Chicago, Rock Island and Pacific Railway v. Denver and Rio Grande Railroad

143 U.S. 596 (1892)

CHICAGO, ROCK ISLAND AND PACIFIC RAILWAY COMPANY
v.
DENVER AND RIO GRANDE RAILROAD COMPANY.
DENVER AND RIO GRANDE RAILROAD COMPANY
v.
CHICAGO, ROCK ISLAND AND PACIFIC RAILWAY COMPANY.

Nos. 1095, 1109.

Supreme Court of United States.

Submitted January 7, 1892. Decided March 7, 1892. APPEALS FROM THE CIRCUIT COURT OF THE UNITED STATES FOR THE DISTRICT OF COLORADO.

Mr. Thomas F. Withrow, Mr. Thomas S. Wright and Mr. A.E. Pattison for appellant.

Mr. Edward O. Wolcott and Mr. Joel F. Vaile for appellee.

MR. JUSTICE BROWN delivered the opinion of the court.

(1) A preliminary question is made with regard to the rights of the Rock Island Company as the successor of the Chicago Company under the contract of February 15, 1888. By art. III, § 9, of this contract it was provided that it should "attach to and run with the railways of the respective parties during the corporate existence of each, and of all extensions of such existence, by renewal or otherwise, and shall be binding upon the lessees, assigns, grantees and successors of each, during the continuance of their several corporate existences; provided, however, that the Chicago Company can assign its interests in this contract only by sale, lease or consolidation of its own property." The original companies, of which the Rock Island Company claims to be the successor, appear to have been the St. Joseph and Iowa Railroad Company, a Missouri corporation, and the Chicago, Kansas and Nebraska Railway Company, a Kansas corporation. On May 15, 1886, the latter company leased its property and franchises to the former, which entered into possession under such lease, which is still in force. On June 13, 1888, after this contract was made, the Chicago, Kansas and Nebraska Company and the Chicago, Rock Island and Colorado Company were consolidated under the name of the Chicago, Kansas and Nebraska Railway Company, which consolidated corporation is admitted by the answer to have succeeded to and become vested with all the property and property rights, and all the corporate rights, powers, franchises and privileges of the said two constituent companies, including the contract between the Chicago Company and the defendant, and thereby entered into possession and enjoyment of the same.

It is unnecessary to set forth at length the numerous steps by way of assignments, leases and consolidations by which the Rock Island Company became the assignee of the Chicago Company under this contract. It is sufficient, for the purposes of this case, that it assumed to take the place of the Chicago Company; that it entered into open possession of the property of that company, and upon the performance of this contract, on the first of January, 1889; that it was recognized by the Denver Company as taking the place of the Chicago Company; that this was done with the consent of that company, and that no question was ever made by the Denver Company of its rights under this contract until its answer was filed in this case: and in its cross-bill the Denver Company prayed for the specific performance of the contract against it. From the time of the consolidation in June, 1888, business was transacted with the defendant in the name of the Chicago, Kansas and Nebraska Company, the consolidated company; and the defendant in issuing its time-cards, at the time connection was made and trains began to run, upon the information furnished it by the officers of that road, designated its trains as the "Chicago, Kansas and Nebraska Express," etc. In May, 1889, upon the request of plaintiff's officers, the caption was changed to the "Chicago, Rock Island and Pacific." On May 16, a notice was issued stating that plaintiff had assumed the operation of the Chicago, Kansas and Nebraska Railway. Upon this coming to the hands of the law department of the defendant in July, some correspondence was had, by which the defendant was apprised that the Rock Island Company was operating the line of the other under a lease. Upon this information, the managing officers of the defendant recognized the plaintiff as the successor in interest under the contract, and made no question of its rights for more than a year thereafter. Had the Denver Company refused to recognize the plaintiff as the legal successor of the Chicago Company, and refused to acknowledge its contract with the Chicago Company as importing any obligation or liability on its part towards the plaintiff, a serious question might have arisen as to the rights of the latter, under this alleged assignment, as the successor of the Chicago Company. But, under the circumstances of this case, a court of equity will treat the assignee in fact as the legal assignee, possessed of the rights and charged with the obligations of the original party to the contract. Wiggins Ferry Co. v. Ohio & Mississippi Railroad, 142 U.S. 396. In short, we find no difficulty in holding that the plaintiff was entitled to file this bill.

