256 Mass. 600 | Mass. | 1926
The New York Central and Hudson River Railroad Company (hereinafter called the Central) became the lessee of the Boston and Albany Railroad Company (hereinafter called the Albany) by an indenture dated November 15, 1899, for the term of ninety-nine years from July 1, 1900, which was consented to by the Commonwealth ■ July 17, 1900, by St. 1900, c. 468. On June 13, 1923, the Central filed a petition to the department of public utilities (hereinafter called the department) for approval of an issue by the Albany of bonds to the amount of $3,000,000 alleging that it had made permanent additions to and improvements upon the demised premises, and asking approval of the proposed issue as reasonable and proper and also as consistent with the public interest, taking into consideration the fixed charges of the Albany, the amount and character of its contingent liabilities and other pertinent conditions. The petition was accompanied by a schedule purporting to show such additions to and improvements upon the demised premises amounting to $3,018,282.18. The department,
The Albany and certain of its stockholders made requests for rulings before the department, which hereafter will be referred to. No requests were made by the Central. After the decision, the Albany and certain of its stockholders filed petitions in the Supreme Judicial Court asking that the order of the department be annulled, reviewed, modified, or amended, for the reasons that under the lease the plaintiff is under no obligation to issue any more bonds and that the department erred in approving an issue to the amount of $1,500,000; and for the further reason that the department adopted an erroneous rule in deciding what expenditures were for permanent additions and improvements. The grounds stated in these petitions were based upon the requests for rulings made before the department. The Central filed a petition for reviewing, modifying, amending or annulling the orders and rulings of the department for the reason that the department did not approve an issue of bonds to the amount of $2,990,000.
The case came on for hearing before a single justice of the Supreme Judicial Court, who made certain findings of fact and reserved and reported the case, and who also reserved the question whether the stenographic notes of oral testimony and arguments at the hearings and conferences before the department and certain reports, votes, letters and schedules, then offered in evidence by the Central, were admissible.
A fundamental question raised by the Albany and its petitioning stockholders is, whether the department had authority to approve the issue of any bonds. They contend that the expression in the lease, “to the extent that it law
It is provided in the lease that “If the Board of Directors of the lessor, by a majority vote, shall consent to or approve of any or all of such permanent additions and improvements or the doing of such other things, including the acquisition of real estate as aforesaid, or if, after a hearing, the Board of Railroad Commissioners of Massachusetts approve an issue of bonds therefor, fixing the amount and purposes for which said bonds may be issued, the lessor shall, at the request of said lessee and to the extent that it lawfully may, issue its bonds at such lawful rate of interest as may be determined by the lessee for such sums as may be necessary or specified by said Railroad Commissioners, to meet the cost and expense thereof, and shall take such lawful corporate action to that end as may be requested by said lessee”; and
The question, whether the department had authority to approve the issue of any bonds, requires us to determine what the parties reasonably intended by the words “to the extent that it lawfully may.” It is to be noted that this expression is a part of a sentence which relates to the future, and naturally refers to what may lawfully be done when the time for action arrives. The parties must have been considering bond issues which might be made at any time in ninety-nine years. The word ‘ ‘ may ’ ’ itself naturally looks to the future, and indicates doubt instead of certainty. The meaning of this word in a contract depends upon the connection in which it is used. Greene v. Robinson, 41 Conn. 470. Payment in lawful money means in money lawful at the time of payment. O’Neil v. McKewn, 1 S. C. 147. It is probable that if the parties were intending to limit bond issues under the lease to the amount of outstanding capital stock of the Albany at the time of the lease, they would have stated the amount or made that meaning clear by some definite expression. There is nothing in the language used in other parts of the lease to show an intention to confine the future issues to the amount authorized when the lease was made. The parties in pro
It would be a strained construction of the lease to say that the parties intended that the directors of the Albany might vote to issue bonds for permanent additions and improvements made by the Central in accordance with changing provisions of law, but that the department could not on petition of the Central approve an issue in excess of the amount that was legally possible at the date of the lease.
When St. 1913, c. 784, was enacted, increasing the possible bond issue to twice the amount of the outstanding capital stock, the outstanding bonds of the Albany had reached the limit authorized by the law as it existed when the lease was made.
