Chicago, Indianapolis & Louisville Railway Co. v. Southern Indiana Railway Co.

Decision Date06 April 1904
Docket Number4,615
Citation70 N.E. 843,38 Ind.App. 234
CourtIndiana Appellate Court
PartiesCHICAGO, INDIANAPOLIS & LOUISVILLE RAILWAY COMPANY v. SOUTHERN INDIANA RAILWAY COMPANY

Rehearing denied June 24, 1904.

Transfer denied June 7, 1906.

From Lawrence Circuit Court; W. H. Martin, Judge.

Suit by the Chicago, Indianapolis & Louisville Railway Company against the Southern Indiana Railway Company. From a decree for defendant, plaintiff appeals.

Affirmed.

E. C Field and H. R. Kurrie, for appellant.

F. M. Trissal and Brooks & Brooks, for appellee.

ROBY, J. Henley, C. J., Comstock and Robinson, JJ., concur. Wiley, P. J., and Black, J., dissent. WILEY, P. J., dissents.

OPINION

ROBY, J.

Demurrers were sustained to each of the three paragraphs of appellant's complaint, and the correctness of such action is the question for decision.

A written contract, executed by the Louisville, New Albany & Chicago Railway Company, as the party of the first part, and by the Evansville & Richmond Railway Company, as party of the second part, is filed with each paragraph and forms the basis for the relief prayed, which in the first and second paragraphs is specific performance of the contract, and in the third, judgment for the reasonable cost of constructing the interlocking switch specified therein. The averments are made that appellant succeeded to the rights of the Louisville, New Albany & Chicago Railway Company, and that appellee holds the title of the Evansville & Richmond Railway Company, and that the one has the right to enforce, and the other is bound by, the contract in question. This is not controverted, so that the rights of the parties will not be different from what they would be had the agreement between them been originally, and the terms "first party" and "second party," when used in this opinion, will be used as applicable to appellant and appellee respectively.

The contract made on July 29, 1889, in terms grants to the second party the right to construct and operate its railroad over and across the main track and switches owned by the first party, at a designated distance north of the Bedford telegraph office, upon certain specified conditions, which the second party bound itself to perform. The substance of these conditions was that the second party should furnish all material and perform all labor necessary to raise a certain switch track belonging to the first party, to furnish all material and perform all labor incident to the construction and maintenance of the crossing, including an interlocking switch and signal system. In event that the first party should thereafter wish to construct additional tracks, it agreed to adopt its own tracks thereto and pay one-half of the expense of whatever else (frogs, signals, etc.) might be necessary to make the crossing safe. It was further stipulated that proper appliances were to be used in such improvement, and that employes performing service at said crossing should be subject to removal at the demand of the first party. The second party bound itself to hold the first party harmless from cost and damage resulting from the construction or the use of said crossing. The concluding clauses of the contract were of the tenor following:

"Sixth. The second party agrees not to run any track or tracks to or from any stone-quarry which is connected with the road of the first party, by switches or tracks built thereto by said first party or under contract therefor, and will not make any demands for the use of said first party's tracks or switches leading to any such quarries, for the shipment of stone therefrom, the express purpose of this clause being to preserve to said first party all rights and benefits now acquired in the business of such quarries; and it is hereby expressly understood and agreed that the consideration for granting the rights and privileges herein expressed to said second party is the covenant and agreement of said second party not in any manner, directly or indirectly, to interfere with or divert the benefits now derived or to be hereafter derived from said first party's connection and business with such quarries.

Seventh. In consideration of making a Y connection, it is agreed between the parties hereto that in case any party or parties require said first party to forward stone or other car-load freight to the line of the second company, it is agreed that the proportion of the through rate from any given quarry or station accruing to the party of the first part shall not be less than three cents per hundred pounds."

By clause sixth the second party agreed not to run any track into any stone-quarry connected by switches or tracks with the road of the first party, and not to demand the use of such tracks for the shipment of stone; "the express purpose of this clause being to preserve to said first party all rights and benefits now acquired in the business of such quarries." The concluding portion of the clause contains a further agreement by the second party not "directly or indirectly to interfere with or divert the benefits now derived or to be hereafter derived from said first party's connection and business with such quarries." This clause clearly states the purpose for which it is drawn. Its effect, and its intended effect, is to deprive a class of citizens, engaged in a certain business, of advantages that might accrue to them from the facilities afforded them for the shipment of their merchandise over a competing railroad.

