THE TITLE 
 
 TEXAS AND PACIFIC RAILROAD CO. 
 
 TO THE PROPERTY OF THE 
 
 MEMPHIS, EL PASO AND PACIFIC RAILROAD CO. 
 
 OPENING ARGUMENT 
 
 ft 
 
 DOUGLAS CAMPBELL, Esq., 
 
 'V 
 
 BEFORE THE 
 
 JUDICIARY COMMITTEE OF THE HOUSE OF REPRESENTATIVES, 
 
 APRIL 11, 1878. 
 
 
 BUREAU OF RAItV C 
 
 WASHINGTQ 
 
 Washington Pity : 
 
 Thomas McGill & Co., Printers and Stereotypers. 
 
 1878 . 
 
 uo-NQiviics 
 
 N, 0 . P. 
 
 •MIIIIIIIF- 
 
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 "C 
 
 Argument of Douglas Campbell, Esq. 
 
 BEFORE 
 
 THE JUDICIARY COMMITTEE OF THE HOUSE, 
 
 April 11, 1878. 
 
 dn\ 
 
 Mr. Chairman and Gentlemen of the Committee : The 
 Texas and Pacific Railroad Company claims to own a con¬ 
 structed road, built over two distinct lines, which come to¬ 
 gether at Fort Worth. One of these lines begins at Marshall, 
 on the east, and runs nearly due west. The title to it is de¬ 
 rived from a corporation called the Southern Pacific Railroad. 
 The other line, which is nearly twice as long, comprising 
 about two-thirds of the property of the Texas and Pacific, 
 begins also at Marshall, but runs thence nearly north to 
 Texarkana, and thence west and south to the junction at 
 Fort Worth. The whole road as constructed forms nearly 
 a parallelogram, three sides of which are composed of this 
 second line. This latter portion of the road, except a very 
 few miles near Marshall, is built upon the original survey 
 and under the charter of the Memphis, El Paso and Pacific 
 Railroad Company. Nor is this all. The unconstructed 
 o road, from Fort Worth to El Paso, on the western border 
 of the State, is located, almost without deviation, on the* 
 - original surveys and upon the line of the Memphis and El 
 ^•LPaso Railroad Company, which owns the right of way and^ 
 accompanying land grants. 
 
 * It is in regard to the title of the Texas and Pacific to this 
 3 property that We appear before your Committee. 
 
 " The title of the Texas and Pacific Railroad Company is- 
 founded on a conveyance made by order of the United- 
 States Circuit Court of the Western District of Texas, on ap¬ 
 plication of John A. C. Gray, alleged receiver of said road, 
 
2 
 
 and on the alleged foreclosure of four mortgages upon the 
 road, instigated by Mr. Gray. 
 
 We claim that Mr. Gray is not now, and never has been, 
 the receiver of the Memphis and El Paso road, but that his 
 alleged appointment was void ; that the alleged foreclosures 
 were void ; that the Memphis and El Paso road is still 
 in existence; that its mortgages are prior liens, and its 
 indebtedness a prior claim, upon the property dominated 
 over by the Texas and Pacific, a portion of which it pro¬ 
 poses .to mortgage to the United States. 
 
 In addition to this proposition, which is founded on strict 
 principles of law, we also claim that, as matter of broad 
 equity, based on universal principles of justice, no liberality 
 should be extended by the Government to the Texas and 
 Pacific Railroad until it has done equity to the innocent 
 parties who hold the valid obligations of the Memphis and 
 El Paso Company, to whose franchises and rights it claims 
 to have succeeded. 
 
 To understand the position of the contestants in this case, 
 it is necessary to go back for nearly ten years, and hastily 
 to review the outlines of the most gigantic fraud ever per¬ 
 petrated upon a friendly, unsuspecting people. This crime 
 shocked even the dull conscience of that day, and its perpe¬ 
 trators have been justly pilloried in history. I wish that 
 with their punishment the narrative could stop, and that 
 the succeeding unwritten chapter was not so worthy of its 
 predecessor. 
 
 In 1856, the Memphis, El Paso and Pacific Railroad Com¬ 
 pany was chartered by the Legislature of the State of Texas. 
 It was incorporated to construct a railroad across the State, 
 from the eastern to the western border. To assist the en¬ 
 terprise, which appealed strongly to public interest and 
 sympathy, the Legislature conferred upon it a most liberal 
 grant of land. This grant comprised the odd sections to 
 the width of eight miles on each side of the road, amount¬ 
 ing to 10,240 acres a mile. 
 
 The title in the land was to vest in the company as the 
 work progressed, and as the road was completed in stipu- 
 
3 
 
 lated sections of ten and twenty miles. It was also required 
 to survey and sectionize all the land within this grant. 
 
 Prior to the breaking out of the rebellion, the company 
 had obtained subscriptions to $1,000,000 of its stock, on 
 which two per cent, was paid; had surveyed its route from 
 the eastern border of the State to El Paso, on the western 
 border; had surveyed and sectionized the land to the Colo¬ 
 rado, and had graded about sixty-five miles of road, which 
 was ready for the rails. The war put a stop to active oper¬ 
 ations, and nothing more was attempted until about 1866. 
 Meantime the Legislature of Texas extended by various acts 
 the time provided in the original charter within which the 
 road should be constructed. 
 
 Reorganized in 1866, the directors of the company began 
 to look around for means to proceed with what seemed a 
 profitable undertaking. They made contracts among them¬ 
 selves and with various outside parties, by which they gave 
 away almost all the stock of the company, but nothing was 
 accomplished until late in the year 1866, when General 
 John C. Fremont was induced to join the enterprise. He 
 was given a large share of the stock, and a commanding in¬ 
 terest in the contracts for construction, which promised to 
 be profitable. Shortly thereafter, early in 1867, the com¬ 
 pany executed two mortgages upon its property, one known 
 as a land-grant mortgage, the other as a construction mort¬ 
 gage. The former, dated February 14, 1867, mortgaged 
 to Governor Andrew G. Curtin, of Pennsylvania, and 
 Svante M. Swenson and Paul S. Forbes, of New York, all 
 the land grant for the first one hundred and fifty miles of 
 road, from Jefferson to Paris. The mortgage was made to 
 secure an issue of $5,000,000 of bonds bearing six per cent, 
 interest in gold, payable in 1890. The construction mort¬ 
 gage bore the same date, and mortgaged the road-bed, 
 franchise, fixtilres, and all other property of the company 
 for the same one hundred and fifty miles, to secure $2,400,000 
 of construction bonds at the rate of $16,000 a mile. 
 
 In December of the next year, 1868, the company made 
 another land-grant mortgage, covering the second one hun- 
 
4 
 
 dred and fifty miles, to secure another issue of $5,000,000 
 of bonds. 
 
 By the provisions of the charter, the office of the company 
 was to he located upon the line of the road in Texas; but, 
 soon after the execution of the first mortgage, the scene of 
 operations of the company seems to have been shifted per¬ 
 manently to New York. By the by-laws, the directors’ 
 meetings were to be held in Texas. Under the statutes of 
 Texas, the by-laws could only be established at a meeting 
 of the stockholders. The by-laws were never amended as 
 to the place of meeting of the directors, and yet, after 1867, 
 no meeting was held in Texas. 
 
 But by a resolution of the board, passed in Texas, all the 
 executive power of the directors was conferred upon an 
 executive committee, of which Fremont soon became the 
 leading member. 
 
 Early in 1867, the executive committee made an arrange¬ 
 ment with Henry Prohst, by which he was appointed finan¬ 
 cial agent for the sale of its bonds in Europe, and he was 
 authorized to dispose of them at sixty cents on the dollar 
 in gold, receiving a commission of six per cent, for his own 
 services. He soon thereafter left for Europe, but accom¬ 
 plished nothing for the next two years. 
 
 Meantime a new partner was taken into the enterprise. 
 This was a Dr. William Schmoele, of Philadelphia. With 
 him, the directors made a contract for the construction of 
 the road, which he divided with Fremont. Dr. Schmoele 
 owned quite a large tract of land lying on the harbor of 
 Norfolk, and now the design was broached of a grand 
 Transcontinental Bailroad Line, to stretch from the Pa¬ 
 cific to the Atlantic, with an eastern terminus upon the 
 lands of Schmoele, to be christened Virginia City. With 
 the conception of this idea of a road from Norfolk via Rich¬ 
 mond, Atlanta, Memphis, Jefferson, and El Paso to San 
 Diego, Fremont began his long-continued campaign to 
 obtain a recognition and a subsidy from Congress. 
 
 To this end, Fremont worked earnestly and with persist¬ 
 ence, but little success crowned his efforts. All that he 
 
o 
 
 could obtain was the passage of a joint resolution by the 
 House, granting the right of way for the Memphis and El 
 Paso from the western border of Texas to the Pacific 
 Ocean. 
 
 Soon after the passage of this resolution, Fremont sailed 
 for France to take care of matters there, which began to 
 look promising for the company. 
 
 Probst had made some provisional contracts for the dis¬ 
 position of the bonds, and had made arrangements for 
 their extensive advertising, but had encountered obstacles 
 which seemed to be insuperable. According to the laws of 
 France, no securities from a foreign country could be offered 
 for sale upon the Paris Bourse except upon proof that they 
 were regularly sold in the markets of the country from 
 which they came. The bonds of the Memphis and El Paso 
 Railroad Company had no market value in America. In 
 fact, they were so far from negotiable, that, although loaded 
 down with almost countless millions in such bonds and 
 stocks, Fremont and the men by whom he was surrounded 
 could hardly command the money to pay for the printing 
 of their paper fortunes. 
 
 To meet this obstacle arising from the laws of France, 
 the first step was taken in the career of fraud which has 
 ruined American credit in France, and brought disgrace 
 upon the very name of the railroad enterprises of America. 
 
