Chicago Ry Co v. Denver Co Denver Co v. Chicago Ry Co

• Decision Date: 07 March 1892
• Citation: 12 S.Ct. 479,143 U.S. 596,36 L.Ed. 277
• Parties: CHICAGO, R. I. & P. RY. CO. v. DENVER & R. G. R. CO. DENVER & R. G. R. CO. v. CHICAGO, R. I. & P. RY. CO
• Court: U.S. Supreme Court

143 U.S. 596

12 S.Ct. 479

36 L.Ed. 277

CHICAGO, R. I. & P. RY. CO. v. DENVER & R. G. R. CO.

DENVER & R. G. R. CO.

v. CHICAGO, R. I. & P. RY. CO.

March 7, 1892.

STATEMENT BY MR. JUSTICE BROWN.

This was a bill in equity brought by the Chicago, Rock Island & Pacific Railway Company, (hereafter designated as the Rock Island Company,) against the Denver & Rio Grande Railroad Company, (hereinafter designated as the Denver Company,) to enforce an alleged right to certain terminal facilities at the city of Denver, and for certain incidental purposes, hereinafter stated in the opinion. There was also a cross-bill filed to enjoin the plaintiff from making use of such facilities, and for other purposes, which was subsequently dismissed by stipulation of the parties.

The litigation arose out of a contract entered into on the 15th day of February, 1888, between the Denver Company and the Chicago, Rock Island & Colorado Company, (hereinafter designated as the Chicago Company,) for the joint use and possession of the Denver road between Denver and Pueblo, the material portions of which are printed in the margin.¹ Pursuant to article 3, § 10, of this contract, the president of the Chicago Company, on March 17, 1888, gave written notice to the defendant company that the Chicago Company elected, as provided by the contract of February 15, 1888, 'to build its railway from the western boundary of the state of Kansas to Colorado Springs, and that it will have the same ready for operation on or before the 31st day of December, in the year 1889.'

Soon after this the Chicago Company completed its connection with the Denver Company's line at Colorado Springs, and thereafter for some time brought all its trains by the way of Colorado Springs to Denver and Pueblo over the defendant's line. The distance from Denver to Pueblo is about 120 miles; Colorado Springs being an intermediate station, nearly midway between the termini.

In April, 1889, the Rock Island Company, claiming to be the successor in interest of the Chicago Company under the contract, assumed the operation of that company's line, and about the same time entered into a contract with the Union Pacific Company, by the terms of which the Rock Island Company acquired the right to connect its railway with that of the Union Pacific at Limon, about 90 miles east of Denver, and to run its trains over the track of the Union Pacific from that point to Denver, which was 64 miles shorter than that by Colorado Springs, and over a road the maximum grade of which was much less than the other. From that time to the present the plaintiff has transacted most of its business to and from Denver over the Union Pacific line, bringing the same over no portion of the Denver Company's line; but at the same time has sought to utilize the defendant's terminal facilities at Denver for the handling of its business. It has still continued, however, to send its Pueblo traffic by way of Colorado Springs, and over the line of the defendant's road.

Immediately after its Denver business began to be thus diverted, and on May 10, 1889, the general manager of the Denver Company telegraphed Mr. Cable, the president of the plaintiff company, as follows: 'I have just seen Mr. Allen, general superintendent, and have notified him that, although we are not required by our contract to handle or care for your trains and equipment brought to Denver over the Union Pacific line, we do so temporarily, and with the understanding that the compensation for such service, as also for the use of our tracks for such trains, will be made at an early date.' To this Mr. Cable replied the next day as follows: 'Your telegram received. Of course, any service performed for us, not covered by contract, will be paid for by our company. When I come out in June I will spend time enough with you to take up matters between us that may require attention. I have no doubt that everything can be satisfactorily arranged.'

No payment for the use of such terminal facilities appears, however, to have been made; the plaintiff asserting its right to use these terminals, for its business brought over the Union Pacific tracks, under the contract made with Chicago Company. The parties being unable to agree upon a proper construction of the contract, the defendant gave notice that it would on August 1, 1890, exclude from its Denver terminals all business brought over the Union Pacific tracks. Thereupon the Rock Island Company filed this bill, and applied for a restraining order, which was granted. By amendments and supplemental bill there were brought into the controversy other matters of difference which had arisen between the two companies. Upon the hearing in the circuit court a decree¹ was made, settling the rights of the two companies to this constract, (45 Fed.Rep. 304,) from which both parties appealed to this court.