(2) The most important question in this case relates to the proper construction of art. 1, § 1, wherein the Denver Company "lets the Chicago Company into the full, equal, joint and perpetual possession and use of all its tracks, buildings, stations, sidings and switches, on and along its line of railway, between and including Denver and South Pueblo, excluding its shops at Burnham, meaning and intending hereby to include in the description aforesaid all and every portion of its railway and appurtenant property between and at the points aforesaid, and all improvements and betterments thereof, and additions thereto, which may be jointly used by the parties, as hereinafter provided." The question is whether this general language is controlled or limited by the facts existing at the time the contract was executed, or by the subsequent provisions of the contract itself. If this be in fact a lease, without qualification, of the entire road and appurtenant property between Denver and South Pueblo, then the Rock Island Company has a right to make use of as much or as little as it pleases, and to introduce its trains upon the tracks of the Denver Company wherever it may choose to do so. It may not only make use of the terminal facilities at Denver for its traffic over the Union Pacific, but it may contract for trackage over any road running to Denver, Pueblo, or the intermediate stations, and demand the use of the defendant's terminals for its entire business over such roads.

There can be no doubt whatever of the general proposition that, in the interpretation of any particular clause of a contract, the court is not only at liberty, but required, to examine the entire contract, and may also consider the relations of the parties, their connection with the subject matter of the contract, and the circumstances under which it was signed. Prior to the execution of this contract, the Chicago Company had determined to construct a road into the State of Colorado from its eastern boundary. Its officers had not, however, settled upon the particular route — whether they should build an independent road from the Kansas State line to Denver, with a branch to Pueblo, or build a connection with the defendant's road at Colorado Springs, thence reaching Denver and Pueblo over defendant's line. This connection had not been made at the time the contract was entered into, though there is a preliminary recital that "the Chicago Company owns a railway which is being constructed from the western boundary of the State of Kansas, at which point it will connect with the Chicago, Kansas and Nebraska Railway, to the city of Colorado Springs," indicating very clearly that this was the road within the contemplation of the parties. Indeed, there was an express provision in the body of the contract (art. III, § 10) that the Chicago Company should, on or before the first day of April, 1888, notify the Denver Company whether or not it elected to build its line to Colorado Springs, and that if it should elect to build such line it was to complete the same and to occupy the line of the Denver Company, and to be bound by the terms of the contract, on or before the thirty-first day of December, 1889. "If it shall elect not to build said line, this contract shall on the said first day of April, in the year 1888, become void and of no effect;" — in other words, the very life of the contract was made to depend upon the fact whether this connection was made, and until that time it was not to go into operation. It is quite evident from this that if, instead of completing its road to Colorado Springs, the Chicago Company had made the connection with the Union Pacific which it subsequently did make, the Denver Company would not have been under the slightest obligation to afford the terminal facilities which the plaintiff now claims. The Denver Company as well as the Chicago Company undoubtedly had an object in view in making the contract, which was largely, at least, to obtain a revenue from the use of its tracks between Denver and Pueblo, of which the terminal facilities at these points were but an incident.

