
    THE DENVER PACIFIC RAILWAY CASE.
    The Denver Pacific Railway Company v. The United States.
    
      On the Proofs.
    
    
      The ease is first, heard on demurrer and determined in favor of the elaimamts (12: O. Gis. R., 237). The defendants answer over, and the case now eomes to a hearing on the proofs. The facts found by the court do not differ materially from those admitted by the demurrer, and upon which the previous decision was based. The judges who now hear the case order judgment to be entered in favor of the claimant for the reasons given in their several opinions.
    
    
      The Bejporters’ statement of tbe case:
    On tbe former bearing of tbis case (12 C. 01s. E., 237) tbe questions of law involved were considered on demurrer and a conclusion was reached by a majority of tbe court favorable to tbe claimants, with leave, however, to tbe defendants to answer within thirty days. At the former bearing' Judges Loring, Nott, and Eicbardson concurred in ordering judgment for tbe claimants; tbe Chief Justice dissented, and Mr. Justice Peck was absent. On tbe present bearing, tbe court was differently constituted; tbe Chief Justice and Mr. Justice Eicbardson being tbe only members present of those who before beard tbe case. As tbe opinions assign different reasons for tbe judgment now directed, no new point can be stated as having been determined. Tbe following are tbe facts found by tbe court:
    I. Tbe Denver Pacific Eailway and Telegraph Company is a corporation, duly incorporated under tbe laws of tbe Territory of Colorado.
    II. Tbe Kansas Pacific Eailrway Company is a corporation, duly incorporated by an act of tbe legislature of tbe Territory of Kansas, passed in tbe year 1855, and entitled “An act to incorporate tbe Leavenworth, Pawnee, and Western Eailroad Company.
    III. Tbe name of said corporation has since been legally changed; first, to tbe “ Union Pacific Eailway Company, Eastern Division,” and then to the “ Kansas Pacific Railway Company.”
    IY. On March 3,1869, said Kansas Pacific Railway Company had completed its road to Sheridan, a distance of 404 miles from the Missouri River and 235 miles from Denver, and had previously thereto received from the United States $6,303,000 in bonds, being the number of bonds it would have been entitled to if it had connected with the Union Pacific Railroad on the one hundredth meridian; namely, at the rate of $16,000 per mile on 393if miles of its road westward from the Missouri River, and which was the entire pecuniary aid to which it was entitled.
    Y. On the 19th March, 1869, the Kansas Pacific Rahway Company, in pimsuance of an act approved March 3,1869, entitled “ An act to authorize the transfer of lands granted to the Union 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,” contracted with the Denver Pacific Railway and Telegraph Company for the construction, operation, and maintenance of its hue from Denver to its point of connection with the Union Pacific Railroad at Cheyenne, and granted and transferred to it all the rights and privileges, subject to the obligations, pertaining to that part of its road, of which said contract and grant the following is a copy:
    “Articles of agreement entered into this 19th day of March, A. D. 1869, between the Union Pacific Railway Company, E. D., party of the first part, and the Denver Pacific Railway and Telegraph Company, party of the second j>art, witness--eth:
    “ Whereas, by the act of Congress entitled “An act to authorize the transfer of lands granted to the Union Pacific Railway Company, E. D., 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,’ apimoved March 3, 1869, it is, among the things, provided that the said Union Pacific Railway Company, E. D., may contract with the Denver Pacific Railway and Telegraph Company 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 at Cheyenne, and to adopt the hue of road already graded by said Denver Pacific Railway and Telegraph Company, 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 the rights and privileges of the said Union Pacific Railway Company, E. D., between Denver and Cheyenne aforesaid, subject to all the obligations pertaining to said part of the line:
    “ Now, therefore, it is agreed that the said party of the first part has for its line of road, by consent of the party of the second part, adopted the line of road already located and graded by the party of the second part, and by virtue of the power and authority contained in the said recited act of Congress, approved March 3, 1869, in strict accordance with its provisions, and subject to the duties, obligations, conditions, and limitations imposed by said act and the other acts of Congress relating to the Union Pacific Railroad and its branches, and upon condition that the Denver Pacific Railway and Telegraph Company, party of the second part, shall and will in all things well and truly perform, observe, and keep all the duties and obligations to be performed, observed, and kept by the party of the first part in respect to the construction and operation of this part of the line of road of the party of the first part, and upon like condition, the grant and transfer of rights as hereinafter made, the said the Union Pacific Railway Company, E. D., party of the first part, has and does hereby give, grant, transfer, and assign to the said Denver Pacific Railway and Telegraph Company, party of the second part, the perpetual use of its right of way and depot-grounds between Denver and Cheyenne, together with all the rights and privileges of the said party of the first part, to construct and operate its railroad from Denver to Cheyenne aforesaid; also all the lands and rights to lands appertaining to the said line of road between Denver and Cheyenne, granted by Congress in aid of the building of said hue of road, subject to the charges and expense of obtaining patents for the same.
    “And the said Denver Pacific Railway and Telegraph Company, in consideration of the premises and of said grant and transfer, hereby agrees, to and with the Union Pacific Railway Company, E. D., to construct and operate said railroad and telegraph line betweeh the points aforesaid, upon the adopted line hereinbefore mentioned between the points aforesaid, in all respects as required by said Act of Congress of March 3, 1869, and as required and contemplated by the several acts or Congress relating to the Union Pacific Railroad and its branches, and to connect with the railroad and telegraph of the party of the first part and of the Union Pacific Railroad Company, as required and contemplated by said acts of Congress, and according to the true intent and meaning thereof; and the said party of the second part agrees to fully complete and equip said road by the 1st day of January, 1871, in default whereof the party of the first part may enter upon and construct the same, paying said party of tlie second part an equitable price for their outlays thereon.
    “In testimony whereof the parties have caused their seals to be hereunto affixed and these presents to be signed in duplicate by their presidents and attested by their secretaries.
    “The Union Pacific Eailway Co., B. D.,
    “By JOHN D. PE BEY, President.
    
