59 F. 813 | 8th Cir. | 1894
after stating the case as above, delivered the opinion of the court.
The chief question to be considered on this appeal is whether the United States is entitled to have the contract of July 1, 1881, between the Union Pacific Railway Company and the Western Union Telegraph Company, canceled and annulled, either because it was originally illegal and beyond the jiower of the Union Pacific Railway Company, or because its provisions are now repugnant to the act of August 7, 1888, (25 Stat. 382.) Subordinate to this general inquiry are the questions whether the contract of October 1, 1866, between the Western Union Telegraph Company and the Kansas Pacific Railway Company, is invalid, and some questions pertaining to the scope, purpose, and effect of the act of August 7, 1888. It. is claimed by the government, and is not denied by the appellants, that the Pacific Railroad acts of July 1, 1862, and July 2, 1864, imposed on the various constituent railroad companies who now compose the Union Pacific Railway Company the duty, among others, of constructing and maintaining on their several rights of way a line of telegraph for governmental, commercial, and other purposes. It was held both by Mr. Justice Brewer in this case, and by Mr. Justice Miller and Judge McCrary in other cases where the same question was involved, that the obligation thus imposed on the several railroad companies to construct and maintain telegraph lines could not be lawfully avoided by leasing their lines of telegraph, after their construction, to some other corporation, to be by it maintained and operated. Vide 50 Fed. 32; W. U. Tel. Co. v. Union Pac. Ry. Co., 3 Fed. 423, 721, 725; Atlantic & P. Tel. Co. v. Union Pac. Ry. Co., 1 Fed. 745, 749. This latter proposition does not seem to he controverted by the appellants, or either of them; therefore, it must be taken as conceded that the lease granted by the Union Pacific Railroad Company to the Atlantic & Pacific Tele
Before stating the provisions of that contract it will be well to describe the situation as it existed when the same was entered into. At that time the Western Union Telegraph Company, as the successor of the Overland, the Pacific, and the California State Telegraph Companies, was lawfully in possession of, and was the owner of a line of telegraph upon the railroad right of way between Omaha and Ogden. The Western Union Telegraph Company had in fact furnished the means to build, and had built, that line of telegraph across the plains, and had caused it to be moved upon the railroad right of w.ay, through the agency of the three telegraph companies last named. On July 1,1881, the Western Union Telegraph Company had also succeeded to all the rights of the Atlantic & Pacific Telegraph Company, which was the lessee of the Union Pacific’s telegraph line under the lease of September 1, 1869. In a suit which had theretofore arisen between the Atlantic & Pacific Telegraph Company and the Union Pacific Railway Company it had been decided that the last-mentioned lease was invalid; but, as it appeared in the course of the suit that the railway company had received for such lease 17,800 shares of the telegraph company’s stock, from which it had realized from four to six hundred thousand dollars, the court had enjoined the railway company from taking possession of the telegraph line then in the possession of the Atlantic & Pacific Telegraph Company under the invalid lease until there had been an accounting, and until the consideration for the lease had been restored. Vide 1 Fed. 745, 752. This injunction was in full force on July 1, 1881. The railway company did not have possession of the telegraph line between Council Bluffs and Ogden, and could not acquire possession of that line except on the condition last indicated. Prior to July 1, 1881, litigation had also arisen with respect to the telegraph line on the, right of way of the Kansas Pacific Railway Company. The Union Pacific Railway Company, after the con
In this posture of affairs the contract of July 1, 1881, was executed. As the contract is lengthy, we shall only undertake to state its material, provisions, and according to their legal effect,' rather than in the language of the parties. It recites, in the first instance, that it is entered into “for the purpose of providing telegraphic facilities for the parties thereto, and maintaining and operating the lines of telegraph along the Union Pacific Railway in the most economical manner, in the interest of both parties, and for the purpose of fulfilling the obligations of the railway company to pjnitecl States and the public in respect to the telegraphic service required by the act of congress of July 1, 1862, and the amendments thereto.” The parties then agreed, in substance, as follows: That all existing suits (being those heretofore mentioned) should he dismissed, and that the contract should operate as a release and discharge of all claims, debts, and liabilities arising and accruing under pre-existing contracts between the parties, which were then in litigation; that the railway company should assure to the telegraph company, as far as it legally could do so, the exclusive right of way along its railroad, and any extensions and branches thereof, for the construction