216 F. 577 | 8th Cir. | 1914
On June 4, 1910, the Ft. Dodge, Des Moines & Southern Railroad Company, hereinafter called the Electric Company, was placed in the hands of receivers by the Circuit Court for the Southern District of Iowa, in actions commenced therein by the Old Colony Trust Company and the American Trust Company, to foreclose as trustees for bondholders two certain mortgages, dated June 24, 1907. Pending the receivership and on July 5, 1913, the Chicago, Milwaukee & St. Paul Railway Company, hereafter called the St. Paul Company, on leave granted, filed in the court below an intervening petition, asking relief as against the Electric Company, and its receivers, relative to a certain contract entered into between the St. Paul Company and the Electric Company, September 5, 1906. This petition was answered by the two Trust Companies and the receivers. The Trust Companies and the receivers also filed supplemental bills asking affirmative relief, with reference to the provisions of the contract. The petition came on for hearing, and the court, after considering the pleadings and proofs, denied the relief asked for by the St. Paul Company, and granted affirmative relief against it as hereinafter stated. The St. Paul Company appeals.
The facts which condition the rights of the parties as they appear from the record are substantially as follows:
In 1881 and 1882 the St.-Paul Company built a line of railroad across the state of Iowa, extending its Illinois lines from a point at Savannah, Ill., across the Mississippi river, through Huxley, Iowa, to the city of Council Bluffs, on the western boundary of Iowa, and it is now operating said line of railroad, and at all times since 1882 has operated the same. Said line of road was a single-track road, with sharp curves and steep grades. The deed which conveyed the
“Do hereby "rant, bargain, sell and convey unto the said company, for all purposes connected with the construction, use and occupation of said railway, the right ol' way over and through the following described tract of land in Story county, Iowa, described as follows, to-wit: * 15 * To have and to hold the same in fee simple, absolute, unto the said company, its successors and assigns, forever.”
In 1906, the Electric Company projected an extension of its railroad from Boone, by way of Des Moines Junction, to Des Moines, which would cross the St. Paul Railroad at Huxley. Negotiations were had between the St. Paul Company and the Electric Company with reference to the proposed crossing. Mr. Blake, who was general manager of the Electric Company, represented it in these negotiations. At the hearing in the court below Mr. Blake testified as follows:
“T cannot recall when I first knew that the Milwaukee Company contemplated lowering the grade of its tracks through Huxley, or when my attention was first called to the matter of changing the grade; but it was one of the requirements in the contract, and I knew of that fact prior to the time the contract was made. In the letter J stated that I had heard that they were likely to lower their tracks at that point some time, and in case they did so in a year or two or three or more, the contract should necessarily read that we build over them at that point. They required that provision in all the negotiations. They would not consider a contract otherwise. I did not understand how much they proposed lowering their grade or track. I do not remember having a conversation with Mr. Foster or Mr. Laas with regard to it I did know that the lowering of the track was in contemplation, but did not know the exact amount of lowering.”
As the result of the negotiations a contract was made and entered into by and between the St. Paul Company and the Electric Company, the material portions of which, so far as this controversy is concerned,, are as follows:
“This agreement, made this 5th day of Sept., A. IX nineteen hundred and six, by and between the Chicago, Milwaukee & St. Paul Railway Company, hereinafter called the ‘St. Paul Company,’ and the Ft. Dodge, Des Moines & Southern Railway Company, hereinafter called the ‘Electric Company,’ wiinesseth:
“That the St. Paul Company, in consideration of the sum of one dollar to it paid by the Electric Company, the receipt whereof is hereby acknowledged, and in further consideration of the performance by the Electric Company of all its covenants and agreements herein contained, hath granted and by these presents doth grant unto the Electric Company the right to construct, maintain anduoperate a single track electric railway over and across the right of way and main track of the St. Paul Company, at a point near the town of Huxley, in the state of Iowa, which said point is marked ‘A’ on the plat hereto attached, marked ‘Exhibit A,’ and made a part hereof.
“It is mutually understood and agreed that, whenever the St. Paul Company shall elect to lower the present grade of its track at the point of crossing aforesaid, all the rights hereby granted shall cease and determine; and the Electric Company, its successors, assigns, grantees and lessees, shall and will, upon receiving ten days’ notice in writing so to do, at its own sole costs and expense, take up and remove said crossing; and the St. Paul Company shall and will thereupon grant to the Electric Company the right to construct (at such point a.s may be mutually agreed upon) and thereafter maintain and use a bridge or crossing structure, carrying the track of the Electric Company over and above the right of way and present main track of the St. Paul Company,*580 and over and above such other track or tracks as the St. Paul Company may hereafter elect to lay at the point of said crossing; it being understood and agreed that such bridge or crossing structure is to be erected and maintained at the sole expense of the Electric Company, and in strict accordance with such plans and specifications as the chief engineer of the St. Paul Company may prescribe. * * *
“Lastly. The grants, covenants, stipulations and agreements hereof shall extend to and be binding upon the respective successors and assigns of the parties hereto, whether so herein expressed or not.”