 Somewhere, and somehow, by whom can only be conjec¬ 
 tured, a certificate was prepared, bearing forged names 
 and a forged seal, purporting to emanate from the stock ex¬ 
 change of the city of New York, and declaring that the 
 bonds of the Memphis, El Paso and Pacific Railroad Com¬ 
 pany were regularly sold and quoted upon its lists. 
 
 This forgery was successful, and the great step was 
 gained of official entry of the bonds upon the Bourse. 
 
 Following this first crime, came rapidly the other steps 
 which made the monstrous fraud successful. A pamphlet 
 was prepared, and circulated everywhere in France, contain¬ 
 ing, among others, the following falsehoods regarding the 
 Memphis and El Paso Railroad. It stated that the com- 
 
6 
 
 pany had purchased and was the owner of a railroad on 
 the east from Texarkana to Little Rock, and thence to 
 Memphis, and that this road was fully built. In fact, 
 it was only begun, and did not belong to the Memphis 
 and El Paso. It stated that the company had also pur¬ 
 chased a line of road reaching from Memphis to Norfolk, 
 by way of Knoxville and Richmond. This was absolutely 
 false. Accompanying the pamphlet was a map bearing the 
 title: “The Railways belonging to the Company Trans¬ 
 continental Memphis Pacific/’ Upon this map the line 
 from San Diego to Norfolk was laid out in unbroken colors 
 as the unquestioned property of the Memphis and El Paso 
 Railroad. 
 
 But the pamphlet contained even more fraudulent state¬ 
 ments than this. It set forth that the United States had, 
 by a bill passed in March, 1869, guaranteed the interest on 
 the construction bonds of the company for fifty years, and 
 payment of the principal at maturity, and, finally, the 
 pamphlet stated that the company had a perfect, indefeas¬ 
 ible title to the land covered by the land-grant mortgage, 
 and that, whether the road was built or not, the lien of the 
 mortgage would remain undisputed and indisputable. Ac¬ 
 companying the pamphlet was an affidavit signed in Wash¬ 
 ington by three citizens of Texas, “ Members of the Con¬ 
 stitutional Convention of that State,” setting forth their 
 acquaintance with the lands covered by the mortgage, stat¬ 
 ing that they were of the very first quality, and, for the 
 greater part, worth, at that time, from fourteen to fifteen 
 dollars per acre. (See pamphlet annexed to bill in original 
 action.) 
 
 The substance of this pamphlet, with the map on a re¬ 
 duced scale, were reproduced in the leading provincial 
 journals, and thus scattered broadcast through the empire. 
 
 When the fraud was at its height, Fremont arrived in 
 Paris. As bearing upon the equitable view of this case, it 
 must be remembered that this man occupied no ordinary 
 position. He had almost from boyhood been a public char¬ 
 acter. With his name, the exploration of the Far West and 
 
7 
 
 the project of a railroad to the Pacific were indissolubly 
 linked. He had married a daughter of a great Senator from 
 Missouri, a statesman before whom all men bowed in honor. 
 He had been the candidate for the presidency of a party 
 which, for the last nine years, had wielded in war and peace 
 the power of our Republic; and in our recent internecine 
 strife he had filled one of the highest positions in the army, 
 there first proclaiming the necessity of the emancipation of 
 the negro, which became a doctrine of the nation. This 
 man, a major-general of the United States, a favorite of the 
 Government as of the people, could hardly be suspected of 
 complicity in fraud. But the very greatness of his name, 
 and the semi-official position which he bore, made the fraud 
 successful. Nor in a moral sense was our Government en¬ 
 tirely blameless. With pamphlets such as I have described 
 circulated through the length and breadth of France, repro¬ 
 duced in the leading journals and discussed in all the public 
 prints, it seems hardly possible that the American legation 
 knew nothing of their contents. If not a legal, at least it 
 would have been a moral and an international obligation to 
 expose a fraud practiced upon a friendly people. 
 
 But not a finger was raised, not a word was said, except 
 some unpublished correspondence carried on with the officials 
 at Washington, until five million four hundred thousand 
 dollars of these bonds were palmed upon the unsuspecting 
 dupes in France. 
 
 In the fall of 1869, after a successful raid of several 
 months, private persons began to expose the fraud. The 
 false pretenses had been so glaring that it was an easy mat¬ 
 ter, with suspicion once aroused, to make the doubt a cer¬ 
 tainty. 
 
 Later on, the government of France prosecuted the prin¬ 
 cipal offenders. -The French agents were consigned to prison 
 or committed suicide, and Fremont was condemned as a 
 common malefactor. But this occurred after Fremont had 
 left the country. Finding the foreign fields exhausted, in 
 November, 1869, he returned to America, to renew his oper¬ 
 ations in Congress. 
 
8 
 
 The money obtained by the sale of bonds in France had 
 been largely squandered in commissions and expenses, but 
 a fraction of it had been properly expended. About half a 
 million dollars went for the purchase of railroad iron and 
 locomotives, consigned to New Orleans ; another half a 
 million was impounded by the courts of France. About 
 four hundred thousand were laid out in the purchase of the 
 stock and interests in connecting railroads, and about three 
 hundred thousand devoted to the construction of the road. 
 But for the remainder no account can be given. 
 
 In addition to his former motives, Fremont now had a 
 new spur to action. If it were possible to retrieve the past, 
 it could only be done by making true the statements with 
 which the Frenchmen had been deceived. The franchise 
 was very valuable; the land grant, although incumbered, 
 still remained ; if only a congressional recognition could be 
 obtained, all might yet be well. To this # object Fremont 
 directed all his energies. The prospect was better than it 
 had ever been before, for the road which now appealed for 
 aid was actually in process of construction. 
 
 Soon after the opening of the session, a bill was intro¬ 
 duced into the Senate and House, chartering a railroad, to 
 be called the “ Southern Transcontinental Railway Com¬ 
 pany.” The road thus chartered was to run from the 
 eastern border of Texas to the Pacific Ocean, was to re¬ 
 ceive a large land grant from the United States, and was 
 to be empowered to purchase the franchise, land grants, 
 and other property of the Memphis and El Paso. The in¬ 
 tention of this bill was to nationalize the Memphis and El 
 Paso, christen it anew, so as to cover up the approaching 
 odium on its old name, and securing all the liens of its 
 creditors, to give it new vitality. The first-named corpo¬ 
 rator was John C. Fremont, the next John A. C. Gray, of 
 whom much hereafter, E. L. Fancher, Marshall 0. Roberts, 
 and many other prominent and well-known men. In the 
 House, no difficulty was encountered in the passage of the 
 bill; but in the Senate the case was very different. There, 
 another element was potent—the influence of a party wish- 
 
9 
 
 ing a charter for the Texas Pacific Kailway, which now 
 first comes upon the scene. To carry out their plans, a bill 
 was introduced into the Senate to incorporate the Southern 
 Texas Pacific Kailway Company, conferring upon it the 
 same rights as were desired for the Southern Transconti¬ 
 nental, hut with a set of incorporators inimical to Fremont. 
 It was referred to the Committee on Pacific Kailroads. 
 Then the frauds perpetrated in France first became the 
 subject of congressional investigation. The examination 
 was limited, for the facts obtainable were few, hut enough 
 was developed to show that a great wrong had been com¬ 
 mitted. The Committee was hostile to Fremont, and re¬ 
 ported hack the bill with some slight amendments. But, 
 in the Senate, matters took a new shape. Senator Nye 
 proposed an amendment to the bill, adding a list of incor¬ 
 porators headed by Fremont, and it was proclaimed that 
 the proper solution of the contest would he a compromise 
 giving to Fremont and his opponents each an equal repre¬ 
 sentation. 
 
 Upon this basis, the bill passed the Senate, but only just 
 before the adjournment in the summer of 1870. In the 
 next session, it passed the House, and thus the Texas 
 Pacific Railway became an accomplished fact. 
 
 A glance at the Senate debate in June, 1870, shows that 
 this road was incorporated as a successor to the Memphis 
 and El Paso, to take its franchises and grants, subject to its 
 liens, and thus to do justice to the citizens of France, who 
 had been so grossly wronged. 
 
 Senator Howard made a powerful speech against Fre¬ 
 mont, denouncing his frauds in France. He knew but 
 little of the facts subsequently developed, and yet he 
 claimed that Fremont’s name should not lead the incorpo¬ 
 rators of this new company. Then the whole Senate sprang 
 to its feet. Fremont was well and eloquently defended. 
 Scarcely a member could believe that fraud could be coupled 
 with his name. If the Memphis and El Paso had been 
 unfortunate, here was a chance to retrieve its fortunes. If 
 the Frenchmen had been misled, their rights would be 
 
10 
 
 secured, and their bonds made valuable under this new 
 incorporation. 
 
 Senator Cameron said, all that the French bondholders 
 have to do is to wait. They have probably made a good 
 investment, and they will make a large profit. (Cong. 
 Globe, 2d sess. 44th Cong., p. 4772.) 
 
 Senator Nye said, the Southern Pacific cannot be car¬ 
 ried out without the aid of the Memphis and El Paso. (P. 
 4768.) 
 
 Senator Sherman said, the new company should purchase 
 the Memphis and El Paso. (P. 4766.) 
 
 All recognize the bill as a means for preserving the Mem¬ 
 phis and El Paso, and preserving the rights of those who 
 had invested in its bonds. 
 
 Meantime, during this campaign of the spring of 1870, 
 strange events had occurred in New York. We come now 
 to Mr. John A. C. Gray, who henceforth becomes the chief 
 actor on the scene. 
 
