192 Pa. 596 | Pa. | 1899
Opinion by
While it is true that the defendant company took its charter under the Act of March 22, 1887, P. L. 8, and became incorporated as a company for the construction and operation of motors and cables, or other machinery for supplying motive power to passenger railways, it is also true that under the eighth clause of the 1st section of the act, it had the power “ to lease the property and franchises of passenger railway companies, which they may desire to operate, and to operate said railways.” And by the Act of May 15,1895, P. L. 65, it is provided, “ That from and after the passage of this act it shall be lawful for any traction or motor company, or street passenger railway company, owning, leasing, controlling or operating different lines of street railways of different companies, to operate as a general system so much of said different lines as occupy streets, and from time to time to lay out such new routes or circuits over the whole or any part of such street or streets occupied by the tracks of the different companies which it thus owns, leases, controls or operates, and upon such routes or circuits to run cars for such distances, and in such directions as will in the opinion of the operating company best accommodate public travel.”
The learned referee has found as a fact in his report that the defendant company, in the exercise of its lawful powers under the above cited legislation, became, prior to the execution of the mortgage in question in this case, the lessee of all the railways, railway lines, franchises, and all the property of every nature and character, real and personal, of the Allentown Passenger Railway Company, the Bethlehem and Allentown Street Railway Company, and the Bethlehem and. South Bethlehem Street Railway Company, and had full power to operate all of said street railways, the whole of them being distinctively street railway companies. He found also that all of these companies became merged in the defendant company by leases and transfers expressly authorized by law. He also finds distinctly that, “The effect of these leases and transfers was, that the Rapid Transit Company became the owner, for a period of nine hundred and ninety-nine years from the date thereof, of the whole system of street railways of the said respective street railway companies, and of all their property of every nature and character whatsoever, and thereafter operated the same, and the said
The first question discussed among the numerous assignments of error is the question of the jurisdiction of the court below to entertain the plaintiff’s bill.
There can be no doubt that under the Act of May 5, 1876, P. L. 128, general power is conferred upon the courts of common pleas to entertain bills for the foreclosure of mortgages given by railroad companies. The language is, “Each of the several eourti? of common pleas of this commonwealth shall have and exercise all the powers of a court of chancery in all cases of and for enforcing rights, under mortgages of the property or franchises of any railroad, canal or navigation corporation, where such property or franchises or any part thereof shall be situate or exercisable within the limits of this commonwealth,” etc. By the Act of March 23, 1877, P. L. 32, the same chancery power is conferred upon the courts of common pleas in cases of mortgages of the property or franchises of any coal, iron, steel, lumber or oil, or any mining, manufacturing or transportation company. We are very clearly of opinion that the jurisdiction can be maintained in the present case under both of these acts, for the plain reason that the mortgagor company is both a railroad and a transportation company within the plain meaning of both acts. The attempted distinction between “ railroad ” and “ railway ” companies has long since been exploded, and indeed never received the sanction of this Court in this class of cases. This is very clearly shown in the report of the referee by the citation of numerous authorities.
In the case of Hestonville, etc., Passenger Railroad Co. v. City of Philadelphia, 89 Pa. 210, it was held that city passenger railway companies are included within the term “ railroads ” as used in -the act of May 16, 1861. In Borough of Millvale v. Evergreen Railroad Company, 131 Pa. 1, we held that there
On the question as to what acts were done by the defendant company, under the various leases and transfers of the rights, privileges, franchises and properties of the several street railway companies mentioned, the referee finds that “ it operated the entire system of said street railways as one property, carrying passengers from point to point on the several lines thereof, charging fares for so doing, and it performed all the essential functions of a street railway company, and all of this it had a right to do under its charter, and under the act of assembly under which it was incorporated.” That the defendant was also a transportation company, under the act of 1877, is too plain for argument. We do not think any further discussion of this branch of the case is required, and we dismiss the assignments of error which relate to this subject.
