119 Mo. App. 541 | Mo. Ct. App. | 1906
Lead Opinion
Tbe petition alleges that plaintiff was hurt by tbe negligence of defendant’s servants in suddenly and violently starting a street car on which she was a passenger and while she was walking in tbe aisle to a seat. Tbe action was instituted against tbe St. Louis Transit Company and tbe United Railways Company and both are alleged to have owned and been engaged in operating tbe car and line of railway on which it was running. Tbe answers filed by tbe two defendants were both general denials. Evidence was adduced tending to prove tbe plaintiff was injured in tbe manner alleged and that it resulted from tbe negligent conduct of tbe car’s crew. It is conceded by tbe plaintiff that tbe evidence proved tbe car was operated by tbe Transit Company under and by virtue of a written instrument executed by tbe two companies and purporting to be a lease. Tbe only evidence relied on to fasten liability for tbe accident on tbe United Railways Company was this
“An ordinance for the greater convenience and further transportation of passengers on the railways of the Cass avenue and Fair Ground Railway Company, Citizens’ Railway Company, Southwestern Railway Company, Southern Electric Railroad Company, St. Louis Railroad Company and Baden and St. Louis Railroad Company, respectively, and for that purpose authorizing change of motive power, the connection of railway tracks respectively, and the running of cars of one or more of said companies on the tracks of one or more of the other companies, and of such companies whose tracks may be intersected by the tracks of either of said companies, with authority to run ambulance, funeral, mail and express cars, also authorizing if found desirable for said purpose, the sale, conveyance or lease of rights, privileges, franchises and property of one or more of said companies, and of the companies whose tracks may be so intersected, to another of said companies or to the St. Louis Transit Company, its successors and assigns,*551 and the acquisition thereof with authority to hold, enjoy and operate the same for a period expiring with the term of the franchise of the Southern Electric Railroad Company, as provided in city ordinance number fourteen thousand, eight hundred and thirty-seven, and to regulate the speed of cars, and authorizing the Southwestern Railway Company to extend its tracks on Gravois avenue from its intersection with the Morganford road to Bates street, and there to connect with the tracks of the Southern Electric Railroad Company, and extending the time for the completion of its tracks from Grand avenue on Chippewa street and Gravois avenue to the Morganford-road, and the Southern Electric Railroad Company to extend its route on Longborough avenue, Gravois avenue and Bates street, and to operate the same.”
The first and third sections of the ordinance read:
“Whereas, it will be to the great advantage of passengers to have the tracks of the Cass Avenue and Fair Grounds Railway Company, Citizens’ Railway Company, Southwestern Railway Company, Southern Electric Railroad Company, St. Louis Railroad Company and Baden and St. Louis Railroad Company, respectively, connected, and the cars of said companies respectively, run on the track or tracks of others of said companies ;
“Therefore, The St. Louis Railroad Company is hereby authorized to connect its tracks on Broadway with the tracks of the Citizens’ Railway Company at Morgan street and Franklin avenue, and to connect its tracks on Broadway and Walnut street with the tracks of the Cass Avenue and Fair Grounds Railway Company, and its tracks at Broadway and Elm street with the tracks a.t that point,’ and to connect its tracks at or near Broadway and Keokuk street with the tracks of the Southern Electric Railroad Company; and authority is given to the Southwestern Railroad Company to connect*552 its tracks with the Southern Electric Railroad Company at Chippewa street and Jefferson avenue; and thereupon with the consent of the St. Louis Railroad Company and said Citizens’ Railway Company, Cass Avenue and Fair Grounds Railway Company, Baden and St. Louis Railroad Company, Southern Electric Railroad Company and the Southwestern Railway Company, respectively, the cars of said companies respectively, may be run on each other of said companies’ tracks respectively, and upon the tracks of any railway company with which any of the tracks of said companies may intersect, and may be agreed upon between them respectively, and with such companies whose tracks may be so intersected, and for that purpose authority is hereby given to make desirable curves and switches and connections therewith, and the cars shall be run at the same rate of speed on the tracks on which they may run as is now provided by ordinance for the running of cars thereon.”
“Sec. .3. For the better effecting the purpose of this ordinance, the said Gass Avenue and Fair Grounds Railway Company, Citizens’ Railway Company, Southwestern Railway Company, Southern Electric Railroad Company, St. Louis Railroad Company, Baden and St. Louis Railroad Company and any company whose tracks may be intersected by the tracks of any of said companies, and their successors and assigns, are hereby severally authorized to sell, convey, or lease, if found desirable, their property, rights, privileges and franchises now owned and held or herein granted, respectively, to any of the said companies named in this section, or to the St. Louis Transit Company, its successors and assigns, the said company and its successors and assigns so acquiring such property, rights, privileges and franchises, is hereby authorized to acquire, hold and enjoy the same during the term of this ordinance; provided, however, that if such acquisition is had, passengers shall be transported over the whole or any part of said rail*553 roads or railways, in the city of St. Lonis, so acquired on one continuous ride for one fare, and for that purpose transfers may he made at convenient points.”
It was admitted on the trial that the United Railways Company (sometimes called herein the Railways Company) acquired by purchase all the railroad lines named in paragraph one of the ordinance, that two-thirds of the stockholders of the two corporations passed resolutions authorizing the lease and that the contract of lease was duly executed.
The contract recited that the United Railways Company and the St. Louis Transit Company were at the date of the instrument, corporations organized under the laws of the State of Missouri; that the former owned several lines of railway in the city and county of St. Louis and certain bonds and stocks described in a deed to the St. Louis Transit, Company of date September 30, 1899; that the United Railways Company was willing to lease its railway lines, property and franchises, and all the income from its bonds and stocks to the Transit Company for a period beginning October 1, 1899, and ending April 1, 1939, and that the Transit Company was desirous of acquiring said lines and franchises by lease. The contract then proceeds to say: “Now, therefore, this agreement witnesseth, that United Railways for and in consideration of the convenants and agreement hereinafter contained on the part of the Transit Company, to be by it made, kept and performed, has granted, demised and leased, and by these presents does grant, demise and lease unto Transit Company all the railways,” etc.
The subsequent portion of the instrument may be summarized as follows: The Transit Company acquired from October 1, 1899 to April 1, 1939—
First. All the railroads constructed, owned or operated by the United Railways Company or that it might thereafter construct, own or operate.
Third. All the income derived from any bonds or stocks owned by the United Railways or which it might acquire.
Fourth. All franchises belonging to the United Railways or which it might acquire, except the franchise to be a corporation and any other right or franchise necessary to preserve its corporate existence and organization.
Fifth. Exclusive right to usé, manage and operate the railways and fix and collect tolls, but not at higher rates than United Railways was empowered to fix them.
Sixth. All money of the United Railways on hands at the date of the lease or received by it afterwards from any source (par. 9).
The Transit Company as consideration agrees—
First. To pay a net annual rental of five dollars per share on all the preferred stock of the United Railways then outstanding or that might be issued with the consent of the Transit Company; said rental to be paid quarterly on the 10th days of January, April, July and October of each year.
Second. At its own cost and expense and without deduction from the rent (a) to maintain, operate, work, use and run and keep in public use the demised railways in the same manner the lessor, the United Railways, was required to do; (b) keep the demised railways and their property in good repair, working order and condition and supplied with rolling stock and equipment so as to develop the business; (c) make any repairs and replacements on the demised property, and all additions to and improvements thereon, and provide such new and additional rolling stock from time to time as might be necessary for the proper operation and use of the property.
Third. In addition to the regular rental, the Transit Company agreed to pay the United Railways Company $1,000 a year for the purpose of defraying the expenses of maintaining the corporate existence of the United Railways and companies connected with it.
Fourth. Pay all the floating debts of the United Railways Company.
Fifth. Pay all tolls, assessments and water rents assessed against the property of all kinds of the United Railways Company.
Sixth. Pay the interest on the bonds thereon issued by the United Railways and the subordinate companies whose lines had been acquired by the United Railways Company and included in the lease to the Transit Company. Seventeen issues of bonds aggregating about $35,-788,000 are enumerated under this item of the consideration paid by the Transit Company for the lease.
Seventh. Keep the demised property insured at its own expense.
Eighth. Apply all net surplus earnings above six per cent annual dividends on its capital stock, either to the extension and betterment of the leased lines of the railway, or the redemption of the mortgage indebtedness of the leased property.
Ninth. To apply all money not needed for current liabilities or interest turned over to it by the United Railways, or on hand at the date of the lease, or re
A. The Transit Company agreed to “indemnify, save and keep harmless the United Railways during the continuance of the lease from all costs, charges and expenses arising from the management and operation of said railways and all matters incident thereto.” (Par. 1 of lease.)
B. The United Railways agreed in effect to maintain its corporate existence, and when requested by Transit Company, put in force and exercise each and every right it owned or might acquire, and do every lawful corporate act necessary or proper to enable the Transit Company to avail itself of the franchises and property demised; and the Transit Company agreed to indemnify the Railways Company “against all expenses, loss, damage or liability for such exercise of corporate power or performance of corporate acts.”
C. The right of re-entry on the demised property was restored to the United Railways in the event the Transit Company failed to keep any of its covenants. It was provided that a re-entry for non-performance of covenants by the Transit Company should not prejudice the right of the United Railways to recover damages for 'the default.
D. All cars, machinery, tools, appliances and other personal property belonging to United Railways should be turned over to Transit Company as soon as the lease took effect, and, in case of the termination of the demise, should be restored to the Transit Company, or in lieu thereof its value paid; the value to be found by an appraisement.
E. On termination of the contract for breach of covenant, all betterments previously made by the Transit Company became the property of the United Railways.
F. The Transit Company agreed to keep true ac
G-. Differences arising between the two parties regarding the meaning of any part of the lease, and other matters, were to be settled by arbitration.
That the United Railways Company is liable in damages to plaintiff notwithstanding the contract between it and the Transit Company, and the operation of the line and car on which she was hurt by the Transit Company pursuant to the contract, is maintained on three grounds; first, that if the contract is a lease, it is inoperative for lack of consent to the leasing by the' city of St. Louis; second, that the contract is not a lease, but in legal effect is an agreemnt by the Transit Company to operate the railway lines it was put in possession of for the United Railways Company as the latter’s agent, or else is a partnership agreement between the two companies; third, that if a valid lease, the United Railways Company as lessor remained liable for all torts of the Transit Company as lessee, because the statute allowing such leases by street railway companies contains no clause expressly exempting a leasing company from liability for the acts of the lessee.
