT OF MARCH 3, 1869.
AjST ACT to authorize the transfer of lands granted to the Union 15 Stat., 324.
Pacific Railway Company, Eastern Division, between Denver and
the point of its connection with the Union Pacific Railway, to the
Denver Pacific Railway and Telegraph Company, and to expedite
the completion of railroads to Denver, in the Territory of Colorado.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled, That Uni on Pacific
the Union Pacific Eailway Company, Eastern Division, be, maydcoXS
and it hereby is, authorized to contract with the Denver 1>a"
Pacific Eailway and Telegraph Company, a corporation Teiegrap^K'm!
existing under the laws of the Territory of Colorado, for
the construction, operation, and maintenance of that part its road a'miteie-
of its line of railroad and telegraph between Denver city Denver oltTand
and its point of connection with the Union Pacific Eailroad, Cheyenne, etc.
which point shall lie at Cheyenne, and to adopt the road¬
bed already graded by said Demrer Pacific Eailway and
Telegraph Company as said line, and to grant to said Den¬
ver Pacific Eailway and Telegraph Company the perpetual
use of its right of way and depot grounds, and to transfer
to it all the rights and privileges, subject to all the obliga¬
tions pertaining to said part of its line.
Sec. 2. And be it further enacted, That the said Union shall extend ita
Pacific Eailway Company, Eastern Division, shall extend graph'to'&ctelso"
its railroad and telegraph to a connection at the city ofaatoform^ontm-
Denver, so as to form with that i>art of its line herein Kansas City to
authorized to be constructed, operated, and maintained hy Ch6yeune,etc-
the Denver Pacific Eailway and Telegraph Company, a
continuous line of railroad and telegraph from Kansas City,
by way of Denver to Cheyenne. And all the provisions of Laws to apply,
law for the operation of the Union Pacific Eailroad, its
branches and connections, as a continuous line, without
discrimination, shall apply the same as if the road from
Denver to Cheyenne had been constructed by the said
Union Pacific Eailway Company, Eastern Division; but at ingot
nothing herein shall authorize the said Eastern Division taritrnotaffected.
Company to operate the road or fix the rates of tariff for
the Denver Pacific Eailway and Telegraph Company.
Sec. 3. And be it further enacted, That said companies The companies
are hereby authorized to mortgage their respective portions u'.eir roadsSa?°
of said road, as herein defined, for an amount not exceeding
thirty-two thousand dollars per mile, to enable them respec¬
tively to borrow money to construct the same; and that each t o receive pat-
of said companies shall receive patents to the alternate sec- s,"rtionson"ndte
tions of land along their respective lines of road, as herein
defined, in like manner and within the same limits as is
provided by law in the case of lands granted to the Union
Pacific Eailway Company, Eastern Division: Provided, But not entj.
That neither of the Companies hereinbefore mentionedUnlteY'st8ates
shall be entitled to subsidy in United States bonds under Wis. k d es
the provision of this act.
32
march 3, 1869. april 10, 1869.
JOINT RESOLUTION OF MARCH 3, 1869.
15 Stat., 348. JOINT RESOLUTION authorizing the Union Pacific Railway Com¬
pany, Eastern Division, to change its name to the "Kansas Pacific
Railway Company."
Union Pacific resolved 1>U the Semite (iiid House of Representatives
Railway r'om- of the United Sta tes of America in CoiKjress assembled, That
?>T\is^ont61totlie Union Pacific Railway Company, Eastern Division, is
change its name hereby authorized by resolution of its board of directors,
Runway* c'o'm-which shall be filed in the office of the Secretary of the
pauy. ' Interior, to change its name to the "Kansas Pacific Rail¬
way Company."
JOINT RESOLUTION OF APRIL 10, 1869.
16 Stat., 56. JOINT RESOLUTION for the protection of the interests of the
United States in the Union Pacific Railroad Company, the Central
Paciiio Railroad Company, and for other purposes.
Be it resolved by the Senate and House of Representatives
stockholders of of the Uii ited States of America in Coiujress assembled, That
e™ to'oiwt^a the stockholders of the Union Pacific Railroad Company,
board of direct- a(; a meeting to be held on the twenty-second day of April,
eighteen hundred and sixty-nine, at the city of Boston
(with power to adjourn from day to day), shall elect a
board of directors for the ensuing year; and said stoek-
their generaVoP holders are hereby authorized to establish their general
ace. office at such place in the United States as they may select
confer red Ro!-111 sa^ meeting: Provided, That the passage of this reso-
waivedhereby, lution shall not confer any other right upon said Union
Pacific Railroad Company than to hold such election, or be
held in any manner to relinquish or waive any rights of
the United States to take advantage of any act or neglect
of said Union Pacific Railroad Company heretofore done
or omitted whereby the rights of the General Government
have been or may be prejudiced: And provided further,
commontcrmi-That the common terminus of the Union Pacific and the
Paciflc'ami ("""Central Pacific Railroads shall be at or near Ogden; and
trai Pacific Rail-the Union Pacific Railroad Company shall build, and the
roads to be at or .. . i 1 J 7
near Ogden, «scc. Central Pacific luulroad Company pay tor and own the
railroad from the terminus aforesaid to Promonotory Sum¬
mit, at which point the rails shall meet and connect and
form one continuous line.
The President Sec. 2. And be it further resolved, That to ascertain the
mihMo'ntoexam-condition of the Union Pacific Railroad and the Central
ino ami roport Pacific Railroad, the President of the United States is
upon the roads. authorized -to appoint a board of eminent citizens, not
exceeding five in number, and who shall not be interested
in either road, to examine and report upon the condition of,
and what sum or sums, if any, will be required to complete
each of said roads, for the entire length thereof, to the said
terminus as a first-class railroad, in compliance with the
Expenses an<i several acts relating to said roads; and the expense of such
pay of commis-board, including an allowance often dollars to each for
their services for each day employed in such examination
or report, to be paid equally by said companies.
MAY 6, 1S70.
33
Sec. 3. And be it further resolved, That the Presidentis tosbeaimtlXki
hereby authorized and required to withhold from each of sufficient1 to se-
said companies an amount of subsidy bonds authorized to X™on°a8 afirstl
be issued by the United States under said acts sufficient class road, of all
to secure the full completion as a first-class road of all sec- ?oaa,°etc.°f such
tions of such road upon which bonds have already been
issued, or in lieu of such bonds he may receive as such
security an equal amount of the first mortgage bonds of
such company; and if it shall appear to the President that
the amount of subsidy bonds yet to be issued to either of t0*f6
said companies is sufficient to insure the full completion sufficient, etc.
of such road, he may make requisition upon such company
for a sufficient amount of bonds already issued to said com¬
pany, or in his discretion of their first mortgage bonds, to
secure the full completion of the same. And in default of
obtaining such security as [is] in this section provided, the
President may authorize and direct the Attorney-General
to institute such suits and proceedings on behalf and in the necessary suits,
name of the United States, in any court of the United
States having jurisdiction, as shall be necessary or proper
to compel the giving of such security, and thereby, or in
any manner otherwise, to protect the interests of the United
States iu said road, and to insure the full completion thereof
as a first-class road, as required by law and the state_ in
that case made.
Sec. 4. And be it further resolved, That the Attorney- Attorney-Gen-
©r«iL to invests
General of the United States be, and he is hereby, author- gate whether the
ized and directed to investigate whether or not the charter uXonr pacific
and all the franchises of the Union Pacific Railroad Com- and central pa-
pany and of the Central Pacific Railroad Company have ic,a4no?beernfor-
not been forfeited, and to institute all necessary and proper felted, etc.
legal proceedings; also to investigate whether or not said
companies have or have not made any illegal dividends
upon their stock, and if so to institute the necessary pro¬
ceedings to have the same reimbursed; and also to investi¬
gate whether any of the directors or any other agents or to institute
employes of said companies have or not violated any penaU™minaq>roceed-
law, and if so to institute the proper criminal proceedingsins!M 'e
against all persons who have violated such laws.
ACT OF MAY 6, 1870.
AX ACT to authorize the Burlington and Missouri River Railroad 16 Stat., 118.
Company, or its assigns, to change the established line of said road
in the State of Nebraska.
Be it enacted by the Senate and House of Representatives Burlington and
of the United States of America in Congress assembled, That k.1s'k.uco.1 may
the Burlington and Missouri River Railroad Company, or ^aa°f®npaPofJjte8
its assigns, in the State of Nebraska, may so far changebraskan m
the location of that portion of its line that lies west of the
city of Lincoln, iu said State, as shown by the map thereof
now on file in the general land office of the United States,
so as to secure a better and more practicable route, and to
connect with the Union Pacific Railroad at or near the
3 PAC
34
MAY 6, 1870.
Fort Kearney reservation, said new line to be located within
the limits of the land grant made by the United States to
Proviso. aid in its construction: Provided, however, That said line
shall not be located farther south than the so[u] thern bound¬
ary line of township number seven, in said State, and said
change shall not impair the rights to, nor change the loca¬
tion of the said laud grant, and the said company, or its
assigns, shall receive no different or other or greater quan¬
tity of land than if this act had not passed, and no change
had been made in the located line of said railroad.
ACT OF MAY 6, 1870.
16 Stat., 121. AN ACT to fix the point of junction of the Union Pacific Railroad
Company and the Central Pacific Railroad Company.
Be it enacted by the Senate and House of Representatives
Point of junc■ of the United States of America in Conqress assembled, That
tion ot the Union . . " -, . , « . ' n ,1 Vr •
Pacific Railroad the common terminus and point of junction 01 tlie Union
PaoificeKUR'es'-^>ac^c Ibiilroad Company and the Central Pacific Railroad
tnbiished north-Company shall be definitely fixed and established on the
tion atf ogdem ,J e railroad as now located and constructed, northwest
etc. ° of the station at Ogdcn, and within the limits of the sec¬
tions of land hereinafter mentioned, viz: Section thirty-
six of township seven, of range two, situated north and
Grant of cer- west of the principal meridian and base line in the terri-
tain sections. £0ry xJtah, and sections twenty-five, twenty-six, and
thirty-five of township seven, of range two, and section
six of township six, and sections thirty and thirty-one of
township seven, of range one, and sections one and two of
township six, of range two, all situate north aud west of
said principal meridian and base line; and said companies
are hereby authorized to enter upon, use, and possess said
sections which are hereby granted to them in equal shares,
with the same rights, privileges, and obligations now by
law provided with reference to other lauds granted to said
Reserve for railroads: Provided, however, That the Secretary of the
schools. Interior shall designate a section of land in said township
seven, of range two, belonging to said companies, aud
reserve the same for the benefit of schools in said territory,
in accordance with the act of February twenty-one, eight¬
een hundred and fifty-five, establishing the office of
surveyor-general of Utah, and to grant land for school and
Price of land, university purposes: Provided also, That said companies
shall pay for any additional lands acquired by this act at
the rate of two dollars and fifty cents an acre: And provided
Private rights, further, That no rights of private persons shall be affected
by this act.
FEB. 24, 1871.
35
ACTS OF JULY 15, 1870, AND MARCH 3, 1871.
The sundry civil appropriation act of July 15,1870, makes
provision for surveys of public lands of tlie grant to the
Union Pacific Railroad Company in the territories of Colo¬
rado, Wyoming, and Utah, and adds the following:
Providing that the foregoing appropriations for surveys
of public lands within the limits of the Union Pacific Rail¬
road Company's land grant shall be conditional upon the
compliance of said company or party in interest with the Compliance
requirements of the twenty-first section of the Act of July act July 2-
2, 1864. (16 Statutes, 305.)
A similar provision in reference to the survey of lands
of the Kansas Pacific Railroad Company in Colorado, is
made in the sundry civil appropriation act of March 3,1871.
(16 Statutes, 502.)
ACT OF FEBRUARY 24, 1871.
AN ACT to authorize the Union Pacific Railroad Company to issue its 16 Stat., 430.
bonds to construct a bridge across the Missouri River at Omaha,
Nebraska, and Couucil Bluffs, Iowa.
Be it enacted by tlie Senate and Rouse of Representatives
of the United States of America in Congress assembled, That union Pacific
for the more perfect connection of any railroads that are Sane tofnds,"
or shall be constructed to the Missouri River, at or near to construct'etc.)
Council Bluffs, Iowa, and Omaha, Nebraska, the Union theMisfouruuv!
Pacific Railroad Company be, and it is hereby, authorizeder at 0maha-
to issue such bonds, and secure the same by mortgage on
the bridge and approaches and appurtenances, as it may
deem needful to construct and maintain its bridge over said
river, and the tracks and depots required to perfect the
same, as now authorized by law of Congress; and said Construction of
bridge may be so constructed as to provide for the passage bridge'toU3,etc-
of ordinary vehicles and travel, and said company may levy
and collect tolls and charges for the use of the same; and
for the use and protection of said bridge and property, the
Union Pacific Railway Company shall be empowered, gov¬
erned, and limited by the provisions of the act entitled
"An act to authorize the construction of certain bridges,
and to establish them as post-roads," approved July twenty-
five, eighteen hundred and sixty-six, so far as the same is
applicable thereto: And provided, That nothing in this act
shall be so construed as to change the eastern terminus of Eastern fer¬
tile Union Pacific Railroad from the place where it is now™/^^ ™ii-
fixed under existing laws, nor to release said Union Pacific changed.
Railroad Company, or its successors, from its obligation as
established by existing laws: Provided also, That Congress Congress may
shall at all times have power to regulate said bridge, andfafes.atetoll3aild
the rates for the transportation of freight and passengers
over the same, and the local travel hereinbefore provided
for. And the amount of bonds herein authorized shall not Amount of
exceed two and a half millions of dollars: Provided, Thatboi"ls'
if said bridge shall be constructed as a draw-bridge, the Draws,
same shall be constructed with spans of not less than two
hundred feet in length in the clear on each side of the
eeutral or pivot pier of the draw.
30
MARCH 3, 1X71. MARCH 3, 1873.
ACT OF MARCH 3, 1871.
16 Stat., 225. AN ACT making appropriations for the support of the Army for the
year ending June 30, 1873, Ac.
# # it- # *
secretary of Sec. 9. That, iu accordance with the fifth section of the
Treasury act approved .1 uly two, eighteen hundred and sixty-four,
ituiiro.i'd eompa-entitled "An act to amend an act entitled 'An act to aid
nics cme-imit of jn ^fie construction of a railroad and telegraph line from
eoinpeii a a t ion, . . ,
etc. the Missouri Kiver to the Paeitic Ocean, and to secure to
the Government the use of the same for postal, military,
and other purposes,' approved July first, eighteen hundred
and sixty-two," the Secretary of the Treasury is hereby
directed to pay over in money to the Pacific Pailroad com¬
panies mentioned in said act, and performing services for
the United States, one-halt' of the compensation at the
rate provided by law for such services, heretofore or here¬
after rendered: Provided, That this section shall not be
LeyairiaiitK of construed to atfect the legal rights of the Government or
wisoatte"t"d!*<'r the obligations of the companies, except as herein specific¬
ally provided.
ACT OF MARCH 3, 1873.
17 Stat., 5oS. AN ACT making appropriations for the legislative, executive, and
judicial expenses of the Government for the year ending June 30,
1871, and for other purposes.
-+ 7* - -f * # *
Secretary of Sec. 2. That the Secretary of the Treasury is directed to
wTtulud«"rpav- withhold all payments to any railroad company and its
raiinrui0 ! 011 account of freights or transportation, over their
mes i'or freight, respective roads, of any kind, to the amount of payments
tt<'■ made by the United States for interest upon bonds of the
United States issued to any such company, and which shall
not have been reimbursed together with the five per cent,
of net earnings due and unapplied as provided by law; and
any such company may bring suit in the Court of Claims to
companieamavrecover the price of such freight and transportation; and
Courti.r claim""1 such suit the right of such company to recover the same
upon the law and the facts of the case shall be determined
and also the rights of the United States upon the merits of
all the points presented by it in answer thereto by them
and either party to such suit may appeal to the Supreme
Appeal u, su- Court; and both said courts shall give such cause or causes
raus"«° to "have precedonce of all other business.
precedence. * * * * * #
Atturney-oen- Sec. 4. That the Attorney-General shall cause a suit in
inViputyagainst equity to be instituted in the name of the United States
O'ernionPu. ifkagainst the Union Pacific Railroad Compauy, and against
Railroad Com- \\ , . ,, . xi "i
pany ami an per-all persons who may, in tlicir own names or through any
sons who, etc. agents, have subscribed for or received capital stock in said
road, which stock has not been paid for in full in money,
or who may have received, as dividends or otherwise, por¬
tions of the capital stock of said road, or the proceeds or
avails thereof, or other property of said road, unlawfully
and contrary to equity, or who may have received as profits
MARCH 3, 1873.
37
or proceeds of contracts for construction, or equipments of
said road, or other contracts therewith, moneys or other
property which ought, in equity, to belong to said railroad
corporation, or who may, under pretense of having complied
with the acts to which this is an addition, have wrongfully
and unlawfully received from the United States bonds,
moneys, or lands which ought, in equity, to be accounted
for and paid to said railroad company or to the United
States, and to compel payment for said stock, and the col¬
lection and payment of such moneys, and the restoration
of such property, or its value, either to said railroad corpo¬
ration or to the United States, whichever shall in equity be
held entitled thereto. Said suit may be brought in the suit t<> i>e
circuit court in any circuit, and all said parties may be made circuit court.'1"7
defendants in one suit. Decrees may bo entered and en- oecrees.
forced against any one or more parties defendant without
awaiting the final determination of the cause against other
parties. The court where said cause is pending may make
such orders and decrees and issue such process as it shall
deem necessary to bring in new parties or the representa- x e w parties,
tives of parties deceased, or to carry into effect the purposesetc-
of this act. On filing the bill writs of subpoena may be TVrits of sui>-
issued by said court against any parties defendant, which any'aistri"" uu.i
writ shall run into any district, and shall be served, as other ll0*w serve.!,
like process, by the marshal of such district. The books, Books of the
records, correspondence, and all other documents of the to'ufopen Vo'in-
Union Pacific Railroad Company, shall at all times be open section,
to inspection by the Secretary of the Treasury, or such per¬
sons as lie may delegate for that purpose. The laws of the
United States providing for proceedings in bankruptcy Bankrupt laws
shall not be held to apply to said corporation. Ho dividend "nivS,?™!,,.w
shall hereafter be made by said company but from the actual stock,mortgages,
net earnings thereof; and no new stock shall be issued, or °"
mortgages or pledges made on the property or future earn¬
ings of the company, without leave of Congress, except for
the purpose of funding and securing debt now existing, or
the renewal thereof. Ho director or officer of said road x? director to
shall hereafter be interested, directly or indirectly, in any anY^mnract'.Vi
contract therewith, except for his lawful compensation as°ept, etc.
such officer. Any director or officer who shall pay or de¬
clare, or aid in paying or declaring any dividend, or creating
any mortgage or pledge prohibited by this act, shall be
punished by imprisonment not exceeding two years, and by Penalty,
fine not exceeding five thousand dollars. The proper cir¬
cuit court of the United States shall have jurisdiction to jurisdiction of
hear and determine all cases of mandamus to compel saidL'suemaudamus'!
Union Pacific Railroad Company to operate its road as
required by law.
38
JUNE 20, 1874.
ACT OF JUNE 20, 1874.
18 Stat.,111. AN AC T making additions to the fifteenth section of the act approved
July 2, 1864, entitled "An act to amend an act entitled 'An act to
aid in the construction of a railroad and telegraph lino from the
Missouri River to the Pacific Ocean, and to secure to the government
the use of the same for postal, military, and other purposes,'
approved July 1, 1862."
Be it enacted by the Senate and House of Representatives
Certain road * of the United States of America in Congress assembled, That
continu'(mste'iin2 there shall be, and is hereby, added to the fifteenth section
wimequaifaciii-of the act approved July second, eighteen hundred and
sixty-four, entitled "An act to amend an act entitled 'An
act to aid in the construction of a railroad and telegraph
line from the Missouri River to the Pacific Ocean, and to
secure to the government the use of the same for postal,
military, and other purposes,' approved July first, eighteen
hundred and sixty-two," the following words, namely:
Agenta or offi-«And any officer or agent of the companies authorized to
cers to be tineu , i
ideaseofreiu^ai. construct the atoresaid roads, or ot any company engaged
in operating either of said roads, who shall refuse to operate
and use the road or telegraph under his control, or which
he is engaged in operating for all purposes of communica¬
tion, travel, and transportation, so far as the public and
the government are concerned, as one continuous line, or
shall refuse, in such operation and use, to afford and secure
to each of said roads equal advantages and facilities as to
rates, time, or transportation, without any discrimination
of any kind in favor of, or adverse to, the road or business
of any or either of said companies, shall be deemed guilty of
a misdemeanor, and, upon conviction thereof, shall be fined
in any sum not exceeding one thousand dollars, and may
Ctmf'au M imprisoned not less than six months. In case of failure
s""'/'In^caae oi or refusal of the Union Pacific Railroad Company, or either
refusal. Gf branches, to comply with the requirements of this
act and the acts to which this act is amendatory, the party
injured or the company aggrieved may bring an action in the
district or circuit court of the United States in the territory,
district, or circuit in which any portion of the road of the
defendant may be situated, for damages on account of such
Penalty fixed. faj]ure or refusal; and, upon recovery, the plaintiff shall be
entitled to judgment for treble the amount of all excess of
freight and fares collected by the defendant, and for treble
the amount of damages sustained by the plaintiff by such
failure or refusal; and for each and every violation of or
failure to comply with the requirements of this act, a new
cause of action shall arise; and in case of suit in any
such territory, district, or circuit, process may be served
upon any agent of the defendant found in the territory,
district, or circuit in which such suit may be brought, and
such service shall be by the court held to be good and suf¬
ficient; and it is hereby provided that for all the purposes
of said act, and of the acts amendatory thereof, the rail¬
way of the Denver Pacific Railway and Telegraph Company
shall be deemed and taken to be a part and extension of
the road of the Kansas Pacific Railroad, to the point of
junction thereof with the road of the Union Pacific Rail¬
road at Cheyenne, as provided in the act of March third,
eighteen hundred and sixty-nine.
JUNE 22, 1874. MARCH 3, 1875.
39
ACT OF JUNE 22, 1874.
AN ACT providing for the collection of moneys due the United States 18 Stat., 200.
from the Pacific Railroad Companies.
Be it enacted by the Senate and House of Representatives
of the United Sta tes of America in Congress assembled, That
the Secretary of the Treasury be, and hereby is, directed demand"!" p e r
to require payment of the railroad companies, their suc. <ent of net earn-
cessors and assigns, or tbe successors or assigns of any or
either of said companies, of all sums of money due or to
become due, the United States for the five per centum of
the net earnings provided for by the act entitled "An act
to aid in the construction of a railroad and telegraph line
from the Missouri River to the Pacific Ocean, and to secure
to the government the use of the same for postal, military,
and other purposes" approved July first, eighteen hundred
and sixty-two, or by any other act or acts in relation to the
companies therein named, or any other snch company or
companies, and in case either of said railroad companies
shall neglect or refuse to pay the same within sixty days
after demand therefor made upon the treasurer of such
railroad company, the Secretary of the Treasury shall cer¬
tify that fact to the Attorney-General, who shall thereupon Attorney-Gen-
cralto nrin°p suit.
institute the necessary suits and proceedings to collect and
otherwise obtain redress in respect of the same in the
proper circuit courts of the United States, and prosecute
the same, with all convenient dispatch to a final determina¬
tion.
ACT OF MARCH 3, 1875.
AN ACT making appropriations for the support, of the Army for the 18 Stat., 453.
fiscal year ending June thirtieth, eighteen hundred and seventy-six,
and for other purposes.
* # * # # * *
Provided, That no money shall hereafter be paid to any Xopaymentfor
railroad company for the transportation of any property ^ops^et^to
or troops of the United States over any railroad which, in railroads rec'eiv-
whole or in part, was constructed by the aid of a grant "tc.land grants
of public land, on the condition that such railroad should
be a public highway for the use of the Government of the tion of officers on
United States, free from toll or other charge, or upon any duty-
other conditions for the use of such road, for such trans¬
portation; nor shall any allowance be made for the trans¬
portation of officers of the Army over any such road when
on duty and under orders as military officers of the United
States. But nothing herein contained shall be construed Kight of cc™-
, . ° , .. , , .. . ,, panies to sue in
as preventing any such railroad irom bringing a suit m the court of Claims.
Court of Claims for the charges for such transportation,
and recovering for the same if found entitled thereto, by
virtue of the laws in force prior to the passage of this a.ct;
provided that the claim for such charges shall not have
been barred by the statute of limitations at the time of statuteoflimi.
bringing the suit, and either party shall have the right oftations.
appeal to the Supreme Court of the United States: And
provided further, That the foregoing provision shall not
40
AUGUST 15, 1876. APRIL 30, 1878.
apply for the current fiscal year, nor thereafter, to roads
where the sole condition of transportation is that the com¬
pany shall not charge the Government higher rate than
they do individuals for like transportation, and when the
Quartermaster-General shall be satisfied that this condi¬
tion has been faithfully complied with.
ACT OF AUGUST 15, 1876.
The legislative, executive, and judicial appropriation act
of August 15, 187(1, appropriated $10,000 for the purpose
of defraying the expenses of a survey of the Union Pacific
and Central Pacific Railways between Council Bluffs,
Iowa, and Sacramento, California, in pursuance of a reso¬
lution of the House of Representatives passed July 19,1870.
(19 Statutes, 159.)
ACT OF APRIL 30, 1878.
20 Stat., 44. AN ACT to provide for deficiencies in the appropriations for the service
of the government for tile fiscal yearending June thirtieth, eighteen
hundred and seventy-eight; and for prior years, for subsistence of
the Army, and for other purposes.
#*-#*# •*- +•
WAR DEPARTMENT.
Transportation Transportation.—To enable the Secretary of War to
ot Army. pay for transportation of the Army, including baggage of
the troops when moving either by land or water; of cloth¬
ing and camp and garrison equipage from the depots of
Philadelphia and Jeffersonville to the several posts and
Army depots, and from those depots to the troops in the
field; of liorse-equipments and of subsistence stores from
the places of purchase and from the places of delivery,
under contract, to such places as the circumstances of the
service may have required them to be sent; of ordnance,
ordnance stores, and small-arms from the founderies and
armories to the arsenals, fortifications, frontier posts, and
Army depots; freights, wharfage, tolls, and ferriages; the
purchase and hire of horses, mules, oxen, and harness,
and the purchase and repair of wagons, carts, and drays,
and of ships, and other sea-going vessels and boats required
for the transportation of supplies and for garrison purposes:
tor drayage and cartage at the several posts; hire of team¬
sters; transportation of funds for the pay and other dis¬
bursing departments; the expense of sailing public trans¬
ports on the various rivers, the Gulf of Mexico, and the
Atlantic and Pacific; for procuring water at such posts as,
from their situation, require it to be brought from a dis¬
tance; and for clearing roads, and for removing obstruc¬
tions from roads, harbors, and rivers, to the extent which
has been required for the actual operations of the troops in
the field, one million two hundred thousand dollars, being
MAY 7, 1878.
41
a deficiency for tlie fiscal year ending June thirtieth, eight¬
een hundred seventy-seven: Provided, however, That no
part of this sum shall be paid to any railroad company or Railway com-
to its assigns on account of freights or transportation over Xcter,.st 0
their respective roads unless there be an excess due such bonds to be de-
company after charging the amount of payments made byduoted"
the United States for interest upon bonds of the United
States issued to any such company; but the same shall be
paid to the Secretary of the Treasury, to be by him with¬
held, as directed by existing law.
# # * *■ # #
ACT OF MAY 7, 1878.
AN ACT to alter and amend the act entitled "An act to aid in the 20 Stat., 56.
construction of a railroad and telegraph line from the Missouri
River to the Pacific Ocean, and to secure to the government the use
of the same for postal, military, and for other purposes,'' approved
July first, eighteen hundred and sixty-two, and also to alter and
amend the act of Congress approved July second, eighteen hundred
and sixty-four, in amendment of said first-named act.
Whereas, on the first day of July, anno Domini eighteen Preamble,
hundred and sixty-two, Congress passed an act entitled
"An act to aid in the construction of a railroad and tele¬
graph line from the Missouri Diver to the Pacific Ocean,
and to secure to the government the use of the same for
postal, military, and other purposes; and
Whereas afterward, on the second day of July, anno
Domini eighteen hundred and sixty-four, Congress passed
an act in amendment of said first-mentioned act; and
Whereas, the Union Pacific Eailroad Company, named
in said acts, and under the authority thereof, undertook to
construct a railway, after the passage thereof, over some
part of the line mentioned in said act; and
Whereas, under the authority of the said two acts, the
Central Pacific Eailroad Company of California, a corpora¬
tion existing under the laws of the State of California,
undertook to construct a railway, after the passage of said
acts, over some p^rts of the line mentioned in said acts;
and
Whereas the United States, upon demand of said Cen¬
tral Pacific Eailroad Company, have heretofore issued, by
way of loan, and as provided in said acts, to and for the
benefit of said company, in aid of the purposes named in
said acts, the bonds of the United States, payable in thirty
years from the date thereof, with interest at six per centum
per annum, payable half-yearly, to the amount of twenty-
five million eight hundred and eighty-five thousand one
hundred and twenty dollars, which said bonds have been
sold in the market or otherwise disposed of by said com¬
pany; and
Whereas the said Central Pacific Company has issued
and disposed of an amount of its own bonds equal to the
amount so issued by the United States, and secured the
same by mortgage, and which are, if lawfully issued and
MAY 7, 1878.
disposed of, a prior and paramount lien, in tlie respect men¬
tioned in said acts, to that of the United States, as stated,
and secured thereby; and
Whereas, after the passage of said acts, the Western
Pacific Railroad Company, a corporation then existing
under the laws of California, did, under the authority of
Congress, become the assignee of the rights, duties, and
obligations of the said Central Pacific Railroad Company,
as provided in the act of Congress passed on the third of
March, anno Domini eighteen hundred and sixty-five, and
did, under the authority of the said act and of the acts
aforesaid, construct a railroad from the city of San Jose
to the city of Sacramento, in California, and did demand
and receive from the United States the sum of one million
nine hundred and seventy thousand five hundred and sixty
dollars of the bonds of the United States, of the descrip¬
tion before mentioned as issued to the Central Pacific Com¬
pany. and in the same manner and under the provisions of
said acts; and upon and in respect of the bonds so issued
to both said companies, the United States have paid inter¬
est to the sum of more than thirteen and a half million
dollars, which has not been reimbursed; and
Whereas said Western Pacific Railroad Company has
issued and disposed of an amount of its own bonds equal
to the amount so issued by the United States to it, and
secured the same by mortgage, which are, if lawfully issued
and disposed of, a prior and paramount lien to that of the
United States, as stated and secured thereby; and
Whereas said Western Pacific Railroad Company has since
become merged iu,and consolidated with, said Central Pacific
Railroad Company, under the name of the Central Pacific
Railroad Company, whereby the said Central Pacific Rail¬
road Company has become liable to all the burdens, duties,
and obligations before resting upon said Western Pacific
Railroad Company; and divers other railroad companies
have been merged in and consolidated with said Central
Pacific Railroad Company; and
Whereas the United States, upon the demand of the
said Union Pacific Railroad Company, have heretofore
issued by way of loan to it and as provided in said acts,
the bonds of the United States, payable in thirty years
from the date thereof, with interest at six per centum per
annum, payable half-yearly, the principal sums of which
amount to twenty-seven million two hundred and thirty-six
thousand five hundred and twelve dollars; on which the
United States have paid over ten million dollars interest
over and above all reimbursements; which said bonds have
been sold in the market or otherwise disposed of by said
corporation; and
Whereas said corporation has issued and disposed of an
amount of its own bonds equal to the amounts so issued to
it by the United States as aforesaid, and secured the same
by mortgage, and which are, if lawfully issued and dis¬
posed of, a prior and paramount lien, in the respect men¬
tioned in said acts, to that of the United States, as stated,
and secured thereby; and
MAY 7, 1878.
43
Whereas the total liabilities (exclusive of interest to
accrue) to all creditors, including the United .States, of the
said Central Pacific Company, amount in the aggregate to
more than ninety-six million dollars, and those of the said
Union Pacific Railroad Company to more than eighty-eight
million dollars; and
Whereas the United States, in view of the indebtedness
and operations of said several railroad companies respec¬
tively, and of the disposition of their respective incomes,
are not and can not, without further legislation, be secure
in their interests in and concerning said respective rail¬
roads and corporations, either as mentioned in said acts or
otherwise; and
Whereas a due regard to the rights of said several com¬
panies respectively, as mentioned in said act of eighteen
hundred and sixty-two, as well as just security to the
United States in the premises, and in respect of all the
matters set forth in said act, require that the said act of
eighteen hundred and sixty-two be altered and amended as
hereinafter enacted; and
Whereas, by reason of the premises also, as well as for
other causes of public good and justice, the powers pro¬
vided and reserved in said act of eighteen hundred and
sixty-four for the amendment and alteration thereof ought
also to be exercised as hereinafter enacted: Therefore,
Be it enacted by the Senate and House of Representatives
o f the Un ited States of America in Congress assembled, That
the net earnings mentioned in said act of eighteen hundred Net earnings,
and sixty-two, of said railroad companies respectively,
shall be ascertained by deducting from the gross amount be as"
of their earnings, respectively, the necessary expensescer ame
actually paid within the year in operating the same and
keeping the same in a state of repair, and also the sum paid
by them respectively within the year in discharge of inter¬
est on their first-mortgage bonds, whose lien has priority
over the lien of the United States, and excluding from
consideration all sums owing or paid by said companies
respectively for interest upon any other portion of their
indebtedness; and the foregoing provision shall be deemed
and taken as an amendment of said act of eighteen hun¬
dred and sixty-four, as well as of said act of eighteen
hundred and sixty-two. This section shall take effect on
the thirtieth day of June next, and be applicable to all Date of effect,
computations of net earnings thereafter; but it shall not
effect any right of the United States or of either of said
railroad companies existing prior thereto.
Sec. 2. That the whole amount of compensation which Compensation
may, from time to time, be due to said several railroad com- £jitai1ned;howaP-
panies respectively for services rendered for the Govern¬
ment shall be retained by the United States, one-half
thereof to be presently applied to the liquidation of the
interest paid and to be paid by the United States upon
the bonds so issued by it as aforesaid, to each of said cor¬
porations severally, and the other half thereof to be turned
into the sinking fund hereinafter provided, for the uses
therein mentioned.
44
MAY 7, 1878.
{Amenfe*inbv ®E0< That there shall be established in the Treasury
section 5 of act of of the United.Ktates a sinking-fund, which shall be invested
March 3,1887.) py fq10 Secretary of the Treasury in bonds of the United
States; and the semi-annual income thereof shall be in like
manner from time to time invested, and the same shall
accumulate and be disposed of as hereinafter mentioned.
And in making such investments the Secretary shall pre¬
fer the live per centum bonds of the United States, unless
for good reasons appearing to him, and which he shall
report to Congress, he shall at any time deem it advisable
to invest in other bonds of the United States. All the
bonds belonging to said fund shall, as fast as they shall
be obtained, be so stamped as to show that they belong to
said fund, and that they are not good in the hands of other
holders than the Secretary of the Treasury until they shall
have been indorsed by him, and publicly disposed of pur-
t suant to this act.
f rmInVsTd Sec. T That there shall be carried to the credit of the
sinting6fund. ° said fund on the first day of February in each year, the one-
half of the compensation for services hereinbefore named,
rendered for the Government by said Central Pacific Pail-
road Company, not applied in liquidation of interest; and,
in addition thereto, the said company shall, on said day in
each year, pay into the Treasury, to the credit of said
sinking-fund, the sum of one million two hundred thousand
dollars, or so much thereof as shall be necessary to make
the live per centum of the net earnings of said road pay¬
able to the United States under said act of eighteen hun¬
dred and sixty-two, and the whole sum earned by it as
compensation for services rendered for the United States,
together with the sum by this section required to be paid,
amount in the aggregate to twenty-five per centum of the
whole net earnings of said railroad company, ascertained
and defined as hereinbefore provided, for the year ending
on the thirty-first day of December next preceding. That
there shall be carried to the credit of the said fund, on the
first day of February in each year, the one half of the com¬
pensation for services hereinbefore named, rendered for the
Government by said Union Pacific Railroad Company, not
applied in liquidation of interest; and, in addition thereto,
the said company shall, on said day in each year, pay into
the Treasury, to the credit of said sinking fund, the sum
of eight hundred and fifty-thousand dollars, or so much
thereof as shall be necessary to make the five per centum
of the net earnings of its said road payable to the United
States under said act of eighteen hundred and sixty-two.
and the whole sum earned by it as compensation for serv¬
ices rendered for the United States, together with the sum
by this section required to be paid, amount in the aggre¬
gate to twenty-five per centum of the whole net earnings of
said railroad company, ascertained and defined as herein¬
before provided, for the year ending on the thirty-first day
of December next preceding.
Sec. 5. That whenever it shall be made satisfactorily to
appear to the Secretary of the Treasury, by either of said
companies, that seventy-five per centum of its net earnings
MAY 7, 1878.
45
as hereinbefore defined, for any current year are or were
insufficient to pay the interest for such year upon tlie obli¬
gation of such company, in respect of which obligations
there may exist a lien paramount to that of the United
States, and that such interest has been paid out of such
net earnings, said Secretary is hereby authorized, and it is
made his duty, to remit for such current year so much of
the twenty-five per centum of net earnings required to
be paid into the sinking-fund, as aforesaid, as may have
been thus applied and used in the payment of interest as
aforesaid.
Sec. G. That no dividend shall be voted, made, or paid u^teiiThenr°'
for or to any stockholder or stockholders in either of said
companies respectively at any time when the said company
shall be in default in respect of the payment either of the
sums required as aforesaid to be paid into said sinking-
fund, or in respect of the payment of the said five per
centum of the net earnings, or in respect of interest upon
any debt the lien of which, or of the debt on which it may
accrue, is paramount to that of the United States; and
any officer or person who shall vote, declare, make, or pay,
and any stockholder of any of said companies who shall
receive any such dividend contrary to the provisions of this
act, shall be liable to the United States for the amount
thereof, which, when recovered, shall be paid into said
sinking-fund. And every such officer, person, or stock- Penalties,
holder who shall knowingly vote, declare, make, or pay
any such dividend, contrary to the provisions of this act,
shall be deemed guilty of a misdemeanor, and, on convic¬
tion thereof, shall be punished by a fine not exceeding ten
thousand dollars, and by imprisonment not exceeding one
year.
Sec. 7. That the said sinking-fund so established and
accum[ul]ated shall at the maturity of such bonds so respect¬
ively issued by the United States, be applied to the i>ay-
rnent and satisfaction thereof, according to the interest and
proportion of each of said companies in said fund, and of
all interest paid by the United States thereon, and not
reimbursed, subject to the provisions of the next section.
Sec. s. That said sinking-fund so established and accu- Application of
mulated shall, according to the interest and proportion 0f sinkinsfund-
said companies respectively therein, be held for the protec¬
tion, security, and benefit of the lawful and just holders of
any mortgage or lien debts of such companies respectively,
lawfully paramount to the rights of the United States, and
for the claims of other creditors, if any, lawfully chargeable
upon the funds so required to be paid into said sinking-
fund, according to their respective lawful priorities, as well
as for the United States, according to the principles of
equity, to the end that all persons having any claim upon
said sinking-fund may be entitled thereto in due order; but
the provisions of this section shall not operate or be held
to impair any existing legal right, except in the manner in
this act provided, of any mortgage, lien, or other creditor
of any of said companies respectively, nor to excuse any of
said companies respectively from the duty of discharging,
46
MAY 7, 1878.
out of other funds, its debts to any creditor except the
United States.
iiennoneaii6t?»e>s ®EC* 9- That all sums due to the United State* from any
ertv of tiiePraiPi" of said companies respectively, whether payable presently
road companies. or J10tj au(j aq gums required to be paid to the United States
or into the Treasury, or into said sinking-fund under this
act or under the acts hereinbefore referred to, or otherwise,
are hereby declared to be a lien upon all the property,
estate, rights and franchises of every description granted
or conveyed by the United States to any of said compa¬
nies respectively or jointly, and also upon all the estate and
property, real, personal, and mixed, assets, and income of
the said several railroad companies respectively, from what¬
ever source derived, subject to any lawfully prior and
paramount mortgage lien, or claim thereon. But this
section shall not be construed to prevent said companies
respectively from using and disposing of any of their prop¬
erty or assets in the ordinary, proper, and lawful course
of their current business, in good faith and for valuable
consideration.
Proceedings gEc. lb. That it is hereby made the duty of the Attorney-
pani?s!the c°m General of the United States to enforce, by proper proceed¬
ings against the several railroad companies respectively or
jointly, or against either of them, and others, all the rights
of the United States under this act and under the acts
hereinbefore mentioned, and under any other act of Con¬
gress or right of the United States; and in any suit or pro¬
ceedings already commenced, or that may be hereafter
commenced, against any of said companies, either alone or
with other parties, in.respect of matters arising under this
act, or under the acts or rights hereinbefore mentioned or
referred to, it shall be the duty of the court to determine
the very right of the matter without regard to matters of
form, joinder of parties, multifariousness, or other matters
not affecting the substantial rights and duties arising out
of the matters and acts hereinbefore stated and referred to.
Sec. 11. That if either of said railroad companies shall
fail to perform all and singular the requirements of this act
and of the acts hereinbefore mentioned, and of any other
act relating to said company, to be by it performed, for the
period of six months next after such performance may be
Forfeiture. <]ue? such failure shall operate as a forfeiture of all the
rights, privileges, grants, and franchises derived or obtained
by it from the United States; and it shall be the duty of
the Attorney-General to cause such forfeiture to be judi¬
cially enforced.
Eight of con Sec. 111. That nothing in this act shall be construed or
Sfend!0 further taken in any wise to affect or impair the right of Congress
at any time hereafter further to alter, amend, or repeal the
said acts hereinbefore mentioned; and this act shall be
subject to alteration, amendment, or repeal, as in the opin¬
ion of Congress, justice or the public welfare may require.
And nothing herein contained shall be held to deny, ex¬
clude, or impair any right or remedy in the premises now
existing in favor of the United States.
Sec. 13. That each and every of the provisions in this
JUNE 19, 1878.
47
act contained shall severally and respectively be deemed,
taken, and held as in alteration and amendment of said act
of eighteen hundred and sixty-two and of said act of eight¬
een hundred and sixty-four respectively, and of both said
acts.
ACT OF JUNE 19, 1878.
AN ACT to create an Auditor of Railroad Accounts, and for other 20 Stat., 169.
purposes.*
Be it enacted by the Senate and Mouse of Representatives of
the United States of America in Congress assembled, That ^Repeal of prior
section 20 of the act entitled "An act to aid in the con- aws'
struction of a railroad and telegraph line from the Missouri
River to the Pacific Ocean, and to secure to the Govern¬
ment the use of the same for postal, military, and other
purposes," approved July first, anno Domini eighteen hun¬
dred and sixty-two, and the act entitled "An act relative
to filing reports of railroad companies" approved June
twenty-fifth, anno Domini eighteen hundred and sixty-
eight, be, and the same are hereby repealed.
Sec. 2. That the otfice of Auditor of Railroad Accounts of0brga^ation
is hereby established as a bureau of the Interior Depart-0 ureau'
ment. The said Auditor shall be appointed by the Presi¬
dent of the United States, by and with the advice and
consent of the Senate. The annual salary of the said
Auditor shall be, and is hereby, fixed at the sum of five
thousand dollars. To assist the said Auditor to perform
the duties of said office, the Secretary of the Interior shall
appoint one book-keeper at an annual salary of two thou¬
sand four hundred dollars, one assistant bookkeeper at an
annual salary of two thousand dollars, one clerk at an
annual salary of one thousand four hundred dollars, and
one copyist at an annual salary of nine hundred dollars.
Actual and necessary traveling and other expenses incurred
in visiting tbe offices of the railroad companies hereinafter
described, and for which vouchers shall be rendered, are
hereby allowed, not to exceed the sum of two thousand
dollars per annum; and it is hereby specially provided that
each of said railroad companies shall furnish transporta¬
tion over its own road, without expense to the United
States, for the said Auditor, or any person acting under
his direction. Incidental expenses for books, stationery,
and other material necessary for the use of said bureaus
are hereby allowed, not to exceed the sum of seven hun¬
dred dollars per annum. And the sum of twelve thousand
dollars is hereby appropriated for the uses and purposes
of this act for the fiscal year ending June thirtieth,' anno
Domini, eighteen hundred and seventy-nine.
Sec. 3. That the duties of the said Auditor under and Duties of Au-
subject to the direction of the Secretary of the Interior ditor'
shall be, to prescribe a system of reports to be rendered to
* Title changed to Commissioner of Railroads. Act March 3, 1881
(21 Stat., 109).
48
JUNE 19, 1878.
Him by the railroad companies whose roads are in whole or
in part west, north, or south of the Missouri ltiver, and to
which the United States have granted any loan or credit
or subsidy in bonds or lands; to examine the books and
accounts of each of said railroad companies once in each
fiscal year, and at such other times as may be deemed by
hii)i necessary to determine the correctness of any report
received from them; to assist the Government directors of
any of said railway companies in all matters which come
under their cognizance whenever they may officially request
such assistance; to see that the laws relating to said com¬
panies are enforced; to furnish such information to the
several departments of the Government in regard to tariffs
for freight and passengers and in regard to the accounts of
said railroad companies as maybe by them required, or, in
the absence of any request therefor, as he may deem expe¬
dient for the interest of the Government; and to make an
annual report to the Secretary of the Interior, on the first
day of ^November, on the condition of each of said railroad
companies, their road, accounts, and affairs, for the fiscal
year ending June thirtieth immediately preceding.
Railroad com- Se<\ 4. That each and every railroad company aforesaid
pamestorej)"!', which has received from the United States any bonds of
the said United States, issued by way of loan to aid in con¬
structing or furnishing its road, or which has received
from the United States any lands, granted to it for a simi¬
lar purpose, shall make to the said Auditor any and all
such reports as he may require from time to time and shall
submit its books and records to the inspection of said
Auditor or any person acting in his place and stead, at any
time that the said Auditor may request, in the office where
said books and records are usually kept; and the said
Auditor, or his authorized representative, shall make such
transcripts from the said books and records as he may
desire.
r<>naity for Sec. That if any railroad company aforesaid shall
fasai.ect °r re neglect or refuse to make such reports as may be called
for, or refuse to submit its books and records to inspection,
as provided in section four of this act, such neglect or
refusal shall operate as a forfeiture, in each case of such
neglect or refusal, of a sum not less than one thousand nor
more than five thousand dollars, to be recovered by the
Attorney-General of the United States, in the name and
for the use and benefit of the United States; and it shall
be the duty of the Secretary of the Interior, in all such
cases of neglect or refusal as aforesaid, to inform the
Attorney-General of the facts, to the end that such forfeit¬
ure or forfeitures may be judicially enforced.
^Application of SEC.fi. Tli is act shall apply to any and all persons or
corporations into whose hands either of said railroads may
lawfully come, as well as to the original companies.
Date of effect. Sec. 7. This act shall take effect on and after the first
day of July, anno Domini eighteen hundred and seventy-
eight.
MARCH 3, 1879. MARCH 1, 1881.
49
ACT OF MARCH 3, 1879.
AN ACT making appropriations to supply deficiencies in the appro- 20 Stat., 420.
priations for the fiscal year ending June thirtieth, eighteen hundred
and seventy-nine, and for prior years, and for those heretofore
treated as permanent, and for other purposes.
#•**** #
POST-OFFICE DEPARTMENT.
# # # # # *
That for the proper adjustments of the accounts of the Settlement of
-A. x~ «/ ncroiiTirQ (it i" o
Union Pacific, Central Pacific, Kansas Pacific, Western dfic Railways.
Pacific, and Sioux City and Pacific Eailroad Companies,
respectively, for services which have been or may hereafter
be performed for the Government for transportation of the
Army and transportation of the mails, the Secretary of the
Treasury is hereby authorized to make such entries upon
the books of the Department as will carry to the credit of
said companies the amount so earned or to be earned by
them during each fiscal year and withheld under the pro¬
visions of section fifty-two hundred and sixty of the Revised
Statutes and of the act of Congress approved May seventh,
eighteen hundred and seventy-eight: Provided, That this
shall not authorize the expenditure of any money from the
Treasury nor change the method now provided by law for
the auditing of such claims against the Government: Pro¬
vided further, That this paragraph shall not be so construed
as to be a disposition of any moneys due to or to become
due to or from said companies respectively, or to, in any
way, aflect their rights or duties or the rights of the United No°Vchauge of
States, under existing laws, it being only intended hereby rights, &c.
to enable the proper accounting officers to state on the
books of the Treasury the accounts between the Govern¬
ment and said companies respectively.
.f
ACT OF MARCH 1, 1881.
AN ACT making .appropriations for the service of the Post-Office 21 Stat.,375.
Department for the fiscal year ending June 30, 1882, and for other
purposes.
» # # * * * *
For railway post-office car service, one million four hun- Railway post-
dred and twenty-six thousand dollars. And hereafter°®teenca®J'vs®^1^
when any railroad company fail or refuse to provide rail- providing rail-
way post-office cars when required by the Post-OfficeP°stoffico
Department, or shall fail or refuse to provide suitable
safety-heaters and safety-lamps therefor, with such num¬
ber of saws aud axes to each car for use in case of accident
as may be required by the Post-Office Department, said
company shall have its pay reduced ten per centum on the
the rates fixed in section four thousand and two of the 40()I> 187g
Revised Statutes, as amended by act of July twelfth, eight- Ch. i79; i9Stat.|
een hundred and seventy-six, entitled "An act making78'
4 PAC
50
MARCH 3, 1881. JUNE 30, 1882.
appropriations for the service of the Post-Office Depart¬
ment for the fiscal year ending June thirtieth, eighteen
hundred and seventy-seven, and for other purposes," and
as further amended by the act of June seventeen, eighteen
hundred and seventy-eight, entitled "An act making ap¬
propriations for the service of the Post-Office Department
for the fiscal year ending June thirtieth, eighteen hundred
and seventy-nine, and for other purposes."
ACT OP MARCH 3, 1881.
21 Stat., 409. AN ACT making appropriations for tlie legislative, executive, and
judicial expenses of the Government for the iiscal year ending June
30,1882, and lor other purposes.
# * # # # # tf
Office of Auditor of Railroad Accounts.—For
Auditor, who shall hereafter be styled Commissioner of
Railroads, four thousand five hundred dollars, &c.
■*##*•# # #
ACT OF JUNE 30, 1882.
22 Stat., 120. AN ACT making appropriations for the support of the Army for the
fiscal year ending June 30, 1883, and for other purposes.
iamiay™ tntraii° ^or the payment for Army transportation lawfully due
roads^for trans- such land-grant railroads as have not received aid in Gov-
portation. eminent bonds, to be adjusted by the proper accounting
officers in accordance with the decisions of the Supreme
Court in cases decided under such land-grant acts, but in
no casfe shall more than fifty per centum of the full amount
of the service be paid, one hundred and twenty-five thou¬
sand dollars: Provided, That such compensatiom shall be
computed upon the basis of the tariff rates for like trans¬
portation performed for the public at large, and shall be
accepted as in full for all demands for said services: And
•provided further, That any such land-grant roads as shall
file with the Secretary of the Treasury their written accept¬
ance of this provision shall hereafter be paid for like serv¬
ice as herein provided; and all accounts of such railroads
for services heretofore rendered shall be audited and paid
as herein provided upon application of such roads and
their acceptance of such sum in full of all claims for such
services; and all laws inconsistent herewith are hereby
repealed.
MARCH 3, 1887.
51
ACT OF MARCH 3, 1887.
AN ACT authorizing an investigation of the hooks, accounts, and 24 Stats. 488.
methods of railroads which have received aid from the United States,
and for other purposes.
Be it enacted by the Senate and House of Representatives . Commission to
of the United States of America in Congress assembled, That books,8 *£tc* Vt
the President of the United States, be, and he is hereby, certain railroads.
,x • , . , ,, . i " 1 Compensation,
authorized to appoint three commissioners, whose compen-eto.
sation shall be seven hundred and fifty dollars per month to
each, and the necessary traveling expenses and board bills,
for which proper vouchers shall be returned, to be approved
by the Secretary of the Interior: and said commission may
appoint a stenographer, if necessary, and fix his compensa¬
tion; and the persons appointed on the said commission
shall have power to examine all books, papers, and methods
of the companies hereinafter named, employ experts if
necessary; and they shall at all times be under the imme¬
diate direction and control of the President of the United
States, and may at any time be removed by him in his dis¬
cretion. The term of office of said commissioners shall not Tt,rm of office-
extend beyond the beginning of the next session of the
Senate.
If the Senate shall be convened after the fourth day of
March, eighteen hundred and eighty-seven and before the
first of December in said year and the duties of the said
commissioners shall not then be completed, the President
shall by and with the advice and consent of the Senate
appoint three commissioners who shall perform and com¬
plete the duties prescribed in this act within the time
therein specified.
Sec. 2. That the duty of said commission shall be to tigation.0 mve3
examine into the working arid financial management of all
of the railroads that have received aid from the Govern¬
ment in bonds; to ascertain whether they have observed
all the obligations imposed upon them by the laws of the
United States under which they received such aid, or which
have been since passed in reference thereto, and complied
with all other obligations to the United States; and whether
their books and accounts are or have been so kept as to
show the net earnings of the aided roads, and what said
books and accounts actually show in regard thereto, and
what have been in fact said net earnings; or whether there
has been a diversion of earnings of aided roads to less
productive branches, through constructive mileage allow¬
ances, or average mileage allowances between aided and
non-aided roads or parts of roads, or otherwise, and also
whether such system of constructive mileage allowances is
fair and usual, and in practical operation has resulted
adversely or otherwise to the aided l'oads and the interest
of the United States; or whether there has been a diver¬
sion of earnings of aided roads to wrongful or improper
purposes, and, if so, to what extent; whether there is a
discrimination of rates in favor of unaided against aided
roads; whether any, and if so, how much, money is due
and owing to the United States on account of mistaken
52
MARCH 3, 1887.
or erroneous accounts, reports, or settlements made by
said roads; whether any traffic or business which could
or should be done on the aided lines of said companies
has been diverted to the lines of any other company or
to non aided lines, and what amounts have been deducted
from the gross earnings of any of said aided railroad com¬
panies, by their general freight and passenger agents or
auditors, by way of rebate, percentage of business done,
constructive mileage, monthly or other payments on any
pooling or rate arrangement, contract, or agreement; and
also to inquire into, ascertain, and report as to the kind,
character, and amount of the assets of said companies, and
what assets of each company are now subject to the lien of
the Government, and the value thereof; and also whether
any dividends have been unlawfully declared by the direct¬
ors or paid to the stockholders of said companies, and, if so,
to what extent, and whether the amount thereof may not
be recovered from the directors unlawfully declaring the
same or persons who have unlawfully received the same;
whether the proceeds of any trust funds or lands loaned,
advanced, or granted have been diverted from their law¬
ful use; whether any new stock or bonds have been issued
or any guarantees or pledges made contrary to or with¬
out authority of law; whether any of the directors, offi¬
cers, or employees of said companies respectively have
beeu or are now directly or indirectly interested, and to
what amount or extent, in any other railroad, steamship,
telegraph, express, mining, construction, or other business
company or corporation, and with which any agreements,
undertakings, or leases have been made or entered into;
what amounts of money or credit have been or are now
loaned by any of said companies to any person or corpora¬
tion ; what amounts of money or credit have been or are
now borrowed by any of said companies, giving names of
lenders and the purposes for which said sums have been or
are now required; what amounts of money or other v .bi¬
llable consideration, such as stocks, bonds, passes, and so
forth, have been expended or paid out by said companies,
whether for lawful or unlawful purposes, but for which suf¬
ficient and detailed vouchers have not been given or filed
with the records of said companies; and, further, to enquire
and report whether said companies, or either of them, or
their officers or agents, have paid any money or other val¬
uable consideration, or done any other act or thing, for the
purpose of influencing legislation; and to investigate and
Consolidation report all the facts relating to an alleged consolidation of
Kansas PaoTtio' Union Pacific Railroad Company, the Kansas Pacific
and Uonver PaiRailway Company, and the Denver Pacific Railway and
Companies!way Telegraph Company into an alleged corporation known as
the Union Pacific Railway Company. Said investigation
shall include the alleged sale of the stock of the Kansas
Pacific Railroad Company to the Union Pacific Railroad
Company, and all the circumstances and particulars per¬
taining to said alleged sale, and whether any of the Pacific
railroad corporations which obtained bonds from the United
States to aid in the construction of their railroads have
MARCH 3, 1887.
53
expended any of their moneys or other assets in the con¬
struction, or to aid in the construction, of other railroads,
or invested of their moneys or other assets in the stocks or
bonds of any manufacturing, mining, and commercial com¬
panies or corporations, or of other railroad corporations;
and if any such expenditures or investments have been
made, the extent and character thereof made by each of
said corporations shall be inquired into, and also the pres¬
ent interest of any of said corporations in the railroads
auxiliary to their respective railroads.
And said commission shall also ascertain and report the holders*0etctoct(I
names of all the stockholders in each of said companies, be reported."' °
from its organization to the date of the investigation herein
provided for, as they appear on the books of said companies
at the date of its annual meeting in each year; the amount
of stock held by each; what consideration, if any, was paid
by each stockholder to said company for his stock, and
when and in what property such payment was made; the
date when each stockholder so appearing on the books
became such; and whether stock is now held or has here¬
tofore been held in the name of any person in trust or for
the benefit of any other, and the names of all such persons;
the total amount of the stock in each company, and the
dates and amount of any increase of such stock, and the
reason for such increase; and the amount of the annual
salaries or compensation that are now or at any prior time
have been paid to any officer or employee of said company,
Avheii such salary or compensation amounts to five thousand
dollars or more per annum, and the names of the persons
now receiving or who have heretofore received such salaries
or compensation, and all bonuses or donations which may
have been given or paid to any such person; and all pay¬
ments made under the head of legal expenses, to whom
made, and the amount paid to each, and for what specific
services such payments were made.
Said commission shall also inquire into and report upon Relations to
the relations of said railroads to the interests of the com- communities,
munities through which they pass; to all questions concern¬
ing the payment of taxes, especially upon lauds granted by
Congress, and the delay of said companies in taking out
patents for such lands; the rates of fare and freight charged,
discriminations, differentials, pools, and other devices, and
the facilities and accommodations furnished to the patrons
of such roads; and their report shall embrace a considera¬
tion of the interests and rights of said communities as
affected by whatever plan of settlement or payment of the
existing debt may be proposed.
Said commissioners shall also consider and report whether obligations of
the interests of the United States require any extension of eovemmentl
the time for performance of the obligations to the United
States of said companies, or any of them, and the facts and
circumstances upon which said opinion is based, including
the security held by the United States for the performance
of such obligations, and the value thereof, and the value of
the property of such companies, and either of them, not
included in such security, and what further security it is
54
MARCH 3, 1887.
expedient that said companies shall be required to give;
and if, in their opinion, such extension shall be required by
the interests of the United States, they shall submit a
scheme for such extension, which shall secure to the United
States full payment of all debts due them from said com¬
panies, with a reasonable rate of interest, in such time as
the commissioners shall propose, having due regard to the
financial ability of said companies and the proper conduct
of their business in such manner as shall afford efficient
service to the public.
Report. And the said commission shall report in full in regard
to all such matters aforesaid, and in regard to any other
matters which may be ascertained or come to their knowl¬
edge in regard to said companies respectively, on or before
December first, eighteen hundred and eighty-seven, to the
President of the United States, who shall forward said
report to Congress, with such recommendations or com¬
ments as he may see fit to make in the premises.
Cost of trans- qqie commissioners shall also ascertain the average cost
portation, eto.
per annum of Government transportation in the region now
traversed by the Pacific railroads between the year eight¬
een hundred and fifty and the completion of said roads, and
also the average cost per annum since such completion,
and what additional facilities have been furnished to the
Government and the people by said roads; also to enquire
what discount the Pacific Railroad and its several branches
were forced to make, in disposing of the bonds guaranteed
by the Government, to obtain the gold coin which was the
currency of the country through which the greater part of
said roads pass; also to ascertain the comparative cost of
construction of said roads as compared with what they
would have cost with the prices of labor and commodities
Relations to the prevailing five years preceding or five years subsequent to
GoTemment. the completion of said roads; also to enquire whether or
not the Pacific Railroad was completed in less time than
was allowed by law, and, if so, how much less time, and if
the United States was benefitted thereby; also to enquire
if either of the Pacific railroad companies have been embar¬
rassed and their earning capacity impaired by antagonistic
local or State legislation; alsotoenquireif the United States,
since the Union and Central Pacific Railroad Companies
accepted the terms proposed by Congress for the construc¬
tion of the Pacific Railroad, has granted aid in lands for
building competing parallel railroads to said Pacific rail¬
roads, and, if so, how many such roads, and to what extent
such competing lines have impaired the earning capacity
of the Pacific railroads; also to enquire if the United States
have contracts with branch roads controlled by either of
said Pacific roads for carrying United States mails, and, if
so, what service has been performed by them, and what
money, if any, has been paid for such service, and what
remains due and unpaid,and if the United States by failing
to pay for such mail services has embarrassed said railroad
companies, or either of them, in paying their indebtedness
to the United States; also to enquire if the several Pacific
railroad companies have complied with the provisions of
MARCH 3, 1887.
55
12 Stat., 489.
13 Stat., 356,
"Aii act to alter and amend the act entitled 'An act to aid
in the construction of a railroad and telegraph line from
the Missouri River to the Pacific Ocean, and to secure to
the Government the use of the same for postal, military,
and other purposes,' approved July first, eighteen hundred
and sixty-two, and also to alter and amend the act of Congress 20 stat.',' i<T
approved July second, eighteen hundred and sixty-four, in
amendment of said first-named act," commonly known as
the Thurman act, and, if not, in what particulars they have
failed to comply; also to enquire what sums the Pacific
railroads and their branches can severally pay annually on
account of their indebtedness to the United States without
imposing such burdens upon the people, and particularly
upon the localities through which the roads pass, as to
retard the development of the country.
That the commissioners hereby created, or either of them, rower to send
shall have power to require the attendance and testimony p°apepr^sonfS nnd
of witnesses and the production of all books, papers, con¬
tracts, agreements, and documents relating to the matter
under investigation, and to administer oaths; aud to that
end may invoke the aid of any court of the United States
in requiring the attendance and testimony of witnesses and
the production of books, papers, and documents under the
provisions of this section. Any of the circuit or district united states
courts of the United States within the jurisdiction of which conwmacy.uni8h
such inquiry is carried on may, in case of contumacy or
refusal to obey a subpoena issued to any person, issue an
order requiring any such person to appear before said com¬
missioners, or either of them, as the case may be, and pro¬
duce books aud papers if so ordered, and give evidence
touching the matter in question; and any failure to obey
such order of the court may be punished by such court as
a contempt thereof.
The claim that any such testimony or evidence may tend Evidence,
to criminate the person giving such evidence, shall not
excuse such witness from testifying; but such evidence or
testimony shall not be used against such person on the
trial of any criminal proceeding.
Sec. 3. That the sum of one hundred thousand dollars, Appropriation,
or so much thereof as may be necessary, is hereby appro¬
priated, out of any money in the Treasury of the United
States not otherwise appropriated, for the purposes of this
investigation.
Sec. 4. That whenever, in the opinion of the President, °f
it shall be deemed necessary to the protection of the inter- prioreiiens%to?°
ests and the preservation of the security of the United
States in respect of its lien, mortgage, or other interest in
any of the property of any or all of the several companies
upon which a lien, mortgage, or other incumbrance para¬
mount to the right, title, or interest of the United States
for the same property, or any part of the same, may exist
and be then lawfully liable to be enforced, the Secretary
of the Treasury shall, under the direction of the President,
r.edeem or otherwise clear off such paramount lien, mort¬
gage, or other incumbrance by paying the sums lawfully
due in respect thereof out of the Treasury; and the United
56
AUGUST 7, 1888.
States shall thereupon become and be subrogated to all
rights and securities theretofore pertaining to the debt,
mortgage, lien, or other incumbrance in respect of which
Proceeding to such payment shall have been made. It shall be the duty
protect "the of the Attorney-General, under the direction of the Presi
Um'ud suues.dent, to take all such steps and proceedings, in the courts
and otherwise, as shall be needful to redeem such lien,
mortgage, or other incumbrance, and to protect and defend
the rights and interests of the United States in respect of
the matters in this section mentioned, and to take steps
to foreclose any mortgages or liens of the United States
on any such railroad property,
investment of Sec. fi. That the sinking-funds which are or may be held
sinking funds. ju ^jie Treasury for the security of the indebtedness of
either or all of said railroad companies may, in addition to
the investments now authorized bylaw, be invested in any
bonds of the United States heretofore issued for the benefit
of either or all of said companies, or in any of the first-
mortgage bonds of either of said companies which have
been issued under the authority of any law of the United
States and secured by mortgages of their roads and fran¬
chises, which by any law of the United States have been
made prior and paramount to the mortgage, lien, or other
security of the United States in respect of its advances to
t either of said companies as provided by law.
Approved, March 3, 18S7.
ACT OF FEBRUARY 1, 1888.
The deficiency appropriation act of February 1, 1888,
appropriates $8."),390.24, in addition to $44,800.74 appro¬
priated August 4, 1880, the two sums to be in full satisfac¬
tion of a judgment of the Court of Claims in favor of the
Pacific Pailroad, reported in House Executive Document
29, Fiftieth Congress, first session. (23 Statutes 24.)
ACT OF AUGUST 7, 1888.
25 Stats., 382. AN ACT supplementary to the act of July first, eighteen hundred and
sixty-two, entitled " An act to aid in the construction of a railroad
and telegraph line from the Missouri Kiver to the Pacific Ocean, and
to secure to the Government the use of the same for postal, mili¬
tary, and other purposes," and also of the act of July second, eight¬
een hundred and sixty-four, and other acts amendatory of said first -
named act.
Be it enacted by the Senate and House of Representatives of
rafiroad'com^'e ^ States of America in Congress assembled, That all
ntes to maintain railroad and telegraph companies to which the United
States has granted any subsidy in lands or bonds or loan
13 stat.,' 356.' of credit for the construction of either railroad or telegraph
lines, which, by the acts incorporating them, or by any act
amendatory or supplementary thereto, are required to con¬
struct, maintain, or operate telegraph lines, and all com
AUGUST 7, 1K88.
57
panies engaged in operating said railroad or telegraph lines
shall forthwith aud henceforward, by and through their
own respective corporate officers aud employees, maintain,
and operate, for railroad, Governmental, commercial, and
all other purposes, telegraph lines, and exercise by them¬
selves alone all the telegraph franchises conferred upon
them and obligations assumed by them under the acts mak¬
ing the grants as aforesaid.
Sec. 2. That whenever any telegraph company which^^"oVo^i'ven
shall have accepted tlic provisions of title sixty-five of the tJTcon netting
llevised Statutes shall extend its line to any station or office ]in^s,Si Title
of a telegraph line belonging to any one of said railroad or lxv, r- iui»-
telegraph companies, referred to in the first section of this
act, said telegraph company so extending its line shall have
the right and said railroad or telegraph company shall
allow the line of said telegraph company so extending its
line to connect with the telegraph line of said railroad or
telegraph company to which it is extended at the place
where their lines may meet, for the prompt and convenient
interchange of telegraph business between said companies;
and such railroad and telegraph companies, referred to in
the first section of this act, shall so operate their respective
telegraph lines as to afford equal facilities to all, without
discrimination in favor of or against any person, company,
or corporation whatever, and shall receive, deliver, and
exchange business with connecting telegraph lines on equal
terms, and affording equal facilities, and without discrimi¬
nation for or against any one of such connecting lines; and
such exchange of business shall be on terms just and
equitable.
Sec. 3. That if any such railroad or telegraph company , interstate
referred to in the first section of this act, or company oper- m'Xm'to c'om-
ating such railroad or telegraph line shall refuse or fail, in p«i compliance,
whole or in part, to maintain, and operate a telegraph line
as provided in this act and acts to which this is supple¬
mentary, for the use of the Government or the public, for
commercial and other purposes, without discrimination, or
shall refuse or fail to make or continue such arrangements
for the interchange of business with any connecting tele¬
graph company, then any person, company, corporation, or
connecting telegraph company may apply for relief to the
Interstate Commerce Commission, whose duty it shall there¬
upon be, under such rules and regulations as said Commis¬
sion may prescribe, to ascertain the facts, and determine
and order what arrangement is proper to be made in the
particular case, and the railroad or telegraph company con¬
cerned shall abide by and perform such order; and it shall
be the duty of the Interstate Commerce Commission, when
such determination and order are made, to notify the par¬
ties concerned, and, if necessary, enforce the same by writ
of mandamus in the courts of the United States, in the
name of the United States, at the relation of either of said
Interstate Commerce Commissioners: Provided, That the /v0o;<0
said Commissioners may institute any inquiry, upon their inveat.
own motion, in the same manner and to the same effect astions- ' lga"
though complaint had been made.
58
AUGUST 7, 1S88.
Attomey-Gon- Sec. I. That in order to secure and preserve to the United,
fnterfereneowith States the full value and benefit of its liens upon all the
mentS0t <^°vcrn telegraph lines required to be constructed by and lawfully
belonging to said railroad and telegraph companies referred
to in the first section of this act, and to have the same
possessed, used, and operated in conformity with the i>ro-
visions of this act and of the several acts to which this act
is supplementary, it is hereby made the duty of the Attor¬
ney-General of the United States, by proper proceedings,
to prevent any unlawful interference with the rights and
equities of the United States under this act, and under the
acts hereinbefore mentioned, and under all acts of Congress
relating to such railroads and telegraph lines, and to have
legally ascertained and finally adjudicated all alleged rights
of all persons and corporations whatever claiming in any
manner any control or interest of any kind in any tele¬
graph lines or property, or exclusive rights of way upon
tlie lands of said railroad companies, or any of them, and
to have all contracts and provisions of contracts set aside
and annulled which have been unlawfully and beyond their
powers entered into by said railroad or telegraph com¬
panies, or any of them, with any other person, company,
or corporation.
Punishment Sec. 5. That any officer or agent of said railroad or tele-
tot* ruinsin!T to *-7
obey law, etc. graph companies, or of any company operating the railroads
and telegraph lines of said companies, who shall refuse or
fail to operate the telegraph lines of said railroad or tele¬
graph companies under his control, or which he is engaged
in operating, in the manner directed in this act and by the
acts to which it is supplementary, or who shall refuse or
fail, in such operation and use, to afford and secure to the
Government and the public equal facilities, or to secure to
each of said connecting telegraph lines equal advantages
and facilities in the interchange of business, as herein pro¬
vided for, without any discrimination whatever for or
adverse to the telegraph line of any or either of said con¬
necting companies, or shall refuse to abide by, or perform
and carry out within a reasonable time the order or orders
of the Interstate Commerce Commission, shall in every
such case of refusal or failure be guilty of a misdemeanor,
and, 011 conviction thereof, shall in every such case be fined
in a sum not exceeding one thousand dollars, and may be
imprisoned not less than six months; and in every such
Actions forcase of refusal or failure the party aggrieved may not only
cause the officer or agent guilty thereof to be prosecuted
under the provisions of this section, but may also bring an
action for the damages sustained thereby against the com¬
pany whose officer or agent may be guilty thereof, in the
circuit or district court of the United States in any State
or Territory in which any portion of the road or telegraph
line of said company may be situated; and in case of suit
Process. process may be served upon any agent of the company
found in such State or Territory, and such service shall be
held by the court good and sufficient.
AUGUST 7, 1888.
59
Sec. 6. That it shall be the duty of each and every one toc2e * mod8' wi til
of the aforesaid railroad and telegraph companies, within Interstate Cora-
sixty days from and after the passage of this act, to Ale™®™6 Commi9"
witli the Interstate Commerce Commission copies of all
contracts and agreements of every description existing
between it and every other person or corporation whatso¬
ever in reference to the ownership, possession, maintenance,
control, use, or operation of any telegraph lines, or property
over or upon its rights of way, and also a report describ¬
ing with sufficient certainty the telegraph lines and prop¬
erty belonging to it, and the manner in which the same are
being then used and operated by it, and the telegraph lines
and property upon its right of way in which any other
person or corporation claims to have a title or interest, and
setting forth the grounds of such claim, and the manner in
which the same are being then used and operated; and it
shall be the duty of each and every one of said railroad
and telegraph companies annually hereafter to report to
the Interstate Commerce Commission, with reasonable full- Reports,
ness and certainty, the nature, extent, value, and condi¬
tion of the telegraph lines and property then belonging to
it, the gross earnings, and all expenses of maintenance,
use, and operation thereof, and its relation and business
with all connecting telegraph companies during the pre¬
ceding year, at such time and in such manner as may be
required by a system of reports which said commission
shall prescribe; and if any of said railroad or telegraph
companies shall refuse or fail to make such reports or any fanurealty for
report as may be called for by said Commission, or refuse
to submit its books and records for inspection, such neglect
or refusal shall operate as a forfeiture, in each case of such
neglect or refusal, of a sum not less than one thousand
dollars nor more than five thousand dollars, to be recovered
by the Attorney-General of the United States, in the name
and for the use and benefit of the United States; and it
shall be the duty of the Interstate Commerce Commission
to inform the Attorney-General of all such cases of neglect
or refusal, whose duty it shall be to proceed at once to
judicially enforce the forfeitures hereinbefore provided.
Sec. 7. That nothing in this act shall be construed to ^Amendment,
affect or impair the right of Congress, at any time hereafter,
to alter, amend, or repeal the said acts hereinbefore men¬
tioned; and this act shall be subject to alteration, amend¬
ment, or repeal as, in the opinion of Congress, justice or
the public welfare may require; and nothing herein con¬
tained shall be held to deny, exclude, or impair any right
or remedy in the premises now existing in the United
States, or any authority that the Postmaster-General now
has under title sixty-five of the Revised Statutes to flxTxv s"ioTuitl0
rates, or, of the Government, to purchase lines as provided " 'p'
under said title, or to have its messages given precedence
in transmission.
60
AUGUST 13, 1888.
ACT OF AUGUST 13, 1888.
25 Stats., 439. AN ACT to protect purchasers of lauds lying in the vicinity of Den¬
ver, Colorado, heretofore withdrawn by the Executive Department
of the Government as lying within the limits of certain railroad
grants, and afterward held to lie without such limits.
die it enacted by the S"nate (tnd House of Representatives
PurihasersS'( t°f United States of Americd in Conyress assembled, That
ian(DCfromrrail-as to all lands lying in the vicinity of Denver, iu the State
ver'ma^enterTt Colorado, heretofore withdrawn by the Executive De-
Uomesfead rates, partmeut of the Government for the use or benefit of the
Union Pacific Pailway Company, eastern division, and the
Denver Pacific Pailway and Telegraph Company, or their
or either of their successors, under the construction here¬
tofore, placed by the Executive Department of the Gov-
Voi. is, i>. 324. ernment upon the act of Congress entitled "An act to
authorize the transfer of lands granted to the Union Pacific
Pailway Company, eastern division, between Denver and
the point of its connection with the Union Pacific Railroad,
to the Denver Pacific Railway and Telegraph Company,
and to expedite the completion of railroads to Denver, in
the Territory of Colorado," approved March third, eighteen
hundred and sixty-nine, construing the grant in said act
mentioned to be one continuous grant west of Port Riley,
in Kansas, through Denver, Colorado, to Cheyenne, Wyo¬
ming Territory, and which lands have been sold by said
companies, or either of them, or their or either of their suc¬
cessors prior to December ninth, eighteen hundred and
eighty-seven, to citizens of the United (States, or to persons
who have declared their intention to become such citizens,
the holder of the title under such purchase from the railroad
company, unless he be a director or other officer of the Union
Pacific Railway Company, may, upon making proof of such
purchase at the proper land office, and the further proof of
the time of his or, if he claim by inheritance, his ancestor's
purchase, that he or his ancestor relied in good faith upon
the validity of the title of such railroad companies, and that
such purchase was made for a valuable consideration, enter
and pay for said lands at the ordinary Government price
for like lands, and patents shall issue therefor to the holder
of such title and inure to the benefit of the original pur-
ProvisoK. chaser and all claiming under him: Provided, That nothing
ailtsdver8eclami herein shall be held to dispossess or determine the rights
of parties who may hold adversely to each other under pur¬
chase from the railroad company: And provided further,
Mortgage. That a mortgage or pledge to secure the payment of money
shall not be considered a purchase under the provisions of
this act.
ACT OF OCTOBER 19, 1888.
The act of October 19, 1888, for the disposal of Fort
Wallace Military reservation in Kansas, excludes front the
operation of the act the right of way theretofore granted
JULY 16, 1892.—JULY 28, 1892. 61
to the Union Pacific Railroad Company, and gives said
company certain preference rights to purchase lands of the
reservation occupied by them. (25 Statutes, 012.)
ACT OF JULY 16, 1892.
The army appropriation act of July 16,1892, has the fol¬
lowing provisio to the section for army transportation:
Provided farther, That no money herein appropriated Transportation
shall be used in payment of the transportation of troops oHroop3'
and supplies of the Army over any of the non-bonded
lines owned by the Union Pacific Railroad Company or by
the Central Pacific Railroad Company, but this provision
shall not withhold payment from lines leased and operated
but not owned by said companies. (27 Statutes, 180.)
ACT OF JULY 28, 1892.
The deficiency appropriation act of July 28,1892, has the
following provision (27 Statutes, 287):
Payment to the Pacific Railroads: The Secretary raciflo rail-
of the Treasury is hereby authorized and directed to cause r°cS1afimsf01.serv.
a careful examination to be made of the claims heretofore ices to be exam-
reported to Congress for services performed for the Gov- oTrrJa3urrytary
ernment by the several Pacific railroads, their branches
and leased lines, as set forth and described in House Exec¬
utive Documents numbered seventy-one and one hundred
and twenty-two, and Senate Executive Documents Num¬
bered one hundred and thirty-two and One hundred and
thirty-five, Fiftieth Congress, second session; House Exec¬
utive Documents Numbered One hundred and forty-four,
One hundred and seventy four, and Three hundred and
ninety-four, and Senate Executive Documents Numbered
Two hundred and ten and Two hundred and eleven, Fifty-
first Congress, first session; House Executive Documents
Numbered One hundred and sixty-seven and One hundred
and seventy-one, Fifty-first Congress, second session; and
House Executive Documents Numbered Ninety-four, One
hundred and ninety-two, One hundred and ninety-nine,
Two hundred and five, Two hundred and sixteen, and Two
hundred and fifty-eight, and Senate Executive Documents
Numbered One hundred and twenty-three and One hundred
and forty, Fifty-second Congress, first session; and shall
ascertain the amounts respectively due, if any, for services
over the aided and non-aided or leased lines of said roads,
and the relation of said roads to their branches and leased
lines respectively, and report the same to Congress at the Report,
beginning of its next session.
MARCH 12, 1894 AUGUST 18, 1894.
ACT OF MARCH 12, 1894.
The urgent deficiency act of March 12,1891, contains the
following:
To enable the Attorney-General to represent and protect
the interests of the United States in matters and suits
affecting the Pacific railroads, and for expenses in connec¬
tion therewith, thirty thousand dollars. (28 Statutes, 42.)
ACT OF AUGUST 18, 1894.
The sundry civil appropriation act of August 18, 1894,
contains the following:
To enable the Attorney-General to represent and protect
the interests of the United States in matters and suits
affecting the Pacific railroads, and for expenses in connec¬
tion therewith, thirty thousand dollars. (28 Statutes, 417.)
DECISIONS
OF THE
SUPREME'COURT OF THE UNITED STATES
RELATIVE TO THE
UNION PACIFIC, CENTRAL PACIFIC, AND WESTERN PACIFIC
RAILROAD COMPANIES.
United States v. Union Pacific Railroad Company.
(91 U.S., 72.)