Indeed, the contract from beginning to end is full of provisions which indicate that the minds of the parties met only upon an understanding that the Chicago Company should make its connection with the Denver road at Colorado Springs, and should make a constant use of its tracks from that point to Denver and Pueblo, and, inferentially at least, that the Denver Company would not have consented to it upon any other theory. The preamble contains a recital that "the interest of both parties and of the public will be promoted by the establishment and operation of a through line of railway between all the points on the line of the railway of the Denver Company, between and including Denver and South Pueblo, and all points on the line of railway which will be operated by the Chicago Company, and on the system of railways of which the Chicago Company will form a part." By art. II, § 3, the Chicago Company covenanted that it had power to construct a line from the western boundary of Kansas to Colorado Springs. By art. I, § 3, the Denver Company is to furnish "all water and coal which the Chicago Company will need for the operation of its trains over the railway of the Denver Company. It agrees, if so required, to provide and maintain engine-houses to properly and safely shelter all locomotive engines which said Chicago Company may have occasion to use on the railway of the Denver Company." (Art. I, § 5.) The rent payable by the Chicago Company began to run "from and after the completion of its railway from the boundary line of the State of Kansas to a connection with the railway of the Denver Company at or near Colorado Springs." (Art. II, § 2.) And there was a further express provision that "no compensation will accrue or be paid to the Denver Company from or by the Chicago Company for the use and occupation of said premises, before the railway of the Chicago Company shall be completed from its initial point on the western boundary of the State of Kansas to a connection with the railway of the Denver Company within the time hereinafter specified." (Art. II, § 2, sub. 10.) Among the payments to be made was a proportionate amount of the cost or expenses for keeping the railway and appurtenant property in repair, and supplying it (the Chicago Company) with water, "as the number of wheels per mile run by it, the Chicago Company, over said railway, or any part thereof, bears to the whole number of wheels per mile run over the same during the same period," (Art. II, § 2, sub. 4,) — a provision wholly inapplicable to the separate use of terminal facilities; since it needs no argument to show that the amount of compensation for the use of such facilities cannot be practically determined upon a wheelage basis.

By art. III, § 4, the Chicago Company agrees to do no business as a carrier of persons or property between Denver and Colorado Springs, or between intermediate stations between Colorado Springs and Pueblo, or between any such intermediate stations and Denver, Colorado Springs or Pueblo; but it was to have the right "to transport persons and property between stations on its railway and connecting lines, and all points between and including Denver and South Pueblo: Provided, however, that if the Chicago Company shall at any time acquire by purchase, construction or otherwise, a railway extending not less than fifty miles from Pueblo, it shall have the right to transport persons and property between any point on such line and Denver." There is certainly an inference from this proviso that it was not contemplated that the Chicago Company should acquire similar rights upon railways from other points than Pueblo. In addition to this, the situation and plan of the Denver station grounds show that while they possess every facility for the admission of trains from the southward, their connection with the Union Pacific to the northward is by two tracks, one of which is wholly used for the transfer of freight cars to other systems of railways, the other only making direct connection with the station of the Union Pacific — an obviously inadequate provision for a large and continuous traffic. Taking all the facts of this contract together, we regard it as quite clear that it was never intended to grant the use of terminal facilities except as appurtenant to the use of the road itself. Indeed, where a road is leased with its terminal facilities the implication is strong that it was the lease of the road which induced the lease of the terminals, and the contract should not be construed as importing a separate lease of such terminals without clear language to that effect. If plaintiff's contention be correct, we see no reason why it may not construct or lease another track direct from Limon to Pueblo, and demand the use of the defendant's terminals at that point, and practically, at least, abandon its line to Colorado Springs.

Upon the whole, we think the defendant's construction of this contract is the correct one, and the decree of the court below in that particular should be affirmed.

(3) A question of some importance arises with regard to the proper construction of the exception, in the general granting clause, of the "shops at Burnham," the plaintiff claiming generally that the restriction applies only to the shop buildings and the land upon which they stand, and the defendant insisting that it includes all that portion of its property at Burnham west of the main line, consisting of about sixty acres purchased and mostly used for the construction, repairing and equipment of its rolling stock. The specific parcels of such property in dispute are, (a) about twenty acres south of the shop grounds proper, known as the Bailey tract, lying mostly to the west of the main line, which runs through the tract; (b) about six acres to the northward of the shops, and known as the Burlingame tract; (c) certain coach tracks within the yard occupied by the machine shops, and used by both parties for cleaning their passenger coaches; (d) a certain track known as the "wye," on the Bailey tract, and used for reversing the direction of the trains.