The Constitution of the State forbids the enactment of a statute granting the right to construct and operate a street railway in any city without first obtaining the consent of the local authorities, and forbids too the transfer of a right or franchise to occupy a street with a street railroad without first obtaining such consent. [Const., art. 12, sec. 20.] The argument for the plaintiff is that the ordinance relied on as giving the consent of the city of St- Louis to the lease in question did not, in truth, give consent, because it only authorized the raihvav companies named in it to lease the lines of railway named, including the one on which plaintiff was hurt, and did not authorize a lease of the properties
Is the agreement between the companies a lease or
Does the contract possess the elements of a lease? In this connection, it is proper to remark in the first place that goods, chattels and franchises may be leased as well as lands and tenements. [1 Platt, Leases, p. 24; 1 Wood, L. & T. (2 Ed.), sec. 202; 1 McAdam, L. & T. (2 Ed.), p. 258; 1 Taylor, L. & T. (9 Ed.), secs. 17 and 18.] The statutes of the State gave the United Railways Company the right to lease its franchises, railway lines and every other property, and by the same statute the Transit Company had the right to acquire every character of property belonging to the United Railways Company, including its franchises. [R. S. 1899, p. 393, sec. 1187.] •• We need not be troubled about the power of the two companies to enter into a lease covering all the properties mentioned in the instrument. The contract in question divested the United Railways Company of tlie possession and use of the properties during the period named (40 years) in consideration of a specific rent to be paid by the Transit Company, and other duties, in the nature of rent, to be performed by' the latter; provided further, for the reversion of the property to the grantor, the United Railways Company, at the end of the term, and for re-entry if the Transit Company defaulted in the performance of its covenants dur
“After a careful consideration of all its terms and stipulations, we are constrained to hold that it is not [i. e., a lease]. Its use of the words ‘demise’ and ‘leased cannot be held to be controlling. For want of a better definition it may be styled an operating contract, under the stipulations of which the Wabash retains all the substantial and beneficial interest in its several railroads and leased lines and in which the Iron Mountain railroad, under the power of attorney therein granted, assumes to operate the Wabash system, collect the tolls and freights, and disburse them for the sole use and benefit of the Wabash, subject at all times to the supervision of the board of directors of the Wabash as to its management and the right to inspect its books and the accounts of the earnings and disbursements.
“It will be observed that the Iron Mountain nowhere in said contract binds itself to pay the Wabash a certain rent unconditionally out of its own moneys and revenues. It merely undertakes that out of the earnings of the Wabash it will, so far as they will suffice, pay the fixed charges which the Wabash had already assumed, and if there is any surplus, to pay this over as directed by the board of directors of the Wabash.- Under no circumstances are the earnings of the Wabash system or any part thereof to become the property of the Iron Mountain. All idea of individual liability of the Iron Mountain over and beyond the earnings of the Wabash for any of the obligations assumed is carefully and studiously excluded. There is no right on the part of the Wabash to a certain profit issuing periodically out of its properties as rent reserved.
“Instead of passing to the Iron Mountain a definite determinate estate of which it should be the absolute owner, it seems to us that the true effect of the whole
“To transform this carefully guarded undertaking merely to operate the road for the Wabash and account to it for all the earnings and disburse them for its sole use, into the unconditional and absolute liability assumed by the Wabash in the lease from plaintiff to it would certainly be subversive of the clear intention of the Wabash and the Iron Mountain, and as already said, this ought never to be done unless the established rules of law will permit no other alternative.”
By the contract before us the Transit Company’s liability for rent was not confined to the earnings of the leased property. The Transit Company was a corporation with a capita] stock running into the millions, and its property was all subject to the obligation of its contract with the United Railways Company to pay the various charges and items of rent enumerated in the lease.
But it is insisted that paragraph 9 of the lease bound the United Railways Company to turn over to the Transit Company any money received by the former from any source and, therefore, whatever rent the Transit Company paid would be repaid to it; thus showing there was no real consideration for the lease. One item of rent is to he used to maintain the corporate existence of the United Railways Company. Another item, to be paid quarterly, is in the nature of a dividend on the preferred stock of the Railways Company. We hardly think the ninth paragraph intends that those cash
The proposition next to be considered is, conceding that the contract was a lease, did the United Railways Company nevertheless remain responsible for injuries to a passenger resulting from the negligence of the Transit Company? In other words, is a leasing railway company so far liable for the torts of the lessee, that it must answer in damages for a tortious injury to the passenger? This question is one on which there is a great diversity of judicial opinion; but it is proper to state, as a circumstance bearing on the weight of authority, that in most of the cases affirming the liability of the lessor, there were dissents. I think the preponderance of authority, and the great preponderance of reason, are against the liability of the lessor in such cases. I think, too, that as a rule of law, the doctrine that the lessor is liable, is at war with the general rules and principles governing the liability of lessors for the acts of their lessees and the settled.canons of statutory construction. As the statutes of this State give a street railway company, poAver to lease all of its property to another street railway company, there was direct statutory authority for the lease in dispute; and only those adjudications are exact precedents wherein statutory authority for the controverted lease existed. • The particular statute authorizing such leases appears in the Revised Statutes of 1899 as a new section (1187).' It is said not to have gone into force until November 1, 1899, and too late to confer authority for the contract we are dealing with, which was dated .September 80, 1899, and took effect on October first, or the next day. But the statute was enacted with an emergency clause and approved June 19, 1899, prior to the contract in question. It is further said that the enactment only conferred the power to lease on corporations formed under the act and that both the United
Cases affirming the liability of a leasing railway company for torts of the lessee, should be classified with reference to the existence of such a statute when the lease was executed. All courts agree that in the ab
Before going into a discussion of the question on principle, it is well to classify the adjudications, so that those directly in point may be studied more readily, and those wherein the proposition affirmed is not identical with the one involved here, may have attached to them the value they merit as containing the lucubrations of judges on the general question and not treated as precedents on the exact question before ns. When the lease is authorized by statute, the leasing company, of course, remains liable for the acts of the lessee if the statute says it shall. [Smith v. R. R., 61 Mo. 17; Markey v. R. R., 185 Mo. 348, 84 S. W. 61; Main v. Id., 18 Mo. App. 388; Brown v. Id., 27 Mo. App. 396; McCoy v. Id., 36 Mo. App. 445; Quested v. R. R., 127 Mass. 204; Daniels v. Hart, Treas., 118 Mass. 543; Bower v. R. R., 42 Iowa 546; Whitney v. R. R., 44 Maine 362; Stearns v. R. R., 46 Maine 95.] When the statute authorizes the leasing, but says nothing as to whether the lessor shall remain liable, a few courts hold that nevertheless the lessor is liable as fully as the lessee itself would be, for the latter’s tortious acts; and in pursuance of this extreme view, these courts have held the leasing company liable for negligent injuries inflicted by the lessee on its own servants. [Chicago, etc., R. R. v. Hart, 209 Ill. 414; Logan v. Id., 116 N. C. 940; Harden v. Id., 129 N. C.
The foregoing cases may be classified, too, with reference to the principles on which they hold the leasing company responsible. Some courts profess to do this because public policy requires it, but disagree as to what particular public policy is to be subserved by the rule. Some ground the responsibility, as we have seen, on the fact that a railway company is an artificial person, deriving its powers from the sovereignty and in consideration of those powers, agreeing to perform certain duties for the sovereignty; hence should be held strictly acountahle for their proper performance. Other cases declare that charter duties cannot be transferred and that it is a charter duty to' carry passengers safely. Others that neither charter nor common-law duties can be transferred to a lessee so as to shift responsibility from the lessor; and that if the safe carriage of passengers is not a charter duty of the leasing company, it is at least a common-law duty, for the due performance of which the company that owns the railway is answerable.
Much stress is laid in some decisions on the supposed fact that if one railway company is permitted to lease its property to another, and thereby relieve itself from liability for the lessee’s torts, leases may be made to irresponsible companies and the public left remediless. [Harden v. R. R., 129 N. C. 354.] There is one case— perhaps there may be others — which held the lessor responsible, apparently, on the ground that the lease did not transfer every franchise- possessed by the lessor. [Braslin v. Somerville, 145 Mass. 64.] Still other cases hold the lessor responsible because, by the terms of the lease, it retains control of the management and opera
It will be seen from the foregoing analysis that there is a Avide divergence of opinion among courts holding the leasing railway company liable for the misfeasance of the lessee, both as to the extent of the liability (i. e., Avhat instances of tortious conduct it covers) and the principles on Avhich it is founded. A more direct reference to some of the cases may aid in elucidating the doctrines held and the sources Avhence they are derived. The Illinois cases run back to Ohio, etc., R. R. v. Dunbar, 20 Ill. 623, in Avhich a leasing railway company was held ansAverable for breach of a contract by the lessee to carry freight. The point came up on demurrer to a plea of the lease by way of defense. No statute authorizing such a lease was in force at the time and the contract was held to be ultra vires. In later cases, after such a lease had been authorizd by statute, the Supreme Court of Illinois founded the liability of the lessor at first, on the theory that the lessee was its agent for the operation of the railway. [West v. R. R., 63 Ill. 545.] Afterwards this theory Avas discarded as unsound and the notion adopted that public policy forbade the leasing; because an insolvent lessee could be selected and all responsibility to the public evaded by the company to> whom the State had granted franchises. [Chicago, etc., R. R. v. Hart, 209 Ill. 414.] The North Carolina cases are traceable to Aycock v. R. R., 89 N. C. 321, wherein a company Avhich had permitted another company to run trains over its track was made to pay for damage done by fire communicated to adjacent farms, from rubbish permitted to accumulate on the right of way and ignite from sparks from an engine having no spark arrester. There was no lease and it did not appear that the defendant was not actually operating trains on its road. [See dissenting opinion in Harden v. R. R., 129 N. C. 354.] The Massachusetts case of Braslin v. R. R. Co., supra, lays
The policy of the State in regard to such contracts was settled by the Legislature when it authorized the leasing of the property of one street railway company to another. The policy is, of course, to permit such leases; for the very highest evidence of the public policy of any State is its statutory law. But it is said that the true public purpose is to permit the lease, but hold the leasing company answerable for the torts of the lessee. Inasmuch as there is legislation on the subject, the policy of the State must, as said, be derived from the enacted laws. If it appears on a fair interpretation of the statutes authorizing the leasing, that the Legislature contemplated a continuance of the liability of the lessor, the law should be so declared; but if it appears that the Legislature did not construe this liability against the leasing company, but authorized leases of street railway properties with all the legal effects pertaining to lease contracts at common law, then the courts have no right to partially annul the legislative intention, or engraft on the law,an exception in the
“Seventh. To purchase, lease, or acquire by other lawful contract, Avhich shall include the right to purchase the capitel stock and bonds of other street railroad companies, and to hold and dispose of the same, and to hold, use and operate any street railroad or roads, with all and singular its or their franchises and properties of every description belonging to any other street railroad corporation or corporations: Provided, that such purchase, lease or other contract be authorized or approved by the vote of the holders of tAvo-thirds in amount of the capital stock of the company so purchas
“Eighth. To sell, lease, or dispose of by any other lawful contract, to any other street railroad company, its railroad rights, franchises, including the right to be a corporation, and all and singular its other properties of every character and description: Provided, that such sale, lease or other contract disposing of its railroad, franchises and other properties, shall be first authorized or approved by the vote of two-thirds in amount of the holders of its capital stock at a regular or called meeting of its stockholders convened pursuant to such notice as is required in the nest preceding clause.” [R. S. 1899, sec. 1187.]
