Iron Mountain R. Co. of Memphis v. City of Memphis

• Decision Date: 05 July 1899
• Docket Number: 696-715.
• Citation: 96 F. 113
• Parties: IRON MOUNTAIN R. CO. OF MEMPHIS v. CITY OF MEMPHIS et al.
• Court: U.S. Court of Appeals — Sixth Circuit

96 F. 113

IRON MOUNTAIN R. CO. OF MEMPHIS v. CITY OF MEMPHIS et al.

No. 696-715.

United States Court of Appeals, Sixth Circuit.

July 5, 1899

These are cross appeals in a suit in equity begun by the Iron Mountain Railroad Company of Memphis against the city of Memphis and the members of the legislative council of that city. The object of the bill was to enjoin the city of Memphis and its legislative council from attempting to enforce a forfeiture of the rights of the complainant under a contract made between the complainant and the predecessor of the corporation of the city of Memphis, the taxing district of Shelby county, whereby the right was given to the complainant to occupy Kentucky avenue within the taxing district for one mile with a double-track railroad for the term of 55 years, subject to certain conditions precedent and subsequent. The bill further prayed that the legislative council and the citizens of Memphis, by permanent mandatory injunction, might be required to cancel and annul the resolution of March 25, 1898, declaring the forfeiture.

Complainant avers in its bill: That it was chartered and organized in 1886 under the laws of the state of Tennessee as a railroad corporation and a common carrier of freight and passengers having its principal office in the city of Memphis, for the purpose of constructing, owning, and operating a railway in Shelby county and the city of Memphis, with the right to run its line along or across the streets and alleys of the city and along and across the public roads of Shelby county, and over private property. That on the 13th of November, 1886 for the purpose of carrying out its corporate objects, it entered into a contract with the taxing district of Shelby county. That thereby the taxing district granted to the complainant the right to enter upon Kentucky avenue at the southern boundary of the taxing district, and to lay down maintain, and operate with locomotive power a double-track railroad on either side of the central line of the avenue, the tracks not to exceed 13 feet from center to center, and to be in the middle line of the street. That the term granted was 55 years. That the complainant agreed to pave the street from curb to curb from the point where its track entered the street to the point where it left the street. That complainant agreed to build a freight depot within 5 years after it should begin the use and enjoyment of the privileges granted, and to complete the paving of Kentucky avenue in 18 months. That sections 15 and 16 of the contract were as follows: '(15) It is further agreed that said second party will at no time during the term of this contract unequally discriminate against the first party or its citizens in its rates for the carriage of freight and passengers to and from the taxing district. (16) It is further agreed and understood that the original and continued performance of each and every stipulation hereof on the part of said second party is a condition of the grant herein contained, and that failure of said second party to perform same, or any part thereof, or its failure to perform the same within the time herein stipulated, or to exercise the privilege herein granted within the time herein stipulated, shall, at the option of the said first party, work an entire forfeiture and cessation of all rights and privileges in said second party under this contract, and the first party may, in the event aforesaid, at once retake and resume its possession and control of the said premises, as if this contract had never been made. But it is agreed that such forfeiture shall not be enforced unless said second party shall for thirty days after notice neglect to perform such obligations, or to exercise such privileges.'