In 1917 an additional bond issue of $1,000,000 was authorized by the directors of the Albany at the request of the Central with the approval of the public service commission. The interpretation which the parties have placed upon doubtful or ambiguous words in a contract is of great weight in determining their true meaning. New York Central Railroad v. Stoneman, 233 Mass. 258. Considering the purpose of the lease, the reasons which would justify the issuance of bonds, and the possibility that the amount which might lawfully be issued would vary from time to time, that issues legal when the lease was made might become illegal during
The Albany and petitioning stockholders made a request concerning the word “permanent” in the following terms: “The board has no jurisdiction to compel the Boston and Albany to issue bonds at the request of the New York Central unless the expenditures to be paid for by such bonds have been made for'what are strictly ‘permanent’ additions and improvements to the property of the lessor.” In dealing with this request and that numbered ten, hereafter mentioned, the department stated: “As we have considered, in arriving at our decision as to what of the items set forth in the petitioner’s schedule were capitalizable, only such items as we deemed permanent additions and improvements within the meaning of the lease, in substance we have granted the
The department rejected certain items in the schedule, and upon the record it is not possible for us to say what those items were, or that any were included in the findings which we could say as matter of law did not represent permanent additions and improvements. The word “permanent” as used in the lease, is not the equivalent of “perpetual.” • See Lowell v. French, 6 Cush. 223, 224. Trippeer v. Couch, 110 Ore. 446. Knickerbocker Co. v. Seattle, 69 Wash. 336. In Texas & Pacific Railway v. Marshall, 136 U. S. 393, which dealt with an agreement permanently to establish a terminus at a certain place, it was decided that the word permanent is “to be construed with reference to the subject matter” and the agreement was complied with “by the establishment of the terminus . .• . with no intention at the time of removing or abandoning [it].” See Mead v. Ballard, 7 Wall, 290. In deciding whether additions and improvements were permanent, the department had the right to take into consideration not only the time they would last, but to some extent the purpose in making them. The determination of this matter called for the exercise of sound judgment, and it cannot be said that the department erred as matter of law. No sufficient reason appears for sending the case back for further hearing upon this question. Request number ten of the Albany is based upon methods of accounting by the interstate commerce commission in the matter of making charges to investment as distinguished from operat
The remaining requests for rulings made to the department, upon which the Albany and petitioning stockholders now rely, are three in number. ' These are to the effect that the issue of bonds in 1917 does not estop the Albany from asserting lack of power in the Central or in the department to compel a further issue of bonds by the Albany and that it does not estop the department from considering on its merits or from rejecting the present application; they were in substance given. No one is now objecting to these rulings and in this opinion it is assumed that they were right, interpreting the word “compel” to mean “approve” as applied to the department.
The Central contends that the department had no right to consider depreciation in determining the amount for which the bond issue should be approved; that it was limited to the provisions of paragraph 8 of the lease and to an inquiry as to the amount of permanent additions and improvements; and it further contends that if the department had a right to consider depreciation, it adopted wrong principles in determining its amount.
In Stein v. Strathmore Worsted Mills, 221 Mass. 86, 89, 90, the court said: “The controversy in the case at bar centres on the point whether a reasonable depreciation on the building and machinery and such like physical property owned and employed by the defendant in the production of its manufactured goods should be included among the elements making up the amount to be deducted from the receipts. It is clear that the value of buildings and machinery devoted to the manufacture of textile products cannot in the nature of things be the same after a year of use that it was at the beginning. There must have been deterioration. Machinery wears out. Buildings tend toward decay. Both may diminish in value by reason of advance in the state of the art of manufacturing, or by inventions of more effective devices. In order that any such concern may be maintained at uniform efficiency, there must be allowance for depreciation.”
