Faulk v. Missouri River & N. W. Ry. Co.

CORSON J.

This is an appeal by the defendants from a judgment entered in favor of the plaintiff and from the order denying a new trial.

It is alleged in the plaintiff’s complaint that ever since the 2d day of September, 1890, he has been and still is the owner of a 40-acre tract of land situated in Pennington county, in this state; that the said defendant railway company' was duly organized and is now existing under and by virtue of the laws of the state of South Dakota, and is the owner of and maintains and operates that certain line of railroad running from Rapid City, in said Pennington county, in a general southwesterly direction along the valley of Rapid creek, to Mystic, in said county, a distance of about 33 miles, and over and across said land; that as such corporation the said railway company is vested with the right to take or damage the said land of the plaintiff, together with the appurtenances thereto, and to construct and maintain its railroad thereon, and to operate the same under the laws of this state, upon first ascertaining and paying just compensation to plaintiff therefore, before possession thereof is taken or any injury or damage done; and that, to enable defendant corporation to construct, operate, and maintain said railroad over the land of the plaintiff, it is necessary that the railway company and receiver accjuire a right of way therefor over the premises of plaintiff; that the defendant Charles O. Hailey is the receiver of the said railway company, duly appointed by the circuit court of Pennington county, and is now in possession as such receiver of all the property of said railway company.

Plaintiff further alleges that the said defendant the Cleveland Trust Company is a corporation duly organized and existing under and by virtue of the laws of the state of Ohio, and as such corporation is a trustee for all the bondholders of the several bonds issued by said railway company, aggregating about $1,000,000, secured by a p'retended mortgage upon all of the property of .the said railway company for the purpose of constructing and equipping the said railroad; that the said trust company claims a lien, interest, or estate in said railway company and its property as security for the bonds mentioned, but plaintiff alleges that whatever interest, lien, or estate said trust company may have the same is subject to and inferior to the claim of .plaintiff herein; that during the years 1891-92, the said railway company and its predecessors-iii interest located and constructed its said railroad from Rapid City to Mj'stic, over and across the said land of plaintiff, and have occupied and still occupy a strip of land ioo feet wide and 1,380-feet in length, cutting said land in two and destroying a large amount of meadow and plowland, and also destroying and filling up a ditch of plaintiff’s; that ever since the construction of said roadbed over the said premises of plaintiff the said railway company and its predecessors in interest, and its said receiver, have operated said railroad over and across said premises and occupied the said strip of land therefor, without right and without payment therefor,. and have never acquired any title thereto, and neglect anrl deláy so to do; and, though often demanded to do so, they have refused to pay this plaintiff any damages therefor, and have refused to commence and prosecute condemnation proceedings, whereby this plaintiff has been damaged in the sum of $500, no part of which has been paid or deposited in the office of the clerk of the court, or , elsewhere. Wherefore plaintiff prays for an order fixing the time and place for hearing of this complaint and requiring the said railway company and its receiver to commence and prosecute with all speed in this court, by a day, to be named, before a jury, legal proceedings under the law of eminent domain, to ascertain the damages of the plaintiff for the taking and injur}' of the premises of the plaintiff as aforesaid.

Plaintiff further praj-s that upon the final hearing of this action judgment may be rendered in favor of the plaintiff and against the defendant railway company and its receiver for the said sum of $500, and that the judgment of this plaintiff may he declared to be a first lien on said railroad and its appurtenances, prior and superior to the claims of said defendants, and each of them.

To this complaint the trust company separately answered, and denied all the allegations of the complaint, except such as were thereinafter specifically admitted; admits that the railway company is a corporation organized under the laws of the state of South Dakota, and the owner of the railroad described in plaintiff's .complaint; that C. O. Bailey is receiver of said railroad, and as such is in possession thereof and maintains and operates the same; and that said railway company is vested with the right of eminent domain. The trust company then proceeds to set out its incorporation under the laws of the state of Ohio, and as such is trustee for all the bondholders of said railroad, aggregating about $i,ooo,ooo, which bonds are secured on all the property of the said railway company, and which were issued for the purpose of constructing and equipping the same; asserts that the defendant has a lien upon, interest and estate in, all of said property as security for the bonds mentioned; that during the years 1891-92 the predecessor of said railway company located and constructed said 1 abroad from Rapid City to, upon and across the land described in the complaint, and for a number of years thereafter occupied the strip of land for a right of way, as described in the complaint.