1. The solution of the question, whether the Union Pacific Railroad Company is
required to pay the interest before the maturity of the principal of the bonds
issued by the United States to the company, depends on the meaning of the
fifth and sixth sections of the original act of 1862 " to aid in the construction
of a railroad and telegraph line from the Missouri River to the Pacific Ocean,
and to secure to the government the use of the same for postal, military, and
other purposes," and of the fifth section of the amendatory act of 1864. Held,
upon consideration of said sections, of the scheme of said original act, and of
the purposes contemplated by it, that it was not the intention of Congress to
require the company to pay the interest before the maturity of the principal of
the bonds.
2. As commonly understood, the word " maturity," in its application to bonds and
other similar instruments, applies to the time fixed for their payment, which is
the termination of the period they have to run.
3. A provision in the charter that the grants thereby made are upon the condition
that the company "shall pay said bonds at maturity," while it implies an obli¬
gation to pay both principal and interest when the bonds shall become due,
does not imply an obligation to pay the interest as it semi-annually accrues.
4. In construing an act of Congress, the court may rScur to the history of the times
when it was passed, in order to ascertain the reason for, as well as the meaning
of, particular provisions in it; butthe views of individual members in debate,
or the motives which induced them to vote for or against its passage, cannot be
considered.
Appeal from the Court of Claims.
Under the authority of the second section of the act of Congress ol
March 3,1873,' the Union Pacific Railroad. Company filed its petition in
1 That the Secretary of the Treasury is directed to withhold all payments to any
railroad company and its assigns, on account of freights or transportation over their
respective roads, of any kind, to the amount of payments made by the United States
for interest upon bonds of the United States issued to any such company, and which
shall not have been reimbursed, together with the five per cent of net earnings due
and unapplied, as provided bylaw; and any such company may bring suit in the
Court of Claims to recover the price of such freight and transportation; and in
such suit the right of such company to recover the same upon the law and the facts
of the case shall be determined, and also the rights of the United States upon the
merits of all the points presented by it in answer thereto by them; and either party
to such suit may appeal to the Snpreme Court; and both said courts shall give such
cause or causes precedence of all other business.
63
64
decisions of the supreme court.
the Court of Claims, alleging that it had rendered services to the gov¬
ernment in the transportation of the mails, troops, supplies, and public
stores of the United States, between the dates of February, 1871, and
February, 1874, both inclusive, and praying for judgment that tbe
United States pay the company one half part of the amount due for
such services, and give credit to the company on account of the bonds
issued by the United States in aid of tbe construction of tbe road to
the amount of tbe remaining half part of said amount.
The United States filed an answer and counterclaim denying tbeir
indebtedness, and alleging that they had issued to the company their
coupon bonds to the amount of $100,000,000, bearing interest at the
rate of six per cent per annum, payable semi-annually, pursuant to
the acts of Congress of July 1, 1802, and July 2, 1804, and paid to tbe
holders of said bonds, at the stated semi-annual periods, tbe interest
due thereon; and that the company, although bound by law to reim¬
burse them for payments so made for such interest, bad never paid
any part thereof; and they prayed judgment against tbe company for
$12,000,000.
The provisions of tbe act of July 1, 1802, and the amendatory act of
July 2, 1804, which bear upon tbe questions at issue, are as follows:—
Act of July 1,1802, 12 Stat., p. 489. " Sect. 5. The Secretary of tbe
Treasury shall, upon the certificate in writing of said commissioners,
. . . issue to said company bonds of the United States of one thousand
dollars each, payable in thirty years after date, bearing six per centum
per annum interest, said interest payable semi-annually, ... to tbe
amount of sixteen of said bonds per mile; . . . and to secure tbe
repayment to the United States, as hereinafter provided, of tbe amount
of said bonds so issued and delivered to said company, together with
all interest thereon which shall have been paid by tbe United States,
the issue of said bonds and delivery to the company shall ipso facto
constitute a first mortgage on the whole line of tbe railroad and tele¬
graph, together with the rolling stock, fixtures, and property of every
kind and description; and, in consideration of which, said bonds may
be issued; and on tbe refusal or failure of said company to redeem said
bonds, or any part of them, when required to do so by the Secretary
of tbe Treasury, in accordance with the provisions of this act, tbe said
road, with all the rights; functions, immunities, and appurtenances
thereto belonging, and also all lands granted to the said company by
the United States which at tbe time of said default shall remain in tbe
ownership of said company, may be taken possession of by the Secre¬
tary of the Treasury for tbe use and benefit of the United States.
"Sect. 0. Tbe grants aforesaid are made upon condition that said
company shall pay said bonds at maturity; . . . and all compensation
for services rendered for the government shall be applied to the pay¬
ment of said bonds and interest until the whole amount is fully paid.
Said company may also pay the United States, wholly or in part, in the
same or other bonds, treasury notes or other evidences of debt against
the United States, to be allowed at par; and after said road is com¬
pleted, until said bonds and interest are paid, at least five per cent of
the net earnings of said road shall also be annually applied to the pay¬
ment thereof."
Act of July 2,1804,13 Stat., p. 350. " Sect. 5. Only one-half of the
compensation for services rendered for the government shall be required
to be applied to the payment of the bonds issued by the government in
aid of the construction of said road."
The Court of Claims found in favor of the company, and adjudged
DECISIONS OF THE SUPREME COURT.
65
that it recover from the United States $512,0312.50, and that the counter¬
claim of the United States be dismissed.
The United States appealed to this court.
Mr. Attorney-General Pierrepont for the appellant.
The primal question is, whether the railroad company is bound to
reimburse the interest as the same falls due, or whether it may post¬
pone the payment thereof (which the government advances half-yearly)
until the maturity of the bonds.
Should the decision on this question be adverse to the appellant, then
the only other question is, whether the government can retain all the
earnings of the company made in the service of the government, or
only half thereof.
In 1862, Walter S. Burgess and his associates obtained a charter
from the United States to build the Union Pacific Railroad, subject to
the conditions, inter alia, that the company shall do t-he government's
transportation at rates not to exceed the amounts paid by private par¬
ties; that all compensation for services rendered for the government
shall be applied to the payment of the bonds and interest; and that
after the road is completed, until the bonds and interest are paid, at
least five per centum of the net earnings shall be annually applied to
the payment thereof.
Two years went by. This corporation then procured the passage of
the act of 1864, which confers large additional donations and privileges.
Sects. 5 and 10 grant an extension of one year for completing the road,
and require that only one-half of the compensation for services rendered
the government shall be applied to the payment of the bonds. They
authorize the company, on the completion of each section of the road
and telegraph line, to issue its bonds to an amount not exceeding the
amount of those issued to it by the United States; and they give to
the mortgage for securing its bonds priority over that of the United
States.
In 1871, Congress required the Secretary of the Treasury to pay over
to the company, in money, one-half of the compensation for services
to the United States theretofore or thereafter rendered; but declared
that this provision should not affect the legal rights of the government
or the obligations of the company, except as therein specially provided.
In 1873, Congress passed the act of March 3.
It is submitted, First, The question before the court is, whether the
United States are entitled to retain the whole value of the service
which they have received from the company, and apply the same
towards payment of the interest advanced from time to time by the
government upon the bonds loaned to the company,—a question not
embarrassed by the acts of 1864 and 1871, as they were repealed by the
act of 1873.
The whole question of the liability of the company to pay the interest
on the government bonds before their maturity is raised by the counter¬
claim set up by the United States, and is before the court.
Second, That the Union Pacific Bailroad Company is a private cor¬
poration has been settled. The Company v. Peniston, 18 Wall. 31.
A grant of privileges and exemptions to a corporation is strictly con¬
strued. Ohio Life & Trust Co. v. Peholt, 16 How. 435; Dubuque &
Pacific P.P. v. Litchfield, 23 id. 88, 89; Opinion of Attorney-General
Black, 9 Opinions of Attorneys-General, 59, 60.
Third, Applying these and other well-settled principles of construc¬
tion to the statutes relating to the company, there is no difficulty in
arriving at their true meaning.
5 PAC
66
DECISIONS OP THE SUPREME COURT.
There is nothing ambiguous about the fifth section of the act of 1802
The government proposed to advance to the company bonds bearing
interest at six per cent, "said interest payable semi-annually;" and, to
secure them according to their terms, the company agreed to give a first
mortgage, and also to give additional security for the interest as well
as the principal. The mortgage was executed when the company
received the bonds.
Fourth, By the act of 1804, the company is required to assume noth¬
ing; but the absolute right to amend or repeal is reserved.
Fifth, The fact that the company, under the act of 1804, issued its
mortgage to secure the same amount of bonds as it was entitled to
receive from the government, and made the interest thereon payable
half-yearly, is conclusive as to the understanding of the company when
it filed its assent to the provisions of the act.
The Attorney- General referred at some length to the consequences to
the government should the decision be against it, and cited the debates
in Congress on the passage of the act of 1862 as furnishing the clearest
proof of the purpose of that body to require the immediate repayment
by the company of the interest advanced by the government.
dir. Sidney Bartlett and dir. F. W, Stoughton for appellee.
The rule, that, where the entire purpose of a charter is to confer
bounties on corporations, the construction of any provision therein
about which there is doubt must be in favor of the government, does
not extend to charters where there are stipulations for services, or
pecuniary returns by the party endowed. Charles River Bridge v.
Warren Bridge, 11 Pet. 420; Ohio L. A T. Co. v. Debolt, 1(5 How. 435;
Dubuque & P. R. Co. v. Litchfield, 23 id. 88. That the charter of the
Union Pacific ltailroad Company contains such stipulations, either by
condition or contract, cannot be controverted.
The only sections having a direct bearing upon the question at issue—
the right of the government to have the immediate reimbursement of
the interest paid by it—are five, six, and seventeen of the act of July 1,
1802, and five of the act of July 2,1804. Under them, we submit, that
while conditions are imposed on the company, a breach of which would
work a forfeiture, there is no assumpsit or covenant, express or implied,
on which, by action at law or set-off, the company can be compelled to
reimburse the principal or interest of the bonds issued to it; but
should we concede that such a covenant or assumpsit could be found
in the charter, then the covenant or assumpsit to pay the interest is to
pay the same as each bond or class of bonds matures, and not- from time
to time, each six months, as it shall have been paid by the government.
Upon an analysis of the charter as to the time at which the interest
was to be reimbursed, it will be seen that the earliest clause is the
mortgage clause set out in the fifth section of the act of 1862. It con¬
tains two provisions, neither of which fixes, in terms, the period at
which either the bonds or the interest thereon is to be reimbursed.
The words are, the " grants aforesaid are made on condition that the
company shall pay said bonds at maturity." Will the court, then,
import into the statute the words " and each semi-annual payment of
interest as it accrues"? Unquestionably not. If such had been the
purpose of Congress, why was it not so stated? One thing would seem
clear from the terms used,—namely, that, whatsoever payment was to
be made, the period of such payment is definitely fixed at the maturity
of the bonds; and, if words are to be interjected so as to include inter¬
est, why should further alterations be made by the insertion of a new
and different period for its payment? These are the only provisions
which apply to the time of payment.
DECISIONS OF THE SUPREME COURT.
67
The clauses as to the mode of payment are found in the sixth section.
Sect. 5 of the act of 1864 provides " that only one-half of the compen¬
sation for services rendered for the government by said companies shall
be required to be applied to the payment of the bonds issued by the govern¬
ment." The act of March 3,1871, sect. 9, and the proviso thereto reserv¬
ing the rights of the government, were designed to leave open for legal
construction thequestion of when and how interest was payable; and the
purpose of the act of 1873 was not to repeal the charter, or any part of
it, since it authorized the suit to be brought by the company against
the United States to recover the price of freight and transportation
due under existing laws. If Congress meant to repeal the provision
for the payment of one-half of the transportation, it would have been
an empty mockery to authorize a suit to recover for that very trans¬
portation. The right of the company to be paid in some form is indis¬
putable; but its right to recover without its being subject to set-off was
the one matter in controversy. The purpose of the act was to remit to
judicial determination the question, whether, upon the true construc¬
tion of the charter, the government was legally bound to pay the com¬
pany for one half the transportation; or whether it might retain that
half, and apply it towards interest on the bonds.
Mr. Justice Davis delivered the opinion of the court.
The Union Paciftc Railroad Company, conceding the right of the
government to retain one-half of the compensation due it for the trans¬
portation of the mails, military and Indian supplies, and apply the
same to reimburse the government for interest paid by it on bonds
issued to the corporation to aid in the construction of its railroad and
telegraph line, seeks to establish by this suit its claim to the other
moiety. The United States, on the other hand, haviug paid interest on
these bonds in excess of the sums credited to the company for services
rendered by it, insist upon their right to withhold payment altogether.
Que of the grounds on which this right is sought to be maintained is by
reason of the general right of set-off, which, as a general proposition,
exists in the government, and is commonly exercised by it when settling
with those having claims against it. But, manifestly, the rules applica¬
ble to ordinary claimants for services rendered the United States do not
apply to this controversy. The bonds in question were issued in pur¬
suance of a scheme to aid in the construction of a great national high¬
way. In themselves they do not import any obligation on the part of
the corporation to pay; and whether, when the United States have
paid interest on them, a liability to refund it is imposed on the com¬
pany, depends wholly on the conditions on which the bonds were
delivered to and received by it. These conditions are embodied in the
legislation of Congress on the subject; and if, on a fair interpretation
of it, the corporation is found to be now a debtor to the United States,
the deduction for interest paid on the bonds can be lawfully made.
But, if the converse of this proposition is true, the government cannot
rightfully withhold from the corporation one-lialf of its earnings.
In construing an act of Congress, we are not at liberty to recur to the
views of individual members in debate, nor to consider the motives
which influenced them to vote for or against its passage. The act itself
speaks the will of Congress, and this is to be ascertained from the lan¬
guage used. But courts, in construing a statute, may with propriety
recur to the history of the times when it was passed; aud this is fre¬
quently necessary, in order to ascertain the reason as well as the mean¬
ing of particular provisions in it. Aldridge v. Williams, 3 How. 24;
Preston v. Browder, 1 Wheat. 120.
G8
DECISIONS OP THE SUPREME COURT.
Many of the provisions in the original act of 18613 are outside of the
usual course of legislative action concerning grants to railroads, and
cannot be properly construed without reference to the circumstances
which existed when it was passed. The war of the rebellion was in
progress; and, owing to complications with England, the country had
become alarmed for the safety of our Pacific possessions. The loss of
them was feared in case those complications should result in an open
rupture; but, even if this fear were groundless, it was quite apparent
that we were unable to furnish that degree of protection to the people
occupying them which every government owes to its citizens. It is
true, the threatened danger was happily averted; but wisdom pointed
out the necessity of making suitable provision for the future. This
could be done in no better way than by the construction of a railroad
across the continent. Such a road would bind together the widely
separated parts of our common country, and furnish a cheap and expe¬
ditious mode for the transportation of troops and supplies. If it did
nothing more than afford the required protection to the Pacific States,
it was felt that the government, in the performance of an imperative
duty, could not justly withhold the aid necessary to build it; and so
strong and pervading was this opinion, that it is by no means certain
that the people Mould not have justified Congress if it had departed
from the then settled policy of the country regarding works of internal
improvement, and charged the government itself with the direct execu¬
tion of the enterprise.
This enterprise was vievod as a national undertaking for national
purposes; and the public mind was directed to the end in view, rather
than to the particular means of securing it. Although this road was a
military necessity, there M ere other reasons active at the time in pro¬
ducing an opinion for its completion besides the protection of an exposed
frontier. There was a vast unpeopled territory lying between the Mis¬
souri and Sacramento Pi vers which was practically worthless without
the facilities afforded by a railroad for the transportation of persons
and property. With its construction, the agricultural and mineral
resources of this territory could be developed, settlements made where
settlements were possible, and thereby the wealth and power of the
United States largely increased; and there was also the pressing want,
in time of peace even, of an improved and cheaper method for the trans¬
portation of the mails, and of supplies for the army and the Indians.
It was in the presence of these facts that Congress undertook to deal
with the subject of this railroad. The difficulties in the way of build¬
ing it were great, and by many intelligent persons considered insur¬
mountable.
Although a free people, when resolved upon a course of action, can
accomplish great results, the scheme for building a railroad tMTo thou¬
sand miles in length, over desei'ts, across mountains, and through a
country inhabited by Indians jealous of intrusion upon their rights,
was universally regarded at the time as a bold and hazardous under¬
taking. It is nothing to the purpose that the apprehended difficulties
in a great measure disappeared after trial, and that the road was con¬
structed at less cost of time and money than had been considered
possible. No argument can be drawn from the wisdom that comes
after the fact. Congress acted with reference to a state of things
believed at the time to exist; and, in interpreting its legislation, no aid
can be derived from subsequent events. The project of building the
road was not conceived for private ends; and the prevalent opinion
was, that it could not be worked out by private capital alone. It was
DECISIONS OF THE SUPREME COURT. G9
a national work, originating in national necessities, and requiring
national assistance.
The policy of the country, to say nothing of the supposed want of
constitutional power, stood in the way of the United States taking the
work into its own hands. Even if this were not so, reasons of economy
suggested that it were better to enlist private capital and enterprise in
the project by offering the requisite inducements. Congress undertook
to do this, in order to promote the construction and operation of a work
deemed essential to the security of great public interests.
It is true, the scheme contemplated profit to individuals; for, without
a reasonable expectation of this, capital could not be obtained, nor the
requisite skill and enterprise. But this consideration does not in itself
change the relation of the parties to this suit. This might have been
so if the government had incorporated a company to advance private
interests, and agreed to aid it on account of the supposed incidental
advantages which the public would derive from the completion of the
projected railway. But the primary object of the government was to
advance its own interests, and it endeavored to engage individual
co-operation as a means to an end,—the securing a road which could be
used for its own purposes. The obligations, therefore, which were
imposed on the company incorporated to build it, must depend on the
true meaning of the enactment itself, viewed in the light of contempo¬
raneous history.
It has been observed by this court, that the title of an act, especially
in congressional legislation, furnishes little aid in the construction of it,
because the body of the act, in so many cases, has no reference to the
matter specified in the title. Hadden v. The Collector, 5 Wall. 110.
This is true, and we have no disposition to depart from this rule; but
the title, even, of the original act of 1862, incorporating the appellee,
seems to have been the subject of special consideration, for it truly dis¬
closes the general purpose of Congress in passing it. It is "An act to
aid in the construction of a railroad and telegraph line from the Mis¬
souri Biver to the Pacific Ocean, and to secure to the government the
use of the same for postal, military, and other purposes." That there
should, however, be no doubt of the national character of the contem¬
plated work, the body of the act contains these significant words: "And
the better to accomplish the object of this act,—namely, to promote the
public interest and welfare by the construction of said railroad and
telegraph line, and keeping the same in working order, and to secure to
the government at all times (but particularly in time of war) the use
and benefits of the same for postal, military, and other purposes,—
Congress may at any time, having due regard for the rights of said
companies named herein, add to, alter, amend, or repeal this act." 12
Stat. p. 497. Indeed, the whole act contains unmistakable evidence,
that, if Congress was put to the necessity of carrying on a great public
enterprise by the instrumentality of private corporations, it took care
that there should be no misunderstanding about the objects to be
attained, or the motives which influenced its action.
If it had been equally explicit in the provision regarding the bonds
to be issued in aid of the company, there would have been no occasion
for this suit. But even in this particular, looking to the motives which
prompted the act and to the objects intended to be effected by it, we do
not think there is any serious difficulty in getting at the true meaning
of Congress. The act itself was an experiment. It must be considered
in the nature of a proposal to enterprising men to engage in the work;
tor, with the untried obstacles in the way, there was no certainty that
70
decisions of the supreme court.
capital could be enlisted. If enlisted at all, it could oidy be on condi¬
tions which would insure, in case of success, remuneration proportion¬
ate to the risk incurred.
The proffered aid was in lands and interest-bearing bonds of the
United States. There is no controversy about the terms on which the
lands were granted; and the only point with which we have to deal
relates to the nature and extent of the obligation imposed by Congress
on the company to pay these bonds. It is not doubted that the gov¬
ernment was to be reimbursed, both principal and interest; but the
precise question for decision is, whether the company was required to
pay the interest before the maturity of the principal.
The solution of this question depends upon the meaning of the fifth
and sixth sections of the original act of 18G2, and the fifth section of
the amendatory act of 18(M. The fifth section of the original act con¬
tains the undertaking of the government, and the sixth defines theobli-
gation of the company. By the fifth it is provided, that, 011 the com¬
pletion of the road in sections of forty miles, there shall be issued and
delivered to the company a certain number of interest-bearing bonds of
the United States, maturing thirty years after date, with interest pay¬
able semi-annually. And "to secure the repayment to tlieUnited States,
as '■hereinafter provided,'' of the amount of said bonds, together with all
interest thereon which shall have been paid by the United States," it is
further provided that the issue and delivery of the bonds shall consti¬
tute a first mortgage on the property of the company, with a right
reserved to the government to declare a forfeiture and take possession
of the road and telegraph line in case "of the refusal or failure of the
company to redeem said bonds, or any part of them, when requested to
do so by the Secretary of the Treasury, in accordance with the provisions
of the act." The manifest purpose of this section is to take a lien on the
property of the corporation lor the ultimate redemption of the bonds,
principal and interest; but the manner and time of redemption are left
for further provision.
That the government was expected in the first instance to pay the
interest is clear enough; for the mortgage was taken to secure the
repayment of the bonds, "together with all interest thereon which shall
have been paid by the United States." This phrase implies a prior
payment by the United States, whatever may be the duty of the corpo¬
ration in regard to reimbursement as subsequently defined. Besides
this, when repayment is spoken of, it is understood that something has
been advanced which is to be paid back. Apart from this, had it been
the intention that the corporation itself should pay the interest as it
fell due, apt words denoting such a purpose would have been used.
But when and how the reimbursement was to be made was declared to
be "as hereinafter provided,"—that is, in conformity with the terms
prescribed in another portion of the act; and that this is so is evident
enough from the latter part of the section, which directs the Secretary
of the Treasury to enforce the forfeiture and take possession of the road
011 failure of the corporation to redeem said bonds, or any part of them
(referring to the different periods of their issue), according to the plan
of redemption thus provided, or, in other words, "in accordance with
the provisions of this act." The obligations imposed 011 the corpora¬
tion, or assumed by it, in relation to the repayment of the bonds, are
set forth entire in the sixth section; which, on account of its impor¬
tance, is here given at length:—
"Sect. 6. And be it further enacted, That the grants aforesaid are
made upon condition that said company shall pay said bonds ah matu¬
rity, and shall keep said railroad and telegraph line in repair and use,
DECISIONS OF THE SUPREME COURT.
71
and shall at all times transmit despatches over said telegraph line, and
transport mails, troops, and munitions of war, supplies and public
stores, upon said railroad, for the government, whenever required to do
so by any department thereof; and that the government shall at all
times have the preference in the use of the same for all the purposes
aforesaid (at fair and reasonable rates of compensation, not to exceed
the amounts paid by private parties for the same kind of service); and
all compensations for services rendered for the government shall be applied
to the payment of said bonds and interest until the whole amount is
fully paid. Said company may also pay the United States, wholly or
in part, in the same or other bonds, treasury notes, or other evidences
of debt against the United States, to be allowed at par; and after said
road is completed, until said bonds and interest are paid, at least five per
centum of the net earnings of said road shall also be annually applied
to the payment thereof.''
Leaving out of consideration the parts of this section not pertinent
to the present inquiry, there are three things, and three only, which
the corporation is required to do concerning the bonds in controversy.
1st. To pay said bonds at maturity. 2d. To allow the government to
retain the compensation due the corporation for services rendered, and
apply the same to the payment of the bonds and interest until the
whole amount is fully paid. 3d. To pay over to the government, after
the road shall have been fully completed, five per cent of the net earn¬
ings of the road, to be appropriated to the payment of the bonds and
interest.
If the language used is taken in its natural and obvious sense, there
can be no difficulty in arriving at the meaning of the condition '• to
pay said bonds at maturity." As commonly understood, the word
" maturity," in its application to bonds and other similar instruments,
refers to the time fixed for their payment, which is the termination of
the period they have to run. The bonds in question were bonds of the
United States, promising to pay to the holder of them one thousand
dollars thirty years after date, and the interest every six months. This
obligation the government was required to perform; and, as the bonds
were issued anil delivered to the corporation to be sold for the purpose
of raising money to construct its road, it is insisted that Congress
must have meant to impose a corresponding obligation on the corpora¬
tion. In suxiport of this construction, it is sought to give to the word
" maturity" a double signification, applying it to each payment of inter¬
est as it falls due, as well as to the principal. But this is extending,
contrary to all legal rules, the operation of words by a forced construc¬
tion beyond their real and ordinary meaning. Courts cannot supply
omissions in legislation, nor afford relief because they are supposed to
exist. "We are bound," said Justice Buller in an early case in the
King's Bench, " to take the act of Parliament as they have made it: a
casus omissus can in no case be supplied by a court of law, for that
would be to make laws; nor can I conceive that it is our province to
consider whether such a law that has been passed be tyrannical or not."
Jones v. Smart, 1 T. B. 44-52.
Lord Chief Baron Eyre, in Gibson v. Minet, 1 H. Bl. 509-614, said,
"I venture to lay it down as a general rule respecting the interpreta¬
tion of deeds, that all latitude of construction must submit to this
restriction; namely, that the words may bear the sense which by con¬
struction is put upon them. If we step beyond this line, we no longer
construe men's deeds, but make deeds for them." This rale is as appli¬
cable to a statute as to a deed. The words "to pay said bonds at
maturity" do not bear the sense which is sought to be attributed to
72
DECISIONS OF THE SUrREME COURT.
them. They evidently imply an obligation to pay both principal and
interest when the time fixed for the payment of the principal has
arrived, but not to pay the interest as it accrues. It is one thing to be
required to pay principal and interest when the bonds have reached
maturity, and a wholly different thing to be required to pay the inter¬
est every six months, and the principal at the end of thirty years. The
obligations are so different, that they cannot both grow out of the
words employed; and it is necessary to superadd other words in order
to include the payment of semi-annual interest as it falls due. Neither
on principle nor authority is such a plain departure from tlie express
letter of the statute warranted, especially when it leads to so great
change in the condition annexed to the grant.
The failure to perform that condition is a cause of forfeiture. If the
natural meaning of the words be adopted as the true meaning, there
can be 110 forfeiture until the bonds themselves have matured. O11 the
contrary, if the construction contended for be allowed, the grant is
subject to forfeiture 011 each occasion that six months' interest falls due
and is not met by the corporation. It would require a pretty large
inference to draw from the language used authority to vary in a par¬
ticular so essential the terms of a condition assumed by the corporation
when it assented to the act. Besides this, when Congress imposed this
condition, it well knew that the undertaking of the government bound
it to pay interest every six months, and the principal at the time the
bond matured. "With this knowledge, dealing as it did with the rela¬
tions the company was to bear to the government 011 the receipt of
these bonds, it would, had it intended to exact the payment of interest
before their maturity, have declared its purpose in unequivocal lan¬
guage. But if the words, " to pay said bonds at maturity,'' do not give
notice that this exaction was intended, neither do the other provisions
of the sixth section. They created no obligation to keep down the
interest, nor were they so intended. The provision for retaining the
amount due for services rendered, and applyiug it towards the general
indebtedness of the company to the government, cannot be construed
into a requirement that the company shall pay the interest from time
to time, and the principal when due. It was in the discretion of Con¬
gress to make this requirement, and then, as collateral to it, provide a
special fund or funds out of which the principal could be discharged.
This Congress did not choose to do. but rested satisfied with the entire
property of the company as security for the ultimate payment of the
principal and interest, and in the mean time, with special provisions
looking to the reimbursement of the government for interest paid by
it, and to the application of the surplus if any remained, to discharge
the principal. The company, for obvious reasons, might be very willing
to accept the bonds on these terms, and very unwilling to make an
absolute promise to pay the interest as it accrued. If it were in a con¬
dition, either during the progress or 011 the completion of the road, to
earn any thing, there would be no hardship in applying the compensa¬
tion due it; but, as can be readily seen, if it were required to raise
money every six months to pay interest, when all its available means
were necessary to the prosecution of the work, the burden might be
very heavy. Congress did not see fit to impose it, and thus place the
company in a position to incur a forfeiture of all its grants in case of
failure to provide the means to pay current interest. Besides, it is fair
to infer that Congress supposed that the services to be rendered by the
company to the government would equal the interest to be paid. That
this was not an unreasonable expectation is shown by the published
DECISIONS OP THE SUPREME COURT.
73
statistics of the vast cost of transporting military and naval stores and
the mails to the Pacific coast by the modes of transit then in use.
The views presented on the provision for retaining the compensation
are equally applicable to the provision, that, after the road is completed,
live per cent of its net earnings shall be annually applied to the pay¬
ment of bonds and interest. It is not perceived how, 011 any principle
of construction, an obligation of the corporation to pay the interest on
the bonds every six months after they shall have been issued can be
based on this provision, any more than 011 the other. Each created a
reserved fund, out of which the government was to be reimbursed in
the first instance the interest it had paid, leaving the surplus, if any,
to be applied to the payment of the principal.
In addition to all that has been said, there is enough in the scheme
of the act, and in the purposes contemplated by it, to show that Con¬
gress never intended to impose on the corporation the obligation to pay
current interest. The act, as has been stated, was passed in the midst
of war, when the means for national defence were deemed inadequate,
and the public mind was alive to the necessity of uniting by iron bands
the destiny of the Pacific and the Atlantic States. Confessedly the
undertaking was beyond the ability of unaided private capital. Only
by the helping hand of Congress could the problem, difficult of solution
under the most favorable circumstances, be worked out. Local busi¬
ness, as a source of profit, could not be expected while the road was in
course of construction, on account of the character of the country it
traversed; and whether, when completed, it would prove valuable as
an investment, was a question for time to determine. But vast as was
the work, limited as were the private resources to build it, the growing
wants as well as the existing and future military necessities of the
country demanded that it be completed. Under the stimulus of these
considerations Congress acted, not for the benefit of private persons,
nor in their interest, but for an object deemed essential to the security
as well as to the prosperity of the nation.
Compelled as it was to incorporate a private company to accomplish
its object, it proffered the terms on which it would lend its aid. If
deemed too liberal now, they were then considered, with the lights
before it, not more than sufficient to engage the attention of enterpris¬
ing men, who, if not themselves possessing capital, were in a position
to command the use of it. These terms looked to ultimate security
rather than immediate reimbursement, inasmuch as the corporation
would require all its available means in construction; and to require
it, while the work was in progress, to keep down the interest on the
bonds of the United States, might seriously cripple the enterprise at a
time when the primary object of Congress was to advance it. There
could, however, be no reasonable objection to the application "of all
compensation for services rendered for the government" from the out¬
set, and of "five per cent of the net earnings after the completion of
the road" to the payment of the bonds and interest. These exactions
were accordingly made.
Of necessity there were risks to be taken in aiding with money or
bonds an enterprise unparalleled in the history of any free people, the
completion of which, if practicable at all, would require, as was sup¬
posed, twelve years. But these risks were common to both parties.
Congress was obliged to assume its share, and advance the bonds, or
abandon the enterprise; for clearly the grant of lands, however valua¬
ble after the road was finished, could not be available as a resource for
building it.
74
DECISIONS OF THE SUPREME COURT.
If tlie road were a success, in addition to tlie benefits it would confer
011 the United States, the corporation would be in a situation to repay
the advances for interest and the principal when due. If, on the con¬
trary, it proved to be a failure, subjecting the private persons who
invested their capital in it to a total loss, there would be left the entire
property of the corporation, of which immediate possession could be
taken by the government 011 a declaration of forfeiture.
The circumstances under which the act of 1802 was passed, the pur¬
poses to be accomplished by it, and its scope and effect, are inconsist¬
ent with the position assumed by the appellant.
Notwithstanding the favorable terms proposed by Congress, the enter¬
prise languished. The effect of this was the amendatory act of 1804.
By it the grant of lands was doubled, a second in lieu of a first mort¬
gage accepted by the government, and a provision inserted that "only
one-half of the compensation for services rendered for the government
by said companies (meaning this and the auxiliary companies incorpo¬
rated at the same time) shall be required to be applied to the payment
of the bonds issued by the government in aid of the construction of
said road."
This provision was, without doubt, intended merely to modify the
original act, so as to allow the government to retain only one half of
such compensation, instead of all. That act applied the whole compen¬
sation "to pay the bonds and interest;" and it cannot be supposed that
Congress intended to relinquish the right thereby secured to make the
application in the first place to the interest, and then to the principal.
The purpose could have been nothing more than to surrender the right
to retain the ichole of the companies' earnings for services to the gov¬
ernment, and to accept, in lieu of it, the right to retain the half. This
very material change was intended, doubtless, as a substantial favor to
the companies; but, on the principle contended for by the appellant, it
would be of 110 value. Of what possible advantage could it be to them
to receive one-half of their earnings, if they were subject to a suit to
recover it back as soon as it was paid? And this is the effect of the
provision, if they are debtors to the government on every semi-annual
payment of interest. They could not, in the nature of things, have
accepted the stipulation with an understanding that any such effect
would be given it. If the government consents to diminish its security,
so that only half of the money due for services is to be applied to the
payment of the interest or principal, what is to become of the other
half? There is 110 implication that the government shall keep it; and,
if not, who is to get it? Assuredly the companies who have earned it.
It is very clear that the Congress of 1804 did not suppose, in making
this concession, that it would be barren of results; but, as the rights
of the parties have been settled by the construction given to the origi¬
nal provision on this subject, it is unnecessary to consider the question
further.
The practice for a series of years was in conformity with the views
we have taken of the effect of the charter, until the Secretary of the
Treasury withheld the payment of the money earned by the companies
for services rendered the government. His action brought the subject
to the attention of Congress; and the act of March 3, 1871 (16 Stat., p.
525, sect. 9), was passed, directing that one-half of the money due the
Pacific Kailroad companies for services rendered, either "heretofore or
hereafter," be paid them, leaving open the question of ultimate right
for legal decision.
Another act was subsequently passed, by virtue of which this suit
DECISIONS OF THE SUPREME COURT.
75
was instituted by the appellee. Act of March 3j 1873, 17 Stat., p. COS,
sect. 2. It is contended that this act repeals that portion of the charter
of the company which contains the provisions we have discussed. But,
manifestly, its purpose was very different. Although it directs the Sec¬
retary of the Treasury to withhold all payments to the companies on
account of freights and transportation, it at the same time authorizes
any company thus affected to bring suit in the Court of Claims for
" such freight and transportation;" and in such suit " the right of such
company to recover the same upon the law and the facts shall be deter¬
mined, and also the rights of the United States npon the merits of all
the points presented by it in answer thereto by them." This means
nothing more or less than the remission to the judicial tribunals of the
question, whether this company, and others similarly situated,have the
right to recover from the government one-half of what they earned by
transportation; and this question is to be determined upon its merits.
The merits of such a question are determined when the effect of the
charter is ascertained and declared. It is hardly necessary to say that
it would have been idle to authorize a suit, had Congress intended to
repeal the provision on which alone it could be maintained.
Counsel have dwelt with special emphasis upon the consequences
which would result from a decision adverse to the appellant. We can¬
not consider them in disposing of the questions arising upon this record.
The rights of the parties rest upon a statute of the United States. Its
words, as well as its reason, spirit, and intention, leave, in our opinion,
no room for doubt as to its true meaning. We cannot sit in judgment
upon its wisdom or policy. When we have interpreted its provisions,
if Congress has power to enact it, our duty in connection with it is
ended.
Judgment affirmed.
Union Pacific Railroad Company v. Hall et al.
(91 IT. S., 313.)
1. Tbe initial point of the Iowa branch of the Union Pacific Railroad was fixed by
the act of Congress of July 1, 1862 (12 Stat. 489), on the Iowa bank of the Mis¬
souri River.
2. The order of tbe President of the United States, bearing date the seventh day of
March, 1864. established and designated in strict conformity to law the eastern
terminus of said branch at a poiut " on the western boundary of Iowa east of
and opposite to the east line of section 10, in township 15, north of range 13,
east of the 6tli principal meridian, in the Territory of Nebraska."
3. The bridge constructed by the Union Pacific Railroad Company over the Missouri
River, between Omaha in Nebraska and Council Bluffs in Iowa, is a part of the
railroad. The company was authorized to build it only for the uses of the road,
and is bound to operate and run the whole road, including the bridge, as one
connected and continuous line.
4. Private persons may, without the intervention of the government law-officer,
move for a mandamus to enforce a public duty not due to the government as such.
Error to the Circuit Court of the United States for the District of
Iowa.
Submitted on brief by Mr. A. J. Poppleton for the plaintiff iu error,
and by Mr. John N. Rogers, contra.
Mr. Justice Strong delivered the opinion of the court.
This is a proceeding instituted under the act of Congress of March
3, 1873 (17 Stat. 509, sect. 4), which confers upon the proper Circuit
Court of the United States jurisdiction to hear and determine all cases
of mandamus to compel the Union Pacific Railroad Company to operate
76
DECISIONS OF THE SUPREME COURT.
its road as required by law. The alternative writ, as amended, com¬
manded the railroad company to operate the whole of their road from
Council Blurt's westward (including that portion thereof between Council
Blurt's and Omaha, and constructed over and across their bridge span¬
ning the Missouri River) as one continuous line for all purposes of com¬
munication, travel, and transportation; and especially commanded
them to start from Council Blurt's their regular through freight and
passenger trains westward bound, and to run their eastern-bound trains
of both descriptions through and over said bridge to Council Blurt's
under one uniform time-schedule with the remainder of their road, and
to desist and refrain wholly from operating said last-mentioned portion
of said road as an independent and separate line, and from causing
freight or passengers bound westward or eastward to be transferred at
Omaha, or to show cause why they did not obey the writ.
To the alternative mandamus the railroad company put in a return,
which was met by an answer filed by the relators; and the case was
heard by the Circuit Court on the facts stated in the writ, the return,
and the answer (the averments of the answer not being controverted),
and a peremptory mandamus was ordered. It is of this final judgment
that the plaintiffs in error now complain.
The obligation of the Union Pacific Railroad Company to operate
their road as a continuous line, throughout its entire length, is not
denied. The company is a creature of congressional legislation. It
was incorporated by the act of Congress of July 1, 1S02 (12 Stat. 189);
and its powers and duties were prescribed by that act, and others
amendatory thereof. By the twelfth section it was enacted that the
"whole line of the railroad and branches and telegraph shall be oper¬
ated and used for all purposes of communication, travel, and trans¬
portation, so far as the public and government are concerned, as one
connected, continuous line." A similar requisition was made in the
fifteenth section of the amendatory act of July 2, 18G4. 13 Stat. 356.
The contest in the case does not relate to the existence of this duty: it
is principally over the question, whether the railroad bridge over the
Missouri River, between Omaha in Nebraska and Council Bluffs in
Iowa, is a part of the Union Pacific Railroad; for, if it is, there can be
no doubt that the company are required by law to use it in connection
with, and as a part of, their entire road, operating all parts together as
a continuous line.
The answer to this question must be found in the legislation of Con¬
gress, and in what has been done under it. By the first section of the
act of 18G2, the Union Pacific Railroad Company was authorized to
construct, maintain, and enjoy a continuous railroad and telegraph,
with the appurtenances, from a point on the one hundredth meridian
of longitude west from Greenwich to the western boundary of the
Territory of Nevada. There it was intended to meet and connect with
the line of the Central Pacific Railroad Company of California (sect. 8),
thus forming a continuous line to the Pacific Ocean. This was the
main line. But the same act made provision also for several eastern
connections. The ninth section authorized the Leavenworth, Pawnee
and Western Railroad Company of Kansas (now the Kansas Pacific) to
construct a railroad from the Missouri River, at the mouth of the Kan¬
sas River (on the south side thereof, so as to connect with the Pacific
Railroad of Missouri), to the point of western departure of the Union
Pacific on the one hundredth meridian. Thus provision was made
for an eastern connection by an unbroken line of road to St. Louis
on the Mississippi. This was not all. By the fourteenth section of the
DECISIONS OF THE SUPREME COURT.
77
act the Union Pacific was authorized and required "to construct a
single line of railroad and telegraph from a point on the western
boundary of the State of Iowa, to be fixed by the President of the
United States, , . . so as to form a connection with the lines of the
said company at some point on the one hundredth meridian of longitude
aforesaid, from the point of commencement on the western boundary
of the State of Iowa." Thus provisions were made for the Iowa eastern
branch of the main line. It was doubtless intended to render possible
a connection with any railroad that might thereafter be constructed
from the western boundary of Iowa eastward. None was then com¬
pleted; but a railroad was in progress of construction through the
State, from its eastern border to the Missouri River.
The fourteenth section also made provision for another eastern con¬
nection. It enacted, that whenever there should be a line of railroad
completed through Minnesota or Iowa to Sioux City, then the said
Pacific (Union Pacific) Railroad Compauy should be authorized and
required to construct a railroad and telegraph from said Sioux City, so
as to connect with the Iowa brauch, or with the main line, at a point
not farther west than the one hundredth meridian of longitude.
The scheme of the act of Congress, then, is very apparent. It was
to secure the connection of the main line, by at least three branches,
with the Missouri and Iowa Railroads, and with a railroad runuing
eastwardlyfrom Sioux City in Iowa, either through that State or through
Minnesota. An observance of this scheme, we think, will aid in con¬
sidering the inquiry at what place the act of Congress, and the orders
of the President made in pursuance thereof, established the eastern
terminus of the Iowa branch. From it may reasonably be inferred that
the purpose of Congress was to provide for connections of the branches
of the main liue of the Union Pacific road with railroads running
through the States on the east of the Territory, and to provide for
those connections within those States, at points at or near their western
boundaries. Thus the northern branch was required to be constructed
from Sioux City (which is in the State of Iowa) westward toward the
main liue; and the southern branch was authorized to build their rail¬
road from the south side of the Kansas River, at its mouth, so as to
connect with the Pacific Railroad of Missouri. If, now, the provisions
of the act respecting the central or Iowa brauch be examined, the same
purpose is evident. Those provisions are found in the fourteenth sec¬
tion, and they are as follows:—
"And be it further enacted, That the said Union Pacific Railroad
Company is hereby authorized and required to construct a single line of
railroad and telegraph from a point on the western boundary of the State
of Iowa, to be fixed by the President of the United States, upon the most
direct and practicable route, to be subject to his approval, so as to form
a connection with the lines of the said company at some point on the
one hundredth meridian of longitude aforesaid, from the point of com¬
mencement on the western boundary of the State of Iowa."
This clause contains the only provisions of the act respecting the
eastern terminus of the Iowa branch, and it twice defines that terminus
as " a point on the western boundary of the State of Iowa." The legal
boundary of the State is the middle of the channel of the Missouri
River. >9 Stat. 52. But it is very evident that Congress did not intend
that the road should start from a point in the mid-channel of the river.
That would be impossible; and, were it possible, it would not carry out
the general design of the act, which, as we have seen, was to provide
78
DECISIONS OF THE SUPREME COURT.
for connections with the eastern railroads then in existence or contem¬
plated. It is conceded by the counsel of the company that Congress
ought not to be held to have intended to fix the initial point in the mid-
channel of the river, exactly on the line which is the legal boundary of the
State. Such a construction of the law, it is acknowledged, would be
unreasonable, because it would involve the requirement of an impossi¬
bility. But, if Congress did not mean to require a construction of the
railroad from the imaginary line which is the legal boundary of Iowa,—
namely, from the inidcliaunel of the river,—they must have intended the
initial point to be either on the Iowa shore or on the Nebraska shore.
If the Nebraska shore was intended, why was it not mentioned? Why
was not the west bank of the Missouri Biver designated? or why was
not the eastern boundary of Nebraska fixed as the point of departure?
Still more, why was Iowa mentioned at all ? or why was the initial point
described as a point on the western boundary of Iowa? It is impossi¬
ble to give a satisfactory answer to these questions, if the eastern or Iowa
shore of the river was not intended to be the terminus of the railroad.
Unless it was so intended, no reason is found in the acts of Congress
for mentioning Iowa at all. The western shore of the river is no
nearer the western legal boundary of Iowa than the eastern shore is;
while the latter is, in common understanding, the western boundary of
the State. Congress may well be supposed to have used language in
accordance with the common understanding. It is common usage to
speak of the boundary of a state or county as a river, though the
legal boundary may be the middle of the river ; and particularly when
anything is to be constructed on such a boundary, which from its
nature must be constructed on dry land, would no one understand the
place of construction as any other than the shore of the river. It is
perfectly legitimate and in accordance with every day usage to say that
a house built in Illinois on the eastern shore of the Mississippi stands
on the western boundary of the State, though the legal boundary of
the State is the mid-channel of the river. In common understanding,
therefore, a point on the western boundary of Iowa would be a point
in Iowa on the eastern shore of the Missouri, precisely as a point on
the eastern boundary of Nebraska would be understood to be in
Nebraska, on the western shore of the river. The words "on the
boundary of Iowa'' are not technical words; and therefore they are to
be taken as having been used by Congress in their ordinary significa¬
tion. Instances are not rare in which statutes have been construed,
not literally, but in accordance with the common use of the language
employed by the law makers. Authority to construct a railroad or
turnpike from A. to B., or beginning at A. and running to B., is held
to confer authority to commence the road at some point within A., and
to end it at some point within B. The words "from," "to," and "«t,"
are taken inclusively, according to the subject-matter. 1 Mas. 126; 1
Stra. 17!); Fanners1 Turnpike v. Coventry, 10 Johns. 389. So in the
case of The Mohawk Bridge Company v. The Utiea and Schenectady R.
R. Co., 6 Paige, 554, a similar ruling was made. The city of Schenec¬
tady was on the south bank of the Mohawk Biver, the north bounds
of the city being the middle of the channel of the river; yet it was
held that a railroad company authorized to build a railroad "commenc¬
ing at or near the city of Schenectady, and running thence on the
north side of the Mohawk Biver," was by those words empowered to
build a bridge over the Mohawk, and commence their railroad at or
within the city. These decisions bear some analogy to the construction
DECISIONS OF THE SUPREME COURT.
79
given by the Circuit Court to tbe phrase " on the western boundary of
Iowa;" and that construction is the only one consistent with the para¬
mount purpose manifested in the act of Congress, to provide for con¬
nections with the railroads of the States east of Nebraska Territory,—
a purpose to which we have already referred. Unless the Iowa branch
of the Union Pacific was intended to commence on the Iowa shore of
the Missouri Itiver, its connection with the Iowa railroads would have
been impossible. Those roads could not be extended to the Nebraska
shore; for the State of Iowa was without power to authorize the erec¬
tion of a bridge over the river, or even the establishment of a ferry.
We do not propose to enter upon a consideration of the question,
whether Congress had power to authorize the construction of railroads
within a State: it is not necessary for the present case. Even the
appellants would shrink from denying the lawful existence of their
bridge. What is to be sought now is the intention of Congress, not
its poweix Did Congress intend the place of connection to be on the
eastern shore of the river? That they did is manifest, if they intended
any connection; for no other was possible, either with or without the
co operation of Iowa.
In accordance with this understanding of the act of 18G2 was the
action of the President. The fourteenth section of the act required
the company to construct the Iowa branch from a point on the western
boundary of Iowa, to be fixed by the President of the United States. In
discharging the duty thus imposed, the President, by an executive order,
dated Nov. 17,1863, fixed so much of the western boundary of the State
of Iowa as lies between the north and south boundaries of the United
States township within which the city of Omaha is situated as the
point from which the line of railroad and telegraphs should be con¬
structed. This designation was, in one particular, indefinite. While it
adhered to the western boundary of Iowa, it left undetermined at what
place on that boundary the initial point should be, except that it should
be somewhere between the north and south boundaries of a township,
those boundaries being six miles apart. The President, therefore, on
the seventh day of March, 1864, by a second executive order, made a
more definite location. By that order he designated and established
the point from which the railroad company was authorized to construct
the road as a point " on the western boundary of Iowa east of and oppo¬
site to the east line of section 10, in township 15, north of range 13, east
of the 6th principal meridian, in the Territory of Nebraska." Section
10 is a fractional section, its eastern boundary being the Missouri Itiver.
That the President understood this designation as fixing the point'on
the eastern shore of the river, and within the State of Iowa, is mani¬
fest from the message which, two days afterwards, he sent to Congress
accompanying a copy of his official orders, in which he declared that the
orders fixed the point on the western boundary of Iowa,"within the
limits of the township in Iowa opposite the town of Omaha, in Nebraska."
And such appears to be the plain meaning of the executive orders. The
point could not have been " east of and opposite to the east line of sec¬
tion 10, in township 15 " (the section spoken of), if it was on the western
shore of the river. It would then have been in Nebraska. The desig¬
nation by the President was thus in strict conformity with the act of
Congress; for, whenever that act spoke of the terminus of the Iowa
branch with reference to its location, it described it, not as being in
Nebraska, not even as being in the Missouri Biver, but as on the west¬
ern boundary of Iowa.
Thus far we have confined our attention to the act of 1862, and to the
80
DECISIONS OF THE SUPREME COURT.
President's action under it. From that act alone we have deduced the
conclusion that the company was authorized and required to build their
railroad to the Iowa shore. That authority included within inself power
to build a bridge over the Missouri. No express grant to bridge the
river was needed. Whatever bridges were necessary 011 their line were
as fully authorized as the line itself; and the company were as much
empowered to build one across the Missouri as they were across the
Platte or any other river intersecting the route of their road. People
v. The Saratoga d; Rensselaer R. P. Co., 15 Wend. 1.10; Springfield v.
Connecticut River R. R Co., 4 Gush. 63; Mohawk Bridge Co. v. Utica &
Schenectady R. R. Co., ut supra.
But the amendatory act of 1864 is not to be overlooked. It is to be
regarded in connection with the act of 1862, and interpreted as a part
of it. By its ninth section the company were expressly authorized to
construct bridges over the Missouri, and other rivers which their road
might pass in its course, for the convenience of their road; and the act
declared this authority to be given to enable the company to make con¬
venient and necessary connections with other roads. This enactment
may not have been necessary. The power may have been conferred
upon the Union Pacilic Railroad Company by the act of 1862; and we
think it was. But, whether necessary or not, it shows clearly that
Congress had in view the construction of the railroad to the Iowa
shore of the river. No bridge could be constructed without making
use of the Iowa shore.
It is well to observe here that the authority was given to the company
as a railroad company, and not as a bridge company. The bridge was
for the convenience of their road, and to enable them to connect it with
other roads. They could build it for no other uses. They were not
authorized to use it for other purposes than those of their road. They
were not allowed to charge rates of toll which they did not charge upon
other portions of their line. If they acquired such a right, it was by
subsequent legislation—by the act of 1871, to which we shall refer here¬
after; but if, under the acts of 1862 and 1864, the company were author¬
ized to build a railroad bridge across the river, and if such bridge was
a part of their road, and not another railroad, the conclusion is irresis¬
tible that their road was intended to have its eastern terminus 011 the
Iowa shore of the river.
It is 110 answer to this to urge that Congress could not have intended
to invade a State by chartering a company to build a railroad in part
within the State limits. The stubborn fact remains, that Congress did
authorize the building of a railroad bridge 011 land within the territo
rial limits of the State, and, as necessarily incidental to that, a railroad
upon the necessary approaches to the bridge. So, also, Congress
authorized building a railroad from Sioux City, in Iowa, across the Mis¬
souri River westward. The statute does show a plain intention that
the company's railroad should enter the State under its authority; and
the twelfth section enacted what should be done whenever the route of
the road should cross the boundary of any State or Territory, and
authorizes the President of the United States, in case the companies
met there and disagreed respecting the location, to determine it.
Our attention has been called to other clauses in the acts of 1862 and
1864, in which the road is spoken of as from the Missouri River to the
Pacific coast, or to the navigable waters of the Sacramento, or from
Omaha, as indicating that the eastern terminus was intended to be
Omaha, or the western shore of the Missouri River. But these clauses
have other objects in view than designating the terminus of the road.
DECISIONS OF THE SUPREME COURT.
81
Tliey are descriptive of the road, but not of its beginning or ending.
Whenever the attention of Congress was turned to the eastern termi¬
nus alone, and the purpose was to determine its location, there is no
variance in the language employed. It is always "a point on the west¬
ern boundary of Iowa." The different forms of expression employed
in other sections and for other purposes can have no bearing upon the
question.
Again: it is claimed that the contemporaneous construction given to
the charter of the company, by its officers and by the officers of the
government, tends to show that the terminus was fixed by the statute
on the Nebraska side of the river. It must be conceded, that, in a
case where the interpretation of an instrument is doubtful, the practi¬
cal construction given to it by the parties is of weight. But we do not
discover that the United States government, or its officers, ever acted
upon the theory that the eastern terminus of the road was on the west¬
ern shore of the river. The officers of the company asserted it for a
time, it is true, but not in their practical intercourse with the national
government. Indeed, it never became a practical question until the
bridge was erected ; and from that time to the present the government
has asserted that the true terminus of the road was fixed on the Iowa
shore. There is nothing, we think, in any contemporaneous construc¬
tion given to the acts of Congress, which ought to have any weight in
determining the question now before us.
Our conclusion, therefore, is, that the initial point of the Iowa branch
of the Union Pacific Railroad was fixed by the act of Congress on the
Iowa bank of the Missouri River.
If we are correct in this conclusion, it seems to be clear that the
bridge over the river, built by the railroad company, is a part of their
railroad, and required by law to be so operated. It was commenced in
1869 under the acts of 1862 and 1864. These acts were the only author¬
ity the company had at the time of its commencement for building it.
It is a railroad bridge, a continuation of the line west of the river; and
it connects the road with its required eastern terminus.' The acts char¬
tering the company manifest no intention to distinguish between the
bridge over the Missouri River and other bridges on the line of their
road. If it is not a part of their road, neither is any bridge between
the Missouri and the western boundary of Nevada; for the power to
build all bridges was given in the same words.
It has been argued, however, that the bridge is not a part of the
company's railroad, because it is not located opposite section 10, east
of and opposite to which, on the western boundary of Iowa, the Presi¬
dent fixed the terminus. It is, however, the only bridge the company
has extending their road to the western boundary of Iowa; and clearly
they have no authority to build any other. True, it is not opposite sec¬
tion 10 ; but the company has taken up its road from that section, and
now it comes to the river where the bridge is actually constructed.
Having abandoned their road, so far as it extended above that point;
having commenced their bridge where it is; having applied to Con¬
gress for power to mortgage it, and for special power to levy tolls and
charges for the use of it; and having obtained those powers,—they are
not at liberty now to assert that they have located their bridge at the
wrong place. There is nothing, either in the act of 1862 or 1864, or in
that of Feb. 24, 1871, which empowers them to build more than one
bridge over the Missouri for the Iowa branch; and the latter act con¬
tains an implied recognition of their right under the former acts to
build their bridge on its present location. There is no intimation in it
6 PAC
82
DECISIONS OF THE SUPREME COURT.
of a distinct bridge franchise. It grants no power to build a bridge.
Its main purpose manifestly was to give the company additional means
and privileges for the completion of a structure already authorized, not
to enable them to construct a new and independent road. To hold that
the bridge is not a part of the road would defeat the plain object Con¬
gress had in view in 1862 and 1804,—a continuous line fur connection
with the Iowa roads. It would be allowing the connection to be made
in Nebraska, instead of on the western boundary of Iowa, when the
act of 1871 expressly declared that nothing therein should be so con¬
strued as to change the eastern terminus of the Union Pacitic ltailroad
from the place where it was then fixed by existing laws. Indeed, that
proviso was quite unnecessary if the bridge was not thought to be a
part of the railroad connecting the other part with the western bound¬
ary of Iowa.
Holding then, as we do, that the legal terminus of the railroad is
fixed by law on the Iowa shore of the river, and that the bridge is a part
of the railroad, there can be no doubt that the company is under obli¬
gation to operate and run the whole road, including the bridge, as one
connected and continuous line. This is a duty expressly imposed by
the acts of 1862 and 1864, and recognized by that of 1871. "What this
means it is not difficult to understand. It is a requisition made for the
convenience of the public. An arrangement, such as the company has
made, by which freight and passengers destined for or beyond the east¬
ern terminus are stopped two or three miles from it and transferred to
another train, and again transferred at the terminus, or by which freight
and passengers going west from the eastern end of the line must be
transferred at Omaha, breaks the road into two lines, and plainly is
inconsistent with continuous operation of it as a whole. If riot, the
injunction of the statute has no meaning. The mandamus awarded in
this case, therefore, imposes no duty beyond what the law requires.
Such is our opinion of the merits of this case. A single objection
made and urged against the form of proceeding remains to be consid¬
ered. The appellants contend that the court erred in holding that
Hall and Morse, on whose petition the alternative writ was issued,
could lawfully become relators in this suit on behalf of the public with¬
out the assent or direction of the Attorney-General of the I Tnited States,
or of the district attorney for the district of Iowa. They were mer¬
chants in Iowa, having frequent occasion to receive and ship goods
over the company's road; but they had no interest other than such as
belonged to others engaged in employments like theirs, and the duty
they seek to enforce by the writ is a duty to the public generally. The
question raised by the objection, therefore, is, whether a writ of man¬
damus to compel the performance of a public duty may be issued at the
instance of a private relator. Clearly in England it may. Tapping on
Mandamus, p. 28, asserts the rule in that country to be, that, "in gen¬
eral, all those who are legally capable of bringing an action are also
equally capable of applyiiig to the Court of King's Bench for the writ of
mandamus." This is true in all cases, it is believed, where the defend¬
ant owes a duty, in the performance of which the prosecutor has a pecul¬
iar interest; and it is equally true, we think, in case of applications to
compel the performance of duties to the public by corporations. In The
King v. The Severn & Wye Railway Co., 2 Barn. & Ad. 646, a private
individual, without any allegation of special injury to himself, obtained
a rule upon the company to show cause why a mandamus should not
issue commanding them to lay down again and maintain part of a rail¬
way which they had taken up. Under an act of Parliament, the railway
DECISIONS OF THE SUPREME COURT.
83
was a public highway; and all persons were at liberty to pass and repass
thereon, with wagous and other carriages, upon payment of the rates.
What the prosecutor complained of was the loss by the public, aud par¬
ticularly by the owners of certain collieries (of which he does not appear
to have been one), of the benefit of using the railway taken up. The
writ was awarded. It was not even claimed that the intervention of
the Attorney-General was needed. Other cases to the same effect are
numerous. Clarkev. The Leicestershire (k Northamptonshire Union Canal
Co., 6 Ad. & El. n. s. 898; 1 Ghit. 700.
In this country there has been diversity of decision upon the ques¬
tion whether private persons can sue out the writ to enforce the per¬
formance of a public duty, unless the non-performance of it works to
them a special injury; and in several of the States it has been decided
that they cannot. Au application for a mandamus, not here a preroga¬
tive writ, has been supposed to have some analogy to a bill in equity
for the restraint of a public nuisance. Yet, even in the supposed anal¬
ogous case, a bill may be sustained to enjoin the obstruction of a public
highway, when the injury complained of is common to the public at
large, and only greater in degree to the complainants. It was in the
Wheeling Bridge Case, 13 How. 518, where the wrong complained of was
a public wrong, an obstruction to all navigation of the Ohio River.
The injury to the complainants in that case was no more peculiar to
Pennsylvania than is the injury to Hall and Morse in this peculiar and
special to them.
There is, we thinlt, a decided preponderance of American authority
in favor of the doctrine, that private persons may move for a mandamus
to enforce a public duty, not due to the government as such, without
the intervention of the government law-officer. People v. Collins, 19
Wend. 56; County of Pike v. The State, 11 111. 202; Ottaica v. The Peo¬
ple, 18 id. 233; Hamilton v. The State, 3 Ind. 452; Hall v. The People,
57 H. Y. 307; People v. Halsey, 37 id. 344; State v. The County Judge of
Marshall, 7 Iowa, 186; State v. Bail-way, 33 N. J. Law, 110; Watts v.
Carroll Parish, 11 La. Ann. 141. See also Dillon on Mun. Corp., sect.
695, and High on Ex. Eem., sects. 431, 432; Cannon v. Janvier, 3 Houst.
27; State v. Railway, 33 N. J. Law, 110. The principal reasons urged
against the doctrine are, that the writ is prerogative in its nature,—a
reason which is of no force in this country, and no longer in England,—
and that it exposes a defendant to be harassed with many suits. An
answer to the latter objection is, that granting the writ is discretionary
with the court, and it may well be assumed that it will not be unneces¬
sarily granted.
There is also, perhaps, a reasonable implication that Congress, when
they authorized writs of mandamus to compel the Union Pacific Rail¬
road Company to operate their road according to law, did not contem
plate the intervention of the Attorney-General in all cases. The act of
1873 does not prescribe who shall move for the writ, while the Attorney-
General is expressly directed to institute the necessary proceedings to
secure the performance of other duties of the company. For these
reasons, we think the Circuit Court did not err in holding that Hall
and Morse were competent to apply for the writ in this case.
The decree of the Circuit Court is affirmed.
Mr. Justice Bradley dissenting.
I am obliged to dissent from the judgment of the court in this case.
The Missouri River is, by common acceptance, the western boundary of
Iowa; and the fair construction of the charter of the LTnion Pacific Rail¬
road Company, which adopts that boundary as its eastern terminus, is,
84
DECISIONS OF THE SUPREME COURT.
that the road was to extend from the Missouri River westwardly. The
subsequent express authority given to construct a bridge across the
river, in my judgment, confirms this view of the subject; and as a
mandamus is a severe remedy, requiring a clear right and clear duty to
support it, I think it ought not to be granted in this case, especially as
it requires the company to use the bridge as a part of their continuous
line with all their trains, which may impose much inconvenience on
them, without corresponding benefit to the public.
United States v. Union Pacific Railroad Company.
(98 IT. S„ 569.)
1. The act of March 3, 1873 (17 Stat. 509), is a valid and constitutional exercise of
legislative power. Congress, by requiring the Attorney General to bring a
suit in equity in the name of the United States in any Circuit Court against
the Union Pacific Railroad Company and others, intended, not to change the
substantial rights of the parties to the suit, but to provide a specific mode of
procedure, which, by removing certain restrictions on the jurisdiction, process,
and pleading which are in other cases imposed, would give a larger scope to the
action of the court, and a more economical and efficient remedy than before
existed.
2. The provisions authorizing process to be served without the limits of the district
where the suit might be brought, and parties and subjects of controversy to
be united which, in an ordinary chancery suit, would render a bill multifari¬
ous, are regulations of practice and procedure which are subject to legislative
control.
3. Statutes have been frequently passed directing suits for specific objects to be
brought by an attorney-general, and regulating the proceedings in them, such
as a quo warranto, or a bill in equity against a corporation to test its right to
the exercise of its franchises, or to declare them forfeited, or, if insolvent, to
wind up its business and distribute its assets; and the validity of such stat¬
utes has uniformly been recognized.
4. This bill having, on demurrer, been dismissed below, its sufficiency must be
determined here by the provisions of said act; for it cannot be supposed that
Congress, in laying down in specific terms the subject-matter of the suit, and
granting enlarged and peculiar powers to the court, intended that any other
matters should be tried in the case.
5. This is confirmed by the fact that the same act provided other remedies for other
subjects of controversy with the Union Faciiic Railroad Company, and an
effectual means of investigating all its affairs.
6. That act authorized a decree in favor of that company for money due for capital
stock, for money or property received from it on fraudulent contracts, or which
ought in equity to belong to it; and also a decree in favor of it or of the United
States for money, bonds, or lands wrongfully received from the latter, which
ought in equity to be paid or accounted for.
7. Except in favor of the company or of the United States, there can, under this act,
therefore, be no recovery, and none but such as was sanctioned by the principles
of equity before it was passed.
8. The company might, by a cross-bill, have availed itself of the act; but it refuses
to do so, and demurs to the bill, thereby foregoing any relief in its favor in this
suit. As it is conformable neither to the principles of equity nor to those of
the common law to render a decree or a judgment in favor of a competent party
who asserts no claim and declines to proceed in the case, there can be no recov¬
ery in this suit in favor of the company.
9. Though the bill sets up many fraudulent transactions on the part of the direct¬
ors of the company and some of its stockholders, for which the other stock¬
holders would be entitled to relief, the latter are not parties, and neither the
frame of the bill nor the provisions of the act authorize any relief or recovery
in their favor.
10. The United States sustains two distinct relations to the company; namely, that
of the government creating it and exercising legislative and visitatorial pow¬
ers; and that growing out of the contract contained in the charter and its
amendment.
11. This bill exhibits no right on the part of the United States to relief founded on
that contract. The company has completed its road, keeps it in running order,
and carries all that is required by the government. To the latter nothing ia
due, and it has the security which by law it provided.
decisions of the supreme court.
85
12. Nor does the bill show any thing which authorizes the United States as the
depositary of a trust, public or private, to sustain this suit.
13. This interference by the Attorney-General with corporations ou the ground of
such a trust in the government is limited to two classes, to neither of which
the present case belongs: 1. Where religious, charitable, municipal, or other
corporations whose functions are solely public, and whose managers have
destroyed or misappropriated the fund, or otherwise abused their functions;
2. Where other corporations exercise powers beyond those to which they are
limited by the law of their organization.
14. While the court does not say that there is no trust in regard to the duties of the
company which the United States can enforce in equity, it is of opinion that
none such is shown in this bill, and that no case is made for any relief author¬
ized by the act under which it was brought.
Appeal from the Circuit Court of the United States for the District
of Connecticut.
The act of Congress making appropriations for the legislative, exec¬
utive, and judicial expenses of the government, approved March 3,1873
(17 Stat. 509), has the following language in its fourth and last section:—
"The Attorney General shall cause a suit in equity to be instituted,
in the name of the United States, against the Union Pacific liailroad
Company, and against all persons who may, in their own names or
through any agents, have subscribed for or received capital stock in
said road, which stock has not been paid for in full in money, or who
may have received, as dividends or otherwise, portions of the capital
stock of said road, or the proceeds or avails thereof, or other property
of said road, unlawfully and contrary to equity, or who may have
received as profits or proceeds of contracts for construction or equip¬
ment of said road, or other contracts therewith, moneys or other prop¬
erty which ought, in equity, to belong to said railroad corporation, or
who may, under pretence of having complied with the acts to which
this is an addition, have wrongfully and unlawfully received from the
United States bonds, moneys, or lands which ought, in equity, to be
accounted for and paid to said railroad company or to the United States,
and to compel payment for said stock, and the collection and payment
of such moneys, and the restoration of such property, or its value,
either to said railroad corporation or to the United States, whichever
shall in equity be held entitled thereto. Said suit may be brought in
the Circuit Court in any circuit, and all said parties may be made defend¬
ants in one suit. Decrees may be entered and enforced against any one
or more parties defendant without awaiting the final determination of
the cause against other parties. The court where said cause is pending
may make such orders and decrees, and issue such process as it shall
deem necessary to bring in new parties, or the representatives of par¬
ties deceased, or to carry into effect the purposes of this act. On filing
the bill, writs of subpoena may be issued by said court against any par¬
ties defendant, which writ shall run into any district, and shall be
served, as other like process, by the marshal of such district."
Following this, and constituting a part of the same section, are cer¬
tain provisions for the future government of the railroad company and
its officers, to wit: that its books and correspondence shall at all times
be open to inspection by the Secretary of the Treasury; that no divi¬
dend shall be made but from actual net earnings, and no new stock
issued or mortgages created without consent of Congress; and punish¬
ing directors who shall violate these provisions. Also enacting that
the corporation shall not be subject to the bankrupt law, and shall be
subject to a mandamus to compel it to operate its road, as required
by law.
A previous section directs the Secretary of the Treasury to withhold
86
DECISIONS OF THE SUPREME COURT.
from every railroad company wbicli has failed to pay the interest on
bonds advanced to it by the government, all payments on account of
freights or transportation over such roads, to the amount of such inter¬
est paid by the United States, and also the five per cent of the net
earning of the roads due and unapplied as provided by law; and it
authorized the companies who might wish to contest the right to with¬
hold these payments to bring suit against the United States in the
Court of Claims for the money so withheld.
The Attorney General, pursuant to said fourth section, filed a bill in
equity in the Circuit Court of the United States for the District of
Connecticut against the Union Pacific Railroad Company, the Wyoming
Coal Company, the Credit Mobilier Company, and some one hundred
and fifty individual defendants.
The bill, after reciting certain provisions of the acts of July 1, 1802
(12 Stat. 480), and July 2, 1804 (13 id. 356), and other acts amendatory
thereof, in relation to the Union Pacific Railroad Company, and alleg¬
ing that the company was organized in October, 18(53, and its road
opened in 1869; that a board appointed under the joint resolution of
April 10,1809, reported deficiencies of construction, requiring an expend¬
iture of $1,580,100; that the United States issued to the company bonds
to the amount of $27,236,512, which, with the interest, after deducting
one half the compensation for services, made its aggregate liability,
Jan. 1, 1873, $33,435,221.77; and that under the mortgage it executed
(Nov. 1, 1805, to secure the payment of its first-mortgage bonds, it lias
issued and disposed of them to the amount of $27;237,000; charges
that, April 10, 1807, it executed a mortgage to secure the payment of
its so-called land-grant bonds, providing for the application of the pro¬
ceeds of all sales of its land from time to time in the redemption of
such bonds; that it has issued $10,400,000 of them, at seven per cent
interest, $8,811,000 of which remain outstanding and unpaid; that it
intends to sell land and apply the proceeds to redeem them, to that
extent impairing the security of the United States for the repayment
of its bonds issued to the company; that the company, on Sept. 1,1809,
issued $10,000,000 of so-called income-bonds, at ten per cent interest,
secured by an indenture pledging the net income for the interest, after
paying that on the first-mortgage bonds and land-grant bonds; that it
lias also issued $2,500,000 of eight per cent bonds, secured by mortgage
ou its bridge across the Missouri River; that for the redemption of the
income-bonds it intends to issue and put in the market eight per cent
sinking-fund bonds for $16,000,000, secured by mortgage on the prop¬
erty of the company; that it has a floating debt of $2,000,000, and has
issued certificates of stock amounting to $30,702,300; that, July 16,
1808, it entered into an agreement with Godfrey & Warded, which was
assigned, April 1, 1809, to the Wyoming Coal and Mining Company,
purporting, among other things, to lease the coal lauds of the Uniou
Pacific Railroad Company for fifteen years; that the stock in said coal
company, with the exception of one-tenth thereof, is owned by stock¬
holders and managers of the railroad compauy; that said contract is a
fraudulent method of obtaining for them a monopoly of coal supplies
and of the coal trade on the line of the road, and was made in contra¬
vention of sect.3 of the act of 1862; that on Sept. 1,1869, the railroad
company made a contract with the Atlantic and Pacific Telegraph
Company to transfer to the latter the entire line of telegraph appurte¬
nances constructed for the railroad company under the acts of Congress;
that the managers of the two companies are in part or in whole the
same; and that the arrangement is a fraudulent device to make for
DECISIONS OF THE SUPREME COURT.
87
said managers illegal profits, and to deprive the United States of its
lawful security and advantage from the telegraph line.
The bill sets forth an agreement with the Omaha Bridge Transfer
Company, and charges that it is a fraudulent arrangement on the part
of the managers and stockholders to transfer to themselves personally
profits which equitably belong to the railroad company.
The bill then charges, among other things, that the cost of the road
was less than one-half of the sum represented by the stock and other
preteuded outstanding liabilities; that the larger part of the stock and
bonds was issued by certain defendants in the name of the company,
to enrich themselves; that the greater portion of the stock was never
paid for in cash, or in any other thing of equivalent value; that the
company is insolvent; that the government bouds and a portion of the
first-mortgage bonds would have been sufficient to construct the road,
without any expenditure from stock subscribed, or from land-grant
bonds, or from income bonds; and that the stock, if paid in cash or its
equivalent, would have been sufficient with less than one-half of the
government bonds to complete the road, without the issue of bonds by
the company; that at its organization in 1863 $2,177,000 stock was sub¬
scribed, on which ten per cent was paid; but no considerable sum was
afterward paid thereon, and no considerable amount of other subscrip¬
tions was ever made, except as part of the fraudulent transactions set
forth; that at the organization of the company the practical manage¬
ment of its business was committed to the executive committee, whereof
one of the defendants, Durant, then vice-president, was elected a mem¬
ber; that in August and September, 1864, he and his associates used
the name of one H. M. Iloxie to disguise a contract made by them in
the name of the company on one side, with themselves in the name of
Hoxie on the other, to construct about two hundred and forty-six miles
of the road between Omaha and the one hundredth meridian, at the
price of $50,060 per mile, which was known to be in excess of a fair
price therefor; that on Oct. 7, 1864, certain defendants, directors, and
another, a stockholder, agreed with him to take large interests in this
contract, with the design of becoming possessed of all the franchises
and property of the company, and to use, manage, and dispose of the
same for their private benefit; that in execution of said design they
obtained, in November, 1864, control of the charter of the Credit Mobi-
lier of America, a corporation of Pennsylvania, and on March 15,1865,
entered into a contract in writing to conduct its operations in connec¬
tion with the railroad company, outside of its charter, at an agency in
New York; that their intention was to substitute the Credit Mobilier
as a contractor in the "Hoxie contract," and that on the same day they
assigned to it the entire beneficial interest from the beginning in this
contract, when the Credit Mobilier was organized toco operate with the
railroad company, defendant Durant being chosen its president; that
they, in 1865 and 1866, purchased in the name of the Credit Mobilier,
and had conveyed to it, large numbers of shares of stock of the rail¬
road company, originally subscribed for in good faith at its organiza¬
tion; that they caused to be allotted among themselves, as stockhold¬
ers in the Credit Mobilier, the shares of railroad stock purchased from
the original subscribers, and also large numbers of other shares sub¬
scribed by, or in the name of, the Credit Mobilier, on which it was pre¬
tended that thirty per cent had been paid, and also to be distributed
among themselves a large amount of scrip procured by the Credit
Mobilier from the railroad company in pretended payment for construc¬
tion under the "Hoxie contract," which scrip, instead of cash, they
88
DECISIONS OF THE SUPREME COURT.
used in making pretended payments for the stock, certificates of which
they procured to be issued to them severally by the officers of the rail¬
road company.
It then states the division among certain defendants, in February,
18(17, of one thousand two hundred and fifty first-mortgage bonds
($1,250,000), which they had caused the railroad company, to issue and
deliver to the Credit Mobilier, on pretence of payment for road build¬
ing under the " lloxie contract;" that in 1807 they procured transfers
to the Credit Mobilier, with few exceptions, of all the outstanding
original shares of stock of the railroad company; and that thenceforth
they, the holders of all the stock of the Credit Mobilier, became also
holders of substantially all the stock of the railroad company, and
managed the same without regard to the rights or interests of the
United States; that in December, 1867, they fraudulently distributed
among themselves, as stockholders of the Credit Mobilier, in the way
of dividends, sixteen thousand shares of Union Pacific railroad stock,
issued to the Credit Mobilier, as assignee of the " Hoxie contract," on
account of fifty-eight miles of railroad west of the one hundredth me¬
ridian, already constructed and paid for by the railroad company, and
charges that they were from the beginning, and throughout, interested
in the whole of the profits of the " Hoxie contract," and that all the
work thereunder was done, and all measurements thereof and set¬
tlements therefor were made, by them in the double capacity of repre¬
sentatives of the two companies.
It then recites the facts aud objects of the so-called " Oakes Ames
contract," and charges that after the completion of the road, under the
"Hoxie contract," to the one hundredth meridian, in October, 1806,
they, as managers of the railroad company, went on, constructed, aud
paid for, at the price of about $27,500 per mile, a section of about one
hundred and thirty-eight miles of road west of the one hundredth
meridian, which was completed October, 1867; that they then entered
into a series of writings intended in effect to constitute a contract with
themselves as stockholders of the Credit Mobilier, for constructing at
excessive prices six hundred and sixty-seven miles of road, beginning
at the one hundredth meridian, and including the one hundred and
thirty-eight miles already built aud paid for at much lower rates; that
the objects and effects of this transaction were to despoil the company
of $3,000,000 of its stock and bonds, distributed among the defend¬
ants, under pretext of a contract to build a portion of its road already
built and paid for, and to give them, under the disguise of a contract
between jiarties in different interests, excessive prices for constructing
other portions of the road, and to place the control of the company in
seven trustees, and withhold its management and direction from the
stockholders and directors; that the first three dividends under the
" Oakes Ames contract" were received by the defendants named; that
on June 3 and 7, 1868, all the trusts in the triplicate agreement (one of
the writings connected with the "Oakes Ames contract"), in favor of
the stockholders of the Credit Mobilier, were directly declared in favor
of defendants individually, who received the dividends personally, and
not as stockholders of the Credit Mobilier; that thereafter defendants
proceeded, as general copartners in form as well as in fact, with the
seven trustees as their general managers, and that the last three divi¬
dends or allotments under the "Oakes Ames contract" were: July 3,
1868, $2,812,500, in first-mortgage bonds; July 8, 1868, $1,125,000 in
cash; Dec. 20, 1868, seventy-five thousand shares of stock at par value.
DECISIONS OF THE SUPREME COURT.
89
It then states the facts in regard to the pretended "Davis contract"
in November, 186S, for the construction of about 125.23 miles of the
road not embraced in the "Oakes Ames contract," which was assigned
to the same persons for the same trusts as in the case of the "Oakes
Ames contract;" and that the road to its western terminus was con¬
structed by certain stockholders of the company, acting through the
assignees, under cover of the " Davis contract."
After setting forth at large the dates aud amounts of the several
subscriptions which the defendants caused to be made to the stock of
the railroad company by the Credit Mobilier, or to be assumed by it, as
required by the " Hoxie contract," and the distribution of the stock
among the defendants; also the dates and amounts of the subscription
to the stock of the company made by the trustees under the " Oakes
Ames contract" and under the "Davis contract," and its distribution
in like manner; that neither the Credit Mobilier nor the trustees ever
paid for any portion of their stock, but the excessive contract prices
for construction were set off against the subscriptions; that the
accounts of the railroad company under the three contracts are unset¬
tled, with large balances claimed against the company; that defend¬
ants caused large amounts of money belonging to the company to be
expended for unlawful purposes.
Certain alleged fraudulent transactions on the part of one of the
defendants, a director, in relation to the sale of bonds, are set forth, in
respect of which it is charged he is accountable to the company, which
wrongfully refuses to compel him to account.
The bill then charges that the defendants made further divisions
and distributions among themselves of the assets of the company, and
engaged in other unlawful transactions and dealings with respect to its
property, which the complainant is unable to set forth in detail, but
which amount to about $17,000,000 in excess of the amounts partic¬
ularly set forth, and that large amounts of the stock and bonds divided
among defendants are still held by them or some of them.
The present condition of the company, with regard to its stock,
finances, value of its road, and management, is then set forth, and it is
averred to be doubtful whether the road would sell under the lirst
mortgage for more than enough to pay those bonds, and that if the
land-grant mortgage is allowed to be administered according to its
terms, it will exhaust the security of the United States in the lands;
that the company had no right to issue first-mortgage bonds or land-
grant bonds or income bonds for distribution among stockholders as
profits or for sale to them below their value, and such bonds to the
extent so issued and distributed or sold are invalid, unless in the hands
of bona fide purchasers without notice; that it has no right to exhaust
the security of the United States by paying either principal or interest
of land-grant bonds or income bonds; that the so-called trustees and
assignees, under the "Oakes Ames contract" and "Davis contract,"
are jointly and severally responsible for all the stock and bonds issued
to them; that the grants to the company in the acts of Congress were
grants in aid of a public work of the United States, aud are held in
trust, to be applied to a public use; and that the property mentioned
is also a trust for the payment to the United States of the subsidy
bonds; that the present management of the company is in adverse
interest to the United States; that the latter is entitled, as further
security for its debt, and for the public objects provided for by Con¬
gress, to have declared that the management of the company should
90
DECISIONS OF THE SUPREME COURT.
be subject only to tlie votes of tlie stockholders holding full-paid stock;
to have the franchises, powers, and means so administered that unrea¬
sonable and unnecessary liabilities should not be created, and to have
an account of reasonable and necessary expenditures and liabilities as
a basis for regulating rates of fare under the eighteenth section of the
act of 18G2, and for determining the basis for estimating the five per
cent of net profits; to have the franchises, powers, and property so
administered as to secure the United States for the repayment of its
bonds and promote the public objects of the corporation; to have
maintained by the corporation, as a security for those objects, the char¬
acter and credit which would ensue from a lawful administration of
the franchises, powers, and means granted; and to have the lien of
the United States remain a first lien, except as to the priority given
to the first-mortgage bonds within the limits and for the purposes
expressed by Congress; that the company neglects and refuses to
state or render an account of cost 011 a lawful or just basis; that the
stock of the Credit Mobilier, and the stock, bonds, and cash of the
railroad company, held by and allotted, distributed, and divided among
several of the defendants, were received in trust for others, whom com¬
plainant asks leave to make parties defendant when discovered.