It will be seen that the statute authorizes any railway company to purchase, lease or acquire by other lawful contract, all the franchises and property of every description belonging to any other street railway corporation, including the stock and bonds of the latter, and further authorizes the purchasing or leasing company to hold, use and operate the railway leased. The statute further authorizes any street railway company to sell, lease or dispose of by any other lawful contract, to another company, its railroad rights and franchises, including the right to be a corporation, and all and singular its other properties of every description. We remark emphatically, that as the Legislature granted street railway companies the power to dispose of their franchise to be a corporation, it could never have been
Furthermore, it happens that there have been other statutes enacted in this State authorizing a railway company to lease its property, in which the Legislature expressly provided for the retention of liability on the
That this interpretation of the statute is a sound one, is maintained by practically all the elementary treatises and, in our judgment, by the weight of judicial opinion. The following cases are directly in point. Arrowsmith v. Nashville, etc., Co., 57 Fed. 165; Heron v. R. R., 68 Minn. 542; Hayes v. R. R., 74 Fed. 279; Carruthers v. R. R., 44 L. R. A. 737; Mahoney v. R. R., 63 Maine 69; St. L. R. R. v. Curl, 28 Kan. 622; Scziwak v. R. R., 4 Penn. Dist. Ct. 339; Lakin v. R. R., 13 Ore.
“The last point made by appellant is that, even if the Pennsylvania Traction Company was incorporated, the lease to it by the Columbia & Donegal Railway did not exonerate the latter from liability. But such a proposition is contrary to> all the established rules of law in regard to lessor and lessee. The latter steps, into the place of the former, is substituted for him, and assumes all subsequent liabilities incurred in the operation of the property leased. That is the very ground on which it is held that a corporation cannot lease or transfer any part of its franchises without express legislative or charter authority. [Nelson v. Railroad Co., 26 Vt. 721.] If a lease did not exonerate the lessor, but left his liability unaffected, and only added the liability of the lessee, no one could possibly be hurt by it, or have any standing to complain. It is conceded that a franchise is a duty imposed as well as a privilege granted, by the State, and the duty cannot be avoided or transferred to another without the State’s authority. But when such authority is shown, as in the act of 1887, to motor-power companies to assume by lease the operation of passenger railway companies, it must be construed as a grant, with ail the ordinary
In the Heron case (68 Minn. 542) it is said that in enacting a statute authorizing the lease without retaining the liability of the lessor, the Legislature impliedly relieved it from liability. The same doctrine is maintained in the Carruthers case decided by the Supreme Court of Kansas, and in most of the other cases cited above. The New York courts hold that an unrestricted lease of a railway, made pursuant to a statute which confers on the lessee the right to take and operate the property, stands like any other case of leasing, and that if the lessor turns property over to the lessee without any reservation of control, the latter alone is responsible for the negligent use of it. In the following text-books, the doctrine that the lessor ceases to be responsible is maintained: 2 Elliott, Railroads, sec. 469; Hutchinson, Carriers (2 Ed.), sec. —; Pierce on Railroads, 283, 284; Booth, St. Ry. Law, sec. 425; 5 Thompson, Corporations, sec. 5884; Nellis, Surface Railroads, p. 266, sec. 16; Nellis, St. Ry. Acc. Law, p. 488, sec. 6; Noyes, Intercorporate Relations, sec. 219, particularly p. 316. See, also, comments made by Judge Redfield in his work on Railways on the decision of Nelson v. R. R., 26 Vt. 721. In commenting, he says that the effect of legislative consent to the lease was not met or decided in the Nelson case. [Redfield, Railways, p. 618, note.]
Of course those commentators recognize the division of judicial authority on the question; but every one of them gives his voice in favor of the soundness, on
If evidence was adduced to show that it was contemplated from the first by the incorporation of the two companies that the property should be leased to the Transit Company in order to accomplish a fraudulent purpose, and that the alleged lease was a sham; or any other fact was proved to show it was not made in good faith, but to protect the United Railways Company from debts and judgments, a very different proposition would be presented for decision. The essential fact to be shown to overthrow the lease is that it was not bona fide, but colorable — was a fraudulent conveyance. This, however, is purely a question of fact to be established by relevant evidence in the bill of exceptions touching such an issue. The proposition squarely asserted is that the United Railways Company is responsible, as a matter of law, for the “injuries of the plaintiff, even if its contract with the Transit Company was a lease in legal effect and executed with an honest purpose. We do not assent to that proposition, but think the liability of the Railways Company depends on facts in pais and cannot be established by construing the writing purporting to be a lease.
The judgment is affirmed.
Concurrence Opinion
(concurring). — 1. It is urged with much force by the learned counsel for appellant that the document introduced in evidence is not a lease, but is rather an operating contract whereby the Transit Company operated the street railroad mentioned therein and especially the line on which the plaintiff received her injury, either as an agent for, or the partner of, the United Railways Company, the owner, and the liability of the United Railways Company is therefore asserted; first, upon the theory that the principal is responsible for the negligent acts of the agent committed within the scope of the agent’s authority, and while conducting the business of the principal in pursuing the agency; or, second, upon the principle of agency as applicable to partnerships in and about the conduct of the partnership business. As appears from the separate opinions of each of my associates, there is no disagreement between the members of this court on this question. After mature deliberation, we all agree: first, that the legal effect of the instrument is not such as to establish the relation of principal and agent, nor that of co-partnership between the parties, so that the United Railways Company is liable for the negligent acts of the Transit Company. It is the unanimous opinion of the court on the record before us (and that is a record devoid of either allegation or proof of fraud pertaining to the transaction), that the document on its face is, as a matter of law, a lease, whereby the United Railways Company, the lessor, demised to the Transit Company, the lessee, the property therein mentioned, etc. Second, we are likewise all of the same opinion with respect to the sufficiency of the showing made to the effect that the city of St. Louis had, by ordinance, accorded its assent to the leasing of the railroads in question, in conformity with the constitutional provisions in that behalf. From these facts, it appears that there remains but one question in the case about which there is conflict of opinion, and
2. Inasmuch as the identical question here presented has never been determined by the courts of'last resort in this State, I deem it not improper, in view of the difference of opinion entertained by the members of this court, to set out a few of the reasons which have impelled me to the conclusion announced in the opinion of the court. I do not write because I feel that anything which should have been said, has been left unsaid, or that I can add anything of substantia] worth to the very able and exhaustive review and reasoning to be found in that opinion, but on the contrary I contribute my views for no other purpose than to say that after an extended, careful and candid investigation of the subject, it has revealed itself to my mind as a marvel of simplicity which has become much immeshed in the intricate reasoning of learned judges and confounded by the misapplication of wholesome general principles not in the least pertinent here, but pertaining to a wise and sound public policy with respect to such-corporations as are chartered by the State to serve all of the people, and therefore, in their nature, public institutions. And in this connection, I may say that I have read and re-read each and all-of the authorities cited in the opinions by my learned associates, both Judges Bland and Goode, as well as each and all of the authorities cited in the various briefs on file and such other cases, both in this country and in England, that have come under my observation, and I have studied every case upon its merits with respect to the facts before the court in each individual instance, candidly and earnestly seeking to arrive with that degree of accuracy of which the subject is worthy, at the correct principle which should influence the court in its adjudication, if there be any principle pertinent thereto other than that which applies between citizens generally
There is indeed a marked conflict noticeable upon the first or cursory reading of the authorities. When the cases are carefully and studiously examined, this conflict is discovered to be more apparent than real. Many of the adjudicated cases rest upon facts where no statutory authority of any sort for the lease was had, and of course in such cases, on the principle that a chartered corporation cannot absolve itself of its obligation to the public Avithout the consent of the State, the lessor has been held liable. Yet others rest upon facts where the statutes under which the lease was executed, in express terms reserves the liability of the lessor, and of course, in these cases, the liability has been properly adjudged against the lessor. In others, the injury for which the lessor is sought to be held to answer, was occasioned by the neglect of the lessor in the original construction of the property leased, and the lessor in such cases, has been held responsible on the same principle that the landlord of a building would be held responsible for an injury resulting from the negligent construction of a building in the occupancy of his lessee. In other cases, the injury for which the lessor is sought to be held was occasioned by the neglect of some positive duty affixed by the charter or general statutes against the lessor, which cases proceed upon the theory that such positive statutory obligation cannot be shifted except by equally clear and positive statutory exemption therefrom. And the other class of cases, like the one at bar, presents the
As said, it results from all of this that but one of the several classes of cases referred to are precedents here, and that is the line of cases in which it is sought to enforce the lessor under a statute, in broad terms authorizing the lease without any express exemption from or reservation of liability of the lessor, to respond for the negligent acts of the lessee whereby a third party, not in the employ of either, is injured. Such are the cases of Caruthers v. Railway (Kan.), 44 L. R. A. 737, where is to be found a very learned and able note on the question; see also same case, 54 Kans. Rep. 673; Arrowsmith v. Railway Co., 57 Fed. 165; Hayes v. Railway, 74 Fed. 279; Heron v. Railway Co., 68 Minn. 542; Mahoney v. Railway, 63 Me. 69; Scizwak v. Railway Co., 4 Pa. Dist. Ct. 339; Lakin v. Railway Co., 13 Ore. 463; Gwathney v. Ry. Co., 12 Ohio St. 92; Texas, etc., v. Mangum, 68 Tex. 342; Fisher v. Railway Co., 34 Hun 433; Ditchett v. Railway Co., 67 N. Y. 425; Mayor, etc., v. Railway Co., 113 N. Y. 311; Miller v. Railway Co., 125 N. Y. 118; Railway Co. v. Curl, 28 Kas. 622. In the case last cited, then judge, now Mr. Justice Brewer of the Supreme Court of the United States, clearly and aptly pointed out what appears to me to be the correct distinction as follows :
“Defendant contends that where the statute authorizes the lease by one railway company to another of its track, the lessor company is not responsible for injuries*589 caused by tbe torts of tbe lessee company, and in support of that doctrine cites some authorities. To a certain extent this proposition is true; if the injury results from negligence in the handling of trains or in the omission of any statutory duty connected with the management of the road, matters in respect to which the lessor company could in the nature of things have no control, then the lessee company will alone be responsible; but when the injury results from the omission of some duty which the lessor itself owes to the public in the first instance' — something connected with the building of the road — then we think the company assuming the franchise cannot divest itself of responsibility by leasing its track to some other company.”