    •[SEAL.]
    “Attest.
    “Chas. B. Lamborn, Secretary.
    
    “Denver Pacific Eailway & Telegraph Co.,
    “By JOHN BYANS, President.
    
    [SEAL.]
    ■“Attest.
    “B. E. McCormick, Secretary.”
    YI. The Kansas Pacific Eailway Company, in pursuance of said last-mentioned act, proceeded to complete its railroad from Kansas City, connecting there with the Missouri Pacific Bail-road to Denver, connecting there with the line of said Denver Pacific Kailway and Telegraph Company, and completed same in August 1870; and the Denver Pacific Eailway and Telegraph Company mortgaged its road from Denver to Cheyenne for the sum of $2,500,000, to enable it to borrow money to construct the same, and issued and sold its bonds, secured by said mortgage, and with the funds so obtained constructed its railroad from Denver to Cheyenne, in the Territory of Wyoming, and completed same on or about July 1,1870.
    YII. By virtue of various acts of Congress and of said con- . tract and grant, the rights, powers, donations, grants of lands, rights of way, privileges, and franchises granted to the Kansas Pacific Eailway Company for the construction of that portion of its line between Denver and Cheyenne became vested in said Denver Pacific Eailway and Telegraph Company, as assignee of said Kansas Pacific Eailway Company, as aforesaid, for the purpose of aiding the claimant in the construction of its railroad and telegraph line.
    YIII. No bonds or pecuniary aid of any description were given by the United States to the claimant, but its railroad was duly approved by the President, and it has received the grant of the alternate sections of land along its line of road given by said acts of Congress to aid in the construction of the various Pacific roads, and to which it had become entitled by the duly-authorized assignment from tbe Kansas Pacific Railway Company hereinbefore mentioned.
    IX. The claimant bas rendered services to tbe Government of tbe United States in tbe carriage and transportation of tbe United States mails for tbe Post-Office Department over tbe railroad of tbe claimant, and sucb services, tbe times when they were rendered, and tbe value and amounts due tbe claimant for sucb services, are fully specified in tbe following account:
    
      The United States to the Denver Pacific Railway anid Telegraph Company, Dr.
    
