Chicago, M. & St. P. Ry. Co. v. Wabash, St. L. & P. Ry. Co.

61 F. 993 | 8th Cir. | 1894

CALDWELL, Circuit Judge

(after stating the facts). The design of the contract on which the appellant rests its claim is not left to presumption or conjecture. Its purpose is apparent on the face of the instrument. Its object was not to avoid ruinous competition by entering into an arrangement to carry freight at reasonable rates, but its evident purpose was to stifle all competition for the purpose of raising rates. By the terms of the contract, all of the roads are to be operated, as to through traffic, “as they should be if operated by one corporation which owned all of them.” These seven corporations were made one company so far as concerned their relations with each other, with rival carriers, and with the public. Between them there could be no competition or freedom of action. To the extent of the traffic covered by this contract,—and it covered no inconsiderable portion of the traffic of the continent,—each company practically abdicated its functions as a common carrier, and conferred them on a new creation, for the sole purpose of suppressing competition. Before they entered into this contract, each of these companies had the power, and it was its duty, to make rates for itself, and to make them reasonable; but, by the terms of this contract, every one of the companies was divested of all its powers and discretion in this respect. The contract removed every incentive to the companies to afford the public proper facilities, and to carry at reasonable rates; for, under its provisions, a company is entitled to its full percentage of gross earnings, even though it does not carry a pound of freight. The necessary and inevitable result of such a contract is to foster and create poorer service and higher rates. There is no inducement for a road to furnish good service, and carry at reasonable rates, when it receives as much or more for poor service, or for no service, as it would receive for good service and an energetic struggle for business.

A railroad company is a quasi public corporation, and owes certain duties to the public, among which are the duties to afford reasonable facilities for the transportation of persons and property, and to charge only reasonable rates for such service. Any contract by which it disables itself from performing these duties, or which makes it to its interest not to perform them, or removes all incentive to their performance, is contrary to public policy and void; and, the obvious purpose of this contract being to suppress or limit competition between the contracting companies in respect to the traffic covered by the contract, and to establish rates without regard to the question of (heir reasonableness, it is contrary to public policy, and void. Railroad Co. v. Closser, 126 Ind. 348, 26 N. E. 159; Gulf, C. & S. F. R. Co. v. State (Tex. Sup.) 10 S. W. 81; State v. Standard Oil Co. (Ohio Sup.) 30 N. E. 279; Texas & P. Ry. Co. v. Southern Pac. Ry. Co. (La.) 6 South. 888; Gibbs v. Gas Co., 130 U. S. 396, 9 Sup. Ct. 553; Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. St. 173; Salt Co. v. Guthrie, 35 Ohio St. 666; Stanton v. Allen, 5 Denio, 434; Hooker v. Vandewater, 4 Denio, 349; Chicago Gaslight & Coke Co. v. People’s Gaslight & Coke Co., 121 Ill. 530, 13 N. E. 169; West Virginia Transp. Co. v. Ohio River Pipe Line Co., 22 W. Va. 600; W. U. Tel. Co. v. American Union Tel. Co., 65 Ga. 160; Sayre v. Association, 1 Duv. 143; U. S. v. Trans-Missouri Freight Ass’n, 7 C. C. A. 15, 58 Fed. 58.

But, conceding that the contract is illegal, and- void,', the appellant asserts' that it has been performed, and that..'the appellee ,-is bound to account for moneys received under the;.contract according to its terms. This contention rests on a misconception 'of the character of this suit. The appellant’s claim is grounded On the illegal and' void contract, and this suit is, in legal effect, 'nothing more than a bill to enforce specific performance of that Contract.

The contract contemplated two modes of pooling,:—one by an actual division of the traffic, and the other by a division of the 'gross earnings. The traffic not having been divided, this is a suit to enforce the second method of the pool,—a division of the gross Warnings; or, in other words, a pooling of the earnings.' The illegal •and void contract has not been executed, and the appellant invokes the aid of the court to compel the Wabash Company to execute it . on-its part by pooling its earnings. It may be conceded that the illegal contract has been performed on the part of the appellant, though it does not appear to have done anything more than to sign the contract.' The only thing it could do towards a performance-of the contract was not to. compete for the business. This was a violation of its duty to the public, and illegal. But a contract performed on one side only is not an executed contract. Where an illegal act is to- be done and paid for, the contract is not executed until thé act is done and paid fori .'A court will not Gompel the act to be done, even though it has been paid for. Neither will it compel payment, although the act has been done; for this would be to enforce the illegal- contract. The "illegality taints the entire contract, and neither of the parties to it> can successfully make it the foundation of an action in a court of justice. The Wabash Company performed the service that earned! the money the appellant is seeking to recover. The appellant earned- no part <6f it. There-is nothing in the record to show that the appellant would have carried more or the Wabash Company less freight if ..the contract had never been entered into. The money demanded 'Was received by the Wabash Company for freight tendered to it by shippers themselves, and carried by it over its own line. ‘It Was-legally bound to accept the freight thus tendered, and was éntitled to receive the compensation for the carriage; and'cannot be compelled to pay the money thus earned, or any part of it, to the appellant on this illegal and void contract. >

The case of Brooks v. Martin, 2 Wall. 70, is not'in point. In that case the defendant set up an illegal contract, which had been fully performed and executed, as a defense against á 'demand that .existed'independently of the contract; whereas, in this ' case, the illegal contract is set up by the plaintiff as the foundation of its ¿action. Strike this contract out, and confessedly- the' complaint -States no cause of action; leave it in,-and it states an illegal and void 'Cause of action.,

-Courts, will not lend-their aid to enforce the performance of a contract which is contrary to public policy or the-law of the-land, but will leave the parties in the plight their own illegal action has placed them. Central Transp. Co. v. Pullman’s Palace Car Co., 139 U. S. 24, 11 Sup. Ct. 478; Gibbs v. Gas Co., 130 U. S. 396, 9 Sup. Ct. 553; Texas & P. Ry. Co. v. Southern Pac. Ry. Co., 41 La. Ann. 970, 6 South. 888; Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. St. 173; Hooker v. Vandewater, 4 Denio, 349. We have not overlooked the case of Central Trust Co. v. Ohio Cent. R. Co., 23 Fed. 306. The opinion in that case is not supported by the authorities, and is unsound in principle.

The decree of the court below is affirmed. '