Thos. F. Withrow, for Chicago, R. I. & P. Ry. Co.

E. O. Wolcott, for Denver & R. G. R. Co.

Mr. Justice BROWN, after stating the facts in the foregoing language, delivered the opinion of the court.

1. A preliminary question is made with regard to the rights of the Rock Island Company as the successor of the Chicago Company under the contract of February 15, 1888. By article 3, § 9, of this contract, it was provided that it should 'attach to and run with the railways of the respective parties during the corporate existence of each, and of all extensions of such existence, by renewal or otherwise, and shall be binding upon the lessees, assigns, grantees, and successors of each during the continuance of their several corporate existences: provided, however, that the Chicago Company can assign its interests in this contract only by sale, lease, or consolidation of its own property.' The original companies, of which the Rock Island Company claims to be the successor, appear to have been the St.Joseph & Iowa Railroad Company, a Missouri corporation, and the Chicago, Kansas & Nebraska Railway Company, a Kansas corporation. On May 15, 1886, the latter company leased its property and franchises to the former, which entered into possession under such lease, which is still in force. On June 13, 1888, after this contract was made, the Chicago, Kansas & Nebraska Company and the Chicago, Rock Island & Colorado Company were consolidated under the name of the Chicago, Kansas & Nebraska Railway Company, which consolidated corporation is admitted by the answer to have succeeded to and become vested with all the property and property rights, and all the corporate rights, powers, franchises, and privileges, of the said two constituent companies, including the contract between the Chicago Company and the defendant, and thereby entered into possession and enjoyment of the same.

It is unnecessary to set forth at length the numerous steps by way of assignments, leases, and consolidations by which the Rock Island Company became the assignee of the Chicago Company under this contract. It is sufficient for the purposes of this case that it assumed to take the place of the Chicago Company; that it entered into open possession of the property of that company, and upon the performance of this contract, on the 1st of January, 1889; that it was recognized by the Denver Company as taking the place of the Chicago Company; that this was done with the consent of that company, and that no question was ever made by the Denver Company of its rights under this contract until its answer was filed in this case; and in its cross-bill the Denver Company prayed for the specific performance of the contract against it. From the time of the consolidation, in June, 1888, business was transacted with the defendant in the name of the Chicago, Kansas & Nebraska Company, the consolidated company; and the defendant, in issuing its time-cards, at the time connection was made and trains began to run, upon the information furnished it by the officers of that road, designated its trains as the 'Chicago, Kansas and Nebraska Express,' etc. In Mat, 1889, upon the request of plaintiff's officers, the caption was changed to the 'Chicago, Rock Island and Pacific.' On May 16th a notice was issued stating that plaintiff had assumed the operation of the Chicago, Kansas & Nebraska Railway. Upon this coming to the hands of the law department of the defendant, in July, soem correspondence was had, by which the defendant was apprised that the Rock Island Company was operating the line of the other under a lease. Upon this information, the managing officers of the defendant recognized the plaintiff as the successor in interest under the contract, and made no question of its rights for more than a year thereafter. Had the Denver Company refused to recognize the plaintiff as the legal successor of the Chicago Company, and refused to acknowledge its contract with the Chicago Company as importing any obligation or liability on its part towards the plaintiff, a serious question might have arisen as to the rights of the latter, under this alleged assignment, as the successor of the Chicago Company. But under the circumstances of this case a court of equity will treat the assignee in fact as the legal asignee, possessed of the rights and charged with the obligations of the orginal party to the contract. Wiggins Ferry Co. v. Ohio & M. R. Co., 142 U. S. 396, 12 Sup. Ct. Rep. 188. In short, we find no difficulty in holding that the plaintiff was entitled to file this bill.

2. The most important question in this case relates to the proper construction of article 1, § 1, wherein the Denver Company 'lets the Chicago Company into the full, equal, joint, and perpetual possession and use of all its tracks, buildings, stations, sidings, and switches on and along its line of railway between and including Denver and South Pueblo, excluding its shops at Burnham, meaning and intending hereby to include in the description aforesaid all and every portion of its railway and appurtenant property between and at...