The contract contained other provisions, and among those an agreement on the part of the Electric Company that, whenever its line of railroad should cease to be operated exclusively as an electric line for the carriage of passengers only, it would furnish and erect at its own expense, at its point of crossing, safety appliances commonly known as an interlocking and derailing system. There is no controversy over this part of the contract. The line did cease to be operated exclusively for the carriage of passengers, and the interlocking and derailing system was constructed as agreed. It became, however, useless by reason of the lowering of the tracks of the St. Paul Company as hereinafter stated. In 1902 a survey was made and a profile prepared by the St. Paul Company for an improvement of its entire line across the state of Iowa, by eliminating curves and reducing grades. The profile and plan provided for the lowering of the tracks of the St. Paul Company at Huxley to the extent of 13 or 14 feet. In 1912 the St. Paul Company was actively engaged in the prosecution of the improvement of its line in accordance with the profile and plan of 1902, and as the work progressed towards Huxley, and on June 13, 1912, it served on the receivers of the Electric Company a notice that it had elected to change the grade of its track at the point of crossing, and requesting them to take up and remove the tracks of the Electric Company-constituting the crossing, as provided in the agreement of September 5, 1906. The receivers declined to comply vyith the notice, alleging that neither they, the bondholders, nor trustees were bound by the agreement. Whereupon the St. Paul Company intervened in the foreclosure suit by petition as above stated.
In its petition the St. Paul Company tendered the receivers a right of way for the construction of a temporary track west of the established crossing in order to detour the trains of the Electric Company and to provide for their operation without interruption during the lowering of the grade. A preliminary hearing of the questions in controversy was had on July 20, 1912, and in pursuance thereof the District Court made an order permitting the St. Paul Company to proceed with its work, upon the condition that it should, at its own expense, construct a temporary track and crossing of its railroad for' the use of the Electric Company, according to a plan and conditions described. The order provided that all expenses incurred from time tó time in providing temporary tracks, crossings, etc., should be paid by the St. Paul Company, and that the question of who should ultimately bear the whole or any portion of such expenses as between the parties under the agreement of September 5, 1906, or under the laws of Iowa, should thereafter be determined by the court. Pur-
After a final hearing on September 1, 1913, the court below entered a judgment and decree, holding that the rights granted in the agreement of September 5, 1906, ceased and determined on the election of the St. Paul Company to change its grade; that the agreement was void as against public policy, unfair, and inequitable; that, not having been recorded, it was not binding upon the mortgagees or bondholders, who, it was found, were purchasers for value, without notice, actual or constructive, of the agreement; that the St. Paul Company, in changing the grade of its railroad and constructing two main tracks at the point of crossing, was practically building a new railroad, and thereby became a junior line, so far as the crossing was concerned; that all expenses incurred in the construction of the temporary track, crossing, etc., in order to provide for the traffic of the Electric Company without interruption, should be borne by the St. Paul Company, as well as all the expense of the elevation of the Electric road and the construction and maintenance of the permanent overhead crossing. The decree also adjudged that the St. Paul Company should construct and maintain, in perpetuity, the overhead crossing for the use of the Electric Company, which overhead crossing-should be of such strength and capacity as to sustain and carry cars and trains of the Electric Company over the same; that the St. Paul Company should pay the expense of elevating the track of the Electric Company, in order to secure a sufficient clearance over the tracks of the St. Paul Company, and should construct the approaches, the grade of which should not exceed 1 per cent. '
“It is mutually understood and agreed that, whenever the St. Paul Company shall elect to lower the present grade of its track at the point of crossing aforesaid, all the rights hereby granted shall cease and determine.”
If the 'contract ended with the language quoted there would be force in the suggestion; but the contract proceeds, and grants to the Electric Company the right to construct and thereafter maintain and use a bridge or crossing structure, carrying the track of the Electric Company over and above the right of way and present main track of the St. Paul Company, and over and above such other track or tracks as the St. Paul Company may hereafter elect to lay at the point of crossing. Such bridge or crossing structure to be erected and maintained at the sole expense of the Electric Company. The right to cross at the old grade is terminated by the giving of the notice of election to lower the grade, but the right to cross by an overhead bridge or crossing structure is granted after grade is lowered. When the whole context and object of the contract is considered, it clearly appears that it was only the right to cross at grade that was terminated by giving the notice of election to lower the grade,
Second, it is claimed that the contract is void as ultra vires the Electric Company, and against public policy as the performance of the conditions of the contract would prevent the company from performing its duties as a common carrier. There is certainly no merit in this contention. The whole work of making a new crossing has been completed practically in accordance with the contract without interruption of business on the part of the Electric Company, and it is certainly not ultra vires or against public policy for a comnion carrier to bear the expense of constructing its own crossing over the tracks of another carrier. Moreover, it is the highest public policy that one should perform his lawful contracts.
