APPEAL from the Circuit Court for the District of Nebraska; the case being thus:
By act of Congress of July 1st, 1862, entitled 'An act to aid in the construction of a railroad and telegraph line from the Mississippi River to the Pacific Ocean, and to secure the government the use of the same for postal, military, and other purposes,' Congress incorporated certain individuals, their associates and successors, as the 'Union Pacific Railroad Company,' with authority to build a continuous railroad and telegraph from a point on the one hundredth meridian to the western boundary of Nevada Territory. The act fixed the amount of the capital stock and shares, and declared that 'the stockholders should constitute said body politic and corporate.' The government had no stock in the road, though through the President of the United States it was to appoint two directors, not stockholders, out of fifteen, which the charter provided for as the number to be appointed in all. Annual reports were to be made to the Secretary of the Treasury. The act granted to the company the right of way through the public lands, and '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 the public stores thereon,' made to it an extensive grant of lands, and provided for the issuing of patents therefor. And for the same purposes the United States agreed to, and did issue its 6 per cent. bonds, payable in thirty years, to the company, to the amount of $16,000 per mile, for each section of forty miles; which bonds the original act declared 'shall, ipso facto, constitute a first mortgage on the whole of the railroad and telegraph, together with the rolling stock, fixtures, and property of every kind,' and made specific provision as to proceedings on the failure of the company to redeem the bonds.
By an act of July 2d, 1864, this was changed, and the company authorized to issue its 'first mortgage bonds to an amount not exceeding the bonds of the United States,' and the lien of the bonds of the United States was declared to be subordinate to the bonds so issued by the company, with the exception relating to the transportation of dispatches, troops, mails, &c., for the government.
The grants to the company were declared by the original act to be made upon condition that the company shall (1) pay the bonds of the United States at maturity; (2) keep their line and road in repair and use; (3) 'transmit dispatches over said telegraph line, and transport mails, troops, and munitions of war, supplies, and public stores upon said railroad for the government,' & c., giving the government the preference at fair and reasonable rates of compensation, not exceeding those charged to private individuals, the amount thus earned to be applied in payment of the bonds, as well as 5 per cent. of the net earnings of the road after its completion.
By the seventeenth section of the same act it was provided that if the road, when finished, should for any unreasonable time be permitted to remain out of repair, or unfit for use, Congress should have authority to put the same in repair and use, and from the income of the road reimburse the government for expenditures thus caused.
The eighteenth section provided that when the net earnings of the road should exceed 10 per cent. of its cost, Congress might reduce, fix, and regulate rates of fare thereon, and declared that 'the better to accomplish the object of this act, to wit, 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 the government at all times (but particularly in times 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 also contained provisions, that so far as the public and government were concerned the railroad and branches should be worked as one connected and continuous line.
There was no provision, in any act of Congress relating to this company, respecting the taxation of it or its property by the States through which its roads might run.