Recurring now to the merits of the case, we find that the defense set up against the proceeding on the bill is an impeachment of the consideration of the mortgage debt. The mortgage was given to secure the payment of 200 bonds of $1,000 each, and was dated March 1, 1894, though not executed and acknowledged until March 8, 1894. There were two series of bonds, each of $100,000 in the aggregate, the first series falling due March 1, 1895, and the second series
Next after this, and during the year 1893, negotiations were had between the Allentown and Lehigh Valley Traction Company, a competing company with the Rapid Transit Company, on the opposite side of the Lehigh river, and between the same terminal points, and the Industrial Improvement Company, a corporation organized under the laws of New Jersey, and which was the company that furnished the money and built most of the roads composing the system owned by the Rapid Transit Company, and which also held the majority of the'stoek of the transit company. The purpose of the negotiations was the purchase by the traction company, from the industrial company, of the stock held by the industrial company in the Rapid Transit Company, thus giving the traction company the control and management of the transit company. In the course of these negotiations a committee of experts was appointed to examine into the financial condition and indebtedness of the transit company. This committee consisted of Mr. G. E. Tripp on behalf of the improvement company, Mr. Davies on behalf of the traction company, and Mr. Fisher, the bookkeeper of the Rapid Transit Company. All of them were experienced and skilled accountants, and were selected for that reason by their respective companies. These gentlemen subsequently reported the total indebtedness of the transit company to be $404,501.73. Of this amount they reported that $340,589.24 was due to the improvement company, of which $308,243.10 was represented by promissory notes given by the Rapid Transit Company to the improvement company, and $32,346.14 was represented to be due on the open accounts between the two companies. The remainder of the entire indebtedness of the transit company, to wit: $404,501.73, was reported to be due other parties and corporations. Copies of tins report were furnished to each one of the three corporations interested.
The next proceeding of interest in the direct connection of events was a meeting of the directors of the Rapid Transit Company which was held on February 21,1894, at which a preamble and resolutions were adopted reciting, (1) the stockholders’
Then follows the general statement showing the whole detail of the extensions, improvements and expenditures “ on the Allentown and Bethlehem Rapid Transit Company’s road since the closing of the construction contracts and the completion of the road in September, 1892.” These are set forth in nineteen items, consisting of the Rittersville Hotel Company investment, double tracking various portions of the several roads of the system, building and rebuilding several other portions, erection of a power plant, an electric light investment, some purchases of property and other smaller matters not necessary to mention.
The third preamble recites that in making said improvements and investments “an indebtedness has been created, represented partly by notes and partly by open accounts, and by cash advanced, now aggregating $404,501.73, as per schedule hereto attached.” The fourth recital declares, “And whereas it is desirable that the said debts may be provided for in some definite form.” These preambles were followed by a resolution in these words : “ That the officers of the company are hereby authorized to issue notes and obligations of the company for the said indebtedness to the persons entitled thereto, and where they have heretofore issued obligations therefor, their action is hereby ratified. Resolved further, that, if it is deemed desirable by the officers of the company, they are hereby authorized to give such security on the property of the company as may seem necessary to provide for, secure and pay the said indebtedness.”
