of, a prior and paramount lien, in the respect mentioned in said acts, to that of the United States, as stated, and secured thereby; and

Central

Whereas the total liabilities (exclusive of interest to Liabilities accrue) to all creditors, including the United States, of the Union Pacific. said Central Pacific Company, amount in the aggregate to more than ninety-six million dollars, and those of the said Union Pacific Railroad Company to more than eightyeight million dollars; and

not secure.

of

and

Whereas the United States, in view of the indebtedness United States and operations of said several railroad companies respectively, and of the disposition of their respective incomes, are not and cannot, without further legislation, be secure in their interests in and concerning said respective railroads, and corporations, either as mentioned in said acts or otherwise; and

Acts of 1862 and 1864 require

the protection of

the the United States

and the railroad

Whereas a due regard to the rights of said several companies respectively, as mentioned in said act of eighteen to be amended for hundred and sixty-two, as well as just security to United States in the premises, and in respect of all matters set forth in said act, require that the said act of eighteen hundred and sixty-two be altered and amended as hereinafter enacted; and

the companies.

Whereas, by reason of the premises also, as well as for other causes of public good and justice, the powers provided and reserved in said act of eighteen hundred and sixty-four for the amendment and alteration thereof ought also be exercised as hereinafter enacted: Therefore,

to be ascertained,

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That Net earnings the net earnings mentioned in said act of eighteen hundred how. and sixty-two, of said railroad companies respectively, shall be ascertained by deducting from the gross amount of their earnings respectively the necessary expenses actually paid within the year in operating the same and keeping the same in a state of repair, and also the sum paid by them respectively within the year in discharge of interest on their first mortgage bonds, whose lien has priority over the lien of the United States, and excluding from consideration all sums owing or paid by said companies respectively for interest upon any other portion of their indebtedness; and the foregoing provision shall be deemed and taken as an amendment of said act of eighteen hundred and sixty-four, as well as of said act of eighteen hundred and sixty-two. This section shall take effect on the thirtieth day of June next, and be applicable to all computations of net earnings 30, 1878.

This section to take effect June

portation to be

ted States and

dation of interest

thereafter; but it shall not affect any right of the United States or of either of said railroad companies existing prior thereto.

Compensation SEC. 2. That the whole amount of compensation which due by the United States for trans- may, from time to time, be due to said several railroad retained by Uni- companies respectively for services rendered for the Govapplied to liqui- ernment shall be retained by the United States, one-half on bonds. thereof to be presently applied to the liquidation of the interest paid and to be paid by the United States upon the bonds so issued by it as aforesaid, to each of said corporations severally, and the other half thereof to be turned into the sinking-fund hereinafter provided, for the uses therein mentioned.

Sinking-fund established.

be invested in.

SEC. 3. That there shall be established in the Treasury of the United States a sinking-fund, which shall be invested by the Secretary of the Treasury in bonds of the United States; and the semi-annual income thereof shall be in like manner from time to time invested, and the same shall accumulate and be disposed of as hereinafter mentioned. What bonds to And in making such investments the Secretary shall prefer the five per centum bonds of the United States, unless, for good reasons appearing to him, and which he shall report to Congress, he shall at any time deem it advisable to invest in other bonds of the United States. All the bonds belonging to said fund shall, as fast as they shall be ob tained, be so stamped as to show that they belong to said fund, and that they are not good in the hands of other holders than the Secretary of the Treasury until they shall have been indorsed by him, and publicly disposed of pursuant to this act.

Credits to sink.

ing-fund.

Ante, p. 223.

SEC. 4. That there shall be carried to the credit of the said fund, on the first day of February in each year, the one half of the compensation for services herein before named, rendered for the Government by said Central Pacific Railroad Company, not applied in liquidation of interest; and, in addition thereto, the said company shall, on said day in each year, pay into the Treasury, to the credit of said sinking-fund, the sum of one million two hundred thousand dollars, or so much thereof, as shall be necessary to make the five per centum of the net earnings of its said road payable to the United States under said act of eight een hundred and sixty-two, and the whole sum earned by it as compensation for services rendered for the United States, together with the sum by this section required to be paid, amount in the aggregate to twenty-five per centum of the whole net earnings of said railroad company, ascer

tained and defined as herein before provided, for the year ending on the thirty-first day of December next preceding. That there shall be carried to the credit of the said fund, on the first day of February in each year, the one-half of the compensation for services hereinbefore named, rendered for the Government by said Union Pacific Railroad Company, not applied in liquidation of interest; and, in addition thereto, the said company shall, on said day in each year, pay into the Treasury, to the credit of said sinkingfund, the sum of eight hundred and fifty thousand dollars, or so much thereof as shall be necessary to make the five per centum of the net earnings of its said road payable to the United States under said act of eighteen hundred and sixty-two, and the whole sum earned by it as compensation for services rendered for the United States, together with the sum by this section required to be paid, amount in the aggregate to twenty-five per centum of the whole net earnings of said railroad company, ascertained and defined as hereinbefore provided, for the year ending on the thirtyfirst day of December next preceding.

Secretary of the Treasury authorized undercertain

circumstances to

the amount re

fund.