In ascertaining the scope of this exception little aid can be derived from the illustrations employed by counsel upon both sides, since the meaning of the reservation must be determined in every case by the particular facts of such case. For instance, if the vendor of a city lot should, in a deed of such lot, reserve to himself a building standing thereon, it would be manifest that he reserved only the right to remove such building, since a different construction would be destructive of the grant. On the other hand, if a testator devised to his sons a large farm, reserving to his widow the right to occupy the farm-house during her life, it might, and probably would, be held to include the out-buildings and gardens, or messuage. So, while a shop in which an individual carried on a trade might be limited to the particular building, and even to the particular room in which his work was done, we should not apply this narrow construction to the shops in which a large railroad corporation carries on its manufacturing and repairing. The intent of the parties must be gathered from the character of the conveyance, the nature and situation of the property conveyed and of the property excepted, and the purpose of such exception.

The grant in this case was of the "possession and use of all its tracks, buildings, stations, sidings and switches on and along its line of railway between and including Denver and South Pueblo, ... intending hereby to include in the description aforesaid all and every portion of its railway and appurtenant property between and at the points aforesaid," etc. No specific mention is here made of real estate, and while, as we have had recent occasion to hold, New Orleans Pacific Railway v. Parker, ante, 42, land is not ordinarily appurtenant to other land, much less to personal property, there can be no doubt that, under this grant, all land occupied by the stations, tracks, water tanks, etc., and all other land habitually used in the daily operation of the road, would pass as appurtenant to the railway. The very fact that the grant is so liberal in its terms is an indication that the exception also should not be narrowly construed. It is evident that an interpretation which would limit it to the buildings actually used for mechanical purposes would fail to express the intention of the parties with regard to this exception, since repairs are frequently made to cars while standing in the yards, and track room must be provided for cars while they are waiting their turn in the shops, as well as round-houses for the accommodation of locomotives. As the Denver Company owned and operated some fifteen hundred miles of railway, and had its principal shops for making and repairing its rolling stock, and for storing its cars, supplies and materials for its whole line of road, at Burnham, it is manifest that extensive buildings, grounds, tracks and other appliances would be required for such purposes. The amount originally purchased seems to have been about forty acres; but finding this to be insufficient, from time to time other purchases were made, including the two tracts in question, and at the date of the contract the ground purchased for the use of the shops and intended to be devoted to such purposes embraced about sixty acres. There was a map of these lands published in 1884, entitled "A New Map of the Denver and Rio Grande Railway shops at Burnham," which it is probable, at least, was consulted by the parties before this contract was made. While there is some conflict of testimony as to what occurred at that time, it seems somewhat improbable that, in making a contract of this magnitude, some reference should not have been made to this map, a glance at which would have apprised plaintiff of what the defendant claimed to be embraced under the designation of the Burnham shops. For these reasons, we think that the plaintiff's theory that the exception applies only to the shop buildings is untenable.

With regard to the Bailey and Burlingame tracts, so called, it is at least doubtful whether they would have passed without the exception, as an appurtenance to the tracks, buildings, stations, sidings and switches, and other property of the road, unless, at least, they were occupied by tracks used in the operation of the road. Indeed, they are appurtenant rather to the shops than to the railway. It is clear they ought not to be detached from the shop grounds proper, with which they are connected, for which they were purchased, and of which they form a part. If these grounds were put to a separate use, distinct from the other shop grounds — a use connected with the customary operation of the road — a different question might arise.

There was no error in the decree providing that the plaintiff should not be excluded from the "wye" track at Burnham, for the turning of its engines, cars and trains, so long as it should continue to pay, for the use thereof, interest upon the cost of its construction, according to the arrangement made at the meeting of February 13, 1890, until the defendant should provide at Denver another similar track for the same purpose.

If there be any real dispute as to which is the "main line" contemplated in the 4th paragraph of the decree of the Circuit Court, it should be settled by an application to that court.