and maintenance of lines of telegraph, and that the railway company would not transport men and material for the construction of a line or lines of telegraph to be operated in competition with the Western Union Telegraph Company, except at its regular local rates, nor furnish such competing lines facilities for construction that it could lawfully withhold, nor stop its trains or distribute material at other than regular stations; that no employe of the railway company should he employed by, or have any connection with, any other telegraph company than the Western Union Company; and that the latter company should have the exclusive right, as against any other telegraph company, to occupy and connect with the railway company’s depots or station houses for commercial telegraph purposes. Concerning the mode of keeping up, maintaining, and renewing the existing lines of telegraph then on the railroad right of way, the contract contained the following stipulations: That the railway company should, at its own expense, furnish all the labor in that behalf required, except a foreman; that the telegraph company should provide a foreman, skilled in the work of construction and repair, to direct and supervise such work; and that each party should pay one-half the cost of poles, wire, insulator's, tools, and other materials used for the
It is claimed by the United States (and this contention seems to have prevailed in the circuit court) that this contract was originally beyond the power of the Union Pacific Railway Company, and therefore invalid, because the railway company thereby transferred or surrendered its telegraphic franchise to the Western Union Telegraph Conijiany, and disabled itself to discharge its obligations to the government and the public; secondly, that the contract is in restraint of trade and against public policy, and for that reason is illegal and void,
With reference to this contention it should he remarked, at the outset, that when the contract of 1881 was executed, and long prior thereto, the Western Union Telegraph Company was lawfully in possession of a line of telegraph on the railroad right of way, and was operating the same for commercial and other purposes. It was there with the express sanction of congress under the nineteenth seciion of the act of July 1, 38(52, and neither acquired nor claims to hare acquired its right to operate its existing wires under the said contract. Looking at the provisions of the agreement, it is also noteworthy that it imposes no limitations or restrictions upon the right of the railway company to operate a telegraph for commercial, governmental, and other purposes. It has wires which are devoted to its exclusive use, telegraphic offices at convenient points along its road, operators to work its wires, who are expressly required to send over the same all such messages of a governmental or commercial character as are directed by the senders to be°so sent, and the right to string such additional wires as may at any time he deemed essential or convenient to meet the demands made upon it for telegraphic service. It surely cannot he maintained that in addition to the foregoing facilities the railway company must maintain a separate line of poles on its right of way and at its own expense, for when congress authorized other telegraph companies to go upon this right of way, as it did by the act of July .1, 1862, and
Perhaps the strongest evidence of an intent on the part of the Union Pacific Railway Company to part with its telegraphic franchise is to be found in those provisions of the contract- whereby the telegraph company gained access to the railway company’s station houses with some of its wires, and the right to avail itself of the services of employes of the railway company; but on a careful scrutiny it will be seen that the most that can be alleged against these provisions is that they afforded to the telegraph company some facilities for competing with the railway company in the matter of transacting a commercial business, which it would not have enjoyed if it had been compelled to maintain independent offices at all of such points, and to man them with its own operators. These provisions cannot be said to have amounted to a transfer or surrender of the telegraphic franchise, because, notwithstanding these provisions, the railway company still retained its right and capacity to do a commercial business. Moreover, it does not occur to us that there are any provisions in the Pacific Railroad acts which made it the duty of the railway company to withhold from any telegraph company that was authorized to occupy its right of way any facility for the convenient and economical operation of its line, merely because it would enable such company to compete more successfully with the railway company in the transaction of a telegraph business. Congress had offered to relieve the railway company of the entire burden of constructing and maintaining a telegraph line, if it would arrange with one of these telegraph companies to move its line upon the railroad right of way. "When those acts were passed, congress was desirous, above all things, to have a telegraph line constructed across the plains that would be able to render cheap, prompt, and efficient service both to the government and the public. This purpose is manifest throughout all of the legislation of congress, which antedates the contract of 1881, and for that reason we cannot hold the provisions of the contract now in question to be unlawful merely because they gave the telegraph company better opportunities for successful competition. We think it obvious that they
