37 Neb. 713 | Neb. | 1893
This action was begun in the district court of Buffalo ■county, Nebraska, by William A. Nash, for himself and on behalf of the taxpayers of the city of Kearney, against the mayor and members of the city council of said city, and the Kearney & Black Hills Railway Company, to enjoin the collection of $75,000 in bonds voted by the city of Kearney in aid of the construction of said railroad. The petition, or rather the amended petition, upon which the case was tried, was very lengthy, alleging, as it did, many irregularities in the manner of submitting the proposition for voting bonds to the Kearney & Black Hills Railway Company, and setting forth other irregularities as to the manner in which the votes were cast and the result ascertained and announced. The chief paragraph however, and the one to which we have devoted special attention, reads as follows:
“7. That the Kearney & Black Hills Railway Company, by its officers and agents, procured the votes at said pretended election to be cast in favor of said bonds by false and fraudulent representations made to the electors of said city concerning the said Kearney & Black Hills Railway Company, in this; that said railway company, by its officers and agents, represented and pretended to the electors, for the purpose of procuring their votes for said proposition, that the said railway was an independent line of road, and a competing line with all other roads, and had no connection with any other line of railroad in its management, operation, or organization, and would be so run aiid operated.
The prayer of the amended petition was, that a temporary order of injunction might be granted restraining the said authorities designated from authorizing the issuance of said bonds and donating the same, or any part thereof, to the Kearney & Black Hills Railway Company, or to any person in its behalf or for its use and benefit, and restraining the Kearney & Black Hills Railway Company from taking or receiving the said bonds or any part thereof from the officers of said city, or from attempting to or negotiating and disposing of said bonds and procuring the same to be.registered, or from in any way interfering or meddling until the further order of the court, and that upon the final hearing said injunction might be made perpetual, and for such other and further relief as was just and equitable.
Issue was duly joined upon the averments of the amended petition, and a trial thereof was had, and decree rendered in favor of the defendants on the 15th day of July, 1891. In this decree is the following finding, to-wit:
“The court further finds that while the officers and agents of the Kearney & Black Hills Railway Company represented to the voters of the city of Kearney that said line of road would be an independent line of road, and that great benefits were likely to accrue to the city of
As we regard this finding of the court as not at all satisfactory as to the averments set out in paragraph 7, we shall examine de novo the issues specially presented by that paragraph, taken in connection with the averments of the amended petition.
John H. Hamilton, vice-president of the Kearney & Black Hills Railway Company, testified that a night or two before the date of the election, February 13, 1890, E. C. Davidson, president of the above railroad company, made a speech at Durley’s hall at Kearney, in which he urged that the bonds be voted as proposed, and said that the Union Pacific Railway Company did not own a dollar of the stock of the Kearney & Black Hills Railway Company; that the Union Pacific was to receive and be paid $205,000 in bonds by the Kearney & Black Hills Railway Company for the right of way and grade up the Wood river valley; that to his knowledge no director or stockholder of the Kearney & Black Hills company was in any way either directly or indirectly connected with the Union Pacific railroad. Mr. Hamilton testified further, that before the election he had stated to the people that the Kearney & Black Hills railroad was not controlled by the Union Pacific Railway Company; that the Kearney & Black Hills
~W. C. Holden testified that at the public meeting held at Durley’s Hall, just before the bonds were voted, Mr. Davidson, the .president of the Kearney & Black Hills Railroad Company, had said that the latter company had a traffic agreement by which all unconsigned freight would be turned over to the Union Pacific at Kearney, and that Mr. Cameron, and possibly Mr. Holcomb, of the Union Pacific, held stock in the Kearney & Black Hills Railroad Company, — witness thought to the amount of $100,000; never heard that it held one-half of said stock. It was insisted by the opposition to the bonds, that the Union Pacific Company was interested in the Kearney & Black Hills Company, and was to hold a controlling interest in the road. This was denied by the other party, who claimed it was not a Union Pacific road.
E. C. Davidson, the president of the Kearney & Black Hills Railway Company, testified that he made a speech to the people of Kearney two nights before the election, at Durley’s Hall. About one hundred people were present. That he stated to these people that he and his associates in the Kearney & Black Hills Railroad Company had an option that permitted them to buy the right of way and
Thomas H. Cornett testified that in the canvass for the bonds it was urged in opposition to voting them that the road proposed to be aided was simply a Union Pacific “stub,” and a scheme of the Union Pacific to secure the bonds to be voted. The friends of the proposition scouted that idea all through the campaign, denied it, and claimed that if the road was built and operated the Union Pacific would not have anything to do with it so far as its ownership or control was concerned. Witness attended only one meeting, but at that it was stated that the headquarters of the proposed road would be at Kearney. In a general way the opponents of the bonds claimed it was a ruse of the Union Pacific, and that the Union Pacific was
B. H. Goulding testified that the opponents of the bonds undertook to fight them down with the idea, or with those statements, that it was a Union Pacific “stub.” Witness had one or two talks with different parties and the company, — one with Mr. Davidson, and once or twice talked with Mr. Hamilton, — and never understood that it was a “stub” road, but understood it was an independent company that had a good traffic arrangement. That was one of the things witness inquired about.