 Mr. Gray was a retired merchant of New York, who for 
 years had been prominent in railroad enterprises. He was 
 an old business friend of Fremont. Is said to have aided 
 him in his Mariposa matters and some other of his large 
 affairs. Gray was in Paris in the summer and fall of 1869, 
 while the land-grant bonds were selling ; was on confiden¬ 
 tial terms with Fremont, and thoroughly acquainted with 
 his affairs. 
 
 During the winter, when Fremont was much troubled 
 with fears of danger in the Senate, Gray sent word that he 
 could help him. At first, Fremont rejected the proffered 
 aid, knowing the man too well; but Gray found means to 
 change this resolution. 
 
 Anticipating a congressional investigation, Fremont had 
 telegraphed to Paris for Emanuel Lissignol, one of the 
 French agents for the sale of bonds, and one of the chief 
 actors in the frauds. (This roan was subsequently con¬ 
 victed in France, and imprisoned for two years.) 
 
 Lissignol arrived; Gray made his acquaintance, and 
 gathered from him all the details of the French transac- 
 
11 
 
 tions. Armed with this information, and with a knowl¬ 
 edge of the affairs of the New York office from one of the 
 under officers, Gray forced himself upon Fremont. At the 
 time, Fremont was greatly in need of $50,000, for a special 
 purpose. Gray offered to loan the money, asking only as 
 security that Fremont should assign to him the company’s 
 railroad iron in New Orleans, which had cost nearly half a 
 million dollars. This occurred in March, 1870. 
 
 At this time the officers in New York were quarrelling 
 among themselves ; some of them were unpaid, and all 
 complained of Fremont for appropriating to himself the 
 money intended for the construction of the road. Gray, 
 now on friendly terms with Fremont, soon found means to 
 dispose of them. It was alleged that some of them had ob¬ 
 tained a portion of the money received in France. All felt 
 the taint of a crime to which they had been privy. In 
 friendly fashion, Gray caused them to be notified that a 
 warrant had been issued for their arrest; and the president 
 and secretary left their comfortable quarters, never to re¬ 
 turn. Then, at Gray’s suggestion, the offices were closed, 
 the furniture disposed of, the name of the company obliter¬ 
 ated from the doors, and the field was clear. Then Gray 
 set out for New Orleans, to secure his iron. There he met 
 Thomas C. Bates, who held an alleged claim, for $350,000, 
 against the company. Of this claim we shall speak here¬ 
 after. It is enough to say now, that Gray had an interview 
 with him, which was followed by swift results. In New 
 Orleans, Gray also met A. M. Gentrj 7 , the contractor for the 
 road, who, at Gray’s suggestion, levied an attachment on 
 the iron in his hands. 
 
 Kecalled to Washington early in April by a telegram 
 from Fremont, Gray rendered active services in the con¬ 
 gressional struggle, but was more earnestly employed in 
 preparing for a master-stroke which should give him abso¬ 
 lute control of the Memphis and El Paso road. The means 
 employed, and carried apparently to a successful issue, w*ere 
 an action for the appointment of a receiver, which receiver 
 was to be Mr. John A. C. Gray. 
 
12 
 
 At the outset, difficulties were encountered, but, as we 
 shall see, they were apparently overcome by a little skillful 
 management. To secure the appointment of a receiver, it 
 was necessary to show that the company was insolvent. 
 As it had paid the interest upon its bonds, and money was 
 reserved in Paris for the coupons coming due in July, and 
 as it had scarcely any other liabilities, this was no easy 
 matter. But, in New York, Gray found a number of per¬ 
 sons who had pretended claims against the company. At 
 his instigation, these persons put their claims in suit, and 
 attached the company’s property in his hands. By this 
 means, parties were subsequently able to swear that suits 
 involving over a million of dollars were pending against 
 the company, although when the receiver, several years 
 after, made a report upon these matters, almost all of these 
 claims proved to have been fictitious, or without foun¬ 
 dation. . 
 
 To show the frauds committed in France, and upon which 
 chief reliance was to he placed, Gray now took bodily pos¬ 
 session of Lissignol. This gentleman, fearful of arrest in 
 New York if he should be found within its borders, and 
 alike fearful of a return to France, fell completely under 
 the influence of Gray. Gray kept his papers in his house, 
 hut hoarded his important witness in Jersey City. There 
 Gray introduced him to Courtlandt Parker, of Newark, a 
 leading lawyer of the New Jersey bar. Parker was re¬ 
 tained, nominally by Lissignol, but actually by Gray. He 
 received a retaining-fee of $5,000 from the hands of Lissig¬ 
 nol, but subsequently Gray repaid the sum advanced. 
 Early in May, the Frenchman made a long statement to 
 Parker, narrating the transactions of Fremont and his 
 agents in Paris. This was incorporated into an affidavit, 
 and then, his usefulness having been exhausted, he was 
 shipped to France, there to be punished for his crimes. 
 
 Thus a foundation had been laid for an action, and the 
 principal evidence obtained, yet other difficulties remained. 
 Parties were needed to begin the suit. At this juncture 
 Gray made a valuable acquaintance. Blanton Duncan, of 
 
13 
 
 Louisville, had, since 1861, been actively engaged in the 
 Memphis and El Paso. Dissatisfied with the action of 
 Fremont, he was now in New York breathing vengeance. 
 He, too, thought of obtaining a receiver, but intended to 
 limit his operations to the local courts. With him Gray 
 sought acquaintance, unfolded his plans of an action in the 
 courts of the United States, and engaged his cooperation 
 by saying that only one person was fitted for the position 
 of receiver, and that was Colonel Blanton Duncan. 
 
 Duncan now was thoroughly in earnest. He sought out 
 one of the trustees, Paul S. Forbes, whom he had known 
 in Paris ; at Gray’s request, took him to New Jersey, for in¬ 
 troduction to Parker, and through his aid secured the 
 acquiescence of Swenson in the scheme which Gray repre¬ 
 sented as the only means for protecting the parties who had 
 bought the bonds. Governor Curtin, the third trustee, 
 meantime had gone to St. Petersburgh as American Min¬ 
 ister to Russia, hut his associates felt authorized to use his 
 name. Thus, the trustees were secured as parties to the suit. 
 A stockholder being considered necessary, at Gray’s sug¬ 
 gestion three hundred shares of illegally-issued stock were 
 transferred to a young man in Illinois named Frederick A. 
 Lyon. This gentleman had never heard of the existence of 
 such a company, but his brother-in-law, one of the officers 
 of the company, was working with Gray, and it was not 
 considered essential to require his assent. 
 
 The preliminaries being thus arranged, the first blow 
 was struck, in the form of a flank movement in a suit then 
 pending at Rochester, New York. We have already seen 
 that in March Gray made the acquaintance of a certain 
 Thomas C. Bates at New Orleans. Bates pretended to a 
 claim against the company arising under a contract made 
 before the war. To secure this contract, the company had 
 made a mortgage to a man named Harrison, covering all its 
 land grants and other property. This mortgage was secretly 
 recorded, but never indexed on the records, and Harrison 
 declared that it had never been delivered. About 1867, 
 Bates began an action upon his claim in Rochester, where he 
 
14 
 
 resided, but the officers of the company declared it ground¬ 
 less. In October, 1869, the action came on for trial, hut 
 Bates’s counsel, after the evidence was in, withdrew a juror, 
 and the suit was deemed substantially abandoned. But, 
 late in June, Bates changed his attorney, and moved foi* a 
 receiver of the property of the Memphis and El Paso within 
 the State of New York. In violation of a statute just passed 
 by the Legislature of New York, which made the proceed¬ 
 ings void, (see vol. 1, Laws of 1870, April 7, p. 422,) the 
 court by default appointed a receiver, in the person of one 
 Macomber, a son-in-law of Bates’s counsel. Macomber pro¬ 
 ceeded to New York and demanded, from Gray possession of 
 the assets of the company then in his possession. Gray 
 met this demand by declaring the intention of the company 
 to open the default and oppose the motion. The matter was 
 settled by the resignation of Macomber and the appointment 
 of John A. C. Gray to take his place. This blow being 
 struck, which gave an apparent judicial sanction to the 
 theory that the road was insolvent and demanded a re¬ 
 ceiver, Gray had now everything prepared for his final 
 movement, except a court. 
 
 And here he met a difficulty which proved insuperable 
 for all his skill, and rendered the title of those who claim 
 under his proceedings an utter nullity. 
 
 The Memphis, El Paso and Pacific Railroad Company 
 was chartered under the laws of Texas, and, of course, no 
 action could be brought for its dissolution, or for the ap¬ 
 pointment of a general receiver of its property, except in 
 the State or United States courts of Texas. 
 
 Bank of Augusta v. Earle, 13 Peters, 519. 
 
 Lafayette Ins. Co. v. French, 18 How., 404. 
 
 But to begin an action in that State would defeat the end 
 proposed. Two-thirds of the directors of the company, as 
 required by the charter, were Texans, and they had no idea 
 of having a receiver appointed for the road, certainly not a 
 New-York friend of the man who had nearly wrought its 
 ruin. Benjamin H. Epperson, who had for many years 
 
15 
 
 been president of the company, had just returned to Texas. 
 He knew all about the company’s affairs; knew that it was 
 not insolvent; suspected the designs of Gray and Fremont, 
 and he would never consent to the appointment of a re¬ 
 ceiver. 
 
 At first Gray and Parker thought of sending to Texas to 
 have the action begun there—in fact, Blanton Duncan being 
 selected as the agent, letters of introduction were obtained 
 for him to Judge Bradley, in order to aid his mission. 
 
 But, upon reflection, this course seemed impracticable. 
 (It was afterwards urged that there was no time after the 
 frauds were discovered, &c.; but LissignoTs affidavit was 
 verified May 17, 1870—about seven weeks before the motion 
 for a receiver was made at Newark.) 
 