The defendant then pleads the six and ten year statutes of limitations as a defense to the action. It is then alleged in the answer that the defendant corporation was chartered as such on the 15th day of April,'1904, and has since been such corporation; that the Dakota, Wyoming & Missouri River Railway Company was, prior to the year 1890, duly organized and existing as a railroad corporation under the laws of the state of South Dakota, and continued to be such corporation for many ■ years thereafter; that said railroad was graded and constructed over and across the land described in the complaint, with the consent and acquiescence of the plaintiff, in the year 1891, axrd more than 16 years prior to the comxncncement of this action, and that said i-ailroad was for many years thereafter maintained and operated by said Dakota, Wyoming & Missouri River Railwaji- Coxnpany; that thereafter, and before this action was commenced, the defendant railway company succeeded to and became the owner of all the right, title, and interest formerly owned and possessed by the former railway coxnpany, and that said defendant railway coxnpany relied upon said plaintiff's long-continued consent to, and acquiescexx.ee in, the claim of said former company to have a valid right of way, over and acx'oss said land, and after its purchase of said railroad and appurtenances this defendant expended over $700,000 to complete and equip the same, and but for such acquiescence and reliance would never have purchased the said railroad or made the said- expenditure; that the plaintiff slept upon his rights, if he has any, more than 16 years before this action and never, until this action, brought any suit or other proceedings to obtain damages for said right of way used and operated as aforesaid, or for other relief; and the plaintiff's said claim is a stale demand without standing in a court of law or equity; and that by reason of the premises the plaintiff is barred by laches, and by the statute of limitation's, and is also estopped to claim or assert any estate, right, title, or interest whatsoever in or to, or lien upon, said.land aforesaid adverse to the defendants, or to assert any claim for damages against them or either of them.

It is then alleged in the answer that the plaintiff claims some estate or interest in and to said parcel of land, but that he has not any estate, right, title, or interest whatsoever in and to the same, or any part thereof, and demands judgment that its title to :he said premises he quieted.

The defendant Missouri River & Northwestern Railway company and Charles O. Bailey also filed separate answers, and pleaded substantially the defenses set up in the answer of the trust company. To these answers the plaintiff replied, denying many of the allegations therein contained, and denied that the said claim of the defendant is prior ^and superior to the claim of plaintiff.

This action was commenced in July, 1908, and on the 9th day of March, 1909, came on for trial before the court, and again came on for trial before the court and a jury on the 4th day of November, 1909. The jury, returned a verdict for $485, and the court made its findings and conclusions of law, in which the court finds, in substance, the facts as alleged in the plaintiffs complaint, and, among others, that the plaintiff has a first lien upon the said railroad as described in the complaint, together with its right of way, appurtenances, and franchises, prior and superior to the claims and demands of the defendants, and each of them, for the said sum of $485, found by the jury; that the defendants the Cleveland Trust Company and the Missouri River & Northwestern Railway Company have an estate, lien, and interest in said railroad, appurtenances, and franchises, but that such lien and interest is subject to and inferior to the claim of plaintiff; that Charles (). Hailey is the duly appointed and acting receiver of said defendant railway company, and i's now maintaining and operating the same; but that 'his estate possession, and interest therein is - subject to and inferior to the claim and lien of the plaintiff; that this action was duly commenced by the issuance of a summons and complaint on the 30th day of July, 1908, and is not barred by the statute of limitations; that during the month of April, 1904, the said defendant-the Missouri River & Northwestern Railway Company became the owner of all the estate and interest of its predecessor, the Dakota, Wyoming & Missouri River Railway Company, in and to said railroad and appurtenances, and ever since that time has, together with Verne Crouch, an intermediate receiver, and the defendant. Charles O. Bailey, the present receiver thereof, without right or the consent or acquiesence of plaintiff, continually occupied said premises of plaintiff, and has maintained and operated said railroad over and across the same; but, though often demanded, has refused to commence condemnation proceedings to acquire the right of way over the same, or pay plaintiff any damages therefor.

And the court concludes that the plaintiff is entitled to a judgment against the defendant railway company and Charles O. Bailey as receiver, for the said sum of $485 and costs, and that said judgment should be declared to be a first lien upon said railroad right of way, appurtenances, and franchises, prior and superior to the interest, lien or claim of each and all of the defendants herein, and all persons claiming through them, and that the said premises be adjudged to be sold in the manner provided by law, and out of the proceeds of sale the plaintiff be paid the said sum recovered, with interest and accrued costs, and judgment was-1 thereupon entered accordingly.

Numerous errors are assigned, but for convenience the counsel have grouped them under the following heads: (1) Those to which appellants contend the statute of limitation's apply: (2) plaintiff's laches; (3) errors as to the measure of damages; (4) errors as to priority of plaintiff’s lien.