Gen. A. H. O’Connor, whom the evidence shows to have been very active and efficient in urging that the bonds should be voted, testified that in his speeches he did not claim it would be a competing line, for he knew if it came into Kearney with no way to get out it could not be competing; that he said in urging people to vote the bonds he did not believe it was a Union Pacific railroad, and lid did not believe it was; that he was frank in that.
The above quoted evidence was given by witnesses sworn on behalf of the defendants on the trial in the district court.- For the plaintiff in that court the testimony of F. J. Switz, Henry S. Harding, Lyman Brigham, J. C. Bes.wick, James O’Kane, A. H. Bolton, H. H. Seeley, P. D. Henderson, B. G. Henderson, J. E. Shipman, M. Y. Esler, C. F. Yost, J. W. Worsley, F. Y. Robertson, and Lewis Robertson was even more pointed as to the representations being that the proposed line of road would, when built, be entirely independent of the Union Pacific Railway Company, than was the evidence of the defendants’ witnesses. These last named witnesses further testified to the generally favorable effect- of the assertions of the Kearney & Black Hills Railroad Company’s independence of the Union Pacific Railway Company in respect to the bond proposition, and at least three of these witnesses directly
It now becomes material to consider what relations were .sustained or in contemplation between the Union Pacific Railway Company and the Kearney & Black Hills Railway Company at the time the bonds were voted. The ordinance under which the proposition to vote the bonds was submitted required that active work should commence in the construction of the proposed railroad within thirty days from the election adopting the proposition, and from the •time its adoption should be duly declared. Within that space of time a written contract was entered into on March 14, 1890, between the Omaha & Republican Yalley Railroad Company, the Kearney & Black Hills Railway Company, and the Union Pacific Railway Company. This agreement recited that the Republican Yalley Railroad Company had acquired the right of way for a great part of a proposed line of railroad from Kearney to Milldale, and had expended large sums of money in unfinished construction of a railroad thereon, and that an agreement had been entered into between the two first above named companies for the sale by the first to the second named of the said right of way, and for the completion of said line of railroad by the second, and for the working of the said railway •in connection with the railway of the Union Pacific Railway Company upon the terms in said agreement contained.
The agreement further provided that the Republican. Valley Railroad Company should, for the period of fifty years, be entitled to name two members of the board of directors and the secretary of the Kearney & Black Hills Railroad Company. During that period no mortgago could be made for over $20,000 per mile, and the capital stock could not exceed $24,000 per mile, to be completed before the creation of such stock; and in case of an increase of stock, one-half of such increase should be thereupon
Tiie agreement provided for the construction of the line of road contemplated upon certain conditions, which it is needless to quote, except to note that it was required to be of uniform gauge with that of the Union Pacific railway, and that for all purposes of traffic during the existence of the agreement, the Kearney & Black Hills railroad line was required to be worked as one line with the Union Pacific Railway Company’s lines and the lines worked and controlled by the last named company.
The Kearney & Black Hills Railroad Company further agreed that it would never make any discrimination as regards rates or otherwise against the railway system of the Union Pacific Company; and it was agreed between them that the rates for all traffic carried between any places by the railways of the two last named companies should always be as low as the rates for carrying traffic between the same or competitive places by any other railway or railways in competition with the railway systems of said companies, and’that all traffic secured by the Kearney & Black Hills Company to be carried to or by way of any place or places on the railway system of the Union Pacific Railway Company should, so far as the Kearney & Black Hills Company could lawfully determine the same, be carried by the railway system of the Union Pacific Railway Company, and for that purpose be delivered upon its railway system at some point of juncture of the two systems.
It was further provided that the Kearney & Black Hills Railway Company should always use its influence in favor of such traffic being so carried, and during the continuance of the agreement always work in close harmony and connection with the railway system of the Union Pacific Company, and would not at any time make any contract with any other railway company or line for connection or interchange of traffic, except at places on the northwesterly part
The Union Pacific Railway Company on its part bound itself to divert to the Kearney & Black Hills Company such traffic as it lawfully might during the existence of the agreement. It was further provided that the Kearney & Black Hills Company, under such reasonable rules and regulations as the superintendent of the Union Pacific railway should prescribe, might use for its passenger trains the passenger station of the Union Pacific Railway Company at Kearney, and have performed for it such usual service as 'that use rendered necessary, at a price not exceeding $75 per month so long as the Kearney & Black Hills Company’s line should not in length exceed 100 miles.