Five days after the passage of the foregoing preamble and resolutions, to wit: on February 26, 1894, a contract was executed between the Industrial Improvement Company and the Allentown and Lehigh Yalley Traction Company, by which the
The referee finds that in pursuance of this contract and in execution of its terms, the improvement company assigned and transferred to the traction company 7,200 shares of the stock of the rapid transit company which the improvement company held or controlled, for which the traction company paid the improvement company $20.00 per share, as provided in the contract, and transferred also $10,000, at par, of the preferred stock of the Electric Light and Power Company. He finds also that the improvement company acquired and purchased the debts and outstanding obligations, other than mortgage bonds of the rapid transit company not already held and owned by the improvement company, amounting to $400,501.73, as specified in the contract, and that the improvement company assigned and transferred to the traction company obligations of the transit company to the amount of $130,000 and all obligations mentioned hi sections 1, 2 and 5 of the sixth clause of the contract, making in all $200,501.73 of the indebtedness of the transit company, and leaving only $200,000 still to be provided for under the terms of the contract, sections 3 and 4. By the terms of those sections these were to be paid, $100,000 thereof on March 1, 1895, and the other $100,000 on September 1,1895, and in article seven of the contract it was provided that the improvement company may cause the rapid transit company to mortgage all its property and franchises as security for the payment of these obligations, under the terms and
As has been said heretofore, the defense against the mortgage set up in the answer is an impeachment of its consideration by an averment that the bonds for $200,000, which the mortgage was given to secure, were not valid obligations, for the reason that the indebtedness of the transit company to the improvement company for which the bonds were given was fictitious and fraudulent. It was also alleged by way of defense that the bonds were certified by the trustee in violation of article ten of the mortgage.
We are clearly of opinion that neither the transit company nor the traction company is competent to make any such defense. The referee has found as a fact, and it is true beyond all question, that every part of the contract between the improvement company, who held all the bonds, and the traction company was fully performed, except the payment of the bonds for $200,000 secured by the mortgage. ' All the securities and all the properties which were to be delivered by the improvement company to the traction company, were in fact delivered
Moreover, the referee has affirmatively and positively found the fundamental and vital fact, that all the notes and obligations given by the transit company to the improvement company for which, in part, the $200,000 of bonds were given, were valid legal obligations of the transit company, given in good faith, for actual indebtedness incurred by the transit company, and in force on February 10,1894. As this is one of the most, if not the most, important findings made by the referee, we give it entire.
Premising that there were outstanding at the date of the contract, February 26, 1894, twenty-five notes of the transit company which were to be surrendered to the Old Colony Trust Company, trustee, and for which bonds were to be issued for $200,000, to be secured by the mortgage in suit, the referee finds fhat “ the said twenty-five notes, numbered from one to twenty-five inclusive, thus surrendered to the Old Colony Trust Company, the trustee in said mortgage, for cancelation, and for which said bonds were certified and delivered to the said Industrial Improvement Company, were all notes of the Allentown and Bethlehem Rapid Transit Company payable to said improvement company, and were all either outstanding on February 10, 1894, or substitutes or renewals of notes then outstanding, or notes issued thereafter against the balance due on the open accounts of the said rapid transit company to the said improvement company on that date. All of the said notes were valid and legal obligations of the said rapid transit company to the said improvement company on said February 10, 1894, for work and materials theretofore done and furnished, and for money theretofore paid and advanced to and for the said rapid transit company by the said improvement company. And the referee further finds that the total amount of the indebtedness bona fide due and owing by the said rapid transit company to the said improvement company on said February 10, 1894, properly and legally chargeable against the said rapid transit company, was $340,589.24, at least, and that the total
As this finding is fatal to the defendant’s contention, and is the chief point of attack in the argument for the appellant, it will be desirable to recur with as much brevity as is practicable to at least some of the considerations which support it. They are all fully and convincingly set forth in the report of the referee, and it will not be necessary to do more than indicate them.
As the finding is one of fact which has been confirmed by the court below it has all the force of the verdict of a jury, and must prevail unless error is clearly shown. The application of this rule is resisted in the appellant’s argument upon the ground that the finding is but a mere inference from facts which are not disputed, and is therefore not binding upon the court which can draw its own inferences. We do not consider this point is well taken, because the finding is a distinct finding upon specific testimony, and depended upon ■ the credibility of witnesses, which also the referee distinctly found. The chief contention of the appellant is that the various accounts of the indebtedness of the defendant were fictitious and fraudulent, because there was no previous contract or agreement that the improvement company was to do this work and make these expenditures for the transit company, but as between them the improvement company “was bound to bear the burden of.” On this subject the referee finds directly against the proposition thus advanced. He thus states the question: “This of course involves the question of the substantial correctness of the indebtedness of the Rapid Transit Company on February 10,1894, as reported by the expert accountants, $404,501.73, of which amount $340,589.24 was reported to be due the improvement company. The balance of said indebtedness due to outside parties is not disputed. If the amount thus reported to be due the improvement company was a valid indebtedness of the Rapid Transit Company then it follows that the twenty-five notes surrendered by the improvement company to the trustee for cancelation, at the time the bonds were certified and issued, were valid obligations, and the validity of the bonds and the mortgage in suit must be sustained.”
