Chicago, B. & QR Co. v. North Kansas City Develop. Co.

• Decision Date: 02 March 1943
• Docket Number: No. 12243.,12243.
• Citation: 134 F.2d 142
• Parties: CHICAGO, B. & Q. R. CO. v. NORTH KANSAS CITY DEVELOPMENT CO. et al. NORTH KANSAS CITY DEVELOPMENT CO. et al. v. CHICAGO, B. & Q. R. CO. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

134 F.2d 142 (1943)

CHICAGO, B. & Q. R. CO. v. NORTH KANSAS CITY DEVELOPMENT CO. et al. NORTH KANSAS CITY DEVELOPMENT CO. et al. v. CHICAGO, B. & Q. R. CO. et al.

No. 12243.

Circuit Court of Appeals, Eighth Circuit.

March 2, 1943.

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COPYRIGHT MATERIAL OMITTED

Andrew C. Scott, of Chicago, Ill. (John L. Rice, of Denver, Colo., William S. Hogsett and Hale Houts, both of Kansas City, Mo., and Raymond E. Skov, J. C. James, Walter McFarland, and Eldon Martin, all of Chicago, Ill., on the brief), for Chicago, B. & Q. R. Co.

Godfrey Goldmark, of New York City, and Henry N. Ess, of Kansas City, Mo. (Elton L. Marshall and Paul Barnett, both of Kansas City, Mo., and Max Freund, of New York City, on the brief), for North Kansas City Development Company and others.

Before SANBORN, THOMAS, and JOHNSEN, Circuit Judges.

JOHNSEN, Circuit Judge.

The Burlington Railroad sought to condemn,¹ for railroad purposes, 19 separate right-of-way strips, each about 17 feet in width, totalling 18.86 acres, and the 10.8 miles of lead tracks and 94 switch turnouts constructed thereon, constituting the middle portion of some 40-foot alley-ways in the North Kansas City Industrial District of North Kansas City, Clay County, Missouri, and connecting with the shipping sidings for approximately 100 industrial plants located in the district.

The North Kansas City Development Company held record title to practically all of the strips sought to be condemned. Title to .30 of an acre stood in the name of the North Kansas City Bridge and Railroad Company, a kindred corporation, and three additional small tracts stood in the names of other parties. All of the record owners were made parties defendant, but further reference to such parties, except the Development Company and the Bridge Company, is unnecessary in disposing of the controlling questions here presented.

The Development Company and the Bridge Company challenged the Burlington's right to condemn, on the grounds that the property already was legally dedicated and being devoted to the same public use for which the Burlington was seeking to acquire it, and that the Burlington was estopped, by previous recognition and conduct, from asserting otherwise. A preliminary trial was held on these foundational questions, and the court adjudged that, under the Missouri statutes, the Burlington was legally entitled to make the condemnation. Commissioners were appointed to assess the amount of the damages, and the Burlington thereafter filed exceptions to the report which they returned. The court thereupon granted a jury trial on the issue of damages, pursuant to section 1508, Mo.Rev.St.1939, Mo. R.S.A. § 1508, and the jury returned a verdict against the Burlington in the amount of $835,000.

From the judgment entered on the verdict, the Burlington has appealed, alleging errors of law in the admission of evidence and in the giving and refusing of instructions. The Development Company and the Bridge Company have cross-appealed from the adjudication of the Burlington's right to condemn. In the logical treatment of the questions thus requiring consideration here, the issues raised by the cross-appeal of the Development Company and the Bridge Company will be first discussed.

Right to Condemn.

Under section 1504, Mo.Rev.St. 1939, Mo.R.S.A. § 1504, a railroad is given the usual general power to condemn for railroad purposes. Section 1512 of these statutes provides, however, that, "In case the lands sought to be appropriated are held by any corporation, the right to appropriate the same * * * shall be limited to such use as shall not materially interfere with the uses to which, by law, the corporation holding the same is authorized to put said lands." Under the Missouri decisions, the word "corporation" in this section must be taken to mean public service corporation; the word "uses" to mean public uses; and the term "by law * * * authorized" to mean authorized by corporate charter, consisting of the applicable incorporation statutes and the specific articles of association. Kansas & Texas Coal Ry. Co. v. Northwestern Coal & Mining Co., 161 Mo. 288, 320-321, 323, 61 S.W. 684, 691, 692, 51 L.R.A. 936, 84 Am.St.Rep. 717. See, also, Mo.Const. art. 12, § 7, Mo.R. S.A.; Orpheum Theater & Realty Co. v. Seavey & Flarsheim Brokerage Co., 197 Mo. App. 661, 199 S.W. 257; Hoagland v. Hannibal & St. J. R. Co., 39 Mo. 451, 459; In re Missouri Pacific R. Co., D.C.E.D.Mo., 13 F.Supp. 888, 892.