The statute (St. 1900, c. 468) authorizing and consenting to the lease provided that the Central during the term of the lease should not diminish or permit to be diminished the facilities for travel and business over the Albany or any part of it, nor lower or permit to be lowered the standard of its service as shown in the quality and equipment of its cars, in the construction and care of its stations, station grounds and approaches thereto, and in the provisions made for the security and convenience of the public. These provisions were agreed to by the contracting parties and the lease was made subject to them. The lease could not have become effective had not the Commonwealth, acting through the Legislature, authorized and consented to it by the passage of this act. See York & Maryland Line Railroad v. Winans, 17 How. 30. Thomas v. Railroad Co. 101 U. S. 71. By the act consenting to the lease the Legislature has in effect said that the terms of the lease are in furtherance of the public interest. The department had a right to take into consideration those terms in deciding whether or not the bond issue was consistent with the public interest. The interpretation of the lease by the department, namely, that “The lease contemplates, in our judgment, the maintenance of the railroad in good order and condition during the term of the lease and its return, at the termination of the lease, in as good condition as it was at the beginning of the term or may have been thereafter put in, with all improvements and additions thereon, without impairment,” is not inconsistent with its provisions.
In deciding whether the department could consider accrued depreciation in approving the bond issue, we must have in mind not only the language of the lease, but all attendant circumstances, including the purpose to be accomplished by it, the term for which it is to run, the fact that the parties are public service corporations and in a measure subject to public control, that the matter is not wholly between the two corporations but that the Commonwealth by the act approving the lease has rights to be
If it be assumed that the question whether, as matter of law, the department erred in its method of determining depreciation is open, the report of the department discloses no basis upon which we can say that its method of reaching the conclusion on that subject was unlawful. But the Central sought to establish the unlawfulness of the method adopted for determining depreciation by its offer of stenographic notes of oral testimony and arguments at the hearings and conference before the department, and of certain reports made to the department, and certain votes, letters and schedules referred to in the reservation. This evidence was objected to by the Albany, the intervening stockholders and the department. The reservation states that this evidence may be considered by the full court if it should have been admitted, and that any party might, at his own expense, print any or all of it in his brief for the use of the full court. It does not appear from the stipulation filed that the evidence offered before the single justice was all the evidence considered by the department. The decision stated
The statute (G. L. c. 25, § 5) gives the Supreme Judicial Court jurisdiction in equity to review, modify, amend or annul any ruling or order of the commission but only to the extent of the unlawfulness of such ruling or order. It requires the commission to rule upon any question of substantive law properly arising when requested so to rule. It provides for objection to the ruling made by any party aggrieved. In order further to secure the rights of parties and establish the practice, it is provided that a failure to rule upon a request is to be taken and recorded as a ruling adverse to the party requesting the ruling; and the department is required to file a written decision assigning its reasons therefor. The method of obtaining a review is then stated to be in equity in the Supreme Judicial Court. The burden of proof is on the party adverse to the commission to show that its order is invalid. The purpose of the statute is to provide for a review of questions of law raised before the department. It appears that the department has undertaken in its report to state in substance every ultimate finding of fact upon which its decision rests, and certain agreed facts were found by the single justice.
The position of the Central in asking for a review of the order is, in some respects, like that of a party appealing from a final decree in equity without having saved any rights in the trial court. It is assumed for the purposes of this decision that the Central is entitled to present the question,
So far as the record discloses, the Central made no objection to testimony or its relevancy or to the right of the department to make its own independent investigation. The stenographic notes and other evidence objected to were not admissible. In the case of Haven v. County Commissioners, 155 Mass. 467, a petition for a writ of certiorari, the evidence heard by the county commissioners was held to be properly before the court, but an examination of the record in the case discloses the fact (which does not appear in the printed report) that requests for rulings based on the whole evidence were presented to the county commissioners. In Paine v. Newton Street Railway, supra, a question was raised at the hearing before the railroad commissioners upon the whole evidence. Furthermore, in that case it did not appear that there was any objection made to the introduction of the evidence heard by the railroad commissioners. That case limited the review under the statute then applicable to rulings of law made by the railroad commissioners. See Westport v. County Commissioners, 246 Mass. 556; Clough v. Cromwell, 250 Mass. 324.
The Central cannot question the standard adopted by the department in determining depreciation. It did not request that one standard rather than anothér be used and the reasons assigned by the department for its decision do not indicate the standard adopted.
No argument has been addressed to us concerning the provisions of § 20 (a) added to the interstate commerce act, by § 439 of c. 91, 41 U. S. Sts. at Large, 494, which relates to the approval by the interstate commerce commission of the
Upon a consideration of all questions open to the parties which have been argued, we see no sufficient reason for annulling, modifying or amending the order. In each case a decree dismissing the petition is to be entered.
Ordered accordingly.