SEC. 5. That whenever it shall be made satisfactorily to appear to the Secretary of the Treasury, by either of said companies, that seventy-five per centum of its net earnings remit a portion of as herein before defined, for any current year are or were quired to be paid insufficient to pay the interest for such year upon the obli- into the sinking. gations of such company, in respect of which obligations there may exist a lien paramount to that of the United States, and that such interest has been paid out of such net earnings, said Secretary is hereby authorized, and it is made his duty, to remit for such current year so much of the twenty-five per centum of net earnings required to be paid into the sinking-fund, as aforesaid, as may have been thus applied and used in the payment of interest as aforesaid.

SEC. 6. That no dividend shall be voted, made, or paid for or to any stockholder or stockholders in either of said companies respectively at any time when the said company shall be in default in respect of the payment either of the sums required as aforesaid to be paid into said sinking-fund, or in respect of the payment of the said five per centum of the net earnings, or in respect of interest upon any debt the lien of which, or of the debt on which it may accrue, is paramount to that of the United States; and any officer or person who shall vote, declare, make, or pay, and any stockholder of any of said companies who shall receive any such dividend contrary to the provisions of this act, shall be liable to the United States for the amount thereof, which, when

No dividends to be voted or paid when companies

are in arrears, &c.

Penalty for vio- recovered, shall be paid into said sinking-fund. And every lating this provision. such officer, person, or stockholder who shall knowingly vote, declare, make, or pay any such dividend, contrary to the provisions of this act, shall be deemed guilty of a-misdemeanor, and, on conviction thereof, shall be punished by a fine not exceeding ten thousand dollars, and by imprisonment not exceeding one year.

Sinking-fund, how to be applied.

Sinking-fund to be held for what purpose.

SEC. 7. That the said sinking fund so established and accumulated shall, at the maturity of said bonds so respectively issued by the United States, be applied to the payment and satisfaction thereof, according to the interest and proportion of each of said companies in said fund, and of all interest paid by the United States thereon, and not reimbursed, subject to the provisions of the next section.

SEC. 8. That said sinking-fund so established and accumated shall, according to the interest and proportion of said companies respectively therein, be held for the protection, security, and benefit of the lawful and just holders of any mortgage or lien debts of such companies respectively, lawfully paramount to the rights of the United States, and for the claims of other creditors, if any, lawfully chargeable upon the funds so required to be paid into said sinking-fund, according to their respective lawful priorities, as well as for the United States, according to the principles of equity, to the end that all persons having any claim upon said sinkingExisting rights fund may be entitled thereto in due order; but the provisions of this section shall not operate or be held to impair any existing legal right, except in the manner in this act provided, of any mortgage, lien, or other creditor of any of said companies respectively, nor to excuse any of said companies respectively from the duty of discharging, out of other funds, its debts to any creditor except the United States.

not to be impaired.

All sums due to the United States

companies to be a

property, rights, franchises, &c.

SEC. 9. That all sums due to the United States from any from said railroad of said companies respectively, whether payable presently lien against their or not, and all sums required to be paid to the United States or into the Treasury, or into said sinking-fund under this act, or under the acts herein before referred to, or otherwise, are hereby declared to be a lien upon all the property, estate, rights, and franchises of every description granted or conveyed by the United States to any of said companies respectively or jointly, and also upon all the estate and property, real, personal, and mixed, assets, and income of the said several railroad companies respectively, from whatever source derived, subject to any lawfully prior and paramount Lien not to pre- mortgage, lien, or claim thereon. But this section shall not vent sale, &c., in be construed to prevent said companies respectively from good faith.

using and disposing of any of their property or assets in the ordinary, proper and lawful course of their current business, in good faith and for valuable consideration.

Attorney-Genprovision of this

eral to enforce the

act and of the acts

preamble.

SEC. 10. That it is hereby made the duty of the Attorney. General of the United States to enforce, by proper proceed ing against the said several railroad companies respectively mentioned in the or jointly, or against either of them, and others, all the rights of the United States under this act and under the acts herein before mentioned, and under any other act of Congress or right of the United States; and in any suit or proceeding already commenced, or that may be hereafter commenced, against any of said companies, either alone or with other parties, in respect of matters arising under this act, or under the acts or rights hereinbefore mentioned or referred to, it shall be the duty of the court to determine the very right of the matter without regard to matters of form, joinder or parties, multifariousness, or other matters not affecting the substantial rights and duties arising out of the matters and acts hereinbefore stated and referred to. SEC. 11. That if either of said railroad companies shall fail to perform all and singular the requirements of this act and of the acts herein before mentioned, and of any other act relating to said company, to be by it performed, for the period of six months next after such performance may be due, such failure shall operate as a forfeiture of all the rights, privileges, grants, and franchises derived or obtained by it from the United States; and it shall be the duty of the Attorney-General to cause such forfeiture to be judicially enforced.

Effect of failure

of said companies

to

perform the re

quirements of the

act.

Right of Congress to alter,

reserved.

SEC. 12. That nothing in this act shall be construed or taken in any wise to affect or impair the right of Congress amend, or repeal, at any time hereafter further to alter, amend, or repeal the said acts herein before mentioned; and this act shall be subject to alteration, amendment, or repeal, as, in the opinion of Congress, justice or the public welfare may require. And nothing herein contained shall be held to deny, exclude, or impair any right or remedy in the premises now existing in favor of the United States.

of this act to be

SEC. 13. That each and every of the provisions in this How provisions act contained shall severally and respectively be deemed, taken. taken, and held as in alteration and amendment of said act of eighteen hundred and sixty-two and of said act of eighteen hundred and sixty-four respectively, and of both said acts.

Approved, May 7, 1878.