It presents itself to my mind as being entirely a question of statutory construction or interpretation. Inasmuch as the Legislature is presumed to know the law, and to know and understand the meaning of words in common use, it seems that when it authorized the lease in broad language without either express exemption or reservation pertaining to the liability of the lessor, it must be understood to have employed the word “lease” as reasonable men employ the same word, with the same understanding of the law and the meaning of the word, and to have authorized the lease with the same immunities and obligations as are attributed and appurtenant to a lease between citizens generally, and that the lessor could no more be held responsible under such circumstances for the negligent acts of the lessee in which he did not participate and over which he had no control, than a lessor of a farm could be held responsible for the negligent acts of his tenant in which he did not participate and over which he had no control. And for the life of me, I can see no reason why this principle is not conducive to the end always sought to be attained by our system of jurisprudence, and that is, equal rights for one and all before the law. On principle and common justice
Before proceeding further on this line of argument, however, I desire to comment upon that class of cases in point and holding contra to the views herein indicated. Three points are especially noticeable about those cases holding the lessor liable in a lease authorized by the statute without reservation of liability to such third parties for the negligent acts of the lessee, cases of the following class: Railway Co. v. Hart, 209 Ill. 414; Harden v. Railroad, 129 N. C. 354; Brown v. Railroad, 131 N. C. 159; Hawkins v. Railroad, 119 Ga. 159. And these three points should be enough in themselves to place a careful and discriminating lawyer on his guard. They are: first, the same reasoning is scarcely employed in any two of them. Now, all men must concede this to be a true proposition; that is, but one conclusion on any given subject can he the correct conclusion, and to* reach, that conclusion, but one set of reasons can lead inevitably thereto. Therefore, when we see several courts reaching the same conclusion on a given subject and each advancing new and different reasons therefor, we are usually dubious as to the correctness of that conclusion. One of two things is evident with respect to those cases, either the courts have reached the wrong conclusion entirely, or, if the conclusion be correct, then some of them have assigned wrong reasons therefor, as they are evidently not in accord as to why their conclusion is correct. This is sufficient to shake the confidence of the profession in the conclusion reached. Second, another point about those cases is that many of them are decided by a divided court, and the majority opinion is usually accompanied with an able and vigorous dissent, and this is sufficient of itself, ordinarily, to shake one’s-confidence in the authority of the adjudication. See Railroad Company v. Hart, 209 Ill. 414, where three
Now it seems to me that the correct view to adopt with respect to this subject is that it is essentially one of statutory construction, for we are seeking to ascertain what was the true intention of the Legislature in authorizing this lease. Entertaining this view, I have sought to gather that intention from the words of the statute itself and from such other legitimate sources as are competent, and I learn that in section 1187, Revised Statutes 1899, every street railroad corporation is declared to “have power” to do, among other things, the folloAving:
“Seventh, to purchase, lease or acquire by other lawful contract, which shall include the right to purchase the capital stock and bonds of other street railroad companies, and to hold and dispose of the same, and to hold, .use and operate any street railroad or roads, with all and singular its or their franchises and properties of every description belonging to any other street railroad corporation or corporations: Provided, that such purchase, lease or other contract be authorized or approved by the vote of the holders of two-thirds in amount of the capital stock of the company so purchasing, leasing or
“Eighth, to sell, lease or dispose of by any other lawful contract, to any other street railroad company, its railroad rights, franchises, including the right to be a corporation, and all and singular its other properties of every character and description; Provided, that such sale, lease or other contract disposing of its railroad, franchises and other properties, shall be first authorized or approved by the vote of two-thirds in amount of the holders of its capital stock at a regular or called meeting of its stockholders convened pursuant to such notice as is required in the next preceding clause.”
Power to execute the lease is here conferred by the competent legislative authority of the State in broad terms without any express exemption from or reservation of liability in the lessor. The Legislature, in its endeavor to expressly authorize the lease, went so far as to say that the lessor company is not only authorized to demise its tangible property, but expressly provided as well that it might lease out “its right to be a corporation.” Now it seems to me that when the lessor is authorized to farm out its right to existence, which seems to preclude the motion of its remaining in esse, it is manifest from this alone that there could be no implication arising from a fair construction of the context of the act, that the company, after having parted with its right and rendered itself incapable of existence, should remain liable for the acts of its lessee. We are endeavoring now to ascertain the legislative intent from the words of the
Now in ascertaining the meaning of the Legislature in this behalf and interpreting its language, we must remember that it is fundamental and axiomatic that “the Legislatures are presumed to know existing statutes and the state of the law relating to the subjects with which they deal.” [Sutherland on Stat. Const. (2 Ed.), sec. 447.] With this rule before us, let us examine and ascertain what was the state of the law and existing statutes in the minds of the Legislature. The answer must be and is that the Legislature knew, when it employed the word “lease” in the statute, that the term had a well-understood and definite meaning in the law. To lease is to transfer for a term specified therein from the lessor
Entertaining this view, as said before, the whole matter seems to me to be one of great simplicity and after much wandering through mazes of authorities, which to my mind confuse the subject by attempting the application of far-fetched principles and remote doctrines pertaining to public corporations and public policy.with respect thereto, I am persuaded that the only correct solution is to be found by the courts remaining in close proximity to the subject and adhere to the reasoning indicated, just as we would were a citizen attempting to hold a farmer who had let his premises to a tenant without reserving any portion of the management or control, for the negligent acts of such tenant, in which the lessor did not participate and over which he had no control. And in such case, no one would attempt to argue or affix liability on the lessor.
Now that this is the correct view, appears to me to be settled beyond all question from the language of the first clause of our statute on “laws” or the “construction of statutes,” bearing in mind, as said by Mr.
“The construction of all statutes of this State shall be by the following additional rules, unless such construction be plainly repugnant to the intent of the Legislature, or of the context of the same statute: First, words and phrases shall be taken in their plain or ordinary and usual sense, but technical words and phrases having a peculiar and appropriate meaning in law, shall be understood according to their technical import.” etc. [Sec. 4160, R. S. 1899.]
Now with this statute, addressed as it is to the courts commanding that they shall so hold with respect to the meaning of the word “lease” employed, on what legitimate process of reasoning can the court arrive at a conclusion other than that the Legislature intended that the court should perform its positive duty imposed by this statute and hold that the word “lease” employed by them is a lease as understood in the law with its ordinary qualities, incidents, attributes, immunities and obligations, and none other. Now, the only presumption the court can indulge is that of laudable motives and correct conduct. We cannot and we will not, for it is against common sense and good morals to do so, presume that the Legislature deliberately enacted the statute employing the word “lease,” intending that the courts should stultify themselves by as deliberately proceeding contrary to the positive commands of the statute on the construction of laws, quoted supra, and hold that the word “lease” as employed, was intended to have a meaning other than that ordinarily understood in the law. To sustain the contention of appellant in this case, and engraft upon the word “lease” an additional incident
It appears from other statutes that the Legislature, acting with the full knowledge of the prior state of the law as pertaining to the obligations and immunities incident to leases, and with a full understanding of its mandate addressed to the courts of the State, commanding them to give to technical wnrds employed their tecln nical import, has seen fit to provide other statutes authorizing railroad leases, and indulging the reasonable presumption, of course, that courts will do their duty in construing such statutes, and attach to the word “lease” its technical import as commanded, the Legislature therefore signified its intention with respect thereto when it sought to affix additional obligations upon the lessor, as in section 1060, Revised Statutes 1899, autho
Many of the cases holding the lessor in an autho
Now it is proper to say of the Nelson case, that the author of that opinion, Judge Redfield, in the fifth edition of his work on Railroads, in a note on page 618, volume 1, points out a fact which does not appear in the opinion; to-wit, that the question of a lease authorized by statute, was not before the court in that case at all. In the other cases last above cited, resting upon considerations of public policy, there was no legislative authority for the lease, and in that event, the public-policy doctrine was certainly correct, for it is a matter within the province of the Legislature to authorize the lease or not, as it sees fit, and in the event no such authorization is had, the proposition is absolutely sound, for it is most certainly against public policy to permit the transfer of the duties and obligations appurtenant to public corporations and involved in such transfers without the consent of the State. The doctrine is eminently sound as predicated upon the principle that the act of incorporation and accepting a charter from the State, constitutes a contract between the corporation and the State. , This being true, the attempted lease, whereby one party to this contract seeks to shift the responsibilities arising in virtue thereof upon a lessee of its own choice without the consent of the State, that of the'other contracting party, first being had and obtained, must fail as being in conflict with the most elemental principles of contract law. This must be true in such cases the same as the identi
I will devote a moment to what seems to me to be a conclusive answer to this entire proposition, and it ought not to require but a moment to dispose of a question so palpably at variance with fundamental principles. In the first place, all lawyers know that in a representative government, it is axiomatically true that the legislative authority, within the limits of the Constitution, is the general guardian of the policy of the, State pertaining to all internal affairs. This proposition must be true under our form of government, and it necessarily follows, when the competent legislative authority has, by solemn enactment, provided thus or so, •on any given subject within its constitutional powers, that this enactment is a manifestation of the public policy of the State on that question, of the very highest and first importance, and that the judicial department thereof is bound thereby, and while the general sources for determining the public policy of a State are its Constitution, laws and decisions of the judicial tribunals, it is primarily true that a legislative enactment within the •constitutional limits, is of very first importance and the judicial department is without authority to hold otherwise. This proposition is so thoroughly grounded in both principle and the reasons underlying and support
“Where the Legislature, by a statute not objectionable as being unconstitutional, expressly authorizes the execution of a particular contract or class of contracts, the courts are without power to declare such contracts illegal as against public policy, as when the government through its legislative branch has determined its public policy the judicial branch is bound thereby.” See, also, large number of cases cited in note one, thereunder.
It is unnecessary to multiply authorities on this proposition which is familiar to the entire profession. This being true, I am at a loss to understand how this or a,ny other court could predicate upon a question of public policy which has been, by legislative enactment, entirely foreclosed to it and say that the contract of lease authorized by it is a different and distinct lease from that so universally understood in the law, or that any rule of public policy asserted could be violated by the lessor transferring the operation of its properties to another under such express statutory authority from the express guardian of all public policy.
