Doniphan, Kensett & Searcy Railroad Co. v. Missouri & North Arkansas Railroad Co.

• Decision Date: 01 July 1912
• Citation: 149 S.W. 60,104 Ark. 475
• Parties: DONIPHAN, KENSETT & SEARCY RAILROAD COMPANY v. MISSOURI & NORTH ARKANSAS RAILROAD COMPANY
• Court: Arkansas Supreme Court

149 S.W. 60

104 Ark. 475

DONIPHAN, KENSETT & SEARCY RAILROAD COMPANY v. MISSOURI & NORTH ARKANSAS RAILROAD COMPANY

Supreme Court of Arkansas

July 1, 1912

Appeal from White Chancery Court; John E. Martineau, Chancellor reversed and dismissed.

Decree reversed and case dismissed.

Brundidge & Neelly, J. W. & J. W. House, Jr., and Wm. L. Stocking, for appellant.

1. It is only when a contract is ambiguous or uncertain that parol evidence is admissible to determine what the contract is. 4 Ark. 179; 75 Ark. 55; 86 Ark. 169; 90 Ark. 272; 93 Ark. 1.

2. Where a contract has been reduced to writing and signed by the parties, oral testimony is not admissible to show that they intended to make a different contract. 78 Ark. 574; 80 Ark. 505; 94 Ark. 130.

3. In construing a contract, all its parts must be considered and construed together. 96 Ark. 320; 93 Ark. 497. 94 Ark. 493; 40 Am. Dec. 608; Id. 621; 36 Me. 102; 37 Minn; 338; 78 Am. Dec. 414; 186 Mass. 217; 56 W.Va. 402. See also 55 F 701.

4. Where the parties reduce a contract to writing, with knowledge of its contents, parol evidence will not be admitted to show any intent or understanding of the parties different from that expressed in the contract. 13 Ark. 593; 40 Ark. 117; 33 Ark. 416; 67 Ark. 62; 65 Ark. 333; 66 Ark 393; 64 Ark. 650; 78 Ark. 574; 83 Ark. 105; 86 Ark. 162; 94 Ark. 130; 95 Ark. 131; 53 Ark. 58-65; 56 Ark. 320; 82 U.S 94; 77 N.C. 128; 72 F. 366; 104 Ill.App. 232; 71 Ark. 185; 89 Ark. 309.

5. Where it is sought to reform a contract on the ground of mutual mistake in its preparation, the evidence of such mutual mistake must be clear, unequivocal and decisive, before a reformation will be decreed. 97 Ark. 635; 96 Ark. 230; 91 Ark. 246; Id. 62; 90 Ark. 24; 89 Ark. 309; 85 Ark. 62; 84 Ark. 349; 82 Ark. 226; 81 Ark. 166; Id. 420; 79 Ark. 256; Id. 592.

J. Merrick Moore and W. B. Smith, for appellee.

1. The proof that the agreement between the parties was that the Doniphan Company should have trackage rights for the handling of pine logs only for manufacture at Doniphan, is clear, convincing and satisfactory. It is also as clearly proved that appellant's president wrote section 1, of article 4, of the agreement so as to give the Doniphan Company the right to handle in its trains through business, and, believing that to be the meaning of the language used, fraudulently concealed it from appellee's vice-president, and by such inequitable conduct induced the latter to enter into the contract while in the belief that the clause limited the traffic the former company could handle in its trains to pine logs. Upon such proof the court had jurisdiction to reform the contract. 4 Pomeroy, Eq., § 1376; Id. 847; 136 F. 661; 146 Ind. 340; 117 N.W. 775; 64 S.W. 336; 57 Minn. 337; 192 Pa.St. 21; 69 A. 533; 29 Ga. 168; 64 S.W. 406; 34 Cyc. 920 et seq.; 69 Ark. 406; 136 F. 661.

The admissibility of parol evidence is not to be determined upon the grounds contended for by appellant; for the question at issue here is the reformation of the contract; and, to determine whether it should be reformed or not, parol evidence is admissible to determine what the contract is and the circumstances of the parties entering into it. The exception is as well established as the rule against the admission of parol evidence to vary written instruments. 2 Pomeroy, edition of 1886, § 858.

2. All intendments are in favor of the chancellor's finding, and it will be sustained unless clearly against the preponderance of the evidence. 67 Ark. 200; 73 Ark. 489; 89 Ark. 318.

OPINION

FRAUENTHAL, J.