Much stress, however, is laid on the fact that under the operation of the contract the great bulk of the commercial telegraph business over the lines in question is done by the Western Union Company. Attention is also directed to the circumstance that the wires devoted to the use of the railway company are about sufficient to do its ordinary railroad business, and are wholly insufficient to do a considerable portion of the commercial business. With reference to the last of these suggestions it is sufficient to say that the record does not disclose that the railway company has ever failed or refused to transmit over its own wires a single governmental or commercial message which was tendered it to be so sent. The wires which it operates seem to be adequate for its patronage, and’ under no possible construction of its charter can it be held bound to furnish more wires than are needed to meet the demands made upon it for telegraphic service. But it is said that its loss of patronage is due to the contract with the telegraph company, and that what has actually occurred under the operation of that contract is persuasive evidence of what w'as intended to happen, and that it should control in determining the purpose of the parties thereto and the true interpretation of the agreement. We entertain no doubt that the bulk of the commercial business, as claimed, is in the hands of the Western Union Telegraph Company; that fact is abundantly shown by the record, and is practically admitted by the appellants. But we are unable to concedí' that the fact last mentioned is mainly due to the operation of the contract of 1881, or that it should be accepted as a safe test by which to determine the legal effect of that agreement. It is not a necessary inference that the failure of the railway company to secure a fair share of the commercial telegraph business is due to the existence of the contract; much less does it follow that, because the Western Union Telegraph Company now transacts the great bulk of the commercial telegraph business, the railway company has therefore parted with its telegraphic franchise, and disabled itself from fulfilling its public duties. The telegraph company is engaged exclusively in operating lines of telegraph for commercial and other purposes. Its wires ramify throughout the United Stains, and -reach every import,ant city and hamlet, while the railway company is limited to the lines erected on its right of way, and must depend upon connecting lines for the transmission of all dispatches that are not pu'rely local. In view of this fact it becomes highly probable that, under the operation of natural laws of trade, the same disparity in the business of (be two companies would in any event exist, because of the superior facilities of the telegraph company for reaching distant points, and forwarding messages intrusted to it with promptness and accuracy. At all events, we cannot regard the existing disparity in the amount of commercial business done by the respective companies as of much importance in deciding whether the contract was be
The result of our deliberations on this branch of the case has been that we are unable to declare the contract of 1881 to be beyond the power of the railway company because it divests the company of its telegraphic franchise, or because it renders it powerless to discharge its public duties. In our judgment, the Union Pacific Bailway Company has now the same absolute power to operate a telegraph line for commercial and other purposes that it ever had. Under the contract in question it secured at once the absolute control of several lines of wire, with authority to use them for all purposes, and the right to string any number of additional wires, and to use them as it saw fit. By the provisions of the agreement it also avoided a litigation of vast proportions and great intricacy in which it was then involved, touching its right to the lines of telegraph on its right of way, and at the same time it was relieved of its liability to account for large sums of money which it had received from the Atlantic & Pacific Telegraph Company under the invalid lease of September 1, 1869. Prom the standpoint of the railway company it was confessedly a beneficial business arrangement, by means of which it has realized great advantages in which the government has participated; and the record before this court fails to disclose that’ the general public have been prejudiced by the manner in which the lines of telegraph in question have been maintained and operated under the provisions of the agreement. We would not be understood as intimating that the considerations last mentioned should have any weight if the contract was in fact con'trary to law; but they furnish an adequate, reason why it should not be set aside and canceled, unless it appears that it was clearly beyond the power of the railway company to enter into such an arrangement.