Now it is certain that the lease would be wholly invalid without legislative authority. The Legislature might permit it, if it saw fit, and it might affix whatever burdens it saw fit in connection with the authority, but having affixed none and granted broad authority to lease, it is not for the court to invade its province and incumber the right which it has freely granted. Indeed, on this question, the reasoning of the very learned and able Judge Elliott seems to me so terse, exhaustive and complete that I adopt it here in full at the expense of prolonging the opinion:
“Our opinion is that where the lease is executed under the provisions of a statute, in accordance with its*601 requirements, is made to a company having authority to accept it, and is made in good faith and not for the purpose of transferring duties or obligations to an irresponsible party, the lessor company is not liable for injuries caused by the negligence of the lessee and not attributable to a breach of any public duty of the company that executed the lease. It must be assumed that in granting the authority to execute a lease the Legislature had in mind former statutes as well as the established rules of the common law. When power to execute a lease is conferred upon a corporation the Legislature must in the absence of countervailing language, be deemed to intend to authorize the execution of such an instrument as the established law regards as a lease. The law enters as a silent factor into every contract, and hence of every lease it is an important element. The legal effect of a lease is to transfer for a prescribed period of time the possession and control of the property to the lessee. In authorizing the execution of a lease, the Legislature grants the right to execute and carry into effect such an instrument as divests the lessor of possession and control and places it in the lessee to the exclusion of the lessor. The possession of the one party is excluded and that of the other is made complete by the legislative sanction. If a sale is made under valid legislative authority the company that acquires the property acquires an exclusive right and interest, and the lessee by virtue of the lease acquires a similar right so far as possession, control and management are concerned, for the term for which the property was leased. It can not be doubted that a statute conferring general authority to sell, means a complete and effective sale, and upon the same principle it must he concluded that the power to lease, unless qualified and limited by statute, is a power to make a complete and effective lease. A complete and effective lease certainly vests the right of possession, control and management in the lessee, since no other effect can be*602 assigned such, a lease without a direct and palpable violation of long and well-established principles of law. The lessor company does no wrong in executing a lease which the law of the land gives it full power to execute, so that in executing the lease there is no improper motive, no illegal act, nor any wrongful attempt to escape a duty. In granting authority to lease, the Legislature empowers the lessor company to transfer the duty of operating the road to the lessee, and in doing what the Legislature authorizes, no rule of public policy is violated. It is, indeed, inconceivable that there can be a violation of a rule of public policy where the act done by a party is done under a legislative enactment and in -accordance with its provisions. The cases which hold the lessor liable, although the lease is an authorized one, upon the ground that there must be an express exemption from liability in order to exonerate the lessor, concede, what could not be denied without leaving the domain of reason, that the Legislature may by express enactment exonerate the lessor, so that, even upon that theory (which we believe to be unsound) the question, at bottom, is one of statutory construction. The courts which assert the theory mentioned tacitly assume that in granting authority to lease, the Legislature granted something less than an authority to lease. We believe that the only theory that can be defended on principle is that in granting authority to execute a lease the Legislature conferred authority to execute an effective instrument with all the qualities and incidents with which the law invests a lease. If this be true then the lease does not transfer possession and control from one party to the other for the term of the lease, and the rights and obligations of the parties are such, and such only, as the law annexes to the relation of lessor and lessee. For negligence in managing and using the demised premises the lessor is not responsible. If it had performed its duty in constructing tracks and the necessary struc*603 tures, it can not be held responsible for tbe negligence of the lessee in employing incompetent servants, or in negligently handling trains, or in negligently overloading cars, or in negligently failing to provide a sufficient number of persons to manage trains, or for any negligence which relates solely to the mode of operating the leased road.” [2 Elliott on Railways, sec. 469.]
The reasoning of Judge Elliott quoted, is to my mind so illuminating, exhaustive and conclusive on the question in its entirety that I shall leave the subject except to say that we find the almost unanimous views of the text-writers to the same effect, which can only augur that those truly learned in this department of the law, who have devoted much time, careful thought and labor to investigating the adjudications thereon, have, with marked unanimity, arrived at the conclusion announced by this court. And it is worthy in this connection to say that Judge Thompson, who is always found lifting his voice in favor of equal rights for all before the law, says, in his work on Private Corporations, vol. 5, sec. 5884, on this question: “On the other hand, if the lease has been made under authority of law, then, on principle and the better opinion, the lessor company is not liable for damages done by the lessee company, or its servants, in operating the road, unless there is a statutory reservation of such liability.”
See also the following authors: Hutchinson on Carriers (2 Ed.), sec. 515; Peirce on Railroads, p. 283; Booth, Street Railway Law, sec. 425; 5 Thompson on Private Corporations, sec. 5884; Nellis, Street Railway Accident Law, p. 488, sec. 6; Nellis, Surface Railroads, p. 266, sec. 16; Noyes, Intercorporate Relations, sec. 219, particularly p. 316. See also comments of Judge Red-field in his work on Railways discussing the case of Nelson v. R. R., 26 Vt. 721, heretofore cited; 2 Elliott on Railways, sec. 469. It is also worthy of mention that this, too, is the opinion entertained by the author of the
For the reasons given, I concur with Judge Goode in the opinion that under a valid lease of this character, authorized by the Legislature without reservation of liability thereon, the lessor is no' more responsible for the negligent acts of the lessee in which it did not participate and over which it had no control than is the landlord at common law liable under the same circumstances for the negligent acts of his tenant. Entertaining these views, I am of opinion that the very learned trial judge properly ruled in sustaining the motion for a new trial as to the defendant, United Railways Company, and that his ruling should be sustained. The judgment should be affirmed.
Dissenting Opinion
(dissenting). — Suit was begun against the St. Louis Transit Company and the United Railways Company, as joint owners and joint operators of the Eighteenth street line of railroad, in the city of St. Louis. The petition alleged that through the negligence of these two companies in operating one of their cars, on said Eighteenth street line, upon which plaintiff was a passenger, she was injured. The answer was a general denial.
Plaintiff’s evidence shows negligence in the operation of a car, on which she was a passenger, on said line, causing injury to her. It is admitted that the Transit Company alone operated the car. To connect the other defendant with the Transit Company in the operation of the car, or to make it liable for the negligence of the Transit Company, the plaintiff offered in evidence the following contract of lease and showed that the Eigh
“Contract of the Lease between United Railways of St Louis and St. Louis Transit Company:
“This agreement made and entered into between the United Railways Company of St. Louis, hereinafter called ‘United Railways/* a corporation duly organized and existing under the laws of the State of Missouri, party of the first part, and the St. Louis Transit Company, hereinafter called ‘Transit Company/ also a corporation duly organized and existing under the laws of the State of Missouri, party of the second part, witnesseth, that
“Whereas, ‘United Railways’ is the owner of several lines of railway in the city and county of St. Louis, in the State of Missouri, and of certain bonds and stocks more specifically described in a certain deed of trust to the St. Louis Trust Company, bearing date September 20, A. D. 1899, and is willing to lease all of its said lines of railway lying and being situated in the city and county of St. Louis, including all the property and franchises appurtenant thereto, together with all income to be derived from said bonds and stocks to ‘Transit Company’ for the period beginning on the first day of October, A. D. 1899, and ending on the first day of April, A. D. 1939, upon the terms and conditions hereinafter stated; and
“Whereas, Transit Company is desirous of acquiring the said lines of railway including all the property and franchises appurtenant thereto, together with any and all income derived from the ownership of the bonds and stocks now owned by United Railways or which it may hereafter acquire during the term of this lease.
“Now, therefore, this agreement witnesseth, that United Railways for and in consideration of the covenants and agreements hereinafter contained on the part of the Transit Company, to be by it made, kept and pea?*606 formed, has granted, demised and leased, and by these presents does grant, demise and lease, nnto Transit Company, all of the railways now constructed, owned or operated by it, or which may be hereafter constructed, owned or operated by it, and all its rights, title and interest in and to all its property, real, personal and mixed, now held by it, as owner or otherwise, with all franchises of every sort and kind, to it now belonging, or which it may hereafter acquire, as fully as it now holds, or owns, or may acquire the same, together with all income derived from any bonds or stocks now owned by the United Railways, or which m,ay be hereafter acquired by it, provided, always, however, that nothing herein contained shall operate to grant or demise, or be construed to include, the franchise to be a corporation heretofore granted to the said party of the first part, or any other right, privilege or franchise, which is, or may be, necessary to preserve the corporate existence or organization of the party of the first part under its charter, and all the rights, privileges and franchises last aforesaid are hereby expressly reserved and excepted from these presents.
“To have and to hold said demised property, real, personal and mixed, with the franchises unto Transit Company, its successors and assigns, for the full term from the first day of October, A. D. 1899, until the first day of April, A. D. 1939.
“In consideration of the premises United Railways covenants and agrees that Transit Company, its successors and assigns, shall, at all times during the term aforesaid, have full and exclusive power, right and authority to use, manage and operate the said railways of United Railways and shall have the right to fix the tolls thereon, but not at a higher rate than United Railways is authorized so to do; and further, that Transit Company shall have the full, free and exclusive right to charge and collect all the tolls to accrue from the railways*607 of United Railways daring the said term and appropriate the same to its own use, and shall have, use and exercise all the rights, powers and authorities aforesaid, and all other lawful powers and privileges which can belawfully exercised and enjoyed on or about the said demised railways, properties, franchises and premises, as exclusively, fully, amply and entirely as the same might or could have been used by United Railways had this lease and contract not been made. ■
“And in consideration of the premises Transit Company has agreed, and does by these presents agree, to and with United Railways as follows, to-wit:
“1. That it, Transit Company, shall and will during the continuance of this lease, at its own proper cost and expense, and without deduction from the rent herein provided to be paid, maintain, operate, work, use and run, and keep in public use the said demised railways in the same manner as United Railways, as the owner orlessor thereof, is now, or at any time hereafter may be required to do. And Transit Company shall and will, at its own proper cost and expense and without deduction from the rent herein provided to be paid, at all times, during the continuance of this lease, maintain, operate and keep the railways, property and premises hereby demised, and every part of the same, in good repair, working order and condition, and supplied with rolling stock and equipment, so that the business of said demised railway shall be increased and developed. And Transit Company hereby agrees and promises to and with Railways Company, that it, Transit Company, shall and will, at its own proper cost and expense, and without deduction from the rent aforesaid, from time to time, during the term aforesaid, do, or cause to be done, to and upon the said demised premises and railways, any and all repairs and replacements and any and all additions thereon and improvements which may be reasonably required for the purposes aforesaid, and provide*608 thereon such new and additional rolling stock, equipments and other appliances, as shall and may he reasonably required for the purpose aforesaid; and Transit Company shall and will use all reasonable efforts to maintain, develop and increase all the business of the railways hereby demised.
“Transit Company shall and will keep a complete and accurate record of all additions, acquisitions, betterments, and improvements made by it upon said demised premises and property and the amounts of money expended therefor, and shall, from time, to time file the same with Railways Company, and thereupon, when requested by resolution of the board of directors of Transit Company, Railways Company will deliver to Transit Company, or its order, any of its unissued first general mortgage bonds at par on payment for the money so expended, which it would be authorized to use, for the same purpose under the terms and conditions of the mortgage securing said bonds; or, in' payment for said sums of money so expended by Transit Company, Railways Company will deliver at par, when requested, as aforesaid, to Transit Company any of its unissued preferred or common stock.
“And Transit Company will indemnify, save and keep harmless, during the continuance of this lease, United Railways from all costs, charges and expenses arising from the management and operation of said railways, and all matters incident thereto.
“2. That Transit Company shall pay to Railways Company a net annual rental of five dollars per share upon all the preferred stock of Railways Company, now outstanding or which may hereafter be issued by Railways Company with the consent of Transit Company; said rental shall be payable quarterly on the tenth days of January, April, July and October during each and every year hereafter for the full period of this lease, provided, however, that the first quarterly payment shall be*609 made on the tenth day of April, 1900. Payments of the rental herein provided for shall be made at the office of the Transit Company in the city of St. Louis, or at the agency of the Transit Company in the city of New York, either or both, as Transit Company, shall from time to time, determine.
“3. That in addition to the rental provided to be paid by Transit Company in paragraph two of this lease, Transit Company shall pay to the United ’ Railways the further sum of one thousand dollars per annum, for the purpose of defraying the expense of maintaining the corporate existence of the railway and traction companies connected with, or interested in, the properties and franchises herein mentioned, which sums shall be paid semiannually in equal installments at the times and at the place or places hereinabove provided for the payment of the rental.