The relief prayed for is, that the grants by the United States be
declared to be held by the company for a public use, &c., and the prop¬
erty granted by the United States, &c., to be a trust fund to secure
the bonds lent by them, &c.; that the construction contracts, and the
land-grant and income mortgages be declared void; that an account
be taken of the actual cost, &c., of the Union Pacific Pail road and
Telegraph: the United States bonds issued, &c.; the stock subscribed,
sold, issued, &c.; and of the lands, &c., obtained from the United
States; that persons unlawfully holding stock or other property of the
company restore it, &c.
A large number of the defendants resided out of the district and
State of Connecticut. Subpoenas directed to them were issued to the
marshals of the several districts in which they respectively resided, and
service thereof was there duly made upon them. There were three
classes: 1. Those sued in their own right; 2. Those sued as executors
of the estates of deceased persons domiciled at the time of their death
out of said State; and, 3. Corporations organized under laws of some
other State.
The railroad company demurred, alleging " that the complainant hath
not, by its said bill, made such a case as entitles it in a court of equity
to any discovery or relief from or against this defendant touching the
matters contained in the said bill, or any of such matters."
The defendants who were served with process in the district of Con¬
necticut likewise appeared, and filed demurrers to the bill for want of
equity and for multifariousness.
A large number of those defendants who were served with process
out of the district of Connecticut appeared de bene esse, and filed
motions to dismiss the bill as to them, respectively, stating as the
grounds of their motion that by the averments of the bill they were
respectively non-residents of Connecticut, and that the process showed
that it was served upon them out of the district.
Some of the defendants, residing out of Connecticut, demurred to the
bill for want of equity and for multifariousness; others, who were non¬
residents of Connecticut, filed answers with clauses of demurrer.
The case was argued upon the bill and the pleadings, and the motions
DECISIONS OP THE SUPREME COURT,
91
to dismiss. The demurrers were sustained, and an order entered over¬
ruling the motions.
The several non-resident defendants whose motions to dismiss were
thus overruled, thereupon, under a protestando, demurred for want of
equity and for multifariousness.
Several defendants, who had answered, withdrew their answers after
the decision of the court on the demurrers, and demurred.
At the April Term, 1874, the court below entered a general and final
decree upon the bill, demurrers, and answers so filed, dismissing the
bill as to all the defendants duly served with process. Whereupon the
United States appealed to this court, and here assigns the following
errors:—
The court below erred,—
1. In sustaining the demurrers.
2. In dismissing the bill as to certain defendants who had answered.
3. In dismissing it as to parties who had neither pleaded, answered,
nor demurred.
The case was argued at the October Term, 1876, The Solicitor-Gen¬
eral, Mr. Aaron F. Perry, and Mr. J. Eubley Ashton appearing for the
United States, and Mr. Sidney Bartlett and Mr. William M. Evarts for
the appellees.
A reargument having been ordered, it was again heard at the pres¬
ent term.
The Attorney-General and The Solicitor-General for the United States.
The objections taken by motion to the jurisdiction of the court below
have not been duly brought before this court, inasmuch as the defend¬
ants did not object to the jurisdiction over their persons by plea (either
instead of their motions or after these had been denied), but demurred
for want of equity, and thereby waived their supposed personal privi¬
lege of being served within the district. The protest attached to the
demurrers cannot impart to the proceeding by motion an effect which
it did not otherwise possess, although it may save any objection duly
made and entered.
However, in case it shall be considered that the question is duly pre¬
sented here, we submit that process was lawfully served.
This proposition depends, of course, upon the validity of the act of
March 3, 1873, the constitutionality of which is questioned not only by
the motions but by the demurrers. It therefore seems convenient to
consider all of these questions together.
I. It is "suggested that in compelling the defendants alone, in contra¬
distinction to the great mass of citizens, to obey process served outside
of the State and district of the court which issued it, especially where
such persons are executors or administrators authorized by some other
State, the act is unconstitutional, because it deprives tliem of their
property without due process of law, and sets up a special court differ¬
ent from those ordained and established by the general legislation of
Congress.
It may be admitted that Congress cannot, by retrospective legisla¬
tion, constitutionally make a substantial difference between citizens
taken individually as regards the process to which these are either
entitled or amenable; and also that the word " substantial," so used,
includes other rights than such as are elsewhere conferred by the Con¬
stitution. Courts understand, as matter of law, that certain rights of
suitors are important, and that others are not so, and discriminate
accordingly. It is competent for Congress, and for the legislature of
92
DECISIONS OP THE SUPREME COURT.
every State the constitution of which contains that guaranty, to make
any provision as to process for a particular suit which does not mate¬
rially affect the parties thereto. Upon the general topic of due process,
see Murray's Lessee et al. v. Hoboken Land and Improvement Co., 18
How. 272.
In the present instance, the variation against the defendants, as
regards service of process, is unimportant; for it is indifferent to a
suitor in equity whether he be sued iu one district or in another,
because—
1. The Constitution regards political or geographical limits as impor¬
tant for criminal, and perhaps other, trials at common law, but is sig¬
nificantly silent in this respect as to suits in equity.
In this connection, it is submitted that those who framed that instru¬
ment, and those who in a temper severely critical proposed the earliest
amendments to it, turned their attention to the matter of the place
where trials should be held, and that their repeated consideration and
action resulted in an express provision in that respect for the trial of
persons charged with crimes,—a qualified one for trials at common law,
and an entire omission to regulate the trial of equity causes.
There also may be a qualified regulation of suits at common law,
because it seems that trial by jury does, in the nature of things, savor
of locality, so that it might well be suggested that a retrospective law
subjecting a person to trial by a jury drawn from a place other than
that of juries who by law try such matters for citizens in general,
would violate one of his important rights.
It is otherwise where a trial by the court is competent. There, both
principle and authority show that under our system venue is immaterial.
In Burnam v. The Commonwealth (1 Duv. (Ky.) 210), the court con¬
sidered certain special provisions for the service of process created by
the Kentucky act of 1.802, c. 504, which authorized an action against
the officials of the provisional government of that State. Those provi¬
sions operated retrospectively upon a definite number of individuals,
yet the court said: " We cannot adjudge any provision of the act to be
unconstitutional. As in other cases, when actual notice cannot be given
to absent defendants, there must either be no remedy, or constructive
notice must be substituted as sufficient; and what constructive notice
shall be given is a question of legislative discretion rather than of power.
We see no abuse of sound discretion in the mode of service prescribed
in this statute."
That decision seems entirely in point here. The only difference in
regard to service of process is that Kentucky, having no political juris¬
diction over the territory iu which the defendants were supposed to be,
was confined to a summons by publication; whereas here the United
States has such jurisdiction, and therefore could authorize actual service.
2. The method of taking testimony in courts of equity renders subor¬
dinate geographical limits in that connection unimportant.
3. So also does their method of deciding upon issues of fact.
4. Courts of the United States, no matter where sitting, take notice
of, and, whenever applicable, administer in behalf of suitors the laws
of every other State. 0wings v. Hull, 9 Pet. 607.
Therefore executors and administrators are at no special disadvan¬
tage in being sued outside of the State from which they derive their
appointment. A Yew York executor or administrator has iu the courts
of the United States in Connecticut every advantage and protection
which he possesses in those of his own State. Green's Administratrix
v. Cr eight on et al., 23 How. 90.
DECISIONS OF THE SUPREME COURT.
93
II. The act of 1873 is said to be unconstitutional in empowering the
United States to bring the suit. The United States can only recover
the moneys and property to which in equity it is entitled; and the
general principles of equity jurisprudence as heretofore upheld and
applied must ascertain and determine its title to relief. A remedy only
is furnished to enforce an existing right.
Among the parties against whom suit is authorized are those who,
under pretence of having complied with the act to which this is an
addition, wrongfully and unlawfully received from the United States
bonds, moneys, or lands, which ought in equity to be accounted for and
paid to it or to the company.
The bill states that certain persons, defendants, conspired to obtain,
for their own corrupt purposes, and did obtain, control of the company,
in its transactions with the United States, and in this way received
bonds and lauds. If this be established, there may be something to be
restored to the United States. It is true that the special purpose of
the act is the relief of the company and its restoration to the statu quo
contemplated by the charter. But if, upon taking the accounts, some¬
thing is to be restored to the United States, it seems that the above
particular state of facts, together with the general prayer, will authorize
such relief. English et al. v. Foxhall, 2 Bet. 595. The probability of
such a state of things seems anticipated by the act.
As to other matters, the act leaves the right of recovery where it
originally was,—in the company. It is true that the company is for¬
mally a defendant, but it is not uncommon for such parties to assume
by appropriate pleading the relation of complainants in equity suits,
and thereupon to partake in the relief decreed against their original
co-defendants.
The United States is made the complainant in a suit the main object
of which is to give relief directly to the company and indirectly to the
complainant, but which, in a certain event, contemplates direct relief
also to the latter. The act relates to the remedy alone, and at most
authorizes virtually one sort of multifariousness or misjoinder. That
is a matter of form, which Congress can, at its pleasure, regulate and
control.
Excluding from consideration the special sort of multifariousness
above mentioned,—that is, taking for granted that the United States
claims nothing here for itself,—the peculiarity of the act lies in author¬
izing the United States to bring a suit in which it is to recover nothing,
the litigating parties on both sides being made defendants, and it being
actor only so far as to ask intervention by the court among the defend¬
ants, according to the principles of equity; i. e., by a sort of statutory
interpleader which the United States is interested in bringing about
and superintending until it becomes effective. The question, who shall
be the complainant of record, is not, therefore, one of substance. It
has been not unusual in the different States to provide by special
statutes that debts may be sued upon and recovered, for the benefit of
those really interested, in the name of some one designated by the act
and not privy to the contract. Cuyahoga Falls Co. v. McGaughey, 2 Ohio
St. 152; Carey v. Giles, 9 Ga. 253; Crawford v. Branch Banlc of Mobile,
7 How. 279; Hurdman v. Piper, 50 Mo. 292. See also a like principle
asserted in such cases as Livingston's Lessee v. Moore, 7 Pet. 469;
Watlcins v. Holman's Lessee, 16 id. 25; Edwards v.Pope, 3 Scam. (111.)
465; Hepburn v. Curtis, 7 Watts (Pa.), 300; Kilby v. Chitwood, 4 B. Mon.
(Ky.) 91.
The circumstance that the United States is not a stranger to the
94
DECISIONS OF THE SUPREME COURT.
company, but has always been represented within it by directors
appointed by the President, has been from the tirst a standing sugges¬
tion of a sort of guardianship by it, and therefore of its right to apply
to equity to enforce any course of honest or lawful dealing which it,
being in a minority in the direction, may have been prevented from
otherwise securing. The act of 1873 is no surprise, but is according to
due process.
Again, considering the act to be an amendment to the charter, as it
plainly is, it appears to be according to reasonable expectations founded
upon the pecuniary and other extraordinary interests of the United
States which are involved, that, if unlawful and fraudulent occurrences
like those specified in the act should take place, the government would
intervene, as complainant, to have the general condition of the com¬
pany restored as far as practicable to that originally contemplated.
Notice to this effect must be regarded as having by this state of things
been served upon everybody.
The act evidently has in view a case in which the company if ever it
were so, may not be sui juris, nor be able or willing to bring suit against
its masters, or at least cannot be relied upon to maintain such a suit to
its legitimate end. If this be true, the bill in question is a mere repeti¬
tion in technical form of certain circumstances contemplated by the
act, which, being the organic law of the suit, deals in generalities only.
Therefore, while the act of 1873 affords our only rule of allowance,
that rule is expressed organically; and, moreover, a suit brought under
it need not take all the risks against which it insures.
It is said that the act deprives the defendants of due process, in
allowing decrees against one or more parties, before the final determi¬
nation of the case. The direction is that such partial decree may be
given. Considering the context, the meaning is that this may be done,
where otherwise it will be according to the substantial equities among
the parties. Under such circumstances, it seems that no other party
than that whose connection with the case is so ended could object; if
otherwise, however, the matter is one merely of form, iu relation to
which Congress is competent to give directions.
III. A chief end of the creation and endowment of the Union Pacific
company was the accomplishment of governmental purposes.
This is manifested in the title of the act of 1802; the special provi¬
sions for vesting the franchises in it; the appointment and the duties
of the directors on the part of the United States; the requirement of a
continuous road for the use of the government for postal, military, and
other purposes; the absolute and preferential character of the right of
the United States to use the road; the reserved right to control the
profits of the company's business. In addition to its rights as sover¬
eign, the United States reserved certain rights as creditor, viz.: That
the subsidy bonds should be paid by the company at their maturity,
and in the meanwhile should be secured by mortgage; that five per
cent of the net earnings should anfiually be applied to the principal
and interest of such bonds; that one-half of the compensation payable
to the company for public services should also be so applied. The com¬
pany was not empowered by its charter to include its franchises in its
first mortgage, or to make mortgages of its land grants or of its
income.
IV. The endowment of the company is held as a public trust, and
not as a mere donation. Olcott v. The Supervisors, 10 Wall. 693;
Worcester v. The Western Railroad Co., 4 Mete. (Mass.) 500; Railroad
Commissioners v. Railroad Company, 03 Me. 209.
DECISIONS OF THE SUPREME COURT.
95
The company, however, by its charter has specific and extraordinary
relations and duties of that sort. Denison v. Union Pacific Railroad
Co., 9 Wall. 579; Union Pacific Railroad Co. v. Penniston, 18 id. 5;
Tucker v. Ferguson, 22 id. 572; Rice v. Railroad Company, 1 Black, 358.
Y. Property held for public purposes becomes a trust-fund subject
to the ordinary jurisdiction of equity. Attorney-General v. Brown, 1
Swans. 265; Attorney-General of Ireland v. Mayor of Dublin, 1 Bli. N.
s. 312; s. c. 2 01. & Fin. 289; Attorney-General v. Aspinall, 2 My. & Or.
613; Parr v. Attorney-General, 8 01. & Fin. 409; Skinners' Company v.
The Irish Society, 12 id. 482.
Such jurisdiction is not visitatorial. Dartmouth College Case, 4
Wheat. 676.
YI. The obligations assumed by the company under the charter
raise a trust in favor of the United States.
The charter is a contract affecting specific property, and this fastens
a trust upon such property. Regard v. Hodges, 1 Yes. 477; 1 Perry,
Trusts, sect. 82; Seymour v. Freer, 8 Wall. 214; Barings v. Dabney, 19
id. 9; Evans v. Coventry, 5 DeG., M. & G. 920.
The word " condition " (see act of 1862, sect. 6) creates a trust. Stan¬
ley v. Colt, 5 Wall. 165; Soliier v. Trinity Church, 109 Mass. 1; Wright
v. Wilkins, 2 Best & Sm. 248.
So the assets of corporations are said to be a trust fund for creditors.
Curran v. Arkansas, 15 How. 307; Railroad v. Howard, 7 Wall. 409.
The objects to which the company was required by its charter to
devote its entire property were the construction, operation, and main¬
tenance of the road as an agency in governmental matters, and the
security and ultimate payment of the bonds lent by the United States.
A diversion of its property from these ends was a breach of trust.
Burke v. Smith, 16 Wall. 395.
In this connection see the provisions in the following sections of the
charter; viz., act of 1862, sects. 1, 3, 5, 6, 17, and 18; and act of 1864,
sects. 2, 5, and 10.
YII. The property of the company and its proceeds were a trust
fund for the payment of the bonds loaned by the United States to the
company.
These bonds were secured not only by a condition to that effect (act
of 1862, sect. 6), but also by a mortgage; and by stipulations that five
per cent of the net profits, and one-half of the compensation for services
to the United States, should be applied to pay them, and that the sub¬
scriptions for stock should be paid in cash.
YIII. The court has jurisdiction on the ground that the transactions
were ultra vires. Hare v. Railroad Company, 2 Johns. & H. Ill; East
Anglian Railroad Co. v. Eastern Counties Co., 11 O. B. 812; Solomons v.
Laing, 1 B. 1.351, and 3 id. 14; Zabriskie v. Railroad Company, 23 How.
381; Bissel v. Railroad Company, 22 X. Y. 288; Holmes v. Abattoir Com¬
pany, Law Bep. 1 Ch. 682.
As to the parties entitled to sue in order to correct action ultra vires,
see Bagshaic v. Railroad Company, 2 Mac. & G. 389; Spackman v. Lat-
timore, 3 Gif. 15; Reams v. Leaf, 1 Hem. & M. 681; Hare v. Railroad
Company, supra.
For observations pertinent to the right of the United States, consid¬
ering its special relations to this company, to obtain relief in equity
against its transactions ultra vires, see Walworth v. Holt, 4 My. & Or.
635.
IX. Jurisdiction of equity to protect public interests against viola¬
tions of charters. Attorney-General v. Detroit, 26 Mich. 266; Attorney-
9b
DECISIONS OF THE SUPREME COURT.
General v. Tudor 104 Mass. 239; The State v. Saline County
Court, 51 Mo. 300; „, torney-Gencral v. Mid. Kent Railway Co., Law Hep.
3 <Jli. 100, Ac.; Commissioners v. Smith, 10 Allen (Mass.), 135; Attorney-
General v. Railroad Companies, 30 Wis. 511; Dodge v. Woolsey, 18 How.
331
X. Jurisdiction to decree specific performance of the obligations of
the charter as to the nse of the property.
XI. Jurisdiction on the grounds of waste and fraud. Clagett v. Sal¬
mon, 5 Gill & J. (Md.) 331; Maryland v. Railroad Company, 18 Md. 193;
Kearney v. Leaf, 1 Hem. & M. 708; Jaclcson v. Ludeling, 21 Wall. 016;
Jones v. Bolles, 9 id. 301.
It is therefore submitted, in conclusion:—
1. That the United States has beneficial or property interests involved
in the transactions complained of, which might be enforced at the suit
of an individual, and concerning which it stands toward the railroad
company as a third party. It may enforce its rights in the same way
and lias the same rights as such party.
2. That the act of 1873 authorizes a suit in equity without express
restrictions, specifying several purposes, but not excluding others, and
not requiring the cause of action to be split. It joins only such parties
and such causes of action as would be joined in an ordinary equity suit
to accomplish the purpose, and looks only to the ordinary incidents of
a chancery suit. The provision for process is necessary, and the only
provision in the act which is necessary to the relief asked. But if there
should be greater departure from ordinary procedure than is supposed,
there is none involving constitutional objections.
3. That the United States having the two kinds of interest described,
the relief which would be granted in an equity suit, without a statute,
is coextensive with the relief specified in different terms by the statute.
It is inadmissible under such circumstances to construe the statute as
an arbitrary one, conflicting with rights of property; and without such
construction there is no constitutional objection to it.
1. That, construed however rigorously, the constitutional objections
supposed to e«ist against the relief prayed, as to past transactions, do
not apply to the preventive remedies sought, which are themselves
important to the ends of justice.
5. That the demurrers are untenable, in any view of the case, and
should be overruled.
Mr. Sidney Bartlett and Mr. lb. G. Russell, contra.
I. As to the constitutionality of the act of March 3, 1873.
1. The act under which this suit was brought violates the fundamen¬
tal right of citizens under a free government to ''equality before the
law," and may, therefore, be void, without reference to any express con¬
stitutional limitation or prohibition. The doctrine that there are implied
reservations of individual rights, even in the broadest grant of legis¬
lative power, has been judicially recognized and asserted; and among
them that of equality before the law has been, and must be, included.
Wilkinson v. Behind, 2 Pet. 627; Calder v. Bull, 3 Dall. 386; Taylor v.
Porter, 4 Hill (N. Y.), 110; Jlolden v. James, 11 Mass. 396; Durkee v.
Janesville, 28 Wis. 461; Bagg's Appeal, 43 Pa. 512; Loan Association
v. Topeka, 20 Wall. 655; Cooley, Const. Lim., pp. 487-490.
The express grants of constitutional power by which the validity of
the act in question is to be determined are to be found in art. 1, sects.
1 and 8, of the Constitution. Admitting that under them the power to
constitute tribunals inferior to the Supreme Court includes that of
ordaining the extent and mode in which the judicial power shall be
exercised, subject to the provisions defining its limits, we yet submit
DECISIONS OF THE SUPREME COURT.
97
that the grants are subject to the limitation that they are not to be so
construed as to imply a surrender by the people of "those reserved
individual rights which grow out of the nature of a.free government,"
a grant of which cannot be assumed to "lurk under any general grant
of legislative power;" and that under such interpretation any act which
undertakes to destroy or impair the great reserved right of equality
before the law cannot be deemed an exercise of legislative power.
It is not claimed that the actis void and unconstitutional merely because
it is retrospective in its action, or is special legislation affecting only a
single case, or confers upon the plaintiff in judicial proceedings new
and material privileges aud exemptions from existing rules of law, or
that it imposes upon the defendants in conducting their defence new
and onerous conditions at variance with pre-existing rules of law; but
because it combines all these objectionable elements, and thus passes
the limits of constitutional legislation, and exercises a power every¬
where recognized as arbitrary and tyrannical.
2. The act is unconstitutional and void, as repugnant to the Fifth
Amendment to the Constitution of the United States. "Nor shall any
person . . . be deprived of life, liberty, or property without due process
of law."
In construing this clause, its history and the circumstances under
which it was adopted and the purpose for which it was designed may
be considered.
It is matter of common knowledge that equality before the law was
then recognized as a fundamental principle; that much solicitude
was expressed that it had not been sufficiently guarded in the Consti¬
tution then proposed; and that the amendment in question was, with
others, adopted at the earliest possible date, for the purpose of protect¬
ing the citizen in this right against legislative encroachments. Feder¬
alist, No. 84; Journal of Congress (1787, 1788), vol. xiii., Appendix,
pp. 64-94.
If it be capable, the language is to be so construed, so that the words
"due process of law" shall be extended to the whole course of judicial
" proceedings, shaping, regulating, and enforcing remedies which affect
the rights and safety of the citizen, or his means or facilities of defence,
and to preclude all possible special legislation which should attempt in
relation thereto to discriminate between one citizen and another."
The adjudicated cases in which the terms of the Fifth Amendment
and equivalent or analogous terms of constitutional limitation have
been considered and applied, support our construction. Wayman v.
Southard, 10 "Wheat. 1; Murray's Lessee v. Eobohen, etc., Company, 18
How. 272; Davidson v. New Orleans, 96 IT. S. 97; Merrill v. Sherburne,
1 N. H. 199; Bates v. Kimball, 2 Chip. (Vt.) 77; Lewis v. Webb, 3 Me.
(Greenl.) 326; Durham v. Lewiston, 4 id. 140; Holden v. James, 11 Mass.
396; Picquet, Appellant, 5 Pick. (Mass.) 65; Davison v. Johonnot, 7
Mete. (Mass.) 388, 393; Simonds v. Simonds, 103 Mass. 572; Taylor v.
Porter, 4 Hill (N. Y.), 140; Westervelt v. Gregg, 12 N. Y. 202; Wynelia-
mery. The People, 13 N. Y. 378; 0'Conner v. Warner, 4 Watts & S. (Pa.)
223; Greenouqh v. Greenough, 11 Pa. 489; De Cliastelluxy. Fair child, 15
id. 18; Ervine's Appeal, 16 id. 256; Bagg's Appeal, 43 id. 512; Ruber
v. Riley, 53 id. 112; Wally's Heirs v. Kennedy, 2 Yerg. (Tenn.) 554;
Banh of State v. Cooper, 2 id. 599; Budd v. State, 3 Humph. (Tenn.)
483; Teft v. Teft, 3 Mich. 67; Bull v. Conroe, 13 Wis. 233; Durhee v.
Janesville, 28 id. 464; Journal of Congress (1787-88), vol. xiii., Appen¬
dix, pp. 64-94; 2 Kent, Com. 13; Story, Const., sect. 1945; Cooley,
Const. Lim., pp. 438, 441, 490.
7 PAC
D8
DECISIONS OF THE SUPREME COURT.
By tlie general law of tlie land applicable to all cases at tlie date of
the act, and still applicable to all other like cases, certain established
rules and principles of equity jurisprudence wore and are of binding
force, governing', as to the joinder of parties and the joinder of causes
of action; and among them the rule that "uniting in one bill several
matters, perfectly distinct and unconnected, against one defendant, or
the demand of several matters of a distinct and independent nature
against several defendants in the same bill," is inconsistent with the
right of defence, and cannot be upheld in a court of equity.
Equally established is the rule that there shall be but one final de¬
cree in which the rights and interests of the parties are to be settled.
These rules are by the terms of this act suspended and annulled.
The act is at variance with the right to due process of law, in another
respect still more important.
By the law as it then existed, and still exists as to all other cases,
the jurisdiction of each circuit court over the persons against whom
its process issues was confined to the district in which the court sits.
That tlie jurisdiction and process of these courts were confined by
their organization itself within the limits of their respective districts,
without regard to the limitation imposed by the eleventh section of the
Judiciary Act, was laid down by Mr. Justice Washington, as follows:—
"The division and appointment of particular courts for each district
necessarily confines the jurisdiction of the local tribunals within the
bounds of the respective districts within which they are directed to be
holden." Ex parte Graham, 3 Wash. 450. See also Picquet v. IS man, 5
Mas. 35; Poland v. Sprague, 12 Pet. 300; Day v. Newark Co., 1 Blatch.
628; Pomeroy v. New York & Hudson River Railroad Co., 4 id. 120.
But from abundant caution, Congress, by the eleventh section of the
Judiciary Act, provides expressly that "no civil suit shall be brought
before either of said courts (the Circuit or District Court) against an
inhabitant of the United States, by any original process, in any other
district than that whereof he was an inhabitant, or in which he shall
be found at the time of serving the writ."
In this condition of the statute law Congress intervenes, and pro¬
vides for this one case against certain defendants, not only a mode of
procedure unknown to the general rules of law, but a special and iso¬
lated jurisdiction, vested in some one circuit court to be designated by
the Attorney-General, to which, by the law then and still in force, as
to all other citizens, they could not be subjected, and to which by pos¬
sibility no one of them was, but for this act, subjected.
Under authority of the act providing that, "on filing the bill, writs
of subpoena may be issued by said court against any parties defendant,
which writ shall run into any district, and shall be served as other like
process by the marshal of such district." Writs of compulsory process
in a suit commenced in the Circuit Court for the District of Connecti¬
cut have been issued from said court into different States, and served
upon persons not inhabitants of said district nor found within its
limits.
In judging of the character of the act as affecting its constitutional
validity, we are entitled to look to the act itself, and not merely to the
course which has been pursued under it.
It is obvious that, under its provisions, suit might well have been
brought in a district where, by general law, no one of the defendants
was subject to the jurisdiction, and that to the act itself this objection
lies with equal force on behalf of all the defendants alike.
Equally obvious is it that the act, with reference to its constitutional
DECISIONS OF THE SUPREME COURT.
99
validity, is to be tried, by the same tests which should be applied to
any similar act conferring in favor of a particular individual a like
peculiar jurisdiction against particular designated defendants, against
whom a cause of action might exist.
Under it, at the discretion of the Attorney-General, each of these
defendants might be summoned, and, in order to defend his right, be
compelled to appear, before a circuit court of the United States in a
district remote from his home and his means of defence, into which but
for this act he could not be summoned, and into which no other citizen
can be compelled, which is in the nature of things a pecuniary burden
and something more.
This is imposing upon him an onerous condition as to his defence.
Ex parte Graham, supra.
Tliis objection applies with added force in favor of the corporations
made defendants; for they being, for purposes of jurisdiction, citizens
and inhabitants of the several States in which they are established and
under whose laws alone they exist, not only cannot have a domicile
elsewhere, but are incapable of being away from home, and hence are
in no event subject to process except in the State or district where
they are created or have their domicile. Banlc of Augusta v. Earle, 13
Pet. 519; Baltimore & Ohio Railroad v. Harris, 12 Wall. 05; Railway
Company v. Whitton, 13 id. 270; Hay v. Newark India-rubber Manu¬
facturing Co., 1 Blatch. 028; Pomeroy v. New York & Hudson River Rail¬
road Co., 4 id. 120; Sayles v. Northwestern Insurance Co., 2 Curt. 212.
3. The act is unconstitutional and void in its provisions affecting the
jurisdiction and mode of procedure in the present suit, because it is in
violation of sect. 1 of art. 3 of the Constitution of the United States,
and is an exercise of judicial power by the Legislative Department.
By that article, in connection with arts. 1 and 2, declaring how the
legislative and executive powers shall be vested, it cannot be questioned
that the partition and separation of these powers is distinct and com¬
plete. Hash v. Van Kleeck, 7 Johns, (hi. Y.) 477; Merrill v. Sherburn,
1 H. H. 199.
Congress deals directly with a cause between adverse parties, and
prescribes certain rules of procedure, or, in other words, issues its
mandate to the court as to the manner in which a cause shall be con¬
ducted and determined.
It declares that facts which, under the ordinary administration of
the rules of equity jurisprudence, would justify the defence of multi¬
fariousness shall be held by the court not to sustain that defence, and
thus in a particular case itself exercises the judicial function. •
In O'Connor v. Warner, 4 Watts & S. (Pa.) 223, Gibson, C. J., says:
UA legislative direction to perform a judicial function in a particular
way would be a direct violation of the Constitution, which assigns to
each organ of the government its exclusive function and a limited
sphere of action. Ho one will assert that a court would be bound by
a mandate to decide a principle or a cause a particular way. Such a
mandate would be a usurpation of judicial power." p. 227.
A legislative mandate, that in a particular case the court shall
decide as to one defence in a particular w,ay, is obviously open to the
same objection as an order so to decide the case itself. Picquet, Appel¬
lant, 5 Pick. (Mass.) 65; Bates v. Kimball, 2 Chip. (Vt.) 77; Lewis v.
Webb, 3 Me. 326; Merrill v. Sherburn, 1 N. H. 199; Greenough v. Green-
ough, 11 Pa. 489; He Chastellux v. Fairchild, 15 Pa. 18; Waters v.
Stickney, 12 Allen (Mass.), 1.
4. The act is unconstitutional, and inoperative to maintain jurisdiction
100
DECISIONS OF THE SUPREME COURT.
in this suit, because it fails to confer that jurisdiction on the Circuit
Court of the District of Connecticut, or on any other court.
The power to ordain and establish courts inferior to the Supreme
Court is vested in Congress. Setting aside the objection to special
legislation for a particular case, we may admit the power of Congress
to confer additional jurisdiction on any one or on all the inferior courts
it has established, in such manner as to include the present suit. To
do so, however, involves directly the increase of territorial jurisdiction
of all or of some one of such courts; for neither all nor any of them
had, without the aid of the act, power to issue the process for which it
provides.
Congress then might have conferred the required additional territo¬
rial jurisdiction 011 all or on any one of said courts. It has in fact done
neither.
The action of the Attorney-General was required not to determine
in which of the circuit courts he should bring his bill, but which should
have jurisdiction of it when brought.
This constitutes a case of delegated legislative power which Congress
was not competent to grant, or the Attorney-General to exercise.
It is by his will that this act becomes operative, if it operates at all,
to confer jurisdiction on the Circuit Court for the District of Connecti¬
cut. Congress described and defined the jurisdiction, and declared
that some one circuit court of the United States should possess it, but
omitted to designate that one court. The power to ordain, establish,
or determine the jurisdiction of the inferior courts is one which it is not
left to an executive officer to exercise in whole or in part.
5. The act is void and inoperative as to those defendants who are
made parties to the bill as executors or administrators. It is not com¬
petent for Congress to subject them to the jurisdiction of the court in
this suit, because an enactment to that effect is at variance with their
established common law right to be exempt from suit or liability except
in that State from which their powers are derived. Their authority to
appear and defend, and their liability to be compelled so to do, are lim¬
ited to such State. The limit of their liability is the subject of State
legislation only, which Congress can neither increase nor diminish.
Yaughan v. Northup, 15 Pet. 1; Dixon's Executors v. Ramsay, 3 Cranch,
319; Armstrong v. Lear, 12 Wheat. 109; Low v. Bartlett, 8 Aileu (Mass.),
259.
II. As to the case made by the bill.
The entire object to be accomplished by the act is to procure restora¬
tion or pecuniary compensation for past wrongs or frauds suffered by
the company during its early history, which, it is alleged, were com¬
mitted by a portion of its directors and by others, members of as well
as strangers to it.
There is thus raised the question, Does the government stand in the
attitude or till such relations to the company as would enable it, upon
legal principles, without the act, to maintain such a suit?
A scrutiny of the decided cases and an examination of the princi¬
ples on which they rest warrant the assertion of the following propo¬
sitions :—
1. Such wrongs are to be redressed by the action of the corporation
itself, or, 011 its neglect or refusal, by any one or more of its share¬
holders.
2. The only exceptions to this rule are either when such corporation
holds its property to charitable uses, or when, by legislation, its prop¬
erty is impressed with a public trust.
In the case of charitable uses, the government, as parens patrice, has
DECISIONS OF THE SUPREME COURT.
101
the prerogative right and duty to redress such wrongs, because, from
the contingent character of the possible beneficiary, there is no cestui
que trust capable in law of redressing the same; and by statute the
other class of corporations hold their property on a declared, expressed
public trust, for the violation of which it is the prerogative right of the
State to recover. Attorney-General of Ireland v. City of Dublin, 1 Bli.
N. s. 306, 34-7.
The only other remaining class of corporations whose past wrongs
or injuries can by the law of England be now the subject of suit by the
State consists of municipal or other public corporations. It is settled
that the right of the State thus to interpose had no existence until the
same was created by the statute of William IV. (1835).
The prior condition of the law in England is displayed by counsel,
and conceded by the court, in Attorney-General v. Corporation of Liver¬
pool, 1 Myl. & (Jr. 201. The doctrine is thus stated by Lord Campbell
in Parr v. Attorney-General, 8 CI. & Fin. 431: "Before the Municipal
Corporations Act passed, corporate property was not subject to any
trust: the corporations might do with it what they pleased, and, gen¬
erally'speaking, no relief could be obtained at law or in equity for any
misapplication of it." See also Attorney-General v. Aspinall, 2 Myl.
& Cr. 613; Attorney-General v. Poole, 4 id. 17; Attorney-General v. Wil¬
son, Cr. & Ph. 1.
The question of the right of a State, by suit in its name, to redress
and restore pecuniary losses of political corporations arising from the
frauds of their officers was thoroughly discussed, and, it is believed,
all the authorities now cited by the government collected by eminent
counsel in People v. Ingersoll, 58 N. Y. 1. And it was determined that
the State could not maintain the action, but that redress must be sought
by the corporation.
If it be held that the doctrine of the English courts, that, prior
to the statute of William IV., property of political or municipal corpo¬
rations is not so held in trust as to warrant the interference of the
State for its recovery, has no application under our institutions; that
not only are such corporations to be deemed public corporations, but
that all frauds or wrongs by which their property is diminished or lost
are to be redressed and restoration obtained, not by the corporation
but by the State (for it would seem the right cannot exist in both), the
inquiry then arises, Can this railroad company be held to belong to
the same class as municipal or political corporations?
If its character had not been discussed and determined by this
court to be one where the property is " neither in whole nor in part the
property of the government. The ownership is in complainant, a pri¬
vate corporation, though existing for the performance of public duties"
{Railroad Company v. Peniston, 18 Wall. 5), this point might call for a
more extended discussion.
That the company exists for a public purpose, and could only be
created ou that ground, by no means constitutes it a public corpora¬
tion. To use the language of Mr. Chief Justice Marshall, "Corpo¬
rations are only public when the whole interest and trust franchises
are the exclusive property and domain of the government itself." See
Rational Panic v. Commonwealth, 9 Wall. 353.
Assuming that the company does not belong to the class of public
or charitable corporations, holding all its property in trust, it is sub¬
mitted that the perusal of the cases relied on by the government to
maintain its bill will show with distinctness,—
First, That although the jmwer of the government has in England
been recently extended to the restraint by information in equity of
102
DECISIONS OF THE SUPREME COURT.
excesses or abuses of corporate franchises (see Attorney-General v.
Great Northern Railway Co., 1 Drew & Sin. 154),—a doctrine which is
in controversy in this country (see cases cited at the end of sect. 1)27,
2 Story, Eq.),—yet no case has been or can be cited where, in any pro¬
ceeding in equity by the State alone against a corporation, except in
the eases of public charity or public trust, any attempt has ever been
made to recover to its own use or that of the corporation compensation
or restoration for losses suffered by maladministration.
Second, That not only is there an absence of any such case or cases,
but the authorities show that the only method known to the law by
which such restoration or compensation can be attained is for the gov¬
ernment to permit the corporation or party injured and seeking redress
or compensation to join with the information of the Attorney-General,
tiled in behalf of the government, seeking to enjoin and restrain an
existing abuse, a bill in behalf of the injured corporation or party
seeking compensation for such loss. Attorney-General v. Wilson (Cr.
A Ph. 1) is an illustration of this rule, and contains an exposition of
the doctrine. See also Attorney-General v. Johnson, 2 Wils. Ch. 87;
Attorney-General v. Forbes, 2 Myl. & Gr. 123; Soltativ. l)e Helds, 2 Sim.
N. s. 151; Attorney-General v. Sheffield, 3 De G., M. & G. 304.
If this assumed right of action depends upon the inaction of the
corporation or the complicity of its present managers, seemingly such
right exists only in favor of stockholders or of some party who tills
substantially that relation.
If it is asserted to result from trust, or from the relation of the gov¬
ernment as mortgagee or as creditor, then it in no manner rests on the
inaction or refusal of the corporation or its officers to pursue its reme¬
dies: but the direct right exists independently of such inaction or
refusal, so that all the allegations of the bill, in that regard, may be
stricken out as valueless.
If it is placed on the ground of trust, then, since it seeks to follow
trust property into the hands of third parties, by reason that their
holding and possession are derived from fraud, to which the managers
of the corporation were parties, the asserted trust must be shown to
be one in which the title to the whole property of the corporation is
held by it in trust for the government, of which trust, aside from any
alleged actual notice, the parties have by the public charter notice.
There can be no such trust derived from this charter.
Perhaps it may be conceded that, as the result of the agreement
contained in the charter, the road of the company, upon its completion,
and all its appurtenances, are, as between the parties, held in what may
perhaps be called a quasi trust to carry out and give effect to all its
declared duties to the government in relation to the construction and
use of the road, and that the government might on neglect or refusal,
by proceeding in equity, compel the execution of that trust, and that
its redress for the violation of the trust is not limited to the forfeiture
set forth in the charter. Knox v. Guy, Law Rep. 5 H. L. 007.
But neither the act nor the bill is framed to enforce the performance
of such trusts. The road has been completed to the acceptance of the
government, and the company has heretofore, at all times, fuliilled each
and all of its duties.
To sustain this act and bill, there must be shown, as resulting from
the charter, a further agreement, under which not only is the property
of the company held in trust to secure the completion and use of the
road by the government, but that although the company has completed
the work and is discharging all its duties to the government, yet, lest
DECISIONS OF THE SUPREME COURT.
103
in some future contingency the performance of those duties may be
imperilled, all its assets are to be forever held in trust, so that at all
times whensoever by the misapplication or the fraudulent abstractions
of its property by its managers (or strangers with notice of the trust),
the same shall be diminished, the State may interfere, not merely to
restrain, but by suit to enforce restoration from the wrong-doers, be
they managers or third parties.
The seemingly conclusive argument against the existence of any such
trust is to be found in the fact that the endowments are, by the same
act creating the company, bestowed upon the same terms and like'con¬
ditions, in all respects, upon several State corporations who can hardly,
by the acceptance of the endowments be deemed to have subjected
their entire property to a trust of this character.
It has been suggested by the counsel for the government that
although it shall be held that the causes of action are limited by the
act upon which the bill rests, yet, within that act, the United States
may maintain this bill: 1, as mortgagee; 2, as creditor; 3, as being
authorized, under sect. 18 of the act of 1862, whensoever the income of
the road shall exceed ten per cent, to reduce its tolls; 4, as being
entitled, under the sixth section of the same act, to five per cent of net
income.
The results aimed at by the act are the restoration of money or
property of which the company has in times past been despoiled, and
to this it is in terms confined.
It nowhere contemplates a suit for an account of the actual cost of
the road, or what would have been such actual cost if its assets had not
been abstracted or diminished by the alleged wrongs set forth in the
act, so that it may be determined whether its power of reducing tolls
may or not now, under the eighteenth section, be exercised. Nor does
the act authorize a suit to determine whether the net earnings have not
been effected or reduced, and the five per cent diminished, by the frauds
or abstractions for which it directs suit to be brought. It discloses no
controversy between the company and the government as to the cost or
as to the five per cent. The wrongs set forth in the act, for which suit
is authorized, have no connection with either of these subjects.
As to the rights of the government as mortgagee or as creditor, it is
to be noted that the assets or property alleged to have been wasted or
abstracted are not embraced by the mortgage. That mortgage does
not comprehend the shares of the company, its bonds, or its choses in
action, which are to be reclaimed or restored under the act.
But if it were true that the act was framed to vindicate and protect
the rights of the government as a mortgagee whose debt has not
matured, it will be impossible, we think, to find authority to recover
back from the mortgagor or a third party, by a bill or information in
equity, the pecuniary value of past waste. It would be alike impos¬
sible to recover as against third parties who profited by the waste.
The rights of the government as a creditor (and a creditor no part of
whose debt has matured) even to restrain waste by its debtor of his
general assets would hardly seem to require discussion.
Mr. Justice Miller delivered the opinion of the court.
The Union Pacific Railroad Company brought the suit provided for
in the second section of the act of March 3, 1873, 17 Stat. 508. The
case was argued before us on appeal from the judgment of the Court of
Claims. All the questions which concern the obligations of the com¬
pany to pay money to the government, either by way of freight or gov¬
ernment transportation, or for the five per cent on the net income of
the road, were raised in that suit.
104
DECISIONS OF THE SUPREME COURT.
The Attorney-General, in pursuance of the directions of the fourth
section of the act, filed this bill in equity. Many of the defendants
demurred to the bill generally, and at the head of this class is the rail¬
road company.
The Circuit Court sustained this demurrer and dismissed the bill, and
the case is before us on appeal from that decree.
No suggestion is made either here or in the court below of any defect
in the bill which can be remedied by amendment. The bill is very elab¬
orate, very ably drawn, and no doubt presents in a very intelligible man¬
ner every thing which the facts known or suspected justified the pleader
in placing in any bill which can be framed under the special statute
authorizing the suit.
The question for decision is, therefore, squarely presented to us, as
it was to the Circuit Court, whether, by the aid of that statute, and
within the limits of the power it intended to confer, this bill can be sus¬
tained under the general principles of equity jurisprudence.
We say by the aid of that statute, because it is conceded on all sides
that without it the bill cannot stand. The service of compulsory process
on a party residing without the limits of the district of Connecticut who
is not found within them, is expressly forbidden by the general statute
defining the jurisdiction of the circuit courts. Parties and subjects of
complaint having no proper connection with each other are grouped
together in this bill, and they, by the accepted canons of equity plead¬
ing, render it multifarious. This, aud other matters of like character,
which are proper causes of demurrer, are fatal to it, unless the difficulty
be cured by the statute.
When we recur to its provisions, which are said to authorize these
and other departures from the general rules of equity procedure, coun¬
sel for the appellees insist that it is unconstitutional, not only in the
particulars just alluded to, but that it is absolutely void as affecting
the substantial rights of defendants in regard to matters beyond the
power of Congress.
If this be true, Ave need inquire no further into the frame of the bill,
and we therefore proceed, 011 the threshold, to consider the objections
to the validity of the statute.
The Constitution declares (art. 3, sect. 2) that the judicial power shall
extend to all cases in law and equity arising under the Constitution, the
laws of the United States, and the treaties made, or which shall be
made, under their authority; and to controversies to Avliich the United
States shall be a party.
The matters in regard to which the statute authorizes a suit to be
brought are very largely those arising under the act which chartered
the Union Pacific liailroad Company, conferred on it certain rights and
benefits, and imposed on it certain obligations. It is in reference to
these rights and obligations that the suit is to be brought. It is also
to be brought by the United States, which is, therefore, necessarily the
party complainant. Whether, therefore, this suit is authorized by
the statute or not, it is very clear that the general subject on which
Congress legislated is within the judicial power as defined by the
Constitution.
The same article declares, in sect. 1, that this "power shall be vested
in one supreme court and in such inferior courts as the Congress may,
from time to time, ordain."
The discretion, therefore, of Congress as to the number, the character,
the territorial limits of the courts among which it shall distribute this
judicial power, is unrestricted except as to the Supreme Court. On
DECISIONS OP THE SUPREME COURT.
105
that court the same article of the Constitution confers a very limited
original jurisdiction,—namely, "in all cases affecting ambassadors, other
public ministers, and consuls, and cases in which a State shall be a
party,"—and an appellate jurisdiction in all tlie other cases to which
this judicial power extends, with such exceptions and under such regu¬
lations as the Congress shall make.
There is in this same section a limitation as to the place of trial of all
crimes, which it declares shall (except in cases of impeachment) be held
in the State where they shall have been committed, if committed within
any State.
Article (5 of the amendments also provides that in all criminal prose¬
cutions "the accused shall enjoy the right to a speedy and public trial
by an impartial jury of the State and district wherein the crime shall
have been committed, which district shall have been previously ascer¬
tained by law." These provisions, which relate solely to the place of
the trial for criminal offences, do not affect the general proposition.
We say, therefore, that, with the exception of the Supreme Court, the
authority of Congress, in creating courts and conferring on them all or
much or little of the judicial power of the United States, is unlimited
by the Constitution.
Congress has, under this authority, created the district courts, the
circuit courts, and the Court of Claims, and vested each of them with
a defined portiou of the judicial power found in the Constitution. It
has also regulated the appellate jurisdiction of the Supreme Court.
The jurisdiction of the Supreme Court and the Court of Claims is not
confined by geographical boundaries. Each of them, having by the law
of its organization jurisdiction of the subject-matter of a suit, and of the
parties thereto, can, sitting at Washington, exercise its power by appro¬
priate process, served anywhere within the limits of the territory over
which the Federal government exercises dominion.
It would have been competent for Congress to organize a judicial sys¬
tem analogous to that of England and of some of the States of the Union,
and confer all original jurisdiction on a court or courts which should
possess the judicial power with which that body thought proper, within
the Constitution, to invest them, with authority to exercise that juris¬
diction throughout the limits of the Federal government. This has been
done in reference to the Court of Claims. It has now jurisdiction only
of cases in which the United States is defendant. It is just as clearly
within the power of Congress to give it exclusive jurisdiction of all
actions in which the United States is plaintiff. Such an extension of
its jurisdiction would include all that the statute under consideration
has granted to the Circuit Court.
It is true that Congress has declared that no person shall be sued in
a circuit court of the United States who does not reside within the dis¬
trict for which the court was established, or who is not found there.
But a citizen residing in Oregon may be sued in Maine, if found there,
so that process can be served on him. There is, therefore, nothing in
the Constitution which forbids Congress to enact that, as to a class of
cases or a case of special character, a circuit court—any circuit court—
in which the suit may be brought, shall, by process served anywhere in
the United States, have the power to bring before it all the parties
necessary to its decision.
Whether parties shall be compelled to answer in a eourt of the United
States wherever they may be served, or shall only be bound to appear
when found within the district where the suit has been brought, is
merely a matter of legislative discretion, which ought to be governed
10G
DECISIONS OF TIIE SUPREME COURT.
by considerations of convenience, expense, &c., but which, when exer¬
cised by Congress, is controlling on the courts.
So, also, the doctrine of multifariousness; whether relating to improp¬
erly combining persons or grievances in the bill, it is simply a rule of
pleading adopted by courts of equity. It has been found convenient in
the administration of justice, and promotive of that end, that parties
who have no proper connection with each other shall not be compelled
to litigate together in the same suit, and that matters wholly distinct
from and having no relation to each other, and requiring defences
equally unconnected, shall not be alleged and determined in one suit.
The rule itself, however, is a very accommodating one, and by 110 means
inflexible. Such as it is, however, it may be modified, limited, and con¬
trolled by the same power which creates the courts and confers its juris¬
diction. The Constitution imposes no restraint in this respect upon the
power of Congress. Sect. 921 of the Kevised Statutes, which has been
the law for fifty years, declares that when causes of like nature or
relating to the same question are pending, the court may consolidate
them, or make such other orders as are necessary to avoid costs and
delay. It is every day practice, under this rule, to do what the statute
authorizes to be done in the case before us.
But it is argued that the statute confers a special jurisdiction to try
a single case, and is intended to grant the complainant new and sub¬
stantial rights, at the expense and by a corresponding invasion of those
of the defendants.
It does not create a new or special tribunal. Any circuit court of the
United States where the bill might be filed was, by the act, invested
with the jurisdiction to try the case. Xor was new power conferred ou
the court beyond those which we have regarded as affecting the mode
of procedure. It seems to us that any circuit court, sitting as a court
of equity, which could by its process have lawfully obtained jurisdic¬
tion of the parties, and considered in one suit all the matters mentioned
in the statute, could have done this before the act as well as afterwards.
But if this be otherwise, we are aware of no constitutional objection
to the power of the legislative body to confer on an existing court a
special jurisdiction to try a specific matter which in its nature is of
judicial cognizance.
The principal defendant in this suit, the one around which all the
contest is ranged, is a corporation created by an act which reserved the
right of Congress to repeal or modify the charter. To this corporation
Congress made a loan of $27,000,090, and a donation of lands of a value
probably equal to the loan.
The statute-books of the States are full of acts directing the law
officers to proceed against corporations, such as banks, insurance com¬
panies, and others, in order to have a decree declaring their charters
forfeited. Special statutes are also common, ordering suits against
such corporations when they have become insolvent, to wind up their
business affairs, and to distribute their assets, and prescribing with
minuteness the course of procedure which shall be followed and the
court in which the suit shall be brought.
This court said, in the case of The Bank of Columbia v. Okcly (I Wheat.
235), in speaking of a summary proceeding given by the charter of that
bank for the collection of its debts: ''It is the remedy, and not the
right, and as such we have no doubt of its being subject to the will of
Congress. The forms of administering justice, and the duties and
powers of courts as incident to the exercise of a branch of sovereign
power, must ever be subject to legislative will, and the power over them
DECISIONS OF THE SUPREME COURT.
107
is unalienable, so as to bind subsequent legislatures." And in Young
v. The Bank of Alexandria (-4 Crunch, 397), 3Ir. Chief Justice Marshall
says: " There is a difference between those rights on which the validity
of the transactions of the corporation depends, which must adhere to
those transactions everywhere, and those peculiar remedies which may
be bestowed on it. * The first are of general obligation: the last, from
their nature, can only be exercised in those courts which the power
making the grant can regulate." See also The Commonwealth v. The
Delaware if Hudson Canal Co. et al., 43 Fa. St. 227; State of Maryland
v. Northern Central Railroad Co., 18 Md. 193; Colby v. Dennis, 3ti Me.
1; Goican v. Penobscot Railroad Co., 44 id. 140.
Statutes of this character, if not so common as to be called ordinary
legislation, are yet frequent enough to justify us in saying that they
are well-recognized acts of legislative power uniformly sustained by
the courts.
It may be said, and probably with truth, that such statutes, when
they have been held to be valid by the courts, do not infringe the sub¬
stantial rights of property or of contract of the parties affected, but
are intended to supply defects of power in the courts, or to give them
improved methods of procedure in dealing with existing rights.
This leads to an inquiry indispensable to a sound decision of the case
before us; namely, does this statute, by its true construction, do any
thing more than this?
We might rest this branch of the case upon the concession of counsel
for appellants, made both in their brief and in the oral argument, but
we proceed to examine the proposition for ourselves.
The first suggestion of the legal mind on this inquiry is; that it will not
be presumed, unless the language of the statute imperatively requires
it, that Congress, by a retrospective law, intended to create new rights
in one party to the suit at the expense, or by an invasion of the rights,
of other parties; or, where no right of action founded on past trans¬
actions existed, that Congress intended to create it.
The United States was to be sole complainant in a suit in equity, and
though there may be other defendants, the Union Pacific Railroad Com¬
pany is the only one named in the act. The relief to be granted is the
collection and payment of moneys and the restoration of property, or
its value, u either to said railroad corporation or to the United States,,
whichever shall in equity be entitled thereto." The decree, therefore,
can only be made on the ground of some relief to which the United
States or the company is entitled by the general principles of equity
jurisprudence. It is no objection to granting such relief that the com¬
pany is a defendant, for by the flexibility of chancery practice a person
whose interest in the subject of litigation are on the same side with the
complainant may be made a defendant. The corporation could also in
such a suit file a cross bill against the complainant, and, by virtue of
this statute, against any co defendant of whom it could rightfully claim
the relief which the statute authorizes.
But whatever be the relief asked, it could only, by the express terms
of the act, be granted to that party who was in equity thereunto enti¬
tled. It is very plain that there was here no new right established.
No new cause of equitable relief. No new rule for determining what
were the rights of the parties. That was to be decided by the princi¬
ples of equity; not new principles of equity, but the existing principles
of equitable jurisprudence.
But the statute very specifically defines the matters which may be
embraced in this suit as foundations for relief, and classifies them under
108
DECISIONS OF THE SUPREME COURT.
{i vei-y few lieads, by declaring who besides the corporation may be
sued. They are persons who have received, —
1. Capital stock of the company without paying for it in money;
2. Other property of the company unlawfully and contrary to equity;
3. As profits or proceeds of contracts for construction, money or other
property which ought in equity to belong to the corporation; or,
4. Persons who have wrongfully received from the United States
bonds, moneys, or lands which ought in equity to be accounted for, or
paid to it or to the company.
There is in this description of the class of persons who may be sued
an implied condition that they are already subject to be sued for causes
which render them equitably liable. The relief to be granted is also
such as to equity belongs.
We are of opinion, therefore, that the act in question was intended
not to change the substantial rights of the parties to the suit which it
authorized, but to provide a specific method of procedure, which, by
removing restrictions on the jurisdiction, process, and, pleading in ordi¬
nary cases, would give a large scope for the action of the court, and a
more economical and efficient remedy than before existed; and that it
is a valid and constitutional exercise of legislative power.
If in passing on its constitutional validity we have given the subject
much consideration, it will be seen that we have at the same time been
compelled to give a construction to its language which will go far to
enable us to decide whether it authorized the bill that was filed; for
we are of opinion that nothing other than what is found in the act, by
express language or by fair implication, can be introduced into this suit
as a foundation for the action of the court.
The Attorney-General is peremptorily ordered to bring the proceed¬
ing. The filing of the bill and its subject-matter are both removed from
the domain of discretion. For the purposes of this suit, the court
wherein it is brought is vested with powers and aided by modes of pro¬
cedure which it can apply to no other. Parties are subjected to a juris¬
diction by process to which the same court cannot subject them in any
other suit, and they are required to litigate their rights in a suit com¬
mon to them and others with whom they could not be joined under the
rules governing such matters in any other case.
We are bound, therefore, to presume that Congress did not intend
that this special remedy should include anything beyond the matters
which we have seen were so carefully and so specifically mentioned as
grounds of relief.
Other provisions of the act show that Congress had, or believed that
it had, other grievances against this company for which other remedies
are furnished. Any director or officer who violates certain provisions
is to be punished criminally. By mandamus in the proper court, but
not in this suit, the company is to be compelled to operate its road as
required by law. The second section directs the Secretary of the Treas¬
ury to withhold payment for transportation for the United States until
what is due for interest paid shall be satisfied, and the matter, if dis¬
puted, is to be settled by suit brought by the company in the Court of
Claims.
This consideration makes it clear that any bill brought by the Attor¬
ney-General under the fourth section of the act of 1873 must be limited
by the provisions of that act, both as to the grievances on which it
counts and the relief which it seeks.
With these views of the statute under which this bill is brought, and
by which its sufficiency on demurrer must be tested, we approach the
examination of the bill itself.
DECISIONS OP THE SUPREME COURT.
109
It consists of forty-seven pages of printed matter, divided into forty-
eiglit separate paragraphs, each of which undertakes to set forth a dis¬
tinct ground of relief, or points out the relief which is sought.
It will, therefore, be impossible to give in this opinion the results of
the separate examination of each of these paragraphs; nor is this at all
necessary. A consideration of the principal grounds of relief, grouped
as they can easily be under a few heads, will indicate the views which
we believe to be sufficient to decide the whole.
We will consider together the allegations of the bill against the Wyom¬
ing Coal Company, the Credit Mobilier Company, the Pullman Palace
Car Company, and the three construction contracts of H. M. Hoxie,
Oakes Ames, and James W. Davis. These are by far the most impor¬
tant as regards the sum involved as well as the principles which must
decide the case.
The substance of the charge is, that the board of directors of the
railroad company made contracts for building the road, and for running
the Pullman cars on it, and for mining its coal lands and purchasing
the coal so mined, which were a fraud upon the company; that these
contracts allowed exorbitant prices for work done and material fur¬
nished; that otherwise they were very advantageous to the other con¬
tracting parties and injurious to the company; that in all of them the
directors, or a controlling majority of them, were interested adversely
to the company; that in fact they were, in the name of the company,
making contracts with themselves as the other party. In short, it may
be taken for granted that if these allegations are true, as they must be
held to be 011 demurrer, frauds more unmitigated than those set forth
in this bill were never perpetrated on a helpless corporation by its
managing directors.
That these frauds are such as a court of equity would relieve against
in a proper case, may be seen in the opinion of the Circuit Court for
the Nebraska district, in a suit growing out of the Wyoming Coal Com¬
pany's contract. Wardell v. The Union Pacific Railroad Co., 4 Dill. 330.
The first inquiry arising on these facts is, What relief can be given,
and who is entitled to it1?
The obvious reply to the first branch of the question is, that the par¬
ties who made this contract and received the pecuniary benefit of it
can at law be made responsible in damages, or held in equity to com¬
pensation for the loss suffered. There would be no difficulty in adjudg¬
ing in a proper suit that such contracts were void, and then ordering au
accounting, on the basis of a fair compensation for what had been done
in the way of construction, building, opening mines, furnishing coal, &c.,
and what had been received for such work and materials. The difficulty
is, to whom shall this money be paid when recovered, and can it be
recovered in this suit? If the railroad company, falling into purer
hands, had brought such a suit, the bill might be sustained.
But the company is not the complainant here. It seeks no relief for
these wrongs. It may have been the design of the law to give the cor¬
poration an opportunity by a cross-bill to obtain relief agaiust the other
defendants, who are charged with these frauds. Such a bill, if not strictly
within the rule of equity procedure, which only allows a defendant to
file a cross-bill against a complainant, might be sustained under the pro¬
visions of this statute. But the company files no such bill. It desires
no such relief. On the contrary, it resists by demurrer any further pro¬
ceeding in the matter. Can it be compelled in this mode to prosecute
such a suit? So long as it exists in the possession and unrestrained
exercise of all its corporate powers, its board of directors, unless under
judicial prohibition or compulsion, is vested with the sole authority to
110
DECISIONS OF THE1 SUPREME COURT.
decide whether it will assert its right of action for a supposed injury, or
will condone it.
The circumstances of the alleged fraud, the probability of success in
the suit, the extent of the injury, the amount which may be recovered,
the expense of the proceeding, and the danger of injury to the company
itself, are all matters which address themselves to them as grounds for
the exercise of the discretion of the directors. They have decided to
have nothing to do with it. How, then, can a decree be rendered in
their favor, or relief be given them which is not asked? With what
hope of advantage can the court enter upon the inquiry touching the
frauds alleged, and the amount of the injury sustained, when the party
aggrieved refuses to proceed?
On the other hand, if the court does proceed, shall the decrees, if
rendered against the defendants, be in favor of the company? If so,
what good results would follow? Since the company resists any decree
in its favor now, it would probably enter satisfaction or releases of the
decrees as fast as they are rendered. If it.did not do this, how would
the moneys, if collected and paid into its treasury, be applied? It is
alleged to be insolvent and in debt, but except the claim of the govern¬
ment, which will be presently considered, there is no allegation show¬
ing to what use the court cau decree the application of these moneys.
They must, therefore, go into the treasury of the company, to become
subject to the control of its directors, who are now resisting this action.
Hot only this, but it is obvious that the amount recovered would come
mainly out of the same men who now as directors or as stockholders
would control the fuud, and would probably order its redistribution to
the parties who paid it, or give receipts or releases in advance.
The truth is, that the persons who were actually defrauded by these
transactions, if any such there be, were the few bona fide stockholders
who took no part in them, and had no interest in the fraudulent con¬
tracts. But it is not alleged that there are such. If there be, they
are not made parties to this bill, nor does it provide any relief for them.
Yet a moment's consideration will show that they alone (to say nothing
of the complainant for the present) suffered any legal injury, or are
entitled to any relief. As to the directors and stockholders who took
part in these fraudulent contracts, they are partieipes criminis, and can
have 110 relief. This class probably included nine-tenths in value of the
shareholders. 'It is against all the principles of jurisprudence, whether
at law or in equity, to permit them to litigate this fraud among them¬
selves. If the innocent stockholders are not parties here, we have
already seen that, with the power of the directors over the money
recovered, they would get no relief by the suit.
The statute, however, did not permit them to be made parties. Their
interest is not the same as that of the company. The statute provides
only for the collection and payments of money, or the restoration of
property, or its value, to the railroad company, or to the United States,
as either of them may be in equity held entitled thereto. This does
not embrace what a defrauded stockholder may be entitled to in his
individual right.
We are of opinion, therefore, that no decree can be rendered in favor
of the railroad company on account of these transactions, or for the
value of the stock not paid for by those who received it. Although
issuing it without payment may have been in violation of law, and an
implied contract may exist on which the company could compel pay¬
ment, the United States cannot in this suit recover it, and the company
refuses to assert its right thereto.
DECISIONS OF THE SUPREME COURT. 1 1 1
The same principle applies to the arrangements made by the railroad
company with the Atlantic and Pacific Telegraph Company, and with
the Omaha Bridge Company, which are here assailed. These are exist¬
ing contracts under which the business of the principal corporation
with the others is conducted, and with which it is satisfied. It asks no
rescission, and is content to comply with them. It is not within the
power of the court to annul them, or to make new ones for the parties.
No decree can therefore be rendered on this bill in favor of the Union
Pacific Railroad Company, because it is not the complainant, but a
defendant, and, asking no affirmative relief or any other, it resists
being brought into this suit, and refuses to plead in it any further than
compelled by the court.
If there is any relief to which the United States is entitled against
the company, the latter, being a defendant, must remain and answer
to the claim. But it is conformable to the principles neither of the
common law nor of equity to compel it to prosecute a suit as complainant
which it disapproves, or to establish a claim which it denies, or take a
decree where it asserts nothing to be due.
We must now inquire whether the bill makes a case in which the
United States, the complainant, is entitled under the terms of the
statute to relief.
The United States is not, and never has been, a stockholder in this
company. It is a creditor.
The government sustains two distinct relations to the railroad com¬
pany, and, in considering her rights under this statute, it is important
to keep them separate. The company is organized under, and owes its
corporate existence to, an act of Congress. The government has all
the rights which belong to any other government as a sovereign and
legislative power over this creation of that power. That this power
should not be too much crippled by the doctrine that a charter is a
contract, the eighteenth section declares that Congress may at any
time, having due regard for the rights of the companies named therein,
add to, alter, amend, or repeal the act. The power of Congress, there¬
fore, in its sovereign and legislative capacity over this corporation is
very great.
The government, however, holds another very important relation,
namely, that of contract. It has loaned to the company $27,000,000,
and granted to it on certain terms many million acres of land. The
government is paying all the time the semi-annual interest on its own
bonds, loaned to the company. The company is bound by contract to
pay them, principal and interest, at their maturity. The government
by the contract has a lieu on the road and its appurtenances to secure
this payment. The company is also bound by the contract to perform
for the government all the transportation and telegraphing that may
be required of it, and to keep its road and line always in order and
readiness to render these services. It may have other contract obli¬
gations to the government not here mentioned, but these are all that
are important to our inquiry. The government has delivered its bonds
to the company. The company has built the road, owns it, and oper¬
ates it. Does the bill allege any thing whfcli, growing out of this con¬
tract, entitles the United States to relief?
One of its allegations is that there is due to the United States and
unpaid, on account of interest on the bonds, the sum of $6,198,700, and
that the balance of interest for which the company is liable is rapidly
accumulating. It was filed in May, 1873, and this court, at its October
Term, 1875, decided, in United States v. Union Pacific Railroad Co. (91
112
DECISIONS OF THE SUPREME COURT.
U. S. 72), tliat tlie company was not bound to pay this interest until
the bonds mature, except so far as the act made in that regard two
special provisions. One was that half the compensation for transpor¬
tation performed for the United States should, as provided by the sub¬
sequent amended charter of lStif, be withheld by the government for
that purpose; the other was that after the completion of the road live
per cent of its net earnings were to be applied annually to extinguish
the debt to the United States.
The second section of the act of 187.'!, as we have seen, provides for
the tirst of these cases, and as to the other, the government has brought
suits, which are now ripe for decision in this court.
There is, therefore, no ground for relief on account of money due by
the company to the United States.
It is said that the latter, as a creditor whose lien is endangered by
the extravagance of the company, and the misappropriation of its means,
has the right to come into equity for preventive relief to secure the col¬
lection of the sums of which the company has been defrauded.
The government made its contract and bargained for its security.
It had a first lien on the road by the original act of incorporation,
which would have made its loan safe in any event. But in its anxiety
to secure the rapid prosecution of the work,—an end more important to
it than to any one else, and still more important to the people whom it
represented,—it postponed this lien to another mortgage, that the
means might be raised to complete the road. It has the second lien,
however, and the right to appropriate one-lialf of the price it annually
pays for the use of the road,—a very large sum,—and five per cent of
the net earnings of the road, whicli may become much larger, to the
extinction of this debt. It is not wholly unreasonable to suggest that
the amount which the company may be compelled to pay annually,
under these two provisions, will be sufficient as a sinking fund to pay
the entire debt, principal and interest, before it falls due.
It is difficult to see any right which as a creditor the government has
to interfere between the corporation and those with whom it deals. It
has been careful to protect its interests in making the contract, and it
has the right which that contract gives. What more can it ask? It is
true that there is an allegation of insolvency. But in what that insol¬
vency consists is not clearly shown. It has a floating debt. What
railroad company has not'! It is said it does not pay the interest on its
debt to the United States. We have shown that it owes the United
States no money that is due. There is no allegation that it does not
pay the interest on all its own funded debt. The allegation as it is
would be wholly insufficient to place the corporation in bankruptcy,
even if that was not forbidden by the act under which this bill is dra wn.
The facts stated are utterly insufficient to control a creditor's bill by
the United States. That requires a judgment at law, an execution
issued, and a return of nulla bona. Here there is no judgment, no money
due, and no sufficient allegation of insolvency.
We are unable, therefore, to see any relief to wffiich under this bill
the United States, on account of its contract relations with the company,
would be entitled in a court of equity.
If we look at the statute this is still clearer. The moneys clue for
unpaid stock, or for property of the company unlawfully received, or as
profits in fraudulent contracts for construction, are all described in the
act as belonging to the corporation, and to be restored to it. Those
who may have wrongfully and unlawfully received from the United
States bonds, moneys, or lauds which ought in equity to be accounted
DECISIONS OF THE SUPREME COURT.
113
for and paid to it or to the company, may be compelled to pay the
moneys or restore the property to the party, which shall in equity be
entitled thereto.
But in this connection, no one but the company has received prop¬
erty, lauds, or moneys from the United States. There is no allegation
that the moneys were not used to build the road. If there was, there
is nothing now due, and the company is performing all its obligations
to the government under the contract.
The bill establishes no right in the government, under this or any
other clause of the act, to recover in its own right any property or
money from the company.
In its sovereign or legislative relation to the company, the United
States has powers the extent of which it is unnecessary to define in
this case. The two sections of the act. under one of which this suit
was instituted, are instances of the exercise of these powers, and they
affect the interest of the company in important particulars. Congress
might also have directed the Attorney-General, either as part of this
proceeding or as an independent one, to ask the court to declare the
franchises of the company forfeited. It might have ordered a bill to
inquire if the company was insolvent, and if so, to wind up its affairs
and distribute its assets. In short there are many modes in which the
legislature could have called into operation all the judicial powers
known to the law. But it has not done so, and that is the constantly
recurring answer to this bill. It provided in the statute for a mode of
securing a full inquiry into the affairs of the company, by enacting that
the Secretary of the Treasury should have free access to all its books and
correspondence.—a mode of obtaining information far more effective
than a bill of discovery. The statute, therefore, did not authorize a
bill of discovery. Not wanting the company declared bankrupt and
closed out by a decree of the court, Congress enacted that it should not
be subject to the bankrupt law, as other corporations were, but should
continue to exercise its franchises and perform its duties, and that it
might be compelled to do this by a writ of mandamus from the proper
court. It limited the relief to be granted under this act, therefore, both
by the terms in which it was granted and by other provisions, to the
recovery of a moneyed decree, or a restoration of specific property to
which the United States or the company was by law entitled.
It is useless, therefore, to inquire what might have been done by some
other legislation, or what, independently of legislation, are the rights
of the government; for we can only act on such as are recognized by
the act under which the Circuit Court proceeded.
This brings us to the consideration of the last ground of i*elief which
we propose to notice, and which, with the alleged right to a decree in
favor of the company against the individuals and corporations who have
defrauded it, is most earnestly insisted on here.
The proposition is that the United States, as the grantor of the fran¬
chises of the company, the author of its charter, and the donor of lands,
rights, and privileges of immense value, and as parens patriae, is a trus¬
tee, invested with power to enforce the proper use of the property and
franchises granted for the benefit of the public.
The legislative power of Congress over the subject has already been
considered, and need not be further alluded to. The trust here relied
on is one which is supposed to grow out of the relations of the corpora¬
tion to the government, which, without any aid from legislation, are
cognizable in the ordinary courts of equity.
It must be confessed that, with every desire to find some clear and
8 PAG
114
DECISIONS OF THE SUPREME COURT.
well-defined statement of the foundation for relief under this head of
jurisdiction, and after a very careful examination of the authorities cited,
the nature of this claim of right remains exceedingly vague. Nearly
all the cases—we may almost venture to say all of them—fall under two
heads:—
1. Where municipal, charitable, religious, or eleemosynary corpora¬
tions, public in their character, had abused their franchises, perverted
the purpose of their organization, or misappropriated their funds, and
as they, from the nature of their corporate functions, were rnoie or less
under government supervision, the Attorney-General proceeded against
them to obtain correction of the abuse; or,
2. Where private corporations, chartered for definite and limited par-
poses, had exceeded their powers, and were restrained or enjoined in
the same manner from the further violation of the limitation to which
their powers were subject.
The doctrine in this respect is well condensed in the opinion in The
People v. Tnyersoll, recently decided by the Court of Appeals of New
York. 58-N. Y. 1. "If," says the court, "the property of a corpora¬
tion be illegally interfered with by corporation officers and agents or
others, the remedy is by action at the suit of the corporation, and not
of the Attorney-General. Decisions are cited from the reports of this
country and of this State, entitled to consideration and respect, affirm¬
ing to some extent the doctrine of the English courts, aud applying it
to like cases as they have arisen here. But in none has the doctrine
been extended beyond the principles of the English cases; and, aside
from the jurisdiction of the courts of equity over trusts of property for
public uses and over the trustees, either corporate or official, the courts
hove only interfered at the instance of the Attorney-General to prevent and
prohibit some official ivrong by municipal corporations or public officers,
and the exercise of usurped or the abuse of actual powers." p. 16.
To bring the present case within the rule governing the exercise of
the equity powers of the court, it is strongly urged that the company
belongs to the class first described.
The duties imposed upon it by the law of its creation, the loan of
money and the donation of lands made to it by the United States, its
obligation to carry for the government, and the great purpose of Con¬
gress in opening a highway for public use and the postal service between
the widely separated States of the ETiion, are relied on as establishing
this proposition.
But in answer to this it must be said that, after all, it is but a rail¬
road company, with the ordinary powers of such corporations. Under
its contract with the government, the latter has taken good care of
itself; and its rights may be judicially enforced without the aid of this
trust relation. They may be aided by the general legislative powers of
Congress, and by those reserved in the charter, which we have specif¬
ically quoted.
The statute which conferred the benefits on this company, the loan
of money, the grant of lands, and the right of way, did the same for
other corporations already in existence under State or territorial char¬
ters. Has the United States the right to assert a trust in the Federal
government which would authorize a suit like this by the Attorney-
General against the Kansas Pacific Kailway Company, the Central
Pacific Eailroad Company, aud other companies in a similar position?
If the Uuited States is a trustee, there must be cestuis que trust.
There cannot be the one without the other, and the trustee caunot be a
DECISIONS OF THE SUPREME COURT.
115
trustee for himself alone. A trust does not exist when the legal right
and the use are in the same party, and there are no ulterior trusts.
Who are the cestuis que trust for whose benefit this suit is brought?
If they be the defrauded stockholders, we have already shown that they
are capable of assertiug their own rights; that no provision is made for
securing them in this suit should it be successful, and that the statute
indicates no such purpose.
If the trust concerned relates to the rights of the public in the use of
the road, no wrong is alleged capable of redress in this suit, or which
requires such a suit for redress.
Railroad Company v. Peniston (18 Wall. 5) shows that the company
is not a mere creature of the United States, but that while it owes duties
to the government, the performance of which may, in a proper case, be
enforced, it is still a private corporation, the same as other railroad
companies, and, like them, subject to the laws of taxation and the other
laws of the States in which the road lies, so far as they do not destroy
its usefulness as an instrument for government purposes.
We are not prepared to say that there are no trusts which the United
States may not enforce in a court of equity against this company.
When such a trust is shown, it will be time enough to recognize it. But
we are of opinion that there is none set forth in this bill which, under
the statute authorizing the present suit, can be enforced in the Circuit
Court.
There are many matters alleged in the bill in this case, and many points
ably presented in argument, which have received our careful attention,
but of which we can take no special notice in this opinion. We have
devoted so much space to the more important matters, that we can only
say that, under the view which we take of the scope of the enabling
statute, they furnish no ground for relief in this suit.
The liberal manner in which the government has aided this company
in money and lands is much urged upon us as a reason why the rights
of the United States should be liberally construed. This matter is
fully considered in the opinion of the court already cited, in United
Rtatesv. Union Pacific Railroad Co. [supra), in which it is shown that it
was a wise liberality for which the government has received all the
advantages for which it bargained, and more than it expected. In the
feeble infancy of this child of its creation, when its life and usefulness
were very uncertain, the government, fully alive to its importance, did
all that it could to strengthen, support, and sustain it. Since it has
grown to a vigorous manhood, it may not have displayed the gratitude
which so much care called for. If this be so, it is but another instance
of the absence of human affections which is said to characterize all cor¬
porations. It must, however, be admitted that it has fulfilled the pur¬
pose of its creation and realized the hopes which were then cherished,
and that the government has found it a useful agent, enabling it to
save vast sums of money in the transportation of troops, mails, and
supplies, and in the use of the telegraph.
A court of justice is called on to inquire not into the balance of bene¬
fits and favors on each side of this controversy, but into the rights of
the parties as established by law, as found in tlieir contracts, as recog¬
nized by the settled principles of equity, and to decide accordingly.
Governed by this rule, and by the intention of the legislature in passing
the act under which this suit is brought, we concur with the Circuit
Court in holding that no case for relief is made by the bill.
Decree affirmed.
116
DECISIONS OF THE SUPREME COURT.
Mk. Justice Swayne, with whom concurred Mr. Justice Harlan,
dissenting.
1 concur in the opinion, so far as it relates to the constitutional valid¬
ity of the act of Congress which lies at the foundation of the case. In
the residue I cannot concur.
Union Pacific Railroad Company v. United States.
(99 TT. S.,402.)
1. The act entitled "An act to aid in the construction of a railroad and telegraph
line from the Missouri River to the Pacific Ocean, and to secure to the govern¬
ment the use of the same for postal, military, and other purposes," approved
July 1, 1S62 (12 Stat. 4S!>), after providing for the issue of patents for land and
of bonds to the Union Pacific Railroad Company and other companies from time
to time, as successive sections of their respective roads should be completed,
requires the companies to perform all government transportation of mails, troops,
Ac., and to credit the compensation therefor on the government loan; and then
adds, that "after said road is completed, until said bonds and interest are paid,
at least five per centum of the net earnings of said road shall also be annually
applied to (lie payment thereof." Held, 1. That the liability of the Union
Pacific Railroad Company to make this payment accrued when it reported, and
the President of the United States accepted, its road as completed, for the pur¬
pose of issuing the bonds, though the acceptance was provisional, and security
was required that all deficiencies in construction should be supplied. 2. That
the company having obtained the bonds and agreed in regard to the security, is
estopped from denying that the road was then completed.
2. The "earnings" of the road include all the receipts arising from the company's
operations as a railroad company, but not those from the public lands granted,
nor fictitious receipts for the transportation of its own property. "Net earn¬
ings," within the meaning of the law, are ascertained by deducting from the
gross earnings all the ordinary expenses of organization and of operating the
road, and expenditures made bona fiile in improvements, and paid out of earn¬
ings, and not by the issue of bonds or stock; but not deducting interest paid on
any of the bonded debt of the company.
3. The government bonds issued to the company were declared to be a first lien on
the road and property; the act of July 2, 1S64 (13 id. 3.16), authorized the com¬
pany to issue an equal amount of first-mortgage bonds, to have priority over
the government bonds. Held, that this priority authorized the payment of the
interest accruing on these first-mortgage bonds out of the net earnings of the
road, in preference to the five per centum payable to the government, which is
only demaudable out of the excess in each year.
Appeal from the Court of Claims.
This is a suit by the Uuion Pacific Railroad Company to recover com¬
pensation for services rendered to the United States prior to 1874, and
during a portion of that year 1874, and the whole of the year 1875. A
counter-claim is set up for five per cent of the net earnings of the com¬
pany. under the provision of the sixth section of the act of July 1,1802
(12 Stat. 489), that "after the said road is completed, until said bonds
and interest are paid, at least five per centum of the net earnings of
said road shall also be annually applied to the payment thereof." The
United States alleges that the road was completed on the 6th of Novem¬
ber, 1809. and that since that time a large amount of net earnings has
been realized by the company, which it has failed to pay or apply to
the said bonds. The company deuies this, and alleges that its road was
not finished until Oct. 1.1874, and that it lias not realized any net earn¬
ings in any year, since either the 6th of November, 1809, or the 1st of
October, 1874; and denies that it was its duty to pay to the United
States annually any money whatever, as and for five per cent upon its
net earnings, to be applied in the manner aforesaid.
The Court of Claims decided that the road was completed on the
Oth of November, 1869, and that the company did, after that period,
annually realize net earnings to a large amount, for the six years from
DECISIONS OF THE SUPREME COURT.
117
Nov. G, 1SG9, to Nov. G, 1875, amounting in the aggregate to the sum
of $28,052,015.G7; and that five per cent thereof, to wit, the sum of
$1,402,602.28, was payable to the government; whilst one-half of the
compensation due for the services rendered by the company to the
government, for the period covered by the petition, amounted to only
$593,627.10; and, therefore, that the government was entitled to recover
from the company the difference between these two sums, amounting
to the sum of $808,975.18. From this judgment the company appealed.
So much of the eighteenth finding by the Court of Claims as is
referred to and commented on in the opinion of the court is as follows:—
A.—Earnings.
Nov. 6.1869,
to Nov. 5,
1870.
Nov. 6.1870, Nov. 6,1871,
to Nov. 5, to Nov. 5,
1871. 1872.
Nov. 6, 1872,
to Nov. 5,
1873.
Nov. 6,1873,
to Nov. 5,
1874.
Nov. 6,1874,
to Nov. 5,
1875.
7. Company freight earn¬
ings
12. Miscellaneous
$482, 387. 43
116, 300.14
$362,414.56 $403,591.90
94,610.20 112,920.09
$465, 734. 02
140, 039.31
$506, 698. 53
218,942.15
$657,641.92
166, 696.94
B.—Expenditures.
Nov. 6, IS89, Nov. 0,1870,
to Nov. 5, to Nov. 5,
1870. 1871.
