Union Pac Ry Co v. Chicago Ry Co Union Pac Ry Co v. Chicago St Ry Co

• Decision Date: 25 May 1896
• Docket Number: 158,Nos. 157,s. 157
• Citation: 16 S.Ct. 1173,41 L.Ed. 265,163 U.S. 564
• Parties: UNION PAC. RY. CO. et al. v. CHICAGO, R. I. & P. RY. CO. UNION PAC. RY. CO. v. CHICAGO, M. & ST. P. RY. CO
• Court: U.S. Supreme Court

163 U.S. 564

16 S.Ct. 1173

41 L.Ed. 265

UNION PAC. RY. CO. et al.

v CHICAGO, R. I. & P. RY. CO.

UNION PAC. RY. CO.

v. CHICAGO, M. & ST. P. RY. CO.

Nos. 157, 158.

May 25, 1896.

[Syllabus from pages 564-566 intentionally omitted] These were petitions in equity filed by the Chicago, Rock Island & Pacific Railway Company against the Union Pacific Railway Company and the Omaha & Republican Valley Railway Company, and by the Chicago, Milwaukee & St. Paul Railway Company against the Union Pacific Railway Company, in the district court of Douglas county, Neb., January 2, 1891, to compel the specific performance of two contracts, dated May 1, 1890, and April 30, 1890, respectively, and removed on petition of the Union Pacific Railway Company to the United States circuit court for the district of Nebraska, where they were heard by Mr. Justice Brewer, and decrees rendered in favor of complainants. 47 Fed. 15. From these decrees defendants appealed to the United States circuit court of appeals for the Eighth circuit, by which they were affirmed. 10 U. S. App. 98, 2 C. C. A. 174, 51 Fed. 309. Thereupon these appeals were prosecuted.

To the contract of May 1, 1890, the Union Pacific Railway Company, the Omaha & Republican Valley Railway Company, and the Salina & Southwestern Railway Company- were parties on one side and the Chicago, Rock Island & Pacific Railway Company and the Chicago, Kansas & Nebraska Railway Company on the other; and the contract of April 30th was between the Union Pacific Railway Company and the Chicago, Milwaukee & St. Paul Railway Company.

The Union Pacific Railway Company controlled and operated more than 5,000 miles of railroad, and, among others, a main line extending from Council Bluffs, Iowa, by way of Omaha and Valley Station, Neb., to Ogden in Utah territory, a distance of about 1,100 miles; a main line from Kansas City, Mo., by way of Topeka and Salina, Kan., to Denver, Colo.; the Republican Valley Railroad, extending from Valley Station, Neb., by way of Lincoln and Beatrice, in that state, to Manhattan, Kan.; the Salina Railroad, extending from Salina to McPherson, in Kansas; a railroad extending from Hutchinson, in Kansas, to the southern border of that state; and other auxiliary roads.

The Rock Island Company owned and operated a line of railway extending from Chicago, by way of Davenport, to Council Bluffs, Iowa, and from Davenport to St. Joseph, Mo. As the owner of the latter line, and lessee of the Chicago, Kansas & Nebraska Railway Company and othe corporations, it controlled and operated a through line of railway from Chicago, by way of Davenport, St. Joseph, and Beatrice, Neb., to Colorado Springs and Denver, Colo.; a line from St. Joseph, Mo., by way of Horton, Topeka, and Hutchinson, to Liberal, Kan.; and other lines,—amounting in the aggregate to more than 3,000 miles of railway.

The Union Pacific Railway owned nearly all of the stock and bonds, elected the directors, and built, controlled, and operated the railroads of the Republican Valley and Salina Companies, and the Rock Island Company owned and operated the roads of the Kansas Company under a lease for 999 years, so that the Pacific Company and the Rock Island Company were practically the real parties in interest to the contract of May 1st.

The St. Paul Company was operating more than 6,000 miles of railroad, and one of its lines extended from Chicago to Council Bluffs, Iowa.

The following sketch roughly indicates the domain of the contracts:

Early in 1890 the Rock Island Company determined to connect its lines from Chicago to Council Bluffs with its southerly line to Colorado Springs by constructing a bridge across the Missouri river at Council Bluffs, and a railroad from that terminus, by way of Omaha land South Omaha and Lincoln, to Beatrice, Neb., thereby shortening its line from Chicago to Denver and Colorado Springs; and the St. Paul Company joined in the undertaking in order to extend its line from Council Bluffs on to Omaha and South Omaha. Acting in concert, the two companies caused a corporation to be created under the laws of the state of Iowa by the name and style of the Nebraska Central Railway Company, with power to build a bridge across the river at Omaha, and one or more lines from that city west. Congress granted to this corporation the necessary franchise for the bridge. (23 Stat. 43.) Preliminary surveys and estimates were made, which showed that the entire cost of the bridge and tracks to South Omaha would be about $2,500,000. In February, 1890, the presidents of the St. Paul and Rock Island Companies visited New York for the purpose of arranging for the construction of the proposed work, when the Pacific Company requested them to suspend operations, and proposed to make a trackage arrangement with them by which they could use the bridge and tracks of the Pacific Company between Council Bluffs and South Omaha for their terminal facilities in Omaha and South Omaha, and the continuous line desired by the Rock Island Company could be completed. By direction of the president and at least two directors of the Pacific Company, its chief of construction and two of its directors obtained a meeting with the presidents of the St. Paul and Rock Island Companies and agreed with them upon the terms of the contracts in question. From the memoranda then made by the chief of construction of the Pacific Company, the contracts were subsequently drawn. They were examined and approved by the general solicitor of the company at Omaha. The executive committee of the board of directors of the Pacific Company at a meeting on April 22, 1890, at which six of the seven members of that committee- were present, five in person and one by proxy, considered and unanimously voted to approve of the contracts and authorized the president to execute them. The custom of the secretary had been not to specify in the notice of the meetings of the executive committee the subjects to be considered, and the notice of this meeting did not state that the subject-matter of these contracts would be considered. The member of the executive committee who was absent and not represented was a government director.

At the annual meeting of the stockholders of the company, held April 30, 1890, at which more than two-thirds of the stock was represented, these contracts and the action of the executive committee thereon were considered, and resolutions passed, by a unanimous vote of that stock, approving and ratifying the contracts and the action of the committee authorizing their execution. The call of the annual meeting did not state that the subject-matter of these contracts would be considered, but that certain other subjects would be, and that the meeting was for the selection of directors for the coming year and the transaction of any other business which might legally come before the meeting. The record of the meeting of the executive committee, April 22, 1890, reads thus:

'The president submitted Vice President Holcomb's letter No. 1,139, dated April 18, 1890, inclosing an agreement between this company and the Chicago, Milwaukee & St. Paul Railway Company, and an agreement between this company, the Omaha & Republican Valley Railway Company, the Salina & Southwestern Railway Company, the Chicago, Rock Island & Pacific Railway Company, and the Chicago, Kansas & Nebraska Railway Company, dated May 1, 1890.

'Whereupon, after consideration, it was,

'On motion of Mr. Spaulding,

'Voted unanimously, that the agreement submitted to the committee between this company and the Chicago, Milwaukee & St. Paul Railway Company, granting trackage rights to the latter company over this company's lines between Council Bluffs, Omaha, and South Omaha, for a period of- 999 years from May 1, 1890, at a monthly rental of $3,750, is approved, subject to the ratification of the stockholders, and the president is hereby authorized to execute the same on behalf of this company;

'Voted, unanimously, that the agreement submitted to the committee dated May 1, 1890, between this company, the Omaha & Republican Valley Railway Company, the Salina & Southwestern Railway Company, the Chicago, Rock Island & Pacific Railway Company, and the Chicago, Kansas & Nebraska Railway Company, providing for the use of this company's lines from Council Bluffs to Omaha, including the bridge over the Missouri river and the lines of this company's Omaha & Republican Valley Branch from Lincoln to Beatrice, Nebraska, and for the use by this company of the Chicago, Kansas & Nebraska Railway Company's lines between McPherson, Kansas, and South Hutchinson, Kansas, for a period of 999 years from May 1, 1890, and for the use of the line between the cities of South Omaha and Lincoln, Nebraska, for a period of 999 years from October 1, 1890, at the rentals severally provided for therein, is approved, subject to the ratification of the stockholders, and the president is hereby authorized to execute the same on behalf of the company.'

The following are the resolutions severally adopted by a separate vote of the entire stock represented in favor of each:

'Resolved, that the agreement between the company and the Chicago, Milwaukee & St. Paul Railway Company, dated May 1, 1890, granting trackage rights to the latter company over this company's lines, between Council Bluffs, Iowa, and Omaha and South Omaha, Nebraska, a copy of which is herewith submitted, be, and is hereby, approved, and the action of the executive committee in authorizing its execution is hereby ratified, approved, and confirmed.

'Resolved, that the agreement between the Union Pacific Railway Company, the Omaha & Republican Valley Railway Company, the Salina & Southwestern Railway Company, the Chicago, Rock Island & Pacific Railway- Company, and the Chicago, Kansas & Nebraska Railway Company, dated May 1, 1890, a copy of which is herewith submitted, granting to the latter companies trackage rights over this company's lines...