[1] It is contended by the appellants that plaintiff’s cause of action accrued in 1891 or 1892, when.the appropriation of the right of way was made by the Dakota, Wyoming •& Missouri River Railway Company, and was therefore barred by the six-year statute of limitations. It is contended by the respondent, however, that where, under a state Constitution like that of South Dakota, compensation must be first made before property can be taken for public use, the owner’s right to compensation is not barred; except by adverse possession for 20 years.

We are inclined to take the view that the respondent is right in his contention. It is provided by section 13, art. 6, of our state Constitution, that “Private property shall not be taken for public use, or damaged, without just compensation as determined by a jury, which shall be paid as soon as it can be ascertained and before possession is taken. * * *” This provision of the Constitution was designed, and its effect is, to prevent the taking of private property for public use, until the damages occasioned thereby shall be ascertained and paid to the owner of the property, and a party cannot be deprived of that protection by statutes of limitation within the period of prescription for the recovery, of property, by ejectment, or, as held by the 'Supreme Court of Pennsylvania, until the law presumes that the compensation has been paid to the owner, which is at the expiration of 20 years. And it has been, recently held by the Sopreme Court of Nebraska that a statute imposing limitation is unconstitutional. Kime v. Cass County, 71 Neb. 67. 99 N. W. 546, 101 N. W. 2. And the same view was taken by the Supreme Court of Mississippi in Levee Com’rs v. Dancy, 65 Miss. 335, 3 South, 568.

Mr. Lewis, in his work on Eminent Domain- (3d Ed.) § 967, under the head of limitations, when property is appropriated with out complying with the law, says: “We have seen that where property is entered upon and appropriated to public use, without complying with the law, the owner may waive the tort and sue for his just compensation. The same rule applies where the entry is by consent and the questions of compensation is left for future adjustment. In such cases the action for just compensation is not barred, except by adverse possession for the requisite period to establish a title ‘by prescription’'’ — citing Lehigh Valley R. R. Co. v. McFarlan, 43 N. J. Law, 605; McFarlan v. Morris Canal & Banking Co., 44 N. J. Law, 471.

And in Pennsylvania, where the Constitution requires compensation to be first made or secured, it is held that the right to compensation is not barred by any length of time, but that after 20 years there is a presumption of payment, as in cases of all obligations for the payment of money, which must be overcome by proof. Carter v. Ridge Turnpike Co., 208 Pa. 565, 57 Atl. 988; Stauffer v. East Stroudsburg, 215 Pa. 143, 64 Atl. 411; Connellsville Gas Coal Co. v. Baltimore, etc., R. R. Co., 216 Pa. 309, 65 Atl. 669; Keller v. H. P. R. R. Co., 151 Pa. 67, 25 Atl. 84.

In the case of Carter v. Ridge Turnpike Co., supra, the learned Supreme Court of Pennsylvania, in discussing the question of limitations in such an action says: “If the' land was taken under the right of eminent domain, as contended by appellants, and they are, under the authority of Oliver v. Pittsburg, etc., Railway Co., 131 Pa. 408, 19 Atl. 47; the proper parties to bring this suit, there can be no question about their right to recover the damages sustained, if the same have not been paid, for no statute of limitations can" bar their constitutional right to actual compensation for the land so taken from their ancestor” — citing a number of Pennsylvania cases.

The Court of Appeals of New York, in the matter of Clark v. Water Commissioners, 148 N. Y. 1, 42 N. E. 414, takes the same view, and holds that their statute of limitations does not apply to that class of cases. It was contended in that case that the 6-year statute of limitations was applicable, and, if not, then the 10-year statute of limitations was applicable. The court, in discussing the last question, says: “The only other section which might be applicable is section 388, which provides that an 'action, the limitation of which is not specially prescribed in this or the last title, must be commenced within io years after the action accrues. The answer to that provision lies in the fact that the proceedings here were commenced before the expiration of the 10 3’ears provided for therein,”

It is contended by the appellant that by this clause in the opinion the court held that the io-year statute of limitations was applicable, but we do not so understand the language used as being a decision upon that point. It will be noticed that the language is, ‘’the onfy other section which might be applicable,” but they dispose of the question b}'- stating that the io years had not expired in that case; and hence, in effect, it was not necessary to pass upon that question.

While there seems to be some conflict in the decisions, we are of the opinion that the views expressed by the Supreme Courts of Pennsylvania, New Jersey, New York, Nebraska, Mississippi, and the learned author on the subject of Eminent Domain, before referred to, state the true and correct rule, for as was said by the Supreme Court of Nebraska, in Kime v. Cass County, supra, if it was competent for the Legislature to make any provisions limiting the time for commencing an action by the owner, it could make such provisions as would effectually abrogate or fritter away the guaranty of the Constitution. The trial court was, therefore, clearly right in holding- that plaintiff’s action was not barred by the statute of limitations, as the prescriptive period of 20 years had not elapsed.