 Another plan had to be devised, in order to secure secrecy 
 and the actual possession of the property, before any one 
 should be aware. The scheme arranged and carried out 
 was to entitle the action in the United States Circuit Court 
 for the Western District of Texas ; have a pretended officer 
 of the company waive service of the papers, and consent to 
 a hearing in New Jersey, and then to have a formal appear¬ 
 ance by an unauthorized solicitor. 
 
 The scheme was carried out, and thus John A. C. Gray 
 was appointed receiver of the Memphis, El Paso and Pa¬ 
 cific Railroad Company, upon filing a bond in the sum of 
 $50,000. 
 
 Giving the history of this transaction a little more in 
 detail, the facts were as follows : 
 
 On the 6th day of July, 1870, a bill, unverified and unsign¬ 
 ed by any solicitor or counsel, was presented to Judge Joseph 
 P. Bradley, at Newark, New Jersey, asking for the appoint¬ 
 ment of a receiver for the Memphis, El Paso and Pacific 
 Railroad Company, and for an injunction against its officers. 
 The bill was headed, Circuit Court of the United States, 
 Western District of Texas. There was nothing else to show 
 that the suit was a Texas suit. Accompanying the bill and 
 affidavits, a letter was presented to Judge Bradley, written 
 by Gray, and copied and signed by J. C. Fremont, as pres- 
 
16 
 
 ident, directed to Edward Gilbert, of 69 Broadway, New 
 York, asking him, as the attorney of the company, to ap¬ 
 pear in the suit, accept service therein, waive all objections 
 to the hearing of the case out of the Western District of 
 Texas, and to recommend Mr. John A. C. Gray as receiver. 
 
 It is but fair to General Fremont to state, in this connec¬ 
 tion, that he did not read the bill of complaint until live 
 years afterwards, and then denounced it as a tissue of false¬ 
 hoods from first to last. He further stated, that had he 
 known the character of its charges, he would not have con¬ 
 sented to a judgment by default. 
 
 It is stated in a subsequent opinion of Judge Bradley 
 that the “justice who granted the original injunction, and 
 appointed the receiver, declined to proceed until the presi¬ 
 dent of the company had been personally notified of the 
 proceedings, and had waived all objections to a hearing of 
 the motion out of the circuit limits/’ 
 
 Judge Bradley was deceived. General Fremont was not 
 the president of the company, and had no authority to ac¬ 
 cept service, appoint an attorney, or waive a hearing out of 
 the circuit limits. 
 
 General Fremont pretended, for a few months before this 
 transaction, to be the president of the company by virtue of 
 some proceedings of the directors, at a meeting held in New 
 York city, December 24, 1869, when five directors were in 
 attendance, to whom the resignation of B. H. Epperson, 
 president of the company, was tendered. 
 
 The by-laws of the company were adopted in Texas, 
 1856, prior to the war, and had never been changed. 
 
 They provided: 
 
 “Sec. 12. The directors shall meet, until otherwise or¬ 
 dered, in the town of Paris, Lamar county, Texas.” 
 
 “Sec. 14. Six members of the directors shall constitute a 
 quorum, and shall be competent to transact business.” 
 
 These were the by-laws of the company in 1867, when the 
 last stockholders’ meeting was held in Texas. After that 
 
BUREAU OF RAILWAY ECONOMICS. 
 WASHINGTON, D. C. 
 
17 
 
 they could not have been changed, for no power, except a 
 meeting of stockholders, could change them. 
 
 See section 4, Laws of Texas, 1857, amending act of 1853, 
 “ To Regulate Railroad Companies” : “ That every railroad 
 company shall have the power to make such by-laws as they 
 may think proper for the government of the company, the 
 same not being inconsistent with the object of its charter 
 and the laws of this State; and, in the enactment of such 
 by-laws, the stockholders shall be entitled to one vote for 
 each share of stock held by them, and may vote in person 
 or by written proxy, and it shall require a vote of a major¬ 
 ity of not less than two-thirds of the stock of the company 
 to establish such by-laws.” 
 
 By the act of 1853, of which this was an amendment, all 
 railroads of the State accepting State aid were made subject 
 to its provisions. (See Paschal’s Laws of Texas, 1873, § 
 4911, &c.) 
 
 Under these provisions of the law, a meeting of the direct¬ 
 ors outside the State was illegal and its proceedings void. 
 
 Hilles v. Parrish, 14 N. J. Eq., 380. 
 
 Opinion of Judge Bradley, in Galveston R. R. v. Cow¬ 
 drey, 11 Wallace, 476. 
 
 The question, whether directors, in the absence of by¬ 
 laws, can meet outside of the State, is an open one ; but 
 with a by-law forbidding it, the meeting is void. 
 
 The stockholders could not meet outside the State to 
 change the by-laws. 
 
 Angell & Ames on Corporations, § 498. 
 
 Field on Corporations, § 243. 
 
 The fact that the meeting of the directors in New York, 
 at which the pretended election of Fremont took place, was 
 illegal and their proceedings void, was well known to Mr. 
 Parker, who drew the bill, to Mr. Gray, its parent, and to 
 the nominal parties to the suit. 
 
 The bill of complaint, referring to a resolution of the 
 board of directors, says : 
 
 “And the said complainants show that the last-recited 
 
 2 
 
18 
 
 resolution was illegal and invalid, as for other reasons, so 
 also for this: that the same was passed at a meeting of said 
 board of directors held in the city of New York, where, by 
 law, the said board had no authority to convene/ ’ (P. 14, 
 
 printed bill.) 
 
 And incorporated in the bill of complaint was the section 
 of the law of Texas regarding the enactment of by-laws. 
 (P. 36, printed bill.) 
 
 The fact that John C. Fremont was not the president of 
 the company, is no new discovery of the contestants. 
 
 Early in 1871, a Mrs. Ives, of Syracuse, New York, began 
 an action against the company, at the suggestiou of Mr. 
 Gray, upon an old claim of her deceased husband. Service 
 was made upon John C. Fremont and W. G. Snethen, then 
 secretary of the company. Judgment being taken by de¬ 
 fault, Mr. Gray, some two years afterwards, moved to open 
 the default, upon the ground that the company was never 
 served. In his affidavit, verified June 25, 1873, he says: 
 
 “And deponent further says, that neither the said Fre¬ 
 mont nor the said Snethen had ever been duly or legally or 
 otherwise elected by the said company, or by its directors 
 or stockholders, as officers of the said company/’ 
 
 Snethen was secretary of the company, for he was elected 
 in Texas, at a meeting of the directors, December 10, 1867. 
 
 Mr. Gray’s motion to open the default was denied. Upon 
 appeal the General Term affirmed the order, and the Court 
 of Appeals dismissed Gray’s appeal. (58 N. Y. Rep., 630.) 
 
 At the time of the hearing before Judge Bradley, Mr. 
 Snethen, the secretary, resided at Elizabeth, New Jersey, 
 but a few miles from Newark, but no attempt was made to 
 serve him, and neither he nor Mr. Epperson, the president, 
 knew of the suit until long after the receiver had been 
 appointed. 
 
 Even if Fremont had been president of the company, he 
 would have had no power to waive a hearing in Texas, or 
 to appoint an attorney to waive such a hearing. A presi¬ 
 dent is elected for no such purpose. The question was one 
 
19 
 
 of jurisdiction. It is very questionable whether a board of 
 directors could by resolution consent to confer jurisdiction 
 upon a court outside of their State for the purpose of de¬ 
 stroying the life of their corporation. Certainly the presi¬ 
 dent could not do it. He is elected to preserve, not to 
 destroy the corporation. 
 
 He cannot begin an action in the name of the corporation, 
 without consent of the directors. 
 
 The Ashuelot Manf. Co. v. Marsh, 1 Cushing, 507. 
 
 He cannot stay the collection of an execution in favor of 
 his corporation. 
 
 8 Alabama N. S., 333. 
 
 He cannot make contracts outside of his usual and cus¬ 
 tomary powers as president. 
 
 Crump v. U. S. Mining Co., 7 Gratt., (Ya.,) 352. 
 
 Walworth, C. B., v. Farmers’ L. & T. Co., 14 Wis., 
 325. 
 
 Blen v. Bear River, &c., Co., 20 Cal., 602. 
 
 Farmers’ Bank v. McKee, 2 Pa. St., 318. 
 
 Bacon v. Miss. Ins. Co., 31 Miss., 116. 
 
 The statutes of Texas provided the mode of beginning 
 an action against the company, it was by service on the 
 president, secretary, or by leaving the papers at the office 
 of the company. But the officers could not be served out¬ 
 side of the State. Their official functions did not follow 
 them out of Texas. The court could not obtain jurisdiction 
 of them by service in New York or New Jersey. 
 
 Toland v. Sprague, 12 Peters, 328. 
 
 2 Abbott’s U. S. Prac., 27. 
 
 This being so, jurisdiction could not be obtained by their 
 accepting service or waiving service, for the latter is but a 
 substitute for the former. No such doctrine has ever been 
 known in a court of justice. 
 
 Bank of Ya. v, Adams, 1 Parsons’ Select Eq. Cases, 
 (Pa.,) 534. 
 
20 
 
 The law is perfectly well settled, that the Circuit Court of 
 the United States cannot obtain jurisdiction of a corpora¬ 
 tion, except by service within the district where the corpor- 
 
 ation is chartered. „ , 19n 
 
 Pomeroy ®. N. Y. & N. H. R. Co., 4 Blatchford, 120. 
 
 Opinion of Judge Nelson. 
 
 Day v. Newark Bubber Co., 1 Blatchford, 628. 
 