1. Conducting transpor¬
tation expenses [
2. Motive-powerexpensesi
3. Maintenance of cars
expenses
4. Maintenance of way
expenses
5. General expenses (in¬
cluding taxes)
6. Ferry expenses
7. Deficiency in fuel and
material account
8. Legal expenses
9. United States revenue
stamps
10. Salary account
11. Government directors.
12. Government commis¬
sioners
13. Expense account
14. Telegraph earnings re¬
funded
15. Omalia bridge, ex¬
penses of operating..
16. Car-service
17. Discount and interest
on floating debt
18. Expenses ot land and
town-lot depart¬
ments
19. Taxes on lands and
town lots
20. Interest on first-mort¬
gage bonds
21. Interest on land-grant
bonds
22. Interest on income
bonds
23. Interest on sinking-
fund bonds
24. Interest on Omalia
bridge bonds
25. Premium on gold to
pay coupons
26. Construction of Omaba
bridge
27. Expenditures for sta¬
tion buildings, shops,
and fixtures, &c.,as
per statement at¬
tached
$829,
1, 778.
608.
1,403,
445,
54,
75,
85,
6,
16,
3,
2,
26,
771.
G01.
622.
090.
119.
714.
577.
508.
639.
355.
655.
391.
057.
15 $671,194.53
44 1, 229, 048. 51
90 302,225.
28 995, 683. 49
88 397, 651. 07
54
81 48,807. 41
32 926.02
90 53,522.39
30 3, 115. 00
Nov. 6,1871,
to Nov. 5,
1872.
Nov. 6,1872,
to Nov. 5,
1873.
$746, 950. 28
1,681,610.17
3G7, 584.14
1, 551, 999. 92
353,556.19
15
18 24,241.41
57, 698. 94
1, 866. 72
28. 725.
6,047. 00
12,194. 07
3, 294. 23
89, 621. 97
Nov. 6.1873.
to Nov. 5,
1874.
$759, 426. 61
1,754.271.78
436, 332. 64
1, 700, 434.97
363, 976. 69
12. 852. 55
$760. 646. 38
1,585, 962. 21
429, 562.89
Nov. 6,1874,
to Nov. 5,
1875.
$917, 250. 86
1,811,629.48
"567, 566. 25
1,700.481.14 1,910,420.20
405, 813.19 446, 519.10
25, 246.43
326. 85
24,886.69 54,218.18
4, 561. 00 3, 301.75
21,237. 90, 26, 873. 24
247, 680.10. 201, 814. 87
21,780.78
53, 016. 88
32, 750. 83
4,180. 45
722. 40
17, 971. 73
234, 683.12
409, 668. 66 188,136.73 142, 267. 54 340,506.40 308, 795. 60 61,545.17
41, 524.47 60, 824, 89 87, 795.12
35, 778. 90 85,105.49, 88, 610. 97
2, 015,326. 28 1, 715, 200. 961, 657, 386. 75
553,947.91 601,647.34 641,209.01
673,238.41
882, 306. 95 935, 550.00
117, 569.84
98, 480. 00
149, 278.18
896,977. 03 66, 849. 73 497, 875.85 155,739. 72 177.124. 57
89,768.58' 104,888.00 141,482.34
1, 086.88 1, 262. 64 169, 773. 68
1, 633,020. 00 1, 633, 410. 00 1, 634,100. 00
585, 061.53^ 576, 765.00 546,175. UO
935, 641.06 778, 348.00 450. 01
157, 912.00 1, 021,388. 88
196, 957.24 194, 841.01 190, 278.38
264,963.27 235,971. 97 301,786.53
24, 334.25 4,390.00
2, 810.11
118
DECISIONS OF THE SUPREME COURT.
B.—Expenditures—Continued.
28. Requirements of sink¬
ing-funds l'or the re¬
demption of funded
debts:
Omaha bridge
bonds
Sinking-fund mort¬
gage bond*
29. Premium on Omaha
bridge bonds re¬
deemed
30. United States interest
half transportation
accounts charged
during the year
Total.
Nov. 6.1889,
to Nov. 5,
1870.
Nov. 6,1870,
to Nov. 5,
1871.
$324, 697. 40
$527, 799. 06
Nov. 6,1871,
to Nov. 5,
1872.
$38, 000. 00
Nov. 6, 1872, Nov. 6.1873, Nov. 6.1874,
to Nov. 5, to Nov. 5, to Nov. 5,
1873. 1874. 1876.
$41, 000. 00 $44, 000. 00
12, 218. 00 10, 752. 50
335,181.24 302,569.93 364,971.73 358,193.39
10, 287, 954. 25 7, 942, 755. 88 9, 572, 784.15 9, 968, 854. 70 9, 809,105. 08 10, 628, 208.16
I I
Detail of Expenditures for Station Buildings, &e., constituting Item 27
above.
Not. 6,1809, Nov. 6,1870, Nov. 6,1871.
to Nov. 5, to Nov. 5, to Nov. 5,
1870. 1871. 1872.
Nov. 6.1872, Nov. 6,1873,
to Nov. 5, to Nov. 5,
1873. 1874.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15
16.
17.
18.
19.
Station buildings
Shops and fixtures
Equipment
Government commission¬
ers
Fencing
Snow sheds and fences
Express outfit
Engineering
Bridging
(Jar shops and sheds
Roadway and track
Hotels
Tenements
Coal-sheds
Omaha depot buildings
Omaha general offices
Real estate
Laramie rolling-mill
Water-works
$249, 384. 74
40, 618. 27
109, 933. 18
91.80
72, 763. 20
200,147. 90
7, 136.41
13, 880.90
124, 047.59
12, 938. 08
64. 426. 30
1, 548. 66
$48, 286. 40
94, 855. 51
$119, 795.14
106, 067. 83
47, 598. 03
956. 50
5, 787. 67
595. 44
116, 770. 54
11,599.75
" *6, 66L86*
15, 759. 26
8, 247. i
23, 244. G3
31, 885.19
40, 775. 37
2, 905. 70
$14,580.81
2, 744. 02
8, 380. 72
$1, 718. 32
93, 213.18
66. 909. 23
102. 87
11,480. 85
1, 020. 26
16, 550. 09
403. 60
11, 006. 63
7, 821.07
14, 977. 95
37. 255.16
6, 896. 46
12. 525. 00
16. 550. 33
8,960.12
$896,977.03 $181,906.95 $497,875.85 $156,038.10 $177,124.57
less keceipts and expendi¬
tures.
20. Equipment
21. Fencing
22. Roadway and track .
Ill, 430. 40
"*5*626*82*
298. 38
$117,057.22
$298.38
Totals of item No. 27.... $896, 977. 03 $66, 849. 73 |$497, 875. 85 $155, 739. 72 $177,124. 57 $2, 810. IT
Items 5, 6, ?, 8, 9, 10, 11, 12, 14, and 15 are not in dispute.
Item 1, "conducting transportation expenses," is liable to be reduced
by the amounts shown in line 1 •of the table below as expended for
"tenement-houses and hotels," and by the amounts shown in line 2 as
expended for new station-buildings; item 2, "motive-power expenses,"
is liable to be reduced by the amounts shown in line 3 as expended for
"engine-equipment," and by the amounts shown in line 4 as expended
for "tanks and water-works ;" item 3, "maintenance of cars expenses,"
is liable to be reduced by the amounts shown in line 5 as expended for
DECISIONS OF THE SUPREME COURT.
119
"car-equipmentand item 4, "maintenance of way expenses," is liable
to be reduced by tlie amounts shown in line 6 as expended for the
"Laramie rolling-mills." in case such several and respective outlays
are regarded as not proper to be deducted from "gross earnings" in
order to arrive at "net earnings."
Nov. 6,1872,|Nov. 6,1873, Nov. 6,1874,
to Nov. 5,
1873.
to Nov. 5,
1874.
$6, 909.1
$1, 659. 96
18,146. 77
25, 398. 69
734.99
3, 600. 00
43, 716. 01
1. Tenement-houses and hotels.
2. New station-buildings
3. Engine-equipment
4. Taukx and water-works
5. Car equipment
6. Laramie rolling-mills
Item 13, "expense account," is subject to be reduced by the following
amounts in case such outlays are regarded as not proper to be deducted
from "gross earnings" in order to arrive at "net earnings;" viz., In the
year, Nov. 6. 1809, to Nov. 5, 1870, expenses relating to an issue of
bonds, $10,339.70; March 13, 1871, cost of a plate for the bridge bonds,
$1,500; June 5, 1874, aud expense relating to the issue of sinking-fund
bonds, $0,579.10.
The disputed expenditures in items 1, 2, 3, and 4 were for new con¬
struction. Item 27 was also for new construction.
I tun 10 was for the use of the cars of other companies.
Items 17, 20, 21, 22, 23, 24, and 25 show payments of interest on debts.
Items 18 and 19 show payments made on account of the land depart¬
ment of .the company's business.
Item 20 shows payments in the construction of the Omaha bridge
above the amounts received from the sale of the mortgage bonds
secured by it.
Items 28 and 29 show expenditures made for a sinking-fund for the
redemption of the company's debt.
Item 30 shows an assumed payment of a portion of the interest on
the government subsidy bonds by the application to it of half the gov¬
ernment transportation account.
Mr. Sidney Bartlett for the appellant.
The Attorney-General and Mr. Joseph K. McCammon, contra.
Mr. Justice Bradley, after stating the case, delivered the opinion
of the court.
This case is in some respects supplemental to that of United States v.
Union Pacific Railroad Co., 91 U. S. 72. That was a suit brought in
the Court of Claims, by the company, to recover one-half of the com¬
pensation due to it for services rendered to the government between
the dates of February, 1871, and February, 1874, against which claim
the United States set up a counter-claim for the interest which it had
paid on the subsidy bonds advanced to the company. This court held
that, by the terms of the acts of Congress granting said subsidies, the
company was not required to pay the interest on said bonds until the
maturity of the principal thereof; and therefore the counter-claim of
the government was overruled. The present case arises upon a like
suit brought by the company in the Court of Claims for the recovery
of one-half of the compensation due to it for services rendered to the
government during the remainder of the year 1874 and the whole of
120
DECISIONS OF THE SUPREME COURT.
the year 1875, including certain services performed prior to 1871, not
included in the first suit.
The general history of the legislation of Congress in reference to the
Union Pacific Railroad Company and the associated enterprises, and of
the policy of the government respecting the same, is fully stated in our
opinion in the former case, and need not he repeated here. We shall
only advert to the several acts, and to the proceedings and negotia¬
tions which have taken place between the parties, so f ar as may be nec¬
essary to an understanding of the specific questions which are raised
in this suit. The facts are fully set forth by the Court of Claims in its
findings. Three principal questions are raised by the acts of Con¬
gress and the facts found by the court, which it is necessary for us to
determine.
First, When was the road completed?
Secondly, What is included in net earnings?
Thirdly, How and under what conditions are they to be paid?
I. First, as to the completion of the road.
In one sense, a railroad is never completed. There isnever, orhardly
ever, a time when something more cannot be done, and is not done, to
render the most perfect road more complete than it was before. This
fact is well exemplified by the history of the early railroads of thecoun-
try. At first, many of them were constructed with a fiat rail, or iron
bar, laid on wooden string-pieces, resulting in what was known, in for¬
mer times, as snake heads—the bars becoming loose, and curving up in
such a manner as to be caught by the cars, and forced through the
floors amongst the passengers. Then came the T rail; aud finally the
H rail, which itself passed through many successive improvements.
Finally, steel rails in the place of iron rails have been adopted as the
most perfect, durable, safe, and economical rails on extensive lines of
road. Bridges were first made of wood, then of stone, then of stone
and iron. Grades originally crossed, and. in most cases, do still cross,
highways and other roads on the same level. The most improved plan
is to have them, by means of bridges, pass over, or under, intersecting
roads. A single track is all that is deemed necessary to begin with;
but now, no railroad of any pretensions is considered perfect until it
has at least a double track. Depots and station-houses are at first
mere sheds, which are deemed sufficient to answer the purpose of busi¬
ness. These are succeeded, as the means of the company admit, by
commodious station and freight houses, of permanent and ornamental
structure. And so the process of improvement goes on; so that is often
a nice question to determine what is meant by a complete, first class
railroad; and if a question of right or obligation between parties
depends upon the completion of such a structure, courts are obliged to
spell out, from the circumstances of the case, and the language aud
acts of the parties, what they mean when they use such terms.
In the present case, we have for our guidance several clauses in the
charter of the Union Pacific Railroad Company (the act of 18621, in
which the terms referred to are used, as well as the acts of the parties
in reference thereto. One of these clauses is in the fourth section of
the act, which contains an engagement on the part of the government
to grant certain sections of land to the company on the completion of a
certain number of miles of its road. The third section having granted
to the company every alternate section of the public land, designated
by odd numbers, to the amount of five alternate sections per mile on
each side of the railroad, on the line thereof, and within the limits of
decisions of the supreme court.
121
ten miles, not otherwise disposed of by the United States, the fourth
section proceeds as follows:—
"Sect. 4. That whenever said company shall have completed forty
consecutive miles of any portion of said railroad and telegraph line,
ready for the service contemplated by this act, and. supplied with all
necessary drains, culverts, viaducts, crossings, sidings, bridges, turn¬
outs, watering-places, depots, equipments, furniture, and all other
appurtenances of a first-class railroad, the rails aud all the other iron
used in the construction and equipment of said road to be American
manufacture of the best quality, the President of the United States
shall appoint three commissioners to examine the same and report to
him in relation thereto; and if it shall appear to him that forty con¬
secutive miles of said railroad and telegraph line have been completed
arid equipped in all respects as required by this act, then, upon certifi¬
cate of said commissioners to that effect, pateuts shall issue conveying
the right aud title to said lands to said company, on each side of the
road as far as the same is completed, to the amount aforesaid; and
patents shall in like manner issue as each forty miles of said railroad and
telegraph line are completed, upon certificate of said commissioners. . . .
Provided, lioivever, that no such commissioners shall be appointed by
the President of the United States unless there shall be presented
to him a statement, verified on oath by the president of said company,
that such forty miles have been completed in the manner required by
this act, and setting forth with certainty the points where such forty
miles begin and where the same end, which oath shall be taken before
a judge of a court of record."
By the act of 1804 (13 Stat. 356), the amount and extent of the grant
is doubled.
Again, by the fifth section of the act of 1862 it is enacted as follows:—
"Sect. 5. That, for the purposes herein mentioned, the Secretary of
the Treasury shall, upon the certificate in writing of said commissioners
of the completion and equipment of forty consecutive miles of said rail¬
road and telegraph, in accordance with the provisions of this act, issue
to said company bonds of the United States of $1,000 each, payable in
thirty years after date, bearing six per centum per annum interest, . . .
to the amount of sixteen of said bonds per mile for each section of forty
miles, and to secure the repayment to the United States, as hereinafter
provided, of the amount of said bonds so issued aud delivered to said
company, together with all interest thereon which shall have been paid
by the United States, the issue of said bonds and delivery to the com¬
pany shall ipso facto constitute a first mortgage on the whole line of the
railroad and telegraph, together with the rolling-stock, fixtures, and
property of every kind and description, and in consideration of which
said bonds may be issued."
By the eleventh section the amount of bonds granted was to be
$48,060 per mile for one hundred and fifty miles through the Bocky
Mountains, and for the same distance including the Sierra Nevada
Mountains, and $32,000 per mile between those points; and by the act
of 1864 the completed sections were reduced to twenty miles instead of
forty.
By the sixth section of the act it is further enacted as follows:—
"Sect. 6. That the grants aforesaid are made upon condition that
said company shall pay said bonds at maturity, and shall keep said
railroad and telegraph line in repair and use, and shall at all times
transmit despatches over said telegraph line, and transport mails,
122
decisions of the supreme court.
troops and munitions of war, supplies and public stores, upon said rail¬
road for the government whenever required to do so by any department
thereof, and that the government shall at all times have the preference
in the use of the same for all the purposes aforesaid (at fair and reason¬
able rates of compensation, not to exceed the amounts paid by private
parties for the same kind of service), and all compensation for services
rendered for the government shall be applied to the payment of said
bonds and interest until the whole amount is fully paid. Said company
may also pay the United States, wholly or in part, in the same or other
bonds, treasury notes, or other evidences of debt against the United
States, to be allowed at par, and after said road is completed, until said
bonds and interest are paid, at least fire per centum of the net earnings of
said road shall also be annually applied to the payment thereof."
Heading these sections together, it seems hardly possible to conceive
that the word "completed,'' in the last clause of the sixth section, has
any other or different meaning from that which it has in the fourth and
fifth sections; or that the five per cent of the net earnings should not
be demaudable by the government as soon as the whole line was com¬
pleted in the same manner in which any forty [or twenty] miles was to
be completed in order to entitle the company to bonds. Tins conclusion
is so obvious and self-evident that it hardly needs a word of argument
to maintain it.
Now, the findings of fact show that the company began to claim the
subsidy of lands and bonds for completed sections of the railroad and
telegraph line in June, 1800; and from that time forward made similar
successive applications nearly or quite every month, tendering the affi¬
davit of the president of the company as to the completion of the several
sections, as required by the act. The first of these affidavits was made
on the I'dth of June, 1806, and was in the words following:—
"John A. Dix, being duly sworn, deposeth and saith, that he is presi¬
dent of the Union Pacific Hail road Company, and in pursuance of the
requirements of sect. 4 of the act of Congress approved July 1, 1801,
entitled 'An Act to aid in the construction of the railroad and telegraph
line from the Missouri River to the Pacific Ocean," &c., he now states,
under oath, that one hundred and five consecutive miles of said rail¬
road, beginning at Omaha and ending at a point one hundred and five
miles westward thereof, on the line designated by the maps of said
company on file in the Department of the Interior, have been completed
and equipped in all respects as required by the act referred to, as he is
informed by the engineer charged with the construction of said line,
and as he verily believes to be true; and he further states, under oath,
that one hundred and five miles of telegraph have been completed for
the said one hundred and five consecutive miles, as he is also advised
by the engineer in charge.
" john A. Dix, President.
" Sworn to, June 25, 1800,"
The last affidavit, relating to the completion of the last section of the
road (and indeed extending some fifty miles beyond the point of divi¬
sion finally agreed upon between the Union and Central Pacific Hail-
road Companies), was made on the 13th of May, 1809, and was iu the
words following:—
"Oliver Ames, being duly sworn, deposeth and saith that he is presi¬
dent of the Union Pacific Railroad. And in pursuance of the require¬
ments of sect. 4 of the act of Congress approved July 1, 1802, entitled
'An Act to aid in the construction of a railroad and telegraph line from
decisions op the supreme court.
123
the Missouri Kiver to the Pacific Ocean,1 &c., he now states, under oath,
that another section of eighty-six miles, commencing at 1,000 mile and
ending at 1,086 mile post, was completed on the tenth day of May, 1869,
making in all 1,086 consecutive miles of said road, beginning at the
initial point on section 10, opposite western boundary of the State of
Iowa, as tixed by the President of the United States, and ending at a
point 1,086 miles westward therefrom on the line designated by the maps
of said company on file in the Department of the Interior, that have
been completed and equipped in all respects as required by the act
referred to, as he is informed by the engineer charged with the construc¬
tion of said line, and as he verily believes to be true. And he further
states, under oatli, that 1,086 miles of telegraph have been completed
for the said 1,086 consecutive miles, as he is also advised by the engineer
in charge.
"Oliver Ames,
" President Union Pacific Railroad Company.
"Sworn to, May 13, 1869."
The Court of Claims finds as a matter of fact that "on the 10th of
May, 1869, the last rail of the claimant's road was laid, and about a
week^iifterwards the road was opened over the entire length to public
use lor the transportation of passengers and freight, and for the service
of the government; and this service was from that time forward per¬
formed continuously."
It further found that on the 23d of December, 1865, the President of
the United States, under the authority of sect. 1 of the said act of July
1, 1862, appointed commissioners to examine and report upon the first
section of forty miles of said road; and some time prior to April 30,
1866, he appointed other commissioners to examine and report upon
the second section of twenty-five miles of said road; and after the mak¬
ing of each of the foregoing affidavits, he appointed other commissioners
to examine the sections of the road as successively completed, and
report to him in relation thereto. The reports of the commissioners so
appointed were made in the first instance to the Secretary of the Inte¬
rior, who transmitted them to the President, who approved the recom¬
mendations of the Secretary of the Interior by writing his approval
thereon. The following is the first letter of the said secretary, with the
President's indorsement thereon:—
"Department of the Interior,
"Washington, D. C., Jan. 24, 1866.
"Sir,—I have the honor to submit herewith enclosed, for your action,
the report of the commissioners appointed by you on the 23d December,
1865, to examine the first section of forty miles of the Union Pacific
Kailroad, extending west from the city of Omaha, Territory of Nebraska.
The company authorized to build this road having, as shown in the
report of the commissioners, obligated itself to remedy, within a reason¬
able time, the deficiencies in the construction of said section, I respect¬
fully recommend that the same be accepted, and proper steps be ordered
for the issue of the bonds and land-grants due the company agreeably
to law.
"I am, sir, with much respect, your obedient servant,
"Jas. Harlan, Secretary.
"The President."
124
decisions of the supreme court.
"Executive Mansion, Jan. 24,18G6.
"Tlie within recommendations of the Secretary of the Interior are
approved, and the Secretary of the Treasury and himself are hereby
directed to carry the same into effect.
"Andrew Johnson."
Similar reports were made by the Secretary of the Interior, as the
successive sections were completed and reported on by the commission¬
ers, down to and including the ninth day of February, 1SG9, and were
severally approved by the President; and the company received the
subsidy bonds of the government in accordance therewith.
As it appeared by the reports of some of the commissioners that the
several sections of road were not, and could not, under the circum¬
stances be, fully completed up to the ultimate standard of a first-class
railroad, though they might be, and actually were, completed, section
by section, so as to admit of transportation and travel over the same,
the railroad company, on the 12th of February, 18G9, being thereto
required by the Attorney-General of the United States, as a guaranty
for the ultimate full completion and equipment of the road, executed
an agreement of the last-mentioned date to deposit in the Treasury
Department their own first-mortgage bonds (which by the act of July
2, 18G4, they had been authorized to issue, and which were to be pre¬
ferred to the lien of the United States) to the amount of -$3,000,000, to be
held by the government as security for the completion of the road accord¬
ing to the provisions of the statutes in that behalf, and until the Presi¬
dent. on a proper examination of the same, should be satisfied that it was
so completed. At the same time, the company also agreed, by way of
further security, to leave their land grants with the government, without
taking out patents to the same, until the President should be satisfied
as aforesaid,—or pro tanto to such extent as he might not be satisfied.
On the 10th of April, 18G9, a joint resolution was passed by Congress,
by which, amongst other things, it was declared that the common ter¬
minus of the Union Pacific and the Central Pacific railroads should be
at or near Ogden. And that the President was thereby authorized to
appoint a board of eminent citizens, not exceeding five in number, to
examine and report upon the condition of the two roads (the Union
Pacific and the Central Pacific), and what sum, if any, would be required
to complete each of them. And the President was further authorized
and required to withhold from them an amount of subsidy bonds suffi¬
cient to secure the full completion of the roads as first-class roads, or
to receive an equal amount of the first-mortgage bonds of the companies.
A board of five eminent citizens was appointed under this resolution in
the month of August following.
In the meantime, two additional reports were made by the Secretary
of the Interior to the President, one on the 27th of May, 18G9, and the
other on the loth of July, 18(19, in each case recommending the accept¬
ance of the section referred to therein, and also recommending the issue
of bonds therefor, in accordance with the agreement aforesaid, to the
effect that the company should deposit its first-mortgage bonds with the
Secretary of the Treasury to such amount as might be deemed neces¬
sary to secure the ultimate completion of the road.
The last of these reports, with the President's indorsement thereon,
is in the words following, to wit:—
"Department of the Interior,
Washington, D. C., July 15, 1SG9.
"Sir,—I have the honor to transmit herewith, for your action, five
reports, dated the 9th ultimo, of the commissioners, Messrs. Gouverueur
DECISIONS OF THE SUPREME COURT.
125
K. Warren and James F. Wilson; also tlie report of Isaac N. Morris,
the otlier commissioner, dated May 2S, 1869, appointed by you to exam¬
ine and report upon a section of 85$$, miles of the road and telegraph
line, constructed by the Union Pacific Railroad Company, commencing
on the road of said company at the 1,600th mile post west from Omaha
and terminating at the l,085-n,-o- mile post.
''The majority of said commissioners, in their report, represent the
said section of 85,-^ miles ready for present service, and completed
and equipped as a first-class railroad, and that the telegraph line is
completed for the same distance; and as the company have paid the
per diem and mileage due them under the twenty-first section of the
act of Congress approved July 27, 1866, on account of their examina¬
tion of said section of road and telegraph line, I therefore respectfully
recommend the acceptance of the same and the issue of bonds and of
patents for land due on account of said section, agreeably to the act
approved July 1, 1862, entitled 'An Act to aid in the construction of a
railroad and telegraph line from the Missouri River to the Pacific
Ocean, and to secure to the government the use of the same for postal,
military, and other purposes,' and the acts amendatory thereof. Said
bonds and patents to be issued to the Union Pacific Railroad Company
on account of the work from said 1,000th mile-post to the'common
terminus of the Union Pacific and Central Pacific Railroads,' 'at or
near Ogden;' and the bonds and patents on account of said work from
said common terminus to Promontory Summit to be issued to such
company as the proper authority, after full investigation of the respec¬
tive claims of the Union Pacific Railroad Company and the Central
Pacific Railroad Company of California shall determine to be thereunto
lawfully entitled: Provided, however, that no bonds or patents shall in
any event be issued until such security shall be deposited with the
Secretary of the Treasury necessary to secure the ultimate completion
of the road, agreeably to the acts mentioned in my letter to you of the
27th of May last.
"I am, sir, very respectfully, your obedient servant,
" J. D. Cox, Secretary.
"The President."
"Executive Mansion, July 15, 1869.
"The within recommendations of the Secretary of the Interior are
approved, and the Secretary of the Treasury and himself are hereby
directed to carry the same into effect.
"U. S. Grant."
It is found by the Court of Claims that on the 22d of July, 1869, in
partial performance of this last order of the President, $640,000 of
subsidy bonds were issued to the company, being the subsidy for the
section of twenty miles extending from the 1,000th to the 1,020th mile
from Omaha, the subsidy bonds on all the previous sections having
been received by the company before that time.
As before stated, in August, 1869, the President, in accordance with
the joint resolution of April 10, 1869,*appointed a board of five emi¬
nent citizens, to examine and report upon the condition of the road,
and what sum would be required to complete it as a first class railroad.
This board made a detailed examination, and on the 30th of October,
1869, made an elaborate report, specifying a number of particular
things at various points, such as ballasting, embankment, masonry,
trestle-work, &c., which required perfecting to put the road in first-
126
DECISIONS OF THE SUPREME COURT.
class condition; estimating tl»e aggregate expense of such improve¬
ments 011 the whole line from Omaha to Ogden at $1,580,100. They
conclude their report as follows: "This great line, the value of which
to the country is inestimable, and in which every citizen should feel a
pride, lias been built in about half the time allowed by Congress, and
is now a good and reliable means of communication between Omaha
and Sacramento, well equipped, and fully prepared to carry passengers
and freight with safety and despatch, comparing in this respect favor¬
ably with a majority of the first-class roads in the United States.1'
This report being made and accepted, on the 3d of November, 1809,
the Secretary of the Interior issued directions to the Commissioner of
the General Land-Ofiice to commence patenting lands to the companies,
and to issue patents for one half of the lands which they were to
receive,—the patents for the other half to be suspended until further
directions, in addition to the bonds retained, as security for the com¬
pletion of the roads in the matters reported deficient or not up to the
standard by the said committee.
Cp to the Gtli of November, 1S69, the point at which the Union
Pacific and Central Pacific roads should meet was not settled- but
assuming that the former would go no further west than Ogden,
1,033miles from Omaha, the Secretary of the Treasury on that day
ordered that bonds at the rate ot $32,000 per mile for the distance ot
IS-fw miles from the 1,020th mile-post to Ogden should be issued, but
ordered that the register of the treasury should hold $323,188 thereof
as security for the over-issue of first-mortgage bonds by the company,
and deliver the balance to it. The reason of withholding these bonds
was, that the company, having been authorized by the act of July 2,
1861, supplementary to its charter, to issue the same amount of first-
mortgage bonds as it was entitled to receive from the government, and
which was accorded a priority over the lien of the government bonds,
and having actually constructed the road fifty-three miles west of
Ogdeir, had issued a larger amount of its own bonds than the amount
of subsidy to which it was entitled as the point of division between its
road and that of the Central Pacific was finally settled. By a subse¬
quent arrangement with the Central Pacific Pailroad Company, the
point of junction between the two roads was fixed at a point five miles
west of Ogden, which entitled the Union Pacific Company to bonds tor
such five additional miles, amounting to $160,060, which it received in
July, 1870, making the total amount of subsidy bonds which it was
entitled to, and did receive, the sum of $27,235,760.
It thus appears that prior to the sixth day of November, 1869, the
entire road of the company had, in separate sections, been reported by
it, under the oath of its president, as being completed and furnished
as a first-oiass railroad, in accordance with the requirements or the
act, and that upon the strength of these representations, and the cor¬
responding reports of the commissioners appointed to examine the
several sections, it had been accepted by the President; and that the
company, with the exception of the last $160,000 of bonds, the claim
to which arose from a mutual arrangement between the two companies,
had received its entire subsidy of government bonds; and had received
an order for the issuing of patents for its grant of public lands to the
extent of one half thereof; the patents for the other half being sus¬
pended, by virtue of the agreement made in April, 1869, as security
for the more perfect completion of certain parts of the work.
It is urged that the acceptance of the road by the President up to
this period was only provisional, and not final. We cannot perceive
DECISIONS OF THE SUPREME COURT.
127
that this makes any difference. It was an acceptance by which the
company was enabled to receive its subsidy of government bonds; and
was sought by it in order that it might obtain them.
It seems to us unnecessary to look further, or to review the subse¬
quent proceedings which took place between the President and the
company, in reference to the fulfilment of the conditions by the latter,
on which the issue of the patents for the remaining lands depended.
It appears that another commission was appointed to examine the road
in 1871, and that, on their report, the President was satisfied that all
the imperfections, as a security for the removal of which any patents
had been suspended, were removed. The company insists that this
was the period which should be taken for the completion of the road
in reference to the payment of five per cent of its net earnings,—a
period five years after it had reported the last section completed
according to the act of Congress, and after the President, by virtue of
the agreement aforesaid, had consented to accept it as completed for
the purpose of enabling the company to draw its subsidy of govern¬
ment bonds, and after it had received said bonds.
Can a stronger case of estoppel than this well be presented? The
plea that the government still retained a portion of the public lands
which the company was to receive, as security for the supply of cer¬
tain deficiencies in the road, cannot avail to diminish the strength of
the estoppel. This was done by the voluntary agreement of the com¬
pany itself. And as, by making tliis concession, it succeeded in obtain¬
ing the formal acceptance of its road for the sake of the benefit to
accrue therefrom, to wit, the procurement of the subsidy bonds, the
company ought to be willing to bear the burden of such acceptance,
to wit, the payment annually of five pei cent of the net earnings of
the road on account of the bonds. It would be an unfair construction
of the acts of the parties under the law, to hold that the road was
completed for one purpose and not for the other. We think, therefore,
that the Court of Claims was right in deciding that the road was com¬
pleted 011 the sixth day of November, 1869, so far as the duty of the
company to account for five per cent of its net earnings is concerned.
II. The question next arising is, What are the "net earnings" for
five per cent of which the company became liable to account, and in
what manner are they payable?
lu the first place, they are the "net earnings of the road;" that is,
the net earnings of the road as a railroad, including the telegraph.
They have nothing to do with the income or profits of the company as
a holder of public lands. The proceeds of this source of income are no
part of the earnings of the road. These earnings, however, must be
regarded as embracing all the earnings and income derived by the com¬
pany from the railroad proper, and all the appendages and appurte¬
nances thereof, including its ferry and bridge at Omaha, its cars, and all
its property and apparatus legitimately connected with its railroad.
In the present case, but little difficulty is presented in determining
what are the proper earnings of the road, except in one particular.
The company insists that the compensation accruing to it for services
performed for the government, under the sixth section of the act of
1862, should not be estimated amongst the earnings of the road, in
taking au account of net earnings upon which to calculate the five per
cent in question. That compensation is not receivable by the com¬
pany,—does not come into its hands,—at least was not receivable by it
according to the act of 1862, but was directed by the sixth section to be
applied to the payment of the subsidy bonds. After giving this direc-
128
DECISIONS OF THE SUPREME COURT.
tion, the section proceeds to add, that after the road is completed,
"until said bonds and interest are paid, five per centum of the net
earnings of said road shall also be annually applied to the payment
thereof.1' It is contended that the net earnings here referred to are
intended to be exclusive of said compensation for government service,
no part of which the company was to receive. It must be admitted
that there is some force in this view. But the majority of the court is
of opinion that the plain letter of the statute cannot be thus varied by
construction. The compensation accruing by means of services per¬
formed for the government is unquestionably earnings of the road and
telegraph; and as there are no words in the act which go to show any
intention to except this portion of earnings from the other earnings of
the road in estimating the amount of net earnings, the conclusion
arrived at is, that no such exception can be made. The fact that by a
subsequent law the company is allowed to receive in money one half of
the compensation referred to, removes to a great extent the practical
difficulties that have been suggested in this behalf.
There is another item in the table of earnings set forth in the eight¬
eenth finding of the Court of Claims which may require consideration.
We refer to the seventh item, entitled "company freight." If this means
freight for the transportation of the company's own property over its
own road, it ought not to he put down as a receipt, unless the same
amount is also embraced amongst the expenses on the other side of the
account. How this fact may be we have not before us the means of
knowing. The evidence which the Court ot Claims has in its posses¬
sion will enable it to determine this matter. We merely decide that if
the item appears only as a receipt or earning, and is of the character
we have supposed, it ought to be excluded from the account.
Having considered the question of receipts or earnings, the next
thing in order is the expenditures which are properly chargeable against
the gross earning in order to arrive at the "net earnings,"as this expres¬
sion is to be understood within the meaning of the act. As a general
proposition, net earnings are the excess of the gross earnings over the
expenditures defrayed in producing them, aside from, and exclusive of,
the expenditure of capital laid out in constructing and equipping the
works themselves. It may ofteu be difficult to draw a precise line
between expenditures for construction, aud the ordinary expenses inci¬
dent to operating and maintaining the road and works of a railroad
company. Theoretically, the expenses chargeable to earnings include
the general expenses of keeping up the organization of the company,
and all expenses incurred in operating the works and keeping them in
good condition and repair; whilst expenses chargeable to capital include
those which are incurred in the original construction of the works, and
in the subsequent enlargement and improvement thereof. With regard
to the last mentioned class of expenditures, however, namely, those
which are incurred in enlarging and improving the works, a difference
of practice prevails amongst railroad companies. Some charge to con¬
struction account every item of expense, and every part and portion of
every item, which goes to make the road, or any of its appurtenances
or equipments, better than they were before; whilst others charge to
ordinary expense account, and against earnings, whatever is taken for
these purposes from the earnings, and is not raised upon bonds or issues
of stock. The latter method is deemed the most conservative and ben¬
eficial for the company, and operates as a restraint against injudicious
dividends and the accumulation of a heavy indebtedness. The tempta¬
tion is, to make expenses appear as small as possible, so as to have a
DECISIONS OF THE SUPREME COURT.
129
large apparent surplus to divide. But it is not regarded as tlie wisest
and most prudent method. The question is one of policy, which is
usually left to the discretion of the directors. There is but little
danger that any board will cause a very large or undue portion of then-
earnings to be absorbed in permanent improvements. The practice will
only extend to those which may be required from time to time by the
gradual increase of the company's traffic, the despatch of business,
the public accommodation, and the general permanency and complete¬
ness of the works. When any important improvement is needed, such
as an additional track, or any other matter which involves a large out¬
lay of money, the owners of the road will hardly forego the entire sus¬
pension of dividends in order to raise the requisite funds for those
purposes; but will rather take the ordinary course of issuing bonds or
additional stock. But for making all ordinary improvements, as well
as repairs, it is better for the stockholders, and all those who are inter¬
ested in the prosperity of the enterprise, that a portion of the earnings
should be employed. We think that the true interest of the govern¬
ment, in this case, is the same as that of the stockholders; and will be
subserved by encouraging a liberal application of the earnings to the
improvement of the works. It is better for the ultimate security of
the government in reference to the payment of its loan, as well as for the
service which it may require in the transportation of its property and
mails, that a hundred dollars should be spent in improving the works,
than that it should receive five dollars towards the payment of its sub¬
sidy. If the five per cent of net earnings, demandable from the com¬
pany, amounted to a new indebtedness, not due before, like a rent
accruing upon a lease, a more rigid rule might be insisted on. But it
is not so; the amount of the indebtedness is fixed and unchangeable.
The amount of the five per cent and its receipt at one time or another
is simply a question of earlier or later payment of a debt already fixed
in amount. If the employment of any earnings of the road in making
improvements lessens the amount of net earnings, the government
loses nothing thereby. The only result is, that a less amount is pres¬
ently paid on its debt; whilst the general security for the whole debt
is largely increased.
We are disposed to agree, therefore, with the judge who delivered the
concurring opinion in the court below, that the twenty-seventh item of
expenditure, as stated in the table of expenses in the eighteenth find¬
ing, entitled " expenditures for station buildings, shops, &c.," is a charge
that may properly be made against earnings, since, as the fact is, such
expenditures were actually paid therefrom, and were not carried to
capital account. Should the company ever attempt to make a stock or
bond dividend in consideration of such expenditure, the government
would be entitled to demand its due proportion thereof by way of pay¬
ment on account of its debt. But as long as such expenditures are
fairly and in good faith charged to account of earnings, we see no good
reason for disallowing the charge.
Of course, the allowance of this item will supersede the deduction of
fifteen per cent from the seventh item of earnings; which item, however,
is subject to the observations that have already been made upon it.
Expenses of the same kind as those included in item 27, which are
contained in other items, and were disallowed by the Court of Claims,
are to be allowed in like manner as those in item 27, including the
expenses for issuing bonds.
We agree with the Court of Claims in its rejection of the expenditures
contained in items 17 to 30 in the table referred to, excepting item 27.
9 PAC
130
decisions of tiie supreme court.
All payments of interest on the bonded indebtedness of the company
should be charged to capital interest account, and not to current expend¬
itures. Though payable out of earnings before any dividend can be
made to stockholders, they cannot be deducted for the purpose of ascer¬
taining the " net earnings " of the road, as that term is to be understood
in the sixth section of the act. The bpnded debt incurred for the pur¬
pose of construction and equipment is but another form of capital, anal¬
ogous to preferred stock; and the interest accruing thereon is in the
nature of a dividend on such capital. It has nothing to do with, and
cannot affect, the amount of the net earnings of the road.
So the expenses of land and town-lot departments, and taxes on lands
and town lots, are expenses properly belonging to the land department
of the company's property. They are entirely distinct from its expenses
as a railroad company; and form 110 proper charge, in the accounts,
against the earnings of the road.
The other items disallowed by the court require no particular
remark. Their irrelevancy in the account of net earnings is obvious.
III. We have still to consider the manner in which, and the condi¬
tions subject to which, the live per cent of net earnings is payable and
demandable.
We have seen that by the fifth section of the act of 18G2 the issue to
the company of the subsidy bonds was to constitute a first mortgage
011 the whole line of the railroad and telegraph, together with the roll¬
ing-stock, fixtures, and property of every kind and description, [and]
in consideration of which said bonds should be issued. By the act of
July 2, 180-1, this priority of the government claim was relinquished in
favor of a certain amount of first-mortgage bonds which, by that act,
the company was authorized to issue. The provision referred to is con¬
tained in the tenth section of the act of 1801, which is as follows:—
" Sect. 10. And be it further enacted, that sect. 5 of said act [of
July 1, 1802] be so modified and amended that the Union Pacific Pail-
road Company, the Central Pacific Railroad Company, and any other
company authorized to participate in the construction of said road,
may, on the completion of each section of said road, as provided in this
act and the act to which this act is an amendment, issue their first-
mortgage bonds 011 their respective railroad and telegraph lines to an
amount not exceeding the amount of the bonds of the United States,
and of even tenor and date, time of maturity, rate and character of
interest, with the bonds authorized to be issued to said railroad com¬
panies respectively. And the lien of the United States bonds shall be
subordinate to that of the bonds of any or either of said companies
hereby authorized to be issued on their respective roads, property, and
equipments, except as to the provisions of the sixth section of the act
to which this act is an amendment, relating to the transmission of
despatches and the transportation of mails, troops, munitions of war,
supplies, and public stores for the government of the United States.'"
It is found by the Court of Claims that the Union Pacific Railroad
Company did issue its first-mortgage bonds as authorized by this sec¬
tion, and to the full amount allowed thereby. The company contends
that the interest of these bonds, if not its other interest, should be
charged as an expenditure against the earnings of the road in taking
an account of its net earnings, which would reduce the net earnings of
each year by the amount of said interest. We have already expressed
an opinion that this claim cannot be sustained. The interest 011 these
bonds do not, any more than the interest of any other bonds of the
company, form any proper portion of the expenditures of the road to be
DECISIONS OF THE SUPREME COURT.
131
considered in estimating the net earnings mentioned in sect. 6 of the
act of 1802.
But whilst we decide against the company on this point, we are
clearly of the opinion that the annual interest accruing on these par¬
ticular bonds are to be tirst paid out of the net earnings, before the
government can demand its live per cent thereof. We conceive this to
be the legitimate effect of the concession by the government of its pri¬
ority. It can hardly be pretended that, notwithstanding this conces¬
sion, the live per cent to be applied in payment of the government
bonds is to be first paid. It seems to us an absurdity to say that these
bonds are entitled to a priority, but that the government must be first
paid. This would be to grant a priority, and, in the same breath, to
take it back again. It will not do to say that both must be paid, if
there is not enough to pay both. It is a question between two parties
having a claim against a common fund, and one of them having a pri¬
ority over the other.
It may, perhaps, be urged that the first-mortgage bondholders have
no lien on the net earnings. But it has the same lien that the govern¬
ment has. Both liens are coextensive with the whole property of the
company, so far at least as relates to the railroad and telegraph lines
and their equipment and all property appurtenant thereto. There is a
direction, it is true, that if the company makes net earnings, it shall
pay five per cent thereof on its debt to the government. But that
direction was contained in the act of 1S62; the authority to issue the
first-mortgage bonds, and the concession of priority thereto, was given
two years afterwards, and is the controlling enactment. It cannot be
supposed, after this transaction, that the company is bound to pay the
government first, and to allow the interest on the first-mortgage bonds
to go unpaid, or, in order to pay it, to go out in the money market and
make a new loan. Such could never have been the intention of the
law. Hot to pay the interest on the first mortgage would expose the
road and works to be seized and sold,—a result, certainly, that could
not be to the interest of the government, when we consider that its
entire debt is postponed to the first mortgage, and would be liable to
be lost by such a proceeding. Borrowing money to pay the interest (if
it could be borrowed) would only be to put off the evil day.
The interest accruing on the first mortgage is as much payable out
of the net earnings as the five per cent payable to the government is.
It is the proper fund out of which to pay both; and if but one can be
paid, the former has the precedence; or else the whole government debt
might be paid to the exclusion of the first mortgage, which is admitted
to have the priority. Such a result would be manifestly absurd.
The truth is, that the provision for paying five per cent of the net
earnings on the subsidy debt was a provision for payment out of a
particular fund. If by voluntary agreement on the part of the govern¬
ment a portion of that fund is appropriated to another purpose (which
we think it is), then the government is entitled to go against the bal¬
ance only. The provision created no new obligation or indebtedness,
but only entitled the government to anticipate part payment of a fixed
indebtedness out of a particular fund, if there should be such a fund.
If the fund should not arise, or should be exhausted by claims to which
the government gave priority over its own claim, there would clearly
be nothing for thft government to demand.
It is not like the case of two mortgages, one prior to the other, and
both having claims for interest coming due. In such case, if both
claims are not paid, the one which is not paid becomes a cause of action,
132
DECISIONS OF THE SUFREME COURT.
and may be put in suit. Here, the claim of the government is on the
fund alone. If that is exhausted by its own consent, no cause of action
arises. There is simply nothing left of the fund to which it has a right
to resort.
The government, however, may contend that if there is not a suffi¬
cient surplus of net earnings in one year to pay the live per cent, due
for that year, it may be carried over to a succeeding year, and taken
out of the surplus thereof. We do not think that this position is more
tenable than the other. Each year is to stand by itself. If there is a
deficit in any year instead of net earnings, such deficit cannot be car¬
ried over into the next year's accounts by the company; and if there
are net earnings which are absorbed by the interest due on the first
mortgage, the claim of five per cent cannot be carried over into the
next year by the government. The one is no more a debt than the
other is a credit. The statute makes the application an annual one.
If the year produces net earnings sufficient for the purpose, the govern¬
ment gets its five per cent; if it does not produce sufficient, the gov¬
ernment does not get its five per cent; and there the account ends for
that year. It was never intended that this account should be carried
on from one year to another.
This seems to us to be the fair and reasonable construction of the
statutes, and one that does no injustice to either of the parties. The
object of Congress in all of them was to extend a liberal hand in aid of
the enterprise which the company undertook to carry out, and not to
exact, in addition to the amount of service which the company was
required to perform, the payment of any part of its loan before maturity,
except a small portion of the net earnings of the road which the com¬
pany would be presumed to have in its hands. So far as these were
otherwise disposed of by the government's own consent, the application
to its debt must be regarded as intended to be waived.
The fact that by the ninth section of the act of March 3, 1871 (16
Stat. 525), the Secretary of the Treasury is required to pay over in
money to the companies one-half of the compensation for the services
performed by them for the United States, has no bearing on the ques¬
tion now under consideration. The statutes out of which this question
arises were all passed long before, and are to be construed as if the act
of 1871 had never been passed.
We may add, in conclusion, that Congress, by the act passed May 7,
1878 (20 Stat. 56), supplementary to the acts of 1862 and 1861, has
expressly directed that, in estimating the net earnings of the roads,
the interest of the first-mortgage bonds, as well as the current expenses,
is to be deducted from the gross earnings. Whilst this enactment
cannot be invoked as furnishing any decisive rule for the construction
of the statutes under review, it at least shows that Congress deems the
interest of said first-mortgage bonds as fairly entitled to priority of
payment out of the earnings of the road, before the payment of any
portion thereof on the government debt. We think, therefore, that we
are justified in supposing that our conclusion is in harmony with the
views of the legislature, as to the justice and right of the case.
The conclusions to which we have come on the whole case will require
the following modifications of the decree appealed from:—
First, In estimating the amount of gross earnings, no deduction will
be made from the earnings included in items 7 or 12, as set forth in
the table contained in the eighteenth finding of the Court of Claims,
unless it be found that item 7, entitled " company freight," is for trans¬
porting the company's own property on its road, and is not balanced
decisions of the supreme court.
133
by being also contained among the expenditures. If this be the case,
then the whole of item 7 should be struck out.
Secondly, In estimating the amount of expenditures to be deducted
from gross earnings, the claimant should be credited with the expendi¬
tures contained in item 27 of the table of expenditures, and the other
expenses which, are disallowed by the Court of Claims, except items
17 to 26 inclusive, and items 28, 29, and 30, which are properly
disallowed.
Thirdly, If with these modifications it should be found that the net
earnings, in any one year, were not more than sufficient to pay the
interest on the first-mortgage bonds accruing in said year, then
the company will not be decreed to pay any portion of the said five
per cent of net earnings for that year. But if the net earnings were
more than sufficient to pay said interest, the excess will be subject, as
far as it will go, to the payment of said five per cent; but the company
will not be decreed to pay any more than said excess.
The decree will be reversed with instructions to enter a decree in
accordance with this opinion; and it is
So ordered.
Mr. Justice Strong, with whom concurred Mr. Justice Harlan,
dissenting.
1 concur with the majority of the court in holding that the railroad
was completed, within the meaning of the sixth section of the act of
1862, on the sixth day of November, 1869. I concur also in the defini¬
tion of "net earnings," as the term was used in that section. But the
majority now express the opinion that if the net earnings in any one
year are not more than sufficient to pay the interest on the first-mortgage
bonds of the company in that year, the United States is not entitled
to any portion of five per cent of those earnings for that year, though,
if they are more than sufficient to pay that interest, the excess or sur¬
plus is subject, so far as it will go, to the payment of the five per cent.
This is substantially holding that the claim of the government to the
annual payment of five per cent of the company's net earnings, after
the completion of the road, is postponed to the annual interest on the
first-mortgage bonds. To this I cannot assent. It is, I think, based
upon an entire misconstruction of the acts of Congress which gave
existence to the company, and to which alone we can look for the con¬
tract between it and the government. A very few words will indicate
my opinion, and show the reasons upon which it rests. By the fifth
section of the act of 1862, the Secretary of the Treasury was required
to issue to the company bonds of the United States to an amount
therein specified. The bonds were to be issued as a loan, and the sec¬
tion provided as follows: "And to secure the repayment to the United
States, as hereinafter provided, of the amount of said bonds so issued
and delivered to said company, together with all interest thereon which
shall have been paid by the-United States, the issue of said bonds and
delivery to the company shall, ipso facto, constitute a first mortgage
on the whole line of the railroad and telegraph, together with the rolling-
stock, fixtures, and property of every kind and description, and in con¬
sideration of which said bonds may be issued." This clause describes
the lieu, and the only lien, reserved by the United States. It covers
the railroad and telegraph, the rolling-stock and fixtures, and property
of every kind and description. It does not cover income from the prop¬
erty, either gross receipts or net receipts derived from Its use, while
it remains in the possession of the company and before any forfeiture
134
DECISIONS OP THE SUPREME COURT.
for breach of the conditions of the mortgage. A mortgage of a prop¬
erty is a very different thing from a mortgage of its income. The
mortgagor, so long as he remains in possession, or until actual entry
by the mortgagee, may receive the rents and profits to his own use,
and is not accountable for them to the mortgagee. Fitchburg Cotton
Manufacturing Corporation v. Melven et al., L.r> Mass. 2(>9; Boston Bank
v. Reed et al., 8 Pick. (Mass.) 459. Indeed, it is clear law that a mort¬
gagee has no specific lien upon the rents and profits of mortgaged
premises until condition broken. The Bank of Ogdensburgh v. Arnold
and Others, 5 Paige (N. Y.), 38. I think it very apparent that in the
reservation of the lien Congress did not intend to interfere with or
assert rights over the earnings of the railroad, or to prevent their
appropriation to the general uses of the company. They were not
intended to be covered by the lien, or embraced within it. And I am
confirmed in this belief by the fact that, immediately following the
clause in the filth section describing the lien, a right was reserved to
the United States to take possession of the road on failure of the corn-
jtany to redeem the bonds loaned.
Assuming that I am correct in this, I pass to the sixth section of the
act, which makes no reference to the lien, though it imposes duties
upon the company. It enacts that the grants aforesaid are made upon
condition that said company shall pay said bonds at maturity, and
shall keep said railroad and telegraph in repair and use, shall transmit
despatches at all times over said telegraph line, and transport mails,
troops, Ac., for the government when required, giving to the govern¬
ment the preference in the use of the road and line for all the purposes
aforesaid. The section then declares that all compensation (subse¬
quently changed to one-half thereof) for services rendered for the gov¬
ernment shall be applied to the payment of the bonds and interest, so
as aforesaid named, until the whole amount is fully paid. Then follows
the clause which the United States is seeking in this action to enforce.
It is as follows: "And after said road is completed, until said bonds
and interest are paid, at least five per centum of the net earnings
of said road shall also be annually applied to the payment thereof."
The grants referred to in this section, and declared to be conditional,
are probably those of the right of way and alternate sections of land
given previously in the preceding sections. They can hardly refer to
the loan of bonds. This, however, is not very material. While it is
true that the section refers to payment of the debt due to the United
States, it contains no allusion to the lien for the security of the debt
reserved in the fifth section. And it can hardly be pretended that per¬
formance of the duties thereby imposed upon the company is secured
by the statutory mortgage. The mortgage is not a security for having
the road and telegraph kept in order, nor for the transmission of de¬
spatches, or the transportation for the government, nor for priority of
use by the government, nor for the application to the payment of the
bonds of half the compensation for services to the government. Xor is
it any more a security for the required payment of a percentage of the
net earnings. These duties are secured by the condition attached to
the land grants, and by the implied assumption of the company. They
are entirely collateral to the obligation and lien of the mortgage.
They are not a part of it. It is no uncommon thing that a creditor has
several securities for one debt. He may have a bond and a mortgage
to secure its payment; he may have also a promissory note, or an
assignment of stock. Yobody would claim that in such a case the
note and the assignment are included in the lien of the mortgage.
DECISIONS OP THE SUPREME COURT.
135
Having thus shown, as I think, what the lien of the government was,
what it covered, and what it did not, I pass to the tenth section of the
amending act of 1804, by which, as construed by a majority of the court,
the claim of the United States to a percentage annually of the net earn¬
ings of the road, is postponed to the rights of what is called the first
mortgage of the company. That section authorized the company, and
other companies, to issue their first-mortgage bonds on the roads and
telegraph lines to an amount not exceeding the bonds of the United
States, and of even tenor and date, time of maturity, rate and character
of interest, with the bonds authorized to be issued to them. It then
declared thus: "And the lien of the United States shall be subordinate
to that of the bonds of any or either of said companies hereby author¬
ized to be issued on their respective roads, property, and equipments,
except as to the provisions of the sixth section of the act to which this
act is an amendment, relating to the transmission of despatches, and
the transportation of mails, troops, munitions of war, supplies, and pub¬
lic stores for the government of the United States.''
The first mortgage thus authorized was less comprehensive than the
statutory mortgage of the United States. It did not include the lands
of the company, nor any of its property, except the road and the tele¬
graph line. It certainly did not include the earnings of the company.
What, then, was subordinated to it? I think nothing but the lien of
the United States bonds,—that lien which was reserved in the fifth
section of the act of 1862. This is the express language of the section.
Whatever right to the railroad and telegraph line the United States
had by virtue of its mortgage, that right was postponed to the mort¬
gage bonds authorized by this tenth section, and issued under it. Noth¬
ing else was postponed. Subordination of the lien of the United
States to the company's first mortgage could not have the effect of
enlarging the operation and scope of that mortgage and bringing addi¬
tional subjects within it. Surely it did not make the mortgage a lien
ui)on any other property than that which the company was authorized
to mortgage. It did not make it a lien, either prior or subsequent,
upon the lands of the company, or the income or earnings of its road.
And as I think I have shown the duty of the company to apply annu¬
ally five per cent of its net earnings, after the completion of its road,
to the payment of its debt to the United States, was collateral to its
other obligations,—a cumulative duty, not embraced in the lien or mort¬
gage reserved by the United States in the fifth section of the act of
1862,—it can not be affected by the tenth section of the act of 1864.
Whatever else was postponed, it was not.
It has been argued on behalf of the appellant that the exception
from the subordinating clause of those provisions of the sixth section
of the act of 1862, relating to the transmission of despatches, and the
transportation of mails, troops, munitions of war, supplies, and public
stores for the government of the United States, implies that the other
provisions of that section, or at least the five per cent provision, were
intended to be subordinated to the lien of the first-mortgage company
bonds. This supposed implication is the principal reason urged in
support of the position taken by a majority of the court. It is, how¬
ever, in my judgment, entirely unfounded. The purpose of the excep¬
tion appears to me to be very plain. As I have noticed, the section
authorized the company to issue their first-mortgage bonds upon the
railroad and the telegraph line, and enacted that the lien of the United
States bonds should be subordinate to the company's first-mortgage
bonds. Subordinate, clearly, only in its effect upon that which was
136
DECISIONS OF THE SUPREME COURT.
covered by tlie company's mortgage, namely, the road and the tele
graph line. But if the company's mortgage was permitted to be with¬
out exception the paramount lien upon the road and telegraph line, the
right secured to the United States by the sixth section of the act of
18(12 to the transmission of despatches, and transportation of the
mails, &c., might be totally destroyed by a foreclosure of the mortgage
and a sale under it. To guard against this possibility was evidently
the sole purpose of the exception, and its necessity is manifest. I
repeat, if the company's authorized mortgage on the railroad and the
telegraph line were permitted to be, without restriction, a paramount
lien, the preferential right secured to the United States by the condi¬
tions of the sixth section of the act of 1862—the right to the transmis¬
sion of despatches and transportation of mails, stores, munitions of
war, &c., in preference to others—would have been at the mercy of the
company's mortgagees. That right of priority Congress was not will¬
ing to endanger. The exception was introduced to avert the danger of
its loss. Congress, in effect, said to the company, "Though we agree
that your mortgage shall be the first lien upon the road and the tele¬
graph line, yet no foreclosure of it, no taking possession under it, and
no sale shall interfere with the right of the United States to the trans¬
mission of despatches and to transportation in preference to all others."
To save that right the exception was necessary. It had reference solely
to the operation of the company's mortgage upon the road, upon which
a preferential right to transportation had been reserved, and to the
telegraph line, along which government despatches were first to be car¬
ried. I cannot believe it had any other purpose or intent, much less
that it was intended to operate as a grant, or to postpone the other rights
assured to the United States in the sixth section. The implication that
every duty in that section imposed upon the company, except the one
expressly mentioned, was intended to be subordinated to the lien of
the company's bonds is too unreasonable to be accepted, and it will not
be claimed. Yet such must be the extent of the implication, if the
exception means what the majority of the court think it means. If
the duty of the company to apply to the payment of its bonds a per¬
centage of its net earnings annually after the completion of its road is
postponed to the rights of the first-mortgage bondholders, so is the
duty to apply one-half the compensation for services rendered for the
government, and so is the duty to keep the railroad and telegraph line
in repair, by parity of reason. Those rights of the government and
the right to the percentage of the earnings stand alike. They are all
reserved by the tenth section of the act of 1864.
My conclusion, therefore, is that nothing in the tenth section of the
act of 1864 postpones the right of the government to recover five per
cent of the net earnings of the road before anything is deducted from
those earnings for either principal or interest of the first-mortgage
bonds of the company.
It may be that the construction of the acts of Congress for which I
contend, if adopted by the court, would not increase the amount recov¬
erable by the United States in the present suit, but it may have an
important effect on future claims against the company for the five per
cent, and it has upon the claims of the United States against the other
companies to which the sixth section of the act of 1862 was applicable.
DECISIONS OF THE SUPREME COURT.
137
United States v. Central Pacific Railroad Company.
(99 u.s., 449.)
1. This case, in all material respects, involves the same questions as Union Pacific
Eailroad Company v. Uniled Stales (supra, p. 116), and the court adheres to the
conclusion there announced as to the time when the road must be considered
as completed, so as to render the company thereafter liable to pay annually five
per cent of the net earnings of the road for the purposes mentioned in the sixth
section of the act of July 1, 1862. 12 Stat. 489.
2. The rulings in that case upon the question of the earnings and expenditures of the
road, and upon the principles by which the amount of net earnings is to be ascer¬
tained and in what manner paid, reaffirmed.
Error to the Circuit Court of the United States for the District of
California.
The facts are stated in the opinion of the court.
The Attorney-General and Mr. Joseph K. McCammon for the plaintiff
in error.
Mr. S. W. Sanderson, contra.
Mr. Justice Bradley delivered the opinion of the court.
This was an action by the United States against the Central Pacific
Railroad Company, to recover five per cent of the net earnings of the
railroad belonging to said company, from the sixteenth day of July,
18G9, the date at which it is alleged that the said railroad was com¬
pleted, to the thirty-first day of October, 1874. The road extends from
the termination of the Union Pacific Railroad, at or near Ogden in the
Territory of Utah, to the waters of the Pacific; and was constructed
under tiie provisions of the Pacific Railroad Act of July 1, 18G2, and
the several acts supplementary thereto. It was originally constructed
by two corporations of California, namely, the Central Pacific Railroad
Company of California, and the Western Pacific Railroad Company;
which companies, however, accepted the terms of the said acts of Con¬
gress, received subsidies from the government under the same, and
were finally consolidated into one corporation under and by virtue of
the said acts, by the name of the Central Pacific Railroad Company,
which succeeded to all the rights and duties under said acts of Con¬
gress which belonged or appertained to the original companies.
On the trial, a jury was waived, and the court found the facts spe¬
cially; and upon such findings gave judgment for the defendant. The
United States brought a writ of error, and the case is nowhere for
review.
The case, in all material respects, involves the same questions which
have just been disposed of in the case of Union Eaeific Eailroad Com¬
pany v. United States, supra, p. 116. The same subsidies were granted
to the companies in this case, and upon the same terms and conditions,
as in that of the Union Pacific Railroad Company; the same acts of
Congress, in the main, applying to both. The claim of the government
is founded upon that clause in the sixth section of the act of July 1,
18G2, which declares that " after said road is completed, until said
bonds and interest are paid, at least five per centum of the net earnings
of said road shall also be annually applied to the payment thereof."
The allegation of the government is, that the railroad was completed
on the sixteenth day of July, 18G9; and that the net earnings of the
road from that time to the thirty-first day cf October, 1874, amounted
to the sum of $36,732,702. The defendant denies the allegations of the
bill; and the principal issue at the trial was. the time of the completion
of the road. The conclusion of the court from its findings of fact was,
138
DECISIONS OF THE SUPREME COURT.
that the road was not completed until the first day of October, 1874,
and, hence, that the government was not entitled to recover.
It is unnecessary to review all the findings. The course of proceed¬
ings was in all respects similar to what took place in the case of the
Union Pacific Railroad Company: similar reports of completed sections
by the company under the oath of its president, similar examination
and reports of commissioners, and similar acceptances by the Presi¬
dent of the United States. The seventh finding of the court is as
follows:—
" VII. That as each section of twenty miles or more of the road was
constructed, the president of the company filed a statement, under
oath, in pursuance of the statute, to the effect that the section, describ¬
ing it, had been completed as required, specifying the particulars in the
language of the statute, and asking that the commissioners appointed
under the statute might be notified, and that they might examine and
report upon such section. Upon afavorable report by the commissioners,
the President accepted the section provisionally, an(q issued to the
company the bonds authorized by the statute. This was the course of
proceeding till 1868, when it was found that the government might
advance all the subsidies upon a road only provisionally accepted in
sections, and have no security for its absolute completion, as a whole,
up to the standard of a first class road. The question of the propriety
of this course was submitted to the Attorney-General, who rendered an
opinion on Sept. 5, 1868, which was to the effect that the course before
pursued by the government was in accordance with the law, and that
the President had authority to appoint commissioners to review that
portion of the road which had been accepted provisionally, and to
refuse a final acceptance of the road as a whole until all the deficien¬
cies should be supplied, and that sufficient subsidies might be with¬
held, or other guaranties required of the company to secure absolute
completion. The opinion is reported in 12 Op. Att'y-Gen., at page 477,
and is referred to and made a part of this finding. The President
thenceforth acted upon this opinion of the Attorney-General, and
accepted each section when provisionally completed, leaving the ques¬
tion of the absolute completion of the road, as a whole, to be deter¬
mined upon examination and report of commissioners to be specially
appointed for that purpose."
This opinion had respect both to the Union Pacific and the Central
Pacific roads.
The court then finds that on the 25th of September, 1868, the Presi¬
dent, in pursuance of the opinion of the Attorney-General, appointed a
commission of civil engineers to examine the entire road, so far as then
provisionally completed, and report upon it in accordance with instruc¬
tions to be furnished by the Secretary of the Interior; that these com¬
missioners made their report on the 14tli of May, 1869, pointing out
many particidars in which the road as constructed failed to come up to
the standard of a first-class road, and estimating that to supply such
deficiencies would require a further expenditure of §4,493,380; that the
Secretary suspended the grant of lands to the company until further
orders, and required it to deposit with the Secretary of the Treasury
$4,000,000 of its first-mortgage bonds, to secure the proper completion
of the road, under a similar agreement to that made by the Union
Pacific Railroad Company; that on the 11th of May, 1869, the connect¬
ing rail uniting the Central and Uniou Pacific railroads was laid, and
soon thereafter regular through passenger aud freight trains were placed
upon the roads between San Francisco and Omaha, and have run regu-
DECISIONS OF THE SUPREME COURT.
139
larly between said points ever since; and that on the sixteenth day of
July, 1869, and ever since, said roads have been in fact operated as rail¬
roads, and have been able to carry, and have in fact carried, all pas¬
sengers, freights, mails, troops, supplies, and munitions of war offered
for transportation between the eastern terminus of the Central Pacific
Railroad and the Pacific Oceon. The fourteenth finding is as follows:—
"XIV. That on July 15, 1869, the Secretary of the Interior trans¬
mitted to the President the report, dated May 15, 1869, of the commis¬
sioners appointed to exaudne and report upon a section of twenty and
three-tenths miles of the Central Pacific Railroad, this being the last
section constructed by said defendant. In his letter transmitting said
report to the President for his action, the Secretary says: 'I respect¬
fully recommend the acceptance of the same, and that bonds be issued
to the company thereon in accordance with the agreement made with
the company, which is to the effect that they deposit their first-mortgage
bonds with the Secretary of the Treasury to such amount as may be
deepied necessary to secure the ultimate completion of the road agree¬
ably to the provisions of the act approved July 1,1862.'
" Recommendations in all respects similar to the last had been made
by the Secretary of the Interior to the President as to the reports made
upon the several preceding sections of the roads, and a similar approval
was indorsed thereon by the President. Upon the same day, July 15,
1869, the Secretary of the Interior made a similar recommendation as
to the section-commissioner's reports upon the last sections of the Union
Pacific Railroad, in which he recommends a similar provisional accept¬
ance of the section, and adds: '■Provided, however, that no bonds or
patents shall in any event be issued until such security shall be depos¬
ited with the Secretary of the Treasury necessary to secure the ultimate
completion of the road, agreeably to the acts mentioned in my letter to
you of the 27th of May last.'
"This recommendation was approved by the President, and the Sec¬
retaries of the Treasury and Interior directed to carry the same into
effect. These constitute the last conditional acceptances of sections as
provisionally completed."
By the twenty-fourth and twenty-fifth findings it is found as fol¬
lows:—
" XXIV. That iu pursuance of the provisions of said acts of Congress
hereinbefore mentioned, and at the time of the construction, equipment,
and provisional acceptance, as hereinbefore stated, of each and every
section of said railroad by either of said railroad companies, the plain¬
tiff issued and delivered to the said Central Pacific Railroad Company
of California and to its assignee, the Western Pacific Railroad Com¬
pany (where the latter was entitled thereto under said acts), except as in
these findings otherwise indicated, when some portions were tempo¬
rarily withheld as security for the ultimate completion of the road, bonds
of the United States of $1,000 each to the amount of forty-eight of said
bonds per mile for each such section for oue hundred and fifty miles
eastwardly from the western base of the Sierra Xevada mouutaius, and
thirty-two of said bonds per mile for all of said railroad constructed
east of said last-mentioned point, and sixteen of said bonds per mile
for all of said railroad constructed west of the western base of the
Sierra Xevada mountains.
"XXV. That between the first day of July, 1862, and the twenty-
seventh day of January, 1870, this plaintiff, in pursuance of said acts
of Congress, caused to be issued and delivered to said railroad com¬
panies, in the mode and manner and at the times herein set forth, all
140
decisions of the supreme court.
except five of said $1,000 bonds. That the bonds so delivered by
plaintiff to said companies amounted in the aggregate to the sum of
$27,850,020."
It was further found that, in pursuance of the joint resolution of Con¬
gress, passed April 10, 1809 (as in the case of the Union Pacific Kail-
road Company), the board of eminent citizens referred to in that case,
on the third day of November, 1809, made their report respecting the
Central Pacific roads, in which they stated that the amount required to
supply deficiencies and complete the work np to the required standard
had been reduced since the last commissioners' report from $4,498,380,
to $570,050; and the Secretary of the Interior thereupon modified his
former order suspending the issue of patents to lands so as to allow
patents for one-half the lands to be issued, and soon after allowed the
withdrawal of said first-mortgage and other bonds, still retaining as
security the other half of the lands.
It thus appears that the work of the Central Pacific roads went on
pari passu with the Union Pacific, and on the same terms and condi¬
tions; and that the roads were completed, the subsidy bonds received,
and the collateral securities for the ultimate supply of deficiencies given
up at the same time in each case.
We do not propose to repeat the views which have already been ex¬
pressed in the case of the Union Pacific Railroad Company. Our con¬
clusion, with regard to the time of completion of the road is the same in
this case as in that. As this is the only question raised by the record,
it is unnecessary to add anything further. The question of the amount
of earning, and expenditures, and of net earnings deducible therefrom,
was not reached by the court below, and is not presented to us for the
expression of any opinion. But as we have indicated our views in the
other case, as to the principles on which the amount of net earnings is
to be ascertained, and in what manner they are to be paid, the cour:
below, on a re-trial, will be governed by our opinion in that case.
The judgment of the Circuit Court will be reversed, and the cause
remanded for a new trial; and it is so ordered.
Mr. Justice Strong and Mr. Justice Harlan dissented.
United States v. Kansas Pacific Railway Company.
(99 U. S., 455.)
1. The bonds granted by the United States to the Kansas Pacific Railway Company
are not a lien on, nor is the company liable for five per cent of the not earnings
of, that portion of its road west of the one hundredth meridian.
2. The court adheres to the rulings in Union Pacific Railroad Company v. United States
(supra, p. 402),(p.116, this doc.), as to the principle which should govern in deter¬
mining the amount of net earnings. In regard to certain items claimed by the
company as proper deductions from the gross receipts of the road, the following
should be excluded,—money needed to place it in proper repair, hut not actually
expended for that purpose; the expenses of the land department; the interest
on the funded debt, which has priority over the lien of the United States; and
the fifty per cent retained by the latter from the amount due for services ren¬
dered to it; and that the following items sho.uld be allowed, provided they were
actually paid out of the earnings of the road, and not raised by bonds or stock,—
the equipment account, or replacing and rebuilding rolling-stock, machinery,
&c.; the amounts paid for depot grounds, and the expenses of same; and the
construction account or improvements and additions to the track, &c.
Error to the Circuit Court of tlie United States for the District of
Kansas.
The facts are stated in the opinion of the court.
decisions of the supreme court.
141
The Attorney-General and Mr. Joseph K. McCammon for the plaintiff
in error.
Mr. John P. Usher and Mr. S. ir. Sanderson, contra.
Mr. Justice Bradley delivered the opinion of the court.
This case was a suit brought in the court below by the United States
against the Kansas Pacific Railway Company, to recover five per cent
of the net earnings of the road belonging to that company from the
time of the completion thereof, alleged to be the second day of Novem¬
ber, 1869, to the thirty-first day of October, 1874; the said five per
cent being claimed under the last clause of sect. 6 of the Pacific Rail¬
road Act, passed July 1,1862, which lias already received consideration
in the cases of the Union Pacific and the Central Pacific Railroad
Companies, supra, p. 402, p. 449 (p. 116, this document). The cause was
tried by the court, the facts were specially found, and the conclusion
arrived at that nothing was due to the government upon the alleged
claim; and judgment was rendered for the defendant.
The Kansas Pacific Railway Company was originally chartered in
1855, by the Territory of Kansas, under the name of the Leavenworth,
Pawnee, and Western Railroad Company, mentioned in the ninth sec¬
tion of the act of 1862, and afterwards, in 1863, received the name of
the Union Pacific Railway Company, Eastern Division, and finally, in
1869, that which it now bears. By the section referred to, it was author¬
ized to construct a railroad and telegraph line from the Missouri River,
at the mouth of the Kansas River, so as to connect with the Union
Pacific at the initial point on the one hundredth meridian, "upon the
same terms and conditions in all respects as are provided in this act
for the construction of the railroad and telegraph line first mentioned"
(that is, the Union Pacific).
The company accepted the terms of the act, and proceeded to con¬
struct its road, receiving subsidy bonds therefor at the rate of $16,000
per mile for the whole length of its road to the one hundredth merid¬
ian, being 393-H) miles; all of which bonds were delivered as the work
progressed. The road was completed to Sheridan, 405 miles west from
the Missouri State line (the point of commencement), on the second
day of November, 1869, which is the date at which the government
alleges that the road was completed. The authority of the company to
extend its road west of the one hundredth meridian was derived from
the ninth section of the act of 1864, which declared as follows:—
"And provided further, that any company authorized by this act to
construct its road and telegraph line from the Missouri River to the
initial point aforesaid, may construct its road and telegraph line so as
to connect with the Union Pacific Railroad at any point westwardly of
such initial point, in case such company shall deem such westward con¬
nection more practicable or desirable; and in aid of the construction of
so much of its road and telegraph line as shall be a departure from the
route hereinbefore provided for its road, such company shall be entitled
to all the benefits and be subject to all the conditions and restrictions
of this act: Provided further, however, that the bonds of the United
States shall not be issued to such company for a greater amount than
is hereinbefore provided, if the same had united with the Union Pacific
Railroad on the one hundredth degree of longitude; nor shall such com¬
pany be entitled to receive any greater amount of alternate sections of
public lands than are also herein provided."
It thus appears that whilst the company was authorized to extend
its road west of the one hundredth meridian, if it saw fit so to do, it
142
DECISIONS OF THE SUPREME COURT.
•was entirely in its option; and if it did, it was not to expect, or have,
any subsidy of government bonds for such extension. It is found by
the court that the company actually extended its road westward as far
as Denver, 245 miles beyond the one hundredth meridian; but did not
complete the same to that point, so as to be accepted by the President,
until the 19th of October, 1872.
A material question in this case is, whether the whole line to Den¬
ver, or only the line which the company was first authorized to construct
(which terminated at the one hundredth meridian), is liable to the lien
for the government subsidy, and the payment of five per cent of net
earnings. If only the latter, then the time of completion was that
which is claimed by the government, namely, the second day of Novem¬
ber, 18G9; but the net earnings liable to the claim of live per cent would
be only those produced on the first 393jjj miles, or if these cannot be
ascertained, then a pro rata amount of the whole net earnings of the
road.
From a careful examination of the statutes relating to this subject,
we are of opinion that, whilst, as to its entire line, the company, in the
words of the ninth section of the act of 18(14, is "entitled to all the
benefits and subject to all the conditions and restrictions of the act;"
and is bound to furnish transportation and telegraphic accommodations
to the government on the usual terms; yet that the subsidy bonds
granted to the company, being granted only in respect of the original
road, terminating at the one hundredth meridian, are a lien on that
portion only; and that the five per cent of the net earnings is only
demandable on the net earnings of said portion. This deduction, we
think, is clearly demonstrated by the words of the fifth section of the
act of 18(12, which creates the government lien for the payment of the
subsidy bonds. Those words are that "the issue of said bonds and
delivery to the company shall ipso facto constitute a first mortgage on
the whole line of the railroad and telegraph, with the rolling-stock,
fixtures, and property of every kind and description, [and] in consider¬
ation of which said bonds may be issued.1' It is the road and appurte¬
nances, in consideration of which, or in respect of which, the bonds are
issued, that is subjected to the lien. This can apply, in the present
case, only to the first 394 miles of the defendant's road. And as the
lieu only applies to this portion, the stipulation for payment out of net
earnings cannot reasonably be applied to any other portion of the line.
This view is strengthened by the terms of the third section of the act
of March 3, 18G9, authorizing the defendant company to assign and
transfer to the Denver Pacific Railway and Telegraph Company that
portion of its line between Denver and Cheyenne. By that section,
the said companies were authorized to mortgage their respective por¬
tions of said road (referring to the extension of the Kansas Pacific
from the one hundredth meridian to Denver, and thence to Cheyenne)
to the amount of $32,000 per mile; a privilege which would hardly
have been conceded if the lien of the government bonds was deemed
to extend, over those portions of the line.
The result of this conclusion is, that only such part of the annual
net earnings of the road as are due to the first 393jjf miles are in any
event subject to the payment of the five per cent in question.
But inasmuch as the court below, in estimating the net earnings,
credited the company for expenditures which are not allowable accord¬
ing to the principles announced by us in the case of the Union Pacific
Railroad Company; and as, upon a proper accounting, it may appear-
that, in some years, the defendant company realized a sufficient amount
of net earnings from its first 394 miles of road to pay the interest on the
DECISIONS OF THE SUPREME COURT.
143
first-mortgage bonds, and leave a surplus applicable to the five per
cent payable to the government, it will be necessary to reverse the
judgment, in order that a new trial may be had between the parties.
It is proper, however, before concluding, that we should indicate our
opinion with regard to certain classes of expenditures on which the
government and the company are at issue.
The former insists that certain items should be excluded from the
account which are claimed by the latter to be legitimate. These items
are designated in Schedule C, annexed to the findings of the court
below, and are as follows:—
First. "Depreciation account, or expense not charged up." This is
explained to be the amount necessary to put the road in proper repair,
but which was not actually expended for that purpose. We are clearly
of opinion that it is not a proper charge. Only such expenditures as
are actually made can with any propriety be claimed as a deduction from
earnings.
Secondly. "Construction account, or improvements and additions to
track," &c. This item, according to what we have said in the Union
Pacific Eailroad case, ought to be allowed.
Thirdly. "Equipment account, or replacing and rebuilding rolling-
stock, machinery," &c. This item should also be allowed as an expendi¬
ture properly chargeable to the earnings of the road, when actually
paid out of the earnings and not raised by the issue of bonds or stocks.
Fourthly. "Peal estate purchased for depot grounds, &c., and
expenses of same." This item is a proper charge if actually paid out of
the earnings, and not raised by bonds or stocks.
Fifthly. "Expense of land department." This item is not allowable.
Sixthly. "Interest on funded debt prior to government lien." For
the reasons expressed in the case of the Union Pacific Eailroad Com¬
pany, this item is not allowable, though the interest annually accruing
on the first-mortgage bonds issued upon the first 393-j-g- miles of the road
is payable out of the net earnings before the five per cent due the
government.
Seventhly. "Fifty per cent government earnings withheld." This, as
explained in the previous opinion, is not allowable to be charged as an
expense.
The judgment of the Circuit Court will be reversed, and the cause
ordered to be remanded for a new trial; and it is
So ordered.
United States v. Denver Pacific Eailway Company.
(99 U.S., 460.)
The Denver Pacific Railway and Telegraph Company is not liable for the debt
incurred by the Kansas Pacific Railway Company on account of subsidy bonds;
and although it is bound to perform the government service stipulated hy the
Pacific Railroad acts at the rates therein prescribed, and is subject to their
provisions, so far as they are applicable to it, no part of the compensation due
it for such service can he retained hy the United States.
Appeal from the Court of Claims.
The facts are stated in the opinion of the court.
The Attorney-General and Mr. Joseph K. McCammon for the appellant.
Mr. John P. TJsher and Mr. S. IF. Sanderson, contra.
Mr. Justice Bradley delivered the opinion of the court.
The decision in this case is controlled by United States v. Kansas
Pacific Railway Company, supra, p. 455 (p. 140, this document). By
144
DECISIONS OF THE SUPREME COURT.
virtue of the act of March 3, 1869 (15 Stat. 324), the latter company,
under the name of the Union Pacific Railway Company, Eastern Divi¬
sion, was "authorized to contract with the Denver Pacific Railway and
Telegraph Company, a corporation existing under the laws of the Terri¬
tory of Colorado, for the construction, operation, and maintenance of
that part of its line of railroad and telegraph between Denver City and
its point of connection with the Union Pacific Railroad, which point
shall be at Cheyenne, and to adopt the road-bed already graded by said
Denver Pacific Railway and Telegraph Company as said line, and to
grant to said Denver Pacific Railway and Telegraph Company the per¬
petual use of its right of way and depot grounds, and to transfer to it
all the rights and privileges, subject to ail the obligations, pertaining
to said part of its line."
By the same act it was further enacted as follows:—
"Sect. 2. And be it further enacted, That the said Union Pacific Rail¬
way Company, Eastern Division, shall extend its railroad and tele¬
graph to a connection at the city of Denver, so as to form with that
part of its line herein authorized to be constructed, operated, and main¬
tained by the Denver Pacific Railway and Telegraph Company, a contin¬
uous line of railroad and telegraph from Kansas City, by way of Denver,
to Cheyenne."
