New York, NH & HR Co. v. INTERSTATE COM. COMMISSION, 5466.

• Decision Date: 18 January 1932
• Docket Number: No. 5466.,5466.
• Citation: 55 F.2d 1028,60 App. DC 403
• Parties: NEW YORK, N. H. & H. R. CO. v. INTERSTATE COMMERCE COMMISSION.
• Court: U.S. Court of Appeals — District of Columbia Circuit

60 App. DC 403, 55 F.2d 1028 (1932)

NEW YORK, N. H. & H. R. CO. v. INTERSTATE COMMERCE COMMISSION.

No. 5466.

Court of Appeals of District of Columbia.

Argued December 8, 1931.

Decided January 18, 1932.

John L. Hall and Charles O. Pengra, both of Boston, Mass., and P. Michael Cook, of Washington, D. C., for appellants.

Charles W. Needham, Thomas M. Ross, Robert E. Freer, and Mary B. Linkins, all of Washington, D. C., for appellee.

Before MARTIN, Chief Justice, and VAN ORSDEL, HITZ, and GRONER, Associate Justices.

VAN ORSDEL, Associate Justice.

Pursuant to its authority under the Interstate Commerce Act, the Interstate Commerce Commission, hereafter referred to as the commission, on June 30, 1915, instituted a proceeding known as Valuation Docket No. 301, to ascertain the value of the property owned or used by the New York, New Haven & Hartford Railroad Company, hereafter referred to as the New Haven.

The New Haven took exception to the report of the valuation fixed by the commission and filed a petition in the Supreme Court of the District of Columbia praying that a writ of mandamus issue to compel the commission, in making its final valuation of the property owned and used by the New Haven, to investigate, ascertain, and report the value of its rights in the passenger terminal known as the Grand Central Terminal and approaches thereto in New York City, and the passenger terminal known as the South Station in Boston.

From a judgment in the court below discharging the writ, this appeal was taken.

The New York & Harlem Railroad Company, hereafter referred to as the Harlem, was chartered by the Legislature of New York in 1831, and it constructed a line of railroad from White Plains into New York City. The New York & New Haven Railroad Company was granted a perpetual charter by the state of Connecticut on June 7, 1844, and was authorized to construct its railroad from New Haven to the New York state line. Later it applied to the New York Legislature for the right to extend its railroad from the state line into New York City. This authority was not granted.

The two companies, however, entered into an agreement dated January 22, 1846, which was followed by a substituted agreement dated March 17, 1848, which provided, among other things, as follows: "Fourth, It is mutually understood and agreed that when and as soon as the New York and New Haven Railroad Company shall have completed their road from the point of junction by Byram River, they shall have the right to run their trains, engines, and cars for the transportation of passengers, mails, expresses, freight, etc., over the track or tracks of the road of the New York and Harlem Railroad Company from the point of junction aforesaid to and into the city of New York, and as far over the same in the said city as the said company's road shall extend, not, however, below the intersection of said railroad and Pearl Street in said city — the said New York and New Haven Company furnishing their own haulage." This agreement was to continue in force "during the terms of their charters respectively, and for all renewals thereof." The charter of the New York & New Haven being perpetual, it constituted a grant in perpetuity. People v. O'Brien, 111 N. Y. 1, 18 N. E. 692, 2 L. R. A. 255, 7 Am. St. Rep. 684.

The Legislature of New York, by the act of March 29, 1848 (Laws 1848, c. 143), amended the charter of the Harlem as follows: "The New York and New Haven Railroad Company is hereby authorized to enter upon and run their cars and engines for passengers, freights, mails, expresses, and other business, over the road of the New York and Harlem Railroad Company, from the point of junction of the roads of said companies at or near William's Bridge, in the county of Westchester, to the city of New York, and as far into the said city as the said Harlem railroad may extend, upon such terms and to such point as has been or may hereafter be agreed upon by and between said companies; a copy of such agreement or agreements to be duly authenticated and filed in the office of the secretary of state of this state; and to take, transport and convey persons and property upon the said Harlem railroad, by the power and force of steam or animals or any mechanical power or combination of the same." These rights have been enjoyed by the New York & New Haven and its successor, the New Haven, up to the present time.