The bill further avers that on the faith of the contract complainant purchased a large amount of property in the city of Memphis for its depot grounds and other purposes, and made large and expensive improvements, all of which involved an expenditure of upward of $330,000; that it constructed its main tracks and side tracks in accordance with its contract, graded and paved Kentucky avenue from its depot grounds as far south as its line extended; that Kentucky avenue had been entirely unpaved and unused before this, and had a bayou crossing it almost at right angles, with no bridge; that complainant, besides paving the street, constructed a culvert and bridge over the bayou, costing $30,000; that upon the improvements thus made by it complainant has paid taxes aggregating a large amount, to the city of Memphis, since the contract was made. The bill further avers that on the 7th day of October, 1897, the Memphis Freight Bureau, an association of merchants of Memphis, presented to the legislative council of that city a complaint alleging that the St. Louis, Iron Mountain & Southern Railway Company was the successor to the Iron Mountain Railway Company, the complaint, and as such successor became liable to the conditions of the occupancy of Kentucky avenue; that the St. Louis, Iron Mountain & Southern Railway Company had, in violation of section 15, unequally discriminated against the city of Memphis and its citizens in rates published and assessed on merchandise and commodities shipped from Memphis to stations on the lines of said St. Louis, Iron Mountain & Southern Railway Company in the state of Arkansas and Missouri, and on commodities shipped from said stations to the city of Memphis; that the petition prayed the legislative council to give notice to St. Louis, Iron Mountain & Southern Railway Company that, unless the said alleged discriminations complained of were corrected within the period of 30 days, a forfeiture of its rights and privileges under the contract with the city would be at once declared; that the St. Louis, Iron Mountain & Southern Railway Company was a foreign corporation under the laws of the state of Missouri and Arkansas, and was not the successor of the complainant, and had not succeeded to the burdens or benefits of the contract between the complainant and the city of Memphis; that the St. Louis, Iron Mountain & Southern Railway Company appeared by its freight agent and solicitor before the legislative council of Memphis, denied that any rates which it had established on freight originated at or destined to Memphis, which it carried over its lines, were unreasonable, or resulted in an unequal discrimination against the city of Memphis or its citizens, and had contended that the rates complained of were interstate rates; that the legislative council had, therefore, no power to fix or control them, and that any question connected therewith could be considered only by the interstate commerce commission or by the federal courts in proper proceedings instituted therein; that, notwithstanding these objections, the legislative council proceeded with the hearing of the petition, and on the 9th day of December passed resolutions declaring that the complainant had been and was unequally discriminating against the city of Memphis and its merchants in rates of freight, and demanded that within 50 days thereafter it should revise and readjust its rates to and from the city of Memphis so as to obviate the inequality and discrimination; that the time of 50 days was, on February 4, 1898, extended 30 days; that on February 23, 1898, it was extended for an additional 30 days, and on the 25th of March, 1898, the legislative council passed the final resolution upon which the case turns, a copy of which appears below.

Plaintiff further avers that it was never called upon to appear before the legislative council to defend or explain any rates which it had put into effect on its railroad, and that no complaint was ever made that any rates charged for transportation over its road were unreasonable or unequally discriminatory; that though all the proceedings were directed against the St. Louis, Iron Mountain & Southern Railway Company, the resolutions passed by said legislative council were, however, directed to, and were sought to be made effective against, complainant, because of alleged discrimination in rates which are interstate, which rates complainant did not make or promulgate, and for which complainant was in no way responsible. The bill further avers that the resolutions passed by said legislative council were so vague, indefinite, and uncertain that no party to whom they were directed could know or ascertain therefrom what rates should be charged, or the extent of the changes to be made. The bill further avers: 'That it is the declared intention of the defendants, if the said resolutions were not complied with within the time therein mentioned, to enforce against your orator, the Iron Mountain Railroad Company of Memphis, in pursuance of said resolution of March 25, 1898, the forfeiture of all rights hereto attached, marked 'Exhibit B.' and your orator avers that any such enforcement of forfeiture on the part of the city of Memphis or its legislative council will result in immediate incalculable and irreparable loss and damage to your orator. Your orator avers that it has a vested property right in said contract; that upon the faith of said contract your orator has expended large sums of money in property, fixed and immovable, in said city of Memphis; and by the said city, and a dispossession of your orator of its said property, would involve direct, immediate, and irreparable injury to said vested property rights of your orator. Your orator is advised and charges that it is the intention of the defendants, having thus declared a forfeiture of said contract as aforesaid, to attempt, through its police and other officers, by force to oust your orator from the possession of its property in the city of Memphis, and to deprive it of the...