"Sect. 3. And be it further enacted, That said companies are hereby
authorized to mortgage their respective portions of said road, as herein
defined, for an amount not exceeding $32,000 per mile, to enable tliern
respectively to borrow money to construct the same; and that each
of said companies shall receive patents to the alternate sections of land
along their respective lines of road, as herein defined, in like manner
and within the same limits as is provided by law in the case of lands
granted to the Union Pacific Railway Company, Eastern Division:
Provided, That neither of the companies hereinbefore mentioned shall
be entitled to subsidy in United States bonds under provisions of this
act."
The arrangement which was thus provided for and authorized, having
been made between the two companies, and each having constructed
its particular portion of the road, the government claims that the sub¬
sidy bonds granted to the Kansas Pacific Railway Company upon the
first 393f| miles of its road, are a lien upon the whole line to Chey¬
enne, no matter who built it, if built under the authority and powers
given to that company; and that five per cent of the net earnings of
the entire line are applicable to the payment of said bonds.
In United States v. Kansas Pacific Railway Company (supra, p. 455),
(p. 140 this document) we held that the lien of the bonds referred to
only extends to the road in respect of which they were granted, and not
to the extension of it west of the one hundredth meridian. Of course,
that decision controls the present case.
Other reasons might be assigned why the Denver Pacific Railway
and Telegraph Company is not liable to pay the five per cent in ques¬
tion, but it is unnecessary to adduce them. The company is bound, of
course, to perform the government service stipulated for by the sixth
section of the act of 1862, being paid therefor at the rates therein pre¬
scribed; and is bound by such other provisions of the act of 1862 and
the various supplementary and amendatory acts, as are applicable to it.
Judgment affirmed.
Note.—At a subsequent day of the term, Mr. Justice Bradley remarked: Since
delivering the opinion in this case, our attention has been called to the fact that,
DECISIONS OF THE SUPREME COURT.
145
whilst affirming generally the judgment of the court helow, we did not expressly
pass upon the question of the right set up by the government to retain one half of
the amount of compensation due from it to the claimant for the transportation of
mails and other public property. This point was not overlooked in rendering our
judgment in the case. \Ve cannot conceive on what principle the rendition can be
claimed, since the object of retaining the compensation for such services, or any
portion thereof, as expressed in the sixth section of the act of 1KG2, was to apply the
amount so retained to the debt due to the government for subsidy bonds granted to
the companies that should receive the same. But the claimants in this case received
no such bonds, and we decided that neither the company, nor its railroad or prop¬
erty, is liable in any way for the payment of any debt incurred for such bonds re¬
ceived by the Kansas Pacific Railway Company. Consequently there is no room for
the application of the right of retention in this case, and the judgment of the Court
of Claims was properly rendered for the whole amount of such compensation due.
United States v. Sioux City and Pacific Railroad Company.
(99 XT. S., 491.)
The ruling in TJvion Pacific I'ailroad Company v. United States (supra, p. 402), that
the United States is not entitled to recover if, during the period for which it
claims the five per cent of the net earnings of any road, to aid in the construc¬
tion of which the bonds of the United States were granted under the Pacific
Railroad acts, such earnings were absorbed by the interest accruing on the
first-mortgage bonds of the company, reaffirmed.
Error to the Circuit Court of the United States for the District of
Iowa.
The facts are stated in the opinion of the court.
The Attorney-General and Mr. Joseph K. McCammon for the plaintiff
in error.
-1/r. 8. Bartlett and Mr. W. I. Hayes, contra.
Mr. Justice Bradley delivered the opinion of the court.
This was an action brought by the United States against the defend¬
ant in the court below to recover five per cent of its net earnings.
The facts of the case were admitted by the parties, and, amongst
others, the following:—
"5. That if the amount paid by the company as hereinbefore stated
for interest on its first-mortgage bonds during said time should, under
the law, be deducted from the receipts of the company in order to ascer¬
tain the net earnings thereof, then there were no net earnings during
said time; but if, on the other hand, the said payments of interest
should not be deducted from the earnings of the road to ascertain the
net earnings, then the net earnings of the road during said period
amounted to the sum of four hundred and seven thousand seven hun¬
dred and ninety-nine -f-020- dollars ($407,799.50)."
It thus appears that, although the company made net earnings to
the amount of $407,799.50, during the period covered by the time in
respect of which the suit was brought, yet that they were all absorbed
by the interest accruing on the first-mortgage bonds. According to
the principles laid down in our decision, Union Pacific Railroad Go. v.
United States (supra, p. 402), the government cannot claim the five per
cent which would otherwise be applicable to its subsidy.
Judgment affirmed.
Mr. Justice Strong- and Mr. Justice Harlan dissented.
10 PAC
146
decisions of the supreme court.
SINKING-FUND OASES.
Union Pacific Railroad Company r. United States.
Central Pacific Railroad Company v. Gallatin.
(99 U. S., 700.)
1. So far as it establishes in the treasury of the United States a sinking-fund, the act
of Congress approved May 7, 1878 (20 Stat. 56), entitled "An Act to alter and
amend the act entitled 'An Act to aid in the construction of a railroad and tele¬
graph line from the Missouri Kiver to the Pacific Ocean, and to secure to the
government the use of the same for postal, military, and other purposes,'
approved duly 1, 1862, and also to alter and amend the act of Congress approved
duly 2, 1864, in amendment of said lirst-named act,'' is not unconstitutional.
2. The debt of the respective companies therein named to the United States is not
paid by depositing and investing the fund in the manner prescribed by that act.
3. Retaining in the fund the one-half of the earnings for services rendered to the
government by the respective companies, which, by the act of July 2, 1864 (13
Stat. 356), was to be paid, does not release the government from such payment.
Although kept in the treasury, the fund is owned by them, and they will be
entitled to the securities whereof it consists which remain undisposed of when
llie debts obargeable upon it shall be paid. Under the circumstances, such
retaining is, in law, a payment to them.
4. The establishment of the fund is a reasonable regulation of the administration of
the affairs of the companies, promotive alike of the interests of the public and
of the corporators, and is warranted under the authority which Congress has,
by way of amendment, to change or modify the rights, privileges, and immuni¬
ties granted by it.
5. The right of amendment, alteration, or repeal reserved by Congress in said acts of
1862 and 1864 considered.
6. The legislation of Congress in relation to the Central Pacific Railroad Company
and the Western Pacific Ra.lroad Company—the latter now by consolidation a
part of the former—considered, and held, 1. That, to the extent of the powers,
• rights, privileges, and immunities thereby granted, Congress retains the right
of amendment, and by exercising it may, in a manner not inconsistent with the
original charter granted by California, as modified by the act of that State
passed in 1864. accepting what had been done by Congress, regulate the admin¬
istration of the affairs of the company in reference to the debts created by it
under authority of such legislation. 2. That the establishment of the sinking-
fund by the act of May 7, 1878 (supra), does not conflict with any thing in said
charter.
Appeal from the Court of Claims.
Appeal from the Circuit Court of the United States for the District
of California.
The Union Pacific Railroad Company filed its petition in the Court
of Claims against the United States. The court found the following
facts:—
1. That during the month of July, 1878, the claimant, at the request
of the defendant, transported troops of the United States over the
claimant's road, as averred in the petition.
2. That the amount and value of said service so rendered by the
claimant for the defendant, as stated in proposition first, was and is
the sum of $10,451.73, the same being fair and reasonable compensa¬
tion for said service, and not exceeding the amounts paid by private
parties for the same kind of service.
3. That said amount was duly allowed and audited by the accounting
officers of the treasury for the said service, on the eighth day of
October, 1878.
4. That on the twenty-eighth day of October, 1878, the claimant
demanded of the defendant the one half of the said sum, to wit,
$5,225.08.4, and protested against the payment of said one-half into
any sinking-fund, or its application to the payment of bonds issued by
the United States to said company, or to the interest thereon, and
DECISIONS OF THE SUPREME COURT.
147
against the retention of said one-half by the United States on any
account whatever.
5. That on the fourth day of November, 1878, the proper officers of
the Treasury Department of the United States issued a warrant, No.
5950, for the said amount of $10,451.73, on account of the transporta¬
tion aforesaid.
6. That on the fifth day of November, 1878, the Secretary of the
Treasury refused to pay the said one-half to the claimant, giving as
his reason therefor that the same was required by an act of Congress,
approved May 7, 1878, hereinafter referred to, to be turned into a
sinking-fund, as provided in said act.
7. That on Nov. 6, 1878, a draft to the order of the Secretary of the
Treasury, assignee of the Union Pacific Railroad Company, for
$10,451.13, was issued. That the Secretary of the Treasury made the
following indorsement on the draft:—
"Pay to the Treasurer of the United States, to be by him deposited
in the United States Treasury, in general account, on account of
moneys received from the Union Pacific Railroad Company, being the
compensation found due it for transportation performed for the War
Department in July, 1878, and withheld in accordance with the pro¬
visions of sect. 2, act May 7, 1878, as follows:—
" One-half, $5,225.86, on account of reimbursement of interest paid
on bonds issued to the Union Pacific Railroad Company.
"Credit to be given under date of August —, and one-half, $5,225.87,
on account sinking-fund, Union Pacific Railroad Company, to be carried
to credit under sect. 4 of the above act.
"John Sherman,
"Secretary of the Treasury, Assee. Union Pacific Railroad."
And the Assistant Treasurer of the United States indorsed the same.
8. That the Assistant Treasurer of the United States issued a cer¬
tificate of deposit, showing that $10,451.73 on account of moneys
received from the Union Pacific Railroad Company, being compensa¬
tion found due it for transportation performed in July, 1878, and with¬
held, &c., have been deposited in the treasury.
9. That revenue covering warrants were issued, showing the moneys
before mentioned have been covered into the treasury, one-half, viz.
$5,225.86, on account of reimbursement of interest, and one-half, viz.
$5,225.87, on account of sinking-fund.
10. That the Secretary of the Treasury directed the Treasurer of
the United States to purchase at the end of each month five per cent
bonds of the United States, to the amount of the moneys withheld
from the Union and Central Pacific Railroad Companies since July 1,
1878, and apply the same to the credit of the company from which the
money may have been withheld, the bonds to be registered in the
name of the Treasurer of the United States. In a schedule annexed,
the sum of $5,225.87 appears as having been withheld on this account.
11. That the Treasurer of the United States, in accordance with the
directions above recited, purchased bonds of the funded loan of 1881,
for account of the sinking-fund, Union Pacific Railroad Company, to a
large amount.
12. That an appropriation warrant was issued on account of the
sinking-fund, Union Pacific Railroad Company, for the amount expended
by the Treasurer of the United States in the purchase of five per cent
bonds as before recited, and there was included in the amount appro-
14X
DECISIONS OF THE SUPREME COURT.
printed the sum of $5,225.87, which had been deposited and covered
into the treasury, as shown in the other findings.
13. That the claimant never assigned or in any way parted with the
claim sued for; but the issuing of said warrant mentioned in finding
No. 5, in favor of the Secretary of the Treasury as assignee of the
Union Pacific Pail road Company, and the issuing of the draft on said
warrant, as found in finding No. 7, payable to the order of the Secre¬
tary of the Treasury as assignee of the Union Pacific Eailroad Com¬
pany, was each the act of the defendant, done without the consent of
the claimant; and the said warrant and draft were issued in that form
for the purpose of enabling the proper officers of the Treasury Depart¬
ment to place the said money in the treasury, as found in the preceding-
findings.
14. That the said amount placed to the credit of the sinking-fund,' to
wit, the sum of $5,225.87, as hereinbefore found, is the one-half of the
money earned by the claimant, as found in the above findings, Nos. 1
and 2, and for which half this action is prosecuted.
The court adjudged that the petition be dismissed, and the company
thereupon appealed.
Gallatin, a stockholder of the Central Pacific Eailroad Company,
filed his bill against it and the persons constituting its board of direct¬
ors, to compel them to comply with the requirements of the said act of
May 7, 1878. He alleges that the board has threatened to disregard
them, and that, Aug. 27, 1878, it declared a dividend of one per cent
upon the capital stock of the company payable out of the earnings
accumulated since June 30, 1878, although the company was then in
default in respect of the payment of five per cent of the net earnings
as required by the said act; that one of the consequences of its con¬
duct, if persisted in, will be a forfeiture of the company's property and
franchises, to his irreparable injury. He prays for an injunction to
restrain the directors from paying a dividend while the company is in
default in respect to any of the terms, requirements, or provisions of
said act, and from doing any other or further thing whatever in the
premises in contravention or disregard thereof, or that will jeopardize
or imperil, or cause or tend to cause, thereunder a forfeiture of any of
the rights, privileges, grants, or franchises derived or obtained by said
company from the United States.
The defendants filed a demurrer, which was overruled, and on their
declining to answer, the court passed a decree in conformity with the
prayer of the bill. They thereupon appealed.
The following is the legislation bearing upon the questions involved.
The act of Congress approved July 1, 1802 (12 Stat. 48'J), by its first
section enacts:—
(The decision here cites the act of July 1, 1S62, sections 1 to 18; act
of July 2, 1864, sections 5, 10, and 22; act of May 7, 1868.)
The legislature of California, April 4, 1864, passed the following act
(Stat, for 1863-64, p. 471):
"AN ACT to aid in carrying out the Pacific railroad and telegraph act of Congress
and other matters relating thereto.
"The people of the State of California, represented in Senate and
Assembly, do enact as follows: —
" Sect. 1. Whereas, by the provisions of an act of Congress, entitled
'An Act to aid in the construction of a railroad and telegraph line from
the Missouri Eiver to the Pacific Ocean, and to secure to the govern¬
ment the use of the same for postal, military, and other purposes,
DECISIONS OF THE SUPREME COURT.
149
approved July 1, 18G2,' the Central Pacific Railroad Company of Cali¬
fornia is authorized to construct a railroad and telegraph line in the
State of California, and in the Territories lying east of said State
towards the Missouri River; therefore, to enable the said company more
fully and completely to comply with and perform the provisions and
conditions of said act of Congress, the said company, their successors
and assigns, are hereby authorized and empowered, and the right,
power, and privilege is hereby granted to, conferred upon, and vested
in them to construct, maintain, and operate the said railroad and tele¬
graph line not only in the State of California, but also in the said Ter¬
ritories lying east of and between said State and the Missouri River,
with such branches and extensions of said railroad and telegraph line,
or either of them, as said company may deem necessary or proper; and
also the right of way for said railroad and telegraph line over any lauds
belonging to this State, and on, over, and along any streets, roads,
highways, rivers, streams, waters, and watercourses, but the same to
be so constructed as not to obstruct or destroy the passage or naviga¬
tion of the same; and also the right to condemn and appropriate to the
use of said company such private property, rights, privileges, and fran¬
chises as may be proper, necessary, or convenient for the purposes of
said railroad and telegraph, the compensation therefor to be ascer¬
tained and paid under and by special proceedings, as prescribed in the
act providing for the incorporation of railroad companies, approved
March 20, 1861, and the acts supplementary and amendatory thereof;
said company to be subject to all the laws of this State concerning rail¬
road and telegraph lines, except that messages and property of the
United States, of this State, aud of the said company, shall have pri¬
ority of transportation and transmission over said line of railroad and
telegraph; hereby confirming to and vesting in said cofiipany all the
rights, privileges, franchises, power aud authority conferred upon,
granted to, or vested in said company by said act of Congress; hereby
repealing all laws and parts of laws inconsistent or in conflict with the
provisions of this act, or the rights and privileges herein granted.
"Sect. 2. This act shall take effect and be in force from and after its
passage."
The State of Nevada, March 9,1866 (the Territory of that name hav¬
ing in the mean time become a State), passed, mutatis mutandis, a simi¬
lar act. It will be found in the laws of that State for 1866, c. 112.
The cases were heard at the same time.
Mr. Samuel Shellaharyer and Mr. Jeremiah 71/. Wilson for the Union
Pacific Railroad Company.
The Attorney-General and Mr. Edwin B. Smith, Assistant Attorney-
General, for the United States.
Mr. Benjamin H. Hill and Mr. S. W. Sanderson for the Central Pacific
Railroad Company, and Mr. George H. Williams for Gallatin.
Mr. Chief Justice Waite delivered the opinion of the court.
The single question presented by the case of the Union Pacific Rail¬
road Company is as to the constitutionality of that part of the act of
May 7, 1878, which establishes in the treasury of the United States a
sinking-fund. The validity of the rest of the act is not necessarily
involved.
It is our duty, when required in the regular course of judicial pro¬
ceedings, to declare an act of Congress void if not within the legislative
power of the United States; but this declaration should never be made
except in a clear case. Every possible presumption is in favor of the
validity of a statute, and this continues until the contrary is shown
150
DECISIONS OF THE SUPREME COURT.
beyond a rational doubt. Que branch of the government cannot
encroach on the domain of another without danger. The safety of our
institutions depends in no small degree on a strict observance of this
salutary rule.
The United States cannot any more than a State interfere with pri¬
vate 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. Tliey cannot leg¬
islate back to themselves, without making compensation, the lands
they have given this corporation to aid in the construction of its rail¬
road. Neither can they by legislation compel the corporation to dis¬
charge 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 indi¬
viduals. 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 corpora¬
tion. All this is indisputable.
The contract of the company in respect to the subsidy bonds is to
pay both principal and interest when the principal matures, unless the
debt is sooner discharged by the application of one-half the compensa¬
tion for transportation and other services rendered for the government,
and the five per cent of net earnings as specified in the charter. This
was decided in Union Pacific Railroad Co. v. United States, 91 U. S. 72.
The precise point to be determined now is, whether a statute which
requires the company in the management of its affairs to set aside a
portion of its current income as a sinking-fund to meet this and other
mortgage debts when they mature, deprives the company of its property
without due process of law, or in any other way improperly interferes
with vested rights.
This corporation is a creature of the United States. It is a private
corporation created for public purposes, and its property is to a large
extent devoted to public uses. It is, therefore, subject to legislative
control so far as its business affects the public interests. Chicago, Bur¬
lington, & Quincy Railroad Co. v. Ioica, 91 U. S. 155.
It is unnecessary to decide what power Congress would have had
over the charter if the right of amendment had not been reserved; for,
as we think, that reservation has been made. In the act of 1802, sect.
18, it was accompanied by an explanatory statement showing that this
had been done "the better to accomplish the object of this act, namely,
to promote the public interest and welfare by the construction of said
railroad and telegraph line, and keeping the same in working order,
and to secure to the government at all times (but especially in time of
war) the use and benefits of the same for postal, military, and other
purposes,'1 and by an injunction that it should be used with "due regard
for the rights of said companies." In the act of 1801, however, there is
nothing except the simple words (sect. 22) "that Congress may at any
time alter, amend, and repeal this act." Taking both acts together,
and giving the explanatory statement in that of 1802 all the effect it
can be entitled to, we-are of the opinion that Congress not only retains,
but has given special notice of its intention to retain, full and complete
power to make such alterations and amendments of the charter as couie
DECISIONS OF THE SUPREME COURT.
151
•within the just scope of legislative power. That this power has a limit,
no one can doubt. All agree that it cannot be used to take away prop¬
erty already acquired under the operation of the charter, or to deprive
the corporation of the fruits actually reduced to possession of contracts
lawfully made; but, as was said by this court, through Mr. Justice Clif¬
ford, iu Miller v. The State (15 Wall. 498), "it may safely be affirmed
that the reserved power may be exercised, and to almost any extent, to
carry into effect the original purposes of the grant, or to secure the due
administration of its affairs, so as to protect the rights of stockholders
and of creditors, and for the proper disposition of its assets;" and again,
in Holyohe Company v. Lyman (id. 519), "to protect the rights of the
public and of the corporators, or to promote the due administration of
the affairs of the corporation." Mr. Justice Field, also speaking for the
court, was even more explicit when, in Tomlinsony. Jessup (id. 459), he
said, "the reservation affects the entire relation between the State and
the corporation, and places under legislative control all rights, privi¬
leges, and immunities derived by its charter directly from the State;"
and again, as late as Railroad Company v. Maine (96 U. S. 510), "by the
reservation . . . the State retained the power to alter it [the charter]
in all particulars constituting the grant to the new company, formed
under it, of corporate rights, privileges, and immunities." Mr. Justice
Swayne, in Shields v. Ohio (95 U. S. 324), says, by way of limitation,
"The alterations must be reasonable; they must be made in good faith,
and be consistent with the object and scope of the act of incorporation.
Sheer oppression and wrong cannot be inflicted under the guise of
amendment or alteration." The rules as here laid down are fully sus¬
tained by authority. Further citations are unnecessary.
Giving full effect to the principles which have thus been authorita¬
tively stated, we think it safe to say, that whatever rules Congress
might have prescribed in the original charter for the government of the
corporation in the administration of its affairs, it retained the power to
establish by amendment. In so doing it cannot undo what has already
been done, and it cannot unmake contracts that have already been
made, but it may provide for what shall be done in the future, and may
direct what preparation shall be made for the due performance of con¬
tracts already entered into. It might originally have prohibited the
borrowing of money on mortgage, or it might have said that no bonded
debt should be created without ample provision by sinking-fund to meet
it at maturity. Not having done so at first, it cannot now by direct
legislation vacate mortgages already made under the powers originally
granted, nor release debts already contracted. A prohibition now
against contracting debts will not avoid debts already incurred. An
amendment making it unlawful to issue bonds payable at a distant day,
without at the same time establishing a fund for their ultimate redemp¬
tion, will not invalidate a bond already out. All such legislation will
be confined in its operation to the future.
Legislative control of the administration of the affairs of a corpora¬
tion may, however, very properly include regulations by which suitable
provision will be secured in advance for the payment of existing debts
when they fall due. If a State under its reserved power of charter
amendment were to provide that no dividends should be paid to stock¬
holders from current earnings until some reasonable amount had been
set apart to meet maturing obligations, we think it would not be seri¬
ously contended that such legislation was unconstitutional, either
because it impaired the obligations of the charter contract or deprived
the corporation of its property without due process of law. Take the
152
DECISIONS OF THE SUPREME COURT.
case of an insurance company dividing its unearned premiums among
its stockholders without laying by any thing to meet losses, would any
one doubt the power of the State under its reserved right of amend¬
ment to prohibit such dividends until a suitable fund had been estab¬
lished to meet losses from outstanding risks? Clearly not, we think,
and for the obvious reason that while stockholders are entitled to
receive all dividends that may legitimately be declared and paid out of
the current net income, their claims on the property of the corporation are
always subordinate to those of creditors. The property of a corporation
constitutes the fund from which'its debts are to be paid, and if the
oflicers improperly attempt to divert this fund from its legitimate uses,
justice requires that they should in some way be restrained. A court
of equity would do this, if called upon in an appropriate manner; and
it needs no argument to show that a legislative regulation which requires
no more of the corporation than a court would compel it to do without
legislation is not unreasonable.
Such a regulation, instead of being destructive in its character, would
be eminently conservative. Railroads are a peculiar species of property,
and railroad corporations are in some respects peculiar corporations. A
large amount of money is required for construction and equipment, and
this to a great extent is represented by a funded debt, which, as well as
the capital stock, is sought after for investment, and is distributed widely
among large numbers of persons. Almost as a matter of necessity it is
difficult to secure any concert of action among the different classes of
creditors and stockholders, and consequently all are compelled to trust in
a great degree to the management of the corporation by those who are
elected as officers, without much, if any, opportunity for personal super¬
vision. The interest of the stockholders, who, as a rule, alone have the
power to select the managers, is not unfrequently antagonistic to those
of the debt-holders, and it therefore is especially proper that the govern¬
ment, whose creature the corporation is, should exercise its general
powers of supervision and do all it reasonably may to protect investments
m the bonds and stock from loss through improvident management.
No better case can be found for illustration than is presented by the
history of this corporation. Without undertaking in any manner to
cast censure upon those by whose matchless energy this great road
was built and, as if by magic, put into operation, it is a fact which
cannot be denied, that, when the road was in a condition to be run, its
bonds and stocks represented vastly more than the actual cost of the
labor and material which went into its construction. Great under¬
takings like this, whose future is at the time uncertain, requiring as
they do large amounts of money to carry them on, seem to make it
necessary that extraordinary inducements should be held out to capi¬
talists to enter upon them, since a failure is almost sure to involve
those who make the venture in linaneial ruin. It is not, however, the
past with which we are now to deal, but rather the present and the
future. We are not sitting in judgment upon the history of this cor¬
poration, but upon its present condition. We now know that when the
road was completed its funded debt alone was as follows: First mort¬
gage, $27,232,000, subsidy bonds, $27,230,.">12, all maturing thirty years
after date, and that the average time of its maturity is during the year
1807. In addition to this are now the sinking-fund bonds, the land-grant
bonds, and the Omaha bridge bonds, amounting to at least $20,000,000
more. The interest on the first mortgage and all other classes of bonds,
except the subsidy bonds, will undoubtedly be met as it falls due: but
on the subsidy bonds, as has already been seen, no interest is payable,
DECISIONS OF THE SUPREME COURT.
153
except out of the half of the earnings for government service and the
five per cent of net earnings, until the maturity of the principal. Thus
far, as we have had occasion to observe in the various suits which have
come before us during the past few years, involving an inquiry into
these matters, the payments from these sources have fallen very far
short of keeping down the accruing interest, and according to present
appearances it is not probably too much to say that when the debt is
due there will be as much owing the United States for interest paid as
for principal. There will then become due from this company, in less
than twenty years from this date, in the neighborhood of $80,000,000,
secured by the first and subsidy mortgages. In addition to this are
the capital stock, representing $36,000,000 more, and the funded debt
inferior in its lien to that of the subsidy bonds. All these different
classes of securities have become favorites in the market for investments,
and they are widely scattered at home and abroad. They have taken
to a certain extent the place of the public funds as investments. With
the exception of the land-grant, which is first devoted to the payment
of the land-grant bonds, but little if any thing except the earnings of
the company can be depended on to meet these obligations when they
mature. The company has been in the receipt of large earnings since
the completion of its road, and, after paying the interest on its own
bonds at maturity, has been dividing the remainder, or a very consid¬
erable portion of it, from time to time among its stockholders, without
laying by any thing to meet the enormous debt which, considering the
amount, is so soon to become due. It is easy to see that in this way
the stockholders of the present time are receiving in the shape of divi¬
dends that which those of the future may be compelled to lose. It is
hardly to be presumed that this great weight of pecuniary obligation
can be removed without interfering with dividends hereafter, unless at
once some preparation is made by sinking-fund or otherwise to prevent
it. Under these circumstances, the stockholders of to day have no prop¬
erty right to dividends which shall absorb all the net earnings after
paying debts already due. The current earnings belong to the corpo¬
ration, and the stockholders, as such, have no right to them as against
the just demands of creditors.
The United States occupy towards this corporation a twofold rela¬
tion,—that of sovereign and that of creditor. United States v. Union
Pacific Railroad Co.. 98 U. S. 569. Their rights as 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 cred¬
itors, require the company to pay the other debts it owes before they
mature. But out of regard to the rights of the subsequent lienliolders
and stockholders, it is not only their right, but their duty, as sovereign
to see to it that the current stockholders do not, in the administration
of the affairs of the corporation, appropriate to their own use that
which in equity belongs to others. A legislative regulation which
does no more than require them to submit to their just contribution
towards the payment of a bonded debt cannot in any sense be said to
deprive them of their property without due process of law.
The question still remains, whether the particular provision of this
statute now under consideration comes within this rule. It establishes
a sinking-fund for the payment of debts when they mature, but does
not pay the debts. The original contracts of loan are not changed.
They remain as they were before, and are only to be met at maturity.
154
DECISIONS OF THE SUPREME COURT.
All that lias been done is to make it the duty of the company to lay by
a portion of its current net income to meet its debts when they do fall
due. In this way the current stockholders are prevented to some
extent from depleting the treasury for their own benefit, at the expense
of those who are to come after them. This is no more for the benefit of
the creditors than it is for the corporation itself. It tends to give per¬
manency to the value of the stock and bonds, and is in the direct
interest of a faithful administration of affairs. It simply compels the
managers for the time being to do what they ought to do voluntarily.
The fund to be created is not so much for the security of the creditors
as the ultimate protection of the public and the corporators.
To our minds it is a matter of no consequence that the Secretary of
the Treasury is made the sinking-fund agent and the treasury of the
United States the depository, or that the investment is to be made in
the public funds of the 1'nited States. This does not make the deposit
a payment of the debt due the United States. The duty of the man¬
ager of every sinking fund is to seek some safe investment for the
moneys as they accumulate in his hands, so that when required they
may be promptly available. Certainly 110 objection can be made to the
security of this investment. In fact, we do not understand that com¬
plaint is made in this particular. The objection is to the creation of
the fund and not to the investment, if that investment is not in law a
payment.
Neither is it a fatal objection that the half of the earnings for serv¬
ices rendered the government, which by the act of 1864 was to be paid
to the companies, is put into this fund. The government is not released
from the payment. While the money is retained, it is only that it may
be put into the fund, which, although kept in the treasury, is owned by
the company. When the debts are paid, the securities into which the
moneys have been converted that remain undisposed of must be handed
over to the corporation. Under the circumstances, the retaining of the
money in the treasury as part of the sinking-fund is in law a payment
to the company.
Not to pursue this branch of the inquiry any further, it is sufficient
now to say that we think the legislation complained of may be sus¬
tained 011 the ground that it is a reasonable regulation of the adminis¬
tration of the affairs of the corporation, and promotive of the interests
of the public and the corporators. It takes nothing from the corpora¬
tion or the stockholders which actually belongs to them. It oppresses
no one, and infiicts no wrong. It simply gives further assurance of the
continued solvency and prosperity of a corporation in which the public
are so largely interested, and adds another guaranty to the permanent
and lasting value of its vast amount of securities.
The legislation is also warranted under the authority by way of
amendment to change or modify the rights, privileges, and immunities
granted by the charter. The right of the stockholders to a division of
the earnings of the corporation is a privilege derived from the charter.
When the charter and its amendments first became laws, and the work
011 the road was undertaken, it was by no means sure that the enter¬
prise would prove a financial success. No statutory restraint was then
put upon the power of declaring dividends. It was uot. certain that the
stock would ever find a place 011 the list of marketable securities, or that
there would be any bonds subsequent in lien to that of the United States
which could need legislative or other protection. Hence, all this was
left unprovided for in the charter and its amendments as originally
granted, and the reservation of the power of amendment inserted so as
DECISIONS OF THE SUPREME COURT.
155
to enable the government to accommodate its legislation to the require¬
ments of the public and the corporation as they should be developed
in the future. Now it is known that the stock of the company has
found its way to the markets of the world; that large issues of bonds
have been made beyond what was originally contemplated, and that
the company has gone on for years dividing its earnings without any
regard to its increasing debt, or to the protection of those whose rights
may be endangered if this practice is permitted to continue. For this
reason Congress has interfered, and, under its reserved power, limited
the privilege of declaring dividends 011 current earnings, so as to con¬
fine the stockholders to what is left after suitable provision has been
made for the protection of creditors and stockholders against the dis¬
astrous consequences of a constantly increasing debt. As this increase
cannot be kept down by payment unless voluntarily made by the cor¬
poration, the next best tiling has been done, that is to say, a fund
safely invested, which increases as the debt increases, has been estab¬
lished and set apart to meet the debt when the time comes that payment
can be required.
The only material difference between the Central Pacific Company
and the Union Pacific lies in the fact that in the case of the Central
Pacific the special franchises, as well as the land and subsidy bonds,
were granted by the United States to a corporation formed and organ¬
ized under the laws of California, while in that of the Union Pacific
Congress created the corporation to which the grants were made. The
California corporation was organized under a State law with an author¬
ized capital of $8,500,000, to build a road from the city of Sacramento
to the eastern boundary of the State, a distance of about one hundred
and fifteen miles. Under the operation of its California charter, it
could only borrow money to an amount not exceeding the capital stock,
and must provide a sinking-fund for the ultimate redemption of the
bonds. Hittell's Cal. Laws, 1850-64, sect. 840. No power was granted
to build any road outside the State, or in the State except between the
termini named. By the act of 18613, Congress granted this corporation
the right to build a road from San Francisco, or the navigable waters
of the Sacramento River, to the eastern boundary of the State, and
from there through the Territories of the United States until it met the
road of the Union Pacific Company. For this purpose all the rights,
privileges, and franchises were given this company that were granted
the Union Pacific Company, except the franchise of being a corpora¬
tion, and such others as were merely incident to the organization of the
company. The land-grants and subsidy bonds to this company were
the same in character and quantity as those to the Union Pacific, and
the same right of amendment was reserved. Each of the companies
was required to file in the Department of the Interior its acceptance of
the conditions imposed, before it could become entitled to the benefits
conferred by the act. This was promptly done by the Central Pacific
Company, and in this way that corporation voluntarily submitted itself
to such legislative control by Congress as was reserved under the power
of amendment.
No objection has ever been made by the State to this action by Con¬
gress. On the contrary, the State, by implication at least, has given
its assent to what was done, for in 1864 it passed "An Act to aid in
carrying out the provisions of the Pacific railroad and telegraph act of
Congress," and thereby confirmed and vested in the company "all the
rights, privileges, franchises, power, and authority conferred upon,
granted to, or vested in said company by said act of Congress," and
156
DECISIONS OF THE SUPREME COURT.
repealed "all laws or parts of laws inconsistent or in conflict with . . .
the rights and privileges herein (therein) granted." Hittell's Lawsf
sect. 4798; Acts of 1863-64, 471. Inasmuch as by the Constitution o
California then in force (art. 4, sect. 31) corporations, except for munici,
pal purposes, could not be created by special act, but must be formed
under general laws, the legal effect of this act is probably little more
than a legislative recognition by the State of what had been done by
the United States with one of the State corporations.
In so doing, the State but carried out its original policy in reference
to the same subject matter, for as early as May 1, 1852, au act was
passed reciting " that the interests of this State, as well as those of the
whole Union, require the immediate action of the government of the
United States, for the construction of a national thoroughfare connect¬
ing the navigable waters of the Atlantic and Pacific Oceans, for the
purposes of national safety, in the event of war, and to promote the
highest commercial interests of the Republic," and granting the right
of way through the State to the United States for the purpose of con¬
structing such a road. Hittell's Laws, sect. 4791; Acts of 1852,150.
In 1859 (Acts of 1859, 391), a resolution was passed calling a conven¬
tion "to consider the refusal of Congress to take efficient measures for
the construction of a railroad from the Atlantic States to the Pacific,
and to adopt measures whereby the building of said railroad can be
accomplished;" and at the same session of the legislature a memorial was
prepared asking Congress to pass a law authorizing the construction of
such a road, and asking also a grant of lands to aid in the construction
of railroads in the State. Acts of 1859, 395. Nothing was done, how¬
ever, by Congress until the Rebellion, which at once called the atten¬
tion of all who were interested in the preservation of the LTnion to the
immense practical importance of such a road for military purposes, and
then, as soon as a plan could be matured and the necessary forms of
legislation gone through with, the act of July 1,1862, was passed. But
this was not enough to interest capitalists in the undertaking, and
although the legislature of California during the year 1863 passed sev¬
eral acts intended to hold out further inducements, but little was accom¬
plished uutil the amendatory act of Congress in 1864, which, besides
authorizing the first mortgage, and changing in some important par-
ticulars the conditions on which the subsidy bonds were to be issued,
conferred additional powers on the corporation, some of which, such as
the right of eminent domain in the Territories, the State could not
grant, and others, such as the right of issuing first-mortgage bonds
without a sinking-fund, and in excess of the capital stock, it had seen
fit to withhold. This act also reserved to Congress full power of
amendment, and was promptly accepted by the corporation. With this
addition of corporate powers and pecuniary resources the work was
pushed forward to completion with unexampled energy. But for the
corporate powers and financial aid granted by Congress it is not prob¬
able that the road would have been built. The first mortgage bonded
debt was created without a sinking-fund, and the road in the Territo¬
ries built under the authority of Congress, assented to and ratified by
the State.
The Western Pacific Company, now, by consolidation, a part of the
Central Pacific Company, was also organized, Dec. 13, 1862 (Acts of
1863, 81), under the general railroad law of California, with power to
construct a road from a point on the San Francisco and San Jose Rail¬
road, at or near San Jose, to Sacramento, and there connect with the
road of the Central Pacific Company. Afterwards the Central Pacific
DECISIONS OF THE SUPREME COURT.
157
Company assigned to this corporation its rights, under the act of Con¬
gress, to construct the road between San .Jos6 and Sacramento; and
this assignment was ratified by Congress, "with all the privileges and
benefits of the several acts of Congress relating thereto, and subject to
all the conditions thereof." 13 Stat. 504. By the same act further
privileges were granted by the United States both to the Central Pacific
and Western Pacific Companies, in respect to their issue of first-
mortgage bonds.
Under this legislation, we are of the opinion that, to the extent of the
powers, rights, privileges, and immunities granted these corporations
by the United States, Congress retains the right of amendment, and
that in this way it may regulate the administration of the affairs of the
company in reference to the debts created under its own authority, in
a manner not inconsistent with the requirements of the original State
charter, as modified by the State Aid Act of 1864, accepting what had
been done by Congress. This is as far as it is necessary to go now. It
will be time enough to consider what more may be done when the neces¬
sity arises. As yet, the State lias not attempted to interfere with the
action of Congress. All complaint tbus far lias come from the corpora¬
tion itself, which, to secure the government aid, accepted all the con¬
ditions that were attached to the grants, including the reservation of
power to amend.
It is clear that the establishment of a sinking-fund by the act of 1878
is not at all in conflict with any thing contained in the original State
charter, for by that charter no such debt could be created without
provision for such a fund. This part of the act of 1S78 is, therefore,
in the exact line of the policy of the State, and does no more than
place the company again, to some extent, under obligations from which
it had been released by congressional legislation. So, too, the reserva¬
tion of the power of amendment by Congress is equally consistent with
the settled policy of the State; for not only the State charter, in terms,
makes such a reservation in favor of the State, but the Constitution
expressly provides that all laws for the creation of corporations "may
be altered from time to time, or repealed." Art. 4, sect. 31.
It is not necessary now to inquire whether, in ascertaining the net
earnings of the company for the purpose of fixing the amount of the
annual contributions to the sinking-fund, the earnings of all the roads
owned by the present corporation are to be taken into the account, or
only of those in aid of which the land-grants were made and the subsidy
bonds issued. The question here is only as to the power of Congress to
establish the fund at all. If disputes should ever arise as to the man¬
ner of stating the accounts, they can be settled at some future time.
Judgment affirmed. Decree affirmed.
Mr. Justice Field, Mr. Justice Strong, and Mr. Justice
Bradley, dissented.
Mr. Justice Strong. In my opinion, the act of Congress of May 7,
1878, is plainly trausgressive of legislative power. As was said by Mr.
Hamilton in his celebrated communication to the Senate of Jan. 20,
1795, "when a government enters into a contract with an individual, it
deposes, as to the matter of the contract, its constitutional authority,
and exchanges the character of legislator for that of a moral agent,
with the same rights and obligations as an individual. Its promises
may be justly considered as excepted out of its power to legislate,
unless in aid of them. It is in theory impossible to reconcile the idea
of a promise which obliges, with a power to make a law which can vary
158
DECISIONS OF THE SUPREME COURT.
the effect of it." 3 Hamilton's Works, 518, 519, Opinions similar to
this have often found expression in judicial decisions, even in those of
this court. If this be sound doctrine, it is as much beyond the power
of a legislature, under any pretence, to alter a contract into which the
government has entered with a private individual, as it is for any other
party to a contract to change its terms without the consent of the per¬
son contracting with him. As to its contract the government in all its
departments has laid aside its sovereignty, and it stands on the same
footing with private contractors.
The contracts of the government with the Union Pacific Railroad
Company and with the Central Pacific, which the act of Congress of
1878 has in view, were not made by the act of 1802, the act chartering
the former company, nor by the amending act of 1801. They were made
after those acts had been accepted by the companies, and after their
chartered rights had been completely acquired. There was no agree¬
ment of the companies to repay the loan of government bonds made to
them uutil the bonds were issued and delivered. The companies were
under no obligation to accept the loan and assume the liability result¬
ing from its acceptance. The contracts, therefore, are no part of the
charter of the Union Pacific Company, and no part of the acts of 1802
or 1861. They are subsequent to those acts and independent of them.
It is true Congress authorized the loan. It made the companies offers
to lend upon certain conditions; and when those offers and conditions
were subsequently accepted, the contracts of loan were made. Not
until then. Before that time there was nothing but an unaccepted
offer.
What, then, was the contract when it was made? The government
lent its bonds, and, in consideration of the loan, each company assumed
live obligations: 1st, to pay the bonds at their maturity, that is, at the
expiration of thirty years; 2d, to keep the railroad and telegraph line in
repair and use; 3d, to furnish transmission of despatches aud trans¬
portation for the government at reasonable rates, allowing it a prefer¬
ence for such purposes; 4tli, to apply to the payment of the bonds and
interest half the compensation due to it from the government for serv¬
ices rendered until the whole amountof the loan is fully paid; and, 5th,
after the completion of the railroad, to apply to the payment of the
bonds at least five per ceut annually of its net earnings. The lender
required and the borrower undertook nothing more.
It is manifest that by this contract the government acquired a vested
right to payment at the time and in the mode specified, as well as to
preference of transportation and transmission of despatches; and the
company acquired a vested right to retain the consideration given for
its assumption,—that is, a vested right to withhold payment until by
the terms of the contract payment became due. The contract implied
an agreement not to call for payment or additional security before that
time. 1 cannot conceive of any rational doubt of this. There is no
technicality about vested rights. Most of them grow out of contracts,
and, no matter how they arise, they are all equally sacred, equally
beyond the reach of legislative interference. A vested right of action
is property in the same sense in which rights to tangible things are,
and is equally protected. Whether it springs from contract or from
other rules of the common law, it is not competent for the legislature
to take it away. If we look at what must have been the understanding
of all parties to these contracts of loan, the rights created and vested
under them cannot be in doubt. The government sought to induce
private adventurers to construct a railroad and telegraph line to the
DECISIONS OF THE SUPREME COURT.
159
Pacific Ocean,—a work which necessarily required years and immense
expenditures for its accomplishment. A loan, repayable on call or
within a short time, would have been no inducement. Had it been
dreamed that a call could have been made at any time thereafter desig¬
nated by Congress, it is inconceivable that the loan proffered would
have been accepted. It would have furnished no reliable basis for an
attempt to build the road. The parties could not so have understood
the bargain. The bonds were required to be paid by the companies
only at their maturity, except so far as half payment, for governmental
service, and five per cent, of the net earnings, after the completion of
the road, might pay. The contract, therefore, means exactly what it
would have meant had it contained the express stipulation: "The
United States shall not require payment of the amount of the bonds,
or any part thereof (except half-compensation for services, and five per
cent of net earnings), until the expiration of thirty years from their
issue to the company, or date, nor shall additional security be required,
beyond the lien reserved." Such was the contract. It was not one of
the franchises granted in the charter of the Union Pacific or the Central
Pacific, but it was a business transaction, differing in nothing, except
parties, from what it would have been if it had been made between two
private individuals. It is true Congress authorized the loan on the
terms upon which it was made; but, as I have said, the contract was
not made by the act of Congress, or with Congress. It was a subse¬
quent transaction, and the United States became a party to it, not in
its sovereigu character, but as a civil corporation, as said by Mr. Hamil¬
ton, with the same rights and obligations as a private person, and no
more.
Now, what has been attempted by the act of May 7, 1878? That act
was passed with sole reference to this contract, and all its provisions
have in view the imposition of additional obligations upon the railroad
company. It does not purport to be a repeal of the charter. Its lead¬
ing purpose is to take control of the property of the debtor, and
sequester it for the security of a debt, which, by the terms of the con¬
tract, is not due and payable for years to come. I shall not go over all
its provisions. It will be sufficient to notice some of the more prominent
ones, which, if they are ruled to be operative, greatly change the con¬
tract which the parties made when the bonds were delivered and
accepted, when the contract was closed, and which impose new and
oppressive obligations upon the debtor.
By the contract only one-half the compensation for services rendered
to the government, was required to be applied to the payment of the
bonds, but by this act the whole amount of the compensation which
may from time to time be due for services rendered to the government
is directed to be retained by the United States, and, at the same time,
the obligation to render those services is continued. By the third sec¬
tion of the act a sinking-fund is established in the treasury of the
United States, that is, in the treasury of the creditor; and the fourth
section enacts that there shall be carried into that fund, on the first day
of February in each year, the one half of the compensation above
named, not applied in liquidation of interest. By the contract the
debtor was bound to pay only five per cent of its net earnings, after
the completion of the road, annually to the creditor; but this act
requires the debtor to pay into the creditor's treasury, to the credit of
the sinking-fund, twenty-five per cent of its whole net earnings, on the
1st of February in each year. The act further directs that the sinking-
fund thus created shall, with its accumulations, be invested in bonds of
1G0
DECISIONS OP THE SUPREME COURT.
tlie United States, and at the maturity of the bonds loaned to the debtor
be applied to the payment and satisfaction thereof, and of all interest
paid by the United States. There are other provisions of this act intend¬
ed to enforce compliance with these newly added obligations imposed
upon the debtor, as also provisions that the sinking-fund shall be held
for the benefit, protection, and security of other lien-creditors of the
debtor. But I deem it unnecessary to mention them in detail. Those
which I have mentioned are enough for the present case. Mo one can
deny that they materially change the contract of loan and borrowing
previously existing between the government and the railroad companies,
and change it at the will of the creditor alone. Nor can it be denied
that they impose upon the debtors new and onerous burdens that they
never agreed to assume. Practically, they enforce payment of the debt
before, by the terms of the contract, it is due. The act seizes the halt-
compensation, which the government agreed should not be retained,
and covers it into the treasury, appropriating it to the payment of the
debt. For nothing else can it be used. This act also requires payment
into the treasury of twenty-five per cent of the net earnings of the
company, instead of five per cent only, as stipulated when the contract
was made. It is true it does not make immediate application of the
sums thus withheld and demanded to the extinguishment of the debt.
It declares that they shall be applied to the payment of the debt and
interest "at the maturity of the bonds.1' But this is a distinction
without a difference, obviously made to evade what it was known could
not lawfully be done. An immediate application might as well have
been directed. It would probably be better for the debtor if the appli¬
cation were immediately made. The money is taken from the debtor,
withdrawn entirely from the debtor's control and use, and put into the
treasury of the creditor, and there left to the mere agreement of the
creditor to apply it to payment. I apprehend no plain man of common
sense will hesitate to conclude that this is exacting payment before the
debt is due. If A. borrows from B. $1,000, and gives his note therefor,
payable at the expiration of five years, and at the end of one year the
lender demands that there be placed in his hands by the debtor a sum
of money to meet the note when it shall fall due, it will hardly be con¬
tended that would not be requiring payment before the debtor was
bound to pay. And if such a demand could be enforced, it would be at
the expense of the contract. "What more is the present case? And
were it conceded the act of 1878 does not attempt to enforce the pay¬
ment before the maturity of the debt, the concession would be of little
worth, for it will not be questioned that it attempts to enforce giving
additional security for payment beyond that stipulated for in the con¬
tract. That is no less a material alteration of the contract, a serious
addition to it. The plain truth is, the assertion of such a power is
claiming the right to disregard the contract entirely, and substitute for
it a different one, without the consent of the debtor. If the United
States can exact now one-quarter of the net earnings of each of these
companies, and place it in their treasury, they can, by the same power,
and with the same reason, exact the whole of the earnings, or any other
property equal to the amount of the debt. Was any such thing con¬
templated by the parties when the contract was made?
Now, where is the power of Congress to add new terms to any con¬
tract made with the United States, or made between any two private
individuals? Where is the power to annul vested rights? It is cer¬
tainly not to be found in the Constitution. True, the provision that no
State shall pass any law impairing the obligation of contracts applies
DECISIONS OF THE SUPREME COURT.
161
only to State legislation. For such legislation the prohibition was
necessary; for State legislatures have all legislative power which is
not expressly denied to them. But no necessity existed for imposing
such a limitation on the power of Congress. As Mr. Hamilton said in
the eighty fourth number of the Federalist, "Why declare that things
shall not be done which there is no power to do?" Congress has no
power except such as has been expressly granted to it, or such as is
necessary or proper for carrying into execution the powers specitied,
and those vested by the Constitution in the government or some
department or officer thereof. I search in vain for any express or
implied grant of power to add new terms to any existing contracts
made by or with the government, or any grant of power to destroy
vested rights. No power has been given to Congress to lessen the obli¬
gations of a contract between private parties by direct legislation,
except by the enactment of uniform laws on the subject of bankruptcy.
Even a bankrupt law cannot be enacted applicable only to single cor¬
porations or single debtors. To be constitutional, it must be uniform
throughout the United States. I admit that in the exercise of some of
the powers granted, Congress may enact laws that indirectly affect
existing contracts and lessen their obligation, but I deny that it can
by any direct action, otherwise than by a bankrupt law, even relieve a
debtor to a private party from any duty he has assumed by his con¬
tract. Much less can it change the stipulations of the contract and
impose additional liabilities upon a contractor with the government.
Such an exercise of power would be making a contract for parties to
which they never assented. In all the history of congressional legis¬
lation before the act of 1878, such a power was never attempted to be
exercised.
And not only is such legislative authority not conferred upon Con¬
gress by the Constitution, but it is, in effect, expressly denied. The
fifth amendment contains restrictions taken, in substance, from Magna
Charta. Among them are the provisions that no person shall be
deprived of life, liberty, or property without due process of law, nor
shall private property be taken for public use without just compensa¬
tion. These are restrictions upon legislative as well as executive
power. What is due process of law is well understood. It is law in
regular course of administration through courts of justice. Coke, 2
Inst. 272; Murray's Lessee v. The Hoboken Land and Improvement Co.,
18 How. 272. "The terms 'the law of the land,' said Chief Justice
Kuffin {Hoke v. Harderson, 4 Dev. (N. C.) 1), do not mean merely an
act of the General Assembly. If they did, every restriction upon legis¬
lative authority would be at once abrogated, and private property
would be at the mercy of the legislature." p. 15. Yet the act of 1878
does attempt by its own force, and without any judicial action, not only
to change a contract and increase its obligations, but also to deprive
the railroad companies of their property. What is property? What
is the common understanding of the term? It is, in reference to its
subject, whatever a person can possess and enjoy by right, and the
person who has that right has the property. The subject may be corpo¬
real or incorporeal. A right in action is as completely property as is a
title to land. A very large portion of the property of the country con¬
sists in rights attendant upon contract. The right of a promisee to
demand payment when the note falls due is a right of property; and
equally so is the right of a promisor to hold, as against his promisee,
the consideration for the promise until the time stipulated in the note
for payment. The promisee has no right to enforce payment, or to
11 PAO
162
DECISIONS OF THE SUPREME COURT.
enforce giving security for it, if none was promised in the contract.
Such a right is no portion of his property, and it can be enforced only
at the expense of a clear right of the promisor. On the other hand, the
promisor has a right to exemption from liability to give such security.
It is incident to his contract. Indeed, it may be said that whatever
rights are created by contract, or held under it, if they relate to prop¬
erty, are themselves, in a very just sense, property, and as such are
protected by the fifth amendment to the Constitution.
I notice another consideration which, to my mind, is not without
weight. It may, I think, well be doubted whether the act of 1878 is
even an attempted exercise of legislative power. A statute undertak¬
ing to take the property of A. and transfer it to B. is not legislation.
It would not be a law. It would be a decree or senteuce, the right to
declare which, if it existed at all, is in the Judicial Department of the
government. The act of Congress is little, if any, more. It does not
purport to be a general law. It does not apply to all corporations or to
all debtors of the government. It singles out two corporations, debtors
of the government, by name, and prescribes for them as debtors new
duties to their creditor. It thus attempts to perform the functions of
a court. This, I cannot but think, is outside of legislation action and
power.
I turn now to the arguments by which the constitutionality of the
act of Congress has been attempted to be supported. It is said that,
though Congress cannot directly abrogate contracts, or impair their
obligation, it may indirectly, by the exercise of other powers granted
to it. This I have conceded, but I deny that an acknowledged power
can be exerted solely for the purpose of effecting indirectly an uncon¬
stitutional end which the legislature cannot directly attempt to reach.
If the purpose were declared in the act, I think no court would hesitate
to pronounce the act void. In Hoke v. Harder son, to which I have
referred, Chief Justice Buffin, when considering at length an argument
that a legislature could purposely do indirectly what it could not do
directly, used this strong language: "The argument is unsound in this,
that it supposes (what cannot be admitted as a supposition) the legis¬
lature will, designedly and wilfully, violate the Constitution, in utter
disregard of their oaths and duty. To do indirectly in the abused exer¬
cise of an acknowledged power, not given for, but perverted for that
purpose, that which is expressly forbidden to be done directly, is a gross
and wicked infraction of the Constitution."
It is unnecessary, however, to enlarge upon this, for the effect wrought
upon the contracts of these two companies is a direct effect,—a direct
alteration of the obligation assumed by the debtors, and not an inci¬
dental result of legislation upon some other subject over which Con¬
gress has a right to legislate. It is too plain to admit of any doubt
that the sole object of the act of 1878 was to enforce giving new and
additional security for the payment of the subsidy bonds at their matu¬
rity. All its provisions aim directly at that, and the new terms thereby
added to the contract have that end solely in view.
In further attempted support of the validity of the act, it has been
denied that it does change the contract, because it does not require the
application of the additional payments to the satisfaction of the debt
before its maturity. I have, perhaps, said enough upon this subject.
The argument can hardly be seriously made. The act does compel the
debtors to surrender possession of their property to the creditor before
the time when, by the terms of the contract, they were under obliga¬
tion to part with it. The debtors are no longer permitted to hold and
DECISIONS OF THE SUPREME COURT.
163
use one-half the compensation due presently from the government for
services rendered, and are no longer at liberty to use all their net
income or earnings, except five per cent, at their discretion. One
quarter of their net earnings they are compelled to surrender to the
creditor. Thus the creditor becomes the custodian of the debtors' prop¬
erty, and acquires a right to hold and manage it as if it were his own.
It is absurb to say this is not practically a radical change in the rela¬
tions between the parties established by the contract. And it is equally
impossible to maintain that it is not depriving the debtors of their prop¬
erty without due process of law.
I turn now to what lias been most relied upon in support of the
validity of the act. I refer to the clauses in the acts of 1802 aud 1804,
reserving the right to repeal, amend, or alter. There are two such,—
one in the act of 1802, and one in that of 1804. That in the latter act
is the broadest, and it is as follows: ".Congress may at any time alter,
amend, or repeal this act." The power thus reserved is one over the
act itself, not over any thing that may have lawfully been done under
the act, before its repeal or alteration. It is only by great confusion of
things essentially distinct that this power can be construed as applicable
to a contract made after the corporation came into existence. Besides,
the act of 1878 does not attempt to repeal, or alter or amend, the acts
of 18(12 and 1804. It changes no franchise granted by those acts, nor
does it interfere with its exercise. It interferes only with the fruits of
the franchise. The right to possess and enjoy the income of the com¬
pany is not a franchise. It is an incident of the ownership of the com¬
pany's property, though the property may be accumulated by the use
of the franchise. Concede that Congress lias power to regulate the tolls
on the railroad, or in some other mode to restrict the use of the fran¬
chise, and thus lessen the income, yet the income, whether large or small
when made, is the company's property, and, like other property, pro¬
tected against being taken without due process of law. Or suppose the
acts of 1862 and 1864 were repealed, and thus all the franchises granted
by them were taken away, the property of the company would remain,
and the income thereof, though greatly decreased, would be the prop¬
erty of the stockholders. Nobody denies that. Is the lesser greater
than the whole! 1 repeat, therefore, the act of 1878 is no exercise of
the reserved power to alter, amend, or repeal the acts of 1862 and 1864.
It is no attempt to make any such repeal or amendment. It is at most
an attempt to seize the fruits of the franchise after they shall have
become the vested property of the corporations. It is an attempt to
sequester the income of the property owned by them. As well might
the government attempt to seize and put into its treasury the rents,
issues, and profits of the lands granted to tbem by the third and fourth
sections of the act of 1862, and call that an amendment of the act.
There is no distinction to be made between the profits of the road and
telegraph line and the rents of the lands. None has been attempted.
But if the act of 1878 could be considered an alteration or amend¬
ment of the acts of 1862 and 1864, the question would still remain,
what wras the extent of the power reserved by those acts. 1 mean the
power to alter, amend, or repeal them. All the cases agree that such a
reserved power is not without limits. I think its limits may be stated
generally thus: It must be exercised, when exerted at all, so as to do
no injustice to thoseto whom the franchise has been granted. Cer¬
tainly the reservation cannot mean a right to take away the franchise,
in whole or in part, and yet hold the grantee to the performance of the
duties assumed,—the consideration given for the grant. Nor can it
164
DECISIONS OF THE SUPREME COURT.
mean to continue in the legislative power which the legislature never
possessed, and which it is constitutionally incapable of exercising. A
partial definition of the limits of the reserved power may be found in
Commonwealth v. Lssex Company (13 G-ray (Mass.), 239), where Chief
Justice Shaw (speaking of the reserved power to alter, amend, or
repeal a charter), said: "It seems to us this power must have some
limit, though it is difficult to define it. Suppose authority has been
given by law to a railroad corporation to purchase a lot of land and
hold it for purposes connected with its business, and they purchase
such lot from a third person, could the legislature prohibit the company
from holding it? If so, in whom would it vest? Or could the legisla¬
ture direct it to revert to the grantor or escheat to the public? Or
how otherwise? Suppose a manufacturing company, incorporated, is
authorized to construct a dam and How a tract of meadow, and the
owners claim gross damages, which are assessed and paid, can the leg¬
islature afterwards alter the act of incorporation so as to give to such
meadow owners future annual damages? Perhaps from these extreme
cases, for extreme cases are allowable to test a legal principle, the rule
to be extracted is this: that where, under a power in a charter, rights
have been acquired and become vested, no amendment or alteration of
the charter can take away the property or rights which have become
vested under a legitimate exercise of the powers granted." p. 253.
This rule has been recognized ever since. Vide Sage v. Dillard, 15 B.
Mon. (Ky.) 349. It has been adopted by this court. lu Miller v. The
State (15 Wall. 478), it was said by Mr. Justice Clifford: "Power to leg¬
islate founded upon such a reservation in a charter of a private corpo¬
ration is certainly not without limits, and it may well be admitted that
it cannot be exercised to take away or destroy rights acquired by such
a charter, and which, by a legitimate use of the powers granted, have
become vested in the corporation." To the same effect is Holyolte Com¬
pany v. Lyman, id. 500. If this limitation be admitted, it is impossible
to see how a reserved power to alter, amend, or repeal an act granting a
private charter can include a right to change the stipulations of a con¬
tract made under that charter, or to sequester for any purpose the prop¬
erty of the company acquired while the charter remains unrepealed
and unaltered. If the acts of 1802 and 18(34 were repealed, would not
the contract of loan remain unaffected thereby ? Can a legislature that
offers a contract on certain terms change those terms after they have
been accepted and after the contract has been perfected? Yet that is
what the act of 1878 attempts to do. A principal who has authorized
his agent to make a contract for him may revoke or restrict the agency
before any contract is made, but he is bound by a contract made dur¬
ing the continuance of the agent's powers, if those powers were not
transgressed in making it. He cannot afterwards repudiate its terms
or add to them. I see no essential difference between such a case and
the present. I cannot confound an alteration of the acts of 18G2 and
18G4 with an alteration of a subsequent commercial contract authorized
by those acts, and made between the United States and companies
chartered by them. My conviction, therefore, is, that the act of 1878
cannot be defended as a legitimate exercise of the powers reserved to
Congress.
I need not say it cannot rest upon what is generally denominated
the visitatorial power of the government over its own corporations,
though it is upon this power the opinion of the majority of the court
largely relies. That power is applicable only to eleemosynary corpora-
DECISIONS OF THE SUPREME COURT.
165
tions, such as colleges, schools, and hospitals, and the visitation is
always through the medium of courts of justice. It is judicial and not
legislative. 2 Kent, Com., Lect. 23, sect. 4. To claim, therefore, that,
by virtue of that power, a private business corporation can be compelled
by legislative action to establish a sinking-fund for the payment of its
debts, anddeposit it in the treasury of its creditor, is totally inadmissible.
There are, undoubtedly, many cases to be found in which it has been
decided that, by virtue of such a reservation as that contained in the
acts of 18G2 and 18G4, a legislature may make new regulations, to some
extent, of the action of corporations created by it,—such as prescribing
a new measure of tolls, increasing the capital of insurance companies,
repealing an exemption from taxation, and the like. So, without the
reservations, some new regulations may be prescribed in the exercise of
the police power. They are all regulations of the franchise or of its
use,—not invasions of rights or property acquired under the franchise
subsequently to its grant; and not one of them under the practice of
amendment or rightful regulation has undertaken to change or vary
any contract the corporation had made, or to control possession of prop¬
erty acquired. The act of 1878 is, I believe, the first assertion of any
such force in the reservation. It is a very grave and dangerous asser¬
tion. Ttis especially dangerous in these days of attempted repudiation,
when the good faith of the government is above all price. If it can be
maintained, the government is no longer bound by any commercial con¬
tract into which it may enter with these corporations, though it holds
them bound. I cannot assent to any such doctrine; and upon the whole,
in my opinion, the act of 1878 is not only unauthorized by any power
existing in Congress, but it is an infraction of the prohibition I have
pointed out, contained in the fifth amendment of the Constitution.
Most of what I have said is applicable to each of the cases,—that of
the Union Pacific and that of the Central. There are some other con¬
siderations peculiar in the case of the Central Pacific, which is a corpo¬
ration of the State of California, and was such in 18G2. These I leave
for consideration by my brethren who unite with me in dissent.
Mr. Justice Bradley. I am unable to concur in the judgment of
the court in these cases, and will very briefly state the grounds of my
dissent.
I think that Congress had no power to pass the act of May 7, 1878,
either as it regards the Union Pacific or the Central Pacific Railroad
Company. The power of Congress, even over those subjects upon
which it has the right to legislate, is not despotic, but is subject to cer¬
tain constitutional limitations. One of these is, that no person shall be
deprived of life, liberty, or property without due process of law; another
is, that private property shall not be taken for public use without just
compensation; and a third is, that the judicial power of the United
States is vested in the supreme and inferior courts, and not in Congress.
It seems to me that the law in question is violative of all these restric¬
tions,—of their spirit at least, if not of their letter; and a law which
violates the spirit of the Constitution is as much unconstitutional as
one that violates its letter. For example, although the Constitution
declares only that private property shall not be taken for public use
without just compensation, and does not expressly declare that it shall
not be taken for private use without compensation, or, in other words,
does not declare that the property of one person shall not be taken from
him and given to another without compensation, yet no one can reason-
166
DECISIONS OF THE SUPREME COURT.
ably doubt tbat a law which should do this would be unconstitutional,
because the prohibition to do it is within the spirit of the prohibition
that is given, it being the greater enormity of the two.
The contract between the Union and Central Pacific Railroad Com¬
panies and the government was an executed contract, and a definite
one. It was in effect this: that the government should loan the com¬
panies certain moneys, and that the companies should have a certain
period of time to repay the amount, the loan resting on the security of
the companies' works. Congress, by the law in question, without any
change of circumstances, and against the protest of the companies,
declares that the money shall be paid at an earlier day, and that the
contract shall be changed pro tunio. This is the substance and effect
of the law. Calling the money paid a sinking-fund makes no substan¬
tial difference. The pretence or excuse for the law is that the stipulated
security is not good. Congress takes up the question, ex parte, dis¬
cusses and decides it, passes judgment, and proposes to issue execution,
and to subject the companies to heavy penalties if they do not comply.
That is the plain English of the law. In view of the limitations referred
to, has Congress the power to do this? In my judgment it has not.
The law virtually deprives the companies of their property without
due process of law; takes it for public use without compensation; and
operates as an exercise by Congress of the judicial power of the
government.
That it is a plain and flat violation of the contract there can be 110
reasonable doubt. But it is said that Congress is not subject to any
inhibition against passing laws impairing the validity of contracts.
This is true; and the reason why the inhibition to that effect was
imposed upon the States and not upon Congress evidently was, that the
power to pass bankrupt laws should be exclusively vested in Congress,
in order that the bankruptcy system might be uniform throughout the
United States. When the States exercised the power, they often did
it in such a manner as to favor their own citizens at the expense of the
citizens ot other States and of foreign countries. It was deemed expe¬
dient, therefore, to take the power from the States so far as it might
involve the impairing the validity of contracts. State bankrupt laws,
since the Constitution went into effect, have only been sustained when
operating prospectively upon contracts, and then only in the absence
of a national law. The inhibition referred to undoubtedly had its ori¬
gin in these considerations. It fully explains the fact that no such
inhibition was laid upon the national legislature; and the absence of
such an inhibition, therefore, furnishes no ground of argument in favor
of the proposition that Congress may pass arbitrary anil despotic laws
with regard to contracts any more than with regard to any other subject-
matter of legislation. The limitations already quoted exist in their
full force, and apply to that subject as well as to all others. They
embody the essential principles of the Magna Charta, and are espe¬
cially binding upon the legislative department of the government.
Under the English Constitution, notwithstanding the theoretical omnip¬
otence of Parliament, such a la w as the one in questiou would not be
tolerated for a moment. The famous denunciation that ''it would cut
every Englishman to the bone," would be promptly reiterated.
It will not do to say that the violation of the contract by the law in
question is not a taking of property. In the first place, it is literally a
taking of property. It compels the companies to pay over to the gov¬
ernment, or its agents, money to which the government is not entitled.
That it will be entitled by the contract to a like amount at some future
DECISIONS OF THE SUPREME COURT.
167
time does not matter. Time is a part of the contract. To coerce a
delivery of the money is to coerce without right a delivery of that
which is not the property of the government, but the property of the
companies. It is needless to refer to the importance to the companies
of the time which the contract gives. If it be alleged that the security
of the government requires this to be done in consequence of waste or
dissipation by the companies of the mortgage security, that is a ques¬
tion to be decided by judicial investigation with opportunity of defence.
A prejudgment of the question by the Legislative Department is a
usurpation of the judicial power.
But if it were not, as it is, an actual or physical taking of property,—
if it were merely the subversion of the contract and the substitution
of another contract in its place, it would be a taking of property within
the spirit of the constitutional provisions. A contract is property. To
destroy it wholly or to destroy it partially is to take it; and to do this
by arbitrary legislative action is to do it without due process of law.
The case bears 110 analogy to the laws which were passed in time of
war and public necessity, making treasury notes of the government a
legal tender. The power to pass those laws was found in other parts of
the Constitution: in the power to borrow money on the credit of the
United States, to regulate the value of money, to raise and support
armies, to suppress insurrections, and to pass all laws necessary and
proper for carrying into execution the general powers of the govern¬
ment. My views 011 that subject were fully expressed in the Legal Tender
Gases, reported in 11 Wallace, and I have yet seen no reason to modify
them. The legal-tender laws may have indirectly affected contracts,
but did not abrogate them. The case before us is totally different. It
is a direct abrogation of a contract, and that, too, of a contract of the
government itself,—a repudiation of its own contract.
ISTor does the case in hand bear any analogy to what are familiarly
known as the Granger Cases, reported in 91 U. S. under the names of
Munn v. Illinois, &c. The inquiry there was as to the extent of the
police j)ower in cases where the public interest is affected; and we held
that when an employment or business becomes a matter of such public
interest and importance as to create a common charge or burden upon
the citizen; in other words, when it becomes a practical monopoly, to
which the citizen is compelled to resort, and by means of which a trib¬
ute can be exacted from the community, it is subject to regulation by
the legislative power. It is obvious that the present case does not
belong to that category. It is an individual case of private contract
between the companies and the government. It is a question of dollars
and cents, and terms and conditions, in a particular case. To call the
law an exercise of the police power would be a misuse of terms.
Great stress, however, is laid upon the reservation in the charter of
the right to amend, alter, or repeal the act.
As a matter of tact, the reservation referred to really has 110 office in
an act of Congress; for Congress is not subject, as the States are, to the
inhibition against passing any law impairing the obligation of contracts.
It has become so much the custom to insert it in all charters at the
present day, that its original intent and purpose are sometimes forgotten.
Since, however, it is contained in the charter of the Union Pacific Kail-
road Company, it is proper that its meaning and effect should be
adverted to.
It seems to me that this clause has been greatly misunderstood. It
is a sort of proviso peculiar to American legislation^ growing out of the
decision in the Dartmouth College Case. Mr. Justice Story, in his opin-
168
DECISIONS OP THE SUPREME COURT.
ion in that case (4 Wheat. 076), says: "When a private eleemosynary
corporation is thus created by the charter of the crown, it is subject to
no other control on the part of the crown than what is expressly or
impliedly reserved by the charter itself. Unless a power be reserved
for this purpose, the crown cannot in virtue of its prerogative, without
the consent of the corporation, alter or amend the charter, or divest the
corporation of any of its franchises." This hint, that such a reservation
would authorize an alteration or amendment to be made in a charter,
has been freely availed of by legislatures and constitutional conven¬
tions in order to be freed from the constitutional restriction against
impairing the validity of contracts, so far as it applied to charters of
incorporation. The application of that restriction to such charters, by
construing them to be contracts within the meaning of the Constitution,
was a surprise to many statesmen and jurists of the country. Chief
Justice Marshall, indeed, in his opinion in that case, says: "It is more
than possible that the preservation of rights of this description was not
particularly in the view of the framers of the Constitution, when the
clause under consideration was introduced into the instrument." p. 044.
Probably in view of this somewhat unexpected application of the clause,
operating as it did to deprive the States of nearly all legislative control
over corporations of their own creation, the courts have given liberal
construction to the reservation of power to alter, amend, and repeal a
charter; and have sustained some acts of legislation made under such
a reservation which are at least questionable.
In my judgment, the reservation is to be interpreted as placing the
State legislature back on the same platform of power and control over
the charter containing it as it would have occupied had the constitu¬
tional restriction about contracts never existed; and I think the reser¬
vation effects nothing more. It certainly cannot be interpreted as
reserving a right to violate a contract at will. No legislature ever
reserved such a right in any contract. Legislatures often reserve the
right to terminate a continuous contract at will; but never to violate a
contract, or change its terms without the consent of the other party.
The reserved power in question is simply that of legislation,—to alter,
amend, or repeal a charter. This is very different from the power to
violate, or to alter the terms of the contract at will. A reservation of
power to violate a contract, or alter it, or impair its obligation, would
be repugnant to the contract itself, and void. A proviso repugnant to
the granting part of a deed, or to the enacting part of a statute, is void.
Interpreted as a reservation of the right to legislate, the reserved
power is sustainable on sound principles; but interpreted as the reser¬
vation of a right to violate an executed contract, it is not sustainable.
The question then comes back to the extent of the power to legislate.
But that is a restricted power,—restricted by other constitutional pro¬
visions, to which reference has already been made. Certainly the
legislature cannot in a charter of incorporation, or in any other law,
reserve to itself any greater power of legislation than the Constitution
itself concedes to it. It seems to me clear, therefore, that the power
reserved cannot authorize a flat abrogation of the contract by Congress,
because, as before shown, such an abrogation would be a violation of
those clauses which inhibit the taking of property without process of
law and without compensation.
It may be said that by reason of the reserved power to alter and
repeal a charter, this court has sustained legislative acts imposing
taxes from which the corporation by the charter was exempted. This
is true. But the imposition of taxes is preeminently an act of legisla-
DECISIONS OF THE SUPREME COURT.
1G9
tion. Its temporary suspension, conceded in a charter, is a suspension
of the legislative power pro tanto. Being such, a reservation of the
right to legislate, or, which is the same thing, to alter, amend, or
repeal the charter, necessarily includes the right to resume the power
of taxation. The same observations apply to the regulation of fares
and freights ; for this is a branch of the police power, applicable to all
cases which involve a common charge upon the people.
I conclude, therefore, that the power reserved to alter, amend, and
repeal the charter of the Union Pacific Railroad Company is not suffi¬
cient to authorize the passage of the law in question.
I will only add, further, that the initiation of this species of legisla¬
tion by Congress is well calculated to excite alarm. It has the effect
of announcing to the world, and giving it to be understood, that this
government does not consider itself bound by its engagements. It sets
the example of repudiation of government obligations. It strikes a
blow at the public credit. It asserts the principle that might makes
right. It saps the foundations of public morality. Perhaps, however,
these are considerations more properly to be addressed to the legislative
discretion. But when forced upon the attention by what, in my
judgment, is an unconstitutional exercise of legislative power, they
have a more than ordinary weight and significance.
Mr. Justice Field. I also dissent from the judgment of the
court in these cases.
The decision will, in my opinion, tend to create insecurity in the title
to corporate property in the country. It, in effect, determines that the
general government, in its dealings with the Pacific Railroad Compa¬
nies, is under no legal obligation to fulfil its contracts, and that whether
it shall do so is a question of policy and not of duty. It also seems to
me to recognize the right of the government to appropriate by legisla¬
tive decree the earnings of those companies, without judicial inquiry
and determination as to its claim to such earnings, thus sanctioning
the exercise of judicial functions in its own cases. And in respect to
the Central Pacific Company it asserts a supremacy of the Federal
over the State government in the control of the corporation which, in
my judgment, is subversive of the rights of the State. I therefore am
constrained to add some suggestion to those presented by my associates,
Justices Strong and Bradley. In what I have to say I shall confine
myself chiefly to the case of the Central Pacific Company. That com¬
pany is a State corporation, and is the successor of a corporation of the
same name, created before the railroad acts of Congress were passed,
and of four other corporations organized under the laws of the State.
Ho sovereign attributes possessed by the general government were
exercised in calling into existence the original company, or any of the
companies with which it is now consolidated. They all derived their
powers and capacities from the State, and held them at its will.
The relation of the general government to the Pacific companies is
twofold: that of sovereign in its own territory and that of contractor.
As sovereign, its power extends to the enforcement of such acts and
regulations by the companies as will insure, in the management of their
roads, and conduct of their officers in its territory, the safety, conven¬
ience, and comfort of the public. It can exercise such control in its ter¬
ritory over all common carriers of passengers and property. As a
contractor it is bound by its engagements equally with a private indi¬
vidual ; it cannot be relieved from them by any assertion of its sovereign
authority.
170
DECISIONS OF THE SUPREME COURT.
Its relation to the original Central Pacific Company, and to the pres¬
ent company as its successor, in the construction and equipment of its
road, and its use for public purposes, was and is that of a contractor;
and the rights and obligations of both are to be measured, as in the case
of similar relations between other parties, by the terms and conditions
of the contract.
By the first section of the original railroad act of Congress, passed
in July, 1802, certain persons therein designated were created a corpora¬
tion by the name of the Union Pacific Railroad Company, and author¬
ized to construct and operate a continuous railroad and telegraph line
from a designated point 011 the one hundredth meridian of longitude
west from Greenwich to the western boundary of Nevada Territory, and
were invested with the powers, privileges, and immunities necessary
for that purpose, and with such as are usually conferred upon corpora¬
tions.
By subsequent provisions of the act and the amendatory act of 18(54,
three grants were made to the company thus created: a grant of a right
of way over the public lands of the United States for the road and tele¬
graph line; a grant often alternate sections of land 011 each side of the
road, to aid in its construction and that of the telegraph liue; and a
grant of a certain number of subsidy bonds of the United States, each
in the sum of $1,000 payable in thirty years, with semi-annual interest,—
patents for the lands and the bonds to be issued as each twenty consec¬
utive miles of the road and telegraph should be completed. These
grants were made upon certain conditions as to the completion of the
road and telegraph line, their construction and use by the government,
and their pledge as security for the ultimate payment of the bonds.
They were the considerations offered by the government to the company
for the work which it undertook.
By the act which thus incorporated the Union Pacific Company, and
made the grants mentioned, the United States proposed to the Central
Pacific that it should construct in like manner a railroad and telegraph
line through the State of California from a point near the Pacific coast
to its eastern boundary, upon the same terms and conditions, and after
completing them across the State, to continue their construction through
the Territories of the United States until they should meet and connect
with the road and telegraph line of the Union Pacific.
They, in effect, said to the company, that if it would construct a rail¬
road and a telegraph line from the Pacific Ocean eastward to a connec¬
tion with the Union Pacific,—the road to be in all respects one of first
class,—and keep them in repair, so that they could bo used at all times
by any department of the government for the transmission of despatches
and the transportation of mails, troops, munitions of war, supplies, and
public stores, at reasonable rates of compensation, not exceeding such
as were charged private persons for similar services, and allow the gov¬
ernment at all times the preference in the use of the road and tele¬
graph,—they would grant the company a right of way over the public
lands for the construction of the road and telegraph line, and grant to
it ten alternate sections of land 011 each side of the road, and give it
their bonds, each for the sum of $1,000, payable thirty years after date,
with semi-annual interest, such bonds to be issued at the rate of six¬
teen, thirty-two, or forty-eight the mile, according to the character of
the country over which the road should be constructed; and would issue
patents for the lands, and the subsidy bonds, as each twenty consecu¬
tive miles of the road and telegraph should be completed in the manner
prescribed; it being agreed that the company should pay the bonds as
DECISIONS OF THE SUPREME COURT.
171
tliey should mature, and that for the security of their payment they
should constitute a second mortgage upon the whole line of the road
and telegraph, and that one-half of the compensation earned for serv¬
ices to the government, and, after the completion of the road, five per
cent of its net earnings should be retained and applied to the payment
of the bonds; and also, that the company should complete the road by
the 1st of July, 1876, and keep it in repair and use thereafter, or upon
failure to do so, that the government might take possession of the road
and complete it, or keep it in repair and use as the case might be. And
they further, in effect, said that if these terms and conditions were sat¬
isfactory, the company should file its written acceptance thereof with
the Secretary of the Interior, within six months thereafter; and that
thereupon there should be a contract between them.
This proposition of the government the Central Pacific accepted,
and filed its acceptance as required; and thereupon the provisions
of the act became a contract between it and the United States, as com¬
plete and perfect as could be made by the most formal instrument. The
United States thus came under obligation to the company to make the
grants and issue the bonds stipulated, upon the construction of the road
and telegraph line in the manner prescribed. The corporate capacity
of the company in no respect affected the nature of the contract, or
made it in any particular different from what it would have been had a
natural person been one of the parties. The company was not a crea¬
ture of the United States, and Congress could neither add to nor sub¬
tract from its corporate powers. The exercise of the right of eminent
domain allowed in the Territories was not the exercise of a corporate
power. That right belongs to the sovereign authority, and whoever
exercises it does so as the agent of that sovereignty. Nor was its
character as a State institution changed by the fact that it was per¬
mitted by Congress to extend its road through the territory of the
United States. This permission was 110 more than the license which is
usually extended by positive agreement, or by comity in the absence
of such agreement, by one State to the corporations of another State,
to do business and own property in its jurisdiction. Such license is not
the source of the corporate powers exercised. Insurance companies,
express companies, and, indeed, companies organized for almost every
kind of business, are, by comity, permitted throughout the United
States, and generally throughout the civilized world, to do business,
make contracts, and exercise their corporate powers in a jurisdiction
where, in a strict legal sense, they have no corporate existence. The
Pacific Mail Steamship Company, for example, to take an illustration
mentioned by counsel, is a corporation created under the laws of the
State of New York, and, like the Central Pacific, has been subsidized
by the United States. Its ships visit Central America, California,
Japan, and China, and in all these places it leases or owns wharves,
and makes and enforces contracts necessary to the transaction of its
business, yet no one has ever pretended or suggested that it derived
any of its corporate powers from the United States, or from the author¬
ities of any of the places named. By consent of those authorities,
expressed in terms, or implied in what is understood as their comity, it
exercises power derived solely from the State of New York.
When, therefore, Congress assented to the extension into the terri¬
tory of the United States of the road which the Central Pacific was
authorized by its charter to construct in California, it was deemed
important for the company to obtain also the consent and authority of
the State to act without its limits and assume responsibilities not origi-
172
DECISIONS OF THE SUPREME COURT.
nally contemplated. Accordingly, in 1861, the legislature of the State,
at its second session after the adoption of the original railroad act of
Congress, in order to enable the company to comply with its provisions
and conditions, authorized the company to construct, maintain, and
operate the road in the territory lying east of the State, and invested
it with the rights, privileges, and powers granted by the act of Con¬
gress, with the reservation, however, that the company should be sub¬
ject to alt the lairs of the State concerning railroad and telegraph lines,
except that messages and property of the United States, of the State,
and of the company should have priority of transmission and trans¬
portation. The extent of the power which was thus reserved we shall
hereafter consider. It is sufficient at present to observe that it was as
ample and complete as it is possible for one sovereignty to exert over
institutions of its own creation, and that its exercise is incompatible
with the control asserted by the law of Congress of 1878, which has
given rise to the present suit.
