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Dissenting Opinion: Shiras, J.
or bad faith in the parties seeking its enforcement be shown; or duress or fraud appear; or if it be unjust or inequitable; or if the decree would produce results so inequitable as to be incompatible with the proper exercise of the jurisdiction. But here it appears that the contracts were solicited by the Pacific Company; were fairly made on terms substantially proposed by itself; and that their violation by that company was unjustifiable. The contracts were approved promptly and with unanimity; the consideration appears to have been fair and reasonable; the St. Paul and Rock Island companies abandoned their previous enterprise in reliance on them; they entered upon the performance of the contracts, and large sums of money were expended in carrying them out. The conduct of the Pacific Company was not such as to commend itself to a court of equity, and we can do no better than to quote from the opinion of Mr. Justice Brewer, in deciding the case on circuit: “It is to the higher interest of all, corporations and publio alike, that it be understood that there is a binding force in all contract obligations; that no change of interest or change of management can disturb their sanctity or break their force; but that the law which gives to corporations their rights, their capacities for large accumulations, and all their faculties, is potent to hold them to all their obligations, and so make right and justice the measure of all corporate as well as individual action."
Decrees affirmed. NR. JUSTICE SHIRAS dissenting.
To make arrangements with other railroad companies whereby they are permitted to make use of the Missouri River bridge and of the tracks and station-houses within the cities of Omaba and South Omaha may be fairly held to be within the range of the general authority of the Union Pacific Railway Company. Such contracts are not unusual, and are calcalated to promote the convenience of the public and the welfare of the railroad companies which enter into them. And if the contracts in question presented such a case, I should have no difficulty in affirming their validity. But, as I read
Dissenting Opinion: Shiras, J.
them, they go far beyond such supposed arrangements, and contain covenants and stipulations which bring them within the condemnation of our previous decisions.
What is granted to the Rock Island Railway Company and to the St. Paul Railway Company is not a nere right or privilege, for a reasonable compensation, and subject to the rules and regulations of the Union Pacific, to run their trains over the bridge and into and out of the city stations, but “the full, equal and joint possession and use of the main and passing tracks” belonging to the lessor company, and extending from Council Bluffs on the east side of the Missouri River to the town of South Omaba, a distance of -- miles. Nor is the power of control and management reserved to the Union Pacific Railway Company. The words of the contract, in that particular, are as follows:
"Schedules of rules and regulations for the movement of engines and trains over the several railways 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 tiine be operated. Such schedules sball, 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 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, rules or regulation, or as to the modification of any one existing, either party may demand a decision of such controversy by referees as hereinafter directed. 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.”
The legal effect of these contracts is to create a joint ownership, for 999 years, of an important portion of the Union Pacific's railroad and appurtenances, "a full, equal and joint
Dissenting Opinion : Shiras, J.
possession of its tracks," and a subjection to rules and regulations prescribed by the duly authorized officers of the lessor and lessee companies, and, in case of disagreement, subjection to the decision of referees, mutually appointed, invested with power to prescribe schedules, rules and regulations, and to modify existing ones.
These contracts, in my opinion, are plainly void within the principles of the following cases : Thomas v. Railroad Company, 101 U. 8. 71; Branch v. Jessup, 106 U. S. 468; Pennsylvania Railroad v. St. Louis &c. Railroad, 118 U. S. 290; Oregon Railway v. Oregonian Railway, 130 U. S. 1; Central Transportation Co. v. Pullman's Car Co., 139 U. S. 24. The doctrine of those cases may be sufficiently expressed by the following paragraph taken from the opinion of Mr. Justice Miller in the case of Pennsylvania Railroad v. St. Louis &c. Railroad, 118 U.S. 309 :
“We think it may be stated, as the just result of these cases and on sound principle, that, unless specially authorized by its charter, or aided by some other legislative action, a railroad company cannot, by lease or any other contract, turn over to another company, for a long period of time, its road and all its appartenances, the use of its franchises, and the exercise of its powers, nor can any other railroad company without similar authority make a contract to receive and operate such road, franchises, and property of the first corporation, and that such a contract is not among the ordinary powers of a railroad company, and is not to be presumed from the usual grant of powers in a railroad charter.”
To which may be added the following observations of Mr. Justice Gray in the very recent case of Central Transporta tion Co. v. Pullman': Car Co., 139 U.S. 48:
“The clear result of these decisions may be summed up thus: The charter of a corporation, read in the light of any general laws which are applicable, is the measure of its powers, and the enumeration of those powers implies the exclusion of all others not fairly incidental. All contracts made by a corporation beyond the scope of those powers are unlawful and void, and no action can be maintained upon them in the
Dissenting Opinion: Shiras, J.
courts, and this upon three distinct grounds : the obligation of every one contracting with a corporation to take notice of the legal limits of its powers; the interest of the stockholders not to be subjected to risks which they have never undertaken; and, above all, the interest of the public, that the corporation shall not transcend the powers conferred upon it by law.”
In commenting upon that clause of the contracts in which the Union Pacific Company "lets the Rock Island Company into the full, equal and joint possession and use of its main and passing tracks," the opinion of the court states that “the possession here spoken of was such possession as the Rock Island Company would have when its engines, cars and trains were running over the tracks. The company bad no possession before its trains came on the tracks or after they had run off of them, and while its trains were on the tracks its possession was only of the particular part occupied temporarily while running over them.”
But this view, I submit, overlooks the necessary meaning of the language of the contracts. The possession, whose right is given, is described as full — that is, entire, not imperfect, or insufficient; as equal -- that is, as great as that of the lessor company; as joint — that is, united in interest and obligation with the other party. If doubt could be entertained of the meaning of language so explicit, such doubt would be removed by the other express provisions that the “schedule of rules and regulations 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 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.”
Again, the opinion states that “moreover, all trains were to be moved under the direction of an officer of the Pacific Company. The Rock Island trains coming upon a Pacific track immediately passed from the control of the Rock Island Com.
Dissenting Opinion: Shiras, J.
pany into that of the Pacific, and its officials were subject to the orders of the Pacific's officers."
I am unable to so read any provision of the contract. On the contrary, as already stated, it is expressly stipulated that " the schedules of rules and regulations for the movement of engines and trains over the several railways hereby let and deinised 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 ;” and if the parties cannot agree upon such rules and regulations, then mutually appointed referees shall exercise authority to "prescribe schedules, rules and regulations and to modify existing ones.” The plain meaning, as I think, of these contracts is that the Union Pacific Railway Company has thereby parted with its sole and absolute control of those portions of its road and tracks that are embraced within the scope of the contracts, and with the sole and absolute power to exercise its franchises to occupy, possess and operate such portions of its road, and has agreed to participate, for a period of 999 years, with other railway companies, in the full, joint and equal possession of those portions of its road, in their physical aspect, and to confer upon such other companies the right to join, on equal terms, in the making of all rules and regulations pertaining to the use and management thereof. When a contract provides for the possession of a railroad and for its operation by rules and regulations it has covered everything that exists — the road as a physical structure, and the franchises to operate it by rules and regulations.
It is true that the contract provides that the rules and regulations “shall be executed and all trains moved under the immediate direction of the superintendent or other officer of the lessor company.” But the duties of such an officer are subordinate. He is to carry out the rules and regulations prescribed jointly and equally by the lessor and the lessee companies, and the meaning and effect of the provision in question is to prevent the confusion that would result if there were two superintendents to enforce the same rules over the same por tions of railroad.