Chapters on the History of the Southern PacificDaggett, Stuart
History
Chapters on the History of the Southern Pacific
Daggett, Stuart
Pacific railroads -- History; Railroads -- California -- History; Southern Pacific Company
Unfortunately for the government, the United States Supreme Court
squarely refused to entertain the notion that Central Pacific
stockholders were individually liable for repayment of advances which
the United States had made to that company. Individual liability
depends upon express statutory prescription, and no word upon this
point was to be found in the federal laws of 1862 and of 1864. While
California railroad stockholders were undoubtedly personally liable to
some degree for the debts of California corporations, yet the state
law which established this liability was held not to apply to the debt
due to the United States. The terms of liability as regards this debt
were to be sought, according to the Supreme Court, in the Congressional
enactment, and there only. It was said that any other ruling would not
only lack solid legal foundation, but would have the unfortunate effect
of imposing a heavier burden upon stockholders of the Central Pacific
than upon those of the Union Pacific.[566]
Lien of Subsidy Bonds
A second possibility which might have strengthened the government’s
claim that the lien of the subsidy bonds might be held to extend to
the non-bond-aided portions of the Central Pacific as well as to
those portions for the construction of which the government had given
aid. This was also the contention of Mr. Doyle, of San Francisco.
The point was of the highest importance, because if it were denied,
the government possessed a mortgage upon only the trunk lines of the
Pacific railroads. It had no interest in, and could by foreclosure
secure no control over any branches, or over the principal terminals.
On the Central Pacific it could acquire by judicial sale only 860 miles
from a total of 1,360, and on the Union Pacific 1,532 miles from a
total of 7,944. The bond-aided portions of the Central Pacific reached
neither Oakland nor San Francisco.[567]
In order to understand the relation of the subsidy bonds to the
non-aided portions of the Central Pacific, it is necessary to refer for
a moment to the terms of the Pacific railroad legislation. The clauses
of the Act of 1862 which relate to the lien of the subsidy bonds of
the Central Pacific were to be found in Section 5 of that law. They
provided as follows, namely, that:
Public-domain text, read in full here on John Shaqi.
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