The test of the Burlington's right to make the condemnation in the present situation, under the statutes and the decisions cited, was, therefore, whether or not the property already was being devoted to railroad use by another corporation which had the power and the right, under the statutes and under its articles, to engage in such operations.

The North Kansas City Industrial District was a privately platted real estate project, begun by the Development Company in 1903. The Development Company was a real estate corporation and had no charter power to engage in public railroad operations. In order to promote the sale of its industrial sites, however, it entered into an undertaking, in all its land sale contracts, to construct, operate and maintain, or to cause to be constructed, operated and maintained, in the alleys at the rear of the sites which it sold, suitable railroad lead, turnout and switch track facilities,² to serve the locating industries. The 19 lead tracks here involved had been built from time to time, commencing in 1912, as industrial sites were disposed of, in fulfillment of this obligation in the Development Company's contracts.

It is clear, under Missouri law, that, if the Development Company was the owner and operator of the facilities, there can be no room to contend that they had been constructed and were being maintained by a public service corporation having the power and right to do so under the statutes and under its articles, and that they thus legally had become so dedicated to a public use that they could not properly be made the subject of condemnation for similar railroad purposes. But the Development Company and the Bridge Company seek to avoid this situation by alleging in their pleadings and contending here that the tracks were in fact constructed by the Bridge Company, upon the land of the Development Company, with its consent, and were owned and being maintained by the Bridge Company, and that that corporation had such charter powers as legally enabled it to make a dedication of the property to public railroad use and as would therefore preclude the Burlington from appropriating the facilities.

The Bridge Company had been incorporated in 1901, under the Missouri railroad and union depot company statutes, Mo. Rev.St.1899, ch. 12, art. 2, Mo.R.S.A. § 5126 et seq., to construct and operate a railroad between described points in Missouri; to construct and operate a toll and railroad bridge across the Missouri River at Kansas City, Missouri; to construct and operate "a union station for passenger or freight depots, or both," in the city of Kansas City, Missouri, and in any other city of the state; and "to build, maintain and operate terminal railroads and terminal facilities to be used in connection with such union depot or station". Mo.Rev.St.1899, §§ 1164, 1165, Mo.R.S.A. §§ 5251, 5252.

The Bridge Company and the Development Company were kindred corporations, as has been indicated, having the same stockholder interests, officers and office employees. The record shows that the tracks involved had been constructed with funds supplied by the Development Company and on checks issued by it in direct payment of all materials and labor, but the amounts thereof had been charged on its books against the Bridge Company, and the officers had caused the sums to be set up on the records of both corporations as capital expenditures of the Bridge Company. The Burlington contends that these bookkeeping entries were mere paper formalities and that the Development Company was simply using the name of the Bridge Company as a cloak for its own activities, but there is evidence indicating also that, in previous relationships with the Bridge Company and the Development Company, the Burlington had, to some extent at least, recognized ownership of the facilities as being in the Bridge Company.

The trial court found that the tracks had in fact been constructed by and were the property of the Development Company and not the Bridge Company, but it did not rest its decision as to the Burlington's right to condemn upon this narrow ground. Further discussion of the issue and of the evidence in connection with it is unnecessary here, because, under the other circumstances in the record, even if the tracks were owned and maintained by the Bridge Company, that fact would not be sufficient to preclude the Burlington from condemning them, under section 1512 of the statutes. On the undisputed evidence, the Bridge Company had forfeited any power, which it could possibly claim to have had under its charter, to construct, operate and make a valid dedication of the property for public railroad use, and hence the facilities were not exempt from condemnation.

The State of Missouri, as part of its public policy, has imposed a rigid limitation upon the time within which a railroad company must complete the special undertakings of its charter and has made a failure to do so operate automatically, in the public interest, as an absolute forfeiture of all of the unexercised railroad powers of the corporation's charter, except such as may be necessary and incident to the holding and maintaining, for public service, of the facilities previously constructed and validly placed in operation prior to the forfeiture.

By express statute, Mo.Rev.St.1899, § 1161, Mo.R.S.A. § 5248, the legislature has provided that, "If any corporation formed under this article shall not, within two years after its articles of...