The rights thus acquired by the New York & New Haven under its agreement of 1848 were in the nature of a perpetual easement in the Harlem road. By the filing of the agreement in conformity with the grant of power conferred by the New York Legislature, the easement partook of the characteristics of a franchise whereby the Harlem road was subjected to a right of way, subject only to be terminated by the failure of the New York & New Haven to comply with the terms of its contract. The act of 1848, however, went further than the terms of the easement granted by the agreement of 1848, in that it constituted a public grant or franchise to the New York & New Haven road, and impressed in perpetuity a dominant servitude upon the property of its own corporation, the Harlem. It operated as an amendment of the charter of the Harlem by impressing upon it the easement granted to the New York & New Haven as a franchise obligation of the Harlem. The amendment of the Harlem's charter operated as a grant of a franchise to a foreign corporation. This established a property right in the New York & New Haven which could not be destroyed even by the termination of the Harlem charter; a franchise right which could only be terminated by the payment of full compensation, under proper authority, to the New York & New Haven.

The perpetual easement and franchise thus acquired and owned by the New York & New Haven, and later transferred to the New Haven, was granted 25 years before the New York Central acquired any rights over the Harlem tracks. The Central's lease by its terms expires 401 years from April 1, 1873. That lease was of all the property and interests of the Harlem. It logically follows that should this lease extend to its termination and the New Haven still be in operation, it would continue to have its rights preserved to operate over these tracks. In other words, the grant to the Central was for a term of years and as one of the conditions of its lease it is subject to the prior and superior perpetual rights of the New Haven.

On November 1, 1872, the Harlem, the Central, and the New Haven entered into a tripartite agreement whereby the Harlem agreed to construct the original Grand Central Depot at Forty-Second street in New York City and lease it to the Central and New Haven companies for the joint use and occupation of the three companies. In this agreement the rights of the New Haven were to continue during the term of its charter, which was perpetual. In the lease of the Harlem in 1873, the Central agreed to perform all the obligations imposed by this tripartite agreement on the Harlem.

This was followed by a further agreement of July 24, 1907, providing for the construction of the present Grand Central Terminal and the operation of its approaches as far north as Fifty-Ninth street in New York. In paragraph 3 of this contract it was provided: "The Central company, acting for itself and the Harlem company, as hereinafter authorized, in consideration of the rents hereinafter reserved to be paid by the New Haven company, and in consideration of the covenants on the part of the New Haven company hereinafter contained, hath demised, let, and leased, and by these presents both demise, let, and lease unto the New Haven company, during the term of the New Haven company's charter and all renewals thereof, including the charter of any company which shall operate the present railroad of the said New Haven company, the use, in common with the Central company, subject to all the provisions of this agreement, of the said railroad terminal for the accommodation of the traffic of the New Haven company, other than freight traffic; provided, however, that the New Haven company's right to the use thereof shall in no event exceed fifty (50) per centum of the maximum capacity of said railroad terminal, or of any part thereof."

The contract provided, as compensation for the rights thus acquired by the New Haven, that it should pay its proportion of the interest on the cost of construction of the original Grand Central Depot, and a proportion of the annual expenses for maintenance and operation of the present Grand Central Station. The contract further provided that the New Haven could not assign this lease without the consent of the Central and that in case of any default on the part of the New Haven to comply with the terms of the agreement for a period of sixty days, the Central should have the right to "enter into and upon said premises and repossess itself thereof."

The contract further provided that the railroad terminal should be under "the sole charge and direction of a terminal manager, who shall be appointed in writing by the presidents of the Central and New Haven companies, and shall be removable at any time upon written notice by either of said presidents." The agreement was to remain in force not only during the term of the New Haven's charter but of any renewals thereof or the charter of any company which may hereafter operate the New Haven company's railroad.

In the case of Georgia v. Cincinnati Southern Railway, 248 U. S. 26, 39 S. Ct. 14, 15, 63 L. Ed. 104, where the state of Georgia granted to the trustee of the Cincinnati Southern Railway, for the use of the railway, a portion of the right of way of the Western & Atlantic Railroad between certain points, with the provision "that this grant is subject to the consent and approval of the lessees of the Western & Atlantic Railroad as to the term of their lease," the state by statute undertook to repeal the act on the ground that it...