“4. That in addition to the amounts hereinabove provided to be paid by Transit Company to United Railways in paragraphs two and three hereof, Transit Company hereby assumes and agrees to pay all the floating debts of United Railways when and wherever the same may become due and payable.
“5. That Transit Company shall and will also during the continuance of this lease, pay all taxes and assessments and water rents which may be assessed upon the real estate, personal property, franchises, capital stock, business, rental, income, dividends and indebtedness of United Railways, or any of the lines of railways or property leased or operated by it.
“6. That Transit Company shall and will also pay the interest accrued, and to accrue, as the same becomes respectively due and payable, on all the bonds heretofore issued, and now outstanding, by Railways Company, or any of the subordinate companies whose property and*610 franchises Railway Company has acquired, said bonds being as follows:
“The Missouri Railroad Company five per cent bonds, of date February 27, 1896, due March 1, 1906, seven hundred thousand dollars.
“The Forest Park, Laclede & Fourth Street Railroad Company seven per cent bonds, of date May 1, 1885, due June 1, 1900, ninety-two thousand and one hundred dollars.
“The Lindell Railway Company five per cent bonds, of date August 1, 1891, due August 1, 1911, one million five hundred thousand dollars.
“The Compton Heights, Union Depot & Merchants Terminal Railroad Company six per cent bonds, of date July 1, 1893, due July 1, 1913, one million dollars.
“The Taylor Avenue Railway Company six per cent bonds of date July 1, 1893, and due July 1, 1913, five hundred thousand dollars.
“The Union Depot Railroad Company six per cent bonds, of date October 1,1890, due October 1,1910, seven hundred and ninety-one thousand dollars.
“The Union Depot Railroad six per cent bonds, of date June 1, 1893, due June 1, 1918, two million four hundred and nine thousand dollars.
“The Mound City Railway Company (road subsequently acquired by Union Depot Railway Company) six per cent bonds, of date October 1,1890, due October 1,1910, three hundred thousand dollars.
“The Jefferson Avenue Railroad Company five per cent bonds, of date November 2, 1895, due November 2, 1905, two hundred and seventy-seven thousand dollars.
“The People’s Railway Company (property now owned by St. Louis Traction Company) six per cent bonds, of date May 1, 1882, due May 1, 1902, one hundred and twenty-five thousand dollars.
“The People’s Railway Company (property now owned by St. Louis Traction Company) seven per cent*611 bonds, of date May 1, 1886, dne May 1, 1902, seventy-five thousand dollars.
“The Southern Electric' Railroad Company six per cent bonds, of date May 1, 1884, due May 1, 1904, one hundred and sixty-fonr thousand dollars.
“The Southern Electric Railroad Company six per cent bonds, of date May 6, 1890, due May 1, 1915, three hundred and thirty-six thousand dollars.
“The Southern Electric Railroad Company five per cent bonds, of date August 1, 1896, due August 1, 1916, two hundred thousand dollars.
“The Cass Avenue and Fair Grounds Railway Company five per cent bonds, of date July 1, 1892, due July 1, 1912, one million eight hundred and thirteen thousand dollars.
“The Citizens Railway Company six per cent bonds, of date July 1, 1887, due July 1, 1907, one million five hundred thousand dollars.
“The United Railways Company of St. Louis first general mortgage four per cent bonds, of date September 20, 1899, due July 1, 1934, twenty-three million dollars; and Transit Company shall and will also pay-all interest that shall accrue upon all further issue of said first general mortgage bonds issued by Railways Company, under the terms and conditions of the said mortgage deed of indenture securing the same.
“7. That Transit Company shall and will, at all times, keep the property of Railways Company insured against loss by fire, paying the premiums therefor from its own funds, and will, at the expiration of this lease and contract, yield and deliver up the hereby demised railways and properties and their appurtenances, in the same good order and repair as the same are now in, or may be put in during the hereby demised term (reasonable wear and tear excepted), excepting any property sold in accordance with this agreement and contract.
*612 “8. That Transit Company shall and will during the continuance of this lease apply all net surplus earned by it over and above the six per cent annual dividend upon the $20,000,000 of capital stock which Transit Company is now authorized to issue, or so much thereof as may from time to time be outstanding, to the betterment, improvement, or extension of the property or raiíAvay lines now owned, or Avhich may hereafter be acquired by Railways Company, or to the redemption, payment or retirement of the mortgage indebtedness of Railways Company or of its subordinate companies. In ease Transit Company shall purchase out of said surplus earnings any of the underlying bonds issued by any of the subordinate companies, whose property, franchises or stock has been acquired by Railways Company, Transit Company shall have the same right to use the first general mortgage four per cent bonds, which Railways Company, under its mortgage, is authorized to receive in exchange from said underlying bond's of said subordinate companies, in the same manner and to the same extent as Railways Company would have the right under said mortgage to use the same, the Railways Company shall and will do all things requisite or necessary on its part to be done to carry this provision into full force and effect.
“9. That Transit Company shall and will apply all moneys received by it from Railways Company at the time that this lease goes into effect, save and except what may be necessary to meet current liabilities, including interest accrued upon all mortgage indebtedness, to the improvement of the premises hereby demised and shall make like disposition of all moneys that Transit Company may subsequently receive from Railways Company through, the sale of property that may become useless in the conduct of the business of Railways Company; and Railways Company shall and will turn over to Transit Company all moneys of every character in its pos*613 session, or to which it may be entitled, at the time that this indenture goes into effect, and all other moneys that it may subsequently become possessed of from any source whatever, during the term of this lease.
“10. That it is the purpose and understanding of the parties hereto that these presents shall go into effect immediately upon their execution and delivery, and all the rights and liabilities of the parties hereto, as herein assumed, covenanted for and agreed to, shall, upon due execution and delivery hereof, become fixed and ascertained, United Railways Company turning over all assets of every character to Transit Company, and Transit Company assuming all liabilities of every character of United Railways.
“11. That United Railways shall and will, during the term of this contract, maintain its corporate existence and organization, and at all times, from time to time, during the said term, and when requested by Transit Company, its successors or assigns, shall and will put in force and exercise each and every right, and do each and every corporate act, which it may now, or at any time hereafter, lawfully put in force, or exercise, to enable Transit Company to enjoy and avail itself of every right, franchise and privilege in respect to the use, management, renewal, extension or improvement of the premises herein described, or intended so to be, or the business to be carried on, Transit Company agreeing to indemnify and save harmless United Railways against all expense, loss, damage or liability for such exercise of corporate power or performance of .corporate acts when exercised or done at the request of Transit Company.
“12. That in case Transit Company, its successors or assigns, shall, at any time or times hereafter, during the continuance of this lease, fail, or omit to pay, as the same becomes due and payable, the interest due upon any of the bonded indebtedness recited in section six*614 of this lease, or in case Transit Company, its successors or assigns, shall fail or omit to pay the floating indebtedness hereinbefore mentioned and provided to be paid by Transit Company, its successors or assigns, or any part thereof, when the same shall become due and payable, as hereinbefore specified, then immediately upon the happening of such event, it shall be lawful for United Railways, at its'option, to treat this lease as forfeited; or in case Transit Company, its successors or assigns, shall fail or omit to keep and perform the covenants and agreements herein contained, or any of them, and shall continue in default in respect to the performance of such covenants or agreements for the period of sixty (60) days, then and in either and every such case it shall be lawful for United Railways, its successors or assigns, to treat this lease as forfeited; and in case United Railways shall, for any such cause, decide to treat the lease as forfeited, it shall be lawful for United Railways, its succesors, or assigns, at its own option, to enter at once upon the railways and premises hereinbefore demised, and along and upon every part thereof, and remove all persons therefrom, and from thenceforth the said demised railways and premises, with the equipments and appurtenances thereof, to have, hold, possess and enjoy as of the first or former estate of United Railways in the said demised premises, and upon such entry for non-payment of the interest on the bonded indebtedness as above provided, or for non-payment of the floating indebtedness as herein provided, for non-payment of rent, or breach, or non-performance of any covenant or agreement therein contained to be by Transit Company, its successors or assigns, observed or performed, all the estate, right, title, interest, property, possession, claim and demand whatsoever of Transit Company, its successors or assigns, in or to the addition and improvements above mentioned, and in or to the same demised railways and premises, or either, or any part of them, as well as all the right, title*615 and interest of Transit Company, its successors and assigns, in, under and by virtue of this lease, shall wholly and absolutely cease, terminate and become void, anything hereinbefore contained to the contrary in anywise notwithstanding.
“And in case of the re-entry aforesaid, the floating indebtedness, interest and rent provided herein to be paid, shall, up to and until the date of re-entry, be deemed and taken as due and payable, and the same shall be paid by the Transit Company, its successors and assigns.
“And it is further declared and agreed that such re-entry shall not waive or prejudice any claim or right of Railways Company, its successors or assigns, for damages against Transit Company, its successors or assigns, on account of such non-performance or breach of any of the terms of this lease; and all such claims and rights are hereby expressly preserved to the said Railways Company, its successors or assigns.
“13. That all cars, machinery, tools, appliances, etc., generally called personal property, of every sort and kind belonging to the United Railways Company, or held by it as lessee, shall, when this lease goes into effect, be delivered to Transit Company. The same shall be valued by mutual agreement, and, in case said parties cannot agree as to the value, then by appraisers to be appointed in the manner hereinafter provided. In case of the termination of this lease and contract for any cause, Transit Company shall return the said property as inventoried and appraised, in as good order and condition as when received, or the equivalent thereof, or pay the amount of such valuation to United Railways, with interest from the date of the termination of this lease.
“14. Upon the termination of this lease, for any cause arising from breach of covenant by Transit Company, all such property necessary to the operation of the. lines of United Railways-, as enumerated in section 13 of*616 this agreement, and all betterments to the property that may be made by Transit Company, by which is meant all cars, tools, tracks, rails, roadbeds, wires, poles, motors and appliances that may by Transit Company be put upon the lines and property of United Railways, and necessary to the operation of the said road, shall become the property of United Railways.
“15. That Transit Company shall, at all times, keep at its office in the city of St. Louis, full, true and just accounts of any and all moneys received and business done upon the said demised railways, and of all moneys paid, laid out and expended, all liabilities incurred in connection with the same. The accounts to be kept by Transit Company as above provided, and any and all accounts which shall, and may be kept, in relation to the said demised railways, or the business of the same, shall, at all reasonable hours and times during the continuation of this lease, be open to the inspection and examination of the president of the United Railways and such other person or persons as United Railways shall, from time to time, by resolution of its board of directors, appoint to examine the same.
