Union Pac. Ry. Co. v. Chicago, R.I. & P. Ry. Co.

• Decision Date: 19 July 1892
• Docket Number: 16.
• Citation: 51 F. 309
• 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. Court of Appeals — Eighth Circuit

51 F. 309

UNION PAC. RY. CO. et al. v. CHICAGO, R.I. & P. RY. CO.

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

No. 16.

United States Court of Appeals, Eighth Circuit.

July 19, 1892

Statement by SANBORN, Circuit Judge:

These were suits brought by the appellees in the district court of Douglas county, Nebraska, in January, 1891, to compel the specific performance of two contracts, dated May 1, 1890. The suits were immediately removed on petition of appellants to the United States circuit court for the district of Nebraska where they were heard by Mr. Justice BREWER, and decrees entered for appellees, from which these appeals are taken.

To one of these contracts the Union Pacific Railway Company, the Omaha & Republican Valley Railway Company, and the Salina &amp Southwestern Railway Company are parties on one side, and the Chicago, Rock Island & Pacific Railway Company and the Chicago, Kansas & Nebraska Railway Company, on the other. The other contract was between the Union Pacific Railway Company and the Chicago, Milwaukee & St. Paul Railway Company. In this statement, and in the opinion, the Union Pacific Railway Company is called the 'Pacific Company;' the Omaha & Republican Valley Railway Company the 'Republican Valley Company;' the Salina & Southwestern Railway Company, the 'Salina Company;' the Chicago, Rock Island & Pacific Railway Company, the 'Rock Island Company;' the Chicago, Kansas & Nebraska Railway Company, the 'Kansas Company;' and the Chicago, Milwaukee & St. Paul Railway Company, the 'St. Paul Company.' The Pacific Company owned nearly all 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 operated the roads of the Kansas Company under a lease for 999 years; so that in reality the Pacific Company and the Rock Island Company were the only parties in interest in the Rock Island Company's contract.

The negotiations that led to these contracts commenced about the 1st of March, 1890, and the contracts were formulated and signed by the various officers of the corporations before the middle of May in that year. The Pacific Company at this time controlled and operated more than 5,000 miles of railroads; 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 Company's railroad, extending from Salina to McPherson, in Kansas; a railroad extending from Hutchinson, Kan., 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 railroads of the Kansas Company and other corporations, it controlled and operated a through line of railway from Chicago, by way of Davenport, Iowa, St. Joseph, Mo., 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 such other lines that it controlled and operated, in the Liberal, Kan.; and such other lines that it controlled and operated, in the aggregate, more than 3,000 miles of railway. 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.

Early in 1890 the Rock Island Company determined to connect its line from Chicago to Council Bluffs with its more southerly line to Colorado Springs by constructing a bridge across the Missouri river at Council Bluffs, and a railroad from its terminus in that state, by way of Omaha, 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 Chicago to Council Bluffs on to Omaha and South Omaha. To accomplish this purpose, these companies caused a corporation, with the necessary powers, to be created, obtained for it by act of congress the necessary franchise to build and operate the bridge, made the preliminary surveys and estimates, showing the probable cost of construction to be about $2,500,000, and were proceeding to raise the necessary funds 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 certain tracks of the Pacific Company between Council Bluffs and South Omaha for their terminal facilities in Omaha and South Omaha, and to complete the continuous line desired by the Rock Island Company. By direction of the president and at least two of the directors of the Pacific Company, its chief of construction and two of its directors requested and obtained a meeting with the presidents of the Rock Island and the St. Paul Companies, and there agreed with them upon the terms of the contracts in question. From memoranda there 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 Pacific Company at Omaha. The executive committee of the board of directors of that company had a meeting on April 22, 1890, at which six of the seven members of that committee were present, considered and unanimously voted to approve of the contracts and authorize the president to execute them; but the custom of the secretary had been not to specify in the calls of the meetings of this committee the subjects to be considered thereat, and the call of this meeting did not state that the subject-matter of these contracts would be there considered. At the annual meeting of the stockholders of this company held on the 30th day of April, 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 unanimously passed approving and ratifying the contracts and the action of the committee authorizing their execution; but the call of this annual meeting did not state that the subject-matter of these contracts would be considered thereat, but stated that certain other subjects were to be considered, and that the meeting was 'for the choice of directors for the coming year, and the transaction of any other business which may legally come before the meeting. ' The resolution approving the contract with the Rock Island Company read as follows:

'Resolved, that the agreement between the Union Pacific Railway Company, the Omaha and Republican Valley Railway Company, the Salina and Southwestern Railway Company, and the Chicago, Rock Island and Pacific Railway Company, and the Chicago, Kansas & Nebraska Railway Company, dated May 1, 1890, (a copy of which is herewith submitted,) granting to the two last-named companies trackage rights over this company's lines from Council Bluffs to Omaha, including the Omaha bridge, and the lines of this company's Omaha and Republican Valley branch, from Lincoln to Beatrice, Nebraska, and providing, further, for the use by this company of the Chicago, Kansas and Nebraska Railway Company's lines between McPherson and South Hutchinson, Kansas, and the line from South Omaha to Lincoln, Nebraska, on the terms therein provided for, be and is hereby approved, and the action of the executive committee in authorizing the execution thereof is hereby ratified, approved, and confirmed.' The president of the Pacific Company signed and acknowledged the contracts on behalf of that company, and the secretary attested them and affixed the corporate seal thereto. The contracts so executed, with copies of the resolution of the meeting of the stockholders approving and ratifying them, were immediately delivered to the Rock Island Company and the St. Paul Company, and the Pacific Company immediately entered upon the enjoyment of the portion of the contract beneficial to itself. It is conceded that the board of directors and the body of the stockholders of each corporation that is a party to these contracts, the Pacific Company alone excepted, took proper action to authorize or ratify the execution of the contracts of their respective corporations, and that the formal execution of the contracts by all the parties to them was sufficient. These contracts are long, and only those stipulations that are material to the determination of the questions presented here will be stated. The contract with the Rock Island Company provides that 'the Pacific Company hereby lets the Rock Island Company into the full, equal, and joint possession and use of its main and passing tracks now located and established, or which may be hereafter located and established, between the terminus of such tracks in the city of Council Bluffs, in the state of Iowa, and a line drawn at a right angle across said tracks within one and one half miles southerly from the present passenger station of South Omaha, in the state of Nebraska, including the bridge on which said tracks extend across the Missouri river, between said cities of Council Bluffs and Omaha; connections with Union Depot tracks in Omaha, the side or spur track leading from its main tracks to the lower grade of the Pacific Company's sidings and spur tracks in Omaha, and such extension thereof as may be hereafter made; side tracks in Omaha on which to receive and deliver to the Rock Island Company freight that may be handled through the

...