    A. — .AMOUNT DUE EOJR. MAIL SERVICE.
    1873. Jan. 1 to Mar. 31 (first quarter). Between Denver and Cheyenne, 106 miles, at $150 per mile per annum.$3,975 00
    April 1 to June 30 (second quarter). Between Denver and Cheyenne, 106 miles, at $150 per mile per annum. 3,975 00
    July 1 to Sept. 30 (third quarter). Between Denver and Cheyenne, 106 miles, at $190 per mile per annum ... 5,035 00
    Oct. 1 to Dec. 31 (fourth quarter). Between Denver and Cheyenne, 106 miles, at $190 per mile per annum. 5,035 00
    1874. Jan. 1 to Mar. 31 (first quarter). Between Denver and Cheyenne, 106 miles, at $190 per mile per annum. 5,035 00
    April 1 to June 30 (second quarter). Between Denver and Cheyenne, 106 miles, at $190 per mile per annum. 5,035 00
    July 1 to Sept. 30 (third quarter). Between Denver and Cheyenne, 106 miles, at $190 per mile per annum.: .¡. 5,035 00
    Oct. 1 to Dec. 31 (fourth quarter). Between Denver and Cheyenne, 106 miles, at $190 per mile per annum. 5,035 00
    38,160 00
    Less fares paid by special agents. 40 00
    38,120 00
    
      1875. Jan. 1 to Mar. 31 Between. Denver and Cheyenne, (first quarter). 106 miles, at $190 per mile per annum. 5,035 00
    April 1 to June 30 Between Denver and Cheyenne, (second quarter). 106 miles, at $190 per mile per annum. 5,035 00
    June 1 to Sept. 30 Between Denver and Cheyenne, (third quarter). 106 miles, at $190 per mile per annum. 5,035 00
    Oct. 1 to Dec. 31 Between Denver and Cheyenne, (fourth quarter). 106 miles, at $190 per mile per annum. 5,035 00
    58,260 00
    •X. In all settlements for postal service previous to those specified in the account above referred to, performed on the railroad of the claimant, the United States Government has recognized the right to full payment therefor, and has made due payment for such service, without deduction on account of any debt due by the Kansas Pacific Eailway Company to the United States.
    XI. Since said date the United States Government has paid nothing to the claimant, or to any other person or corporation, for such service; and there is now payable to said Denver Pacific Eailway and Telegraph Company for such services, as shown by the account above referred to, the sum of $58,260.
    XII. The Denver Pacific Eailway and Telegraph Company is the sole owner of said claim, and the consideration therefor is the mail service actually performed by said company for the Post-Office Department.
    XIII. Demand has been made of the Postmaster-General for payment of the amount due the claimants for said mail service, and payment has been refused.
    XIY. The gross earnings of the Denver and Pacific Eailway and Telegraph Company, from all sources, from 1870 to 1875 inclusive, were as follows:
    Gross earnings, 1870:
    Freight.$166,852 27
    Passenger.. 130,310 28
    Miscellaneous. 7,575 68
    304,73S 23
    
      Gross earnings, 1871:
    Freight.$148,428 86
    Passenger. 181,431 97
    Miscellaneous. 9,284 62
    339,145 45
    Gross earnings, 1872:
    $182,435 02 Freight.
    165, 780 59 Passenger.
    13, 822 49 Miscellaneous...
    362, 038 10
    Gross earnings, 1873:
    Freight. o> 03 CO CO Cq r-i
    Passenger. <X> H 1C O CO iH
    Miscellaneous ... CO H <N 05 £■*
    316,335 65
    Gross earnings, 1874:
    $125,174 46 Freight.
    177,567 26 Passenger.
    8,169 55 Miscellaneous...
    310,911 27
    Gross earnings, 1875:
    $133,307 15 Freight.
    175, 965 32 Passenger.
    6, 592 26 Miscellaneous...
    315,864 73
    RE CAPITULATION.
    Earnings:
    1870 . $304,738 23
    1871 . 339,145 45
    1872 . 362, 048 10
    1873 . 316,335 65
    1874. 310,911 27
    1875 . 315,864 73
    1,949,043 43
    The amount of United States Government transportation ($103,346.76) is included in the above, of which a portion, as shown in finding XI, is still due.
    
