Pennsylvania Steel Co. v. New York City Ry. Co., 208 F. 777

Pennsylvania Steel Co. v. New York City Ry. Co.

208 F. 777 | S.D.N.Y. | 1913

LACOMBE, Circuit Judge.

Touching the allowance and disallowance of various items of claim for paving the roadway in proximity to the tracks, I infer from the reply brief that, oí the items disallowed on the theory that the city of New York could not recover for them against the Central Park *784Company, judgment has since been actually entered against the latter company for $7,012.42 in favor of the city of' New York. If that he so, upon a proper recital in the decree, the amount awarded by the master for these items of paving should he appropriately increased. With this possible exception the special master’s findings and conclusions as to these paving claims are confirmed.

Referring to claim touching the old bonds of the Central Park road, $1,-200,000, I have serious doubts as to the soundness of the special master’s conclusions, finding much force in the contention that as between lessor and lessee — leaving the bondholder out of consideration — on December 1,. 1912, when the lessee elected not to have the bonds renewed by the lessor, they constituted a matured obligation then due which the lessee had agreed, to pay. Inasmuch, however, as the determination of the questions presented, will depend probably upon the interpretation of former opinions of the Court of Appeals, it seems best to confirm the findings and conclusions as to this part of the claim without further comment.

[1, 2] As to the counterclaim, the special master’s allowance thereof is not sustained. The case differs materially from that of the Second Avenue, because by the terms of the lease the predecessor of the Metropolitan Company expressly undertook itself to pay the expense of changing the motive power of tlie road, etc. In each lease there is a clause providing that, in certain contingencies, the lessor company is to issue bonds for the amount of expenditures for such purposes. In the one case, however, the lessee did not contract to pay such bonds in case they were issued; in the other, it specifically assumed these very bonds as an obligation, -which it was to provide for and pay. The situation seems to be this: Having determined to make the change, the lessee contracted with railroad builders and supply men for what was necessary to complete the work. When the work was done and the bills were presented, the Metropolitan had a choice of two ways in which to pay them. It could have done so out of any surplus cash it had on hand, or it could have borrowed the money on bonds which it could require the Central Park Company to issue. Each course, no doubt, presented its advantages and disadvantages; the first might reduce a fund which would be useful as working capital, the second would increase the fixed yearly charges to the amount of the interest on such bonds. Whichever course were adopted eventually the Metropolitan would pay the whole expense, if it fulfilled its contract. The work seems to have been fully completed and the bills for it paid by 1899. Manifestly, the Metropolitan elected to pay them out of funds of its own, for it made no request then of the lessor company to issue bonds, nor did it make any such request during all the years that elapsed until receivers were appointed in 1907. If under the terms of the contract, the lessor were ultimately to pay for this change of motive power, it might be that delay in making request for the issue of bonds would not be material;' but, since the lessee was the one to pay these expenditures, the language of that clause of the lease seems to me to contemplate that- if it should need the aid of the lessor’s credit to enable it to pay them it should make its request for such credit within a reasonable time after incurring the obligations. The time when the request to issue bonds is to be complied with is “whenever it shall be deemed by the party of the second part expedient * * * to change the motive power.” If just before receivership, in January, 1907, the Metropolitan, eight years after it had made expenditures which under the contract it was itself to pay for, had requested the Central Park Company to issue these bonds and the request had been refused, I do not think it could have enforced their issue under the terms of the contract.

Except so far as required by this opinion, the exceptions are everruled and the report confirmed.