[2] It is next contended by the appellant that plaintiff has lost the right to maintain this action by reason of his laches in failing, for the period of 16 years, to bring his action to recover for the value of the property taken and appropriated by the rail■way company, but, under the decisions of the court there seems to be no merit in this contention. It is not claimed that the plaintiff did not act or made any statement in regard to his property that would estop him from maintaining this action. It clearly appears that the entry upon his premises by the first company- was without his consent and against his protest, and that the entry of the present defendant corporation was not induced by any act of his. His title was of record, and the defendant' railway company was bound to know that it had not acquired the title of the plaintiff, and consequently that the plaintiff had not been paid the value of the same. Mere delay, short of the statute of limitations, will not estop a party from asserting his right to the property, unless he has been guilty of 'some act, declaration, or statement that has, in some manner, misled the other party to his prejudice. Not being barred, therefore by the statute of limitations, other than the prescriptive statute of 20 years, the plaintiff was not required to proceed to recover possession of his property, or to enforce his claim by what is denominated by the Supreme Court of Pennsylvania in the nature of an equitable ejectment; he cannot be deprived of his property by reason of his failure to institute his suit at an earlier date. The defendant railway company and its predecessors in interest could, at any time during the 16 years, have instituted proceedings to condemn the right of way, but failing to take any action in the premises, the defendants cannot now be heard to complain that the plaintiff, who- was not bound to take any proceedings, had neglected to institute them.

[3] It is next contended by appellant -that the plaintiff is not entitled to any lien upon the property -of the defendant railway company, and the court was in error in adjudging that he had. such lien that was prior and superior to the lien of the trust company and the present defendant railway company, but the proceeding in this action seems to be in accord with the general practice of the courts in this class of cases. ^Courts, as before stated, are reluctant to grant injfiction after the railway company has commenced operating its road, or to allow the owner to recover in ejectment, and thereby interfere with the use of the premises by the public. Hence various proceedings have been permitted by the courts for securing to a party his constitutional right without interfering with the public interest, and therefore actions in the-nature of the present action, or of a similar character, ■ seem to have been instituted by the owner and sustained by the courts to enforce the constitutional rights of the owner of the property, and to secure him compensation for the same.

The plaintiff in this action does not claim a vendor’s lien, but authorities and decisions seem to hold that his right is in the nature of such a lien, where ejectment or affirmative injunction would be denied. Lewis on Eminent Domain (3d Ed.) § -885, and authorities cited; Organ v. Memphis R. R. Co., 51 Ark. 235, 11 S. W. 96; Drury v. Midland R. R. Co., 127 Mass. 571; Rio Grande R. R. Co. v. Ortiz, 75 Tex. 602, 12 S. W. 1129; Hobbs v. State Trust Co., 68 Fed. 618; Dayton, X. & B. R. R. Co. v. Lewton, 20 Ohio St. 401. It seems to be also quite generally held that compensation for right of way is given preference over all other claims against the railway company.

[4] Tt seems also to be well settled that the present railway company, defendant, is legally and equitably liable as the successor of the former company for the value of the premises used by it, belonging to the plaintiff, and that before it can legally occupy and possess the same for its railroad purposes it must satisfy the claim of the. plaintiff for its value. This rule seems to be established upon the principle that the present railway .company is no more entitled to occupy'- and use the premises without paying for the same, than was its predecessor. Its use of the premises is therefore without right as against the plaintiff, and the present railway company and the trust company, as trustee in the mortgage for the bonds issued, clearly hold their interest therein, subject to the superior right and claim of the plaintiff to be paid for the premises owned by him.

Air. Lewis, in his work before referred to, in discussing the subject, in section 885, says: ‘‘Where it is held that the title or right to possession may vest before the payment of damages, such title or right is subject to the obligation of making just compensation, which is in the nature of a vendor’s lien. A proceeding in equity for the purpose of enforcing this lien is therefore a proper remedy. * * * But in some cases, instead of decreeing a regular foreclosure of the lien, the courts enjoin the use of the land until payment is made. I11 Ohio it is held that, where the property constitutes a section of a railroad right of way, the decree should be for the sale of the entire road, with its franchises, and not of the property with respect to which the lien exists.”