The other objection to the contract of 1881, which has been heretofore mentioned, is based on- those provisions of the agreement whereby the Western Union Telegraph Company attempted to obtain certain exclusive rights and privileges from the Union Pacific Bail-way Company, and to prevent other telegraph companies from coming upon the railroad right of way. These stipulations are said to have rendered the contract voidable on grounds of public policy. When the contract was executed, the railway company appears to have entertained doubts of its power “to assure to' the telegraph company the exclusive right of way along and upon its line of road;” hence it agreed' to grant such exclusive right only to the extent that it might legally do so. The further provision in the contract relative to withholding facilities for the construction of competing
Passing, now, to the contract of October 1, 1866, between the Kansas Pacific Railway Company and the Western Union Telegraph 'Company, it should be observed, that the necessity of noticing that contract, which has been superseded, for the time being, by the contract of 1881, grows out of the fact that it was annulled by the decree of the circuit court, whereas the appellants claim that it was lawfully entered into under the fourth section of the act of July 2, 1861, and operated to relieve the railway company of its obligation to maintain a telegraph line along the railroad right of way between Kansas City and Denver. Hence, it becomes an important inquiry whether that contract was rightfully annulled. The act of July 2, 1861, last referred to, is entitled “An act for increased facilities of telegraphic communication between the Atlantic and Pacific states and the territory of Idaho.” 13 Stat. 373. Its first section declared “that the United States Telegraph Company and their associates, are hereby authorized to erect a line or lines of magnetic telegraph between the Missouri river and the city of San Francisco, * * * on such route as they may select, to connect with the lines of the said United States Telegraph Company now constructed and being constructed through the states of the Union.” By the same section the company was given the right to use unoccupied land of the United States for right of way, materials, station houses, etc. The second section granted said company the right to erect a line of telegraph from Ft.' Hall to Portland, Or., via San Francisco, and from Ft. Hall to Bannock and Virginia City. The third section granted to the company the right to send dispatches over any line then or thereafter built by authority of congress, to connect with any lines erected by the Russian or English governments. The fourth and last section was as follows:
“Sec. 4. Tlie several railroad companies authorized by act of congress, July one, eighteen hundred and sixty-two, are authorized to enter into arrangements with the United States Telegraph Company so that the line of telegraph between the Missouri river and San Francisco may be made upon and along the line of said railroad and branches as fast as said roads and branches are built, and if said arrangements be entered into, and the transfer of said telegraph line be made in accordance therewith to the line of said railroad and branches, such transfer shall, for all purposes of the act referred to, be held and considered a fulfillment on the part of said, railroad companies of the provision of the act in regard to the construction of a telegraph line; and, in case of disagreement, said telegraph company are authorized to remove their line of telegraph along and upon the line of railroad therein contemplated, without prejudice to the rights of said railroad companies.”
How, tile contract of October 1, 1866, provided, in substance, for the erection of a line of telegraph on the railroad right of way from Lawrence, Kan., to Denver, Colo., at the joint expense of the telegraph company and the railway company, and for their joint use, but the railway company was denied the right to transact a commercial telegraph business over that line, Before this contract was entered into, a small portion of the line between Lawrence and Denver had been wholly or partially constructed by the United States
On the trial of the present case Mr. Justice Brewer held, in effect, that the testimony showed that the United States Telegraph Company and the Western Union Telegraph Company had become lawfully consolidated under the laws of New York, prior to October 1, 1866, and that the latter company was the legal successor of the former. He was of the opinion, however, that the privilege conferred upon the United States Telegraph Company by the fourth section of the act of July 2, 3864, supra, was so strictly personal that it was lost by the consolidation proceedings, and did uot pass to the consolidated company. In all other respects the circuit: court appears to hare fully concurred in the points ruled by Mr. Justice Miller, and in similar rulings made by Judge McCrary in the same case. Vide 3 Fed. 423, 425. The question that we have to decide, therefore, with respect to the contract of 1866, (and, in view of former decisions, the only question that we deem it necessary to consider,) is whether the privilege granted to the