The Central Pacific Company having accepted, as already stated,
the conditions proffered by Congress, proceeded at once to the execution
of its contract. In the face of great obstacles, doubts, and uncertain¬
ties, its directors commenced and prosecuted the work, and within
a period several years less than that prescribed, its telegraph line
and road were completed, the latter with all the appurtenances of
a first-class road, and were accepted by the government. Patents for
the land granted and the subsidy bonds mentioned were accordingly
issued to the company. Since then the road and telegraph line have been
kept in repair and use, and the government has enjoyed all the privi¬
leges in the transmission of despatches over the telegraph, and in the
transportation of mails, troops, munitions of war, supplies, and public
stores over the road, which were stipulated. There has been no failure
on the part of the company to comply with its engagements, nor is any
complaint of delinquency or neglect in its action made by the govern¬
ment. The road is more valuable now than on the day of its comple¬
tion; it has been improved in its rails, bridges, cars, depots, turnouts,
machine-shops, and all other appurtenances. Itsearnings have been con¬
stantly increasing, and it constitutes to-day a far better security to
the United States for the ultimate payment of the subsidy bonds than
at any period since its completion, and to the government it has caused,
with the connecting road of the Union Pacific, an immense saving of
expense. The records of the different departments show an annual
saving, as compared with previous expenditures, in the item of trans¬
portation alone of the mails, troops, and public stores, of $5,000,000,
aggregating at this day over $50,000,000.
Whilst the company was thus complying in all respects with its
engagements, the act of May 7, 1878, was passed, altering in essential
particulars the contract of the company, and greatly increasing its
obligations. By the contract, only one-half of the compensation for
transportation for the government is to be retained and applied
towards the payment of the bonds. By the act of 1878, the whole of
such compensation is to be retained and thus applied. By the contract,
five per cent only of the net earnings of the road are to be paid to the
United States to be applied upon the subsidy bonds. By the act of
1878. twenty-five per cent of the net earnings are to be thus paid and
applied. By the contract, the only security which the government had
for its subsidy bonds was a second mortgage on the road and its appur¬
tenances and telegraph line; and the company was allowed to give a
first mortgage as security for its own bonds, issued for an equal amount.
DECISIONS OP THE SUPREME COURT.
173
By the act of 1878, additional security is required for the ultimate pay¬
ment of its own bonds, and the subsidy bonds of the United States, by
the creation of what is termed a sinking-fund; that is, by compelling the
company to deposit $1,200,000 a year in the treasury of the United
States, to be held for such payment, or so much thereof as may be
necessary to make the live per cent net earnings, the whole sum earned
as compensation for services, and sufficient in addition to make the
whole reach twenty-five per cent of the net earnings.
It is not material, in the view I take of the subject, whether the
deposit of this large sum in the treasury of the creditor be termed a
payment, or something else. It is the exaction from the company of
money for which the original contract did not stipulate, which consti¬
tutes the objectionable feature of the act of 1878. The act thus makes
a great change in the liabilities of the company. Its purpose, however,
disguised, is to coerce the payment of money years in advance of the
time prescribed by the contract. That such legislation is beyond the
power of Congress I cannot entertain a doubt. The clauses of the origi¬
nal acts reserving a right to Congress to alter or amend them do not,
in my judgment, justify the legislation. The power reserved under these
clauses is declared to be for a specific purpose. The language in the act
of 1862 is as follows: "And the better to accomplish the object of this act,
to promote the public interest and welfare by the construction of said
railroad and telegraph line, and keeping the same in working order,
and to secure to the government at all times (but particularly in time of
war) the use and benefits of the same for postal, military, and other
purposes, Congress may at any time—having due regard for the rights
of said companies named herein—add to, alter, amend, or repeal this
act." Sect. 18. The language of the amendatory act of 1864 is more
general: " That Congress may at any time alter, amend, or repeal this
act." The two acts are to be read together; they deal with the same
subject; and are to be treated as if passed at the same time. Prescott
v. Railroad Company, 16 Wall. 603. The limitations, therefore, imposed
upon the exercise of the power of alteration and amendment in the
act of 1862 must be held to apply to the power reserved in the act of
1864. They are not repealed, either expressly or impliedly, by any thing
in the latter act. If this be so, the legislation of 1878 can find no sup¬
port in the clauses. The conditions upon which the reserved power
could be exercised under them did not then exist. The road and tele¬
graph had years before been constructed, and always kept in working
order; and the government has at all times been secured in their use
and benefits for postal, military, and other purposes.
But if the reserved power of alteration and amendment be considered
as freed from the limitations designated, it cannot be exerted to affect
the contract so far as it has been executed, or the rights vested under
it. When the road was completed in the manner prescribed and
accepted, the company became entitled as of right to the land and sub¬
sidy bonds stipulated. The title to the land was perfect on the issue
of the patents; the title to the bonds vested on their delivery. Any
alteration of the acts under the reservation clauses, or their repeal,
could not revoke the title to the land or recall the bonds or change the
right of the company to either. So far as these are concerned the con¬
tract was, long before the act of 1878, an executed and closed trans¬
action, and they were as much beyond the reach of the government as
any other property vested in private proprietorship. The right to hold
the subsidy bonds for the period at which they are to run without pay¬
ing or advancing money on them before their maturity, except as
174
DECISIONS OF THE SUPREME COURT.
originally provided, or furnishing other security than that originally
stipulated, was, on their delivery, as perfect as the right to hold the
title to the land patented unincumbered by future liens of the govern¬
ment. Any alteration or amendment could only operate for the future
and affect subsequent acts of the company: it could have no operation
upon that which had already been done and vested.
There have been much discussion and great difference of opinion on
many points as to the meaning and effect of a similar reservation in
statutes of the States, but on the point that it does not authorize any
interference with vested rights all the authorities concur. Such was
the language of Chief Justice Shaw in the case cited from the Supreme
Court of Massachusetts; and such is the language of Mr. Justice Clif¬
ford in the cases cited from this court. And such must be the case, or
there would be no safety in dealing with the government where such a
clause is inserted in its legislation. It could undo at pleasure every
thing done under its authority, and despoil of their property those who
had trusted to its faith. Commonwealth v. Essex Company, 13 Gray
(Mass.), 239; Miller v. The State, 15 Wall. 478; Holyoke Company v.
Lyman, id. 500. See also Shields v. Ohio, 95 U. S. 319, and Sage v. Dillard,
15 B. Mon. (Ky.) 349.
The object of a reservation of this kind in acts of incorporation is to
insure to the government control over corporate franchises, rights, and
privileges which, in its sovereign or legislative capacity, it may call
into existence, not to interfere with contracts which the corporation
created by it may make. Such is the purport of our language in Tom-
linson v. Jessup, where we state the object of the reservation to be "to
prevent a grant of corporate rights and privileges in a form which will
preclude legislative interference with their exercise, if the public inter¬
est should at any time require such interference," and that "the reser¬
vation affects the entire relation between the State and corporation, and
places under legislative control all rights, privileges, and immunities
derived by its charter directly from the State." 15 Wall. 454. The same
thing we repeated, with greater distinctness, in Railroad Company v.
Maine, where we said that by the reservation the State retained the
power to alter the act incorporating the company, in all particulars con¬
stituting the grant to it of corporate rights, privileges, and immunities;
and that "the existence of the corporation, and its franchises and immu¬
nities, derived directly from the State, were thus kept under its control."
But we added, that "rights and interests acquired by the company, not
constituting a part of the contract of incorporation, stand upon a different
footing." 90 U. S. 499.
Now, there was no grant by the United States to the Central Pacific
Company of corporate rights, privileges, and immunities. No attri¬
bute of sovereignty was exercised by them in its creation. It took its
life, and all its attributes and capacities, from the State. Whatever
powers, rights, and privileges it acquired from the United States it
took under its contract with them, and not otherwise. The relation
between the parties being that of contractors, the rights and obliga¬
tions of both, as already stated, are to be measured by the terms and
conditions of the contract. And when the government of the United
States entered into that contract, it laid aside its sovereignty and put
itself on terms of equality with its contractor. It was then but a civil
corporation, as incapable as the Central Pacific of releasing itself from
its obligations, or of finally determining their extent and character.
It could not, as justly observed by one of the counsel who argued this
case, " release itself and hold the other party to the contract. It could
DECISIONS OF THE SUPREME COURT.
175
not change its obligations and hold its rights unchanged. It cannot
bind itself as a civil corporation, and loose itself by its sovereign legis¬
lative power." This principle is aptly expressed by the great conserva¬
tive statesman, Alexander Hamilton, in his report to Congress on the
public credit, in 1795: "When a government," he observes, "enters
into a contract with an individual, it deposes, as to the matter of the
contract, its constitutional authority, and exchanges the character of
legislator for that of a moral agent, with the same rights and obliga¬
tions as an individual. Its promises may be justly considered out of
its power to legislate, unless in aid of them. It is, in theory, impossible
to reconcile the two ideas of a promise which obliges with a power to
malce a law tvhich can vary the effect of it.n Hamilton's Works, vol. iii,
pp. 518, 519.
When, therefore, the government of the United States entered into
the contract with the Central Pacific, 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 com¬
plaint against the company, it could not undertake itself, by legislative
decree, to redress the grievance, 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 between 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 exer¬
cise of judicial power, —and all such power, with respect to any trans¬
action arising under the laws of the United States, is vested by the
Constitution iu the courts of the country.
In the case of The Commonwealth v. The Proprietors of New Bedford
Bridge, a corporation of Massachusetts, the Supreme Court of that
State, speaking with reference to a contract between the parties, uses
this language: "Each has equal rights and privileges under it, and
neither can interpret its terms authoritatively so as to control and bind
the rights of the other. The Commonwealth has no more authority to
construe the charter than the corporation. By becoming a party to a
contract with its citizens the government divests itself of its sover¬
eignty in respect to the terms and conditions of the contract and its
construction and interpretation, and stands in the same position as a
private individual. If it were otherwise, the rights of parties contract¬
ing with the government would be held at the caprice of the sovereign,
and exposed to all the risks arising from the corrupt or ill judged use
of misguided power. The interpretation and construction of contracts
when drawn in question belong exclusively to the judicial department
of the government. The legislature has no more power to construe
their own contracts with their citizens than those which individuals
make with each other. They can do neither without exercising judicial
powers which would be contrary to the elementary principles of our
government, as set forth in the Declaration of Eights." 2 Gray, 350.
In that case the charter of the corporation authorized the building of
a toll-bridge across a navigable river, with two suitable draws at least
thirty feet wide. A subsequent act required draws to be made of a
greater width; but the court held that the question whether the draws
already made were suitable, and constructed so as not unreasonably or
unnecessarily to obstruct or impede public navigation, was not a ques¬
tion to be determined by the legislature, or by the corporation, but by
176
DECISIONS OF THE SUPREME COURT.
the courts. It was a questiou which could not be authoritatively deter¬
mined by either party so as to control and bind the other. "Like all
other matters involving a controversy concerning public duty and pri¬
vate rights," said the court, "it is to be adjusted and settled in the
regular tribunals, where questions of law and fact are adjudicated on
fixed and established principles, and according to the forms and usages
best adapted to secure the impartial administration of justice." In the
case at bar, the government, by the act of 1878, undertakes to decide
authoritatively what the obligations of the Central Pacific are, and in
effect declares that if the directors of the company do not respect its
construction, and obey its mandates, founded upon such construction,
they shall be subject to fine and imprisonment.
The distinction between a judicial and a legislative act is well defined.
The one determines what the law is, and what the rights of parties are,
with reference to transactions already had; the other prescribes what
the law shall be in future cases arising under it. Wherever an act
undertakes to determine a question of right or obligation, or of prop¬
erty, as the foundation upon which it proceeds, such act is to that extent
a judicial one, and not the proper exercise of legislative functions.
Thus an act of the legislature of Illinois authorizing the sale of the
lands of an intestate, to raise a specific sum, to pay certain parties
their claims against the estate of the deceased for moneys advanced
aud liabilities incurred, was held unconstitutional, on the ground that
it involved a judicial determination that the estate was indebted to
those parties for the moneys advauced and liabilities incurred. The
ascertainment of indebtedness from one party to another, and a direc¬
tion for its payment, the court considered to be judicial acts which could
not be performed by the legislature. 3 Scam. 238. So also an act of
the legislature of Tennessee authorizing a guardian of infant heirs to
sell certain lands of which their ancestor died seised, and directing the
proceeds to be applied to the payment of the ancestor's debts, was, on
similar grounds, held to be unconstitutional. Jones v. Perry, 10 Yerg.
(Tenn.) 59. Tested by the principle thus illustrated, the act of 1878
must be held in many ways to transcend the legislative power of
Congress.
I cannot assent to the doctrine which would ascribe to the Federal
government a sovereigu right to treat as it may choose corporations
with which it deals, and would exempt it from that great law of moral¬
ity which should bind all governments, as it binds all individuals, to do
justice and keep faith. Because it was deemed important, on the adop¬
tion of the Constitution, in the light of what was known as tender laws,
appraisement laws, stay laws, and instalment laws of the States, which
Story says had prostrated all private credit and all private morals, to
insert a clause prohibiting the States from passing any law impairing
the obligation of contracts, and no clause prohibiting the Federal gov¬
ernment from like legislation is found, it is argued that no such pro¬
hibition exists.
"It is true," as I had occasion to observe in another case, "there is
no provision in the Constitution forbidding in express terms such legis¬
lation. And it is also true that there are express powers delegated to
Congress, the execution of which necessarily operates to impair the obli¬
gation of contracts. It was the object of the framers of that instru¬
ment to create a national goverment, competent to represent the entire
country in its relations with foreign nations, and to accomplish by its
legislation measures of common interest to all the people, which the
several States in their independent capacities were incapable of effect-
DECISIONS OF THE SUPREME COURT.
177
ing, or if capable, the execution of which would be attended with great
difficulty and embarrassment. They therefore clothed Congress with
all the powers essential to the successful accomplishment of these ends,
and carefully withheld the grant of all other powers. Some of the
powers granted, from their very nature, interfere in their execution with
contracts of parties. Thus war suspends intercourse and commerce
between citizens or subjects of belligerent nations; it renders during
its continuance the performance of contracts previously made, unlaw¬
ful. These incidental consequences were contemplated in the grant
of the war power. So the regulation of commerce and the imposition of
duties may so affect the prices of articles imported or manufactured as
to essentially alter the value of previous contracts respecting them;
but this incidental consequence was seen in the grant of the power
over commerce and duties. There can be no valid objection to laws
passed in execution of express powers, that consequences like these
follow incidentally from their execution. But it is otherwise when such
consequences do not follow incidentally, but are directly enacted."
"The only express authority for any legislation affecting the obliga¬
tion of contracts is found in the power to establish a uniform system
of bankruptcy, the direct object of which is to release insolvent debt¬
ors from their contracts upon the surrender of their property." 12
Wall. 063. From this express grant in the case of bankrupts the infer¬
ence is deducible, that there was no general power to interfere with
contracts. If such general power existed, there could have been no
occasion for the delegation of an express power in the case of bank¬
rupts. The argument for the general power from the absence of a spe
cial prohibition proceeds upon a misconception of the nature of the
Federal government as one of limited powers. It can exercise only
such powers as are specifically granted or are necessarily implied. All
other powers, not prohibited to the States, are reserved to them or to
the people. As I said in the case referred to, the doctrine that where
a power is not expressly forbidden it may be exercised, would change
the whole character of our government. According to the great com¬
mentators on the Constitution, and the opinions of the great jurists,
who have studied and interpreted its meaning, the true doctrine is,
that where a power is not in terms granted, and is not necessary or
proper for the exercise of a power thus granted, it does not exist. It
would not be pretended, for example, had there been no amendments
to the Constitution as originally adopted, that Congress could have
jiassed a law respecting an establishment of religion or prohibiting the
free exercise thereof, or abridging the freedom of speech, or the right
of the people to assemble and petition for a redress of grievances. The
amendments prohibiting the exercise of any such power were adopted
in the language of the preamble accompanying them, when presented
to the States, "in order to prevent misconception or abuse" of the
powers of the Constitution.
Independent of these views, there are many considerations which
lead to the conclusion that the power to impair contracts, by direct
action to that end, does not exist with the general government. In the
first place, one of the objects of the Constitution, expressed in its pre¬
amble, was the establishment of justice, and what that meant in its
relations to contracts is not left, as was justly said by the late Chief
Justice, in Hepburn v. Griswold, to inference or conjecture. As he
observes, at the time the Constitution was undergoing discussion in the
convention, the Congress of the Confederation was engaged in framing
the ordinance for the government of the Northwestern Territory, in
12 PAC
178
DECISIONS OF THE SUPREME COURT.
which certain articles of compact were established between the people
of the original States and the people of the Territory, for the purpose,
as expressed in the instrument, of extending the fundamental princi¬
ples of civil and religious liberty, upon which the States, their laws and
constitutions, were erected. By that ordinance it was declared, that,
iu the just preservation of rights and property, "110 law ought ever to
be made, or have force in the said Territory, that shall, in any manner,
interfere with or affect private contracts or engagements bona Jide and
without fraud previously formed." The same provision, adds the Chief
Justice, found more condensed expression in the prohibition upon the
States against impairing the obligation of contracts, which has ever
been recognized as an ettieient safeguard against injustice; and though
the prohibition is not applied iu terms to the government of the United
States, he expressed the opinion, speaking for himself and the majority
of the court at the time, that it was clear "that those who framed and
those who adopted the Constitution intended that the spirit of this
prohibition should pervade the entire body of legislation, and that the
justice which the Constitution was ordained to establish was not
thought by them to be compatible with legislation of an opposite tend¬
ency." 8 Wall. 623.
Similar views are found expressed in the opinions of other judges of
this corirt. In Calder v. Bull, which was here in 1798, Mr. Justice
Chase said, that there were acts which the Federal and State legisla¬
tures could not do without exceeding their authority, and among them
he mentioned a law which punished a citizen for an innocent act; alaw
that destroyed or impaired the lawful private contracts of citizens; a
law that made a man judge in his own case; and a law that took the
property from A. and gave it to B. "It is against all reason and jus¬
tice," he added, "for a people to intrust a legislature with such powers,
and therefore it cannot be presumed that they have done it. They may
command what is right and prohibit what is wrong; but they cannot
change innocence into guilt, or punish innocence as a crime, or violate
the right of an antecedent lawful private contract, or the right of pri¬
vate property. To maintain that a Federal or State legislature pos¬
sesses such powers if they had not been expressly restrained, would,
in my opinion, be apolitical heresy altogether inadmissible in all free
republican governments." 3 Dall. 388.
In Ogdenv. Saunders, which was before this court in 1827, Mr. Jus¬
tice Thompson, referring to the clauses of the Constitution prohibiting
the State from passing a bill of attainder, an ex post facto law, or a law
impairing the obligation of contracts, said: "Neither provision can
strictly be considered as introducing any new principle, but only for
greater security and safety to incorporate into this charter provisions
admitted by all to be among the first principles of our government.
No State court would, I presume, sanction and enforce an ex post facto
law, if no such prohibition was contained in the Constitution of the
United States; so, neither would retrospective laws, taking away vested
rights, be enforced. Such laws are repugnant to those fundamental
principles upon which every just system of laws is founded."
In the Federalist, Mr. Madison declared that laws impairing the obli¬
gation of contracts were contrary to the tirst principles of the social
compact and to every principle of sound legislation; and in the Bart-
mouth College Case Mr. Webster contended that acts, which were there
held to impair the obligation of contracts, were not the exercise of a
power properly legislative, as their object and effect was to take away
vested rights. "To justify the taking away of vested rights," he said,
DECISIONS OF THE SUPREME COURT.
179
"there must be a forfeiture, to adjudge upon and declare which is the
proper province of the judiciary." Surely the Constitution would have
failed to establish justice had it allowed the exercise of such a danger¬
ous power to the Congress of the United States.
In the second place, legislation impairing the obligation of contracts
impinges upon the provision of the Constitution which declares that
no one shall be deprived of his property without due process of law;
and that means by law in its regular course of administration through
the courts of justice. Contracts are property, and a large portion of
the wealth of the country exists in that form. Whatever impairs their
value diminishes, therefore, the property of the owner; and if that be
effected by direct legislative action operating upon the contract, forbid¬
ding its enforcement or transfer, or otherwise restricting its use, the
owner is as much deprived of his property without due process of law
as if the contract were impounded, or the value it represents were in
terms wholly or partially confiscated.
In the case at bar the contract with the Central Pacific is, as 1 have
said, changed in essential particulars. The company is compelled to
accept it in its changed form, and by legislative decree, without the
intervention of the courts, that is, without due process of law, to pay
out of its earnings each year to its contractors, the United States, or
deposit with them, a sum that may amount to $1,200,000, and this,
twenty years before the debt to which it is to be applied becomes due
and payable by the company. If this taking of the earnings of the
company and keeping them from its use during these twenty years to
come is not depriving the company of its property, it would be diffi¬
cult to give any meaning to the provision of the Constitution. It will
only be necessary hereafter to give to the seizure of another's property
or earnings a new name,—to call it the creation of a sinking-fund, or
the providing against the possible wastefulness or improvidence of the
owner,—to get rid of the constitutional restraint. To my mind the
evasion of that clause, the frittering away of all sense and meaning to
it, are insuperable objections to the legislation of Congress. Where
contracts are impaired, or when operating against the government are
sought to be evaded and avoided by legislation, a blow is given to the
security of all property. If the government will not keep its faith,
little better can be expected from the citizen. If contracts are not
observed, no prpperty will in the end be respected; and all history
shows that rights of persons are unsafe where property is insecure.
Protection to one goes with protection to the other; and there can be
neither prosperity nor progress where this foundation of all just gov¬
ernment is unsettled. "The moment," said the elder Adams, "the idea
is admitted into society that property is not as sacred as the laws of
God, aud that there is not a force of law and public justice to protect
it, anarchy and tyranny commence."
I am aware of the opinion which prevails generally that the Pacific
railroad corporations have, by their accumulation of wealth, and the
numbers in their employ, become so powerful as to be disturbing aud
dangerous influences in the legislation of the country; and that they
should, therefore, be brought by stringent measures into subjection to
the State. This may be true; I do not say that it is not; but if it is, it
furnishes no justification for the repudiation or evasion of the contracts
made with them by the government. The law that protects the wealth
of the most powerful, protects also the earnings of the most humble;
and the law which would confiscate the property of the one would in
the end take the earnings of the other.
180
DECISIONS OF THE SUPREME COURT.
There are many other objections to the act of Congress besides those
I have mentioned, each to my mind convincing; but why add to what
has already been said? If the reasons given will not convince, neither
would any others which could be presented. I will, therefore, refer
only to the interference of the law with the rights of the State of Cali¬
fornia.
The Central Pacific being a State corporation, the law creating it is,
by the Constitution of California, subject to alteration, amendment, and
repeal by its legislature at any time,—a power which the legislature
can neither abdicate nor transfer. In its assent given to the company
to extend its road into the territory of the United States,—the general
government having authorized the extension,—the legislature reserved
the same control which it possesses over other railroad and telegraph
companies created by it. That control under the new constitution goes,
as is claimed, to the extent of regulating the fares and freights of the
company, thus limiting its income or earnings; and of supervising all
its business, even to the keeping of its accounts, making disobedience
of its directors to the regulations established for its management pun¬
ishable by fine and imprisonment; and the legislature may impose the
additional penalty of a forfeiture of the franchises and privileges of the
company. The law in existence when the corporation was created, and
still in force, requires the creation of a sinking-fund by the company to
meet its bonds, and under it large sums have been accumulated for that
purpose, and still further sums must be raised. In a word, the law of
the State undertakes to control and manage the corporation, in all par¬
ticulars required for the service, convenience, and protection of the
public; and can there be a doubt in the mind of any one that over its
own creations the State has, within its own territory, as against the
United States, the superior authority? Yet the power asserted by the
general government in the passage of the act of 1878 would justify legis¬
lation affecting all the affairs of the company, both in the State and in
the Territories of the United States. It could treble the amount of the
sum to be annually deposited in the sinking-fund; it could command
the immediate deposit of the entire amount of the ultimate indebted¬
ness ; it could change the order of the liens held by the government and
the first-mortgage bondholders; it could extend the lien of the govern¬
ment beyond the property to the entire income of the company, and, in
fact, does so by the act in question (sect. 9); it could require the trans¬
portation for the government to be made without compensation; and it
could subject the company to burdens which, if anticipated at the time,
would have prevented the construction of the road. A power thus vast,
once admitted to exist, might be exerted to control the entire affairs of
the company, in direct conflict with the legislation of the State; its
exercise would be a mere matter of legislative discretion in Congress.
Yet it is clear that both governments cannot control and manage the
company in the same territory, subjecting its directors to fine and
imprisonment for disobeying their regulations. Under the Constitution
the management of local affairs is left chiefly to the States, and it never
entered into the conception of its framers that under it the creations of
the States could be taken from their control. Certain it is that over
no subject is it more important for their interests that they should
retain the management and direction than over corporations brought
into existence by them. The decision of the majority goes a great
way—further, it appears to me, than any heretofore made by the court—
to weaken the authority of the States, in this respect, as against the
will of Congress. According to my understanding of its scope and
decisions of the supreme court.
181
reach, the United States have only to make a contract with a State
corporation, and a loan to it, to oust the jurisdiction of the State, and
place the corporation under their direction. It would seem plain that
if legislation, taking institutions of the State from its control, can be
sustained by this court, the government will drift lroin the limited and
well guarded system established by our fathers into a centralized and
consolidated government.
Union Pacific Railroad Company v. United States.
(104 U. S., 662.)
1. The sixth section of the act of Congress of July 1, 1862, e. 120, incorporating the
Union Pacific Railroad Company (12 Stat. 489), constitutes a contract between
the United States and the company, whereunder the latter, for its service in
transporting upon its road, from Jan. 1, 1876, to Oct. 1,1877, the mails, and the
agents and clerks employed in connection therewith, is entitled to compensation
at fair and reasonable rates, not to exceed those paid by private parties for the
same kind of service.
2. The contract is not affected by the sections of the Revised Statutes declaring that
the Postmaster-General may fix the rate for such service when performed by rail¬
road companies to which Congress granted aid, and he had no authority to
insist that it was not binding upou the United States.
3. The company, having been required to perform the contract, lost no rights by a
compliance therewith, as it protested against and rejected all illegal conditions
attached to the requirement.
Appeal from the Court of Claims.
This was an action brought by the Union Pacific Railroad Company
against the United States to recover compensation alleged to be due for
services rendered from Jan. 1, 1870, to Sept. 30, 1877, in the transpor¬
tation of the mails over its road, and of the employes accompanying
them, who were charged with sorting, distributing, and delivering
them.
The United States traversed the petition of the company, and set up
a counterclaim for five per cent upon the amount of the net earnings
of the company's road from Nov. 6,1875, to Nov. 6,1877.
The Court of Claims was of opinion that the compensation for that
service was not to be determined by reference to the act of July 1,1803,
c. 120, but by the general laws regulating the compensation for similar
service by other railway companies. It therefore adjudged and decreed
as follows: That whereas the sum of $018,910.54 has been found to be
due to the claimant from the defendants for the services alleged in its
petition, of which it is entitled to recover a moiety, to wit, the sum of
$809,455.27, pursuant to the act of 2d July, 1804, c. 210; and whereas
the sum of $082,032.18 has been found to be due from the claimant to
the defendants on the matters alleged in their plea of counterclaim,—
therefore the said moiety of $309,455.27 be set off against and deducted
from the said sum found to be due the defendants, and the defendants
recover from the claimant the balance remaining, to wit, the sum of
$372,570.91.
The company thereupon appealed.
Mr. Sidney Bartlett for the appellant.
The Solicitor-General for the United States.
Mr. Justice Matthews delivered the opinion of the court.
The controversy in the Court of Claims related to the amount of com¬
pensation to which the Union Pacific Railroad Company is entitled for
182
DECISIONS OF THE SUPREME COURT.
postal services from Jan. 1, 1870, to Oct. 1,1877. The claim is based
upon the sixth section of the act of July 1, 1802, c. 120 (12 Stat. 489),
which reads as follows:—
u SECT. 0. And be it further enacted, that the grants aforesaid are
made upon condition that said company shall pay said bonds at matu¬
rity, and shall keep said railroad and telegraph line in repair and use,
and shall at all times transmit dispatches over said telegraph line, and
transport mails, troops, and munitions of war, supplies, and public
stores upon said railroad, for the government, whenever required to do
so by any department thereof, and that the government shall at all
times have the preference in the use of the same for all the purposes
aforesaid (at fair and reasonable rates of compensation, not to exceed
the amounts paid by private parties for the same kind of service); and
all compensation for services rendered for the government shall be
applied to the payment of said bonds and interest until the whole
amount is fully paid."
The contention on the part of the appellant is, that this section of the
statute is a contract between the government and the company, whereby
the former bound itself to furnish the employment specified, and the
latter to render the corresponding services; that this contract has not
been abrogated or modified by subsequent legislation, and regulates
the rate of compensation for the services rendered during the period
named; that the agreed rates of compensation are to be equal to those
paid by private parties for the same kind of service; and that the com¬
pensation received by the appellant from private parties for the trans¬
portation of matter in express cars furnishes the true standard of that
comparison.
We have no hesitation in conceding that the section quoted consti¬
tutes a contract between the United States and the railroad company;
but we are unable to find in it an absolute obligation on the part of
the government to employ the railroad in the described services. It
reserves the right so to do at its option; but it does not stipulate that
it will do so.
On this point we agree with the opinion of the Court of Claims, and
adopt its language, as follows:—
"The section means, we think, that the company shall transport the
government's mails, munitions, troops, &c., whenever required so to do,
and that the government at all times shall have the preference over
private parties; but that the transportation in all cases shall be done
at fair and reasonable rates, which in no case (of preference or other¬
wise) shall exceed the rates paid by any private party for the same kind
of service, while in all cases, even where the ordinary rates are fair
and reasonable, per se, the government shall have the benefit of those
exceptional reductions of rate which railroads frequently make, some¬
times as a matter of policy and sometimes as a matter of favor."
But it is contended on the part of the government that this contract
does not apply to the services, the compensation for which is in ques¬
tion, because prior to the time when they were rendered it had been ter¬
minated by subsequent legislation. The legislation which it is claimed
has that effect is embraced in tit. 46, c. 10, Bev. Stat., sects. 3997-4005,
inclusive, regulating the subject of the railway postal service.
Section 4002, Eev. Stat., fixes a scale of maximum rates, graded
according to the average weight of the mails carried, according to
which the Postmaster-General is authorized and directed to readjust
the compensation thereafter to be paid for the transportation of mails
on said railroad routes. And it was in accordance with a readjustment
DECISIONS OF THE SUPREME COURT.
183
based on these rates that, in the present case, the government insisted
that the appellant was bound to conform its claims, and the Court of
Claims so adjudged.
Section4001 provides that " all rail way companies to which the United
States have furnished aid by grant of lands, right of way, or otherwise,
shall carry the mail at such prices as Congress may provide; and until
such price is fixed by law, the Postmaster-General may fix the rate of
compensation."
The substance of this provision, as is pointed out by the counsel for
the appellant, first appeared in the act of Sept. 20, 1850, c. 61 (9 Stat.
406), granting the right of way and public lands to the State of Illinois,
in aid of the construction of the Central Railroad, said to be the first
land grant to aid in the construction of a railroad. The grant was
accompanied by the condition that the " United States mail shall at all
times be transported on said railroad, under the direction of the Post-
Office Department, at such prices as the Congress may by law direct."
All subsequent similar grants to such corporations were coupled with
the same condition. Prior to 1850, the legislation of Congress had
regard only to the transportation of the mails overrailways established
in the various States to which no government grants or subsidies had
been made; and it merely enabled the Postmaster-General to contract
for the service, if terms could be made with the corporations, and, if not,
to resort to the previous methods of transportation. The provision in
the sixth section of the act of 1862—the Pacific Railroad Act—is the
first of its kind. The clause in sect. 4001, authorizing the Postmaster-
General to fix the rate of compensation to land-grant roads, in the
absence of a price fixed by law, was first added to the general postal
legislation by sect. 214 of the act of June 5, 1872, c. 335 (17 Stat. 309),
which purports to be " An Act to revise, consolidate, and amend the
statutes relating to the Post-Office Department," and is substantially a
codification of the provisions of the law then in force relating to the
subject. From that act it was transferred into the Revised Statutes in
the form as quoted.
It is certainly true that these provisions, in their primary intention,
did not apply to the appellant, for it did not then exist; and when it
cameafterwards into being, by virtue of the act of 1862, it did so with
the special legislative contract in the sixth section of its charter, which
constituted it a land-grant railroad company, sui generis, differing
at least in that respect from those previously provided for; and these
diverse rules as to compensation for service rendered for the govern¬
ment continued thenceforth to coexist without conflict. No change of
a substantial character was made in the provisions enacted prior to 1862,
either by the consolidated act of 1872 or the Revised Statutes, and there
is not, therefore, any ground for the inference of a change of the legis¬
lative intention that might be drawn from a significant change of lan¬
guage. There is consequently no present inconsistency between the
existing provisions of the Revised Statutes, as applicable to the land-
grant roads within their purview, and the continued existence of the
contract contained in the sixth section of the appellant's charter.
The legislation referred to furnishes, therefore, no evidence of any
intention on the part of Congress to alter the relation between the
appellant and the government, established by the sixth section of the
act of 1862, and we are of the opinion that the company is entitled,
under its provisions, for the services rendered during the period cov¬
ered by the present claim, to fair and reasonable rates of compensation,
not to exceed the amounts paid by private parties for the same kind of
184
DECISIONS OF THE SUPREME COURT.
services. To wliat extent and upon what considerations Congress has
the power to make such change, under the reservations in the act, in a
case where it manifests an intention to do so, is a question which does
not ari^e in this suit, and has not been considered.
This conclusion cannot be reconciled with the view taken by the Court
of Claims, that the government, having the option under its contract
to employ the appellant or not in its postal service, had the right to pre¬
scribe the terms on which it would do so; that the sections referred to
in the Eevised Statutes contain the terms so prescribed, and that the
appellant, having performed the service with notice of the law, must
be taken to have assented to those terms, notwithstanding its protest,
in which it claimed the benefit of its contract as still in force. For the
ltevised Statutes, as we have found, do not apply, and, therefore, did
not alter the contract, and gave to the Postmaster-General 110 authority
to insist that it was not binding; and as the company, by its terms, was
bound to render the service, if required, its compliance cannot be
regarded as a waiver of any of its rights. The service cannot be treated
as voluntary, in the sense of submission to exactions believed to be
illegal, so as to justify an implied agreement to accept the compensa¬
tion allowed; for according to the terms of the obligation, which it did
recognize and now seeks to enforce, it had 110 option to refuse perform¬
ance when required. But it might perform, rejecting illegal conditions
attached to the requirement, and save all its rights. This it did.
In computing the amount of compensation to which it claimed to be
entitled, under its contract for the services performed, the appellant
insisted upon the adoption of the rates charged by it to private parties,
for goods carried in express cars, as beiug the only service of the same
kind, and so furnishing the criterion of its compensation. In the agreed
statement of facts two other modes of computation were introduced:
one, including with express matter, cars transporting fruit, fish, and
perishable articles hauled in passenger trains; the other, adopting the
charges upon the latter, exclusive of the express matter, as furnishing
alternatives for the judgment of the court in determining the amount
due according to the contract.
Viewed as a question of law, it is impossible to say that either of these
rules of computation is the true one. The question is, what is a fair
and reasonable rate of compensation? and, in reference to that, we
adopt the opinion of the Court of Claims, as thus expressed:—
" Construing the statute as we do, we think the court would not be
limited, in an action where it was compelled to estimate damages, to
the rates charged by the company to private parties for a single kind
of similar service. We think that a court or jury would be authorized
to look over the entire field of service in determining what was a fair
and reasonable charge for a kind which was similar to. but not identi¬
cal with, any other. For instance, if it should appear that the receipts
of passenger cars were less than the receipts of postal cars, and the
cost and running expenses no greater, we are inclined to think that that
fact might be a proper element in the problem of estimating the amount
of ' fair and reasonable rates of compensation.' The reports of the
auditor of railroad accounts show what rates of compensation the claim¬
ant has received for passenger cars, but in the determination of the case
we do not feel at liberty to go outside of the agreed statement of facts
upon which it was submitted."
The case was not submitted to the Court of Claims in a way to enable
it to determine the question of fact; and upon a retrial, if the parties
do not agree upon the amount or upon the rule of computation, the
DECISIONS OP THE SUPREME COURT.
185
compensation, at fair and reasonable rates, must be determined upon a
consideration of all facts material to the issue, not to exceed the amounts
paid by private parties for the same kind of service.
It will be just and necessary to include in that estimate and finding
an allowance for compensation for the transportation of mail agents and
clerks: not, however, as a separate item of service, to be paid for, neces¬
sarily, at the rates which might reasonably be charged if that were the
whole; but as a part of and incident to the entire service rendered in
the transaction of the postal business required by the government, for
which, as an entirety, the compensation should be made, at fair and
reasonable rates, according to, and subject only to, the limitation
required by the sixth section of ihe act of 1862.
To this end, for the reasons assigned, the judgment of the Court of
Claims will be reversed, and the cause remanded with instructions to
proceed therein in conformity with this opinion; and it is so ordered.
Western Pacific Railroad Company & Another v. United
States.
(108 u. s„ 510.)
appeal from the circuit court of the united states for the
district of california.
Practice—Public Lands.
In a suit brought by a District Attorney of the United States to set aside a patent
conveying public lands, objection was taken in this court that it does not suffi¬
ciently appear that the suit was brought under authority from the Attorney-
General : Held, That, the objection not having been taken below, the fact of such
authority could be inquired into and shown here.
On the evidence it appeared that the lands in question were mineral lands, and were
known to be such by the applicant for the patent, and agent for the railroad
company, at the time of the application. The patent was set aside.
The bill was filed in the court below in February, 1877. Hearing was
had on the evidence, and in June, 1878, a decree was rendered setting
aside the letter patent as "issued by mistake and without authority of
law." The bill did not disclose any authority from the attorney-general
to bring the suit, nor was such authority shown in the court below, nor
was any objection taken for the want of the averment or the proof of
such authority. The controversy below, upon the facts, was in regard
to the character of the lands, whether mineral or not; and, upon the
law, in regard to the effect of the acts of the agents of the United
States upon the patentee's title. The defendants below appealed from
the decree.
Mr. Henry Beard for the appellants.—I. It does not appear in the
pleadings or decree that the United States, by its atlorney-general,
authorized the filing of the bill in this cause. This should have been
averred in the bill. United States v. Throckmorton, 98 U. S. 61.—II.
The lands in question were not mineral lands within the meaning of
that term as defined by acts of Congress. In the act of July 20th,
1866, 14 Stat. 251, c. 262, § 2, mineral lands are defined as "a vein or
lode of quartz, or other rock in place, bearing gold, cinnabar, or cop¬
per," in the act of July 9th, 1870, 16 Stat. ch. 217, 235, § 12, they are
described as "valuable mineral deposits in lands," and in Rev. Stat.
§ 2318, as " lands valpable for minerals." The lands in question were,
in the regular administration of the land laws, surveyed and ascer-
186
decisions of the supreme court.
tained to be non-mineral lands, and patented as such. A second sur¬
vey, after the United States has parted with the laud, is inoperative
to affect the patent.—III. The third point discusses the evidence.
Mr. Assistant Attorney-General Maury for the United States discussed
the evidence, and presented the following letter from the attorney-
general directing the commencement of suit.
"Department of Justice,
"Washington, January 17th, 1877.
"John M. Coghlan, U. S. Attorney, San Francisco, California.
"Sir,—I enclose a copy of a letter of the 16th instant, addressed to
me by the Secretary of the Interior, and the enclosures therewith,
to wit: A copy of the report to the Secretary by the Commissioner of
the General Land Office, and a copy of a letter of March 14th, 1874,
addressed by the then commissioner to the register and receiver at San
Francisco.
"As requested by the Secretary, you will cause legal proceedings to
be instituted to vacate the patent to the Western Pacific Company of
California for the X. E. one-fourth of section 29, T. 1 X., It. 1 E., Mount
Diabolo meridian.
"Very respectfully,
"Alphonso Taft,
"Attorney-General."
Mr. Justice Miller deliverd the opinion of the court.
John M. Coghlan, district attorney of the United States for the Dis¬
trict of California, on behalf of the United States, brought the bill in
this case in the circuit court of that district against the Western Pacific
Eailroad Company and Charles McLaughlin to set aside a patent of
the United States conveying to the railroad company the northeast
quarter of section 29, township one (1) north, range one (1) east, of
Mount Diabolo meridian.
This patent was made under the acts of Congress granting lands to
the Union Pacific, Central Pacific, and Western Pacific Eailroad Com¬
panies, to aid in building a road from the Missouri Eiver to the Pacific
Ocean.
The acts of Congress granted to each company the alternate sections
within certain limits on each side of its road, and authorized the issue
of patents for the same when the work was done and the sections
ascertained. But they excepted out of this grant, among others, such
sections or parts of sections as were mineral lands.
The bill in this case alleges, as the reason for vacating and setting
aside the patent, that the quarter-section in question is mineral land,
that it was so at the time of the grant, and was known to be so when
the patent issued, which was so issued without authority of law by
inadvertence and mistake.
The patent itself is not in the record as an exhibit, or as part of the
evidence. The Western Pacific Eailroad Company, to whom it was
issued, though made defendant in the bill, was not served with the
subpoena and did not appear. McLaughlin, the only defendant who
did appear, defends as purchaser two degrees removed from the com¬
pany. Instead of a general replication to McLaughlin's answer, the
reply is an amendment to the original bill.
The whole record is so imperfect and the case sq obscurely presented,
that we feel tempted to dismiss it.
DECISIONS OF THE SUPREME COURT.
187
Waiving, however, these objections, there is enough to enable us to
consider the two principal errors assigned by appellant.
The first of these is that there is no sufficient evidence that the suit
was instituted under the authority of the Attorney-General, according
to the principle established in the case of United States v. Throclanorton,
98 TT. S. 61.
To this it may be answered that the objection was not raised in this
case in the court below, as it was in that; that the case is argued in this
court on behalf of the government by the Assistant Attorney-General,
who files in the court a certified copy of the order of the Attorney-
General directing the district attorney to bring the suit in the circuit
court, as requested by the Secretary of the Interior.
We think the decree of that court, under these circumstances, can
hardly be reversed now, on this ground, taken here for the first time.
The other objection to the decree in favor of the United States is that
the evidence does not establish as a fact that the land in controversy
was mineral land when the patent issued.
An examination of the evidence on this subject convinces us that
the circuit judge was right in holding that it was. It is satisfactorily
proven, as we think, that cinnabar, the mineral which carries quick¬
silver, was found there as early as 1863, that a man named Powell
resided on the land and mined this cinnabar at that time, and in 1806
established some form of reduction works there; that these were on
the ground when application for the patent was made by defendant
McLaughlin, as agent of the Western Pacific Eailroad Company, and
that these facts were known to him. He is not, therefore, an innocent
purchaser. Concurring as we do with the circuit court in the result
arising from the evidence, we do not deem it necessary to give in this
opinion a detailed examination of it.
This being the first case of the kind in this court, a class of cases
which may possibly be indefinitely multiplied, it is to be regretted that
it was not more fully presented in the circuit court. Many interesting
questions might arise in this class of cases not proper to be considered
in this case. For instance, the nature and extent of mineral found in
the land granted or patented which will bring it within the designation
of mineral land in the various acts of Congress, in which it is excepted
out of grants to railroad companies and forbidden to be sold or pre¬
empted as ordinary or agricultural lands are.
Suppose that when such land has been conveyed by the government
it is afterwards discovered that it contains valuable deposits of the
precious metals, unknown to the patentee or to the officers of the gov¬
ernment at the time of the conveyance, will such subsequent discovery
enable the government to sustain a suit to set aside the patent or the
grant? If so, what are the rights of innocent purchasers from the
grantee, and what limitations exist upon the exercise of the govern¬
ment's right? We can answer none of these questions here, and can
only order that the decree below be affirmed.
188
DECISIONS OF THE SUPREME COURT.
Sioux City & Pacific Eailroad Company v. United States.
(110 T7. S., 205)
in error to tiie circuit court of the united states for
the district of iowa.
Submitted December 18th, 1883.—Decided January 21st, 1884.
Internal Revenue—Land Grant Railroads—Statutes—Taxation.
Under tlie act of July 1st, 1862, 12 Stat. 492-3, and the acts in addition to it, plain¬
tiff in error received from defendant in error subsidy bonds, which were made
by statute a lien upon its road: Held, That, in a suit to collect an internal rev¬
enue tax on the undivided net earnings of the road, carried to a fund or to con¬
struction account, the plaintiff was not entitled to have the interest upon these
bonds deducted from its net earnings before settling the amount to be subject to
the tax; but that the amount of that interest, if earned and carried to a fund or
charged to construction, was taxable.
Suit to recover an internal revenue tax on the undivided net earn¬
ings of the plaintiff's railroad. Defence that the company was not
subject to the tax to the extent of tlve interest on the subsidy bonds
issued to it under the act of July 1st, 1802, 12 Stat. 489, ch. 120.
Mr. E. S. Bailey for plaintiff in error.
Mr. Solicitor-General for defendant in error.
Mr. Justice Bradley delivered the opinion of the court.
This was an action brought by the United States against the Sioux
City & Pacific Eailroad Company to recover certain arrears of taxes
alleged to have accrued from November, 1808, to September, 1871,
inclusive. The first count of the declaration states that for the eleven
months ending September 30th, 1808, the gross receipts of the company
from passengers were $51,780.12, on which it became liable to pay a
tax of 2£ per cent., or $1,294.55; and that the undivided net earnings
of the company for the same period, which were carried to the con¬
struction fund or account, were $43,889.39, on which the company
became liable to pay a tax of 5 per cent., amounting to $2,194.41; that
the company paid the tax on gross receipts, but refused to pay the tax
on net earnings carried to construction account. Three other counts
for the following years showed an aggregate arrearage (including that
stated in the first count) of over $11,000. Tl\ere were four other counts
for penalties, to which the statute of limitations was pleaded, and
which are not the subject of controversy. Issue being taken on the
first four counts, the parties entered into a stipulation for the purpose
of showing the precise matter in dispute.
This stipulation, after stating the title of the cause, was as follows:
"The parties to the above-entitled action hereby stipulate to waive a
jury on the trial thereof. For the purpose of the trial of this action
the following facts are admitted:
"1. All the material facts alleged in the first count of the petition
are true, subject to the following statement and exception, to wit: The
amount of interest accrued during the period mentioned in said count
on the subsidy bonds (so-called) issued by the United States to said
defendant in pursuance of the act of Congress entitled 'An Act to aid
in the construction of a railroad and telegraph line from the Missouri
Biver to the Pacific Ocean, and to secure to the government the use of
DECISIONS OF THE SUPREME COURT.
189
the same for postal, military, and other purposes,' approved July first,
1802, and the amendments thereto, was the sum of thirty-six thousand
dollars ($36,000). If the said sum of $36,000 is subject in law to be
deducted from the gross receipts of the defendant in order to ascertain
the uet earnings thereof for the period named, then the amount of the
net earnings liable to a tax of five per cent, is the sum of seven thou¬
sand eight hundred and eighty-eight and &-0 dollars ($7,888.39), and
the tax on the same is three hundred ninety-four and ^ dollars
($394.41), instead of the sum of $2,194.41, as claimed in said count."
Similar admissions were made with regard to the other counts, and
the stipulation concluded as follows:
"If the court is of the opinion that the interest which accrued on the
said subsidy bonds for the several periods named is subject to be
deducted from the gross receipts in order to ascertain the net earnings,
then the plaintiff is entitled to recover—
On the first count only $394 51
On the second count only 52 60
On the third count only 1,434 37
And on the fourth count 221 81
Total $2,103 29
"But if, on the other hand, the court should be of the opinion that
the said interest accrued on said bonds is not subject to be deducted,
the plaintiff is entitled to receive—
On the first count $2,194 51
On the second count 3,944 77
On the third count 3,416 23
• On the fourth count 22181
Making a total of $9,777 32
Upon this state of facts, the court gave judgment for the latter sum,
and the company has brought this writ of error to review said
judgment.
We think that the judgment was right. The accruing interest on the
subsidy bonds loaned by the government to the company, is payable by
the company at a future day, to wit, at the maturity of the bonds; and
if a sufficient amount of the company's annual net earnings is laid
aside (as it should be) to meet that interest when it shall become due,
the amount so laid aside would be directly within the scope of the
Internal Revenue Act, as it stood when the net earnings in question
arose. The 122d section of that act, as amended in 1866, imposed a
five per cent, tax, not only on all payments of interest due on bonds
and on all dividends declared by any railroad or canal company, but
also on "all profits of such company carried to the account of any
fund, or used for construction." The profits here referred to are the
profits arising from the operation of the road or canal, without deduc¬
tion of interest paid to its bondholders or dividends paid to its stock¬
holders, and correspond to the phrase "net earnings" used in the stipu¬
lation of the parties in this case. Union Pacific Railroad Company v.
United States, 99 U. S. 402. The expression in the act, "Profits carried
to the account of any fund," would cover the exact case here if any
portion of such net earnings had been carried to a fund created for
meeting the interest to be paid on the subsidy bonds. It is very clear,
therefore, that whether the whole of said net earnings were carried to
construction account (as admitted in the stipulation) or a part of it
190
DECISIONS OF THE SUPREME COURT.
were carried to account of sucli accruing interest fund, it would be
expressly taxable by the Internal Revenue Act.
The same result, we think, would have followed had the interest in
the subsidy bonds been payable by the company semi-annually as it
fell due; for although the words of the Internal Kevenue Act, as that
act stood when the transactions in question occurred, 14 Stat. 138,
imposed the live per cent, tax upon interest due and payable by a rail¬
road or canal company only where such company was indebted for
"money for which bonds or other evidence of indebtedness have been
issued, payable in one or more years after date, upon which interest is
stipulated to be paid, or coupons representing the interest;" which
words may be regarded as literally referring only to "bonds or other
evidence of indebtedness" issued by the company itself; yet, if the
company had been obliged to pay the interest accruing on the subsidy
bonds semi-annually as the same fell due, said bonds would have been,
in effect, the bonds "or other evidence of indebtedness" of the com¬
pany. Though in form government bonds, the subsidy act makes them
a mortgage lien on the property of the company, and ultimately pay¬
able by the company, principal and interest, 12 Stat. 493, 598; and if
an obligation had been imposed by the statute to pay both principal
and interest as they respectively fell due, it would have made them
substantially and in effect the bonds of the company, and fairly taxable
under the Internal Kevenue Act.
Be this, however, as it may, it is clear that where, as in the present
case, the interest is to be provided for by a fund, in the nature of a
sinking fund, to be laid by for the purpose, the case comes within the
express terms of the Internal Revenue Act; and no deduction of such
accruing interest cau be made from the taxable net earnings of the
company.
The judgment of the circuit court is affirmed.
Union Pacific Railway Company v. United States.
(116 U. S., 154.)
original motion in a case pending in this court on appeal
from the court of claims.
Argued December 7, 1885.—Decided December 21, 1885.
There is nothing in Rev. Stat. § 5261, authorizing certain railroad companies to bring
suits against the United States in the Court of Claims to recover the price of
freight or transportation, which takes those suits out of the operation of the
general rules of this court regulating appeals from the Court of Claims, or which
makes it proper for this court to require the Court of Claims to send up with its
findings of facts the evidence in regard to them.
When the Court of Claims, on being requested by a party in a cause there pending
to find specifically upon several facts which are only incidental facts and amount
only to evidence touching the main facts in issue, and the court disregards the
requests and finds the facts at issue generally, and judgment is entered, and the
party whose request was denied appeals, this court will not remand the case to
the Court of Claims, with directions to specifically pass upon each of said
requests, or to make a finding of facts on the subject embraced in each of said
requests.
This was a motion made in a case appealed from the Court of Claims,
to require that court to send up the evidence, or to specifically find on
certain requests for findings made by one of the parties, and not passed
upon specifically and in detail by the court. The facts are stated in
the opinion of the court.
decisions of the supreme court.
191
Mr. John F. Billon for the motion.
Mr. Solicitor-General opposing.
Mb. Chief Justice Waite delivered the opinion of the court.
This suit was brought by the Union Pacific Railway Company
against the United States under Rev. Stat. §§ 52G0 and 52G1, to recover
among other things the price of the transportation of mails by the com¬
pany in accordance with the requirements of its charter. These sec¬
tions are as follows:
"Sec. 52G0. The Secretary of the Treasury is directed to withhold
all payments to any railroad company and its assigns on account of
freights or transportation over their respective roads of any kind, to
the amount of payments made by the United States for interest upon
bonds of the United States issued to any such company, and which
shall not have been reimbursed, together with the five per centum of
net earnings due and unapplied, as provided by law.
" Sec. 5261. Any such company may bring suit in the Court of Claims
to recover the price of such freight and transportation; and in such
suit the right of such company to recover the same upon the law and
the facts of the case shall be determined, and also the rights of the
Uuited States upon the merits of all the points presented by it in
answer thereto by them; and either party to such suit may appeal to
the Supreme Court; and both said courts shall give such cause or
causes precedence of all other business."
One of the principal controversies in the case was as to what would
be "fair and reasonable rates of compensation" for such transporta¬
tion, " not to exceed the amount paid by private parties for the same
kind of service." When the case was here on a former appeal, this
court, adopting the ruling of the Court of Claims, said that it would
be proper " to look over the entire field of service in determining what
was a fair and reasonable charge for a kind which was similar to, but
not identical with, any other. For instance, if it should appear that
the receipts of passenger cars were less than the receipts of postal cars,
and the costs and running expenses no greater, we are inclined to think
that that fact might be a proper element in the problem of estimating
the amount of fair and reasonable rates of compensation." And we
also said that, "upon a retrial, if the parties do not agree upon the
amount or upon the rule of computation, the compensation, at fair and
reasonable rates, must be determined upon a consideration of all facts
material to the issue, not to exceed the amounts paid by private parties
for the same kind of service." Union Pacific Railroad Co. v. United
States, 10t U. S. GG2, GG7. Accordingly, when the case went back, evi¬
dence was offered to show:
1. What the public paid for express service, and the similarity of
this service in its nature and cost to the mail service;
2. The earnings per car of the cars employed in the passenger serv¬
ice;
3. What the company charged and the public paid per pound for
carrying extra baggage;
4. What the compauy charged and the public paid for carrying first-
class freight on passenger trains, and how much more it was worth to
carry the same class of matter in passenger trains; and
5. That connecting roads allowed the company on through-business
fifty per cent, more than they themselves received, and the reason for
such allowance.
192
DECISIONS OF THE SUPREME COURT.
The motion papers also show that, before the first trial of the cause,
a stipulation was entered into by the parties agreeing on the amount
due the company for mail service, in case one or another of several
proposed rules for estimating the price should be adopted by the court.
Before the trial began the court was requested to tiud specifically
the facts as to the several kinds of service about which evidence had
been furnished, and the nature, extent, and character of the mail serv¬
ice. The court did not comply with this request, but found generally
that " the amounts allowed and retained by the Treasury Department
for transportation of mails . . . are a fair and reasonable compen¬
sation for the service, and not in excess of the rates paid by private
parties for the same kind of service," and gave judgment accordingly.
The case is now here on appeal by both parties, and the railroad com¬
pany has moved that the Court of Claims be directed " to send up to
this court the entire record in said case, including the interlocutory
rulings, and all the evidence on which the case was heard," or, if that
cannot be done, that the case be remanded with instructions to " spe¬
cifically pass upon, affirmatively or negatively, each of said requests,
or make a finding of facts on the subject embraced in each of said
requests," and that the court be directed to incorporate in the record
the stipulation already referred to, and a certain letter mentioned and
set out in the motion papers.
So far as the first branch of the motion is concerned, it must be
denied on the authority of McClnrc v. United States, just decided, ante,
14o. There is nothing in the statute under which this suit was brought
to show an intention by Congress to allow any other appeal to this
court than such an one as is given by the statute conferring general
jurisdiction on the Court of Claims. The suit is to be at law and not
in equity. The recovery is to be " upon the law and the facts of the
case," but that is no more than is required in every suit at law or in
equity. Under our rule the facts are to be settled by the Court of
Claims, and an appeal brings up for review only the decisions of that
court upon questions of law arising in the course of the trial or in the
application of the law to the facts as finally found. There is nothing
unusual in this. In an ordinary suit at law the facts are settled in the
trial court, and only questions of law are carried to the appellate court
for review. Upon writs of error we hear the case only 011 findings of
fact or exceptions to rulings of the court in the progress of the trial.
Generally, in suits at law there is but one trial upon questions of fact.
The second branch of the motion is also covered by the decision in
McClure's case. The special findings which were requested and refused
related to mere incidental facts which amounted only to evidence, and
were therefore inadmissible as part of the record to be sent here. The
Francis 11 'right, 105 U. S. 381. They were in reality nothing more
than requests for a finding of what the evidence was. The parties
seem to have followed the suggestion on the former appeal, and, after
looking over the entire field of service, they brought in everything
which, in their opinion, could be of use to the court in determining what
would be a reasonable compensation for the service rendered, subject
to the requirement of the statute that it should not be more than was
paid to private parties for the same kind of service. The question to
be determined was one of fact, as much so as the amount of recovery
in any action quantum meruit. A conclusion could only be reached by
considering all the testimony, weighing the facts, and estimating their
comparative v#due as evidence. This presented in no just sense a
question of law. Every fact that was proven according to the motion
DECISIONS OF THE SUPREME COURT.
193
was simply evidence, and as evidence had performed its entire office
when the facts were found. It has no place in the record which is to
come here for review.
The motion is denied.
Union Pacific Railway Company v. United States.
United States v. Union Pacific Railway Company.
(117 U. S., 355.)'
appeals from the court of claims.
Argued January 26,1886.—Decided March 29,1886.
Section 6 of the act of July 1, 1862, in aid of the construction of the railroads to the
Pacific, required them to transport mails, troops, supplies, etc., for the govern¬
ment "at fair and reasonable rates of compensation, not to exceed the amounts
paid by private parties for the same service." The Union Pacific Railway Com¬
pany filed its petition in the Court of Claims, setting forth the performance of
such services for the government and its charges for the same, and averring that
the several amounts were according to rates fixed by it both as respects the
government and the public, which were fair and reasonable, and not exceeding
the amounts paid by private parties for the same kind of service. The govern¬
ment denied the reasonableness of the rates, and averred that less amounts
allowed by it were fair and reasonable. The Court of Claims, after hearing
proof, found "that the amounts allowed and retained by the Treasury Depart¬
ment for transportation of mails as aforesaid, are a fair and reasonable compen¬
sation for the service and not in excess of the rates paid by private parties for
the same service." Held: That this was a proper form of finding.
The provisions of § 6 of the act of July 1, 1862, respecting rates for transportation
done by the Union Pacific Railwsty Company for the United States, govern such
transportation over its bridge between Council Bluffs and Omaha.
The service rendered by a railway company in transporting a local passenger from
one point on its line to another is not identical with the service rendered in
transporting a through passenger over the same rails.
The findings in this case were before the court on a motion for a cer¬
tiorari, reported in 116 IT. S. 402. After that motion was denied the cause
came on for hearing and decision on the merits. The case is stated in
the opinion of the court.
Mr. John F. Billon for The Union Pacific Railway Company.
Mr. Solicitor General for the United States.
Mr. Justice Matthews delivered the opinion of the court.
In the case of Union Pacific Railroad Company v. United States, 104
U. S. 662, on appeal from the Court of Claims, it was decided that the
railroad company, by virtue of the sixth section of the act of July 1,
1862, ch. 120, 12 Stat. 489, 493, was entitled to be paid by the govern¬
ment for services rendered in the transportation of the mails over its
road, and of the employes accompanying them, compensation at fair
and reasonable rates, not to exceed the amounts paid by private parties
for the same kind of service, and not such rates as were or might be
prescribed by general laws regulating the compensation for similar
service by other railway companies; and for the purpose of ascertain¬
ing and awarding the amount due for such services as had been rendered,
and for which the suit had been brought, the judgment was reversed
and the cause remanded to the Court of Claims.
In that court the cause was consolidated with two others between
the same parties, having similar objects, and an amended petition was
substituted, in which The Union Pacific Railway Company was plaintiff,
13 PAC
194
DECISIONS OF THE SUPREME COURT.
that being the name of the consolidated corporation composed of The
Union Pacific Railroad Company, The Kansas Pacific Railway Com¬
pany, and The Denver Pacific Railway and Telegraph Company. In
that petition the plaintiff alleged claims against the government for
compensation for transportation of troops, mails, munitions of war,
supplies, public stores, passengers, mail agents and clerks, and the
transmission of dispatches, the details of which were set out in schedules
attached thereto. Of these the sum of $3,7C8,5(18.00 was alleged to
have accrued for services rendered by the Union Pacific Railroad Com¬
pany prior and up to June 30,1878, one half of which, it was admitted,
should be retained by the government and applied, as required by sec¬
tion 5 of the act of July 2,1864, to the payment of the bonds issued by
the United States in aid of the construction of the road; an additional
sum of $1,415,415.25 was claimed to be due and payable in cash, for
services rendered by the Kansas Pacific Railway Company for similar
services, and the further sum of $04,206.20 for like services rendered
by the Denver Pacific Railway and Telegraph Company.
It was also averred that the several amounts charged for the services
so performed were according to the rates therefor which the railroad
company had determined and fixed, both as respects the government
and the public, and of which the government and the several depart¬
ments were duly notified, which rates were fair and reasonable, and not
exceeding the amounts paid by private parties for the same kind of
service.
The United States filed an answer to this complaint denying gener¬
ally all its allegations, and with it a counter claim for the recovery of
the sum of $11,500,000, alleged to be due, as follows: $1,000,000,being
five per centum on the net earnings of the Kansas Pacific Railway
Company on the subsidized portion of its road from November 2, 1868,
to December 31, 1882; $1,500,000, being five per centum of the net
earnings of the Union Pacific Railroad Company from November 6,1875,
to June 30, 1878; and $9,000,000, as being twenty-five per centum of
the gross earnings of the Union Pacific Railroad Company from June
30, 1878, to December 31, 1882, after deducting the necessary expenses
actually paid within the year in operating and keeping the same in a
state of repair, and also the sum paid within the year in discharge of
interest on the iirst mortgage bonds.
To this counter claim the plaintiff' answered, in substance, that the
twenty-five per centum of the earnings referred to were required by
law to be paid into a sinking fund for the benefit of the plaintiff, and
to be used in liquidation of its obligations; that the amount so to be
paid is such a sum, not exceeding the sum of $850,000 iu any one year,
as, added to the amount earned by the company for transportation for
the defendants, will amount to twenty-five per centum of the net earn¬
ings of said company, no money being required to be paid into said
sinking fund uidess the compensation for transportation shall not equal
twenty-five per centum of said net earnings; that during the period
mentioned in the counter claim, to wit, from June 30,1878, to December
31,1882, the United States became and is still indebted to the plaintiff,
on transportation account, in the sum of $7,158,166.06, as shown in
schedules exhibited, one-half of which amount, $3,579,083.03, is appli¬
cable to bond and interest account, and the other half to the sinking
fund account, which said last mentioned sum is equal to and a full sat¬
isfaction of all the demands of the defendant and of the obligation of
the plaintiff to pay the said twenty-five per centum of its net earnings
during the said period.
DECISIONS OF THE SUPREME COURT.
195
On these issues the Court of Claims ascertained from the evidence
the facts in dispute, which are set forth in special findings, and on
these findings its conclusions of law, that the plaintiff is entitled to be
paid, on account of the matters set forth in the claim, the sum of
$2,910,124.08; that the defendants, on account of the counter claim, are
entitled to be paid the sum of $4,487,807.39; and that the United States
are consequently entitled to judgment for the difference, amounting to
$1,577,083.31, and judgment was so entered.
The United States appealed from so much of this judgment as allowed
to the plaintiff the sum of $2,910,124.08 on its claim.
The plaintiff appealed from the whole judgment.
And the case is now here for determination of these cross-appeals.
The only question of law made upon its appeal by the plaintiff below
is, that the Court of Claims failed in its finding of facts as to compen¬
sation claimed for transportation of the mails to meet the actual issue
made by the pleadings. This issue, it is said, was an affirmation on the
part of the plaintiff, and a denial on the part of the defendant, that
the rates of transportation fixed and determined by the railway com¬
pany, of which notice had been given to the proper department of the
government, were fair and reasonable, and not in excess of what was
paid by private parties for the same kind of service; whereas the find¬
ing of tact by the Court of Claims was, "that the amounts allowed and
retained by the Treasury Department for transportation of mails, as
aforesaid, are a fair and reasonable compensation for the service, and
not in excess of the rates paid by private parties for the same kind of
service." A distinction is thus sought to be made between a quantum
meruit, ascertained according to the rate prescribed by the act, and
rates determined and fixed in the first instance by the railway company,
not to be disturbed if they are found not to be in excess of the limit
prescribed by the statute.
But, as it seems to us, this is a distinction without a difference. It is
quite immaterial whether the amount actually found to be due for trans¬
portation of the mails, "at fair and reasonable rates of compensation,
not to exceed the amounts paid by private parties for the same kind of
service," as required by the sixth section of the act of July 1, 1862, is
ascertained upon evidence comparing them with the rates previously
determined and fixed by Die company, or with those allowed by the
accounting officers of the Government. The only material thing is to
adjudge what is due according to the rule prescribed by the statute.
That the Court of Claims has done. In doing so, it has virtually
decided the point of the issue; for if the company has charged rates
producing a different amount, they are thereby declared not to be lair
and reasonable, because whatever differs from the amount found by the
court to answer this description cannot be supposed to fulfil it. There
cannot be two differing rates for such compensation which will both
correspond with the conditions prescribed by the act of Congress.
We come now to consider the appeal of the United States.
The first question arising upon this appeal relates to the charges
which may be lawfully made to the Government for transportation
services over the bridge of the Union Pacific Ilailway Company between
Council Bluffs and Omaha. On this subject, the finding of the Court
of Claims is as follows:
"The company's uniform rate, during the time covered by this suit,
for the transportation of passengers between Council Bluffs and Omaha,
over its bridge and approaches, a distance of 3.97 miles, was 50 cents
each, which sum was included in the price of tickets sold for longer or
196
DECISIONS OF THE SUPREME COURT.
shorter distances. That was a fair and reasonable rate of compensa¬
tion to be paid by the defendants, and not in excess of the rates paid
by private parties for the same kind of service.
"The Treasury Department did not allow 50 cents for each passenger
so transported for the defendants, but in each case, ascertaining over
what railroad or public highway the passenger reached Council Bluffs
or Omaha, and the rate per mile paid by him over such part of said
railroad or public highway as he had thus travelled, the company was
allowed only the same rate per mile for transporting such passenger
between Council Bluffs and Omaha as he had so paid on the road lead¬
ing to the bridge. On the roads leading to said bridge the rates per
mile are different, and the rates on the same road differ according to
distance travelled.
"The difference between the amount so allowed by the Treasury
Department for the transportation of such passengers for the defendants
and that which the company should be allowed if it has a right to
charge 50 cents for each passenger so transported during the time
above specified, is $3G93.31.
" Similar rules were applied by the Treasury Department to the trans¬
portation of freight over said bridge, and the disallowance resulting
therefrom amounted to $10,885.34. The rate claimed by the company
for transportation of freight over said bridge was fair and reasonable,
and not in excess of the rates paid by private parties for the same kind
of service."
The contention of the Government in support of the allowances made
by the Treasury Department, thus adjudged to be insufficient, is based
on the act of February 24, 1871, ch. 07, 10 Stat. 430, under which it is
claimed the bridge was built, which provides that—
"Said bridge may be so constructed as to provide for the passage of
ordinary vehicles of travel, and said company may levy and collect
tolls and charges for the use of the same; and for the use and protec¬
tion of said bridge and property the Union Pacific Railway Company
shall be empowered, governed, and limited by the provisions of the
act entitled 'An Act to authorize the construction of certain bridges
and to establish them as post roads,' approved July twenty-five, eighteen
hundred and sixty-six, so far as the same is applicable thereto.'"
The act thus referred to is chapter 240 of 1800,14 Stat. 244, of which
section 3 is as follows:
"Any bridge constructed under this act, and according to its limita¬
tion, shall be a lawful structure, and shall be recognized and known as
a post-route, upon which, also, no higher charge shall be made for the
transportation over the same of the mails, the troops, and the munitions
of war of the United States, than the rate per mile paid for the transpor¬
tation over the railroads or public highways leading to the said bridge."
it is argued that this limitation, made by reference a part of the act
of 1871, applies to charges to be made by the Union Pacific Railway
Company for transportation over the bridge, considered as part of its
railway line, and supersedes the legislative contract contained in sec¬
tion six of the act of July 1,1802, whereby it was authorized to receive
compensation at fair and reasonable rates, not in excess of those charged
to private parties for similar service.
The Court of Claims held otherwise, and we think rightly. The
Omaha bridge of the Union Pacific Railway Company was not con¬
structed under the act of 1800. It was constructed under the original
acts incorporating the company—the acts of July 1, 1802, and of July
2,1804, and the act of February 24,1871; and the reference in the last-
DECISIONS OF THE SUPREME COURT.
197
named act to the act of 1SGG was for the purpose of extending the pro¬
visions of the latter, so far as necessary to confer additional powers
upon the railway company for the use and protection of the bridge, and
contains no evidence of any intent on the part of Congress to change
the rule as to rates of transportation over the line of the railway com¬
pany as prescribed by section six of the act of July 1,1862. In the case
of the Union Pacific Railroad Company v. Hall, 91 U. S. 343, it was
decided that the bridge in question became part of the railroad of the
company, and that the company was bound to run and operate its whole
road, including the bridge, as one connected and continuous line. The
bridge, therefore, as part of the railroad, became subject to the provi¬
sions of the act of July 1, 1862, as to the rates to be paid by the Gov¬
ernment for transportation service over it, and there is nothing in the
act of 1871 that changes the application of the rule fixing these rates.
The next question arising on the appeal of the United States relates
to items charged for the transportation of passengers, on account of
the Government, travelling between Council Bluffs and Ogden.
The finding of facts on the subject by the Court of Claims is as fol¬
lows :
" The company's uniform rate for the transportation of passengers
between Council Bluffs and Ogden, when said passengers purchase
tickets at either of those places, is $78.50 each; but, by contracts with
connecting railroad companies, the claimant receives from said compa¬
nies who sell through tickets at reduced rates from New York, San
Francisco, and other places over their own and the claimant's road, $54
only for each passenger carried between said Couucil Bluff's and Ogden
upon said through tickets, as its proportion of money paid for the whole
through distance.
"In computing the compensation set out in Finding IX. the Treasury
Department allowed the claimant only $54 for each passenger carried
for the defendants, when said passenger did not have a through ticket
over its own and other roads, but took the train at Council Bluff's or
Ogden upon an order from the defendants' authorized officers to proceed
over the road between those places at the charge of the Government.
"The difference between $54 allowed as aforesaid and $78.50 claimed
by the company for each passenger so transported by the claimant, is
$2855.38 for the period covered by this suit.
"The court finds that $78.50 is a fair and reasonable rate of compen¬
sation to be paid by the defendants for the transportation of a passenger
taking a train at Ogden or Council Bluffs and passing over the road
between those places, without a through ticket purchased of other
roads as aforesaid, and not in excess of the rates charged private par¬
ties for the same kind of service.
"In some instances the requisition for transportation presented to
the agents of the company stated on its face that the passenger was
bound from seaboard to seaboard, and in others the requisition furnished
no information on the subject.
" How much of the sum disallowed was for one and how much for the
other kind of requisition is not shown, but the company concedes the
reduction in the former cases."
The contention on the part of the United States is, that local passen¬
gers carried on its account between Council Bluffs and Ogden, shall be
carried at the same rates as are charged for through passengers passing
between those points, as part of a journey over the whole line, although
a difference is made in respect to all other persons. But the Court of
Claims has found as a fact that the amount found by it is based on
198
decisions of the supreme court.
rates between those points which are fair and reasonable, and not in
excess of those charged to private persons for the same service. We
cannot review this finding of fact, and no question of law arises upon
it, unless it be oue, whether the service rendered in transporting a local
passenger between the two points is in law identical with that rendered
in transporting a through passenger between the same points as part
of the transit over the distance of the whole line. This we cannot
a til rm.
As the United States did not appeal from that part of the judgment
of the Court of Claims finding the amount due on account of the counter
claim, no question arises thereon.
We find no error in the judgment, and it is accordingly affirmed.
United States v. Central Pacific Railroad Company.
(lis u. s., 235.)
appeal from the court of claims.
Argued April 29, 1886.—Decided May 10, 1886.
The act of July 1, 1862, "to aid in the construction of a railroad and telegraph line
fi om the Missouri River to the Pacific Ocean," 12 Stat. 489, and the act of July 2,
1864, 13 Stat. 356, amending the same, and the act of May 7, 1878, 20 Stat. 56,
commonly called the Thnrman act, are in pari materia and to he construed
together; and so construed the act of May 7, 1868, restores provisions of the act
of 1862 respecting retention of compensation for services performed by the rail¬
roads for the United States which had been changed by the amendment of 1864,
and requires the Treasury to withhold all payment for services performed on the
roads constructed by the aid of government grants, but not on roads owned or
operated by the same companies which were not constructed with such aid.
When a contract is open to two constructions, the one lawful aud the other unlaw¬
ful, the former must be adopted. Hobba v. McLean, 117 U. S. 567, affirmed.
Mr. Solicitor General for appellant.
Mr. John F. Dillon and Mr. Joseph E. MacDonald for appellee.
Mr. Justice Woods delivered the opinion of tlie court.
The appellee, the Central Pacific Railroad Company, brought this
suit, in the Court of Claims, against the United States, to recover com¬
pensation for services rendered the United States in transporting per¬
sons and freight over those parts of its railroad in the building of which
it had not been aided by the government. The United States demurred
to the petition on the ground that it did not allege facts sufficient to
constitute a cause of action. The demurrer was overruled and judg¬
ment rendered in favor of the claimant for the sum demanded. From
that judgment the United States have brought this appeal.
The appellee alleges in its petition that it was originally incorporated
on June 118, 18111, under the laws of the State of California; that, with
the aid of the grant of lands in alternate sections, and of bonds of the
United States issued to it under the acts of Congress approved July 1,
1802, and July 2,1804, it built, either directly or indirectly, aud became
the owner of, eight hundred and sixty-five miles and sixty-six hundredths
of a mile of railroad. In addition to this line of road, the construction
which was so aided by the United States, the appellee, during the period
covered by the petition, controlled and used 383.67 miles of railroad,
acquired by consolidation with other companies, and 1791.35 miles of
railroad leased by it from other companies, making 2175.02 miles, all of
DECISIONS OF THE SUPREME COURT.
199
which had been constructed without any aid from the United States
under the said acts of Congress. The petition demanded pay for serv¬
ice of transportation rendered the United States over the 2175.02 miles
of railroad which had been so constructed without their aid.
The contention of the United States was that they were justified in
withholding the compensation sued for, by virtue of the provisions of
§ 2 of the act of May 7, 1878, ch. 90, 20 Stat. 50, commonly known as
the Thurman act. We do not think this contention is well founded.
The act of July 1, 1802, ch. 120, 12 Stat. 489, was passed "to aid," so
the title declared, " in the construction of a railroad and telegraph line
from the Missouri River to the Pacific Ocean, and to secure to the gov¬
ernment the use of the same for postal, military, and other purposes."
The act of July 2, 1864, ch. 216, 13 Stat. 356, was an amendment to the
act of July 1, 1862. By these acts certain railroad companies were
aided in the construction of their road. Among them was the appellee,
which built the 865.66 miles above mentioned. It was aided in the con¬
struction of this part of its roads by an issue of bonds made to it by
authority of the acts of July 1,1862, and July 2,1864. The act of July
1, 1862, made the following provisions to secure the payment of the
principal and interest of the bonds so issued:
" Sec. 5. . . . The issue of said bonds and delivery to the com¬
pany shall ipso facto constitute a first mortgage on the whole line of the
railroad and telegraph," etc.
" Sec. 6. The grants aforesaid are made upon condition that said com¬
pany shall pay said bonds at maturity, and shall keep said railroad and
telegraph line in repair and use, and shall at all times transmit des¬
patches over said telegraph line, and transport mails, troops, and
munitions of war, supplies and public stores upon said railroad, for the
government, whenever required to do so by any department thereof,
and the government shall at all times have the preference in the use of
the same for all the purposes aforesaid; . . . aud all compensation
for services rendered for the government shall be applied to the pay¬
ment of said bonds and interest, until the whole amount is fully paid;
. . . and after said road is completed, until said bonds and interest
are paid, at least five per centum of the net earnings of said road shall
also be annually applied to the payment thereof."
By the act of July 2, 1864, it was provided as follows:
" Sec. 5. . . . Only one half of the compensation for services ren¬
dered for the government by said companies shall be required to be
applied to the payment of the bonds issued by the government in aid
of the construction of said roads."
These sections, taken together, constitute the contract between the
United States and the appellee. United States v. Union Pacific Pail-
road Co., 91 U. S. 72; Sinking Fund Cases, 99 U. S. 700, 718; Union
Pacific Railroad Co. v. United States, 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, ubi supra.
These provisions of the statute law of the United States being still in
force, Congress passed the act of May 7, 1878, being the Thurman act,
above referred to. The preamble of this act mentions by name the
companies which had been aided by the bonds of the United States
under the acts of July 1, 1862, and July 2, 1864. The first section de¬
clares how the net earnings referred to in those acts shall be ascertained,
and the second section provides as follows:
" That the whole amount of compensation which may, from time to
200
DECISIONS OF THE SUPREME COURT.
time, be due to said several railroad companies respectively for services
rendered for the government, shall be retained by the United States,
one half thereof to be presently applied to the liquidation of the inter¬
est paid and to be paid by the United States upon the bonds so issued
by it as aforesaid, to each of said corporations severally, and the other
half thereof to be turned into the sinking fund hereinafter provided,
for the uses therein mentioned."
The case turns on the true interpretation of this section, the appel¬
lants contending that it authorized them to retain compensation earned
for transportation over all the roads owned or leased by the appellee,
whether the construction of such roads had been aided by the issue of
government bonds or not, and the appellee contending that the com¬
pensation referred to was that earned by transportation over that part
only of its lines which had been assisted by the government subsidy.
The acts of July 1, 1802, July 2, 1804, and May 7, 1878, all relate to
the same subject. The latter act is declared by its tit^e to be amenda¬
tory of the first two, and its last section provides that each and every
of its provisions shall be "held as in alteration and amendment" of the
two acts first mentioned. The three acts are, therefore, to be construed
together as one act, and one part to be interpreted by another. United
States v. Freeman, 3 How. 550, 504; Crespigny v. Wittenoom, 4 T. E. 790,
793; Commonwealth v. Slack, 19 Pick. 304,
One of the provisions of the act of July 1, 1802, closely allied to the
one under consideration, was construed by this court in the case of
United States v. Kansas 1'acific Railtoay Co., 99 U. S. 455. The Kansas
Pacific Eailway Company was one of the companies to which the United
States issued bonds in aid of the construction of its road under the act
just mentioned. Assisted by this issue of bonds, it had built 393{f
miles of road. It afterwards built 245 miles without aid from the gov¬
ernment. The United States brought suit against the company to
recover the five per cent, of net earnings, to be applied to the payment
of the bonds and interest, as provided by § 0 of the act of 1802. One of
the controversies in the case was whether the government was entitled
to the five per cent, net earnings on that part of the road which had
been built without government aid. This court decided that it was not.