It was also agreed that the gross receipts arising from the traffic of both roads under the above provisions should be apportioned between them according to the arrangement that took effect on the 1st of January, 1889, for division of joint earnings between the Union Pacific Company and the Omaha & Republican Valley Railroad Company. No evidence was introduced as to the terms of this arrangement, nor was this subject of division in any place in the record referred to, so that we are without any ' data whereby to determine the ratio of division of the pro- ' ceeds of the joint traffic between the two railroad companies under this agreement. It is probable that the traffic agreement frequently spoken of at the meeting of the peo- ' pie of Kearney antecedent to the vote upon the bonds, is embraced in the latter part óf the above described agreement, and the arrangement between the Union Pacific
To a satisfactory understanding of the alleged traffic agreement between the Union Pacific Railway Company .and the Kearney & Black Hills Railroad Company, the arrangement which took effect January 1, 1889, is indispensable. As we are without the means of ascertaining-the terms of the arrangement referred to, we must consider the relation of the parties as shown by extrinsic evidence. We shall first review the evidence as to the construction of the projected railroad line, prefaced, as it must be, with a short history of its origin and development. Next shall be given the evidence as to the practical relations existing between the Union Pacific Railway Company and the Kearney & Black Hills Company, as indicated by the construction given the contract between the parties.
J. H. Hamilton, who at the time the bonds were voted was vice president of the Kearney & Black Hills Railroad Company, testified that at the time of giving his evidence » the constructed railroad of the Kearney & Black Hills Company was sixty-five and seventy-tjiree one-hundredths-miles in length; that when the company was organized t-he: stock subscriptions were for $500,000, but that the stock-was not issued until the money was paid in and the road built. Altogether there was- paid in $320,000, being eighty per cent on $400,000. The railroad company let the contract for building their road to the Wood River Improvement Company, and the Wood River Improvement Company built the railroad for so much stock and so much bonds. The bonds have been declared in the dividend, and at the time of the trial were held by the individual stockholders of the Wood-River Improvement Company. No1 stock was subscribed by the Wood River Improvement-Company. This company got stock for building the railroad. The stock is not issued yet; it will be issued when
The Union Pacific Eailroad Company held by itself and its officers, of the Wood Eiver Improvement Company’s total stock of $400,000, stock to the amount of $210,000. At the time of the trial there was held by parties resident in Kearney, Mr. Tillson, Mr. Downing, and others, $145,000 par value of stock in the Wood Eiver Improvement Company., The bonds issued by the Kearney &
Mr. Hamilton further testified that Mr. Davidson was not acquainted with the details of the agreement made with the Union Pacific Railway Company; that he guessed he •himself was the only one who was, as he transacted all the ■business. Mr. Davidson knew that the Kearney & Black Hills Railroad Company was to run in connection with the Union Pacific so far as freight traffic was concerned. Mr. Hamilton testified that after the election was held and the result announced, before thirty days had expired, the railroad company commenced the work of construction and completed the road October 7, 1890, to Callaway.
As to the present condition of the traffic affairs of the Kearney & Black Hills Railroad Company, its general
It is unnecessary to review the evidence which has already been stated-at considerable length in stating our conclusions as to-the relations which the Kearney & Black Hills Railway Company sustain to the Union Pacific Railway Company. The last named company owns, by reason of the sale of the road bed, 1,429 shares, and through the Wood' River Improvement Company, controls the remainder of the capital stock of the Kearney & Black Hills
It is established satisfactorily that one main inducement to the voting of the bonds.was the representation that the proposed railroad should, when built, be independent of the Union Pacific Railway Company. With equal conclusiveness the evidence shows that this representation has failed; that though in a certain sense something of independence existed at the time of making these representations, yet that immediately, or very soon after the bonds were voted, such independence, by the voluntary act of the donee of the bonds, wholly ceased to exist. In the face of this condition of affairs the donee of the bonds insists that the injunction prohibiting the delivery of the bonds shall bé dissolved, and that this court shall, sanction such delivery.
In Wullenwaber v. Dunigan, 30 Neb., 877, it was held, where certain petitioners were induced to sign a petition calling an election in K. township, Seward county, upon
In the case under consideration the representation was of the existence of a fact of controlling weight with the electors called upon to vote bonds in aid of the enterprise projected. The voter could only know of the nature and object of the project to be assisted by the representations of its promoters. These representations necessarily referred to future conditions, the power to establish which was lodged in the promoters of the scheme. The promise was that the road, when built, should exist and operate in entire independence of the domination of another road already in existence. It might be that this independence was undesirable, useless, and worthless. That proposition however, should have been argued to the voters. It cannot now be urged against them. In an opinion of this court, in Township of Midland v. County Board of Gage County, 37 Neb., 582, filed dui’ing the present term, it has been held that the electors of a township are entitled to stand upon the very letter of their promise, a wholesome rule which should be
The judgment of the district court is reversed, and a decree will be entered in this court conformably to the prayer of appellant’s petition.
Decree accordingly.