St. Louis, B. & M. Ry. Co. v. Texas Mexican Ry. Co., 11387.

• Decision Date: 31 May 1944
• Docket Number: No. 11387.,11387.
• Citation: 181 S.W.2d 895
• Parties: ST. LOUIS, B. & M. RY. CO. et al. v. TEXAS MEXICAN RY. CO.
• Court: Texas Court of Appeals

181 S.W.2d 895

ST. LOUIS, B. & M. RY. CO. et al. v. TEXAS MEXICAN RY. CO.

No. 11387.

Court of Civil Appeals of Texas. San Antonio.

May 31, 1944.

Rehearing Denied June 21, 1944.

Appeal from 94th District Court, Nueces County; Honorable Paul A. Martineau, Judge.

Suit by the Texas Mexican Railway Company against the St. Louis, Brownsville & Mexico Railway Company and others for an injunction and to recover compensation for use of the plaintiff's tracks and facilities. From a judgment for the plaintiff, defendants appeal.

Affirmed.

E. H. Crenshaw, Jr., of Kingsville, and Andrews, Kelley, Kurth & Campbell, of Houston, for appellant.

E. H. Borchers, of Laredo, B. D. Tarlton and M. G. Eckhardt, both of Corpus Christi, and J. D. Dodson, of San Antonio, for appellees.

NORVELL, Justice.

The St. Louis, Brownsville and Mexico Railway Company (hereinafter referred to as Brownsville Railway) and its Trustee, Guy A. Thompson, have appealed from a judgment for the sum of $184,929.85 rendered against the Trustee and in favor of the Texas Mexican Railway Company (hereinafter referred to as Tex-Mex Railway). The amount of the judgment is based upon a jury finding that the reasonable value per day of the use by Thompson, Trustee, of the railroad tracks and facilities belonging to the Tex-Mex Railway, situated in Corpus Christi, Texas, and between said City and Robstown, Texas, was $278.09 per day from November 1, 1941, to August 27, 1943, inclusive, a total of 665 days.

According to our view of the case, there are two questions of substance involved. One relates to the jurisdiction and power of the trial court to render the judgment involved, and the other relates to the sufficiency of the evidence to support the jury's finding.

In 1904 Tex-Mex Railway owned and operated a railway line between Laredo and Corpus Christi. The Brownsville Railway owned and operated a railway line between Houston and Brownsville. The tracks of the Brownsville Railway and Tex-Mex Railway intersected at Robstown, approximately sixteen and a half miles west of Corpus Christi. The Brownsville Railway, being desirous of running certain of their trains into Corpus Christi, negotiated a contract with the Tex-Mex Railway under the terms of which it secured the right to operate trains over the Tex-Mex tracks between Robstown and Corpus Christi and make use of the Tex-Mex terminal facilities at Corpus Christi. This contract was dated November 1, 1904, and provided for a term of fifty years unless sooner terminated by the parties. Compensation or rental to the Tex-Mex was fixed by the contract through the adoption of a formula based upon two and one-half per cent of the estimated valuation of the privileges granted to the Brownsville Railway, and the proportional cost of maintenance and operation according to a "car basis," that is, the Brownsville Railway agreed to pay its proportionate part of maintenance and operation costs according to the ratio its car operations over the Tex-Mex tracks bore to the total aggregate of cars so operated over said tracks. Brownsville Railway further obligated itself to pay annually an amount equal to one-half the amount of taxes levied and assessed against the Tex-Mex properties jointly used by the Brownsville Railway.

This contract contained the following provision: "It is further agreed that this contract may be terminated without giving any reason therefor, by either party, upon giving twelve months' notice of such intent to terminate the lease."

On the first day of October, 1914, the contract was modified by the parties in certain particulars. Maintenance cost was placed on a "car mileage basis" rather than a "car basis," but the provision of the original agreement above quoted remained unchanged. The evidence indicates that the amount of daily rental arrived at by means of the original contract formula, as modified in 1914, would be substantially less than the amount set forth in the jury verdict.

On October 31, 1940, the Tex-Mex Railway gave written notice of its intention to terminate the contract twelve months from date of notice. Despite this action, the Trustee of the Brownsville Railway, after November 1, 1941, continued to operate over the Tex-Mex tracks and facilities, and was informed by the Tex-Mex Railway that a charge of $500 per day for the use of these facilities would be made. The Trustee and the Brownsville Railway refused to pay this rental or any other charge, save that provided for in the contract of November 1, 1904, as supplemented by the agreement of October 1, 1914.