Speaking by Mr. Justice Bradley it said: "We are of opinion . . .
that the subsidy bonds granted to the company, being granted only in
respect of the original road, . . . are a lien on that portion only,
and that the five per cent, of the net earnings is only dcmandable on
the net earnings of §aid portion." With this decision in view, it would
be impossible to hold with any show of reason that the compensation
for services rendered the United States, which by the same section was
required to be applied to the payment of the same bonds, included
compensation for services rendered by a road the construction of which
had not been aided by the issue to the company of government bonds.
In the case of United States v. Denver Pacific Railway Co., 99 U. S.
400, decided at the same term, and in which the judgment was deliv¬
ered by the same justice, it was held that the United States had no
right, under the sixth section of the act of 1802, to retain compensation
for services rendered upon a road, the construction of which it had not
aided by its bonds. The ground upon which the court placed its deci¬
sion was that the government had no lien except upon a road which it
had so aided, and could retain neither the five per cent, of the earnings
of a road to which it had issued no bonds, nor compensation for trans¬
portation services thereou.
This court having thus interpreted the act of July 1,1802, we cannot,
DECISIONS OF THE SUPREME COURT.
2ol
consistently with the established rules of construction, give a different
meaning to substantially the same words in tlie act of May 7, 1878.
Reiche v. Smythe, 13 Wall. 162. In the act of July 1, 1802, the provi¬
sion is, that "all compensation for services rendered for the govern¬
ment shall be applied to the payment of said bonds." In the act of
May 7, 1878, the words are, that "the whole amount of compensation
. . . for services rendered for the government shall be retained by
the United States," one half to pay interest and the other half to be
turned into the sinking fund. If the two acts are to be construed
together and as one act, we must give the same meaning to like expres¬
sions in both. We cannot say in one case that the compensation men¬
tioned means compensation only for services on aided roads, and in the
other that it includes compensation for services on roads not aided.
There is another view of this controversy which seems to us conclu¬
sive. As the contract between the United States and the railroad com¬
pany contained in the acts of July 1,1862, and of July 2,1861, has been
interpreted by this court to authorize the retention by the government
of compensation for services only on those roads which the United
States aided in building, the construction which the appellants seek to
put on the second section of the act of May 8, 1878, would not only
render that section a breach of faith on the part of the United States,
but an invasion of the constitutional rights of the appellee. We are
bound, if possible, so to construe tlie law as to lay it open to neither of
these objections. Bronyhton v. Pensacola, 93 U. S. 266; Red Rock v.
Henry, 106 U. S. 596; Hobbs v. McLean, 117 U. S. 567, decided at the
present term, and cases there cited; United States v. Coombs, 12 Pet. 72.
The construction contended for by the appellee preserves the good faith
of the government, and frees the act from the imputation of impairing
rights secured by the Constitution of the United States.
In our view the construction of the second section of the act of May
7, 1878, is plain, and not fairly open to controversy. By the act of
July 1, 1872, "all compensation for services rendered for the govern¬
ment" was to be applied to the payment of the bonds issued by the
United States to aid in building the road. By the act of July 2, 1864,
only "one-half of the compensation for services rendered for the gov¬
ernment" by said company was required to be applied to the payment
of the bonds. The act of May 7, 1878, merely restored the provisions
of the act of July 1, 1862, aud again required all compensation for
services rendered the government to be applied to the payment of the
bonds. This compensation, as we have seen, has beeu limited by the
decisions of this court to compensation for services rendered by the aided
roads. The construction of the second section of the act of May 7,1878,
contended for by the appellee, is, therefore, right.
Judgment affirmed.
202
DECISIONS OF THE SUPREME COURT.
United States v. Central Pacific Railroad Company.
(138 U. S„ 84.)
appeal from the court of claims.
No. 758. Argued November 21, 22, 1890 Decided January 26, 1891.
Since the passage of the act of May 7, 1878, 20 Stat. 58, c. 96, § 1, the sums expended
by the Central Pacific Railroad for betterments and improvements on its
road, its buildings and equipments, whereby the capital of the Company
invested in its works is increased in permanent value, are not to be regarded as
part of its current expenses to be deducted from its gross receipts in reaching
and determining the amount of the net earnings upon which a percentage is to
be paid to the United States.
The case of Union Pacific Itailroad Co. v. United States, 99 U. S. 402, distinguished
from this case.
The case is stated in the opinion.
Mr. Attorney General for the United States.
Mr. Joseph E. McDonald and Mr. Joseph K. MeGammon for the Cen¬
tral Pacific Railway Company.
Mr. Justice Bradley delivered the opinion of the court.
This is an appeal from the Court of Claims. The claimant, the Cen¬
tral Pacific Railroad Company, filed a petition October 31, 1887, to
recover from the United States the sum of $804,091.31, alleged to be
due for services rendered to the War, Post Office, and other depart¬
ments, and the sum of $321,157.72, alleged to have been exacted by the
Treasury Department, and paid by the claimant, in excess of the amount
actually due from the claimant to the government for the 25 percent
net earnings required to be paid by the fourth section of the act known
as the Thurman act, passed May 7,1878. The Court of Claims rendered
a decree in favor of the claimant for the first of the above-mentioned
sums, and for a portion of the second claim, amounting to $198,422.83,
the other partof the sum demanded having been barred by the statute
of limitatio7is. Both parties appealed from the decree, but the claim¬
ants have dismissed their appeal and the government has consented
that the decree shall be affirmed as to the said sum of $804,094.31 due
to the claimants for services rendered to the departments, so that the
oidy matter of controversy remaining on the record is the decree for
the said sum of $198,422.83 the alleged amount of over-payments
exacted for 25 per cent of net earnings during the years 1881, 1882,
1883 and 1884. The ground of appeal on the part of the government
as to this sum is that in arriving at the net earnings of the railroad
company for the years before mentioned, the company claimed and the
court allowed certain expenses which, as contended by the government,
were not for current expenses and repairs, but were for betterments
and improvements on the road, its buildings and equipments, whereby
the capital of the company invested in its works was increased in per¬
manent value. These expenses, the government contends, ought not
to have been allowed under the provisions of the Thurman act. They
are of the same class, as appears by a supplemental return made by
the Court of Claims, which were allowed by this court as fairly charge¬
able under the head of expenses under the act of 18G2, in the case of
Union Pacific Railroad Go. v. United States, 99 U. S. 402. But the
accounts in question in that case arose before the Thurman act was
DECISIONS OP THE SUPREME COURT.
203
passed, and the phraseology of this act was probably adopted in view
of the construction of the act of 1862 claimed by the railroad com¬
panies in that case. As the law stood prior to 1878, under which 5 per
cent of the net earnings of the companies was to be paid into the
Treasury towards the liquidation of the bonds loaned to them by the
government, Ave held that in arriving at such net earnings it was
admissible for the companies to charge, as they had done, a reasonable
amount for betterments and improvements, rendered necessary by the
gradual increase of traffic, the better discharge of business, and the
public accommodation; not including, however, the cost of any impor¬
tant improvement, such as additional track, or any other matter
involving a large outlay of money. This view was tnised upon the
practice and usage of conservative and well managed railroad com¬
panies, which tended to the suppression of extravagant dividends that
might be the result of a showing of large uet earnings. But Congress,
in the Thurman act, ex industria used language with regard to the
character of the expenses to be allowed in ascertaining the amount of
net earnings, which seems to preclude any charges for impro\Tements
or betterments, or increase of permanent value of the works in any
manner whatever. The language referred to is as follows: "That the
net earnings mentioned in said act of eighteen hundred and sixty-two,
of said railroad companies respectively, shall be ascertained by deduct¬
ing from the gross amount of their earnings respectively the necessary
expenses actually paid withiu the year in operating the same and keep¬
ing the same in a state of repair, and also the sum paid by them
respectively within the year in discharge of interest ou their first mort¬
gage bonds, whose lien has priority over the lien of the United States,
and excluding from consideration all sums owing or paid by said com¬
panies respectively for interest upon any other portion of their indebt¬
edness; and the foregoing provision shall be deemed and taken as an
amendment of said act of eighteen hundred and sixty-four, as well
as of said act of eighteen hundred and sixty-two." 20 Stat. c. 90, § 1,
p. 58.
Considering the time and the circumstances under which this act
was passed, and the express declaration that the clause in question
was to be deemed aud taken as an amendment of the .acts of 1864: and
1862, we thiuk its meaning cannot be mistaken as intending to exclude
from the category of expenses to be taken from gross receipts in order
to ascertain the "net earnings," all such expenditures as have the
effect of permanently improving the value of the company's property
and works; and, taken prospectively, it is to be regarded as valid under
the decision in The Sinking Fund Cases, 99 U. S. 700. As the expenses
in question are of the category referred to, and the allowance of them
by the Court of Claims reduced the 25 per cent of net earnings by
the said amount of $198,422.83, it follows that the judgment, as to
that sum, must be reversed, aud be affirmed as to the said sum of
$804,094.31; aud the cause
Kemanded with instructions to enter judgment in conformity with
this opinion.
204
DECISIONS OP THE SUPREME COURT.
United States v. Union Pacific Railway Company.
(148 IT. S., 502.)
appeal from the circuit court of the united states for
the district of colorado.
No. 149. Argued March 20, 21,1893.—Decided April 10, 1893.
The right conferred by the act of July 1, 1862, 12 Stat. 489, c. 120, ae subsequently
amended, upon the corporation afterwards known as the Union Pacific Railway
Company, Eastern Division, to construct its road substantially in a direct line
to Denver, and from thence northerly, to connect with the Union Pacific Rail¬
road at Cheyenne, and to acquire a grant of public lands thereby upon each side
of its railroad as constructed, was not affected by the act of March 3, 1869, 15
Stat. 324, c. 127, in such a way as to make the Union Pacific, Eastern Division,
terminate at Denver, and to cause its land grants to terminate there; but, on the
contrary, the act of 1862, being a grant in prirnrnti, the Company's light to lands
upon each side of its road became fixed from the moment it proceeded, under
the act of 1866, to establish its line of definite location so as to make the same
extend from Kansas City westwardly to Denver, and thence northwardly to
Cheyenne, and the act of 1869 is not to be construed as breaking the continuity
of the line.
If there were any doubt with regard to the interpretation of the act of 1869, the
construction placed upon it by the Land Department for eighteen years, under
which lands have been put upon the market and sold, would be entitled to con¬
siderable weight.
This case arose upon demurrers and a plea to a bill in equity tiled
by tlie United States against the Union Pacific Railway Company, and
173 other corporations and individuals, to procure the surrender and
cancellation of certain land patents issued to the Kansas Pacific Rail¬
way and the Denver Pacific Railway and Telegraph Company, and for
a decree declaring all conveyances of such lands clouds upon the title
of the United States.
The bill averred in substance that, by an act of Congress of July 1,
1863, 12 Stat. 489, c. 120, incorporating the Union Pacific Railroad
Company, such company was authorized to construct a road from a
point on the one hundredth meridian longitude, between the south mar¬
gin of the valley of the Republican River and the north margin of the
valley of the Platte River, in the Territory of Nebraska, to the west¬
ern boundary of Nevada, and was granted every odd-numbered section
of land amounting to five alternate sections of land per mile, after¬
wards extended to ten sections by the act of July 2, 1864, 13 Stat. 356,
c. 216, on each side of said railroad, on the line thereof, and within the
limits of ten miles, (subsequently increased to ticenty,) on each side of
the road; and that whenever the company should have completed
forty consecutive miles of its road, (atterwards reduced to ticenty, by
the same act of 1864,) patents should issue for such public lands as
had been granted to it, and had been earned in accordance with the
provisions of the act.
By the same act it was further provided that the Leavenworth, Paw¬
nee and Western Railroad Company, which had been chartered by the
Territory of Kansas, in 1855, was authorized to construct a line of road
from the Missouri River, at the mouth of the Kansas River, to the
aforesaid point, on the one hundredth meridian. The corporate name
of the said Leavenworth, Pawnee and Western Railroad Company of
Kansas was, subsequently to the passage of this act, changed to that
of the Union Pacific Railway Company, Eastern Division.
On July 3, 1866, Congress passed another act, 14 Stat. 79, c. 159,
amending those of July 1, 1862, and July 2, 1864, and providing that
DECISIONS OF THE SUPREME COURT.
205
the Union Pacific Railway Company, Eastern Division, should be
authorized to so change the line of its definite location as to connect
with the Union Pacific Railroad at a point not more than fifty miles
westward from the meridian of Denver in Colorado.
The bill further averred that after tbe passage of this act of July 3,
18G6, the Union Pacific Railway Company, Eastern Division, so
changed its line of definite location as to make the same extend from
its point of beginning at Kansas City, Missouri, westward, and sub¬
stantially in a direct line to the city of Denver, Colorado, and from
that point northward and substantially in a direct line to a connection
with the Union Pacific Railroad at Cheyenne, Wyoming, and proceeded
to build its road 011 that line towards Denver.
Before the Union Pacific had completed its line to Denver, and on
March 3, 1809, Congress passed another act, 15 Stat. 324, c. 127, author¬
izing the Union Pacific Railway Company, Eastern Division, to con¬
tract with the Denver Pacific Railway and Telegraph Company, a
Colorado corporation, for the construction, operation and maintenance
of that part of its line of railroad and telegraph between Denver and
its point of connection with the Union Pacific Railroad at Cheyenne,
and to adopt the road-bed already graded by the said Denver Pacific
Railway and Telegraph Company as said line, and to grant to said
Denver Pacific Railway and Telegraph Company the perpetual use of
its right of way and depot grounds, and to transfer to it all its rights
and privileges subject to all the obligations pertaining to said part of
its line. It was also made the duty of such road to extend its railroad
and telegraph to a connection at the city of Denver, so as to form with
that part of its line herein authorized to be constructed a continuous
line of railroad and telegraph from Kansas City, by way of Denver,
to Cheyenne. It was further declared, section 2, that "all the provi¬
sions of law for the operation of the Union Pacific Railroad, its
branches and connections, as a continuous line, without discrimination,
shall apply the same way as if the road from Denver to Cheyenne
had been constructed by the said Union Pacific Railway Company,
Eastern Division." It was further provided that each of said com¬
panies should receive patents to alternate sections of land along their
respective lines of road, as therein defined, in like manner and within
the same limits as provided by law in the case of lands granted to
the Union Pacific Railway Company, Eastern Division. Upon the
same day, a joint resolution was passed, 15 Stat. 348, authorizing the
Union Pacific Railway Company, Eastern Division, to change its name
to the Kansas Pacific Railway Company.
In pursuance of these acts the new Kansas Pacific Railway Com¬
pany entered into a contract with the Denver Pacific of the nature
and for the purpose set out and authorized by the acts, and, in pursu¬
ance thereof, the Kansas Pacific completed its line to Denver, and the
Denver Pacific completed its line from Denver to Cheyenne.
The bill thereupon charges that, in procuring the passage and accept¬
ing the terms of the act of March 3, 18G9, the Kansas Pacific aban¬
doned its intention of building a line of road to connect with the Union
Pacific at Cheyenne, and, therefore, that Denver became the terminus of
its road, and the company surrendered all its rights to that portion of
the land grant lying beyond its termiuus at Denver, and, by operation
of this act, sections of public land within prescribed limits were granted
to the Denver Pacific as a new and independent grant; that the Kan¬
sas Pacific and the Denver Pacific having completed their lines of road,
they respectively became entitled to certain portions of the laud grant
206
DECISIONS OF THE SUPREME COURT.
independently of each other, notwithstanding the fact that, through
their connections at Denver, they formed a continuous line of railway
from Kansas City to Cheyenne; and their rights to public lands, under
the several acts aforesaid, extended only latterally along the lines of
said roads respectively, and were comprised and limited bylines drawn
through the terminus of each of said roads at right angles to the gen¬
eral direction of the lines of said roads. The bill then referred to a
map, Exhibit A, as showing the lines of said roads as connected at the
city of Denver, their general courses and directions as they extend
eastwardly and northwardly from the city of Denver, and the lines by
which the rights of said respective companies to public lands, under
the acts aforesaid, are limited; that west of the legal terminal limit
of the Kansas Pacific land grant, and south of the legal terminal
limit of the Denver Pacific land grant, lies a large triangular tract of
land of about 200,000 acres, substantially within a radius of 20 miles
of the point of connection of the two roads at Denver, which the bill
alleges was not within the legal limit of the land grant to either of the
two companies, and to the odd-numbered sections of which they
asserted claim, and for which they procured patents from the Interior
Department, the surrender and cancellation of which said patents it
was the object of the bill to secure.
The bill further alleged the consolidation, in January, 1880, of the
Kansas Pacific and the Denver Pacific and the Union Pacific Railroad
Company into one corporation, under the corporate name of the Union
Pacific Railway Company, which became the successor in interest of
the three prior corporations; that certain persons, who were made
defendants to the bill, claimed title to certain lands of this tract by
direct or mesne conveyances from these companies, of the exact nature
of which titles plaintiff is ignorant ; that, under an act of March 3,
1887, providing for the adjustment of land grants made by Congress to
aid in the construction of railroads, etc., the Secretary of the Interior
ascertained that the lands described in the bill had been erroneously
and illegally patented, as herein set out, and thereupon made a demand
upon the Union Pacific Railway Company, as successor in interest to
the others, for a reconveyance of the tracts of land so erroneously
patented, which was refused.
The persons claiming title under these patents having been made
parties to the bill, it prayed that the patents and other outstanding
deeds and other evidences of title be decreed to be void and surren¬
dered for cancellation as clouds upon the plaintiff's title, and for such
other relief as might seem proper.
To this bill demurrers were filed by most or all the defendants, except
one Standley, who filed a plea setting up divers statutes and decisions
in the land office upon which it is claimed the patents rested, but which
need not be specifically stated. Upon the hearing upon these demurrers
and plea, the court made an order sustaining them, 37 Fed. Rep. 551,
and the plaintiff having elected to stand by its bill as originally filed,
it was further ordered that the same be dismissed. Thereupon the
plaintiff appealed to this court.
Mr. Assistant Attorney General Maury for appellant.
Mr. John F. Dillon, (with whom was Mr. Harry Hubbard on the
brief,) for the Union Pacific Railway Company and Joseph Standley.
Mr. Oscar Renter filed a brief for Joseph Standley and others.
decisions of the supreme court.
207
Mr. Justice Brown, after stating the case, delivered the opinion
of the court.
The object of this bill is to procure the surrender and cancellation of
certain patents issued for a triangular tract of land of about 200,000
acres in extent, lying upon the outside of the right angle, or elbow,
made by the junction at Denver of the Kansas Paciiic Railway, whose
general course is east and west, with the Denver Pacific Railway and
Telegraph Company, whose general course is north and south. These
roads are now consolidated under the name of the Union Pacific Rail¬
way Company.
By the original act of July 1,1802, incorporating the Union Pacific
Railroad Company, 12 Stat. 489, c. 120, this company was empowered
to construct a road from a point on the one hundredth meridian,
between certain north and south limits, to the western boundary of
Kevada, and by the same act a Kansas corporation was empowered to
construct its line from the Missouri River westwardly to the initial
point of the Union Pacific at the one hundredth meridian, and to con¬
nect with the latter road at that point. Subsequently, and iu 1866,
the Kansas corporation, whose name had meantime been changed to
the Union Pacific, Eastern Division, was authorized to so change its
line as to connect with the Union Pacific at a point not more than fifty
miles westward from the meridian of Denver. Acting upon this, the
company did change its line so as to make the same extend from Kan¬
sas City westward in a direct line to Denver, and thence northward in
a direct line to Cheyenne. By the original act, the Union Pacific was
to receive a grant of five alternate sections of land for every mile,
(subsequently raised to ten,) on each side of the road, and as the Kan¬
sas corporation was to construct its road " upon the same terms and
conditions in all respects" as the Union Pacific, it followed that it was
entitled to the same land grant. The act authorizing the Kansas cor¬
poration to change its line of road, 14 Stat. 79, c. 159, provided that,
upon the filing of a map, showing the general route of the road, the
lands along the entire line thereof, so far as the same might be desig¬
nated, should be reserved from sale by order of the Secretary of the
Interior, showing clearly that it was designed to preserve the land
grant to which the road was entitled under the original act.
In this condition of things the act of 1869 was passed, which author¬
ized this corporation, then known as the Union Pacific, Eastern Divi¬
sion, to contract with the Denver Pacific, a Colorado corporation, for the
construction of that portion of its line between Denver and Cheyenne,
(hereby clearly recognizing the validity of the change of location,) to
adopt its road-bed, to grant to the Denver Pacific a " perpetual use of
its right of way and depot grounds, and to transfer to it all the rights
and privileges, subject to all the obligations appertaining to such part
of its line." Even supposing that the act of 1866 did not, upon its
face, authorize the change that was actually made, that is, westwardly
to Cheyenne, by the way of Denver, it is clear that, by the act of
March, 1869, this line was recognized as a proper compliance with the
act of 1866, and as a valid and continuous line from Kansas City to
Cheyenne.
The position of the government in this connection is that the act of
1869 separated the grant of lands to the Denver Pacific from that in
aid of the Eastern Division of the Union Pacific, and thereby made
them two distinct and independent lines of road, each with it own land
grant. This construction would disentitle the Kansas Pacific Company
208
DECISIONS OF THE SUPREME COURT.
to any lands west of its terminus at Denver, or west of a north and
south line across its twenty-mile limit, and the Denver Pacific to any
lands south of its terminus at the same place, leaving a triangular piece
of about 200,000 acres to revert to the government. These are the
lands in dispute.
We do not, however, so read the act. It did not declare that the
Union Pacific, Eastern Division, should end at Denver or that the
Denver Pacific should begin at Denver, but simply that the former
might contract with the latter for the construction, operation and
maintenance of a part of its line. Under the interpretation contended
for, if that part had been between the one hundredth meridian and
Denver, instead of between Denver and Cheyenne, it would thereby
have marie it a distinct and independent line of road, though running
in the same direction.
It is true that, under the original act of 1862, the grant was limited
to the odd-numbered sections " on each side of said railroad, on the line
thereof, and within the limits of ten miles on each side of said road,"
but it does not follow that if the road makes a curve or right angle,
the grant ceases in any way to be operative at that point. The rail¬
road is entitled to its grant of ten alternate sections to each mile of
road, and is entitled to have it selected within the limits of twenty
miles on each side; but there is no requirement that the lands shall be
reached by a line run at right angles to the road. Considerable light
is thrown upon the interpretation of the statute of 1869 by the phraseol¬
ogy of section 2, which provides that the Union Pacific, Eastern Division,
shall extend its line to Denver, " so as to form with that part of its line
herein authorized to be constructed" by the Denver Pacific "a continu¬
ous line of railroad and telegraph from Kansas City, by way of Den¬
ver, to Cheyenne," and that "all the provisions of law for the operation
of the Union Pacific Pail road, its branches and connections, as a con¬
tinuous line, without discrimination, shall apply the same as if the
road from Denver to Cheyenne had been constructed by the Union
Pacific Eailway Company, Eastern Division." So far from this lan¬
guage indicating that this was not to be considered a single line, it is
difficult to see how Congress could have expressed more clearly, by
inference, that they were not to be treated as independent roads. This
construction is also reinforced by the amendatory act of June 20, 1871,
18 Stat. Ill, which provides that "for all purposes of said act," (of
1862,) "and of the acts amendatory thereof, the railway of the Denver
Pacific Kailway and Telegraph Company shall be deemed and taken to
be a part and extension of the road of the Kansas Pacific Railroad, to
the point of junction thereof with the road of the Union Pacific Pail-
road Company at Cheyenne, as provided in the act of March third,
1869."
Indeed, it is difficult to avoid the conclusion that the act of 1862,
being a grant inprcesenti, the rights of the Union Pacific, Eastern
Division, to the lands upon each side of its road became fixed from the
moment it proceeded, under the act of 1866, to establish its line of
definite location so as to make the same extend from Kansas City west-
wardly to Denver, and thence northwardly to Cheyenne; and, in fact,
that was practically the ruling of this court in Missouri, Kansas <tc.
Kailway v. Kansas Pacific Railroad Company, 97 U. S. 491, 496, 497, 498.
But however this may be, it is entirely clear that the act of 1869 should
not be construed to have the effect of breaking the continuity of the
line unless its language imperatively requires it. So far from this
being the case, the very title of the act, "to authorize the transfer of
DECISIONS OP THE SUPREME COURT.
209
lands," granted to the Union Pacific, to tlie Denver Pacific, " and to
expedite the completion of railroads to Denver," indicates that it was
never intended to operate as a forfeiture, or as a reduction in amount,
of any lands to which the Union Pacific, Eastern Division, had become
entitled by filing its line of definite location, or to create distinct lines
of road, but was merely designed to permit the Union Pacific to con¬
tract with the Denver Pacific for the construction, operation and main¬
tenance of a portion of its line. It is true that by the 3d section, which
authorizes the "said companies" to mortgage " their respective portions
of said road," and provided that "each of said companies shall receive
patents to the alternate sections of land along their respective lines,"
the two corporations were thereby recognized as independent, yet, at
the same time, it recognized them as two corporations engaged in the
construction of the same line of road, and evidently contemplated a
division between them of the land grant appropriated to such line.
The special proviso of section 3 was doubtless inserted to entitle the
Denver Pacific to take patents for its portion of the laud granted, direct
from the United States.
In addition to all this, the facts set forth in the plea of Joseph
Staudley, which, for the purposes of this case, may be taken as true,
indicate very strongly an acquiescence of the Interior Department
from the date of the act of March 3, 1869, down to December, 1887, a
period of over eighteen years, iu the construction of the act contended
for by the defendant. The plea set forth that, in compliance with the
act of 1866, the Union Pacific, Eastern Division, filed with the Secre¬
tary of the Interior a map of the general route of its line, from the
western boundary of Kansas, through Denver, to Cheyenne, and that
the Secretary of the Interior on the same day directed the withdrawal
of lands in Colorado on the designated line of said route; that, in pur¬
suance of said direction, the Commissioner of the Land Office prepared
a diagram showing the line of route, and the map of the land grant,
and forwarded the same to the register and receiver of the land office
at Denver, directing the odd numbered sections to be withdrawn on
account of this grant; that, included in said diagram, are all the lands
mentioned in the bill; that these lands were so withdrawn in accord¬
ance with these instructions; that this map of the general route was
the only one ever filed; that the directions to withdraw these lands
were never vacated; that on August21,1869, the Denver Pacific filed
its map of definite location of the section between Denver and Chey¬
enne, which was approved by the Secretary of the Interior; that on
May 26, 1870, the Kansas Pacific also filed its map of definite location
between the boundary of Kansas and Denver, which was approved by
the Secretary of the Interior; that, under his directions, the Commis¬
sioner of the General Land Office prepared maps showing the limits of
the laud grants; that, included in these maps, were all the lands de¬
scribed in the bill; and that in 1870, a contest having arisen between
the two roads as to the ownership of certain sections, an adjustment
was had by the Department of the Interior of their several rights.
The plea further avers that, in 1873, in a case then pending in the
General Land Office between the Kansas City Pacific and one William
Hodge and John Tracy, the Commissioner of the Land Office formally
decided that the act of 1869 did not sever the original grant to the
Union Pacific, but that the grant was a continuous one through Den¬
ver to Cheyenne; that his ruling in that particular was affirmed in
1874 by the acting Secretary of the Interior; and that this was the uni¬
form construction put upon the act until 1887, when the Department
14 PAC
210
DECISIONS OF THE SUPREME COURT.
reversed its former decision, and for the first time field tfiat tfie lands
covered by tfie bill were not included within the land grant to either
road.
If there were any doubts with regard to tfie interpretation of tfie act
of 18(19, tfie construction placed upon it by tfie Land Department for
eighteen years, under which construction these lands have been put
upon tfie market and sold, would undoubtedly be entitled to considera¬
ble weight.
We have no doubt of tfie correctness of tfie conclusion reached by
tfie court below, and its decree is, therefore, affirmed.
United States v. Union Pacific Railway Company and
Western Union Telegraph Company.
(100 U. S., 1.)
appeal from the circuit court of appeals for the eighth
circuit.
No. 334. Argued October 18, 19, 1894 Decided November 18, 1895.
The objects which Congress sought to accomplish by the act of .July 1, 18(52, c. 120,
12 Stat. 489, granting a subsidy to aid in the construction of both a railroad and
a telegraph line from the Missouri River to the Pacific Ocean, and by the act of
July 2, 1864, c. 216, 13 Stat. 356, amendatory thereof, were the construction, the
maintenance and the operation of both a railroad and a telegraph line between
those two points; the governmental aid was extended for the purpose of accom¬
plishing all these important results; and there is nothing in subseipient legislation
to indicate a change of this purpose.
The provisions in those acts permitting the railroad company to arrange with certain
telegraph companies for placing their lines upon and along the route of the rail¬
road, and its branches, did not affect the authority of Congress, under its
reserved power, to require the maintenance and operation by the railroad com¬
pany itself, through its own officers and employes, of a telegraph line over and
along its main line and branches.
An arrangement between the railroad company and the telegraph company, such as
was permitted by the l'Jth section of the act of July 1, 1862, and by the fourth
section of the act of July 2, 1864, c. 220, known as the Idaho Act, could have no
other effect than to relieve the railroad company from any present duty itself to
construct a telegraph line to be used, under the franchises granted and for the
purposes indicated by Congress. No arrangement of the character indicated by
Congress could have been made except in view of the possibility of the exercise
by Congress of the power reserved to add to, or amend the act that permitted such
arrangement.
It was not competent for Congress under its reserved power to add to, alter, or
amend these acts to impose upon the railroad company duties wholly foreign to
the objects for which it was created or for which governmental aid was given,
nor, by any alteration or amendment of those acts, destroy rights actually vested,
nor disturb transactions fully consummated. With the policy of such legislation
the courts have nothing to do.
The provision in the act of August 7, 1888, e. 772, 25 Stat. 382, requiring all railroad
and telegraph companies to which the United States have granted subsidies, to
"forthwith and henceforward, by and through their own respective corporate
officers and employes, maintain and operate, for railroad, governmental, com¬
mercial and all other purposes, telegraph lines, and exercise by themselves
alone all the telegraph franchises conterred upon them and obligations assumed
by them under the acts making the grants," is a valid exercise of the power
reserved by Congress.
Since the passage of the act of July 24, 1866, c. 230, the provisions of which were
embodied in the Revised Statutes Title LAY, Telegraphs, no railroad company
operating a post-road of the United States, over which interstate commerce is
carried on, can bind itself, by agreement, to exclude from its roadway any tele¬
graph company, incorporated under the laws of a State, that has accepted the
provisions of that act, and desires to use such roadway for its line in such manner
as will not interfere with the ordinary travel thereon.
DECISIONS OF THE SUPREME COURT.
211
The agreement of October 1, 1866, between the Union Pacific Railway Company,
Eastern Division, and the Western Union Telegraph Company gave the telegraph
company the absolute control of all telegraphic business on the routes of the
railway company, and consequently tended to make the act of July 21, 1866,
c. 230, 14 Stat. 221, ineffectual and was hostile to the object contemplated by
Congress; and, being thus in its essential provisions invalid, it was not binding
upon the railway company.
The agreements of September 1, 1869, and December 14,1871, between the Union
Pacific Railroad Company and the Atlantic and Pacific Telegraph Company were
void.
The agreement of July 1, 1887, between the Union Pacific Railway Company and
the Western Union Telegraph Company is illegal, not only to the extent it
assumes to give to the telegraph company exclusive rights aud advantages in
respect of the use of the way of the railroad company for telegraph purposes,
but also because, in effect, it transfers to the telegraph company the telegraphic
franchise granted it by the United States, which was not permitted by the acts
of Congress defining the obligations of railroad companies that had accepted
the bounty of the government.
While the United States might proceed by mandamus against the railway company
to compel it to perform the duties imposed by its charter, it has the further right,
in this suit, to ask the interposition of a court of equity to compel a cancellation
of the agreements under which the telegraph company asserts rights inconsistent
with the several acts of Congress, and the final decree in such a suit may require
the railway company to obey the directions of Congress as given in those acts.
This suit was commenced by tlie United States in the Circuit Court
for the District of Nebraska. A decree was there made giving the
plaintiff the relief it asked for. 50 Fed. Eep. 28. An appeal was taken
to the Circuit Court of Appeals for the Eighth Circuit, where the decree
of the Circuit Court was reversed. 19 U. S. App. 531. From that
decree the United States took this appeal. The case is stated in the
opinion of the court.
Mr. Solicitor General Maxicell for appellant.
Mr. Rush Taggart for the Western Union Telegraph Company, ap¬
pellee.
Mr. John F. Dillon, for the Union Pacific Railway Company, appellee.
Mr. John M. Thurston and Mr. Jeremiah M. Wilson were on his brief.
Mr. Justice Harlan delivered the opinion of the court.
This suit was brought by the United States against the Union Pacific
Railway Company and the Western Union Telegraph Company under
the authority of the act of Congress of August 7, 1888, c. 772, 25 Stat.
382, supplementary to the act commonly known as the Pacific Railroad
act of July 1, 1802, c. 120,12 Stat. 489, and to the act of July 2,1864, c.
216, 13 Stat. 356, and other acts amendatory of the act of 1862.
By the first section of the above act of 1888, it is provided that all
railroad and telegraph companies to which the United States have
granted any subsidy in lands or bonds or loan of credit for the con¬
struction of either railroad or telegraph lines, and which, by the acts
incorporating them, or by any amendatory or supplementary act, were
required to construct, maintain, or operate telegraph lines, and all com¬
panies engaged in operating such railroad or telegraph lines " shall
forthwith and henceforward, by and through their own respective cor¬
porate officers and employes, maintain, and operate, for railroad, gov¬
ernmental, commercial, and all other purposes, telegraph lines, and
exercise by themselves alone all the telegraph franchises conferred upon
them and obligations assumed by them under the acts making the
grants as aforesaid."
212
DECISIONS OF THE SUPREME COURT.
The second section declares that any telegraph company, having1
accepted the provisions of Title LXV, Telegraphs, of the Revised Stat¬
utes, which should extend its line to any station or otliee of a telegraph
line belonging to any one of the railroad or telegraph companies referred
to in the first section, shall have the right and shall be allowed uto con¬
nect with the telegraph line of said railroad or telegraph company to
which it is extended at the place where their lines may meet, for the
prompt and convenient interchange of telegraph business between said
companies; and such railroad and telegraph companies, referred to in
the tirst section of this act, shall so operate their respective telegraph
lines as to afford equal facilities to all, without discrimination in favor
of or against any person, company, or corporation whatever, and shall
receive, deliver, and exchange business with connecting telegraph lines
on equal terms, and affording equal facilities, and without discrimina¬
tion for or against any one of such connecting lines; and such exchange
of business shall be on terms just and equitable."
If any railroad or telegraph company referred to in the first section,
or any company operating such railroad or telegraph line, refuses or
fails, in whole or in part, to maintain and operate a telegraph line as
provided in the act of 1888 and the acts to which it is supplementary,
u for the use of the Government or the public, for commercial and other
purposes, without discrimination," or refuses or fails to make or con¬
tinue such arrangements for the interchange of business with any
connecting telegraph company, then, by the third section, application
for relief may be made to the Interstate Commerce Commission, whose
duty it shall be to ascertain the facts, and prescribe such arrangement
as will be proper in the particular case.
The fourth section is in these words: uIn order to secure and pre¬
serve to the United States the full value and benefit of its liens upon
all the telegraph lines required to be constructed by and lawfully
belonging to said railroad and telegraph companies referred to in the
first section of this act, and to have the same possessed, used, and ope¬
rated in conformity with the provisions of this act and of the several
acts to which this act is supplementary, it is hereby made the duty of
the Attorney General of the United States by proper proceedings, to
prevent any unlawful interference with the rights and equities of the
United States under this act, and under the acts hereinbefore men¬
tioned, and under all acts of Congress relating to such railroads and
telegraph lines, and to have legally ascertained and finally adjudicated
all alleged rights of all persons and corporations whatever claiming in
any manner any control or interest of any kind in any telegraph lines
or property, or exclusive rights of way upon the lands of said railroad
companies, or any of them, and to have all contracts and provisions of
contracts set aside and annulled which have been unlawfully and
beyond their powers entered into by said railroad or telegraph com¬
panies, or any of tliein. with any other person, company,or corporation."
The fifth section subjects to tine and imprisonment any officer or agent
of a company operating its railroad and telegraph lines who refuses or
fails, in such operation and use, to afford and secure equal facilities to
the government and the public, or to secure to each of said connecting
telegraph lines equal advantages and facilities in the interchange of
business, as provided for, without any discrimination whatever for or
adverse to the telegraph l;ne of any or either of said connecting com¬
panies, or refuses to abide by or perform and carry out within a reason¬
able time the order or orders of the Interstate Commerce Commission.
The party aggrieved may also sue the company, whose officer or agent
violates the provisions of the act, for any damages thereby sustained.
DECISIONS OF THE SUPREME COURT.
213
The sixth section makes it the duty of all railroads and telegraph
companies to report to the Interstate Commerce Commission in relation
to certain matters, and to file with that body copies of all contracts
and agreements of every description between it and every other person
or corporation in reference to the ownership, possession, maintenance,
control, use, or operation of any telegraph lines or property over or
upon its rights of way.
The defendant, the Union Pacific Railway Company, is a corporation
formed by the consolidation (under the authority of the above acts of
Congress of July 1, 1802, c. 120, 12 Stat. 489, and July 2,1864,13 Stat,
c. 216, 356) of the following companies: The Union Pacific Kailroad
Company, incorporated by the act of July 1, 1862; The Kansas Pacific
Itailway Company, formerly known as the Union Pacific Railway Com¬
pany, Eastern Division, which latter company succeeded to the rights
and powers of the Leavenworth, Pawnee and Western Railroad Com¬
pany, a Kansas corporation that accepted the aid provided by the act
of July 1, 1862; and the Denver Pacific Eailway and Telegraph Com¬
pany, a corporation of Colorado.
The present suit proceeds on the ground that the Union Pacific Rail¬
way Company is conducting its business under certain contracts and
agreements with the Western Union Telegraph Company that are not
only repugnant to the provisions of the above act of 18S8, but are
inconsistent with the rights of the United (States, and in violation of
the obligations imposed upon the railway company by other acts of Con¬
gress. The relief asked was a decree annulling those contracts and
agreements and compelling the railway company to maintain and
operate telegraph lines on its roadways, as required by the act of 1888.
By the final decree of the Circuit Court it was adjudged, among
other things, that the following agreements be annulled and held for
naught:
An agreement of October 1,1866, between the Union Pacific Eailway
Company, Eastern Division, and the Western Union Telegraph Corn-
pany;
Two agreements, one of (September 1,1869, and one of December 14,
1871, between the Union Pacific Railroad Company and the Atlantic
and Pacific Telegraph Company, the rights of the latter company hav¬
ing been acquired, as is claimed, by the Western Union Telegraph
Company; and,
An agreement of July 1, 1881, between the Union Pacific Railway
Company and the Western Union Telegraph Company. 50 Fed. Rep. 28.
It will be well, at this point, to refer to the principal parts of the
several agreements that were set aside and annulled by the final decree
of the Circuit Court.
By the agreement of October 1, 1866, between the Union Pacific
Railway Company, Eastern Division, and the Western Union Telegraph
Company, the railway company agreed to pay to the telegraph com¬
pany the cost of the telegraph poles that had been erected by the latter
company along the railroad between Wyandotte and Fort Riley, except
for such as have been already furnished and erected by said railway
company, and also the cost of the wire and insulators for a telegraph
line with one wire, between those points, except for such distance as the
railroad company had already provided wires and insulators; to furnish
and distribute along their road west of Fort Riley, as fast as the same
was completed, suitable poles for a first-class telegraph line, and wires
and insulators for a telegraph line with one wire; to supply and distrib¬
ute suitable telegraph poles, as required from time to time; to repair
214
DECISIONS OF THE SUPREME COURT.
and renew the line as might be necessary; to transport, free of charge,
for the telegraph company all persons engaged in and material required
for the construction, reconstruction, working, repairing, and maintain¬
ing said telegraph line; and to furnish a suitable telegraph olHoe in the
depot at Wyandotte, Kansas, free of charge, and pay one-half of the
salary of the operator in such oflice, or so much thereof as was neces¬
sary to save the telegraph company from loss at that oftice—such oper¬
ator to be fully qualified to do the business of the railway company, and
to be appointed and his salary fixed by the parties to the contract.
The railway company further stipulated "not to transport any per¬
sons engaged in or property intended for the construction or repair of
any other line of telegraph along their railway, except at the usual and
regular rates charged by said railway company for passengers and
freight, nor give permission to nor make any agreement with any other
telegraph company to construct or operate any telegraph line upon the
lauds or roadway of said railway company, without the consent in writ¬
ing of the telegraph company. The above agreed to by said railway
company so far as it has the right to do so."
The telegraph company agreed, upon its part, that it would erect poles,
attach the insulators, and string the wire to be furnished or paid for by
the railway company, as provided, as fast as each section of twenty
miles of railroad was completed; that the first wire should belong to
the railway company, and be for their use exclusively after the second
wire was put up, "but no commercial or paid business shall be trans¬
mitted by the railway company from any station where the telegraph
company shall have an office, without the consent of the latter;" that
if the business of the railway company should, in its opinion, require
more than one wire, they might appropriate another wire, upon paying
to the telegraph company the cost of such wire 011 the poles, the
telegraph company to attach such other wire for the use of the com¬
pany; that the business of the railway company of every kind, and the
family, private, and social messages of its executive officers, should be
transmitted without charge between all telegraph stations on the line
of said roadway, and between all such stations and St. Louis, and over
all other lines in Missouri, Kansas, Colorado, and New Mexico, then
owned or controlled, or which might thereafter be owned or controlled,
by the telegraph company, provided, so far as said lines in Colorado
and New Mexico were concerned, and the road or roads of the Union
Pacific Pailwav Company, Eastern Division, were at the time in proc¬
ess of construction towards Santa Fe or Denver, or both, all such
business should be transmitted free of charge over all other lines then
or thereafter to be owned or controlled by the telegraph company within
the United States, to an amount not exceeding four thousand dollars
per annum, with a rebate of one-half of regular tariff charges for all in
excess of that amount; that until a second wire was put up, both par¬
ties could use the first wire, the business of the railway company hav¬
ing preference; and if either wire was interrupted or required by the
United States, both parties might use the other one as far as practi¬
cable, but without delay or charge to the railway company; that the
telegraph company should furnish all main batteries required for the
efficient working of the telegraph line provided for, and keep the line
in good working order, without expense to the railway company, except
for the materials which the latter had agreed to supply.
Again: That "the railway company may establish, at their own
expense, as many offices as they require, and at all places where rlie
telegraph company has 110 separate office the employes of the railway
DECISIONS OF THE SUPREME COURT.
215
company shall, so long as it may not interfere with the business of said
railway company, receive, transmit, and deliver such commercial or paid
business as may be offered at the tariff rates of the telegraph com¬
pany, provided such paid business does not amount to enough to pay
the expenses of a separate telegraph office, and shall account for and
pay over to the latter, monthly, the amount thereof at such rates;
and concerning such business, all rules, regulations, and orders of the
telegraph company applicable thereto shall be observed; but said rail¬
way company shall not be amenable in any way to said telegraph com¬
pany for the acts or operations of said agents, otherwise than to remedy
the difficulty in future;" that each party, at its own expense, should
have the right to add as many lines as its business required; that it
would perform without charge for the railway company what should be
decided by competent authority to be its telegraphic obligations to the
Government of the United States; and that a telegraph line should be
constructed on the road of the railway company from Leavenworth to
Lawrence at such time, between May 31, 1807, and September 1, 18(58,
as that company might decide, and upon the same terms and conditions
as that west of Fort Biley.
By the agreement of September 1, 1869, between the Atlantic and
Pacific Telegraph Company and the Union Pacific Kailroad Company,
the railroad company, in consideration of thirty-three thousand shares
of the stock of the telegraph company, (for an increase of whose stock
the agreement made provision,) demised and leased to that telegraph
company "all its telegraph line, wires, poles, instruments, offices, and
other property by it possessed appertaining to the business of telegraph¬
ing for the purpose of sending messages and doing a general telegraphic
business," to have and to hold during the whole term of the charter of
the telegraph company, and any renewals thereof, subject to the rights
of the United States, as set forth in the charter of the railroad company,
and on condition that the telegraph company should fully perform all
duties that were or might be imposed upon the railroad company by
its charter or by the laws of the United States.
It was further stipulated in that agreement that the telegraph com¬
pany should proceed at once, as soon as arrangements were perfected
for extending its line to San Francisco, to put two additional wires,
fully equipped and furnished, on the poles demised along the whole
length of its line; the railroad company to maintain and keep in repair
such poles, wires, and equipments at its expense during the period of
such demise, until from age or other cause they were required to be
renewed, in which case the telegraph company should meet the cost of
renewal; that the railroad company should at its own expense employ,
during a period of twenty-tive years, suitable persons to operate said
telegraph at its own stations, other than at Omaha and such other sta¬
tions as required, for the business of both parties, operators in addition
to those needed by the railroad company; that the railroad company
should have the right free of expense to the constant and perpetual use
of two of the wires when required for its business, and the free use for
its business of the whole line of telegraph, which should then or there¬
after belong to or be controlled or operated by the telegraph company,
to and from all parts of the United States, for all purposes connected
with the management of the road or its business; that the telegraph
company should have such preferential privileges and facilities for its
business as are usually granted by railroad companies in contracts of
connection with telegraph companies; and that the railroad company
should "afford all other telegraph companies only such facilities as by
216
DECISIONS OF TIIE SUPREME COURT.
law tliey now are or may hereafter be required to afford as common
carriers or otherwise, in which shall not be included the privilege of
using- hand cars or of stopping trains except at regular stations, or
transporting the officers or servants of such companies, except on regu¬
lar passenger trains at regular rates of fare, or of transporting- material
for such companies or person (other than the parties of the first part)
except on regular freight trains and at the usual rates of freight, unless
the facilities aforesaid, or some of them, shall be required by law to be
afforded such companies or persons."
These companies entered into a supplementary agreement on the 14th
day of December, 1871, by which the original contract was modified in
certain particulars, that need not be set out, and which provided that
for all the purposes of both the original and supplementary contract
the road of the railroad company "demised by said original contract
shall be deemed and taken to terminate at the junction of the Union
Pacific Railroad Company with the Central Pacific Railroad Company,
as now established, which junction is at a point about five miles west of
Ogden, and all the rights of the parties under said contract and supple¬
ment shall be made to conform to this modification."
The agreement between the Western Union Telegraph Company and
the Union Pacific Railway Company of July 1,1881, recites that the
former corporation had acquired all the property, rights, and franchises
of the Atlantic and Pacific Telegraph Company, and was in posses¬
sion of and operating a separate line of poles and wires along the main
line of the Union Pacific Railway Company between Omaha and Ogden;
that the parties were then, and for some time past had been, operating
lines of telegraph along various roads of the railway company, under
sundry contracts, thirteen in number, including the above agreements
of 1806,1869, and 1871, and made between the railway company or com¬
panies formerly in possession of lines of railroad, then controlled by
and forming part of that company, and the Western Union Telegraph
Company, or other telegraph companies that had become merged into
the latter company; and that it was desirable to terminate existing
disputes, and embody the agreement of the parties in one new contract,
in lieu of said existing contract.
The expressed purpose of this agreement was to provide telegraph
facilities for the parties, and to maintain and operate the lines of tele¬
graph along all the railway company's roads in the most economical
manner in the interest of both parties, as well as to fulfil the obliga¬
tions of the railway company to the Government of the United States
and the public, in respect to the telegraphic service required by the
act of July I, 1862, and its amendments.
Among other provisions of the above agreement are the following:
"Third. The railway company, so far as it legally may, hereby grants
and agrees to assure to the telegraph company the exclusive right of
way on, along, upon, and under the line, lands, and bridges of the rail¬
way company and any extensions and branches thereof, for the con¬
struction, maintenance, operation, and use of liues of poles and wires,
or either of them, or underground or other system of communication
for commercial or public uses of business, with the right to put up from
time to time, or cause to be put up or constructed under the provisions
of this agreement, such additional wires on its own or the railway com¬
pany's poles or such additional lines of poles and wires or either as
well on its bridges as on its right of way, or to construct such under¬
ground lines as the telegraph company may deem expedient, doing as
little damage and causing as little inconvenience to the railway com-
DECISIONS OF THE SUPREME COURT.
217
pany as is practicable, and the railway company will not transport men
or material for the construction or operation of a line of poles and wire
or wires or underground or other system of communication in competi¬
tion with the lines of the telegraph company, party hereto, except at
and for the railway company's regular local rates, nor will it furnish for
any competing line any facilities or assistance that it may lawfully
withhold, nor stop its trains, nor distribute material therefor at other
than regular stations: Provided always, That in protecting and defend¬
ing the exclusive rights given by this contract, the telegraph company
may use and proceed in the name of the railway company, but shall
indemnify and save harmless the railway company from any and all
damages, costs, charges, and legal expenses incurred therein or thereby.
" Fourth. It is mutually understood and agreed that all of the tele¬
graph lines and wires covered by this contract, whether belonging to or
used by the telegraph company or the railway company for the purpose
of this contract, as herein provided, shall form part of the general sys¬
tem of the telegraph company. The railway company further agrees
that its employes shall transmit over the lines owned, controlled, or oper¬
ated by the parties hereto, all commercial telegraph business offered at
the railway company's offices, and shall account to the telegraph com¬
pany exclusively for all of such business and the receipts thereon, as
provided herein. JSo employe of the railway company shall, while in its
service, be employed by or have any connection with any other tele¬
graph company than the telegraph company party hereto, and the tele¬
graph company shall have the exclusive right to the occupancy of and
connection with the railway company's depots or station houses for com¬
mercial or public telegraph purposes as against any other telegraph
company: Provided, That if any person or party, or any officer of the
Government, tender a message for transmission over the railway tele¬
graph lines between Council Bluff's and Ogden at any railway telegraph
station between those points and require that the service be rendered
by the railway company, the operator to whom the same is tendered
shall receive and forward the same accordingly at rates to be fixed by
the railway company to the point of destination if not beyond its own
lines. If the destination of said message be beyond said railway com¬
pany's lines, the telegraph company, when receiving the same at the
point at which it leaves the said railway lines, may demand the prepay¬
ment of tolls for the service of forwarding the message on its own lines:
Provided, however, That the local receipts of the railway company on
such messages shall be divided between the parties hereto in the same
manner and subject to the same conditions as provided in the tenth
clause of this agreement."
" Sixth. Each party hereto shall pay one-half of the entire cost of all
poles, wires, insulators, tools, and other material used for the mainte¬
nance, repair, and renewal or reconstruction of existing lines and wires
along all of the railway company's railroads, and for the construction,
maintenance, repair, and renewal or reconstruction of such additional
wires or lines of poles and wires as may be required for commercial or
railroad telegraph purposes along said railroads, and along future
branches or extensions thereof, and along new railroads constructed or
acquired by the railway company, until the total number of wires shall
amount to three for the exclusive use of each party hereto between
Council Bluffs and Ogden, two for the exclusive use of each party hereto
between Kansas City and Denver, and one for the exclusive use of each
party hereto on all other portions of the railway company's railroads,
branches, and extensions. Each party hereto shall pay the entire cost
218
DECISIONS OF THE SUPREME COURT.
of tlie construction, maintenance, repair, and renewal or reconstruction
of wires for its exclusive use in excess of the number hereinbefore men¬
tioned. The material of the telegraph company for additional wires to
be transported free of charge by the railway company over its own lines,
as hereinafter provided. The telegraph company agrees to furnish at
its own expense all blanks and stationery for commercial or other public
telegraph business, and all instruments, main and local batteries, and
battery material for the operation of its own and the railway company's
wires and oflices. . . .
'•Seventh. . . . The telegraph company agrees to furnish, free of
charge, for the railroad business of the railway company, a direct wire
connecting the railway company's office in Omaha, Nebraska, with its
office in Kansas City, Missouri, and with the railway company's offices
at intermediate railroad stations of the railway company along the Mis¬
souri Kiver, including Council Bluffs; and the telegraph company will
receive, transmit, and deliver, free of charge, at and from its offices at
said intermediate stations of the railway company, such messages on
the railroad business of the railway company as may be offered by its
agents and officers for points on the railway company's roads, provided
that the telegraph company may use said wire for the transaction of
commercial or public telegraph business when not in use for railroad
business.
" Eighth. All messages of the officers and agents of the railway com¬
pany pertaining to its railroad business may be transmitted free of
charge between all telegraph stations on the lines of its various rail¬
roads over wires set apart for railroad business. ... It is under¬
stood and agreed that the free telegraphic service herein provided for
is for the transmission of messages concerning the operation and busi¬
ness of the railway company's railroads, and shall not be extended to
messages ordering sleeping car, parlor car, or steamer berths, or other
accommodations for customers of the railway company, the tolls on
which messages should properly be chargeable to such customers.
"Ninth. The railway company agrees to transport free of charge over
its railroads, upon application of the superintendent or other officer of
the telegraph company, all officers of the telegraph company when
travelling on its business, and all employes of the telegraph company
when travelling on the telegraph company's business connected with or
pertaining to the lines or wires and oflices along any of the railway com¬
pany's railroads. And the railway company further agrees to trans¬
port and distribute free of charge along the line of any and all its
railroads all poles and other materials for the construction, maintenance,
operation, repair, or reconstruction of the lines and wires covered by
this agreement, and of such additional wires or lines of poles and wires
as may be erected under and in pursuance of the provisions of this
agreement. Also all material and supplies for the establishment, main¬
tenance, and operation of the offices along said railroads, it being
understood that no charge shall be made for the transportation of poles
or other materials over any of the railway company's railroads for use
on any other of its railroads.
"Tenth. The telegraph company agrees to supply instruments and
local batteries and blanks and stationery for commercial telegraph
business, as hereinbefore provided at offices established and maintained
by the railway company. At all telegraph stations of the railway com¬
pany its employes shall receive, transmit, and deliver such commercial
or public messages as may be offered, and shall render to the telegraph
company monthly statements of such business and full accounts of all
DECISIONS OF THE SUPREME COURT.
219
receipts therefrom, and the railway company shall cause all of such
receipts to be paid over to the telegraph company monthly.
"As compensation to the railway company for the services herein
provided for, the telegraph company agrees to pay or return to the rail¬
way company monthly one-half of the cash receipts at telegraph sta¬
tions maintained and operated by and at the expense of the railway
company, tolls on ocean cable messages and tolls for lines of other com¬
panies excepted, all of which shall be retained by the telegraph com¬
pany, it being understood that the railway company shall not be entitled
to any portion of the tolls on ocean cable messages or tolls belonging
to lines of other companies or to any portion of amounts checked against
other offices. . . .
" The railway company agrees that its employes shall not compete
with the telegraph company's offices in the transaction of commercial
telegraph business at any point where the telegraph company may now
or hereafter have an office separate from the railway company's oil ice,
by cutting rates or by active efforts to divert business from the telegraph
company."'
" Twelfth. It is further agreed that the management of the wires,
the repairs of all the lines along the railway company's railroads, and
the distribution of all materials for use on said lines, shall be under the
supervision and control of a competent superintendent, who shall be
appointed and paid jointly by the parties hereto, and whose salary shall
be fixed by mutual agreement, and said superintendent shall be equally
the servant of each of the parties hereto, and shall, as far as piactica-
ble, protect and harmonize the interest ot both parties hereto in the
transaction of the railroad and commercial telegraph business along
the railway company's railroads. . . .
"Thirteenth. The railway company shall have the right to the free
use of any telegraphic patent rights or new discoveries or inventions
that the telegraph company now owns and uses in its general telegraph
business or which it may hereafter own and use as aforesaid, so far as
the same may be necessary to properly carry on the business of rail¬
road telegraphing on the line of said railroads as provided for herein.
"Fourteenth. The telegraph company hereby promises and agrees
to assume and protect the railway company from the payment of all
taxes levied and assessed upon the telegraph property belonging to
either of the parties to this agreement.
"Fifteenth. The provisions of this agreement shall extend to all
railroads and branches or extensions thereof now or hereafter owned
or controlled by the railway company, provided, however, that in case
the railway company shall hereafter acquire the ownership or control
of any railroad, upon which the telegraph company may already have a
line of telegraph in operation, the provisions of this contract shall not
apply to such railroad and telegraph line without the mutual consent
of the parties hereto at the time of such acquisition."
The contract of 1881 was, by its terms, to continue in force for twenty-
five years, and existing contracts with other companies, and in respect
to other roads, were to be deemed superseded, so long as the last con¬
tract was fully observed 011 the part of the railway company, but to be
again in force, for the protection of the Western Union Telegraph Com¬
pany, in case this contract should not be kept in good faith by the
railway company for the full term of twenty-five years.
By the decree of the Circuit Court it was further adjudged that the
Union Pacific Pailway Company "at once put an end to all relations
between it and the defendant, the Western Union Telegraph Company,
220
DECISIONS OF THE SUPREME COURT.
not equally allowed to all other persons or corporations operating, own¬
ing, or using the telegraph as a means of communication, and also at
once resume possession of its offices, poles, wires, instruments, and all
its other property belonging or appertaining to the business of teleg¬
raphy along such of its main and branch lines as were aided by the
Government under the act of July 1, 1802, and acts amendatory and
supplemental thereto, and henceforth, by and through its own corpo¬
rate officers and employes, maintain and operate, for railroad, govern¬
mental, commercial, and other purposes, such telegraph lines and
instruments, and in all ways exercise by itself alone all the telegraph
franchises conferred upon it and obligations assumed by it under the
several acts granting subsidies in land or bonds or loan of credit to
it and to its constituent companies, or the acts amendatory of or
supplemental thereto; and in all cases where the said defendant com¬
pany has not now adequate facilities to enable it to thus conduct the
telegraph business and afford equal facilities to all without discrimina¬
tion in favor of or against any person, company, or corporation what¬
ever, and to receive, deliver, and exchange business with connecting
telegraph lines and all companies desiring to make such connections on
equal terms and afford equal facilities to all, and without discrimina¬
tion for or against any one of such connecting lines and upon just and
equitable terms (all of which said defendant is required and directed to
at once proceed to do), then said defendant shall at once construct and
provide such facilities as are necessary to carry out the provisions of
this decree and the several acts of Congress creating or aiding said
defendant company or its constituent parts and all acts amendatory
and supplemental thereto."
It was further adjudged that the Western Union Telegraph Com¬
pany " at once vacate all the offices of said railway company without
interference or damage to the same, and without removing, until the
further order of this court, any property therefrom or from the line of
said railway company which has heretofore been jointly used by the
two companies, or the ownership of which is in dispute or is so con¬
nected with or mixed with the property of the railway company as to
make it difficult of identification, or the removal of which will inter¬
rupt or interfere with the discharge of the duties of the defendant rail¬
way company, as herein set forth and enjoined;" this decree, however,
not to be construed as preventing the railway company from leasing to
the telegraph company "the right to occupy with its wires, instru¬
ments, batteries, and operators, upon reasonable and proper terms, any
of its poles along the right of way and space in the depots or stations
of the said the Union Pacific Railway Company not required by the
railway company for the transaction of its business."
Sixty days after the entry of the decree were given to make such
necessary arrangements, adjustments, and changes as might become
necessary by reason of annulling the above agreements, and in order
that the provisions of the decree might be carried into effect. And the
right was reserved to the telegraph company to apply tor and have
stated an account between the defendants in respect of the value of
the telegraph property along the line of the railway company, the cost
of maintenance aud profits of the telegraph lines, the amounts con¬
tributed thereto by the respective defendants or their assignors or
predecessors in title, and all matters affecting the equities of the defend¬
ants—the United States to have the right to intervene on such account¬
ing for the protection of its interests aud those of the public. 50 Fed.
Rep. 28.
DECISIONS OF THE SUPREME COURT.
221
Upon appeal by the defendants to the United States Circuit Court of
Appeals the decree of the Circuit Court was reversed, and the cause
remanded with directions to enter a modified decree adjudging, among
other things, that the agreement of October 1, 1806, was a lawful and
binding contract, and continued in force until it was superseded by
the agreement of July 1, 1881; that the agreements of September 1,
1809, and December 14, 1871, were beyond the powers of the Union
Pacific Railroad Company, and must be annulled; that the equities
arising out of the two last-named agreements were adjusted and settled
by the parties interested when they made the contract of July 1, 1881;
and, that the last-named agreement was valid and binding in all
respects, except that the third and fourth paragraphs were null and
void to the extent, and only to the extent, that they secured or granted,
or were intended to secure and grant, to the Western Union Telegraph
Company any exclusive rights, privileges, or advantages whatsoever.
19 U. S. App. 531; S. G. 59 Fed. Rep. 813.
Before examining the provisions of the agreements that were annulled
by the decree of the Circuit Court, it is necessary to ascertain the
nature and extent of the obligations imposed upon the Union Pacific
Railroad Company and the other constituent companies of the Union
Pacific Railway Company, in respect of the construction, maintenance,
aud operation of telegraph lines along the routes of their respective
roads. If it be found that the Union Pacific Railway Company, in the
exercise of the rights and powers of its constituent companies, was not,
prior to the passage of the act of August 7,1888, under any legal duty,
in addition to the construction of a railroad on the routes prescribed,
to maintain or operate telegraph lines on or along its roadways, the
question will arise, whether it was competent for Congress to require
that company, through its own officers and employes exclusively, to
maintain or operate telegraph lines on or over its roadways, to be used
for railroad, governmental, commercial, and other purposes, and itself
alone exercise the telegraph franchises conferred by the acts of Con¬
gress.
The Union Pacific Railroad Company was created by the above act
of Congress of July 1, 1802. 12 Stat. 489, c. 120. Its title indicated
that the subsidy granted was to aid in the construction of both a rail¬
road and telegraph line from the Missouri River to the Pacific Ocean,
and to secure to the Government the use of the same for postal, mili¬
tary, and other purposes.
Proceeding under that act, the company began in 1865, and in 1809
completed, the construction of a railroad from Omaha to Ogden, mak¬
ing connection at the latter place with the Central Pacific Railway,
extending from Ogden to San Francisco. It also constructed, on the
north side of its right of way, a telegraph line between Omaha and
Ogden.
By the first section of the above act of July 1,1862, the Union Pacific
Railroad Company was authorized and empowered "to lay out, locate,
construct, furnish, maintain, and enjoy a continuous railroad and tele¬
graph" from a named point in the then Territory of Nebraska to the
western boundary of Nevada Territory; by the second section, a right
of way through the public lands was given "for the construction of
said railroad and telegraph line;" by the third section, a grant of pub¬
lic lands was made "for the purpose of aiding in the construction of
said railroad and telegraph line;" by the fourth section, patents for
lands granted were to be issued upon the certificate of commissioners
appointed by the President, when it appeared that forty consecutive
222
DECISIONS OF THE SUPREME COURT.
miles of the "railroad and telegraph line" had been completed and
equipped in all respects as required, and were ready for the service
contemplated by the act; by the fifth section, provision was made for
issuing to the company bonds of the United States that should consti¬
tute a first mortgage on the whole line of "the railroad and telegraph,
together with the rolling stock"—such bonds to be issued when the
commissioners certitied to the completion and equipment of forty con¬
secutive miles of "railroad and telegraph," in accordance with the pro¬
visions of the act; by the sixth section, the grants of land were declared
to be made "upon condition that said company shall pay said bonds at
maturity and shall keep said railroad and telegraph line in repair and
use, and shall at all times transmit despatches over said telegraph
line," etc.; by the seventh section, the company was required, within
one year after the passage of the act, to file its assent to its provisions,
and complete said "railroad and telegraph" from the point of begin¬
ning as provided to the western boundary of Nevada Territory before
the first day of July, 187J; and by the eighth section, "the line of said
railroad and telegraph" was prescribed.
The ninth section authorized the Leavenworth, Pawnee and West¬
ern Railroad Company—which, prior to January 1, 180-i, had located
its line of road from Leavenworth to Fort Eiley—to construct a rail¬
road and telegraph line from the Missouri Eiver, at the mouth of the
Kansas Kiver, on the south side thereof, so as to connect with the
Pacific Iiailroad of Missouri at the aforesaid point, on the one hun¬
dredth meridian of longitude west of Greenwich, upon "the same
terms and conditions in all respects" as were provided in the act for
the construction of the railroad and telegraph line first mentioned, and
to meet and connect with the same at the meridian of longitude
named. The same section authorized the Central Pacific Eailroad
Company, a California corporation, to construct "a railroad and tele¬
graph line" from the Pacific coast, at or near San Francisco or the
navigable waters of the Sacramento Eiver, to the eastern boundary of
that State, " upon the same terms and conditions, in all respects, as
are contained in this act for the construction of said railroad and tele¬
graph line first mentioned, and to meet and connect with the first-
mentioned railroad and telegraph line on the eastern boundary of
California."
The tenth section authorized the Kansas and California companies,
or either of them, after completing their roads, to unite upon equal
terms with the first-named company in constructing so much of said
"railroad and telegraph line and branch railroads and telegraph lines"
in the act mentioned, through the Territories from the State of Cali¬
fornia to the Missouri Eiver, as shall then remain to be constructed, on
the same terms and conditions as provided in relation to the said Union
Pacific Eailroad Company. And the Hannibal and St. Joseph Eail¬
road, the Pacific Eailroad Company of Missouri, and the first named
company, or either of them, on filing their assent to the act, were
authorized to unite upon equal terms, with the said Kansas company, in
constructing said railroad and telegraph, to said meridian of longitude,
with the consent of the said State of Kansas; "and in case said first-
named company shall complete its line to the eastern boundary of Cali¬
fornia before it is completed across said State by the Central Pacilic
Eailroad Company of California, said first-named company is hereby
authorized to continue in constructing the same through California, with
the consent of said State, upon the terms mentioned in this act, until
DECISIONS OF THE SUPREME COURT.
223
said roads shall meet and connect, and the whole line of said railroad and
telegraph is completed; and the Central Pacific Railroad Company of
California, after completing its road across said State, is authorized to
continue the construction of said railroad and telegraph through the
the Territories of the United States to the Missouri River, including
the branch roads specified in this act, upon the routes hereinbefore
and hereinafter indicated, on the terms and conditions provided in this
act in relation to the said Union Pacific Railroad Company, until said
roads shall meet and connect, and the whole line of said railroad and
branches and telegraph is completed."
By the eleventh section it was provided, in respect of bonds issued
in the aid of the construction of the most mountainous and difficult
parts of the road, that "no more than fifty thousand of said bonds
shall be issued under this act to aid in constructing the main line of
said railroad and telegraph;" by the twelfth section, that "the whole
line of said railroad and branches and telegraph shall be operated and
used for all purposes of communication, travel, and transportation, so
far as the public and the Government are concerned, as one connected,
continuous line;" and by the fourteenth section, that the Union Pacific
Railroad Company should construct a single line of railroad and tele¬
graph from the western boundary of Iowa, at a point to be designated
by the President, so as to form a connection with that company's line
on the said one hundredth meridian of longitude, upon the same terms
and conditions prescribed "for the construction of said railroad and
telegraph first mentioned;" and whenever a railroad was constructed
through Minnesota or Iowa to Sioux City, then the above company
should construct a railroad and telegraph line from Sioux City to
connect with the Union Pacific Railroad.
The fifteenth section declared that any company then or thereafter
incorporated should have the right to connect its road with the road
and branches provided by the act, at such places and upon such terms
as the President might prescribe. But by an act of Congress, passed
June 20, 1874, 18 Stat. Ill, c. 331, the following addition was made to
this section of the act of July 1, 1862, 12 Stat. 489, 496, c. 120: "And
any officer or agent of the companies authorized to construct the afore¬
said roads, or of any company engaged in operating either of said roads,
who shall refuse to operate and use the road or telegraph under his
control, or which he is engaged in operating for all purposes of com¬
munication, travel, and transportation, so far as the public and the
Government are concerned, as one continuous line, or shall refuse, in
such operation and use, to afford and secure to each of said roads equal
advantages and facilities as to rates, time, or transportation, without
any discrimination of any kind in favor of, or adverse to, the road or
business of any or either of said companies, shall be deemed guilty of
a misdemeanor, and, upon conviction thereof, shall be fined in any sum
not exceeding one thousand dollars, and may be imprisoned not less
than six months; . . . and it is hereby provided that for all the pur¬
poses of said act, and of the acts amendatory thereof, the railway of
the Denver Pacific Railway and Telegraph Company shall be deemed
and taken to be a part and extension of the road of the Kansas Pacific
Railroad, to the point of junction thereof with the road of the Union
Pacific Railroad Company at Cheyenne, as provided in the act of March
third, eighteen hundred and sixty-nine."
The sixteenth section of the act of 1862 further provided that all of
the railroad companies mentioned in the act, or any two or more of them,
224
DECISIONS OP THE SUPREME COURT.
might form themselves into one consolidated company, the latter com¬
pany to proceed thereafter "to construct said railroad and branches and
telegraph line upon the terms and conditions provided in this act."
The seventeenth section provided that in case said company or compa¬
nies failed to comply with the terms and conditions of the act "by not
completing the said road and telegraph and branches within a reasonable
time, or by not keeping the same in repair and use, but shall permit the
same, for an unreasonable time, to remain unfinished, or out of repair,
and unfit for use, Congress may pass any act to insure thespeedy com¬
pletion of said road and branches, or put the same iu repair and use,
and may direct the income of said railroad and telegraph line to be
thereafter devoted to the use of the United States, to repay all such
expenditures caused by the default and neglect of such company or
companies." '
The eighteenth section provided that whenever it appeared that "the
net earnings of the entire road and telegraph," including the amount
allowed for services rendered for the United States, alter deducting all
expenditures, including repairs, and the furnishing, running, and man¬
aging of said road, shall exceed ten per centum upon its cost, exclusive
of the five per centum to the United States, Congress could reduce the
rates of fare thereon, if unreasonable in amount, and fix and establish
the same by law. And "the better to accomplish the object of this act,
namely, to promote the public interest and welfare by the construction
of said railroad and telegraph line, and keeping the same in working
order, and to secure to the Government at all times (but particularly in
time of war) the use and benefits of the same for postal, military, and
other purposes, Congress may, at any time, having due regard for the
rights of said companies named herein, add to, alter, amend, or repeal
this act."
The act of July 1, 1862, was amended, iu various particulars, by the
act of July 2, 1861, c. 216. 13 Stat. 356. By the tenth section of the
latter act the former was so amended that the Union Pacific Bailroad
Company, the Central Pacific Bailroad Company, and other companies,
authorized to participate in the construction of the proposed lines of
road, could "issue their first mortgage bonds on their respective rail¬
road and telegraph lines to an amount not exceeding the amount of the
bonds of the United States," and "the lien of the United States shall
be subordinate to that of the bonds of any or either of said companies,
hereby authorized to be issued on their respective roads, property, and
equipments," except as to those provisions of the act of 1862, relating
to the transmission of dispatches and the transportation of mails,
troops, munitions of war, supplies and public stores of the United
States.
Section fifteen of the same act was in these words: "That the sev¬
eral companies authorized to construct the aforesaid roads are hereby
required to operate and use said roads and telegraph for all purposes
of communication, travel, and transportation, so far as the public and
the Government are concerned, as one continuous line; and, in such
operation and use, to afford and secure to each equal advantages and
facilities as to rates, time, and transportation, without any discrimina¬
tion of any kind in favor of the road or business of any or either of said
companies, or adverse to the road or business of any or either of the
others, and it shall not be lawful for the proprietors of any line of tele¬
graph, authorized by this act, or the act amended by this act, to refuse
or fail to convey for all persons requiring the transmission of news and
messages of like character, on pain of forfeiting to the person injured,
DECISIONS OF THE SUPREME COURT.
225
for each offence, the sura of one hundred dollars, and such other dam¬
age as he may have suffered on account of said refusal or failure, to be
sued for and recovered in any court of the United States, or of any State
or Territory of competent jurisdiction."
The sixteenth section provided that any two or more of the companies
authorized to participate in the benefits of that act might at any time
unite and consolidate upon such terms and conditions as were not
incompatible with such act or the laws of the State or States in which
the roads of said companies were, and such consolidated company should
be entitled to receive from the Government all the grants, benefits, and
immunities that the respective constituent companies were entitled to,
subject to all the restrictions imposed upon them.
By the twenty-second section it was declared that " Congress may,
at any time, alter, amend, or repeal this act."
In our judgment, it is not difficult to ascertain the intention of Con¬
gress in passing the acts of July 1, 18G2, and the amendatory act of
July 2, 1864, c. 216. The supreme object to be obtained was the main¬
tenance and operation of both a railroad and telegraph line from the
Missouri River to the Pacific Ocean, and governmental aid was extended
in order to accomplish a result so important to the wbole country.
The authority given to the Union Pacific Railroad Company to lay
out, locate, construct, furnish, maintain, and enjoy a continuous rail¬
road and telegraph line on that route, § 1; the grant of public lands for
the purpose of aiding in the construction of said railroad and telegraph
line, § 3; the direction that patents for lands granted should be issued
as each forty consecutive miles of such railroad and telegraph line
appeared, upon the certificate of commissioners, appointed by the Presi¬
dent, to have been completed and equipped in all respects as required,
§ 4; the making the bonds of the United States a first mortgage on
the whole line of the railroad and telegraph, § 5; the explicit declara¬
tion that the grants of public lands were made upon the condition,
among others, that the company should keep said railroad and telegraph
line in repair and use, and at all times transmit dispatches over said
telegraph line, § 6; the requirement that the company should complete
said railroad and telegraph on the route prescribed and within a named
time, § 7; the reservation that Congress may at any time, having due
regard to the rights of the companies named, add to, alter, amend, or
repeal the act in order that it may better accomplish the object of the
government, namely, u to promote the public interest and welfare by
the construction " of said railroad and telegraph line, and keep the same
in working order, and to secure to the government at all times (but
particularly in time of war) " the use and benefits of the same for pos¬
tal, military, and other purposes," § 18; these and other provisions are
wholly inconsistent with the idea that the Union Pacific Railroad Com¬
pany could have fulfilled its obligations to the government by simply
constructing a railroad, without making any provision whatever for
the construction, maintenance, or operation of a telegraph line, thereby
leaving all communication by telegraph, along its route, to the absolute
control of private corporations deriving no corporate authority from
the National Government, and whose operations would not ordinarily
be subjected to national supervision.
The same observations are applicable to the Leavenworth, Pawnee
and Great Western Railroad Company—afterwards, and successively,
as has been stated, the Union Pacific Railway Company, Eastern
Division, and the Kansas Pacific Railway Company. That corporation,
was authorized to construct not simply a railroad, but a railroad and
15 PAC
226
DECISIONS OF THE SUPREME COURT.
telegraph line, between certain points, upon t he same terms and conditions
as were prescribed in the act for the construction of a railroad and
telegraph line by the Union Pacific Railroad Company.
The purpose of Congress, as indicated in the act of 1802, to provide
for the construction of telegraph lines by the company named in it, in
connection with their respective railroads, was unchanged at the time
of the passage of the amendatory act of July 2,1804, c. 210. The latter
act, as we have seen, gave authority to the companies authorized to
participate iu the construction of the roads that were to connect the
Missouri River with the Pacific Ocean to place a first mortgage on their
respective railroads and telegraph lines, and made the mortgage held by
the United States subordinate to it. § 10. It did more. It required
those companies to operate and use their roads and telegraph for all
purposes of communication, travel, and transportation, so far as the
public and government were concerned, "as one connected, continuous
line,'' and without discrimination against either road—a requirement
that would not have been made if Congress had not intended that each
company receiving aid from the government should itself maintain and
operate or control, or should provide for the maintenance, on its own
route, and under its own control, of a telegraph line for the accommoda¬
tion of both the government and the general public.
What we have said as to the objects that Congress intended to accom¬
plish by aiding the construction of a railroad and telegraph line from
the Missouri River to the Pacific Ocean is based upon sections one to
eighteen, inclusive, of the act of July 1, 1862, and upon the provisions
of the amendatory act of July 2,1864, c. 216, and June 20,1874,18 Stat.
Ill, c. 331. If we look alone to those sections and provisions, the con¬
clusion must be that any company named in the act of 1862, and receiv¬
ing the aid therein granted by the government, was required itself, and
through its own officers and employes, to construct, maintain, and
operate both a railroad and telegraph line, and could not assign or
transfer to any other corporation its franchises in that regard.
But there is a section in the act of 1862 showing that, for the benefit
of certain telegraph companies that had already expended large sums
in the construction of telegraph lines, Congress was willing, in a named
contingency, to relieve the railroad companies receiving governmental
aid, from, at least, any present obligation to construct telegraph lines
on their respective rights of way. That contingency is indicated in the
nineteenth section of the act of 1862, which provides:
" That the several railroad companies herein named are authorized
to enter into an arrangement with the Pacific Telegraph Company, the
Overland Telegraph Company, and the California State Telegraph Com¬
pany, so that the present line of telegraph between the Missouri River
and San Francisco may be moved upon or along the line of said railroad
and branches as fast as said roads and branches are built; and if said
arrangement be entered into, and the transfer of said telegraph line be
made in accordance therewith to the line of said railroad and branches,
such transfer shall, for all purposes of this act, be held and considered
a fulfilment on the part of said railroad companies of the provisions of
this act iu regard to the construction of said line of telegraph. And,
in case of disagreement, said telegraph companies are authorized to
remove their line of telegraph along and upon the line of railroad herein
contemplated without prejudice to the rights of said railroad companies
named herein."
A similar provision relating to the Union Pacific Railroad Company
and the United States Telegraph Company and its associates was
DECISIONS OF THE SUPREME COURT.
227
embodied in tlie fourth section of the act of Congress, commonly known
as the Idaho act, of July 2, 1804, c. 220, 13 Stat. 373, entitled "An act
for iucreased facilities of telegraph communication between the Atlan¬
tic and Pacific States and the Territory of Idaho."
By the latter act the United States Telegraph Company and their
associates were authorized to erect a line or lines of magnetic telegraph
between the Missouri Biver and San Francisco on such routes as they
might select, to connect with its lines then constructed and being con¬
structed through the States of the Union. It was given the use of
such unoccupied land of the United States as was necessary for right
of way, and materials, and for the establishing of stations along said
line for repairs, not exceeding at any station one quarter-section of land,
and such stations not to exceed one in fifteen miles on the average of
the whole line, unless said lands should be required by the government
of the United States for railroad or other purposes. § 1. Under the
direction of the President of the United States it was authorized to
erect a telegraph line from Fort Hall to Portland, Oregon, and from
Fort Hall to Bannock and Virginia City, in the Territory of Idaho, with
the same privileges as to the right of way, and so forth, as provided in
the first section; the United States to have priority in the use of said
lines of telegraph to Oregon and Idaho. § 2. It was authorized to
send and receive despatches, on payment of the regular charges for
transmission, over any line then or thereafter to be constructed by the
authority or aid of Congress, to connect with any line or lines author¬
ized or erected by the Russian or English governments, and all
despatches received by its line or lines were to be transmitted in the
order of their reception, and the answers delivered to the United States
Telegraph Company for transmission over their lines to the office whence
the original message was sent, whenever so directed by the sender
thereof. §3. By the fourth section it was provided: "The several
railroad companies authorized by the act of Congress of July one,
eighteen hundred and sixty-two, are authorized to enter into arrange¬
ments with the United States Telegraph Company so that the line of
telegraph between the Missouri River aud San Francisco may be made
upon and along the line of said railroads and branches as fast as said
roads and branches are built, and if said arrangements be entered into
and the transfer of said telegraph line be made in accordance there¬
with to the line of said railroads and branches, such transfer shall, for
all purposes of the act referred to, be held and considered a fulfilment
on the part of said railroad companies of the provision of the act in
regard to the construction of a telegraph line; and, in case of disa¬
greement, said telegraph company are authorized to remove their line
of telegraph along and upon the lines of railroad therein contemplated,
without prejudice to the rights of said railroad companies."
Referring to the nineteenth section of the act of 1862, Mr. Justice
Miller, in Western TJnion Tel. Go. v. Union Pacific Railway, 3 Fed. Rep.
721, 728, (1 McCrary, 581, 588,) said: " The three telegraph companies
here spoken of, together constituted, at the time this statute was passed,
a continuous line of telegraph from the Missouri River to San Fran¬
cisco; and it was obvious that the building of another line parallel to
that, and not far distant from it, would have a very injurious effect
upon the value of the property of those telegraph companies; and it
was to protect those companies and to prevent the injury which would
follow from the construction of another line between the same points,
over an uninhabited region of country, that Congress provided that,
by an arrangement with the railroad company, if those companies
228
DECISIONS OP THE SUPREME COURT.
should remove their wires along the line of that road so they could be
used both for railroad purposes and the use of the general public, then
the obligation of the railroad company under the act of Congress to
build another line should no longer exist."