.“16. That all differences which may arise between the parties hereto at any time hereafter, as to the construction of this agreement, or as to the due performance of any covenant herein contained, or as to the value of ■any property to be allowed by either to the other, shall be conclusively settled by the decision of the three arbitrators, or by a majority of them in case of disagreement; such arbitrators to be chosen in the manner following, to-wit: Railways Company shall select one of the arbitrators and-Transit Company shall select one, and the two thus chosen shall select a third. - In case either party shall fail to select an arbitrator for the period of ten days, after a request in writing delivered to the president, then the arbitrator appointed by the party not in default shall select an arbitrator for the defaulting*617 party, and these two shall proceed as herein provided in case of the selection by each party.
“17. That all the terms and covenants of this lease and agreement shall bind the parties, their respective successors and assigns; it being intended that the benefits of all covenants shall accrue to successors and assigns, as well as to the original parties, and that performance shall be by successors and assigns as well as by original parties.
“18. That Railways Company covenants and agrees from time to time to make any further deed or indenture to carry out these presents that Transit Company may reasonably demand.”
Plaintiff also showed that on January 23, 1904, the day on which plaintiff was injured, the following constituted the board of directors of the Transit Company, to-wit: Murray Carleton, Corwin H. Spencer, Henry S. Priest, James Campbell, Robert McCullough, George L. Edwards, Finis E. Marshall, Eugene Delano, Alonson D. Brown and Louis A. Celia, Murray Carleton being president and James Adkins secretary; and that on the same date the board of directors of the United Railways Company consisted of Murray Carleton, Corwin H. Spencer, Henry S. Priest, James Campbell, Robert McCullough, George L. Edwards, Finis E. Marshall, Eugene Delano, Alonson D. Brown and Edward G. Conrads, Murray Carleton being president, Corwin H. Spencer, vice-president and James A. Adkins, secretary.
It was admitted that since the beginning of the suit, the United Railways Company has taken the leased property the Transit Company was operating under the lease' and has operated it since taking it from said company.
Defendant offered in evidence a number of ordinances of the city of St. Louis, authorizing the construction of a number of street railways in the streets of said city, including the Eighteenth street line, and ordinance No. 19738; in the first paragraph of the first section of
Under the instructions of the court, the jury found for plaintiff and awarded her substantial damages. The United Railways Company filed its separate motion for a new trial and in arrest of judgment. The court sustained its motion for new trial on the sixth, fourteenth and fifteenth grounds assigned in said motion. They are as follows:
“6. The court erred in allowing the case to go to the jury as to this defendant.
“14. The court erred in admitting, over the objection of this defendant, the lease offered in evidence by plaintiff.
“15. The court erred in refusing to give the peremptory instructions in the nature of demurrers, offered by this defendant at the close of plaintiff’s evidence and at the close of all the evidence.”
From the order granting a new trial, plaintiff duly appealed to this court.
By the eighth clause of section 1187, Revised Statutes 1899, street railroad companies of this State are expressly authorized to lease their roads, therefore, the question of power in the United Railways Company (dis
The facts in judgment raised but two questions for decision: the first is, whether or not the contract, denominated a lease, is a lease, in fact, or a mere operating contract under which the Transit Company was operating the United Railways Company’s lines of railroad as the agent of the latter company; second, if the contract is found to be a lease, is the defendant liable for the negligence of the lessee in the operation of cars over the leased lines of railroad, in the absence of a statute declaring it shall be so liable. An analysis of the contract of lease shows that by the granting clause the United Railways Company granted, demised and leased to the Transit Company, for a term of forty years, all the railways the lessor then owned, in the city of St. Louis and the county of St. Louis, all that it might thereafter own or construct or operate and all its right, title and interest in all its property, real, personal or mixed, with all its franchises of every sort, reserving, however, its right to continue to be a corporation. All the powers and rights, in regard to collecting tolls, etc., as were possessed by the lessor, were also granted to the Transit Company, subjected, however, to the same legal restrictions as were imposed on the lessor, the 'Transit Company agreeing to indemnify, save and keep harmless, during the continuance of the lease, the United Railways Company from all costs, charges and expenses arising from the management and operation of said railroads
In Edwards v. Noel, 88 Mo. App. 1. c. 440, this court approvingly quoted the following definition of a lease: “A lease is a contract for the possession and profits of land and tenements, either for life or a certain term of years, or during the pleasure of thé parties.” [Bouvier’s Law Dictionary.] Substantially the same definition of a lease is given in Thomas v. Railroad, 101 U. S. 71, in Heywood v. Fulmer, 18 L. R. A. 491, and in many other cases that might be cited.
In Moore v. Miller, 8 Pa. St. 1. c. 283, it is said: “An agreement that Miller should enter and dig for ore, build houses, etc., he to pay, as a compensation to the
In Walls v. Preston, 25 Calif. 59, it was ruled that an agreement in writing by which one party leased to another, for a specific term, certain land, the second party agreeing to cultivate and plant the land at his own expense and deliver one-sixth of the crops to the first party, was a lease and not a contract for the services of the second party.
In 18 Am. and Eng. Ency. of Law (2 Ed.), sec. 1, p. 597, a lease is defined to be “A contract for the possession and profits of lands and tenements on the one side, and the recompense of rent or property on the other; or, in other words, a conveyance to a person for life, years, or at will, in consideration of a return of rent or other recompense.”
The contract comes within the foregoing definition of a lease and, in terms, conveys what the statute, in effect, declares should constitute a lease of a street railroad, to-Avit, “the right to hold, use and operate the road.” It is contended by the appellant, however, that as the contract shows the United Railways Company agreed to turn over to the Transit Company all its assents, including money on hand and any it might thereafter acquire from any source whatever, with all income derived from any bonds or stocks then owned by it or which it might thereafter acquire, retaining nothing -whatever but the bare right to continue to be a corporation, the Transit Company assuming all liabilities of every character of the United Railways Company and agreeing to indemnify and save harmless the United Railways Company against all expense, loss, damage or liability for the exercise of its corporate powers and franchises and the performance of corporate acts when exercised or done at the request of the Transit Company, and that for betterments and improvements to be made by the Transit Company it should be reimbursed by the bonds of the United Rail
In Missouri Bottlers’ Ass’n v. Fennerty, 81 Mo. App. 1. c. 534, it is said: “The fundamental idea of a partnership inter sese is that it is formed for the purpose of trade or gain in business, and that each has the right to participate in the profits.”
The contract of lease nowhere shows that the United Railways Company was to participate in the profits to accrue from the operation of the leased property and in no sense of the term did the contract create the relation of partners between the two companies.
As agent has been judicially defined to be “one who undertakes to transact some business, or manage some affair for another, by authority and on account of the latter and to render an account of it.” [Wynegar v. State, 157 Ind, 1. c. 579; Metzger v. Huntington, 37 N.
Both corporations had a board of ten directors at the time of the trial. Nine members of the board of directors of the United Railways were also members of the board of directors of the Transit Company, and both companies were served by the same president and the same secretary, but whether or not this or a similar condition existed at the time the lease w7as executed or at the time of the accident is not shown by the evidence, therefore, if any unfavorable inference can be drawn from the fact that both corporations have at the present time a common board of directors and are served by the
2. Having legislative and municipal consent to lease its lines of railroad, is the respondent, nevertheless, liable for damages caused by the negligent operation of cars on the leased lines by its lessee? The authorities on this question are not harmonious.
In Harmon v. Railroad, 28 S. C. 401, the defendant company, Tinder a right given in its charter to “let or farm out,” its road to another company, leased its road. The court held that the lease did not exempt the lessor from responsibility, in the absence of any provision granting such exemption, and that it was liable for cattle negligently killed by a train of cars operated by the lessee. Beach, on the authority of this case, says: “The lessor continues tobe liable for all acts done by the lessee in operating the road, whether the cause of action be ex delicto or ex contractu. .' . ' . And this is so although the charter of the former authorizes it to lease
In Chicago & Grand Trunk Railway Co. v. Hart, 209 Ill. 414, the rule announced in the South Carolina cases was not only approved but was made to extend to an employee of the lessee company who had been injured by its negligence. The argument in support of the rule is thus stated by the learned judge writing the opinion:
“There is a conflict in adjudicated cases on the question whether a lessor railroad company is liable to a servant of the lessee company for injuries occasioned by the negligence of the lessee company in the operation of the leased road. Mr. Elliott, in his work on Railroads (vol. 2, p. 610), says that he inclines to the opinion that the lessor company is not so liable where the injuries to the servant of the lessee company are caused solely by the negligence of the lessee company in operating the road, but this author says that the weight of authority is against the view that he is inclined to adopt. We think this court is committed to the view held by the current of authorities on the question, and, moreover, that, in sound reason and as the better public policy, the doctrine should be maintained that the lessor company shall be required to answer for the consequences of the negligence of the lessee company in the operation of the road, not only to the public, but also to servants of the lessee company who have been injured by actionable negligence of the lessee company.
“The charter of the lessor company empowered it to construct this line of railroad and operate trains thereon. It became its duty to exercise those chartered powers, otherwise they would become lost by non-user. The*627 statute authorized it to discharge that duty through a lessee, and it adopted that means of performing the duty which the State had created it to perform. The statute which authorized it to operate its road by means of a lessee did not, however, purport to relieve it of the obligation to serve the public by operating the road, nor of any of the consequences or liabilities which would attach to it if it operated the road itself. [8 Starr & Cor. Stat. 1896, p. 3247.] Statutory permission to lease its road does not relieve a railroad company from the obligations cast upon it by its charter unless such statute expressly exempts the lessor company therefrom. [Balsley v. St. Louis, Alton and Terre Haute Railroad Co., 119 Ill. 68.] While the duty which rests upon the lessor companies to operate their road is an obligation which they owe to the public, the permission given by the Legislature, as the representative of the public, to perform that duty through lessees, has no effect to absolve such companies from the duty of seeing that the lessee company provides and maintains safe engines and cars, and that the employees of the lessee companies to whom is entrusted the operation of their roads are competent and that they perform the duties devolving upon them with ordinary care and skill, for upon the character and condition of safety of such engines and cars and on the competency and care of such employees depend the lives and' property of the general public.”
In Chicago & Western Indiana Railroad Company v. Doan, 195 Ill. 168, it is said: “The negligence of a lessee of the tracks of a railroad company is imputable to the lessor company.” The same doctrine is stated in Chicago & Erie Railroad Company v. Meech, 163 Ill. 305.
In Aycock v. Railroad, 89 N. C. 321, Smith, C. J., for the court, said: “The cases cited in the well-prepared brief of the plaintiff’s counsel fully sustain the proposition, that the defendant company, leasing the use of its
In Singleton v. Railroad, 70 Ga. 464, the court held:
“The original obligation of the railroad company to the public could not be discharged except by legislative enactment, consenting to and authorizing the lease; with an exemption granted to the lessor company from liability. Legislative consent to the lease is not alone sufficient. There must be a release from the obligations of the company to the public,” and further held that the lessor company was liable for injuries to a passenger, caused by the negligence of the lessee company in putting him off the train. At page 467, the court said:
“It is now a Well-settled principle that a corporation, being the creature of the law, has only the powers conferred upon it by its charter, and that all others not necessarily implied therefrom are withheld. Its grants, whether of power or exemption, are always to be strictly construed, and its obligations are to be strictly performed, whether they may be due to the State or to individuals. It seems also to be well settled that a railroad corporation (and it is with such that we are dealing in this case) cannot, without special authority of statute, alienate its franchise or property acquired under the right of eminent domain, or essential to the performance of its duty to the public, whether by sale, mortgage or lease. [101 U. S. 71; 17 How. 30; 21 How. 441; 4 Biss. 35; 10 Allen 448.]” This case was followed in Hawkins v. Railway, 119 Ga. 159.
