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Statement of the Case.

over the same; and also a reasonable compensation for handling its traffic in Omaha; and that the Pacific Company lets the Rock Island Company into the full, joint and equal possession and use of its tracks, stations and appurtenances along the line of the railway of the Republican Valley Company from a point near the northern boundary of the city of Lincoln to the point where its tracks connect with those of the Kansas Company at Beatrice, Nebraska, for the same length of time, for which the Rock Island Company agrees to pay the Pacific Company a certain rental computed on a percentage of the value of the main track, and a proportion of the cost of maintenance; that the Rock Island Company lets the Pacific Company into the full, joint and equal possession and use of its tracks and stations along the lines of the Kansas Company from McPherson to Hutchinson for the same length of time, for a rental to be computed in the same way; that the Rock Island Company lets, leases and demises to the Pacific Company for a like term, commencing October 1, 1890, the right to move and operate over the tracks of the railway it proposes to construct between the cities of South Omaba and Lincoln in the State of Nebraska its freight and passenger trains, engines and cars of all classes for a rental based upon a mileage of the trains; that each of the parties to the contract shall take such steps as will be necessary to continue all the stipulations of the contract in force; that each contract of lease shall attach to that portion of the railway leased during the corporate existence of the owner thereof and all extensions of such existences by renewal or otherwise, and that the contract shall bind the parties thereto, their successors, grantees and assigns; that "schedules of rules and regulations for the movement of engines and trains over the several rail. ways hereby let and demised shall be made for each railway by the duly authorized officers of the lessor and lessee companies by which such railways shall at the time be operated. Such schedules shall, as nearly as may be practicable, accord equality of right, privilege and advantage to trains of the same class operated by the lessor and lessee, and to trains of a superior class operated by either a preference over trains of an

Statement of the Case.

inferior class operated by the other. All rules and regulations shall be reasonable and just to both lessor and lessee, and shall secure to neither any preference or discrimination against the other. They shall be executed and all trains moved under the immediate direction of the superintendent or other officer of the lessor company. If the parties cannot agree upon the adoption of any schedule, rule or regulation, or as to the modification of any one existing, either party may demand a decision of such controversy by referees as hereinafter provided. The referees are hereby invested with power to prescribe schedules, rules and regulations and to modify existing ones ; and in case of wilful disregard by either party of the rights of the other, to award damages to the party injured for injuries sustained because of such wilful act;" and that the referees shall be appointed when needed by the selection of one by each party, and the appointment of a third by the two so chosen, with further provision for their action in cases of disagreement in other particulars.

It was also agreed that the Pacific Company might admit any other company to the joint use and possession of the same tracks and property upon substantially the same terms, provided such additional burden did not interfere with the Rock Island Company. Another provision was as follows: "If for any reason any of the covenants, promises and agreements in any of these articles expressed, and not material to the right of the lessee to use the property leased and demised, shall be adjudged void, such adjudication shall not affect the validity or obligation of any other covenant, promise or agreement which is in itself valid. In the event of a failure in law of any of the covenants, promises and agreements herein contained, such steps shall be taken and contraots made as shall be advised by counsel to carry into effect the purpose and intent herein expressed.”

The Rock Island Company was chartered to exist until 1930, but the charter provided that its existence might “ be renewed from time to time as may be provided by the laws of the States of Illinois and Iowa."

The Rock Island Company, upon the construction of its pro

Statement of the Case.

posed line from South Omaha to Lincoln, obtained by the agreement access to Omaha and South Omaha, and a shorter continuous line from Chicago to Denver by way of Council Bluffs, Lincoln and Beatrice than by its southerly route; while by the use of the proposed road from South Omaha to Lincoln the Pacific Company obtained a line from Omaha to Lincoln and Beatrice, about forty miles shorter than its former route by way of Valley Station; and, by its use of the road from McPherson to Hutchinson, it filled the gap between its line there and obtained a continuous line by way of Salina to the southern boundary of Kansas; and a rental of $45,000 a year, and other compensation as provided.

The contract with the St. Paul Company let it into the joint and equal use of the tracks and bridge between Council Bluffs and South Omaba for the same time and on the same terms named in the contract with the Rock Island Company. The main tracks of the Pacific Company to be used under this contract were two, extending a distance of about seven miles from Council Bluffs across the bridge and through the city of Omaba to South Omaba.