In reference to the fourth section of the Idaho act, the same eminent
Justice said: "It does not admit, in my opinion, of any reasonable
doubt that if the United States Telegraph Company mentioned in that
statute, or any company which had the same rights and authorities on
that subject that that company had, entered into an agreement with
the Pacific Railroad Company, or any of its branches built under the
authority of the original act of 18G2, which secures the proper construc¬
tion and operation of a line of telegraph along its road for the benefit
of the public, that it is absolved from the obligation imposed upon it
by the act of 18G2, to construct and operate such a telegraph line. It
was manifestly the design of this act of 18G4 to enable the United
States Telegraph Company to become substituted, by a proper arrange¬
ment with the Pacific Railroad Company and its branches, to the right
to build a telegraph line along the track and right of way of those rail¬
road companies, and thereby to relieve those compauies from the obli¬
gation to build and operate such a line." Id. 727.
We concur in these observations as to the scope and effect of the nine¬
teenth section of the act of 18G2, and of the like section in the Idaho
act of July 2, 18G4, c. 220. But it must be observed that the transfer
to the roadway of the Union Pacific Railroad of the lines of the tele¬
graph companies, or either of them, named in the nineteenth section
of the act of 18G2, was not in pursuance of any "arrangement" made
with those companies. On the contrary, as stated by counsel, the lines
constructed by telegraph companies between Omaha and Ogden, and
operated by the Western Union Telegraph Company prior to the actual
completion of the railroad between those points, were transferred to the
south side of the railroad as the work of railroad construction pro¬
ceeded, without any arrrangementwhatever with the railroad company.
This was done under that clause in the nineteenth section of the act of
18G2, providing that "in case of disagreement said telegraph companies
are authorized to remove their line of telegraph along and upon the line
of railroad herein contemplated without prejudice to the rights of said
railroad companies named herein."
In reference to the telegraph line from Kansas City via Lawrence and
Rossville to Denver, the claim is, that a part of it was constructed
under some arrangement between the railroad company and Samuel
llallett, contractor; that the balance was constructed under the con¬
tract of October 1,18GG, between the Western Union Telegraph Com¬
pany and the Kansas Pacific Railroad Company, the latter contracting
by the name it then used of the Union Pacific Railway Company,
Eastern Division; and that after that date and until 1880, the line of
telegraph extending from Kansas City to Denver was operated under
the contract of October 1,18GG. It is further claimed that the telegraph
line so constructed was accepted by the Government as a substitute for
the line which the charter of the railroad company required it to con¬
struct, maintain, and operate.
If it were true that the telegraph line on the Kansas Pacific branch
was constructed on the roadway of the railroad company under such an
"arrangement" with the railroad company as was contemplated or per¬
mitted by the fourth section of the Idaho act, and that the Government,
by not declaring to the contrary, is to be deemed to have accepted the
construction by the telegraph companies of a line on the south side of
DECISIONS OF TIIE SUPREME COURT.
229
the right of way of the Union Pacific Railroad as equivalent to an
"arrangement" allowed by the nineteenth section of the act of 18(12,
the question would remain whether such arrangements, even if legal in
all respects when made, so tied the hands of the Government that it
could not, at a subsequent date, in execution of the purposes of Con¬
gress, require the railroad company, by its own officers and employes
exclusively, to maintain or operate telegraph lines for railroad, govern¬
mental, and commercial purposes, on and over its roads, for the con¬
struction of which the aid of the United States was accepted.
We have seen that the object of giving governmental aid to the
corporations named in the act of 1802 was to promote the public
interest and welfare by the construction and operation of a railroad
and telegraph line, to the use and benefit of which the Government
should be entitled at all times, particularly in time of war, for postal,
military, and other purposes; and that "the better to accomplish" that
object Congress reserved the power, capable of being exercised at any
time, of adding to, altering, amending, or repealing such act, having
"due regard to the rights" of the companies named in it; and that by
the act of 1864, c. 216, the several companies authorized to construct
the roads named were required to operate and use their roads and tele¬
graph for all purposes of communication, travel, and transportation as
one connected, continuous line, affording equal advantages and facilities
as to rates, time, and transportation, without discrimination against
other companies, or against iiersons requiring the transmission of news
and messages.
No express limitation is imposed upon the exercise of the power so
reserved, except that the act of 1862 required that due regard be had
to the rights of the railroad companies that accepted its provisions.
But, looking at the entire act, it is clear that there was no purpose to
interfere with the authority of Congress to enact such laws, by way
of addition to or alteration of existing legislation, as were necessary or
conducive to the attainment of the public objects sought to be attained.
Indeed, the words in the act of 1862, "due regard for the rights of said
companies named therein," suggest only such restrictions as the law,
without such words, would imply.
It would not be competent for Congress, under the guise of altering
and amending the act in question, to impose upon the railroad company
duties wholly foreign to the objects for which it was created or for which
governmental aid was given. Neither could it, by such alteration or
amendment, destroy rights actually vested, nor disturb transactions
fully consummated. We may here, not inappropriately, repeat what
was said in the Sinlcing Fund Cases, 99 U. S. 700, 718, 719, 720, that
"this power lias a limit," and "cannot be used to take away property
already acquired under the operation of the charter, or to deprive the
corporation of the fruits actually reduced to possession of contracts
lawfully made." Again, in the same case: "The United States can¬
not, 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 im¬
pairing 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
230
DECISIONS OF THE SUPREME COURT.
already made in that connection. The United States are as much bound
by their contracts as are individuals. If they repudiate their obliga¬
tions, 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. Ho 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."
But it cannot be doubted that the act of 1888 is within the general
scope, and consistent with the objects, of the previous statutes relating
to railroad and telegraphic communication between the Missouri diver
and the Pacific Ocean. If Congress concluded—and we must assume,
from the provisions of the act of 18G2, that it did conclude—that the
public interests and the general welfare would be promoted if the rail¬
road company, accepting national aid, should exercise through its own
officers and employes exclusively, the telegraphic franchises granted to
it, it is difficult to perceive how legislation designed to enforce such a
j>olicy can be held to be wanting in due regard to the rights of such
company.
It may be that Congress passed the act of 1888 because, in its judg¬
ment, the rights of the Government and of the public, in the matter of
telegraphic communication, could be fully secured or effectively guarded
only by means of telegraph lines maintained and operated by a corpo¬
ration deriving its power from the General Government, and subject,
in respect of the general conduct of its affairs, to national supervision
and control. If such considerations induced the passage of the act of
1888, can the validity of that legislation be made to turn upon the
inquiry by the courts whether the policy inaugurated by Congress was
best for the public interests'? Can it be said that the act of 1888 is not
germane or related to the objects for the attainment of which the aid of
the Government was bestowed, as indicated in the act of 1SG2 ? These
questions must be answered in the negative. We have nothing to do
with the wisdom or policy of legislation. The discretion of Congress
in such matters cannot be controlled by the judiciary, nor can the courts
disregard an act of legislation merely upon the ground that the public
interests would, in their judgment, have been best subserved by leaving
telegraphic communications, along the route of railroads constructed
with national aid, under the domination of private corporations organ¬
ized under state authority. We can consider only the question of legis¬
lative power. If the power existed to enact the statute of 1888, the
duty of the courts is to give full effect to the will of Congress. No other
position can be taken without attributing to the judiciary an authority
to revise the action of the legislative branch of the Government that
it does not possess, and which the established principles of our Govern¬
ment forbid it to exercise.
The contention that the act of 1888 did not have due regard to the
rights of the railroad company is based upon that provision in the act
of 18G2 (§ 19), and a similar provision in the act of 18G4 (§ 4), which per¬
mitted the railroad company to make an " arrangement" with certain
telegraph companies to place their lines upon aud along the route of
the railroad and branches—such transfer to be held and considered,
for all the purposes of the act, a fulfilment on the part of said railroad
companies of the provisions of the act "in regard to the construction of
said lines of telegraph." But such an arrangement, accompanied by
the transfer of telegraph lines constructed by telegraph companies to
the roadway of the railroad company, had no other effect than to
relieve the railroad company from any present duty itself to construct a
DECISIONS OF TIIE SUPREME COURT.
231
telegraph line to be used under the franchises granted and for the pur¬
poses indicated by Congress. It did not affect the authority of Con¬
gress, under its reserved power, to require the railroad company itself
to maintain or operate in the future, by its officers and employes alone,
telegraph lines 011 its main road and branches.
Indeed, no arrangement of the character sjmcified could have been
made, except in full view of the power reserved to add to, alter, or
amend the act that permitted it. Although, as just stated, that power
could not have been exercised, so as to divest either the railroad com¬
pany or the telegraph company of property already acquired, or to dis¬
turb or annul any transaction fully consummated, while such arrange¬
ment was in force, it was competent for Congress to make such addi¬
tions to, or such alterations or amendments of, previous statutes, as
would secure the maintenance or operation by the railroad company,
through its own officers and employes, of a telegraph line over and
along its main line and branches.
It is of no consequence that such legislation may defeat the purpose
contemplated by the parties to an arrangement of the character
described; for they contracted, and could only have contracted, in view
of the possible exercise by Congress of the power expressly reserved
by it. If we should hold the addition made by the act of 1888 to the
act of 18G2, and the acts amendatory thereof, to be beyond the power
of Congress, it would be difficult, if not impossible, to prescribe the
liues within which the national legislature must keep, and beyond
which it may not pass, when exerting its reserved power of adding to,
altering, or amending statutes and charters of incorporation.
We have, therefore, considered the question before us just as if a
contract or arrangement, between the railroad and a telegraph com¬
pany, for the construction by the latter of a telegraph line on the route
of the former, expressly recited the provision of the act of 18G2, by
which Congress reserved the power, to be exerted at any time, to add
to, amend, or repeal the act which authorized such contract or
arrangement.
In this view, it must be held that by its reservation of authority to
add to, alter, amend, or repeal the acts in question, whenever it chose
so to do, Congress, subject to the limitation that rights actually vested
or transactions fully consummated could not be disturbed, intended to
keep within its control the entire subject of railroad and telegraphic
communication between the Missouri Eiver and the Pacific Ocean,
through the agency of corporations created by it, or that had accepted
the bounty of the Government. It was never intended that the rail¬
road companies, accepting such bounty, should be able, by any con¬
tract or arrangement with telegraph companies, to discharge them¬
selves, for all time and beyond the authority of Congress otherwise to
provide, from the obligation to exercise, by their officers and agents
exclusively, the telegraphic franchises received by them from the
57ational Government.
These principles are fully supported by former decisions, in which
this court has determined the scope and effect of constitutional or statu¬
tory provisions that reserved to the legislature granting charters of
incorporation, or enacting statutes under which private rights might-
be acquired, the power to alter, amend, or repeal such charters or stat¬
utes. Tomlinson v. Jessup, 15 Wall. 454, 457, 458; Miller v. State, 15
Wall. 478; Holyoke Company v. Lyman, 15 Wall. 500; Sinking Fund
Cases, 99 XL S. 700, 720, 721; Greenwood v. Freight Co., 105 IJ. S. 13,
21; Close v. Glenwood Cemetery, 107 U. S. 4G6,476; Spring Valley Water
232
DECISIONS OF THE SUPREME COURT.
Works Co., v. Schottler, 110 17. S. 347, 352; Louisville Gas Co. v. Citi¬
zens' Gas Co., 115 U. S. 083, 090; Gibbs v. Consolidated Gas Co., 130 U. S.
390, 408; Sioux City Street RaiIway v. Sioux City, 138 U. 8. 98, 108;
Louisville Water Co. v. Clark, 143 U. S. 1, 12, 14; Hamilton 'Gas Light
Co. v. Hamilton City, 140 U. S. 258, 270; N~. F. ife N. E. Railroad v.
Bristol, 151 U. S. 550, 507.
What has been said in reference to the effect of the reservation in
the act of 1802 of the rig-lit of adding to, altering, amending, or repeal¬
ing its provisions, is applicable to the fourth section ot the Idaho act
of July 2,1804, which permitted the several railroad companies referred
to in the act of 1802 to make an arrangement with the United States
Telegraph Company, such as was permitted by the nineteenth section
of the act of 1802 to be made with the telegraph companies therein
named. The fourth section of the Idaho act was, in legal effect, nothing
more than an amendment or enlargement of the nineteenth section of
the act of 1802, by adding the name of another telegraph company to
those mentioned in the latter section.
It was suggested in argument that the objects of the act of 1802 could
be fully accomplished by means of a telegraph company, incorporated
by one of the States, and which, by placing its lines on the route of the
railroad, could meet all the demands, as well of the railroad company,
as of the Government and the general public. But this suggestion can
have no weight in the present inquiry. For if, as intimated, the execu¬
tion of the act of 1888 will result in no real good to the general public,
and may even be injurious to the pecuniary interests which the Govern¬
ment has in the Union Pacific Railway and its branches, that is a ques¬
tion of public policy, with which the judiciary is not concerned, and
the responsibility for which is with another branch of the Government.
We perceive no escape from the conclusion that it is entirely compe¬
tent for Congress to add to, alter, or amend the acts of 1802 and 1804,
so as to require the Union Pacific Railway Company, possessing the
rights and powers of its constituent companies, to maintan and operate,
by and through its own officers and employes, telegraph lines, for rail¬
road, governmental, commercial, and other purposes, and to exercise
itself and alone all the telegraphic franchises conferred upon it. It is
enjoying the bounty of the Government subject to the condition, among
others, that it will perform these duties whenever so required by
Congress.
It becomes necessary now to determine in what respects the agree¬
ments of I860, 1869,1871, and 1881, if keptand performed by the defend¬
ants, are inconsistent with the rights of the United States, and whether,
by their necessary operation, they will interfere with the performance
by the Union Pacific Railway Company of the duty imposed upon it by
the act of 18S8.
Looking first at the agreement of October 1,1806, between the Union
Pacific Railway Company, Eastern Division, and the Western Union
Telegraph Company, it will be seen that the Western Union Telegraph
Company does not, in that agreement, expressly undertake to meet the
obligations imposed by the Pacific Railroad acts upon the railroad com¬
panies named in them, of constructing, maintaining, and operating both
a railroad and telegraph line, on their respective routes, for tlie use
equally of the Government and the public. It does undertake to per¬
form, without charge to the railway company, what should be "decided
by competent authority" to be the telegraphic obligations of the rail¬
road company to the Government. § 10. Whom the parties regarded
as competent to decide as to the nature and extent of such obligations,
DECISIONS OF THE SUPREME COURT.
233
does not appear from the agreement. The effect of this stipulation, as
between the railway company and the telegraph company, was to excuse
the latter from performing any services for the Government, until com¬
petent authority decided that such service was due from the former.
But passing this point, as one not controlling in the case, it is evi¬
dent that the effect, if not the object, of the agreement was to give
the telegraph company the absolute control of all telegraphic business
on the route of the Union Pacific Railway Company, Eastern Division.
The provision that the railway company should transport for the
telegraph company, free of charge, all the persons engaged, and mate¬
rial required, in the construction, repairing, and maintaining the tele¬
graph line for which the agreement provided, while exacting from other
telegraph companies, for persons engaged and for property intended to
be used, in building a telegraph line on the railway company's roadway,
the usual rates for passengers and freight, §§ 4, 5; the stipulation that
the railway company should not give permission to another telegraph
company to construct or operate any telegraph liue upon the lands or
roadway of the railway company, without the consent in writing of the
telegraph company, § 5; the provision that the railway company should
not, without the consent of the telegraph company, transmit commer¬
cial or paid business from any station where the latter had an office;
and the provision that the railway company should account for and
pay over to the telegraph company, at the tariff rates established by
the latter, all sums received by the railway company for messages sent
from points where the telegraph company had no separate office, if such
sums were not sufficient to meet the expenses of a separate telegraph
office, § 8—these provisions, to say nothing of others, all plainly indi¬
cate that the object ot the agreement was to grant to the Western
Union Telegraph Company, as against all other telegraph companies,
the exclusive right to control the railway company's roadway for tele¬
graphic purposes, so far as that could be done without interfering with
the ordinary operations of the railway company.
This agreement of October 1,1866, enabling the Western Union Tele¬
graph Company to exclude all other telegraph corporations from the
roadway of the railway company, if not void as against public policy,
independently of specific statutory provisions, was inconsistent with
the act of Congress of July 24, 1866, 14 Stat. 221, c. 230, entitled "An
act to aid in the construction of telegraph lines, and to secure to the
Government the use of the same for postal, military, and other pur¬
poses." The substantial provisions of this statute have been preserved
in sections 5263 to 5268, inclusive, of the Revised Statutes.
By the act of June 8, 1872, 17 Stat. c. 335, pp. 308, 309, reproduced
in sectiou 3964 of the Revised Statutes, all the waters of the United
States, during the time the mail is carried thereon, aud all railroads or
parts of railroads iu operation, are post roads. And by the above
statute of 1866 Congress declared that any telegraph company then
organized, or which might thereafter be organized, under the laws of
any State of the Union should have the right to construct, maintain,
and operate lines of telegraph through or over any portion of the pub¬
lic domain of the United States, over and along any of the military or
post roads of the United States which had been or might thereafter be
declared such by act of Congress, and over, under, or across the nav¬
igable streams of the United States; the lines of telegraph to be so
constructed and maintained as not to obstruct the navigation of streams
and waters, or interfere with the ordinary travel on military or post
roads. "And any of said companies," the act declared, " shall have
234
DECISIONS OF THE SUPREME COURT.
the right to take and use 'from such public lands the necessary stone,
timber, and other materials for its posts, piers, stations, and other need¬
ful uses in the construction, maintenance, and operation of said lines
of telegraph, and may preempt and use such portion of the unoccupied
public lands, subject to preemption through which its said lines of bile-
graph may be located as may be necessary for its stations, not exceed¬
ing forty acres for each station; but such stations shall not be within
fifteen miles of each other."
The remaining sections of that act were as follows: "§ 2. That tele¬
graphic communications between the several departments of the gov¬
ernment of the United States and their officers and agents shall, in
their transmission over the lines of any of said companies, have priority
over all other business, and shall be sent at rates to be annually fixed
by the Postmaster General. § 3. That the rights and privileges hereby
granted shall not be transferred by any company acting under this act
to any other corporation, association, or person: Provided, however,
The United States may at any time, after the expiration of five years
from the date of the passage of this act, for postal, military, and other
purposes, purchase all the telegraph lines, property, and effects of any
or all of said companies at an appraised value, to be ascertained by five
competent, disinterested persons, two of whom shall be selected by the
Postmaster General of the United States, two by the company inter¬
ested, and one by the four so previously selected. § 4. That before any
telegraph company shall exercise any of the powers or privileges con¬
ferred by this act, such company shall file their written acceptance
with the Postmaster General of the United States of the restrictions
and obligations required by this act."
It is clear that the essential part of the agreement of 18Gf> is pro¬
hibited by this act of July 24, 186(5. As that act gave every telegraph
company, organized under state laws, and accepting its provisions, the
right to erect its poles and wires upon the post roads of the United
States, the agreement of the Union Pacific Railway Company, Eastern
Division, that it would not permit, except with the consent of the
Western Union Telegraph Company, other telegraph companies to use
its roadway, directly tended to make the act of July 24,1866, ineffectual,
and was, therefore, hostile to the object contemplated by Congress.
Pensacola Tel. Co. v. Western Union Tel. Co., 96 U. S. 1, 11. The rail¬
way company operating one of the post roads of the United States, over
which interstate commerce was carried on, could not, at least after the
passage of that act, grant to any one or more telegraph companies
the exclusive right to use its roadway for telegraphic purposes.
But it is contended that the agreement of 1866 was authorized by
the Idaho act of 1864.
That act, as we have said, authorized the several railroad companies,
named in the act of July 1, 1862, to enter into an "arrangement1' with
the "United States Telegraph Company" for the transfer of its tele¬
graph line to the roadways of the railroad company, and declared that
such transfer, when made, should, for all the purposes of the act of
1862, "be held and considered a fulfilment, on the part of said railroad
companies, of the provisions of this act in regard to the construction of
a telegraph line."
We have already determined that the Idaho act did not affect the
power that Congress reserved, of adding to, altering, amending, or
repealing the original and amendatory acts. It is now to be examined
as to its bearing upon the validity of the agreement of October 1,1866.
If the Western Union Telegraph Company became the successor in
DECISIONS OF THE SUPREME COURT.
235
right and power of the United States Telegraph Company, and entitled
to make any arrangement with the railroad company that its prede¬
cessor could legally have made—and such is the claim of the Western
Union Telegraph Company—the question, nevertheless, remains,
whether the fourth section of the Idaho act authorized any "arrange¬
ment" to be made by the Union Pacific Railway Company, Eastern
Division, with the United States Telegraph Company, in conflict with
the previous act of July 24, 1866. This question is not, in our judg¬
ment, difficult of solution.
The purpose of the fourth section of the Idaho act is quite apparent.
Its effect was, as we have heretofore said, to relieve each of the railroad
companies named in the act of 1862 from any present obligation to con¬
struct a telegraph line on its roadway, by means of an "arrangement"
with the United States Telegraph Company for the construction of such
a line. But no arrangement could be legally made under that act
which tended, in any degree, to defeat the great objects of the act of
1862, and the act amendatory thereof, of July 2, 1864, c. 216. The act
of 1862 did not authorize the railroad company to agree that it would
not itself, at some future time, construct and operate a telegraph line
for the use of the Government and the people. Uor did it, in terms or
by implication, repeal or modify the clause in that act by which Con¬
gress expressly reserved the power to add to, alter, amend, or repeal,
the latter act, having due regard to the rights of the railway com¬
panies named in it. Certainly, it could never be held that a due regard
to the rights of either the railroad company or of any corporation claim¬
ing under it required that the Government, charged by the Constitu¬
tion with the duty of regulating interstate commerce, should permit
the railroad company receiving national aid to invest a corporation, not
deriving its authority from the United States, with the exclusive right
to enjoy its roadway—a national highway—for the purposes of tele¬
graphic communication between the States.
Even if the act of July 24,1866, had never been passed, we ought not
to construe the Idaho act as permitting the railway company to bind
itself by agreement to give to one telegraph company a monopoly of
the use of its roadway for telegraphic purposes. In none of the acts
of Congress, having for their object the establishment of communica¬
tion by railroad and telegraph between the Missouri Biver and the
Pacific Ocean, is there to be found anything indicating a purpose to
allow the post roads of the United States, particularly those aided by
the Government, to fall, for all the purposes of telegraphic communi¬
cation, under the exclusive control of one or more telegraph corpora¬
tions. On the contrary, as early as the act of June 16, 1860, c. 137,
"to facilitate communication between the Atlantic and Pacific States
by electric telegraph," it was declared that nothing in that act contained
should confer "any exclusive right to construct a telegraph to the
Pacific, or debar the Government of the United States from granting
from time to time, similar franchises and privileges to other parties."
12 Stat. 41.
If, however, it be contended that this is not the correct interpretation
of the Idaho act, upon what ground can it be'daimed that any arrange¬
ment could be made under the Idaho act, after the passage of the act
of July 24, 1866, that was inconsistent with the latter act? Can it be
said that, after the passage of the act of 1866, and while it was in
force, a railway company, operating a post road of the United States,
could, by any form of agreement, exclude from its roadway a telegraph
company which had accepted the provision of that act? These ques-
236
DECISIONS OF THE SUFREME COURT.
tions can be answered only in one way, namely, tliat every railroad
company operating a post road of the United States, over which com¬
merce among the States is carried 011, was inhibited, after the act of
duly 24, 1800, took effect, from making any agreement inconsistent
with its provisions or that tended to defeat its operation. The object
of that act was not only to promote and secure the interests of the
Government, but to obtain, for the benefit of the people of the entire
country, every advantage, in the matter of communication by telegraph,
which might come from competition between corporations of different
States. It was very far from the intention of Congress, by any legis¬
lation, to so exert its power as to enable one telegraph corporation,
Federal or state, to acquire exclusive rights over any post road, especially
one for the construction of which the aid of the United States had been
given, and the use of which was, to some extent, under the control of
the National Government.
We are, consequently, of opinion that the agreement of October 1,
18GG, was, in its essential provisions, invalid and not binding upon the
railway company.
In reference to the agreements of 18G9 and 1871 between the Union
Facific Railroad Company and the Atlantic and Pacific Telegraph
Company, but little need be said to show that they were void. By
those agreements the former corporation demised and leased to the
telegraph company, to whose rights, it may be assumed, the Western
Union Telegraph Company succeeded, all the telegraph lines, wires,
poles, instruments, offices, and other property appertaining to telegraph
business, that were possessed by the railroad company. These agree¬
ments were annulled by the Circuit Court, and it was likewise so
adjudged by the Circuit Court of Appeals. The same conclusion had
been previously announced by Judge McCrary in Atlantic and Pacific
Telegraph Co. v. Union Pacific Kailicay Co., 1 McCrary, 541, 547. That
able judge well said: "I conclude that the charter of the Union Pacific
Railroad Company devolved upon it the duty of constructing, opera¬
ting and maintaining a line of telegraph for commercial and other
purposes, and that this is in its nature a public duty. I am further of
the opinion that, by the provisions of the contract of September 1,
18G9, and of December 20, 1871, the railroad company undertook to
lease or alienate property which was necessary to the performance of
this duty. The consideration for these contracts is declared to be 'the
demise of their telegraph lines, property and good will, and of the
rights and privileges, in the manner hereinafter specified,' etc.; and
the property demised by the railroad company is 'all its telegraphic
lines, wires, poles, instruments, offices, and all other property by it
possessed, appertaining to the business of telegraphing, for the purpose
of sending messages and doing a general telegraph business.1 The
lessee was to hold during the whole term of the charter of the railroad
company and any renewal thereof. There is inserted a stipulation that
the lessee shall perform all the duties imposed or that may be imposed
upon the railroad company by their charter or by the laws of the
United States. But, as already intimated, I do not think this latter
clause makes the contract good. The railroad company was not at
liberty to transfer to others those important duties and trusts which it,
for a large consideration and for a great public purpose, had under¬
taken to perform. It certainly could not divest itself of these powers
and duties, and devolve them upon the plaintiff, without express
authority from Congress." Again: "But if the contracts in question
are not ultra vires by reason of the transfer of property necessary to
DECISIONS OP THE SUPREME COURT.
237
the performance, by the railroad company, of its public duties, tbey
are so because tbey attempt to transfer certain franchises of the said
company. The right to operate a telegraph line, and to fix and to
collect tolls for the use of the same, is, to say the least, the most
valuable part of the franchise conferred by Congress upon the railroad
company, as a telegraph company. This right is alienated by a clear
and unequivocal assignment or transfer from the railroad company to
the plaintiff. Without discussing other features of the contracts, I am
compelled to hold that this feature is alone sufficient to render them in
excess of the corporate power of the company."
We now come to the important contract of July 1, 1881, between the
Western Union Telegraph Company and the Union Pacific Railway
Company. As that contract is too lengthy to be inserted at large in
the body of this opinion, we have, in our statement of the case, given
such of its provisions as appear to relate directly to the issues present¬
ed by the pleadings.
We have seen that the contract of July 1,1881, was annulled by the
original decree of the Circuit Court, but was upheld by the Circuit
Court of Appeals, except as to the third and fourth paragraphs, which
were, adjudged by that court to be null and void to the extent that they
secured and granted, or were intended to secure or grant, to the West¬
ern Union Telegraph Company any exclusive rights, privileges, or
advantages whatsoever.
Much said in this opinion touching the agreements of 1806, 1809,
and 1871, is applicable to that of 1881, and need not be here repeated.
We have no difficulty in holding that the latter was invalid in the par¬
ticulars named in the final decree of the Circuit Court of Appeals.
But that agreement is illegal, not simply to the extent that it assumes
to give to the Western Union Telegraph Company exclusive rights
and advantages in respect of the use of the way of the railroad com¬
pany for telegraph business ; but it is also illegal because, in effect, it
transfers to the Western Union Telegraph Company the telegraphic
franchise granted it by the Government of the United States. The
duty to maintain and operate a telegraph line between the points
specified in the act of 1862 was committed by Congress to certain cor¬
porations which it named, and neither they, nor any corporation into
which they were merged, could, without the consent of Congress, invest
a state corporation with exclusive telegraphic privileges on the line of
the roads it then owned or thereafter acquired. The United States
was not bound to look to the Western Union Telegraph Company for
the discharge of the duties the performance of which, in consideration
of the aid received from the Government, the Union Pacific Railroad
Company, and other named companies, undertook to discharge for the
benefit of the United States and of the public. No agreement with
the telegraph company, to which the assent of the Government rvas
was not given, could take from the railroad company its right at any
time to itself maintain and operate the telegraph line required by the
act of 1802 for the use of the Government and of the public, nor impair
the power of Congress to require the performance by the railroad com¬
pany itself of the duties imposed by that act. As to the object of the
provisions of the agreement of 1881, the Circuit Court, speaking by
Mr. Justice Brewer, properly said : " They mean that the telegraphic
business and the telegraphic franchise, in the sense we have defined
it, should be exercised by the Western Union Telegraph Company,
and that no other company, railway or telegraph, should touch it.
The purpose was—a purpose disclosed by every section and line of the
23S
DECISIONS OF THE SUPREME COURT.
contract—that the public and commercial use of the telegraph wires
should belong to the Western Union Company, leaving to the railroad
company only so much of the telegraph wires as was necessary for its
own business." Again: "So it is that the lessons of experience sup¬
port and establish the construction placed upon the contract of 1881,
to the effect that the telegraphic franchise, as a franchise of independ¬
ent, public, and commercial transportation, was intended to be and
was transferred by the railway company to the Western Union Com¬
pany, leaving only to the former so much use of telegraph wire as
would facilitate and further its own railroad business."
That the purpose of the agreement of 1881 was to trarisfer to the
Western Union Telegraph Company the telegraphic franchises granted
by the United States, was asserted by that company in a bill filed by
it (a copy of which is made a part of the present record) to prevent the
Union Pacific Railway Company from complying with the mandate of
the act of August 7, 1888. In that bill it was claimed that the parties
stipulated in the contract of 1881 that the telegraph company " might
render to the Government and to the public such telegraph service as
by the law of its creation it was bound to perform." And the telegraph
company stated, in the same bill, that it had come about under that
agreement, and through the growth of the railroad business, that the
railroad company had "no wires on which it can do a general telegraph
business, all those devoted to its railroad business being overburdened
therewith." Again, in the same bill: "The said wires used by the
defendant in the operation of its road are not equal to its necessities in
that behalf, and it is impossible for it to do any business for the public
or other companies on said wires without seriously interfering with and
impeding the operation of its engines, cars, and trains, and if it under¬
take to do so it will be under the necessity of using your orator's five
wires, or some of them. Upon your orator's said wires is carried on
almost the entire transcontinental business of the Union; nor can your
orator submit to any interference therewith by the defendant or any
other party without seriously impeding and disarranging that business
to its great loss and the public inconvenience." In addition to this, it
may be stated that the telegraph superintendent of the railway com¬
pany testified in this case that it would not be practicable to operate
the wires used by the railroad company " for general commercial busi¬
ness without seriously interfering with the railroad business, and the
railroad company's wires would be inadequate to carry any additional
business." This inquiry need not be further extended, except to observe
that there would be no occasion to make the Western Union Telegraph
Company a defendant in this suit, and it would not have any standing
in court to complain of the act of August 7,1888, if it did not claim that
the construction, or the maintenance and operation by the railway com¬
pany, through its own employes, of a distinct telegraph line on the
route of its road, for the use of the Government and of the public, was
in violation of the contract it had made with the railroad company.
The fundamental question, therefore, is whether such a contract was
permitted by the acts of Congress defining the obligations of railroad
companies that had accepted the bounty of the Government. Tor the
reasons we have given in the discussion of other parts of this case, we
answer this question in the negative. Such a contract is not authorized
by the fourth section of the Idaho act, or by the like section (19th) of
the act of 1862. The "arrangements" authorized by those acts were
not such as to admit of a contract that would disable the railroad com¬
pany from entering upon the construction and maintenance itself of a
DECISIONS OF THE SUPREME COURT.
239
telegraph line for the accommodation of the Government and of the
public, or that would prevent the United States from requiring the rail¬
road company to maintain and operate a telegraph line to be entirely
controlled by itself, and which would be wholly independent of any
telegraph line operated by corporations created under the laws of a
State. And we may add what bas been said in reference to the prior
agreements of 18(10, 180!), and 1871, namely, that no railroad company,
operating a post road of the United States, over which interstate com¬
merce is carried on, can, consistently with the act of July 24,1800, bind
itself, by agreement, to exclude from its roadway any telegraph com¬
pany, incorporated under the laws of a State, which accepts the provi¬
sions of that act, and desires to use such roadway for its line in such
manner as will not interfere with the ordinary travel thereon.
On behalf of the telegraph company it is contended that it was beyond
the power of Congress to so legislate as "to impair the contracts, first,
that between the United States and the several companies mentioned
in the act of 18(12; and, second, those between the railway company
and this defendant." We perceive no ground on which this contention
can properly rest. It has already been fully examined. As we have
seen, Congress in the act of U62 expressly reserved the power not only
to alter, amend, or repeal that act, but to add to its provisions. To what
has already been said as to the power of Congress, under this reserved
power, Ave may add, that the object of such reservation is to enable the
legislative department to protect the public interests, and "to preserve
to the State control over its contract with the corporators, which with¬
out that provision would be irrepealable and protected from any measure
affecting its obligation." Tomlinson v. Jessup, 15 Wall. 454, 457, 458.
Another contention of the telegraph company is that for any failure
or refusal by the railway company to comply with sections one and two
of the act of August 7,1888, the remedy of the United States is an action
at law by mandamus, and that equity is without jurisdiction to enforce
a compliance with those sections.
It cannot be doubted that the Government could lawfully proceed by
mandamus against the railway company for the purpose simply of com¬
pelling it to perform any duty imposed by its charter or by statute.
But that remedy would not afford the United States the full relief to
which it is entitled. Here are agreements between the railway company
and the telegraph company that are wholly inconsistent Avith the present
claims of the Government. Until cancelled—because inconsistent with
the act of 1888, and prejudicial to the rights of the Government and the
public—by a decree to which the telegraph company is a party, those
agreements constitute an obstacle in the way of the enforcement of that
act, and the protection of those rights. In a mandamus proceeding by
the Government against the railway company, the telegraph company
could not properly be made a defendant, and no judgment in mandamus,
as between the United States and the railway company, would conclude
the rights of the telegraph company. The United States is certainly
entitled to the interposition of equity for the cancellation of the agree¬
ments under which the telegraph company asserts rights inconsistent
with the act of 1S62 and the acts amendatory thereof, as well as with
the act of 1888. Jurisdiction in equity being acquired for that purpose,
the court, in order to avoid a multiplicity of suits, can proceed to a
decree that will settle all matters in dispute between the United States,
the railway company, and the telegraph company which relate to the
general subject of telegraphic communication between the points named
by Congress. Consequently a decree cancelling the agreements of I860,
240
DECISIONS OF THE SUPREME COURT.
1SG9, 1871, and 1881, by reason of tlieir being in the way oi tne full
performance by the railway company of the duties imposed by the act
of 1888, may also require the railway company to obey the directions
of Congress as given in the last named act.
Indeed, iu a proceeding by mandamus instituted against the railway
company alone, it might be objected tliat a court of competent jurisdic¬
tion, in a suit brought by the telegraph company against the railroad
company, had enjoined the latter, as between it and the telegraph com¬
pany, from disregarding the agreement of 1881. Atlantic A Pacific
Tel. Go. v. Union Pacific Pail way, 1 McCrary, 541; Western Union Tel¬
egraph Co. v. Union Pacific Railway, 3 Fed. Itep. 423; Same v. Same, 3
Fed. Itep. 721. It is true that the United States, with leave of court,
might have intervened in that suit. But it was not bound to do so. It
was entitled to institute its own suit, and bring before the court both
companies, to the end that its rights might be declared and enforced
by a comprehensive decree against both defendants.
In Boyce v. Grundy, 3 L'et. 210, 215, this court said: " It is not enough
that there is a remedy at law; it must be plain and adequate, or, in other
words, as practical and efficient to the ends of justice and its prompt
administration as the remedy in equity." The circumstances of each
case must determine the application of the rule. Watson v. Sutherland,
5 Wall. 74, 79. Iu Oelrichs v. Spain, 15 Wall. 211, 228, an objection was
raised that the remedy at law was ample. The court, observing that
the remedy at law was not as effectual as in equity, said, among other
things, that a "direct proceeding in equity will save time, expense, and
a multiplicity of suits, and settle finally the rights of all concerned in
one litigation." The final order iu a proceeding by mandamus against
the railway company would not conclude the rights of the telegraph
company. Nor would a suit in equity by the telegraph company against
the railway company conclude the rights of the United States. But a
suit in equity by the United States against both companies for the pur¬
pose of annulling the agreements under which the telegraph company
claims rights adverse to the United States, can embrace all the matters
in controversy and authorize a comprehensive decree that will terminate
all disputes among the parties as to such matters. Coosaw Mining Co.
v. South Carolina, 144 U. S. 550, 507.
These principles are abundantly sustained by the authorities. In 1
Pomeroy's Equity Jurisprudence, § 181, many adjudged cases are cited
in support of the proposition that "if the controversy contains any
equitable feature or requires any purely equitable relief which would
belong to the exclusive jurisdiction, or involves any matter pertaining
to the concurrent jurisdiction, by means of which a court of equity
would acquire, as it were, a partial cognizance of it, the court may go
on to a complete adjudication, and may thus establish purely legal rights
and grant legal remedies which would otherwise be beyond the scope
of its authority." This principle was applied in Pech v. School Dist. the.,
21 Wisconsin, 516, 523. That was a suit to set aside a contract made
by the officers of a municipality. The court held that the contract
should be set aside, and the question arose whether the decree might
not go farther and prevent the collection of the taxes assessed and
levied for the purposes of the contract adjudged to be illegal. It was
held that as the taxes were levied in order to carry the illegal contract
into effect, their collection could be stayed as a proper subsidiary ground
of relief, upon the principle that the jurisdiction of the court having
once rightfully attached, it should be made effectual for all the pur¬
poses of complete relief. " The court," it wras said, "will not annul the
DECISIONS OF THE SUPREME COURT.
241
contract and at tlie same time permit the officers of the district to col¬
lect the taxes to be afterwards recovered back by a multiplicity of suits
at law."
We are of opinion that the Circuit Court properly adjudged that
equity had jurisdiction to give full relief in respect of all matters in
issue between the United States and the defendant companies.
We perceive no substantial error in the decree passed by the Circuit
Court. There are some minor provisions in each of the contracts
annuled by it which may not be regarded as in themselves beyond the
power of the contracting parties, nor inconsistent either with the duties
enjoined upon the railway company by the act of 1888 or with the rights
of the United States. But they are of so little practical importance,
and are so interwoven with, and. so difficult to be separated from, the
provisions found to be illegal and to stand in the way of the due exe¬
cution of the act of Congress, that the Circuit Court properly adjudged
that the contracts referred to should be set aside and annulled.
The decree of the Circuit Court of Appeals of January 29, 1894, is
reversed and set aside, and the decree of the Circuit Court of October 11,
1892, is affirmed.
It is further adjudged by this court that the Circuit Court make a sup¬
plemental decree, enlarging the period within which the defendants may
make such arrangements, adjustments, and changes as shall become neces¬
sary by reason of the annulling of the contracts of October 1,1866, Septem¬
ber 1, 1869, December 14, 1871, and July 1, 1881, and to carry out the
provisions of the final decree of that court. Reversed.
Mr. Justice Brewer took 110 part in the hearing or decision of this
case on the present appeal.
SYLLABI OF OTHER DECISIONS AFFECTINO THE INTER¬
ESTS OF THE U. S.
Pacific Railroad v. United States.
appeal from the court of claims.
(158 U. S., 118.)
Congress having appropriated in payment of a judgment against the United States
in the Court of Claims, the full amount of the judgment, with a provision in the
appropriation law that the sum thus appropriated shall be in full satisfaction of
the judgment, and the judgment debtor having accepted that sum in payment of
the judgment debt, the debtor is estopped from claiming interest on the judg¬
ment debt under Rev. Stat. §> 1090.
United States v. Western Union Telegraph Company and
Union Pacific Railway Company.
(160 U. S., 53.)
Although the United States was entitled to retain and apply, as directed by Congress,
all sums due from the Government, on account of the use by the Telegraph Com¬
pany, for public business, of the telegraph line constructed by the Union Pacific
Railway Company, the entire absence of proof as to the extent to which that line
was, in fact, so used, renders it impossible to ascertain the amount improperly
paid to, and without right retained by, the Telegraph Company, and subse¬
quently divided between it and the Railroad Company.
16 PAC
242
decisions of the supreme court.
Central Pacific Railroad Company v. United States.
(164 IT. S„ 93.)
appeal from the court of claims.
No. 46. Argued aud submitted October 21, 1896.—Decided November 9. 1896.
For several years in succession before the commencement of this action the Central
Pacific Railroad Company transported the mails of the United States on its roads.
During the same period post office inspectors, commissioned by the department,
under regulations which required the railroads "to extend facilities of free
travel" to them, were also transported by the company over its roads. Dur¬
ing all this period the railroad company presented to the department its claim
for the transportation of the mail without setting up any claim for the trans¬
portation of the inspectors, and the said claims for mail transportation were,
after such presentation, from time to time, and regularly, adjusted and paid on
that basis. This action was then brought in the Court of Claims to recover for
the transportation of the inspectors. Until it was commenced no claim for
such transportation had ever been made on the United States. Held, that with¬
out deciding whether the claim of the department that its inspectors were entitled
to free transportation 44 as or was not well founded, the silence of the company,
and its acquiescence in the demand of the government for such free transporta¬
tion operated as a waiver of any such right of action.
SYLLABI OF DECISIONS IN WHICH THE UNITED STATES
IS NOT A PARTY, BUT ITS INTERESTS ARE PASSED
UPON.
Wardell v. Union Pacific Railroad Company
(103 nr. S., 651.)
1. The directors of a corporation are subject to the obligations which the law
imposes upon trustees and agents. They cannot, therefore, with respect to the
same matters, act for themselves and for it, nor occupy a position in conflict
with its interests.
2. Hence, a court will refuse to give effect to arrangements by directors of a rail¬
road company to secure, at its expense, undue advantages to themselves, by
forming, as an auxiliary to it, a now company, with the understanding that
they or some of them shall become stockholders in it, and then that valuable
contracts shall be given to it by the railroad company, in the profits of which
they, as such stockholders, shall share.
3. The contract entered into .Inly 16, 1868, by the Union Pacific Railroad Company,
by direction of the executive committee of the board of directors, with Godfrey
and Wardell (infra, p. 652), which the latter assigned, without consideration,
to a new company, in which a majority of the stock was taken by six directors
of the old company, declared to be fraudulent and void.
Pacific Railroad Removal Cases.
(115 U. S.,1.)
The Union Pacific Railway Company is, as to its road, property and franchises in
Kansas, a corporation de facto created and organized under acts of Congress;
and as to the same in Nebraska, it is strictly and purely a corporation deriving
all its corporate and other powers from acts of Congress.
The Texas and Pacific Railway Company is also a corporation, deriving its corporate
powers from acts of Congress.
These companies are entitled, under the act of March 3, 1875, to have all suits
brought against them in State courts removed to Circuit Courts of the United
States, on the ground that they are suits arising under the laws of the United
States.
decisions of the supreme court.
243
Central Pacific Railroad Company v. California.
(162 U. S., 91.)
error to the supreme court of the state of california.
No. 559. Argued January 15, 16, 1896.—Decided March 16, 1896.
The Central Pacific Railroad Company, being required by the laws of California to
make returns of its property to the Board of Equalization for purposes of taxa¬
tion, made a verified statement in which, among other things, it was said: "The
value of the franchise and entire roadway, roadbed, and rails within this State
is $12,273,785." The Board of Equalization determined that the actual value of
the franchises, roadway, roadbed, rails, and rolling stock of the company within
the State at that time was $18,000,000. The company not having paid the taxes
assessed on this valuation, this action was brought by the State to recover them.
Held,
(T) That the presumption was that the franchise included by the company in its
return was a franchise which was not exempt under the laws of the United
States, and that the board had acted upon property within its jurisdiction ;
(2) That if the Board of Equalization had included what it had no authority to
assess, the company might seek the remedies given under the law, to cor¬
rect the assessment so far as such property was concerned, or recover back
the tax thereon, or, if those remedies were not held exclusive, might defend
against the attempt to enforce it;
(3) Where the property mentioned in the description could be assessed, and the
assessment followed the return, the company ought to be held estopped
from saying that the description was ambiguous, and this notwithstanding
the fact that the statement was made on printed blanks, prepared by the
board.
The decision of the Supreme Court of the State that the findings of the trial court on
the question of whether the franchises taxed covered franchises derived from the
United States was conclusive, and is binding on this court.
The fact that a court, after giving its decision upon an issue, gives its opinion upon
the manner in which it would have decided the issue under other circumstances,
does not constitute an error to be reviewed in this court.
The Central Pacific company is a corporation of California, recognized as such by
the acts of Congress granting it aid and conferring upon it Federal franchises,
and it was not the object of those acts to sever its allegiance to the State or
transfer the powers and privileges derived from it; nor did those consequences
result from the acceptance of the grant by the corporation.
The property of a corporation of the United States may be taxed by a State, but not
through its franchise.
Although a corporation may be an agent of the United States a State may tax its
property, subject to the limitation pointed out in Railroad Co. v. Reniston, 18
Wall. 5.
It is immaterial in this case whether the railroad company operates its road under
the franchise derived from the United States, or under that derived from the
State.
When it is considered that the Central Pacific company returned its franchise for
assessment, declined to resort to the remedy afforded by the state laws for the
correction of the assessment as made if dissatisfied therewith, or to pay its tax
and bring suit to recover back the whole or any part of the tax which it claimed
to be illegal, its position is not one entitled to favorable consideration; but,
without regard to that, the court holds, for reasons given, that the state courts
rightly decided that the company had no valid defence to the causes of action
proceeded on.
INDEX TO LAWS.
[Reference is to Act and section of Act; page reference is to Act only.]
Page.
Accounts of Pacific Railroads with Post-Office Department, settlement of,
Sec. 1, act March 3, 1879 ._ 49
Affidavit of Central Pacific Railroad Company to be filed in California, sec.
6, act July 2,1864 - 13
Annual reports,
to he made to Secretary of the Treasury, sec. 20, act July 1, 1862
(repealed, act of June 25, 1868) 1
to he made to Secretary of the Interior, when; what to contain, act of
June 25, 1868 (repealing sec. 10, act July 1, 1862) ..... _. 29
Appeal, from assessment of damages for right of way, sec. 3, act July 2,1864 13
Appraisement of property, right of way, sec. 3, act July 2, 1864 13
Army, transportation of,
company may sue in Court of Claims, sec. 1, act March 3, 1875 ... 39
either party to suit may appeal, sec. 1, act March 3,1875 _. _ 39
no money to be paid to land-grant roads, sec. 1, act March 3, 1875 39
payment to land-grant roads, sec. 1, act June 30, 1882 50
Assent of Pacific Railroad Company to act to be filed, sec. 7, act July 1,
1862 _ 1
Assessment,
of damages, right of way, sec. 3, act July 2,1864 .. 13
of stockholders, sec. 2, act July 2,1864. 13
Assignment by Central Pacific to Western Pacific, for line from San Jose to
Sacramento, sec. 2, act March 3,1865 25
A ttor ney-Gener al,
appropriation, to protect interests of the United States, March 12,1894. 62
appropriation, to protect interests of the United States, August 18,1894. 62
authorized to institute suits, sec. 3, joint resolution April 10,1869 32
prevent interference with Government's rights in railroad and telegraph
lines, sec. 4, August 7, 1878 56
shall sue in equity against Union Pacific Railroad Company for unpaid
subscriptions to capital stock, sec. 4, act March 3,1873 36
shall bring suit for 5 per cent net earnings, sec. 1, act June 22, 1874 39
shall institute proceedings, sec. 10, act May 7,1878 (Thurman Act) 41
shall enforce forfeitures, sec. 11, act May 7,1878 (Thurman Act) 41
to investigate whether charters forfeited, sec. 4, joint resolution April
10,1869.... 32
to protect interests of United States, foreclose mortgages, liens, etc.,
sec. 4, March 3, 1887.. 51
Auditor of railroad accounts,
application of act, sec. 6, act June 19,1878 47
companies to report, sec. 4, act June 19,1878 47
duties of. sec. 2, act June 19,1878 _ 47
organization of bureau, sec. 2, act June 19, 1878. 47
penalty for not reporting to, sec. 5, act June 19,1878 47
title changed to Commissioner of Railroads, salary, etc., sec. 1, act March
3,1881 50
Banks,
for subscription to capital stock, to be opened in principal cities, sec. 1,
July 1,1862 1
and property to be delivered to directors, sec. 1, July 1, 1862 1
Bond,
Commissioner's treasurer, sec. 1, July 1, 1862 1
and interest account, 5 per cent of net earning shall be applied in pay¬
ment of, sec. 6, July 1, 1862 1
245
246
INDEX TO LAWS.
Bonds, Page
first mortgage, when and how paid, sec. (S, July 1, 1862
first mortgage, to have priority of lien over those of United States, sec.
10, July 2, 1864 (see sec, 5, July 1, 1862, also, sec. 1, March 8, 1865)... 1
first mortgage, may issue 100 miles in advance of completion of line,
sec. 1, March 8, 1865 2
first mortgage, amounts issued and disposed of by companies, preamble,
May 7, 1878 (Thurman Act) . 4
double, between the mountains and treble over the Rockies and Sierras,
sec. 11, July 1,1862.
deliverable on account of construction, reservation of 25 per cent, sec.
17, July 1, 1862 (repealed sec. 7, July 2, 1864)
Missouri River bridge at Omaha, sec. 1, Feb. 24, 1871 ... 3;
outstanding, provision for, sec. 11, July 2, 1864 1;
restriction upon issue of, sec. 9, July 2, 1864 li
shall not be issued on account of any road prior to act of 1862, sec. 11,
July 2,1864 15
shall not be issued to Leavenworth and Lawrence roads, sec. 12, July
2,1864 11
shall not be issued to Union Pacific Railroad Company, eastern division,
until road completed from Omaha to one hundredth meridian, sec.
12, July 2,1864 (see sec. 1, July 3. 1866, 11
subsidy, amount of, loaned by United States,
Central Pacific Railroad Company, $25,885,125, preamble, May 7,
1878 (Tliurman Act) 41
Western Pacific Railroad Company, $1,970,560, preamble, May 7,
1878 (Thurman Act) 41
Union Pacific Railroad Company, $27,236,512, preamble, May 7,
1878 (Thurman Act) 41
subsidy, partial issue of, on incompleted work, sec. 8, July 2, 1864 13
subsidy, issue of, as work proceeds, sec. 5, July 1, 1862; see sees. 5,8,10,
11, July 2,1864 13
(United States), President authorized to withhold sufficient to secure
completion of road^sec. 3, joint resolution, April 10, 1869 32
(United States), interest on. proviso in deficiency appropriation act, sec.
1, April 30, 1878 40
Bridges,
conditions of construction, sec. 9, July 2, 1864 13
over Missouri River at Omaha, sec. 1, February 24, 1871 35
By-laws, to be made by stockholders, sec. 1, July 1, 1862. 1
Burlington and Missouri River Railroad of Nebraska,
bonds (United States), not to be issued in aid of road, sec. 20, July 2,1864. 13
commissioners, appointment to examine road, sec. 20, July 2,1864 13
completion of road, sec. 20, July 2,1864 13
extension of road through Territory of Nebraska, from Missouri River
to one hundredth meridian, authorized, sec. 18, July 2,1864 13
extension of road, shall be completed within ten years, sec. 20, July 2,
1864 13
grant of land. (See "Land grant.")
Indian titles, shall be extinguished by the United States, sec. 18, July 2,
1864. 13
land grant, ten alternate sections per mile on each side of road, with a
proviso, sec. 19, July 2,1864 13
mineral lands not granted, sec. 19, July 2,1864 13
patents; shall issue upon certification by commissioners of completion
of 20 miles of road, sec.20, July 2,1864 13
right of way granted, sec. 18, July 2,1864 13
survey, lands not to be conveyed until payment of cost of, sec. 21, July 2,
1864 13
change of location in Nebraska, May 6,1870 33
Capital stock,
amount and number of shares, sec. 1, July 1, 1862 1
attorney-General shall sue for unpaid subscriptions, sec. 4, March 3,
1873 36
shares changed, $1,000 to $100, sec. 1, July 2, 1864. 13
shall not be increased; deemed personal property, sec. 2, July 2, 1864.. 13
Coal, not included in term "mineral lands," sec. 4, July 2, 1864 13
Commissioner of Railroads, title changed, sec. 1, March 3, 1881 50
Commissioners' treasurer shall give bond, sec. 1, July 1, 1862 1
INDEX TO LAWS.
247
Commissioners, Page.
first meeting at Chicago, sec. 1, July 1, 1862. _ 1
appointment of, meetings, elect directors, sec. 1, July 1, 1862 1
Company, meaning of term, sec. 15, July 1, 1862 1
Companies.
power to make by-laws. sec. 1, July 1.1862 1
may unite on equal terms, sees. 10,16, July 1,1862 (sec. 16 amended, 1864). 1
may arrange with telegraph companies, sec. 19, July 1,1862 (amendment
1864) 1
may consolidate, sec. 16, July 2, 1864. 13
shall examine road on completion of 40 miles (changed to 20 miles,
amendment, 1864), sec. 4, July 1, 1862 1
vacancies filled by President, sec. 4. July 1,1862 1
President authorized to appoint three, sec. 6, July 2,1864 13
appointment of, to examine road, sec. 2, April 10, 1869 32
Compensation,
for services to United States, sec. 6, July 1, 1862 1
amount retained, how applied, sec. 2, May 7, 1878 41
Completion of road,
time extended, sec. 7. July 1, 1862 . 1
main lines to be finished in 1876, sec. 17, July 1, 1862 1
Kansas Company, sec. 10, July 1,1862. 1
Central Pacific, 25 miles per year, sec. 5, July 2, 1864 13
Central Pacific, beyond California border, sec. 16, July 2, 1864 13
Congress may compel speedy completion, sec. 17, July 1, 1862 1
Congress,
may compel speedy completion of road, sec. 17, July 1, 1862. 1
may reduce rates of fare, sec. 18, July 1, 1862 1
Connection of roads west of initial point, sec. 9, July 2, 1864 13
Connections with other roads, sec. 15, July 1. 1862 1
Consolidation of companies, sees. 10 and 16, July 1, 1862 1
sec. 16, July 2, 1864 13
Consolidated companies may complete line, sec. 16, July 2,1864 13
Commission to investigate books, etc., sec. 1, March 3, 1887 51
Consolidation of Union Pacific, Kansas Pacific, and Denver Pacific rail¬
ways to be investigated, sec. 2, March 3,1887 51
Cost of Government transportation, to be investigated, sec. 2, March 3, 1887. 51
Compensation of Government directors, etc., to be paid by companies, sec.
21, July 29, 1866 28
Damages, right of way, assessment of, sec. 2, July 2,1864. 13
Directors,
election of, powers and duties (amended 1864), sec. 1, July 1, 1862 1
election of, sec. 13, July 2,1864 13
(Government), on standing and special committees, sec. 13, July 2,1864. 13
(Government), duties of, sec. 13, July 2,1864 13
time and place of election, term, sec. 14, July 2, 1864 13
of Union Pacific, not to have interest in contracts, sec. 4, March 3,1873. 36
Dividends,
from actual net earnings, sec. 4, March 3, 1873 36
when prohibited, penalties for violation, sec. 6, May 7, 1878 (Thurman
Act) . 41
Denver Pacific Railway and Telegraph Company,
bonds (subsidy), not entitled to, sec. 3, March 3, 1869 31
extension of road, to form continuous line from Kansas City to Chey¬
enne, sec. 2, March 3,1869. .. 31
laws to apply, sec. 2, March 3,1869.. 31
mortgage of road, authorized, sec. 3, March 3, 1869 31
operation of road, to be the same as if constructed by Union Pacific
Railway Company, Eastern Division, but the latter not authorized to
fix rates of tariff, sec. 2, March 3,1869. 31
patents, for alternate sections of land, sec. 3, March 3, 1869 31
rates, Union Pacific Railway Company, Eastern Division, not author¬
ized to fix, sec. 2, March 3, 1869 31
right of way, granted by Union Pacific Railway Company, Eastern
Division, sec. 1. March 3, 1869 31
Union Pacific Railway Company, Eastern Division, may contract with,
for construction of railroad and telegraph line between Denver and
Cheyenne, sec. 1, March 3, 1869 31
Fare, rates may be reduced by Congress, sec. 18, July 1, 1862 1
248
INDEX TO LAWS.
P»K«.
Failure of one company not to affect others, sec. 7, July 2, 1864 13
Ferries, construction of, sec. 9, July 2, 1864 13
First mortgage bonds. (See Bonds, first mortgage.)
Five per cent of net earnings, applied to pay bonds, etc., sec. 6, July 1,1862. 1
shall be demanded by Secretary of Treasury, sec. 1, June 22, 1874 39
Forfeiture, how enforced, sec. 11, May 7,1878 (Thurman Act) 41
Government bonds. (See Bonds, subsidy.)
Government lien, to be subordinate, sec. 10, July 2,1864 13
Government transportation,
rates reasonable, and applied to payment of bonds, etc., sec. 6, July 1,1862. 1
half to be paid in cash, sec. 6, July 1,1862 1
half to be applied to payment of bonds, sec. 5. July 2, 1864 13
half to be paid in cash, sec. 9. March 3, 1871 36
no money to roads having land grant and constructed as " a public high¬
way," sec. 1, March 3, 1875 39
Grant of land,
alternate sections (amended 1864), sec. 3, July 1,1862 1
doubled, restrictions upon, sec. 4, July 2, 1864 13
Grant of certain sections of land in locating termini (Central Pacific and
Union Pacific), sec. 1, May 6, 1870 36
Geological and topographical survey of routes, sec. 3, March 2, 1867 29
Hannibal and St. Joseph Railroad Company,
company may unite with others in building road on equal terms, sec.
10, July 1, 1862 1
extension of road authorized, sec. 13, July 1, 1862. 1
Homestead and preemption rights; lands restored to market, March 6,1868. 29
Interest,
on bonds of United States not reimbursed, Secretary of Treasury to
withhold payment for transportation, suits in Court of Claims, sec. 2,
March 3, 1873 36
on United States bonds to be deducted before payment for transporta¬
tion, April 30,1878.. 40
paid by United States on subsidy bonds, preamble Thurman Act, May
7,1878. 41
on companies' obligations, when 75 per cent of net earnings insufficient
to pay, Secretary of Treasury may remit portion of 25 per cent of net
earnings required for sinking fund, sec. 5, May 7,1878 (Thurman Act). 41
Indian titles. United States shall extinguish, sec. 2, July 1, 1862 (amended,
sec. 18, July 2, 1864). 1
Investment of sinking funds, how made, sec. 5, March 3,1887 51
Iron, not included in "mineral lands," sec. 4, July 2,1864 13
Investigation, commission to examine books, etc., sec. 1, March 3, 1887 51
Junction, of Union Pacific and Central Pacific northwest of Ogden, sec. 1,
May 6, 1870 34
Kansas Pacific Railroad Company,
transportation, mails, army, etc., settlement of accounts, sec. 1, March
3, 1879 ...,. _ 49
name changed from " Union Pacific Railway Company, Eastern Divi¬
sion," sec. 1, joint resolution, March 3, 1869 32
Land grants,
alternate sections, sec. 3, July 1, 1862 (amended 1864). 1
doubled, sec. 4, July 2, 1864 13
Land,
grant of certain sections to locate termini (Central Pacific and Union
Pacific), sec. 1, May 6, 1870 34
reserved for schools, price of, sec. 1, May 6, 1870 34
not to be granted to any road prior to act of 1862, sec. 11, July 2, 1864. 13
Land patents, condition of issue, sec. 4, July 1, 1862 1
Lands,
within 15 miles of route, withdrawn from sale (changed to 25 miles,
1864), sec. 7, July 1, 1862 1
not conveyed to company until cost of survey paid, sec. 21, July 2,1864. 13
exempted from operation of act, sec. 4, July 2, 1864 13
patented, sec. 6, July 2, 1864 13
unoccupied, how acquired, sec. 3, July 2, 1864 13
lying in the vicinity of Denver, Colo., purchasers protected, August
13,1888... 60
restored to market, March 6, 1868 29
INDEX TO LAWS.
249
Page.
Leavenworth road, if built to one hundredth meridian, may proceed in de¬
fault ©f Union Pacific, sec. 12, July 2, 1864 13
Liabilities of Central Pacific and Union Pacific, preamble Thurman Act,
May 7, 1878 41
Lien,
of United States on all properties of companies, sec. 9, May 7, 1878
(Thurman Act) 41
subrogation of United States to, sec. 4, March 3, 1887 . 51
Line of road,
sees. 8 and 10, July 1, 1862 1
through intervening States, sec. 6, July 2, 1864 13
Location of road,
sec. 1, July 1, 1862 1
at State lines and one hundredth meridian, sec. 12, July 1, 1862 1
Leavenworth, Pawnee and Western Railroad Company. (See Union Pacific
Railroad Company, Eastern Division.)
Map,
designating route, to be filed, sec. 7. July 1, 1862 (amended 1864) 1
Union Pacific, Eastern Division, time for filing extended, sec. 1, July
3,1866. 27
Mineral lands, coal and iron not included, sec. 4, July 2,1864 13
Minerals, condition of grant, sec. 3, July 1, 1862 (amended sec. 4, 1864) 1
Mortgage, United States proceedings necessary to protect, sec. 4, March
3,1887.. 51
Name and title of road (Union Pacific), sec. 1, July 1, 1862 1
Net earnings,
five per cent applied to bond and interest account, sec. 6,Julyl,1862 1
when amount exceeds 10 per cent of cost, Congress may reduce rates
of fare, sec. 18, July 1, 1862 1
in case 5 per cent not applied, payment for Government transportation
to be withheld; suits in Court of Claims, sec. 2, March 3,1873 36
Secretary of the Treasury shall demand 5 per cent, sec. 1, June 22,1874. 39
how ascertained, sec. 1, May 7. 1878(Thurman Act) 41
when 75 per cent insufficient to pay prior lien, Secretary of Treasury
authorized to remit, sec. 5, May7, 1878 (Thurman Act) 41
Officers, Union Pacific, to hold for three years, sec. 1, July 1,1862 (amended
sec. 14,1864) * 1
Omaha bridge, Union Pacific Railroad Company may issue §2,500,000 of
bonds to construct; Congress mayregulate tolls and fare, sec. 1, February
24,1871. 35
Pacific railways, settlement of accounts of, sec. 1, March 3, 1879. 49
Patents of lands, conditions of issue, sec. 4, July 1, 1862 1
Payment to land-grant roads for transportation, sec. 1, June 30, 1882 50
Post-Office Department,
settlement of accounts of, sec. 1, March 3, 1879. 49
penalty for not providing postal cars, sec. 1, March 1,1881... 49
Postal cars, penalty for not providing, sec. 1, March 1,1881 49
Proceedings against companies, when, sec. 10, May 7,1878 (Thurman Act). 41
Property of the companies, United States lien on, sec. 9, May 7, 1878 (Thur¬
man Act) 41
Protection of United States security, sec. 4, March 3, 1887. 51
Private rights, not to be affected, sec. 1, May 6, 1870. 34
Public highway, conditions of grant in connection with use of roads by the
Government, sec. 1, March 3, 1875. 39
Rates of fare, may be reduced by Congress under certain circumstances,
sec. 18, July 1, 1862 1
Railway postal cars, penalty for not providing, sec. 1, March 1, 1881 49
Railroad bureau, organization of, sec. 2, June 19, 1878 47
Reports,
annual, to be made to Secretary of Treasury, sec. 20, July 1. 1862 (re¬
pealed June 19,1878, and see sec. 1, act of June 25,1868, and Thurman
Act) 1
companies; when to be made and what to contain, sec. 1, June 25,1868. 29
companies; of what to consist, sec. 4, June 19, 1878 47
companies; penalties for refusal to make, sec. 5, June 19, 1878 47
companies; repeal of prior laws, sec. 1. June 19, 1878 47
commissioners, to Department of Interior, sec. 3, June 25, 1868 29
250
INDEX TO LAWS.
Reports, Pag®
engineers and other officers, annually to Secretary of the Interior, sec.
4, June 25, 1868 _. 29
Reservation, '
of 25 per cent on installment of bonds, sec. 17, July 1, 1802 (repealed,
sec. 7, amendment, 1864) ...
of bonds, sec. 17, July 2, 1804 13
Right of way,
granted, sec. 2, July 1, 1802 (amended, sec. 3, 1804)
additional, appraisement, etc., sec. 3, July 2, 1804-
Road,
to be used as a continuous line, sec. 12, July 1,1802 (see sec. 15, 1804)...
other companies may connect with, sec. 15, July 1, 1802
to be operated as a continuous line, penalty for failure or refusal, sec. 1,
June 20, 1874. 38
Roads,
may arrange with telegraph companies, sec. 19, July 1, 1862... 1
may connect west of initial point, sec. 9, July 2,1864 13
Route, location of, at State line or one-hundredth meridian, sec. 12, July 1,
1862.... 1
Route of road,
map to be filed in Department of the Interior, sec. 7, July 1,1862 1
time for designating and filing map, extended one year, sec. 5, July 2,
1864 13
School lands reserved, sec. 1, May 6, 1870 34
Sinking fund,
established, sec. 3, May 7,1878 (Thurman Act) amended, sec. 5, March 3,
1887) 41
credits and payments to, sec. 4, May 7, 1878 (Thurman Act) 41
application of, sec. 8, May 7, 1878 (Thurman Act). 41
investment of, sec. 5, March 3, 1887 51
State lines, location of road (Union Pacific) sec. 12, July 1, 1862 1
Stock,
capital, amount and number of shares, subscriptions to, sec. 1, July 1,
1862 1
capital, shares changed from §1,000 to §100, sec. 1, July 2, 1864 13
assessment of stockholders, how paid; deemed personal property, sec. 2,
July 2,1864. 13
Stockholders,
power to make by-laws; commissioners call meetings, sec. 1, July 1,1862. 1
of Union Pacific Railroad Company shall elect board of directors and
establish office, sec. 1, April 10, 1869 32
Subsidy bonds. (See Bonds, subsidy.)
Subscriptions to capital stock,
percentage to be paid; books open in several cities, sec. 2, July 2, 1864.. 13
unpaid, Attorney-General shall bring suit in equity, sec. 4, March 3,1873. 36
Sioux City and Pacific Railroad Company,
accounts, for services to United States, sec. 1, March 3,1879 49
bonds, company entitled to same amount as if road was constructed by
Union Pacific, sec. 17, July 2,1864 13
completion of road, proviso, sec. 17, July 2,1864. 13
forfeiture in ten years if not completed, sec. 17, July 2,1864. 13
land grant, alternate sections 10 miles in width, sec. 17, July 2,1864 13
line of road, sec. 14, July 1,1862 (see sec. 17, amendment, 1864) 1
Subrogation of United States to prior liens, sec. 4, March 3,1887 51
Surveys, cost of. land not to be conveyed to any company until payment of,
sec. 21, July 2, 1864 (see sec. 4, July 1,1862, and sec. 6 of this act) 13
maps of, transferred to Interior Department, March 3,1865 26
of lands in Colorado, Wyoming, and Utah, July 15,1870 35
of lands ot Kansas Pacific Railroad Company in Colorado, March 3,1871, 35
of Union Pacific and Central Pacific, from Council Bluffs to Sacra¬
mento, Cal., August 15, 1876.. 40
Telegraph companies existing, roads named may arrange with, sec. 19,
July 1, 1862 (see sec. 5, amendment 1864 1
Telegraphing, penalty for failure to extend facilities to public, sec. 15,
July 2, 1864 (see sec. 19, July 1, 1862) 13
Termini of roads,
(Union Pacific and Central Pacific) shall be at or near Ogden, sec. 1,
April 10, 1869 32
INDEX TO LAWS. 251
Termini of roads, Page
location of (Union Pacific and Central Pacific); grant of land, sec. 1,
May 6, 1870 . 34
Timber,
conditions of grant, sec. 3, July 1, 1802
inland grants, belongs to company; proviso, sec. 4, July 2, 1804
Title to right of way, payment of, sec. 3, July 2, 1864...
Track, to be of uniform width, sec. 12, July 2, 1862
Treasurer, to give bond, sec. 1, July 1, 1862
Transportation,
services rendered United States; rates shall be fair and reasonable; half
to be paid in cash, sec. 6, July 1, 1862 (see sec. 5, amendment, 1864)._ 1
services rendered United States, one-half compensation shall be applied
to the payment of bonds issued by the Government, sec. 5, July 2,1864
(see sec. 6, July 1,1862) 13
services rendered the Government by Pacific railroads; one-half com¬
pensation to be paid in cash, sec. 9, March 3,1871 36
cost to the Government to be investigated, sec. 2, March 3,1887. 51
services rendered the Government; Secretary of the Treasury author¬
ized to withhold payments for reimbursement of interest and 5 per
cent of net earnings; suits in Court of Claims; appeals, sec. 2, March
3,1873. 36
of property or troops of the United States; no money shall be paid to
any railroad constructed by the aid of a grant of public land on the
condition that such road should be a '• public highway;" suits in Court
of Claims, sec. 1, March 3, 1875. 39
of Army, proviso in deficiency act, April 30, 1878 40
of Army, proviso in army appropriation act, July 16, 1892 61
of Army, payment to land-grant railroads for, sec. 1, June 30, 1882 50
-services rendered the Government; amount retained; how applied, sec.
2, May 7,1878 (Thurman Act) 41
claims for services performed to be examined by Secretary of the Treas¬
ury, report to Congress, July 28, 1892 61
Telegraph lines,
subsidized roads shall maintain, sec. 1, August 7,1888 56
equal facilities to connecting lines, sec. 2, August 7,1888 56
failure to maintain; Interstate Commerce Commission to compel com¬
pliance, sec. 3, August 7, 1888. 56
punishments for discriminations, etc., sec. 5, August 7, 1888.. 56
contracts relating to, to be filed with Interstate Commerce Commission,
sec. 6, August 7,1888 56
Uncompleted work, consolidated roads may finish, sec. 16, July 2, 1864 13
Unoccupied lands, how acquired, sec. 3, July 2, 1864.. 13
United States bonds. (See Bonds, subsidy.)
United States,
to extinguish Indian titles, sec. 2, July 1, 1862 1
lien on all property of railroad companies, sec. 9, May 7,1878 (Thurman
Act) 41
Union Pacific Railroad Company, Eastern Division,
authorized to contract with Denver Pacific for construction of road
between Denver and Cheyenne, forming continuous route from Kansas
City to Cheyenne, March 3, 1869 31
bonds, subsidy, shall not be issued to, sec. 12, July 2, 1864 ... 13
line of road, sec. 12, July 2,1864 13
name authorized changed to Kansas Pacific Railway Company, joint
resolution, March 3,1869
time for completion extended, May 7, 1866
Vacancies, in Board of Commissioners, how filled, sec. 4, July 1, 1862 (see
sec. 6, act July 2,1864)
Western Pacific Railroad, time for construction of first section extended.
May 21, 1866
IKDEX TO DECISIONS.
Page.
Act of August 7, 1888, as to telegraph lines, is a valid exercise of reserved
powers of Congress 210
Act of July 1, 1862,
provisions 116
objects of Congress 210
Act of July 1, 1862, as amended,
rights to Union Pacific, Eastern Division 204
original object of Congress not changed by subsequent legislation 210
Act of July 1, 1862, section 6, construed. 181,193
Act of March 3, 1873, constitutionality and scope 84
Act of May 1, 1878 (Thurman Act), constitutionality affirmed. 146
Acts of July 1, 1862, July 2, 1864, and May 7, 1878, construed together 198
Alteration, right of Congress 146
Amendment, right of Congress 146
Attorney-General,
duties under Act of March 3,1873 84
authorization to district attorney to begin suit 185
statutes directing suits valid 84
when interference authorized on ground of United States as trustee... 84
Bonds,
acceptance of, estops denial of completion of road 116
Government, first lien 116
first mortgage, priority over Government bonds. 116
to Kansas Pacific not iien on road west of one hundredth meridian 140
interest on, time of payment 63
Bonds and interest, when liability accrued for 5 per cent of net earnings.. 116
Bridge,
between Omaha and Council Bluffs is a part of the railroad 75
rates for Government service over 193
California, Central Pacific Railroad Company v 243
Central Pacific Company is a corporation of California 243
Central Pacific Railroad Company v. California 243
Central Pacific Railroad Company v. United States 242
Central Pacific Railroad Company, United States v 139,198
Completion of road,
acceptance of bonds estops company from denying completion. 116
company liable thereafter to pay 5 per cent of net earnings 137
Congress,
debates in 63
can regulate practice and procedure .... . 84
mandamus or bill in equity to compel company to obey... 210
creation of sinking fund a proper exercise of power 146
right of amendment, alteration, and repeal 146
object of, in act of July 1,1862 210
reserved rights as to telegraph lines 210
vested rights not to be destroyed 210
Construction,
of contract 198
by Land Department, entitled to weight. 204
Construing act, debates in Congress ... 63
Continuous line, railroad and bridge to be operated together ... 75
Contract, between Union Pacific Railway Company and Western Union
Telegraph Company 210
Contract, by Union Pacific held by directors of company held fraudulent
and void 242
252
INDEX TO DECISIONS SUPREME COURT UNITED STATES. 253
Pa^e.
Contract, when open to two constructions, lawful one adopted. 198
Corporations, Union Pacific Railway Company in Kansas and Nebraska is
a Federal corporation 242
Court of Claims,
appeals from 190
practice in.. 190
Debates in Congress, in construing act. 63
Debt of companies, as specified in Thurman Act 146
Denver Pacific Railway and Telegraph Company not liable for debt of Kan¬
sas Pacific on account of subsidy bonds 143
bound to perform Government service 143
compensation for service not to be retained by United States 143
Denver Pacific Railway Company, United States v 143
Directors,
can not ocoupy position in conflict with corporation interest. 242
can not form auxiliary company to receive valuable contracts 242
"Earnings," what included 116,137,140
"Earnings, net," how ascertained 116,137
Earnings and expenditures 116,137
Earnings, gross, items to be included 140
Estoppel, from denying completion of road 116
Fair and reasonable rates, how determined 193
Franchise, Federal, not taxable by State 243
Fraudulent and void, contract of Union Pacific held by six directors 242
Gallatin, Central Pacific Railroad Company v 146
Gross receipts,
items to be excluded and included 140
how affected by act of May 7, 1878 202
Hall et al., Union Pacific Railroad Company v 75
Improvements of road, in ascertaining net and gross receipts 202
Initial point, Iowa Branch of Union Pacific Road.. 75
Interest on bonds,
time of payment 63
priority of first-mortgage bonds 116
taxation of 188
Iowa Branch, Union Pacific, initial point... 75
Iowa Branch, Union Pacific, order of President of United States designated
eastern terminus 75
Kansas Pacific, «
Government bonds to, not lien on road west of one hundredth meridian. 140
subsidy debt, Denver Pacific not liable for 143
Kansas Pacific Railway Company, United States v 140
Land Department, construction by, entitled to weight 204
Land grants,
to Union Pacific. Eastern Division 204
construction by Land Department entitled to weight 204
Lien,
Government bonds first lien on road and property 116
Government bonds to Kansas Pacific not lien on road west of one
hundredth meridian 140
Mandamus,
private person may move to enforce a public duty 75
relative to telegraph lines. 211
"Maturity," meaning of word. .. 63
Mineral lands, patent for, set aside 185
"Net earnings,"
how ascertained 116,140
interest on first-mortgage bonds payable from 116
five per cent of, when liability accrues 116,137,140,145
internal-revenue tax of 188
after passage of act of May 7, 1878 (Thurman Act) 202
Pacific Railroad removal cases 242
Pacific Railroad v. United States 241
Passenger, local and through rates differ 193
Patent, for mineral lands, set aside 185
Postmaster-General, bound by act of July 1, 1862, as to compensation for
Government service 181
254 INDEX TO DECISIONS SUPREME COURT UNITED STATES.
Practice, Pago.
mandamus 75
subject to legislative control 84
quo warranto H4
suits in equity under act March 3, 1873 84
bill in equity under special act 84
demurrer 84
cross bill 84
authority of district attorney to bring suit . . 185
appeals from Court of Claims _ 190
in Court of Claims 190
mandamus, relative to telegraph lines 210
bill in equity, relative to telegraph lines . .. 210
removal of cases from State to Federal courts 242
Priority, of first mortgage bonds over Government bonds 116
Rates,
fair and reasonable, how determined .. _ 193
for through passenger differ from those for local passenger 193
Removal cases 242
Repeal, right of Congress ... 146
Services to Government, liability for 146
Sinking fund,
act creating (Tliurman Act) constitutional 146
owned by companies. 146
its creation a proper exercise of legislative control .. 146
Sinking-fund cases _ 146
Sioux City and Pacific Railroad Company v. United States 188
Sioux City and Pacific Railroad Company, United States v 145
State can tax property, not franchise, of Federal corporation . _ 243
Stockholders, not parties to bill in equity, not entitled to relief 84
Tax, internal revenue, on net earnings of road 188
Taxation,
State can not tax franchise granted by United States 243
State can tax property of Federal corporation 243
Telegraph lines,
construction of, one of original objects of Congress 010
reserved power of Congress to require telegraph lines 210
under act of August 7, 1888 210
equal privileges under act of July 24, 1866 210
contract between Western Union Telegj-aph Company and the Union
Pacific Railway Company construed _ 210
exclusive rights illegal- . .. . 810
mandamus or bill in equity relative to _ 210
Terminus,
eastern, of iQwa branch. Union Pacific 75
of Union Pacific, Eastern Division 204
Thurman Act,
constitutionality affirmed _ 146
operation of .. 146, 198, 202
Transportation. Government,
under act of July 1, 1862. 116
by Denver Pacific for United States. 143
liability for, under Thurman Act 146
right of compensation for service to Government _ .. 181, 193
Postmaster-General can not vary contract rights under act of July 1,
1862 181
suits for, in Court of Claims 190,193
under acts of July 1, 1862, July 2,1864, May 7,1878 198
of mail inspectors, waivers of compensation ... 242
Trust, United States as depository of 84
Trustee, United States as, when Attorney-General may interfere under act
of March 3, 1873 .... 84
Union Pacific, Eastern Division, rights under act of July 1,1862, and amend¬
ments 204
Union Pacific Railroad Company v. Hall et al 75
Union Pacific Railroad Company v. United States 116.181,190.193
Union Pacific Railroad Company, United States v 63. 84,193, 204
Union Pacific Railroad Company, Wardell r 242
INDEX TO DECISIONS SUPREME COURT UNITED STATES. 255
Page.
Union Pacific Railway Company and Western Union Telegraph Company,
United States v . 210
United States,
relations to Union Pacific 84
as depository of trust, can not sustain suit under act of March 3,1873 __ 84
contract relation for payment for transportation 181,198
United States v. Central Pacific Railroad Copipany 137,198,202
United States v. Denver Pacific Railway Company 143
United States v. Kansas Pacific Railway Company 140
United States v. Sioux City and Pacific Railroad Company _. 145
United States v. Union Pacific Railway Company. 193,204
United States v. Union Pacific Railway Company and Western Union Tele¬
graph Company 210
United States v. Union Pacific Railroad Company. 63,84
United States v. Western Union Telegraph Company and Union Pacific
Railway Company 241
United States, Central Pacific Railroad Company v 242
United States, Pacific Railroads v.. 241
United States, Sioux City and Pacific Railroad Company v . 188
United States, Union Pacific Railroad Company v. 116,146,181
United States, Union Pacific Railway Company v 190.193
United States, Western Pacific Railroad Company and another v... 185
Wardell v. Union Pacific Railroad Company 242
Western Pacific Railroad Company and another v. United States 185
Western Union Telegraph Company and Union Pacific Railway Company,
United States v 210,241
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