By this agreement the two railroad companies undertook to contract away the rights of third parties, without their knowledge, and in defiance of the public duty devolved upon such companies. That the contracting parties were conscious of the quality of such undertaking is indicated by the seventh clause of the contract, where, in case "any party or parties require said first party to forward stone * * * to the line of the second party," then irrespective of distance, at least three cents per hundred pounds must be paid first party for its share of the through rate; a stipulation, the effect of which is to deprive the shipper of the benefits of competition, should he demand that the second party discharge its public duty by furnishing transportation facilities to him. The policy of the law is to prevent the creation of monopolies and to foster fair competition. Eel River R. Co. v. State, ex rel. (1900), 155 Ind. 433, 57 N.E. 388; Indianapolis Union R. Co. v. Dohn (1899), 153 Ind. 10, 45 L. R. A. 427, 74 Am. St. 274, 53 N.E. 937; State, ex rel., v. Portland Nat. Gas Co. (1899), 153 Ind. 483, 53 L. R. A. 413, 74 Am. St. 314, 53 N.E. 1089; Board, etc., v. Lafayette, etc., R. Co. (1875), 50 Ind. 85; 2 Elliott, Railroads, § 359.

"A contract between corporations charged with a public duty, such as that of common carriers, providing for the formation of a combination having no other purpose than that of stifling competition, and providing means to accomplish that object, is illegal. The purpose to break down competition poisons the whole contract, and there is here no antidote which will rescue it from legal death." Cleveland, etc., R. Co. v. Closser (1890), 126 Ind. 348, 361, 9 L. R. A. 754, 22 Am. St. 593, 26 N.E. 159. The important thing to be secured was, the court declared in the case above cited, a sound and salutary general principle, and not merely cases with closely resembling facts. The principle declared, as heretofore quoted, accords with the necessities of commerce and development, and is supported by a vast volume of authority, including the following: Louisville, etc., R. Co. v. Sumner (1886), 106 Ind. 55, 59, 55 Am. Rep. 719, 5 N.E. 404; St. Louis, etc., R. Co. v. Mathers (1874), 71 Ill. 592, 22 Am. Rep. 122; Greenhood, Public Policy, p. 626; Kettle River R. Co. v. Eastern R. Co. (1889), 41 Minn. 461, 43 N.W. 469, 6 L. R. A. 111; West Va. Trans. Co. v. Ohio River, etc., Co. (1883), 22 W.Va. 600, 626, 46 Am. Rep. 527.

It is contended in argument that it was competent to make the contract in question, in order to prevent destructive competition. There is no basis of fact justifying the proposition. A combination between common carries to prevent competition is prima facie illegal. "The burden is on the carrier to remove the presumption, and until it is removed the agreement goes down before the presumption, and the agreement must be held to be within the condemnation directed against all contracts which violate public policy." Cleveland, etc., R. v. Closser, supra, at page 360. And see State, ex rel., v. Portland Nat. Gas Co., supra.

The appellee railroad company has power, by the provisions of the statute, to purchase, receive and take such lands as may be necessary to the construction and maintenance of its railroad, stations, depots and other accommodations necessary to accomplish the objects for which the corporation was created. § 5153 Burns 1901, § 3903 R. S. 1881. The statute also makes it the duty of railroad corporations to furnish sufficient accommodations for the transportation of all such persons and property as shall, within a reasonable time previously thereto, offer or be offered for transportation at the place of starting, at the junctions of other railroads and at sidings and stopping places established for receiving way passengers and freight. § 5185 Burns 1901, § 3925 R. S. 1881. It has frequently been adjudged that contracts of a railroad company, by which it undertakes not to locate stations or depots within prescribed limits, are contrary to public policy and void. Louisville, etc., R. Co. v. Sumner, supra; St. Joseph, etc R. Co. v. Ryan (1873), 11 Kan. 602, 15 Am. Rep. 357; Florida, etc., R. Co. v. State, ex rel. (1893), 31 Fla. 482, 13 So. 103, 34 Am. St. 30, 20 L. R. A. 419; Elkhart County...

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