This suit followed. The Tex-Mex Railway prayed for a permanent injunction restraining the Brownsville Railway from making use of its tracks and facilities, but such relief was denied by the trial court, and no complaint of this ruling is made here.

The judgment contains certain findings made by the trial court, viz.: (1) The contract of November 1, 1904, as supplemented by agreement of October 1, 1914, had been adopted by the Trustee for the Brownsville Railway; (2) the Trustee had operated under the contract from the time of his appointment (1933) until October 31, 1941; (3) due notice of termination of said contract had been given by the Tex-Mex Railway, so that the contract terminated as of October 31, 1941, but (4) the Trustee had since that date made use of the Tex-Mex properties over protest of the Tex-Mex Railway, claiming a right to do so under the contract of November 1, 1904. Based upon these findings and the verdict of the jury, judgment was rendered as above indicated. However, no execution of the judgment (other than for costs) was directed, but the judgment was ordered certified to the United States District Court for the Eastern District of Missouri (Eastern Division), the court having jurisdiction over the bankruptcy proceedings affecting the Brownsville Railway.

The relief prayed for by the Tex-Mex Railway and granted by the court below was an award of compensation for the use of its property (for a specified period of time) by another having no contract rights authorizing such use.

It is clear that unless the jurisdiction of the State District Court over the subject matter has been in some way curtailed or restricted by constitutional federal action, the court below was authorized and fully empowered to settle and determine this controversy by rendering a judgment with reference thereto.

Appellants suggest that the trial court was deprived of jurisdiction over the subject matter by federal action under the bankruptcy power and under the power to regulate interstate commerce.

On June 22, 1933, L. W. Baldwin and Guy A. Thompson were appointed trustees for the Brownsville Railway in accordance with section 77 of the Bankruptcy Act, 11 U.S.C.A. § 205. Baldwin resigned effective December 26, 1935, and since that time Guy A. Thompson has served as sole trustee for the Brownsville Railway.

It appears from the record that a number of orders relating to the prosecution of claims against the debtor in the process of reorganization have been entered by the bankruptcy court, i. e., the United States District Court for the Eastern District of Missouri. The order last entered and now in effect provides in part:

"That the commencement or continuation of suits against any of the debtor companies is hereby stayed and enjoined until after final decree entered in these proceedings; provided, however, that suits or claims for damages caused by the operations of trains, buses or other means of transportation may be filed and prosecuted to judgment in any court of competent jurisdiction, and any order heretofore staying the prosecution of any such causes of action or appeal is hereby vacated."

Appellants cite a number of cases which discuss the powers of the bankruptcy court, as well as the authority of trustees appointed under Section 77 of the Bankruptcy Act. None of these cases, however, is authority for denying to the state court its asserted jurisdiction over the controversy presented here. The case of Anderson v. Scandrett, D. C., 19 F.Supp. 681, is somewhat similar on the facts, and in our opinion supports a holding in favor of the trial court's jurisdiction. We hold that the fact that the Brownsville Railway is in the process of reorganization in bankruptcy (Section 77) does not deprive the state district court of jurisdiction of the subject matter of this controversy.

We next consider the effect of the federal exercise of authority under the interstate commerce power. It is conceded that both corporations here involved are engaged in interstate commerce. Appellants particularly rely upon Section 1 (18) of the Interstate Commerce Act. 49 U.S.C.A. § 1, par. (18), Transportation Act of February 28, 1920, c. 91, § 402, 41 Stat. 477.

This paragraph reads as follows:

"Extension or abandonment of lines; certificate required. * * * No carrier by railroad subject to this chapter shall undertake the extension of its line of railroad, or the construction of a new line of railroad, or shall acquire or operate any line of railroad, or extension thereof, or shall engage in transportation under this chapter over or by means of such additional or extended line of railroad, unless and until there shall first have been obtained from the commission a certificate that the present or future public convenience and necessity require or will require the construction, or operation, or construction and operation, of such additional or extended line of railroad, and no carrier by railroad subject to this chapter shall abandon all or any portion of a line of railroad, or the operation thereof, unless and until there shall first have been obtained from the commission a certificate...