      Tlie operating and other expenses of the road during the same period were as follows: The item “ proceeds to balance ” shows the profits of operating the road each year, after deducting the operating expenses and sums expended each year for taxes and real estate, respectively, from the gross earnings for the year, as show in finding II.
    Expenses, 1870:
    Operating.$150,003 27
    Taxes, &c. • 6,662 00
    Real estate purchased. 6,603 75
    Proceeds to balance. 135,469 21
    304,738 23
    Expenses, 1871:
    Operating.-.$142,975 64
    Taxes, &c.".■. 8,274 51
    Proceeds to balance. 187,895 30
    339,145 45
    Expenses, 1872:
    Operating...$144,158 18
    Taxes, &c. 12, 794 64
    Real estate purchased... 2,856 50
    Proceeds to balance. 202,238 78
    362,048 10
    Expenses, 1873:
    . Operating.$132,599 29
    Taxes, &c. 3, 604 98
    Real estate purchased. 11 25
    Proceeds to balance. 180,120 13
    316,335 65
    Expenses, 1874:
    Operating.$115,865 88
    Taxes, &c. 22, 437 81
    Real estate purchased. 558 25
    Proceeds to balance. 172,049 33
    310,911 27
    Expenses, 1875:
    Operating.$125,521 44
    • Taxes, &c. 13,718 06
    Proceeds to balance-•. 176,625 23
    315, 864 73
    