It will thus be seen that the observations heretofore made fully sustain the proposition that this defendant, having asserted to its creditor, the improvement company, in different and conclusive methods, the entire validity of the bonds secured by the
But in the second place it is also established by the report of the referee in the matters heretofore considered that upon the merits of the appellant’s contentions the facts are determined against them. It is not necessary to repeat either the findings or the testimony which supports them. There is in our opinion no ground for the contention that there was any falsehood, fraud or deceit in the handling of the accounts out of which the obligations in suit arose, and therefore there is no support for the proposition that there was no valid consideration for the mortgage bonds in question. While these conclusions fully dispose of the appellant’s contentions, there is another proposition which is, if possible, still more fatal to the appellants’ claim. It is this. The real defendant actively engaged in this case is the Allentown and Lehigh Valley Traction Company. It is that company which is seeking to escape the payment of the $200,000 of bonds secured by the mortgage in suit. It is that company which became the purchaser of all the stocks, bonds, properties, rights and franchises held by the transit company, which included all those of the subordinate companies, and it is that company which, having become clothed with all the rights, powers, franchises and properties, including the equity of redemption of the mortgage in suit, under and by force of its contracts of purchase, both with the improvement company on February 26, 1894, and with the transit company on December 31,1894, now seeks to evade the payment of $200,000 of the purchase money, the whole of which it especially agreed to pay by both of the contracts referred to. Both of these contracts have been heretofore stated and discussed, and no further reference to them is now needed than to say that, by the third and fourth clauses of article six of the contract with the improvement company the traction company expressly agreed to pay the very $200,000 of obligations for which the bonds for the same amount were given. And by the seventh clause of the agreement between the improvement company and the traction company dated December 31,1894, the traction company agrees and covenants thatit,the said traction company, will assume andpayallthe debt of the transit company including both the mortgages for $500,000
All of our own decisions are to the same effect. A very recent one, Blood v. Crew Levick Co., 177 Pa. 606, decides that when a grantor conveys land by his deed upon terms and conditions stated therein, the grantee by accepting the deed consents to its conditions, and he is bound by them as fully as he could have bound himself by signing and sealing the covenants and conditions contained in the deed, and they may be enforced by the persons in whose behalf they are made -with substantially the same effect. A grantee of land who accepts a deed made “under and subject to the lien ” of a mortgage given by his grantor, and “ subject to the payment of the mortgage ” is a purchaser as between himself and his grantor of the entire estate, and is liable to pay the mortgage as part of the purchase money due from him. In Morris v. Oakford, 9 Pa. 499, Bell, J., delivering the opinion, said: “ By his covenants to pay the amount of
These decisions might be multiplied, but it is not necessary, as there can be no question as to the law upon this subject.
We find no error in the rulings of the referee on the subject of the production of books and papers. The reasons for his action in these matters are fully set forth in his report, and they are undoubtedly correct. It is not necessary to repeat them here.
The same must be said as to his action on the subject of fees, commission, costs and expenses. They are all provided for in the terms of the mortgage, and the referee’s rulings are strictly within those terms. Upon the whole case we are clearly of opinion that the report of the referee is a wise, just and entirely
The assignments of error are all dismissed.
The decree of the court below is affirmed and the appeal is dismissed at the cost of the appellant.