C. & O. Ry. Co. v. Wadsworth Electric Mfg. Co.

• Decision Date: 03 June 1930
• Citation: 234 Ky. 645
• Court: United States State Supreme Court — District of Kentucky
• Parties: Chesapeake & Ohio Railway Company et al. v. Wadsworth Electric Manufacturing Company.

234 Ky. 645

Chesapeake & Ohio Railway Company et al. v. Wadsworth Electric Manufacturing Company.

Court of Appeals of Kentucky. (Common Law and Equity Division).

Decided June 3, 1930.

1. Eminent Domain. — Railroads eliminating grade crossings held not entitled to peremptory instruction in action for damage to property

by change of street grades on ground that they contracted merely to indemnify city.

A city ordinance, accepted by railroad companies, provided that all damages to property of any person or company by construction of underpasses and viaducts, change of street grades, or closing of streets or alleys, should be paid for by railroad companies, and city relieved of all liability.

2. Contracts. — Stranger to consideration may sue on contract made for his benefit.

3. Contracts. — Contract is made for benefit of party having direct financial, legal, or equitable interest in its performance.

4. Eminent Domain. — All corporations participating in taking of private property for public use are liable for damages (Constitution, sec. 242).

5. Eminent Domain. — Railroad company authorized to use street cannot disregard others' property rights, and is not immune from liability for invasion thereof.

6. Municipal Corporations. — City cannot grant corporations rights in streets to exclusion of public, and such grant is no protection against liability for injury to property.

7. Eminent Domain. — Ordinance provision that railroad companies shall pay damages to property by change of street grades in eliminating grade crossings, "as their interest may appear," does not protect any of them from liability.

8. Eminent Domain. — Jury's finding of damages to property by change of street grades in eliminating railroad grade crossings cannot be set aside as excessive, where there is evidence justifying it.

9. Appeal and Error. — Court of appeals cannot interfere with jury's verdict, in absence of error of law affecting appellants' substantial rights.

Appeal from Kenton Circuit Court

GALVIN & TRACY, ROUSE & PRICE and A.E. STRICKLETT for appellants.

SAWYER SMITH and ROBERT C. SIMMONS for appellee.

OPINION OF THE COURT BY JUDGE WILLIS.

Affirming.

The city of Covington in 1927 enacted an ordinance for the elimination of railway grade crossings in portions of the city. It provided for radical alterations at Eleventh street and at Robbins street, where the several tracks of the Covington & Cincinnati Elevated Railroad & Transfer & Bridge Company, the Chesapeake & Ohio Railway Company, and the Louisville & Nashville Railway Company crossed the two streets. A section of the ordinance was as follaws:

"Section 17. The cost and expense of constructing said underpasses and viaducts, and all damages, if any, that may be done to the property of any person or persons, company or companies, by reason of the construction of said underpasses and viaducts, and the approaches thereto, or by reason of the change of grade of any of the streets or avenues, or the closing of any streets, avenues or alleys herein mentioned, shall be paid for by said The Bridge Company, The Chesapeake Company or The Louisville Company, or either of them, as their interest may appear and the city relieved of all liability and responsibility."

Another section provided that the railroad companies, within thirty days after the ordinance became effective, should accept the same in writing, whereupon the ordinance should constitute and thereby become a binding contract between the city of Covington and the three railroad companies named therein. The ordinance was accepted in writing by the railroad companies within the period prescribed and became effective. Pursuant to its provisions the railroad companies made the improvements required by it. In order to do so it became necessary to change the established grades of Eleventh street and Robbins street. Joseph Feltman owned real estate abutting on Eleventh street and extending back to Robbins street and abutting thereon. The property had been leased to the Wadsworth Electric Manufacturing Company with an option to purchase the property, which option had been accepted and converted into an obligation. An action was filed by Feltman and the Wadsworth Company against the city of Covington and the three railroad companies to recover damages to the property resulting from the improvements made under the contract. A trial resulted in a judgment in favor of the plaintiffs against all the defendants for $37,500, to reverse which the railroad companies have prosecuted an appeal.

It is contended that the court should have sustained the motions of the three railroad companies for a peremptory instruction; that the court erred to the prejudice of the railroad companies in permitting the jury to be advised of the terms and provisions of section 17 of the ordinance, which required the railroad companies to pay the damages; and that the verdict of the jury was contrary to the evidence and grossly excessive.

The argument of appellants for a peremptory instruction in favor of the three railroad companies is predicated upon the assumption that no cause of action existed in favor of the plaintiffs against the railroad companies, and that the city of Covington was the only proper or necessary defendant. The argument is deduced from the charter of the city, which vests exclusive control and power over the streets of the city, including the alteration, closing, and grading thereof, and particularly the provision of the charter which authorizes the city to direct and control the construction of all railroad tracks, bridges, and kindred matters. By way of amplification it is insisted that in the nature of things there can be no contractual relation between the citizens whose property may be injured by an improvement and the person or corporation doing the work. The contractor operates as an agency of the city, and, when the contract is performed, any trespass or injury resulting from the execution of the contract must fall upon the municipality and not upon the contractor. In contemplation of the contractual obligation of the railroad companies, derived from the ordinance, to pay the damages, it is argued that it constitutes but an indemnity agreement to reimburse the city for such expenses, and not a contract for the benefit of the injured landowners. The argument proceeds upon a misapprehension of the facts and a misapplication of the law. The petition of the plaintiffs charged that the defendants entered upon the streeets abutting on plaintiffs' property, elevated and changed the established grade, and jointly did all the things enumerated in setting out the facts constituting the cause of damage and the source of the liability. The defendants were the city and the three railroad companies. The answer did not deny those allegations of the petition, but denied merely that any injury had resulted from the operations or that any damage had been caused. According to the allegations of the petition the city and the railroad corporations were jointly liable, and could be jointly sued whether that liability was based upon the contract or section 242 of the Constitution which requires compensation to be made for property taken for public use. But if it be assumed that the contract was performed by the contractor in accordance with the plans and specifications of the city, and that no liability for consequential injuries rested upon the railroad companies because of that fact (Hunt-Forbes Construction Co. v. Robinson, 227 Ky. 138, 12 S.W. (2d) 303), yet, where the property of the abutting owner is actually taken for public use, both the municipality and the contractor are liable to the injured party. Terhune v. Gorham, 225 Ky. 249, 8 S.W. (2d) 431; Black Mountain Corp. v. Houston, 211 Ky. 621, 277 S.W. 993. But these questions are academic so far as this case is concerned because of the agreement of the appellants, not to indemnify the city against such damages as it might have to pay, but to pay all damages for which the city may be legally liable to the abutting property owners resulting from the erection of the viaducts, or from substantial changes in the established grades of the streets involved.

The principle prevailing in this state is that one for whose benefit a contract is made may maintain an action thereon, although a stranger to the consideration; and a contract is made for the benefit of a party who has a direct financial, legal, or equitable interest in its performance. 13 C.J. p. 707, sec. 816; Hall v. Alford, 105 Ky. 666, 49 S.W. 444, 20 Ky. Law Rep. 1482; Louisville & N.R. Co. v. Schmidt, ...