      RECAPITULATION.
    Expenses:
    1S70. $169,269 02
    1871 . 161,250 15
    1872. 159,809 32
    1873 . 136,215 52
    1874 . 13S, 861 94
    1875 . 139,239 50
    894, 645 45
    XY. Tbe amounts- paid for interest by tbe claimants during tbe same period were as follows:
    INTEREST.
    1870. — Face of coupons.$122,500 00
    13.09 premium. 16,035 25
    -$138,535 25
    1871. — Face of coupons. 174,790 00
    13.09 premium. 22,833 24
    - 197,623 24
    1872. — Face of coupons. 174,580 00
    13.09 premium. 22,852 52
    --- 197,432 52
    1873. — Face of coupons. 174,545 00
    15.09 premium. 27,752 66
    - 202,297 66
    1874. — Face of coupons. 173,250 00
    8.13 premium. 14,085 22
    -- 187,335 22
    1875. — Face of coupons.. 170, 730 00
    15.2 premium.. 25,950 96
    - 196,680 96
    1,119,904 85
    Tbe above iiayments of interest were made by tbe claimant upon tbe loan of $2,500,000 mentioned in finding YI. (Additional finding made on request of defendants:)
    XYI. Tbe claimant entered into tbe following agreement with tbe Pacific Eaüroad Company, Eastern Division:
    “Tbis indenture, made tbis 23d day of July, 1868, between tbe Union Pacific Eailway Company, Eastern Division, parties of tbe first part, and tbe Denver Pacific Eailway and Telegraph Company, parties of tbe second part, witnessetb:
    “Tbe said Union Pacific Eailway Company, Eastern Division, a corporation, duly organized under tbe laws of tbe State of Kansas and.under tbe several'laws of tbe United States to tbat effect, in consideration of tbe agreements and conditions herein contained on tbe part of tbe said parties of tbe second part, and of tbe sum of one dollar to them in band paid, tbe receipt of wbicb is hereby acknowledged, do hereby assign, transfer, and quitclaim unto tbe said Denver Pacific Eailway' and Telegraph Company, a like corporation, duly organized "under tbe laws of tbe Territory of Colorado, and to their successors and assigns, tbe right to construct, run, maintain, and operate all tbat portion of a line of railroad and telegraph lying between tbe city of Denver, in tbe Territory of Colorado, to a point of connection with the Union Pacific Bailroad, and connecting at Denver with tbe line and track of tbe said Union Pacific Eailway, Eastern Division, so as to form a continuous line of railroad and telegraph with said other railroads; hereby .also assigning, transferring, and quitclaiming, as aforesaid, all tbe rights, privileges, or powers of constructing, owning, maintaining, and operating the said raikoad and telegraph line "between tbe points named and described as aforesaid, which tbe said Union Pacific Eailway Company, Eastern Division, is or may be authorized to construct, own, maintain, and operate, by an act of tbe Congress of tbe United States of America, entitled ‘An act to aid in the construction of a railroad and telegraph line from tbe Missouri Kiver to tbe Pacific Ocean, and to secure to tbe Government tbe use of tbe same for postal, military, and other purposes,7 approved July 1, 1862, and the acts amendatory thereof, approved, respectively, July 2,1864, and July 3,1866; hereby also assigning, transferring, and quitclaim-ing unto tbe said Denver Pacific Eailway and Telegraph Company, their successors and assigns, all the rights, grants, donations, rights of way, and every other right and thing, so far as concerns or relates to that portion of tbe said railroad and telegraph line hereinbefore described and designated, tbe right construct, own, maintain, and operate, wbicb is hereby assigned, to wbicb tbe said Union Pacific Eailway Company, Eastern Division, is or would be entitled under the acts of Congress aforesaid if this assignment bad not been made j hereby also assigning, transferring, and quitclaiming, as aforesaid, unto tbe said Denver Pacific Eailway and Telegraph Company, their successors and assigns, all rights to tbe raikoad line or route to the raikoad line or route as heretofore or now estabksbed, located, and fixed by tbe said Union Pacific Eailway Company, Eastern Division, and as shown by thek map on file in the Interior Department, between tbe city of Denver and tbe Union Pacific Bailroad, as hereinbefore described, hereby fully vesting in tbe said Denver Pacific Eailway. and Telegraph Company, thek successors and assigns, all tbe rights, privileges, and powers in and to tbe line or route so established, fixed, and located as aforesaid between tbe points aforesaid, forming tbe connections and terminating as aforesaid, to wbicb tbe said Union Pacific Eailroad Co., Eastern Division, is or would be entitled under tbe acts of Congress aforesaid if this assignment bad not been made; it being, however, distinctly understood and agreed by and between tbe said contracting parties, and tbis assignment is upon this express agreement, that the said Denver Pacific Eailway & Telegraph Company shall be authorized to and shall deviate from the route heretofore located between the points named by the said Union Pacific Eailway Company, Eastern Division, in such manner as to connect with the Union Pacific Eailroad at a point at or near Cheyenne, said deviation being as by the line or route now being graded by the said Denver Pacific Eailway & Telegraph Company; and both the parties to this agreement, each for itself, its successors and assigns, are hereby bound to use their best endeavors to secure the passage of, and in case of its passage or failure to pass the same, as effects each other, to carry out in good faith the stipulations of an act now pending in the Congress of the United States of America, being Senate bill No. 570, and entitled ‘A bill for a grant of land, granting the right of way over the public lands to the Denver Pacific Eailway and Telegraph Company, and for other purposes,’ a copy of which act is hereunto annexed, and made part of this agreement.
    “ The foregoing assignment is made upon the following express terms, stipulations, provisions, and conditions, to be done, observed, and performed by the said Denver Pacific Eailway and Telegraph Company, their successors and assigns, and all persons claiming any right, title, or interest in the matters herein assigned by, through, or under the said Denver Pacific-Eailway and Telegraph Co., to wit:
    “The said Denver Pacific Eailway & Telegraph Company shall and will, at any and all times hereafter, well, truly, and. faithfully do, observe, comply with, and perform all, each, and. every act, requirement, term, stipulation, proviso, and condition of all the acts of Congress now in force (except as to the deviation in route hereinbefore recited) or which may hereafter be-enacted, so far as concerns or relates to or affects that portion of the said railroad and telegraph line hereby assigned; also, that said Denver Pacific Eailway & Telegraph Co., them successors and assigns, shall and will construct and complete the said portion of said railroad and telegraph line herein and hereby conveyed by or before the year 1870, or within such further-time as may hereafter be extended by Congress, and that' they shall and will locate and construct that portion of said railroad and telegraph line herein and hereby assigned so as to run from; the city of Denver to a point on the Union Pacific Eailroad at or near Cheyenne, and the said line and track of said railroad, shall be so located and constructed as to connect with the line- and track of the said Union Pacific Eailway Co., Eastern Division, in the city of Denver, and with the line and track of the-Union Pacific Eailroad at or near Cheyenne, so that when completed tlie same shall, with tlie said other railroads, form a continuous line of railroad and telegraph ,* and the said Denver Pacific Railway & Telegraph Company and the Union Pacific Railway Co., Eastern Division, hereby bind themselves, their successors & assigns, to faithfully observe and to hilly to carry into elfect all the provisions and stipulations imposed upon them in the Senate bill Eo. 570, hereinbefore referred to, amended as agreed upon, and which is hereunto annexed and made a part of this agreement.
    “ In witness whereof we, the presidents of the said contracting companies, have hereunto set our hands the day and date above written, subject to the ratification of the boards of directors of said companies.
    “Union Pacific Railway Co., E. D., “ByJRO. D. PERRY, Prest.
    