This is an action instituted by the appellee to enjoin the appellant from proceeding to arbitrate a matter of dispute in reference to a certain traffic contract entered into and executed by both parties, and to reform said contract. Both parties are railroad corporations, organized under the laws of the State of Arkansas. Appellee owns and operates a line of railroad extending through White, Cleburne and other counties of the State, and the appellant owns and operates a railroad extending from Doniphan to Searcy, a distance of about six miles, where it connects with the main line of appellee's railroad, and also a spur line extending from appellee's main line at or near Letona out for a distance of eight or ten miles in Cleburne County. The principal corporators of the appellant company are also the principal corporators of a corporation known as the Doniphan Lumber Company, which operates a mill at Doniphan, and owns large bodies of timber lands situated chiefly in Cleburne County.

The principal property carried by the appellant over its line of railroad is pine logs, which it transports from the said timber lands in Cleburne County to the mill at Doniphan where it is manufactured into the finished product, which is shipped out over its line. The appellant also carries over its railroad merchandise and supplies both to Doniphan and to points on its spur line extending out from Letona, where camps are located in cutting the timber.

On June 6, 1910, the parties to this suit entered into a written contract by which appellee granted to appellant certain trackage rights over its line of railroad. The provisions of said contract which we think are material in determining the questions involved in this case are as follows:

"Article 1. The Arkansas Company (appellee) hereby grants to the Doniphan Company (appellant) for a period of ten years from and after January 1, 1911, the joint and equal use, in common with the Arkansas Company and such other company or companies as the Arkansas Company shall at any time permit to use the same or any part thereof, and, subject to the conditions, limitations and restrictions in this contract set forth, of the main line and passing tracks

of said railroad between the present connection of the tracks of the Arkansas Company and the Doniphan Company at the town of Searcy, White County, Arkansas, and a point three miles north of the water tank at Snell, as now located, in the county of Cleburne. * * *"

"Article 2. The Doniphan Company covenants and agrees to pay to the Arkansas Company * * * for the rights and privileges herein granted the sum of one dollar per mile for each and every mile its trains move over the tracks of the Arkansas Company. * * *"

"Article 4. The Doniphan Company will handle no traffic, whether passenger, freight, mail and express, or of any other character, to or from Searcy or the aforesaid point three miles north of water tank at Snell, or to or from any point between Searcy and the aforesaid point three miles north of water tank at Snell, except pine logs for manufacture at Doniphan, Arkansas; but, if legally compelled to do so, they shall pay to the Arkansas Company sixty per cent. of the Arkansas Company's local rate applying thereon. * * *"

"Article 5. The Doniphan Company hereby assumes all risk of all loss, damage or injury which shall in any manner occur in or upon any track the use of which is hereby granted, whether to the property of the Doniphan Company or to the property in its custody, or to its passengers or to its employees or to third persons, or to the property of third persons, shall there suffer by reason of the movement of any engine, car or train of the Doniphan Company, in all respects as if the Doniphan Company had then been in the exclusive use and control of such track. * * *"

There was also a provision in the contract providing for an arbitration in event any disagreement arose between the parties concerning the construction of any part of the agreement or the business or manner of transacting same.

In proceeding under this contract, a disagreement arose between the parties as to the kind of traffic which appellant was entitled to carry over the appellee's tracks and the compensation which should be paid therefor. The appellee contended that at the time said contract was executed it was intended and agreed that the trackage rights granted were limited and restricted to a certain class or character of traffic, towit, pine logs, and that this portion of the agreement was incorporated in the above article 4. The appellant, however, contended that under the terms of said contract it was not limited or restricted in the kind or class of traffic that it might handle over appellee's rails, except as to such traffic originating or terminating on appellee's line of railroad at or between the points named in said article 4. It claimed that it could transport over appellee's line any class or character of traffic which originated on its own line of railroad, for example, at Doniphan, or at the terminus of the spur extending out from Letona, and that for such traffic it was under obligation to pay only one dollar per mile for each mile its trains ran over the appellee's tracks, as provided in the contract. Thereupon, appellant gave notice to appellee that it desired to arbitrate the question of the construction of the contract in this particular, under the terms of the contract providing therefor, and selected its arbitrator. The appellee then instituted this suit, seeking to enjoin said arbitration, and to reform the contract if it does not express the intent and agreement as contended for by it.

In its original complaint, appellee based its right to a reformation of the contract upon the ground that a mutual mistake had been made by the parties in the employment of language to express the intent and agreement. After all the testimony had been taken in the case, the appellee filed an amendment to its complaint in which it based its right to reformation upon the further alleged ground that the appellant, by inequitable conduct and fraudulent concealment of its interpretation or construction of the contract, induced appellee to...