 As matter of fact, Fremont was not served nor did he 
 waive service of any process. He was simply told, verbally, 
 that an action was about to be begun. If actua service 
 would not be enough to confer jurisdiction, certainly a 
 verbal notification would be insufficient. He did no waive 
 service of process, for no process was ever issued. No evi¬ 
 dence of waiver was given. ,, . • 
 
 If the jurisdiction of the court can be sustained at all, it 
 must be because of the personal presence of Mr. Gilbert be¬ 
 fore Judge Bradley, at Newark, upon the appointment of 
 the receiver, claiming to represent the company. But this 
 
 conferred no jurisdiction. ., 
 
 The appearance of Gilbert was unauthorized and void, 
 and his waiver as attorney of the road, even if lie were such, 
 dh not confer jurisdiction. He had no authority to appear 
 in such a matter without a vote of the directors ; he cer¬ 
 tainly could not do so at the direction of Fremont, who was 
 not the president. His appearance being unauthorized, the 
 order and judgment were absolutely void, not voidable. 
 
 Shelton v. Tiffin, 6 Howard, 163, lob. 
 
 But even if authorized to appear, his action conferred no 
 
 '' U The tui^was a Texas suit. No solicitor could appear in it, 
 and waive any rights of a client, except a Texas 
 Gilbert was not an attorney, counsel, or solicitor m T ? • 
 
 He was a New-York lawyer, and the counsel of the com¬ 
 pany only in New York. He was elected “ counsel in New 
 York,” at a meeting of the directors, held 
 her 10,1867. At the same meeting, Joseph B. Stewart was 
 
 elected, “ solicitor in Washington. 
 
21 
 
 In 1869, Governor Throckmorton was appointed <{ solici¬ 
 tor in Texas.” 
 
 Upon what theory Mr. Gilbert, a New-York attorney and 
 the “ counsel in New York ” for a Texas corporation, had the 
 right to go to New Jersey and there consent that a case 
 should be heard in New Jersey, which, by law, could only 
 be heard in Texas, passes my comprehension. 
 
 Mr. Gilbert was willing enough to aid Gray, for he had 
 been in almost daily communication with him for several 
 weeks; but however willing to aid in the appointment of a 
 receiver, his willingness alone could not make his action 
 legal. 
 
 The ordinary rule, that the appearance of an attorney, 
 whether authorized by his client or not, confers jurisdiction 
 so far as outsiders are concerned, does not apply, for the at¬ 
 torney in such a case must be an attorney of the court in 
 which the action is pending—not an attorney of the court of 
 another country. This rule does not apply in the courts of 
 the United States, but where it does, it is only upon the 
 theory that the attorney is an officer of the court. 
 
 Shelton v. Tiffin, 6 Howard, 163, 186. 
 
 This suit was a Texas suit. If Mr. Gilbert was not a 
 solicitor or counsel of the Circuit Court of the Western Dis¬ 
 trict of Texas, his appearance before Judge Bradley in 
 Newark amounted to just as much as the corporal presence 
 of any other stranger, and nothing more. 
 
 And even if it were shown that Gilbert was the general 
 attorney or counsel for the company, as he was not an at¬ 
 torney of the United States Circuit Court for the Western 
 District of Texas, his appearance would confer no jurisdic¬ 
 tion on the court. The appearance of an attorney in fact 
 is not enough. It is only on the theory that the attorney 
 is an officer of the court that his appearance for a corpor¬ 
 ation confers jurisdiction. 
 
 Osborne v . Bank of the U. S., 9 Wheaton, 738, 830. 
 
 Aside from the fatal defect of want of service, the case 
 
22 
 
 bristles all over with other faults, some of which are fatal, 
 and others show the irregular character of the proceedings. 
 
 The mode of beginning an equity action in the Circuit 
 Court of the United States is regulated by the rules of the 
 Supreme Court of the United States. In this case each of 
 the requisites was wanting. 
 
 Rule 7 provides that a suit in equity shall begin by the 
 issuing of a subpoena from the office of the clerk. No sub¬ 
 poena was issued. 
 
 Rule 7 provides that the bill shall be filed in the clerk’s 
 office before a subpoena shall issue. The bill was not filed 
 until three weeks after Gray’s appointment. 
 
 Rule 24 requires that every bill shall contain the signa¬ 
 ture of a counsel annexed to it. The bill presented to 
 Judge Bradley was signed by no one, counsel or solicitor, 
 and was unverified. 
 
 Rule 17 covers the matter of appearance, and shows by 
 what appearance the court can obtain jurisdiction of a party* 
 It says, speaking of the proceedings at the clerk’s office on 
 the return-day, “the appearance of the defendant, either 
 personally or by his solicitor, shall be entered in the order- 
 book on the day thereof by the clerk.” This was never 
 done. 
 
 Without any of these prerequisites, on an unsigned, un¬ 
 verified bill of complaint, never served, and never seen by 
 an officer of the company, presented to a judge at Newark, 
 the order was made, confiscating all the property of this, 
 corporation, and handing it over to. John A. C. Gray. 
 
 After the granting of the order by Judge Bradley, the 
 bill was sent to Texas, there signed by a firm of Texas 
 lawyers, and filed in the clerk’s office at Tyler. Several 
 months thereafter, an order was made by Judge Duvall, of 
 Texas, confirming the action of Judge Bradley, hut there 
 was no new service, and no new appearance. This order, 
 made simply on the original papers, was as defective as the 
 former, for the court acquired no jurisdiction, and nothing 
 could confirm an act void ab initio. 
 
 All the subsequent orders in the case were made by 
 
23 
 
 Judge Bradley at Washington, upon consents of the same 
 character as the first, given by Fremont or Gilbert, and all 
 of them were void, like the one appointing the receiver. 
 And, in each of these cases, Judge Bradley was deceived as 
 to Fremont’s and Gilbert’s relation to the company, for Gray 
 took good care not to inform him that Fremont was not the 
 president of the corporation. 
 
 Returning now to Gray. After receiving the order of 
 July 6, 1870, appointing him receiver of the company, he 
 and his counsel, Mr. Parker, set sail at once for France, to 
 secure the money impounded by the French authorities. 
 There, he received about $450,000 in gold, which he de¬ 
 posited in England for safe-keeping, and then returned to 
 the United States. 
 
 On January 27th, 1871, Gray presented to Judge Bradley 
 a petition, setting forth, among other things, that he had 
 inquired into the condition of the company’s assets, and 
 that, aside from the franchise and land grants, it had no 
 property except such as represented the proceeds of the land- 
 grant bonds sold in France ; that the franchise was a very 
 valuable one, in the hands of parties who would build the 
 road; that on July 27th, 1870, the Legislature of Texas 
 had incorporated the 4 ‘Southern Transcontinental Railroad 
 Company” ; that the stock required for its incorporation 
 had been subscribed by wealthy and responsible citizens of 
 the city of New York ; that the board was composed of such 
 men as Marshall O. Roberts, John J. Astor, E. B. Hart, 
 Edwards Pierrepont, ex-Governor Throckmorton, of Texas, 
 &c.; that by the second section of the charter of said new 
 railroad company it is provided that the main line of its road 
 shall follow as nearly as may be practicable the old survey of 
 the Memphis, El Paso and Pacific Railroad Company ; and by 
 the third section of said charter it is authorized and permit¬ 
 ted “to purchase the rights, franchise, and property of the 
 Memphis, El Paso and Pacific Railroad Company, hereto¬ 
 fore incorporated by this State.” 
 
 The petition then stated that he had made an arrange¬ 
 ment with the Southern Transcontinental Railroad Com- 
 
24 
 
 pany for the transfer to it of all the rights and franchises of 
 the Memphis and El Paso Company, subject to the liens of 
 the mortgages and bonds held by bona-fide purchasers. 
 
 He then asked permission to carry out this contract with 
 the Southern Transcontinental, or, in the event of its fail¬ 
 ure to perform the contract, that he might sell out the fran¬ 
 chises, right of way, land grants, &c., as an entire thing, to 
 any other purchaser, upon the same terms, “or otherwise." 
 
 On the 31st of January, 1871, Judge Bradley, at Wash¬ 
 ington, made an order in accordance with the prayer of the 
 petition, authorizing Gray to carry out his contract with 
 the Southern Transcontinental, or to sell to any other pur¬ 
 chaser on the same terms, or otherwise. 
 
 So far as the bondholders were concerned, this alleged 
 contract was fair enough, but there probably was no idea 
 ever entertained of carrying it into execution. The Texas 
 and Pacific Bailway bill had not yet passed Congress, but 
 already Fremont had been thrown overboard. He was, to 
 be sure, the leading incorporator in the Southern Trans¬ 
 continental, chartered by the State of Texas in the summer 
 of 1870, and was elected its first president. But he had 
 been forced to surrender his interest, and was without 
 money and almost friendless. In going out of the company, 
 all that he could secure was a promise that, in acquiring 
 the property and franchises of the Memphis and El Paso, 
 the rights of the French bondholders should be protected 
 and secured. 
 
 It was probably to make a pretense of carrying out this 
 arrangement, that the contract was made with Gray for 
 which he received the sanction of the court; or it may be 
 that the whole thing was devised to deceive the court, and 
 obtain its sanction in advance to a sale to any purchaser on 
 any terms, covered by the elastic words “or otherwise. 
 
 But, be this as it may, it was evidently never the inten¬ 
 tion of any party to carry out a sale by which the mortgages 
 would be preserved. 
 
 The contract was never carried out. At a later day, Gray 
 explained to the court that it could not be done, for the 
 
25 
 
 Southern Transcontinental refused to complete when it dis¬ 
 covered the amount of the liens. But this was manifestly 
 not the real explanation. The amount of the liens was 
 known as well before as after the negotiation of the con¬ 
 tract. 
 