On the seventeenth of May the superintendent of the Pacifio Company addressed a letter to the superintendent of the Rock Island Company, requesting the construction of the connecting track which would enable it to use the Kansas Railway between McPherson and Hutobinson. The Rock Island immediately constructed the track, and the Pacific Company at once began to use it, and continued to use it until January 12, 1891.

The Rock Island proceeded with the construction of its road from South Omaha to a connection with the tracks of the Republican Valley in Lincoln, and secured depots and yards in Omaba and South Omaha, and made an arrangement with the Pacific Company for the construction of freight and passenger stations and a yard on the ground of the Republican Valley road in Lincoln to be used by the Rock Island and Pacific companies jointly. Prior to December 1, 1890, it had expended in such construction between South Omaha and Lincoln over $1,400,000. All this was done in reliance upon the contract, and the railway and buildings erected could be used

Statement of the Case.

for the principal purpose for which they had been constructed only in connection with the tracks of the Union Pacific at and between Council Bluffs and South Omaha and at and between Lincoln and Beatrice. The work at Lincoln had commenced on December 1, when the Pacific Company notified the Vissouri and Burlington Company, whose depot it had theretofore been using, that after December 31 it would abandon such use. This notice was given with the intention of entering into the joint use of the Rock Island depots and tracks.

About June 1, 1890, the St. Paul Company entered upon the use and possession of the bridge and the tracks between the points named in its contracts.

November 26, 1890, a change of management in the Union Pacific took place and opposition to the contracts developed. Early in January, 1891, the Pacific Company forcibly prevented the use by the Rock Island and St. Paul companies of its trucks at Omaha which they were entitled to use under the contracts and absolutely refused to perform the contracts. Thereupon these suits were commenced, one by the Rock Island Company against the Pacific Company and the Republican Valley Company, and the other by the St. Paul Company against the Pacific Company. The Pacific Company set up by way of defence that the use of this road as claimed would deprive it of the means granted to it under the act of Congress to earn moneys with which to maintain its corporate existence, perform the duties of a common carrier and meet the demands of the government; that the officers of the Pacific Company were not so authorized to execute the contracts as to make it competent for them to do so and that they were not so entered into as to bind the company to the performance thereof; that the contracts were unjust and inequitable, and were improvidently made, and ought not to be sanctioned and enforced by a court of equity; that the government directors of the Pacific Company did not authorize or sanction the contracts; that the contracts were ultra vires, and that that company did not have any right, power or authority to enter into them; and that the contracts were not such as a court of equity could or should specifically enforce.

VOL. CLXII-37

Statement of the Case.

In the Rock Island case, the Circuit Court decreed that the contract was "the valid obligation of the parties thereto, and should be performed in good faith by each of them;" that it secured the several rights embraced thereby, all of which were specifically set forth, subject to the following limitations :

“1. That the engines, cars and trains of complainant shall be moved on said tracks under rules and regulations to be agreed upon by and between the parties, or ordained by referees selected and appointed in the manner provided by said contract, and securing equality of right, privilege and advantage to trains of the same class operated by both parties, and to trains of a superior class operated by either a preference over trains of an inferior class operated by the other; which rules and regulations shall be executed and all engines, cars and trains moved under the immediate direction of the superintendent or other officers of the defendant, the Union Pacific Railway Company.

“2. That the Union Pacific Railway Company may admit any other company or companies operating a connecting railway or railways to the joint possession and use of the railway, or any part thereof, at and between Council Bluffs and South Omaha, upon substantially the same terms as those granted to the complainant; and apply the compensation which it may receive from such additional company or companies to its own use, without accounting for the same or any part thereof to the complainant.

“ 3. The complainant shall not do any business as a common carrier of persons or property to or from any stations on said line between said cities of Lincoln and Beatrice.

4. That complainant sball make compensation for such possession and use as provided by said contract.”

The decree then continued :

“III. That the defendants, the Union Pacific Railway Company and the Omaba and Republican Valley Railway Company, are commanded severally to specifically perform, keep and observe the several covenants, promises and agreements in said contract set out, to be by them, either jointly or severally observed, kept or performed; and that said rail.

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