(4) Has the plaintiff a right, under the contract, to put into the Denver terminals its own switch engines, switching crews, and other employes devoted to its exclusive service? Soon after the parties entered upon the performance of this contract, a controversy arose between them respecting the employment of switching crews in the several yards of the defendant company. The plaintiff, believing that it could perform such service with its own engines and employés more economically than it was being done by the defendant, notified the defendant that it would, without unnecessary delay, place therein its own engines, agents and employés, who would perform such labor. Defendant promptly replied that it would not permit the employment of such agents, etc., and that, if any attempt were made by plaintiff to employ them, they would be ejected by force; assigning as a reason for such action that such operation of the yards would produce confusion and be attended by danger; and that the proximity of employés engaged by another company to those in its own service would create discontent and trouble between it and its own employés. Defendant subsequently consented to the employment by the plaintiff of certain classes of laborers in its yards at South Pueblo, but has persisted in its threat to exclude any one who should be introduced into the yard at Denver. Defendant justified its action upon the ground that such exclusive employment and service were not provided for by the contract, were in violation of its terms, and could not be permitted by reason of the danger to life and property, etc.

The contract is silent upon this point. The Denver Company does, however, agree (art. I, § 1) to let the Chicago Company into the full, equal, joint and perpetual possession and use of its property, and is bound to do so wherever a joint operation of such property is practicable. There is also a provision (art. II, § 2, sub. 6) for the payment by the Chicago Company, as part of the consideration, of "an amount equal to a proportionate share of the expenses actually incurred in paying proper salaries to the general superintendent and subordinate employés, including switchmen, telegraph operators, train dispatchers and others necessarily employed in the performance of the duties incident to the joint use and occupation of said railway, not including train men, which proportion shall be ascertained in the manner ... above set out." This provision seems to contemplate that the plaintiff shall employ its own operatives upon its own trains, the defendant retaining the general management of the road, and the direction of such employés as are necessary to its operation, and to the regular and ordinary movements of the trains of both companies, in order to prevent confusion and accidents.

This controversy with regard to the employment of switching crews was made the subject of a correspondence between the managers of the two companies early in 1889. On February 16, Mr. Smith, the manager of the defendant company, addressed the president of the plaintiff a letter in which he stated the defendant's construction of certain provisions of the contract, upon which he had taken the advice of its counsel, who, he says, in answer to a query of his, gave it as his opinion that the C.K. & N. Co. had the right, if it desired to do so, to do work in the Colorado Springs yards with its switch engines, and to do all the necessary switching for that company with its own engines; but that this could only be done under the direction and instructions of the superintendent or other designated officers of the defendant. "The same rule," said he, "applies to this case, as stated in query one, that all movement of engines, trains and cars, must be under the sole direction of the superintendent or designated officer of the" defendant. "There can be no divided authority with regard to the movement of engines, trains and cars. In this respect the yards at Pueblo, Colorado Springs and Denver are subject to the same principle."

In reply to this letter, under date of February 22, Mr. Cable, plaintiff's president, said that they acted on the theory "that the movement of trains on your tracks must be under the direction of your operating officers; that operations in the yards must conform to reasonable yard rules, and that in all other respects we have exclusive control of our engines and cars." On the 26th, Mr. Smith said in reply: "This company is at all times ready and willing to unite with you in making and modifying rules and regulations for the movement of engines and trains in such a way as to accord equality of right, privilege and advantage as far as practicable. But in the execution of these rules and regulations there can be no divided authority." This was the construction put upon this contract by the parties shortly after it went into operation, and we think it accords with its spirit, and is not inconsistent with its letter. It is obviously necessary to the harmonious working of the two systems that the general control and management of the yard should remain with the defendant; but it is not easy to see why that control may not be as well exercised over two switching crews belonging to two different companies as over two crews belonging to the same company. The evidence shows that the defendant has nine crews working by day and six by night. There was a good deal of conflicting testimony upon the question whether such joint operation was practicable, and a large number of witnesses were sworn on both sides. Upon the whole, we have come to the conclusion that, while at times it may not be convenient, it is by no means impossible, and the correspondence between the parties indicates that it was not considered objectionable. The gist of the testimony upon this point seems to be that if the employés of the two companies desire to work harmoniously together there is little difficulty in doing so; but if either party chooses to be technical in the assertion of its rights, there is abundant opportunity for friction. It occurs to us that it would cause fully as much inconvenience to transfer the control of trains from the employés of one company to those of another, as such trains entered or left the terminal yard, as it would to permit the switching of such trains within the yard by the hands that brought them in or were to take them out. It appears that yards are jointly operated in this manner in such large railway centres as Kansas City, Toledo, and Chicago without serious difficulty. We think the same rule should also be applied to those employed in handling the freight. With reference to this, the decree of the court below provided that the plaintiff had a right, at its option, to employ its separate switching crews, and operate its own switching engines in the yards of the defendant company, under the sole and absolute supervision, direction and control, however, of the yard master or other properly constituted officer or agent of the defendant, and subject to the orders and instructions of such yard master, etc., and in this there was no error.