 At another time, Gray said that the failure arose from a 
 delay caused by the proceedings of some alleged stock¬ 
 holders, who attempted to intervene in the suit, and ob¬ 
 tained an injunction tying up his hands for about a year, 
 at the end of which time the opportunity was lost. But 
 this was not the explanation. The injunction was not ob¬ 
 tained until April 19, 1871. Before this time, Gray had 
 entered upon another scheme; or, as is more probable, had 
 begun openly upon the scheme which he had always in¬ 
 tended. 
 
 In March, 1871, the Texas and Pacific Railway Company, 
 of which we have already spoken, was chartered by Con¬ 
 gress. It was, as we have seen, the result of a compromise 
 between the Fremont interest and the opposing parties, and 
 its object was the construction of a national line from the 
 eastern border of Texas to the Pacific Ocean, of which the 
 Memphis and El Paso was to be an important link. It was 
 now found an easy matter to throw Fremont aside, and 
 Gray discovered, if he had not always known, that an ar¬ 
 rangement could be made with this company which, to be 
 sure, would be much less advantageous to the French bond¬ 
 holders, but more profitable to himself. 
 
 Accordingly, he began negotiations with the Texas and 
 Pacific long before the injunction was obtained against him 
 by the intervening stockholders. This is shown in his pe¬ 
 tition to the court of date April, 1876, asking for an ap¬ 
 proval of various proceedings taken by him and for a final 
 accounting. 
 
 Some time in 1870, Gray began an action in Texas, against 
 the Governor of the State, to prevent the issuing of patents 
 for lands within the Memphis and El Paso reservation. 
 
 In February, 1871, this suit was decided by the United 
 States Circuit Court in favor of the plaintiff. Gray reports 
 
26 
 
 that directly after the rendition of this judgment he began 
 negotiations with the Texas and Pacific. 
 
 These negotiations took a form very unlike the ones re¬ 
 ported to the court a few weeks before. It was now pro¬ 
 posed to have the Texas and Pacific take the franchise and 
 land grants, and pay to the bondholders a small portion of 
 the land in satisfaction of their bonds. The preliminaries 
 being arranged with the Texas and Pacific, Gray again 
 departed for France, where he arrived in July, 1871. 
 
 There he issued a circular, to which particular attention 
 is requested. It represented that he was the receiver of the 
 Supreme Court of the United States. It set forth an enor¬ 
 mous list of liabilities of the road, most of which he knew 
 were fictitious, said nothing of its large assets, but stated 
 that an arrangement could probably be made with the Texas 
 and Pacific Kailroad Company, by which lands in Texas 
 could he obtained for the bonds at the rate of about eight 
 dollars an acre,—to speak more exactly, at the rate of thir¬ 
 teen acres of land for one hundred dollars in bonds,—in 
 which case the Texas and Pacific Company would receive 
 the share of the assets to which the bondholders would be 
 entitled. 
 
 These circulars were sent to every bondholder. The 
 owners of the bonds were mostly poor peasants, who had 
 invested their little savings in these securities. They knew 
 nothing of the affairs in America. They had heard noth¬ 
 ing from the trustees under their mortgages. They had 
 been told that these lands were worth from fourteen to fif¬ 
 teen dollars per acre. They knew that the Supreme Court 
 of the United States was the highest tribunal of this repub¬ 
 lic. When its official representative recommended this 
 scheme as the only one practicable, it is no wonder that 
 they acquiesced. 
 
 In answer to his circular, Mr. Gray obtained the consent 
 of about four-fifths of the bondholders to his arrangement. 
 The other fifth, better advised, did not consent, and have 
 never consented. 
 
 Returning to America, Mr. Gray, according to his report, 
 
27 
 
 found that the Texas and Pacific would not complete the 
 negotiations until the title and franchises of the Memphis 
 and El Paso should he freed from all its liens of record. 
 
 This meant the wiping out of the mortgages, which, ac¬ 
 cording to the prayer of the original bill and by all the 
 preceding orders of the courts, were to be religiously pre¬ 
 served. This Mr. Gray proceeded to effect in May, 1872, 
 without notice to the court. 
 
 And here we enter upon a new chapter of void and illegal 
 judicial proceedings, making another fatal defect in the title 
 of the Texas and Pacific Railroad Company. 
 
 There were alleged to be four mortgages upon the prop¬ 
 erty, which it was necessary to have disposed of. 
 
 First. A mortgage made in 1860 to William Harrison, 
 as trustee, to secure bonds to the amount of $350,000, for 
 the benefit of Thomas C. Bates, a contractor on the road. 
 Of the claim of Bates we have already spoken. In the ac¬ 
 tion at Rochester, by proceedings which at least are ques¬ 
 tionable, Bates had, early in 1871, recovered a judgment 
 against the company for about $140,000. Soon after, and 
 pending an appeal from this judgment, Gray bought the 
 judgment and mortgage for $35,000, and had them trans¬ 
 ferred to J. S. Messenger, the paying teller in a New-York 
 bank, which Gray controlled. The claim had always been 
 pronounced fictitious by the officers of the company. The 
 mortgage to Harrison was declared by them to be fraudu¬ 
 lent. It had never been delivered to, or accepted by, Har¬ 
 rison, but had been surreptitiously recorded, and did not 
 appear upon the index of records in the office of the county 
 clerk or register. 
 
 On the 25th day of November, 1870, about a year and a 
 half before the pretended foreclosure of which we are about 
 to speak, this mortgage had been set aside as void ab initio , 
 in an action instituted for the purpose by the Memphis and 
 El Paso Company, in the court of the eighth judicial dis¬ 
 trict of the State of Texas, a court of competent jurisdiction. 
 
 Second. The second mortgage was the construction mort¬ 
 gage, covering the road, franchises, fixtures, &c., the trus- 
 
28 
 
 tees being Andrew G. Curtin, Svante M. Swenson, and Paul 
 S. Forbes. 
 
 Third. The first land-grant mortgage, covering the land 
 grant for the first 150 miles, amountring to 1,536,000 acres. 
 The trustees were A. G. Curtin, Svante M. Swenson, and 
 Paul S. Forbes. 
 
 Fourth. The second land-grant mortgage, covering the 
 land grant for the second 150 miles, amounting to 1,536,000 
 acres. The trustees were A. G. Curtin, James Pollock, and 
 Svante M. Swenson. 
 
 The judicial proceedings by which these mortgages were 
 foreclosed were as remarkable in character as those which 
 we have already described. 
 
 Had it been intended in good faith to foreclose the mort¬ 
 gages in the interest of the bondholders, the proceedings 
 would have been simple enough. The trustees would have 
 gone into the State Court of Texas, begun the action against 
 the company, whose president, Mr. Epperson, resided in the 
 State; the foreclosure would have been regular, and the title 
 perfect. But no such course was taken, and for the most 
 obvious reasons: any of the officers of the company in Texas 
 would have fought the Harrison-Bates mortgage as fraud¬ 
 ulent and void. Again, such a course would have given 
 the trustees control of the actions, and Gray was not con¬ 
 fident of their cooperation. 
 
 He, therefore, concluded to begin the actions in the same 
 old United States Court for the Western District of Texas. 
 
 The trustees were informed that it was proposed “ to 
 sell, by order of court, the property and franchises of the 
 Memphis, El Paso and Pacific Railroad Company, at pub¬ 
 lic sale, for the purpose of enabling the receiver to make a 
 pefect title to a bona-fide purchaser, and for the further pur¬ 
 pose of more effectually protecting the interests of the land- 
 grgmt bondholders.” 
 
 Governor Curtin, being in Europe, wrote to Swenson, his 
 co-trustee, consenting to such a sale, in the words just quoted, 
 
29 
 
 but suggesting that it would be prudent to have the trustees 
 bid in the property. 
 
 This letter was approved by Paul S. Forbes, who was 
 then in Paris, and, upon the bottom of a copy of it, Swen¬ 
 son wrote a note to Hon. E. L. Fancher, one of Gray’s 
 counsel, in these words : 
 
 “In accordance with the terms specified in the letter of 
 Hon. A. G. Curtin, (a copy of which is above,) you are 
 authorized to cause the appearance of the trustees to be 
 entered in any suit in Texas for the purpose of selling the 
 railroad property referred to in Mr. Curtin’s letter. I will 
 provide a bidder for the trustees at the sale that may be 
 made under the order or decree of court.” 
 
 Fancher thereupon addressed a letter to John A. Daven¬ 
 port, another of Gray’s lawyers, authorizing him to em¬ 
 ploy attorneys in Texas for the purpose specified in the 
 letter of the trustees. It will be noticed that these letters 
 said nothing about foreclosures, and certainly none of the 
 trustees could suppose that it was intended to foreclose the 
 mortgage to Harrison which had been set aside a year and 
 a half before. 
 
 Gray began operations at once. His attorneys in New 
 York (Messrs. Gray & Davenport) prepared bills of com¬ 
 plaint for the foreclosure of the four separate mortgages. 
 The actions were begun, not in the names of the trustees, 
 but, as to the land-grant and construction mortgages, in the 
 names of alleged bondholders. 
 
 At the same time, the same attorneys in New York pre¬ 
 pared answers in the various actions for the Memphis and 
 El Paso Railroad Company, for the trustees, and for John 
 A. C. Gray, receiver. Loaded down with these documents, 
 of the existence of which Mr. Swenson, who was in New 
 York, knew nothing, Mr. Davenport departed for Texas. 
 Arriving there, he employed a Texan solicitor to sign the 
 bills of complaint, and another to sign the answers of the 
 trustees; while to the answers of the Memphis and El Paso 
 Railroad Company he signed the names of his New-York 
 firm, Gray & Davenport. 
 
30 
 
 On the 30th day of April, 1872, all these documents were 
 presented together to the circuit judge of the Western Dis¬ 
 trict of Texas. On the next day, decrees of foreclosure 
 and sale were entered in all four of the actions, and sales 
 were ordered for the 4th day of June. 
 
