Hoagland v. New York, C. & St. L. Ry. Co.

• Decision Date: 10 May 1887
• Citation: 111 Ind. 443,12 N.E. 83
• Parties: Hoagland and others v. New York, C. & St. L. Ry. Co.
• Court: Indiana Supreme Court

111 Ind. 443

12 N.E. 83

Hoagland and others

v.New York, C. & St. L. Ry. Co.¹

Supreme Court of Indiana.

May 10, 1887.

Appeal from superior court, Allen county.

L. M. Ninde, for appellants. R. C. Bell, for appellee.

Mitchell, J.

Pliny Hoagland and Christian Tresselt sued the New York, Chicago & St. Louis Railway Company to recover damages for obstructing the flow of water to their mills. The facts are briefly as follows: On the twenty-ninth day of November, 1842, the state of Indiana, having partially completed the Wabash & Erie canal, made a lease of lots 24 and 25, in the original plat of the city of Fort Wayne, to Allen Hamilton and Jesse L. Williams, and in the same instrument granted them the use of so much of the surplus water of the Wabash & Erie canal, not required for the purposes of navigation, as would be sufficient to propel three run of four and one-half feet millstones, for a term of 30 years. The lease contained a stipulation that it might be renewed, upon certain terms, for an additional term of 30 years. The lessees took possession under the first lease, and erected a flouring-mill, which, with the appurtenances and other improvements made on the leased premises, are alleged to be of the value of $40,000. Prior to the expiration of the first lease, the state transferred its interest in the canal and appurtenances to a corporation created by an act of the general assembly known as the “Board of Trustees of the Wabash & Erie Canal.” Pursuant to the provisions contained in the original lease, the board of trustees, on the eighth day of May, 1872, granted a new lease of substantially the same rights for the additional term of 30 years. Hoagland and Tresselt are the owners of this last lease by assignment. Neither of the leases contained any covenant to repair, nor was there any covenant for quiet enjoyment, or for a continuation of the right to use the surplus water from the canal, except such as would be implied by law. The right of the lessees to use water from the canal was made expressly subject to the right of the lessors to draw off the water, either wholly or partially, for the purpose of preventing or repairing breaks, or removing obstructions from the canal. It was also stipulated that if the water should be drawn off for any of the purposes above named, or if the supply became inadequate, and the lessees should be wholly or partially deprived of water, a corresponding reduction should be made in the rent. Under these leases the original lessees and their assigns continued to draw and use the surplus water from the canal until about the year 1882, when it is alleged the New York, Chicago & St. Louis Railway Company, having, so far as it appears, lawfully acquired the equitable title to the canal and its appurtenances at the point where it traverses the city of Fort Wayne, and for some distance beyond, proceeded to construct its roadway and track on the line previously occupied by the canal; thereby filling up the channel of the canal, and causing the water to be obstructed to such an extent as practically to deprive the mill-owners of their power.

The railway company acquired its right to the canal in the manner following: The state having become largely indebted through the construction of a system of public improvements which it had undertaken, transferred its interest in the canal to the Board of Trustees of the Wabash & Erie Canal on the thirtieth day of July, 1847. The board of trustees took the property in trust for the payment, out of the revenues to be derived from its operation, of certain bonds and interest coupons which were accepted by creditors of the state in lieu of obligations previously owing to them by the latter. The revenues proved insufficient to meet the maturing obligations thus accepted, and the lien of the bondholders, which antedated the leases under which the mill-owner's rights accrued, was foreclosed. The canal and its appurtenances were sold under a decree of foreclosure. The railroad company acquired its right through mesne conveyances under this decree, the title having been conveyed to one Howard for its use prior to the acquisition of the title by or for the use of the railroad company, the canal had become dilapidated, and had fallen into disuse and decay, and had long before that been abandoned as a highway of commerce, or for any public or commercial purpose. The mill-owners had, however, regularly paid to the successive owners, prior to the railway company, the rents stipulated in the lease. Upon the foregoing facts the question arises whether or not the railway company is liable to the owners of the mill for filling up the canal, and obstructing the flow of water to their wheels.

The theory upon which the appellant's case proceeds, is that although the state and its grantees may not have incurred an affirmative obligation to keep the canal in repair, or to supply the lessees with water, the law, nevertheless, by implication annexed to the lease a covenant for quiet enjoyment. The law having imported such a covenant into the lease, it is contended that the entering upon and filling up the bed of the canal, and thus cutting off the flow of water upon the lessees' wheels, was an invasion of their right, and a disturbance of their possession by the lessor, and hence such an act of aggression and wrong as renders the railway company liable for the resulting injury to their property. That a covenant for quiet enjoyment and that the landlord agrees to do no such acts as will destroy the beneficial use of the leased premises,is implied in every mutual contract for leasing land, by whatever form of words the agreement is made, is now too well settled to be doubted or shaken. Avery v. Dougherty, 102 Ind. 443, 2 N. E. Rep. 123; Smith v. Dodds, 35 Ind. 452;Wade v. Halligan, 16 Ill. 507;Streeter v. Streeter, 43 Ill. 155;Mack v. Patchin, 42 N. Y. 167;Maule v. Ashmead, 20 Pa. St. 482; Eldred v. Leahy, 31 Wis. 546; Woods, Landl. & Ten. 564.

The more serious question usually encountered is that which relates to the measure of the lessee's damages when such a covenant is broken. Ordinarily, if the landlord takes possession, or obstructs the tenant in the enjoyment of any material part of the demised premises, without the latter's consent, that will constitute in law an eviction of the tenant, and will operate to release him from any further liability to pay rent, even for so much of the leasehold as he may continue to occupy. Mack v. Patchin, supra; Bentley v. Sill, 35 Ill. 414;Smith v. Stigleman, 58 Ill. 141. The measure of damages for the breach of a covenant for quiet enjoyment depends largely upon the nature of the estate or title granted, and the character of the landlord's default. The covenant always relates to, and never extends beyond, the interest, estate, or privilege granted. It is restrained and limited to the estate demised. Rawle, Cov. 524. The legal implication of the covenant is that the landlord has an adequate title to the estate created by the lease, and that he will permit the tenant to enjoy, without disturbance or interruption, the interest, title, or privilege demised, subject to all such rights as are expressly or by necessary implication reserved to the lessor. It becomes important, therefore, to inquire into the nature of the right or privilege granted to the lessees by the lease in question, and to ascertain the rights expressly or impliedly reserved to the lessor.

The subject-matter of the lease was so much of the surplus water not required for navigation, to be taken by the lessees from the Wabash & Erie canal, as...