Third, it is next urged that the contract is without consideration and void, as the only right granted to the Electric Company is a right given by the laws of Iowa independent of contract. Section 2020 of the Iowa Code is quoted in support of this contention:
“And such corporation [railway] may construct and carry its railway across, over or under any railway, canal or water course, when it may he necessary in the construction of the same, and in such cases it shall so construct its crossings as not unnecessarily to impede the travel, transportation or navigation upon the railway, canal or stream so crossed. Said corporation shall be liable for the damages occasioned to any person injured by reason of said crossing.”
We do not see how the section of the Code quoted helps the Electric Company in any way in regard to the present controversy. The statute says:
“And such corporation [Electric Company] may construct and carry it3 railway across, over or under any railway, canal or water course,, when it may be necessary in the construction of the same.”
“A railroad right of way is a very substantial thing. It is more than a mere right of passage. It is more than an easement. We discussed its character in New Mexico v. United States Trust Co., 172 U. S. 171 [19 Sup. Ct. 128, 43 L. Ed. 407], We there said (page 183) that, if a railroad’s right of way was an easement, it was ‘one having the attributes of the fee, perpetuity and exclusive use and possession; also the remedies of the fee, and, like it corporeal, not incoi'i>oreal, property.’ And we drew support for this from a New Jersey case, in which state the rights of way in the case at bar are situated. We quoted N. Y., Susquehanna & Western Railroad v. Trimmer, 53 N. J. Law, 1, 3 [20 Atl. 761], as follows: ‘Unlike the use of a private way — that is, discontinuous — the use of land condemned by a railroad company is perpetual and eontinnous.’ And It is held in Pennsylvania ‘that a railway company Is a purchaser, in consideration of public accommodation and convenience, of the exclusive possession of the ground paid for to the proprietors of it.’ Philadelphia & Reading Railroad Co. v. Hummell, 44 Pa. 375 [84 Am. Dec. 457]. It is ‘a fee in the surface and so much beneath as may be necessary for support. * * * But, whatever it may be called, it is, in substance, a» interest in the land, special and exclusive in its nature.’ Pennsylvania Schuylkill Valley R. R. Co. v. Reading Paper Mills, 349 Pa. 18 [24 Atl. 205]; Philadelphia v. Ward, 174 Pa. 45 [34 Atl. 458]; Railway v. Peet, 152 Pa. 488 [25 Atl. 612, 19 L. R. A. 467]. A railroad’s right of way has. therefore, the sub-stantiality of the fee, and it is private property, even to the public, in all else but an interest and benefit in its uses, it cannot be invaded without guilt of trespass. It cannot be appropriated in whole or part, except upon the payment of compensation. In other words, it is entitled to the protection of the Constitution, and in the precise manner in which protection is given. It can only be taken by the exercise of the powers of eminent domain, and a condition precedent to the exercise of such power Is, we said in Sweet v. Rechel [159 U. S. 380, 16 Sup. Ct. 43, 40 L. Ed. 188], that the statute conferring it make provision for reasonable compensation to the owner of the property taken. This condition is expressed with even more emphasis in Cherokee Nation v. Southern Kansas Ry. Co., supra [135 U. S. 641, 10 Sup. Ct. 965, 34 L. Ed. 295].”
The following authorities support this view: City of Albia v. C. B. & Q. R. Co., 102 Iowa, 624, 71 N. W. 541, 543; M. & St. L. R. Co. v. C. R. G. & N. W. Ry. Co., 114 Iowa, 502, 87 N. W. 410; 3 Elliott on Railways (2d Ed.) §§ 1119, 1126; Townsend v. M. C. R. R. Co., 42 C.
We are clearly of the opinion that the waiver by the St. Paul Company of the right to compensation, regardless of the amount of such compensation, was a good consideration for the contract.
The cost of constructing the temporary crossing by means of a detour track west of the main crossing was not mentioned in the contract, but we do not see why such work should not have been in contemplation of the parties at the time the contract was entered into, as the Electric Company knew that the lowering of the grade of the St. Paul Company was a part of its policy; in fact, it was mentioned in the contract, but, as there was no' specific agreement about it, it remains to be adjusted by the trial court under its powers as a court of equity in managing the receivership.
The decree below, therefore, will be reversed, and the case remanded, with instructions to adjust the rights of the parties in accordance with the contract of September 5, 1906, so far as it covers the same, and make such other disposition of the matters involved between the parties as law and justice may require.