 Of -the entry of these decrees and of the proposed sale, 
 not a word was said to the trustees. No advertisement was 
 made in any papers outside of Texas. Not a bondholder in 
 France was informed of the proceedings or apprised that a 
 sale was in contemplation. But Mr. Swenson, one of the 
 trustees, by chance saw the advertisement in an obscure 
 Texas paper. Hastening to Mr. Gray, he demanded an 
 explanation. Gray produced the order of court made in 
 January, 1871; for he had no other order. The result of 
 this conference was an agreement that Judge Fancher should 
 send some person to Texas, to buy in the property in his 
 name, for the benefit of the French bondholders, to be by 
 him conveyed according to the orders of the court. 
 
 On the 4th of June, 1872, at a little village in Texas, the 
 sale occurred. Under the Harrison-Bates mortgage, the 
 property brought $80,000, and was hid in by Judge Fan¬ 
 cher, there being no other bidders. What remained, if any, 
 of the land grants, was sold to the same bidder, for $5,000 ; 
 that is, $2,500 under each mortgage. And a few weeks 
 afterwards, a sale was had under the construction mortgage, 
 and the remnant, if any, of the road brought $5,000, being 
 purchased by the same party. 
 
 Deeds were executed to Judge Fancher, and under these 
 deeds, by order of Judge Bradley, made in Washington, he 
 subsequently made a conveyance to the Texas and Pacific 
 Kailroad Company, which now claims title under these pro¬ 
 ceedings. 
 
 Some two months after the sale, it having been discov¬ 
 ered that the Harrison-Bates mortgage had been set aside, 
 by decree of court, in November, 1870, Mr. Gray applied to 
 the same court to have the mortgage restored. His appli¬ 
 cation was granted; and, on the 10th day of August, 1872, 
 ten weeks after the‘sale, an order was entered, restoring the 
 
31 
 
 mortgage, which order concluded : “And it further appear¬ 
 ing to the satisfaction of this court, that it was intended 
 that the motion now made herein, to vacate the said judg¬ 
 ment and to dismiss the said petition, should have been 
 made at a regular term of this court, held in the said Lamar 
 county in the month of March, 1872, and that the said mo¬ 
 tion was not thus made by reason of unavoidable cause, it 
 is further ordered, adjudged, and decreed that the orders, 
 judgment, and decree of this court now made herein be 
 made and entered nunc pro tunc; that is to say, that the 
 same be made and entered as of the said March term, 1872/* 
 
 In regard to those proceedings, we desire to submit a few 
 suggestions of law : 
 
 First. The order restoring the Harrison-Bates mortgage 
 nunc pro tunc was utterly void. 
 
 An order nunc pro tunc can be entered to correct an error 
 of form. Goelet v. Lansing, 6 John. Chan., 75. 
 
 It can be entered to correct an omission of the court, or 
 to cover the death of a party, pending the suit. 2 Daniels’ 
 Cb. Prac., 4 Ed., 1016. 
 
 But a decree cannot be entered nunc pro tunc so as to va¬ 
 lidate a sale under a former decree which did not author¬ 
 ize it. Gray v. Brignardello, 1 Wallace, 627. 
 
 This defect is something more than formal and technical. 
 It is no answer to say that even if this mortgage was not in 
 existence, and the sale under it void, the other sale gave a 
 good title. 
 
 In the first place, the mortgage, if valid and not fore¬ 
 closed, is still in existence, and is a lien. In the second 
 place, the sales under the other mortgages were necessarily 
 affected by the existence of this decree of foreclosure, and 
 the pretended sale had under its provisions. 
 
 No one would bid under the other mortgages after a sale 
 had just been conducted under this decree, which they could 
 not know to be fictitious. 
 
 Second. The foreclosures of the land-grant and construc¬ 
 tion mortgages were void. 
 
32 
 
 These mortgages could not he foreclosed except by mak¬ 
 ing the mortgagor a party. The mortgagor was the Mem¬ 
 phis, El Paso and Pacific Railroad Company. 
 
 The company had never been wound up or dissolved, and 
 never has been since. 
 
 The company is still in existence, with all its rights and 
 powers unimpaired. This point has been expressly decided 
 by the Supreme Court of the United States in the action 
 already referred to of G-ray, receiver, against Davis, the 
 Governor of Texas, reported in 16 Wallace, 203. * 
 
 It was shown in that action that the State of Texas had 
 attempted to repeal the charter of the company and grant 
 its lands to other corporations. The court held that the 
 grants were contracts, and that the repealing acts were void. 
 
 The foreclosure actions recognize the company as still ex¬ 
 isting. 
 
 The mortgagor being in existence, and a necessary party 
 to the action, should have been served, in order to confer 
 jurisdiction upon the court. No service was ever made, and 
 there was in these cases no pretense of service, nor even a 
 form of waiver of service. 
 
 An appearance of a legally-constituted attorney would 
 have conferred jurisdiction upon the court, but there was no 
 such appearance. 
 
 We have already seen who were the solicitors of the com¬ 
 pany ; but now Messrs. Gray & Davenport, of New York, 
 the attorneys of Mr. Gray, turn up as pretended solicitors 
 for the company. Their appearance did not confer juris¬ 
 diction, for two unanswerable reasons : 
 
 First. They were not attorneys or solicitors for the com¬ 
 pany ; they never were elected to such position by the di¬ 
 rectors, and had no appointment from any authorized offi¬ 
 cials. Under such circumstances the judgment was void. 
 
 6 How., 163, 186. 
 
 Second. Even if they had been appointed, their appear¬ 
 ance as solicitors could confer no jurisdiction, because they 
 were not solicitors of the court in which the action was 
 
33 
 
 pending. Mr. Davenport claims to have been admitted to 
 practice in the United States Circuit Court of Texas, but 
 Mr. G-ray does not. He was never in the State. The ap¬ 
 pearance was of the firm of Gray & Davenport. 
 
 These questions of law we have already discussed, and 
 have cited the authorities sustaining this position. They 
 need not be repeated. 
 
 In regard to the legal questions involved, perhaps one 
 word should be said as to some little judgments obtained in 
 Texas, under which a pretended sale was had at the same 
 time with those under the foreclosure proceedings. 
 
 Under these judgments, amounting to less than $3,000, 
 and controlled by Gray, Judge Fancher became the purcha¬ 
 ser, as upon the other sales, paying his bid of $3,000 with 
 money of the French bondholders received from G-ray. As 
 these judgments were subsequent to the mortgages, they 
 did not affect the liens \ and, in addition, as the purchase- 
 money was paid by the French bondholders, the title vested 
 in them, and could not be divested by an illegal order of 
 Judge Bradley, made without jurisdiction, directing the 
 nominal holder to transfer the title to the Texas and Pa¬ 
 cific. 
 
 Thus much for the legal title derived by the Texas and 
 Pacific Railroad Company from the action of John A. C. 
 Gray, as alleged receiver of the Memphis, El Paso and 
 Pacific Railroad Company, and from the attempted fore¬ 
 closure of its mortgages. 
 
 With the effect of this invalidity upon the bill pending 
 before Congress, of course, I have nothing to do, but per¬ 
 haps I may be pardoned for a few suggestions. 
 
 The land-grant mortgages cover only the land grant for 
 300 miles ; the construction mortgage covers only 150 miles. 
 But the holders of the land-grant bonds and the holders of 
 a few construction bonds are the only creditors of the com¬ 
 pany. As creditors, they have a claim upon the whole 
 franchise, right of wav, and property, from Jefferson to El 
 3 
 
34 
 
 Paso. Their bonds are due, their debt has matured, and 
 their claim covers the surveyed and located route which it 
 is proposed to mortgage to the United States. As to the 
 completed portion of the road, their claim is perfect to about 
 two-thirds of the line as built, on the completion of which 
 the Texas and Pacific founds a standing before Congress. It 
 cannot say that it has built this line under the charter of the 
 Southern Transcontinental, for that charter and franchise 
 are void. The franchise was granted, in 1810, by the Legis¬ 
 lature of Texas, to supersede the charter of the Memphis 
 and El Paso, which, it was claimed, had lapsed. The road 
 was to run over the same route and upon the same survey. 
 Subsequently, in 1873, the Supreme Court of the United 
 States (in Gray v. Davis, 16 Wallace) decided that the 
 charter of the Memphis and El Paso had not lapsed ; that 
 the corporation was still in existence, with all its rights 
 unimpaired. 
 
 Take away from the Texas and Pacific two-thirds of its 
 completed line, cut it off from its connection with the great 
 highways of* the,East, and where does it stand as a grand 
 international highway to the Pacific? 
 
 In conclusion, I should like to say a few words about 
 the equitable claim of the contestants, in anticipation of a 
 probable suggestion that a great deal has been already 
 done for the holders of the land-grant bonds. 
 
 We have already seen that the whole charter of the Texas 
 and Pacific is based upon the tacit understanding that it 
 was to protect the rights of the innocent parties who had 
 bought the securities of the Memphis and El Paso Railroad 
 Company. 
 
 The Southern Transcontinental Company, chartered under 
 the laws of Texas, was organized upon a similar understand¬ 
 ing. Both were charters of Fremont. The present Texas 
 and Pacific, in March, 1871, absorbed the Southern Trans¬ 
 continental by purchase. As it has succeeded to the rights, 
 such as they are, it should be held to the duties of the com¬ 
 pany which it absorbed. 
 
35 
 
 Follow its charter back in either channel, and we come 
 to the same fountain, the Memphis and El Paso, and the 
 rights of these bondholders cannot be ignored. 
 
 The Texas and Pacific now comes to the Congress of the 
 United States, asking for further aid. It demands noth¬ 
 ing as a legal right. It appeals to the broad generosity of 
 the people. Should this be extended, when it comes with 
 unclean hands? 
 
