Buckeye Coal Ry Co v. Hocking Valley Ry Co 51

• Decision Date: 16 November 1925
• Citation: 70 L.Ed. 155,269 U.S. 42,46 S.Ct. 61
• Parties: BUCKEYE COAL & RY. CO. et al. v. HOCKING VALLEY RY. CO. et al. No 51
• Court: U.S. Supreme Court

269 U.S. 42

46 S.Ct. 61

70 L.Ed. 155

BUCKEYE COAL & RY. CO. et al.

v HOCKING VALLEY RY. CO. et al.

No 51.

Argued Oct. 15, 1925.

Decided Nov. 16, 1925.

Messrs. Wm. O. Henderson, for Columbus, Ohio, and Wm. Burry, of Chicago, Ill., for appellants.

Messrs. John F. Wilson, of Columbus, Ohio, Arthur H. Van Brunt, of New York City, and Bynum E. Hinton, of Washington, D. C., for appellees.

[Argument of Counsel from page 43 intentionally omitted] Mr. Chief Justice TAFT delivered the opinion of the Court.

The suit in equity in which this is an appeal was begun by the United States in the District Court for the Southern District of Ohio, Eastern Division, against the Hocking Valley Railway Company, five other railway companies, and three coal companies, and was heard before the three Circuit Judges of that circuit. It was a proceeding under the Anti-Trust Act to dissolve an illegal combination of the defendants to monopolize the business of transporting and selling coal from the coal fields of Ohio in interstate commerce. Act July 2, 1890, c. 647, 26 Stat. 209, as amended by Act Feb. 11, 1903, 32 Stat. 823, c. 544. A full hearing resulted, March, 1914, in finding that the illegal combination existed and a comprehensive decree radically dissolving the combination. United States v. Lake Shore & M S. Ry. Co. (D. C.) 203 F. 295. The railroad companies were directed to part with all their interests in the coal companies, and the business of mining and selling coal was ordered to be separated from that of railway transportation by the sale of the stocks of the defendant coal companies held by the railway companies and the dissolving of other relations which had made the combination possible and effective. Jurisdiction of the cause was retained by the court for the purpose of making such other and further orders and decrees as might be necessary to the due execution of the decree and the complete dissolution of the combination and monopoly therein condemned.

The Buckeye Coal & Railway Company was not a party to the original suit. All of its stock was owned by the Hocking Valley Railway Company. Its property consisted of 11,000 acres of coal land in the coal fields of Ohio, with an estimated deposit of 18,000,000 tons. In 1899, the Buckeye Company had pledged its coal lands in a mortgage of the Hocking Valley Railway Company to the Central Trust Company to secure $20,000,000 of the Railway Company's bonds. In the same mortgage, the Buck- eye Company agreed to pay 2 cents royalty on each ton of coal mined by it to the Central Trust Company, the mortgage trustee, to be applied to the redemption of the bonds. The Buckeye Company was not an obligor on the bonds. The Hocking Valley Railway Company, in addition to the pledge of its railway property, the Buckeye coal lands and the royalty, included in the mortgage also all the capital stock of the Buckeye Company. Upon an intervening petition of the original complainant, the United States, and after a hearing to which the Hocking Valley Railway Company and the Central Trust Company, the mortgage trustee, were parties, an order was made by the court by which the capital stock of the Buckeye Company was directed to be sold, freed from the lien of the mortgage, and subject to the approval of the court. This order was made May 19, 1916. The Hocking Valley Railway Company then made a contract with one John S. Jones, to sell him all the Buckeye Coal Company stock for $50,000 under a contract by which it was agreed that the stock sold should be released from the pledge of the mortgage. There was an express stipulation that the contract was not to impair the covenants of the Buckeye Company in the Hocking Valley Railway mortgage in respect of the lands of the Coal Company or of the 2 cents royalty, except that the Hocking Company agreed that its railroad property pledged under the mortgage should be first exhausted before any recourse should be had to the coal lands of the Buckeye Company. The constract of purchase was made subject to the presentation of its terms to the court and its approval. On October 5, 1916, the Hocking Valley Company reported the sale to the court, reciting the contract. On November 10, 1916, the District Court, after reciting the report of the contract of purchase and the dismissal of the appeal, and the tender of the purchaser for examination, found the purchaser satisfactory and approved the purchase. Jones took pos- session of the stock and organized a new company, the Sunday Creek Coal Company, which by exchange of stock succeeded to the ownership of the coal lands of the Buckeye Company and that of other companies. It is conceded by counsel for the coal companies that the value of the property of the railway that the value of the property of the railway pay the bonds is far greater than the amount due on them so that the lien on the coal lands is negligible.

In April, 1919, the coal companies brought a suit in a state court against the Central Trust Company and the Hocking Valley Railway Company in Ohio to quiet their title to the coal lands. The common...