In opposition to the views last expressed, it is urged by the government that when the act of July 2, 1804-, was passed, congress knew that a line of telegraph bad already been constructed across the plains, by other telegraph companies, about on the proposed route of the main line of the Union Pacific Railroad; that by the last-named act it intended to aid in the construction of an independent and competing line of telegraph; and that this purpose will be defeated unless it is held that the privilege granted to the United States Telegraph Company to enter into an arrangement with the Kansas Pacific Railway Company was strictly a personal privilege accorded to the the former company. It is to be observed, however, that the act now under consideration says nothing about competing lines of telegraph, but, is entitled “An act for increased facilities of telegraphic communication between tin» Atlantic and Pacific States. * * Such additional facilities would be obtained by the construction of a new line on a new route, and congress undoubtedly contemplated that such a line would be built, and such a line was in fact constructed. We fail to sec;, therefore, how the purpose which congress saw fit to express in the title of the act will be defeated by conceding that the privilege mentioned in the fourth section of the act was not strictly personal, but was a grant to the United States Telegraph Company “and its associates.” It might happen, of course, that by a process of consolidation the two companies would fall under one management; hut; even in that event the two line's of telegraph, if erected, would afford increased facilities for communication. Moreover, if tlx; idea of exciting competition by the construction of a second line of telegraph across the continent was at that time entertained by congress, (which we very much doubt,) it was evidently well known to congress that a practical identity of interest and control could lx» effectually secured by other means than by a consolidation of property and franchises, and it, took no precautions to prevent, such a merger. We must conclude, therefore, that the considerations last mentioned are entitled to little weight in determining whether the privilege in question became vested in the Western Union Telegraph Company. An attempt is also made, in behalf of (he government, to deduce evidence, from certain reports made by the Kansas Pacific Railway Company to tho United Hiatos, that the lin'e of telegraph along that, railway, from the Missouri river to Denver, was in fact built by the railway company at its own expense, in fulfillment of its charier obligations; but an obvious answer to this suggestion is that, no statement made by the officers of the railway company can prejudice the rights of the telegraph company. For oilier reasons, however, the suggestion is without merit.. We have no doubt, under the testimony, that the line of telegraph along the Kansas Pacific-Railway was built, substantially in accordance wilh the arrangement embodied in the contract Of October 1, 1800. To enable the railway company to obtain its subsidy it was no doubt required
This opinion has necessarily been extended to such length in the discussion of the foregoing questions that we have felt compelled to dispose of the remaining questions as briefly as possible, although we have considered them attentively, and with a due appreciation of their importance. The fourth section of the act of August 7, 3 888, under which this bill purports to have been filed, provides, in effect, “that in order to secure and preserve to the United States the full value and benefit of its liens upon all the telegraph lines * * * constructed by and lawfully belonging to said.railroad and telegraph companies referred to in the first section of this act [being those mentioned in the Pacific Railroad acts] and to have the same possessed, used and operated, in conformity, with the provisions of this act and of the several acts to which this act is supplementary — it is * * made the duty of the attorney general * * by proper proceedings, to prevent any unlawful interference with the rights and equities of the United States * * * to have legally ascertained and * * * adjudicated all alleged rights of all persons and corporations * * * claiming * * * any control or interest í:' * in any telegraph lines or property, or exclusive rights of way upon the lands of said railroad companies, * * * and to have all contracts and provisions of contracts set; aside, * * * which have been unlawfully and beyond then' powers entered into by said railroad or telegraph companies. * * *» yye must presume in this case, as in all others, that, when congress authorizes the attorney general to take any legal proceedings to enforce the rights of the United States, it is intended, unless the contrary idea is clearly expressed, that rights of a purely legal nature, for the enforcement of which there is an- adequate legal remedy, shall be so enforced by a proceeding at law rather
The decree to be entered by the circuit court pursuant to the mandate of this court should order, adjudge, and decree:
First. That the agreement named in the bill of complaint, entered into on the 1st day of October; 1866, by and between the