Cases Union Pacific Railroad Company v. United States Central Pacific Railroad Company v. Gallatin

• Decision Date: 01 October 1878
• Docket Number: SINKING-FUND
• Parties: CASES. UNION PACIFIC RAILROAD COMPANY v. UNITED STATES. CENTRAL PACIFIC RAILROAD COMPANY v. GALLATIN
• Court: U.S. Supreme Court

99 U.S. 700

25 L.Ed. 496

25 L.Ed. 504

SINKING-FUND CASES.

UNION PACIFIC RAILROAD COMPANY

v. UNITED STATES.

CENTRAL PACIFIC RAILROAD COMPANY

v. GALLATIN.

October Term, 1878

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 compensation 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, $5,225.68 1/2, 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 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 transportation 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 provisions 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 certificate of deposit, showing that $10,451.73 on account of moneys received from the Union Pacific Railroad Company, being compensation found due it for transportation performed in July, 1878, and withheld, &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 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 appropriated 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 Railroad Company, and the issuing of the draft on said warrant, as found in finding No. 7, payable to the order of the Secretary of the Treasury as assignee of the Union Pacific Railroad Company, was each of 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 Department 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 Railroad Company, filed his bill against t and the persons constituting its board of directors, 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 conduct, 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, 1862 (12 Stat. 489), by its first section enacts:——

'That Walter S. Burgess' and other persons therein named, '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 corporate and politic, in deed and in law, by the name, style, and title of 'The Union Pacific Railroad Company;' and by that name shall have perpetual succession, and shall 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 United 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, 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 River, in the Territory of Nebraska, to the western boundary of Nevada Territory, upon the route and terms hereinafter provided, and is hereby vested with all the powers, privileges, and immunities necessary to carry into effect the purposes of this act, as herein set forth. . . .

'SECT. 2. That the right of way 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 to the extent of two hundred 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 stations. The United States shall extinguish as rapidly as may be 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.

'SECT. 3 [as amended by sect. 4 of act of July 2, 1864. 13 Stat. 356]. That there be, and is hereby, granted to the said company, for the purpose of aiding in the construction of said railroad and telegraph line, and to secure the safe and speedy transportation of the mails, troops, munitions of war, and public stores thereon, every alternate section of public land, designated by odd numbers to the amount of...