    “Disnvek Pacific Railway & Tel. Co., “By JOHE EYARS, Prest .”
    May 28,1878.
    
      Mr. John P. Usher and 2fr. Henry Beard for the claimants.
    
      Mr. Joseph K. McCammon (with whom was the Assistant Attorney-General) for the defendants.
   Richardson, J.:

The judgment of the court is that the claimants recover the sum of $58,260, and that the defendants’ counter-claim be dismissed.

I am' still of opinion that the decision of a majority of the court at the former hearing of this case on demurrer was correct (12 C. Cls. R., 237).

On careful reconsideration of the questions of law involved, I cannot bring my mind to the opinion that, when by the transfer act (15 Stat. L., 324) Congress authorized the Kansas Pacific Railroad Company to sell and transfer part of its property and franchise to the claimants, with power to mortgage the same for $32,000 per mile of road, it intended that the United States should have the large mortgage, which they held from the Kansas Company extended over the property and road of the claimants thus authorized to be transferred to them.

I cannot believe that Congress would encourage, countenance, or permit that most objectionable business operation, so hazardous and pernicious, and so frequently leading to fraud, as tbe selling of part of a large property, subject to incumbrances on tlie whole for debts of others than the'purchasers.

Sucha gross departure from correct business principles, which must inevitably lead to embarrassment and litigation, if not to ruin, cannot be contemplatedbyme as within the possible intention of the wisdom of Congress; and I search in vain to find any such unusual and ruinous obligation set forth in the statutes in language which can reasonably bear that construction, or which clearly indicates such an understanding on the part of the contracting parties or of Congress.

The exhaustive opinion of the court upon the demurrer, reviewing the provisions of the Pacific Railway acts bearing upon the questions of law here involved, render it necessary to refer to them again.

Davis, J.:

The argument on the demurrer in this case and the decision of the court upon it cover all the questions of law which are raised by the findings of fact on this trial. I therefore regard the points covered by that decision as res adjudicates in this forum, and concur in the judgment of the court on that ground solely.

Drake, Ch. J.:

I adhere to the views expressed in my dissenting opinion on the demurrer in this case as reported in 12 C. Cls. R., and therefore dissent from the judgment of the court; but consent to the entry of the judgment, as Judge Nott concurred with Richardson and Davis, JJ., in rendering the same.

Nott, J., was absent when this case was tried and'when the decision was announced, but concurs in the opinion read by Mr. Justice Davis, and, upon the merits, in the opinion of Mr. Justice Richardson.  