“The provisions of the lease, including those which are incorporated by reference, define the duties and obligations of the contracting parties as between themselves, and appear to be sufficient effectually to lund the lessee to indemnify the lessor against loss. But it is nowhere stated that the lessor should be exonerated from responsibility, nor was it possible for the parties to make a contract which should have that effect. The sanction of the Legislature was given to the contract as made by the parties, but added nothing by way of exemption from the primary responsibility of the lessor. The lease did not purport to transfer the lessor’s franchise, or the whole of its property. The lessor was not going out of business entirely, but only leased a portion of its road, with provisions for restoration of the leased property at the end of the term, and for re-entry. It was under a positive duty and obligation to’the public, and the consent of the Legislature to the making of the lease did not imply a discharge from the duty and obligation. Indeed, there is a certain implication that the parties did not contemplate any such discharge, arising from the stipulation for indemnity Muring said term,’ that is, during the whole term of the lease. '
“Where a corporation seeks to escape from the burdens imposed upon it by the Legislature, clear evidence of a legislative assent to such exoneration should be found.”
In Chollette v. Railroad, 4 L. R. A. (Neb.) .135, the court held:
*630 “The original obligation of a railroad, company to the public cannot be discharged by a transfer of its franchises to another company, except by legislative enactment consenting to and authorizing such transfer, with an exemption granted to such company relieving it from liability. Legislative consent to the transfer is not alone sufficient; there must be a release from the obligations of the company to the public.”
In McCabe’s Admx. v. Railroad, 112 Ky. 861, it was held that a provision in the charter of a railroad corporation empowering the corporation to “make contracts with individuals, corporations and other railroad companies for the building, completion and operating of said road or any part thereof,” authorized the corporation to lease its road, but did not relieve it from liability for the negligence of the lessee in the operation of a train whereby a person on the track was struck and killed.
In Heron v. Railway, 68 Minn. 542, it was ruled that exemption from liability on the part of the lessor company for damages for acts of the lessee company is not necessarily implied from a lease made with legislate e authority, giving the lessee company exclusive control and possession of the road.
McCoy v. Railway, 36 Mo. App. 445, cited by appellant, where the lessor company was held liable for damages caused by fire escaping from the engine of the lessee company, is not in point, for the reason the statute authorizing the lease expressly reserved that the lessor should, not escape any of the responsibility it owed to the public. Neither is the case of Anderson v. Railroad, 161. Mo. 411, 61 S. W. 874, cited by appellant, in point, nor any other Missouri case cited by counsel for either side.
As stated in 23 Am. and Eng. Ency. of Law (2 Ed.), p. 784, “there is a sharp conflict of authority as to whether the lessor of a railroad is liable for injuries to personal property caused by the wrongful or negligent
Judge Elliott, in his work on Railroads, after noticing the conflict of authority, says: “Our opinion is that where the lease is executed under the provisions of a statute, in accordance with its requirements, is made to a company having authority to accept it, and is made in good faith and not for the purpose of transferring duties or obligations to an irresponsible party, the lessor company is not liable for injuries caused by the negligence of the lessee and not attributable to a breach of any public duty of the company that executed the lease.” [2 Elliott on Railroads, sec. 469.]
Nellis on Street R. R. Accident Law, p. 488, without referring to the conflict of authority or commenting on any of the cases, says: “Where the railroad company is authorized by law to lease its road to another railroad company, the company leasing its road is not liable for the misconduct in the management, if the persons in charge at the time are not in fact its servants or agents, but are the servants or agents of the lessee.”
Hutchinson on Carriers (2 Ed.), sec. 515b, says: “'An authorized lease, however, not otherwise providing, will absolve the lessor from the torts of the lessee resulting fr&m the negligent operation and handling of its trains and the general management of the leased road over which the lessor has no control,” citing Nugent v. Railroad, 80 Me. 62, and Mahoney v. Railroad, 63 Me. 68, as authority for this rule. But no reference is made in the note by the. author to cases holding to the contrary.
On the authority of the M'aine and New York cases, Pierce says: “The lease of a railroad under due authority of law effects a transfer of rights and liabilities in its management, so that the corporation owning the rail
Wood on Railroads, vol. 3, p. 2056, says: “Where the lease is made under due authority, so that there can be no objection to its validity, some authorities hold that the lessor is relieved from liability for injuries resulting from the negligent operation of the road. But this admits of serious question unless the lease contains specific provision for the lessor’s exemption from liability.” Tn a footnote the author cites some of the conflicting cases but refrains from an expression of individual opinion in regard to the rule.
In Arrowsmith v. Railroad, 57 Fed. 165, most of the authorities are reviewed by Judge Lukton and the conclusion reached is, that where a railroad company leases its line by authority of law, and there is no exemption from future liability, either by express terms of the statute or the terms of the lease, nevertheless the lessor is not liable for injuries to a passenger traveling under a contract with the lessee, when such injuries are caused wholly by the lessee’s negligence in operating the road. This case was followed in Hayes v. Northern Pacific R. R. Co., 74 Fed. Rep. 279.
In Ditchett v. Railroad, 67 N. Y. 425, it was held that a recovery could not be had by a plaintiff, suing as administrator for injuries caused his intestate by falling into a cut made by the defendant for the purpose of its railway, said cut having been made by the lessor and inclosed by a substantial fence before the making of the lease, which fence was permitted to become out of repair by the lessee corporation: The court applied to the case the ordinary rule, that a lessor of premises who parts with them while they are in proper condition is not bound to see that they are thereafter properly cared for
In Caruthers v. Railroad, 54 Pac. (Kan.) 673, it was held: “In the case of a. lease made by one railroad company to another under the statute authorizing leases between railroad companies, the lessor company is not liable to third persons for injuries resulting from the negligent operation of the leased line by the lessee company, where the lease is general in its terms, and confers upon the lessee' company ‘the exclusive right to run and operate its trains of cars over and upon the track of the lessor company,’ without reserving to the latter any right of control over the operation of the road by the former.” •
In Pinkerton v. Pennylvania Traction Co., 44 Atl. (Pa.) 284, it was ruled that where a lease of a street railway is duly authorized by law, the lessee only is liable for negligence in its operation.
In Buckner v. Railroad, 18 South. (Miss.) 449, and in Virginia M. Ry. Co. v. Washington, 10 S. E. (Va.) 927, it was held that the lessor company was not liable for injuries caused by the negligence of the lessee company to its employees in the operation of the road.
The authority of the case of Nelson v. Railroad, 26 Vt. 717, holding the lessor liable for the negligence of the. lessee in the operation of a train over the leased road, is somewhat shaken by Judge Redeield, in a note to paragraph 3 (vol. 1, p. 636) in his work on Railways. The paragraph reads as follows:
“But even where such contracts have been made, by permission of the Legislature, it has been held, in this country, that the company leasing itself does not thereby escape all responsibility to the public; but that the public generally may still look to the original company, as to all its obligations and duties,, which grow out of its relations to the public, and are creáted by charter and*634 the general laws of the State, and. are independent of contract or privity between the party injured and the railway.” In a footnote he refers to the Nelson case and says: “But it is, perhaps, worthy of consideration, in regard to this case, that the effect of the legislative consent to the lease is not made a point in this case.”
The courts, of all the States, except New York, so far as we have been able to see, have held that a railroad company is not absolved from its public or statutory obligations by leasing its road to another company, though authorized by the Legislature to execute the lease, unless the statute authorizing it to lease grants the exemption. A street railroad corporation is a quasi public corporation, enjoying a monopoly and is created for the primary and almost exclusive purpose of carrying passengers, and the acceptance of its charter implies an assumption on its part of an obligation in favor of the public to operate its road until discharged from the obligation by the State, hence its duty to carry passengers is a public one. [State v. Railroad, 29 Conn. 538; 1 Morawetz on Private Corporations, sec. 116.] A distinction has been drawn between the common-law obligation of a railroad company to carry freight and passengers and its statutory obligation to fence its road, build cattle-guards at public highway crossings, prevent sparks from escaping from its engines and setting out fire on the land of adjoining proprietors, and- other like statutory requirements. The statutory duties are denominated public ones, from a performance of which a lessor company is not absolved unless the exemption is granted by the Legislature, while the obligation to carry passengers is generally called a private duty arising out of contract. It seems to me this distinction is more subtle than sound. The duty to fence, etc., is imposed by statute. The obligation to carry passengers is grounded in the common law. Both duties are legal and the company assumes to discharge both by the acceptance of its charter, and I cannot see
The foregoing statement and opinion were written and in the hands of the other members of the court for months before their opinions were prepared, and in vieAV of the fact that they have discussed questions not noticed in my opinions, I deem it proper to add my individual views touching these questions, and proceed to do so.
The argument of my learned associates, to the effect that the Legislature, by using the term “lease,” in sections 1187, Revised Statutes 1899, without restricting or qualifying its ordinary meaning, intended the lease
in Kitchen v. Greenabaum, 61 Mo. 1. c. 115, said: “Courts have never yet ventured to de
In Enders v. Enders, 164 Pa. St. 1. c. 271, the court said: “Public policy, in the administration of the law by the courts, is essentially different from what may be public policy in the view of the Legislature. With the Legislature, it may be, and often is, nothing more than expediency.”
In People v. Hawkins, 51 N. E. 1. c. 260, it is said by the New York Court of Appeals: “The courts have often found it necessary to define its (public policy) judicial meaning, and have held that a State can have no public policy except what is to be found in its Constitution and laws.”
In Swann v. Swann, 21 Fed. 1. c. 301, it is said: “The only authentic and admissible evidence of the public policy of a State on any given subject are its Constitution, laws, and judicial decisions.” A like ruling was made in Hartford Fire Ins. Co. v. Railway, 70 Fed. 201.
Prior to 1899, when section 1187 was passed, on grounds of public policy, street railroad companies were denied the power to lease their roads. By the act of 1899, the Legislature abrogated this public policy and declared a different policy by granting them the potver to lease. To this extent the statute is declaratory of the public policy of the State respecting the right of street railroad companies to lease their property. The statute is absolutely silent as to whether or not a lease shall or shall hot exempt the lessor company from liability for failure to perform the statutory duties required of all street railroad companies, or from liabilty for injuries to a passenger caused by the negligence of the lessee; and I am unable to see upon, what rational ground it can be said, the Legislature by granting the power to lease, also by its silence, declared a public policy that should follow the exercise of the power, when the policv is in nowise connected with or essential to a full and complete ex