32 F. 241 (N.D.Cal. 1887), In re Pacific Ry. Commission

Citation:32 F. 241
Case Date:August 29, 1887
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 241

32 F. 241 (N.D.Cal. 1887)


United States Circuit Court, N.D. California.

August 29, 1887

Syllabus by the Court

The Pacific Railway Commission is not a judicial body, and possesses no judicial powers under the act of congress of March 3, 1887, creating it, and can determine no rights of the government, or of the corporations whose affairs it is appointed to investigate.

Congress cannot compel the production of private books and papers of citizens for its inspection, except in the course of judicial proceedings, or in suits instituted for that purpose, and then only upon averments that its rights in some way depend upon evidence therein contained.

The courts are open to the United States as to private parties to secure protection for their legal rights and interests, by regular proceedings.

Congress cannot empower a commission to investigate the private affairs, books, and papers of the officers and employes of corporations indebted to the government, as to their relations to other companies with which such corporations have had dealings, except so far as such officers and employes are willing to submit the same for inspection; and the investigation of the Pacific Railway Commission into the affairs of officers and employes of the Pacific Railway Companies under the act of March 3, 1887, is limited to that extent.

The United States have no interest in expenditures of the Central Pacific Railroad Company under vouchers which have not been charged against the government in the accounts between them; and the Pacific Railway Commission under the act of congress of March 3, 1887, has no power to investigate such expenditures against the will of the company and its officers.

The judicial power of the United States is limited to 'cases' and 'controversies' enumerated in article 3, Sec. 1, Const., as modified by the eleventh amendment, and to petitions on habeas corpus, and cannot be extended by congress; and by such 'cases' and 'controversies' are meant the claims of litigants brought for determination by regular judicial proceedings established by law or custom.

The judicial department is independent of the legislative, in the federal government, and congress cannot make the courts its instruments in conducting mere legislative investigations.

The power of the United States courts to authorize the taking of depositions on letters rogatory from courts of foreign jurisdictions exists by international comity; but no comity of any kind can be invoked by a mere investigating committee appointed by congress.

The Central Pacific Railroad Company is a state corporation, not subject to federal control, any further than a natural person similarly situated would be. Per SAWYER, J.

The Central Pacific Railroad Company is absolute owner of the lands and bonds granted to it by the government, having complied with the act making the grant, subject to the lien of the government to secure its advances, in the same way, and to the same extent as a natural person in like situation. Per SAWYER, J.

The relation of creditor and debtor exists between the United States and the Central Pacific Railroad Company, under the act granting aid to the latter, with like force and effect as if both were natural persons, the relation being private, and having nothing to do with the power of the government as sovereign. Per SAWYER, J.

The United States, as creditor, cannot institute a compulsory investigation into the private affairs of the Central Pacific Railroad Company, or require it to exhibit its books and papers for inspection in any other way, or to any greater extent, than would be lawful in the case of private creditors and debtors. Per SAWYER, J.

The United States, as creditor, have the same remedy as a private creditor, and no other, to compel payment of any moneys due them from the Central Pacific Railroad Company, as their debtor, or to prevent the latter from wasting its assets before the debt matures, and that remedy, if any, must be by a regular judicial proceeding in due course of law, and congress has no power to institute a roving, legislative inquisition into the affairs of the company to ascertain what it has done or is doing with its money. Per SAWYER, J.

Page 242

This is an application of the Pacific Railway Commission, created under the act of congress of March 3, 1887, 'Authorizing an investigation of the books, accounts, and methods of railroads which have received aid from the United States, and for other purposes,' for an order requiring a witness before it to answer certain interrogatories propounded to him. That act authorizes the president to appoint three commissioners to examine the books, papers, and methods of all railroad companies which have received aid in bonds from the government, and in terms invests them with power to make a searching investigation into the working and financial management, business, and affairs of the aided companies; and also to ascertain and report 'whether any of the directors, officers, or employes of said companies, respectively, have been, or are now, directly or indirectly, interested, and to what amount or extent, in any other railroad, steam-ship, 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 loaned by any of said companies to any person or corporation; 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 valuable 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 sufficient and detailed vouchers have not been given or filed with the records of said company; and, further, to inquire and report whether said companies, or either of them, or their officers or agents, have paid any money or other valuable consideration, or done any other act or thing, for the purpose of influencing legislation.'

Page 243

It is difficult to express in general terms the extent to which the commissioners are required to go in their inquisition into the business and affairs of the aided companies; or the extent to which they may not go into other business and affairs of its directors, officers, and employes. The act itself must be read to form any conception of the all-pervading character of the scrutiny it exacts of them. And it provides that the commissioners, or either of them, shall have the power 'to require the attendance and testimony of witnesses, and the production of all books, papers, contracts, agreements, and documents relating to the matter under investigation, and to administer oaths; and 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. ' And it declares that 'any of the circuit or district courts of the United States within the jurisdiction of which 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 commissioners, or either of them, as the case may be, and produce books and 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. ' And also that 'the claim that any such testimony or evidence may tend 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.'

In the discharge of the duties imposed upon them, the commissioners have attended at San Francisco, and called before them as a witness Leland Stanford, who is now, and has been from its organization, president of the Central Pacific Railroad Company, one of the companies which received aid in bonds from the government; and on the tenth of August, while he was under examination respecting the affairs of that company, a number of vouchers purporting to represent the expenditure of moneys belonging to it were produced and verified. These vouchers, as stated by the commissioners, represented the aggregate sum of $733,725.68, which had been expended by Mr. Stanford between November 9, 1870, and December 21, 1880, and by him charged to the company, and by the company subsequently reimbursed to him. The persons to whom the moneys were paid, and the objects to which they had been applied, do not appear upon the face of the vouchers, except that the objects are stated to have been for 'general expense account,' or for 'legal services,' and except, also, that in a few instances the initials of persons to whom the money is purported to have been paid are given. One of the vouchers (No. 2,569 1/2) represented the expenditure of $171,781.89. It reads as follows:

C.P.R.R. Co. to Leland Stanford, Dr.

To cash paid on account of general expenses to December 31, 1875, $137,365.50

To cash paid on account of general expenses to December 31, 1875, 34,416.39



Page 244

This was indorsed, in addition to its number, amount, and a statement of its general character, as follows:

'Allowed February 7, 1876, by board of directors, folio 153.

'I certify that the within account, amounting to $171,781.89, is correct.


When under examination Mr. Stanford...

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