 We will here be told that it has already done all that 
 could be expected as an act of justice to the holders of these 
 bonds. 
 
 Let us see what it has done. By the’ contract with 
 Gray, under which it received a deed, from Fancher, of 
 the road, with all its franchises and rights, it agreed to 
 pay $150,000 for expenses and to transfer to the holders of 
 the land-grant bonds, land at the rate of 700,000 acres of 
 land to $5,400,000 worth of bonds; but this was to be done 
 upon condition that it should succeed to the rights of the 
 bondholders to all the other assets of the company. We 
 have already seen how Gray obtained the consent of about 
 four-fifths of the bondholders to this arrangement in advance. 
 
 To pay off these bonds, the Texas and Pacific Railroad 
 Company has transferred 640,000 acres of land, 550,000 
 acres of which have been appropriated for the bonds col¬ 
 lected by Gray. With this he has organized a land com¬ 
 pany, substantially managed by himself. The rest of the 
 land has not been taken. 
 
 If these men who have accepted land, foreigners igno¬ 
 rant of their rights, and confiding in our courts, have been 
 wronged, they have a claim to redress as well as the holders 
 of the other fifth of the bonds who have declined the land. 
 
 A brief examination *of the character of this transaction 
 will show what are the equities between the parties. The 
 land given to these men consists of 550,000 acres, located 
 not adjacent to the first nor to the second one hundred and 
 fifty miles of constructed road, but back in what is still 
 almost a wilderness, nearly a hundred miles westerly from 
 the point at which the Texas and Pacific has ceased its 
 
36 
 
 building operations. It begins some eighteen miles or 
 more west of the Brazos River. 
 
 The lands covered by the first land-grant mortgage lay 
 along the first one hundred and fifty miles of road, em¬ 
 bracing some 1,500,000 acres. The second mortgage covered 
 an equal amount, along the second one hundred and fifty 
 miles. The French bondholders, in consenting to receive 
 their land, could never have contemplated such a transfer. 
 
 Mr. Gray, in one of his multitudinous reports to Judge 
 Bradley, explains this by stating that he found that so 
 much of the original reservation had been taken up under 
 the State patents or grants to private individuals, that only 
 about 200,000 acres remained of the original 3,000,000. 
 But this was done under the State laws and constitution, 
 which the Supreme Court of the United States (in Gray v. 
 Davis, 16 Wallace) pronounced void, as impairing the obli¬ 
 gations of a contract. The land-grant mortgages were on 
 record before these grants, and the Texas and Pacific has 
 now the right to recover all these lands. Thus it has 
 given up or offered 640,000 acres of land on a remote point 
 of its prospective road, and received by the bargain the 
 right to a much larger tract, nearly 3,000,000 acres, in a 
 thickly-settled region, which it never could have obtained 
 except as successor to the rights of the Memphis and El Paso. 
 It is no answer to say that it would not have built the 
 road unless it could have made the purchase from Gray, 
 for it intended to build it as successor to the Southern 
 Transcontinental of Texas, which had a large land grant 
 and a subsidy of $10,000 a mile from the State. But in 
 that case it would have had no right of action for the 
 recovery of these lands granted by tbe State since 1869. 
 
 The Texas and Pacific Company understood this fully, 
 and has so explained it to its stockholders. 
 
 In its fourth annual report, dated August 10, 1875, 
 after this contract was completed, the president, Thomas 
 A. Scott, says that this arrangement was advantageous to 
 his company : 
 
 First. Because the price paid ($150,000 cash) for the 
 
37 
 
 graded line, iron rails, and locomotives was considered a 
 fair one. 
 
 Second. Because the exchange of lands for bonds would 
 be likely to bring a considerable immigration to our line, 
 and this, with the funds and property in the receiver’s hands 
 for distribution to holder of bonds , all of which , as the owner 
 of the bonds , would come to your company , was considered a 
 fair equivalent for the lands exchanged; and 
 
 Third. Because the obtaining possession by your com¬ 
 pany of the so-called u French bonds” would remove what 
 was generally considered a stain upon American credit, and 
 would be likely to favorably affect the credit of the Texas 
 and Pacific Kailway Company in its future negotiations. 
 
 “It would also enable your company to secure , without fur¬ 
 ther litigation , a considerable quantity of most valuable land 
 within the reservation, that had been coveredj by certificates or 
 patented by the State officials to various parties , under article 
 10, section 5, of the new Texas State Constitution , as the title 
 to this land , under a decision of the United States Supreme 
 Court , obtained by the receiver at the December term , 1872, 
 would become thereby vested in your company , and the quan¬ 
 tity of land so reclaimed , with certificates in receiver’s posses¬ 
 sion , will very nearly equal that required to be exchanged for 
 bonds.” (Fourth Annual Report, August 10,1875, pp. 9-10.) 
 
 Thus it appears, from the statement of Mr. Scott him¬ 
 self, that his* act, instead of* being one of generosity, has 
 been largely beneficial to his company. 
 
 It gives away 640,000 acres of unsaleable land, and gains 
 an equal amount, at least, of land worth several times its 
 value. 
 
 But this is not all. It also receives four-fifths of the 
 assets in the hands of Cray, or rather a right to four-fifths 
 of the assets which he has or should have received. 
 
 By adjudication of the court in one of the applications of 
 the receiver, it was decided that as all the assets of the 
 road, except the franchise, were purchased with the pro¬ 
 ceeds of the land-grant bonds, these assets belonged to the 
 holders of these bonds, and could be diverted to no other 
 purpose. 
 
38 
 
 These assets were as follows : 
 
 Obtained by Mr. Gray in France, the exact 
 amount never stated to the court, but, as ap¬ 
 
 proximately stated, about. $450,000 
 
 With interest from 1870. 
 
 Railroad iron, &c., in New Orleans, about.. 480,000 
 
 Bonds of the State of Arkansas. 110,000 
 
 Stock of the Memphis and Little Rock Railroad 
 
 Company, $1,200,000 par, cost. 300,000 
 
 Stock, &c., of San Diego and Gila Railroad, cost. 100,000 
 (This railroad has been transferred to the Texas 
 and Pacific, who is building it from San Di¬ 
 ego east.) 
 
 Lands in Texas, outside of land grants. Fre¬ 
 mont, in his French pamphlet of September, 
 1869, written by himself, which he claims to 
 be correct, says that the company had, aside 
 from its land grants, 600,000 acres of land in 
 Texas. About a large amount of this land 
 there is no question, for it appears from the 
 records that $85,000 was expended in the pur¬ 
 chase of a part of it. (P. 629.) S. M. Swen¬ 
 son sold the company, in 1868 or 1869, 57,600 
 acres, worth, when Gray took possession, $3 
 per acre. In addition, there were a large num¬ 
 ber of land certificates located by Gray. 
 
 Claims against the officers of the road. One of 
 the chief grounds for the appointment of a re¬ 
 ceiver was that the officers of the road had mis¬ 
 appropriated about $2,000,000 of the proceeds 
 of the land-grant bonds. If so, the receiver 
 had a valid claim against them for that amount. 
 It is but proper to say, however, that he has 
 collected nothing, and reports that they 
 claimed offsets, or denied the charge of mis¬ 
 appropriation. 
 
39 
 
 If this were the place, or if time afforded, it would be an 
 interesting; matter to discuss these assets and see what has 
 been their destination. But the subject is important here 
 only as bearing upon the equities of the holders of the land- 
 grant bonds. 
 
 The theory upon which the Memphis and El Paso Rail¬ 
 road Company was taken under the protection of our Cir¬ 
 cuit Court of the United States, presided over by Judge 
 Bradley, who, all through the circulars of Gray and Scott, 
 receives his full title of Associate Justice of the Supreme 
 Court of the United States, was that the company was 
 utterly insolvent. 
 
 We have seen how the basis was laid for this assertion. 
 It now turns out, from the reports of the receiver, that all 
 the debts of the company, outside its land-grant bonds and 
 the baseless claim of Bates, were a salary of about $5,000, 
 due to an engineer ; a salary of $6,000, due to the secre¬ 
 tary ; a telegraph bill, of about $600 ; a bill to an iron 
 company, of about $25,000; and some minor matters, 
 amounting to a few thousand dollars more. The Bates 
 claim was purchased by Gray, after judgment, for $35,000. 
 It is said to have been offered before to the company for 
 $10,000. Aside from this, the whole floating indebtedness 
 of the concern did not amount to $100,000. 
 
 Can it be believed that, with all these assets and with 
 this little debt, justice has been done to the holders of these 
 bonds by giving them 640,000 acres of land in a boundless 
 wilderness ? It is not necessary to discuss the question to 
 whom belongs the blame of this great wrong. It is need¬ 
 less to show how the assets have been nursed to worthless¬ 
 ness. It is enough for our purpose to lay before you the 
 bold fact that by the intervention of our courts of justice 
 this railroad has been Wrecked. 
 
 We look around, like helpless mariners, for stray frag¬ 
 ments of our vessel, thrown up from the ocean’s relentless 
 maw. We find the hulk in possession of this corporation, 
 which is knocking at the doors of Congress, begging for 
 national assistance. We challenge its title, and lay before 
 
40 
 
 you the proofs of the nullity of the proceedings by which it 
 gained possession of our property. We are thankful that 
 at last this opportunity has come. There are wrongs which 
 no court of justice can redress. These bondholders are 
 poor peasants in a foreign land, without means to follow, by 
 the slow machinery of law, the tortuous windings of the men 
 by whose devices they have been despoiled. But here, 
 through your Committee, to the Congress of the United 
 States, representing the people in their sovereignty, the 
 ultimate tribunal of the land, they present their case with 
 confidence. 
 
 > 
 
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