(5) Defendant also assigns as error that portion of the decree adjudging that defendant should set apart a track at Denver on which the plaintiff should have the right to clean its cars, "and if no existing track can be conveniently devoted to that purpose, the defendant shall construct and equip a track therefor, at the joint expense of the parties, plaintiff and defendant." While the contract makes no express mention of car cleaning facilities, it is an obvious and necessary incident to the operation of railway trains; somehow and by somebody it must be done, and it is difficult to see, why, if the plaintiff is to be admitted to the joint possession and use of the entire railway and its appurtenant property, it can be excluded from such car cleaning facilities as the defendant possesses. If defendant desires to exclude plaintiff from such facilities as it possesses at the Burnham shops, it should provide them at some other convenient point. Unless a different arrangement can be made, it is proper that the actual work of cleaning cars should be done by the plaintiff with utensils provided by it; but the track facilities must be furnished by the defendant. If, however, the plaintiff is not satisfied with the facilities offered for this purpose, and desires further facilities and conveniences which do not now exist, it should proceed under art. III, § 1, of the contract, by giving notice to the defendant of its desire, and if the defendant, within thirty days after receiving such notice, neglects or refuses to construct such facilities, the plaintiff may construct the same and have the right to use and remove them during the term of the contract. The 5th paragraph of the decree should be modified to this extent.

(6) Plaintiff also assigns as error the omission of the court to provide in its decree that the defendant should discharge any of its employés engaged in the operation of any part of the road jointly occupied and used under the contract, upon the demand of the plaintiff that such employé be removed from that portion of the line. In this particular the contract provides (art. III, § 3) that "any employé of one company engaged in the operation of any part of the railway jointly occupied and used under this contract, shall be removed from that portion of said line upon the request of the other." The allegation of the bill in that particular is, that for the purpose of facilitating the transportation of passengers from all points on one road to all points upon the other road, the plaintiff placed in the hands of station agents at the stations between Denver and Pueblo tickets to be sold to passengers who should desire such transportation, and that defendant uniformly and persistently thwarted, when it had power to do so, all attempts to secure the movement of traffic over such through line, and instructed such agents, who were paid for their services jointly by plaintiff and defendant, to refuse to sell such tickets, and to falsely state to passengers that plaintiff's trains would not stop at such stations; and that plaintiff demanded that a number of such agents, who made such statements, should be removed; but the contract in that particular was disregarded by the defendant. In its answer, the defendant admitted that plaintiff demanded that certain of its agents be removed, but alleged that such demand was made during the pendency of these proceedings, within a few days before the filing of the supplemental bill, and that such agents had not as yet been removed by reason of the manifest oversight of the plaintiff in ignoring its time tables and the instructions therein contained, and because it believed that upon a further consideration of the facts plaintiff would withdraw the request. This point was waived in the court below upon a statement of facts made as to the particular agents in the supplemental bill named, and while there seems to be a radical difference between the parties as to a proper interpretation of this clause of the contract, the question as here presented is only a moot one, and we do not feel called upon to settle it.

This disposes of all the errors assigned by counsel, and with the modification of the 5th paragraph, above suggested, the decree of the court below will be

Affirmed, and the costs in this court divided.

MR. JUSTICE BREWER dissented, being of the opinion that the construction placed upon this contract by Mr. Justice Miller on the preliminary hearing in the Circuit Court was correct.