And in section 886 the learned author says: “No rights can be acquired in private property under the power of eminent domain, except subject to the duty of making just compensation therefor. Consequently the party originally taking or occupying the property cannot transfer to another, by mortgage, lease, or otherwise, any right in the property, except subject to the same duty. In other words, the owner’s claim for just compensation is paramount to any right which can be derived by or through the party making or seeking the condemnation. Different courts work out this result in different ways, but we believe all concur in reaching it in one way or another. Some courts hold that the claim for compensation is in the nature of a vendor’s lien, and as such is prior to any right which the party condemning can acquire or transfer. Others hold that no title passes until payment, and consequently that a mortgage or conveyance by the party condemning conveys nothing to the grantee, except such possessory rights as the former may have. The later view seems to us the correct one, and is in accordance with the views heretofore expressed in regard to the proper interpretation of the Constitution. But it is immaterial which view is correct, so far as the present inquiry is concerned. If title docs not pass until compensation is made, the case is clear. On the other hand, if it be held that the title may vest before compensation is made, yet it only vests subject to the obligation of making compensation. The instrument or proceeding’s by which title is acquired is notice of the claim for compensation, and third parties dealing with the property are bound to ascertain whether this claim has been satisfied.”

In section 887 the learned author further says: “Under the authorities referred to in the last section and the principles which they sustain, it follows that the owner of property which has been taken for public use,'and not paid for, may have the same remedies to enforce his rights against those claiming under the party condemning as against such party himself. * * * The first company has taken possession of private property for a public use, and is under an obligation to make just compensation to the owner. When its rights and franchises are transferred to a new company, by foreclosure or otherwirse, the new company is under no obligation to use the property-, nor is it liable for the debts of the old company. The new company may refuse to use the property at all, or it may condemn it anew. In such case it would lose the benefit of the improvements upon the property. But. if it elects to use the property for the purposes for which it was originally taken, and as the successor of the first company, knowing that the right to use it can be obtained only by the payment of just compensation, it in legal effect assents to the performance of this obligation, and an implied promise to pay the same to the owner arises, upon which an action may be maintained. Tf a person accepts anything which he knows to be subject to a duty or charge, it is rational to conclude that he means to take such duty or charge upon himself, and the law may very well imply a promise to perform what he has so taken upon himself.’ ” Broom’s Legal Maxims, 709. And the learned author cites a very large number of decisions in support of the text, among which are the following: Organ v. Memphis, etc., R. R. Co., supra; New York, etc., R. R. Co. v. Hammond, 132 Ind. 475, 32 N. E. 83; Rio Grande, etc., R. R. Co. v. Ortiz, supra; Dayton, X. & B. R. R. Co. v. Lewton, supra.

In the last case cited, the Supreme Court of Ohio, discussing very fully the rights of an owner of property taken for public use, who institutes an action to 'secure the payment for his property, and in which case a decree for the sale of the whole line of the road to s'atisfy the plaintiff’s lien was adjudged, says: “And this is the only mode in which the rights and interests of other parties, either as owners or lienholders upon the road, can be protected, and their property or security saved from absolute destruction.”

[5] It is further contended by the appellant that the value of the land should have been found by the jury as of the date when it was originally appropriated by the first company in 189T or 1892, but this contention is clearly untenable. We are of the opinion that under the constitutional provision in force in this state, where land is appropriated for railway purposes without the consent of the owner; and he is compelled to bring an action to enforce his claim for the value of the property taken, the value should be estimated as of the date of commencing his action, or at the time of trial. Lewis on Eminent Domain, § 705; Cook v. South Park Com’rs, 61 Ill. 115; Oregon & Cal. R. R. Co. v. Barlow, 3 Or. 311; Northeastern Neb. Ry. Co. v. Frazier, 25 Neb. 53, 40 N. W. 609; Mo. Pac. R. R. Co. v. Hays, 15 Neb. 224, 18 N. W. 51; South Park Com’rs v. Dunlevy, 91 Ill. 49; Newgass v. St. Louis R. R. Co., 54 Ark. 140, 15 S. W. 188; Missouri Pac-R. R. Co. v. Wernwag, 35 Mo. App. 449; Lieberman v. Chicago R. R. Co., 141 Ill. 140, 30 N. E. 544.

As the plaintiff remained the owner of the property until the proceedings taken to enforce his claim for the value of the same, it is quite clear he is entitled to the value of the land at the time he takes proceedings 'to enforce payment for- the same. If the property has advanced in value during the time that it has been illegally in the possession of the railway compan)', the plaintiff is entitled to the benefit of that advance, and not the -party who has illegally held possession of the same.

Finding no error in the record, the judgment of the court below and order denying a new trial are affirmed.