Mason City & F.D.R. Co. v. Union Pac. R. Co.

• Decision Date: 19 August 1903
• Docket Number: 55.
• Citation: 124 F. 409
• Parties: MASON CITY & F.D.R. CO. v. UNION PAC. R. CO.
• Court: U.S. District Court — District of Nebraska

124 F. 409

MASON CITY & F.D.R. CO. v. UNION PAC. R. CO.

No. 55.

United States Circuit Court, D. Nebraska.

August 19, 1903

Frank P. Kellogg, Woolworth & McHugh, and Cordenio A. Severance for complainant.

W. R Kelly, John N. Baldwin, and Edson Rich, for respondent.

MUNGER District Judge.

By an act of Congress of date July 1, 1862 (12 Stat. 489, c. 120) the Union Pacific Railroad Company was incorporated with authority to construct and operate a line of railroad from a point to be fixed by the President of the United States on the western boundary of the state of Iowa to the western boundary of the state of Nevada, which act was amended by Congress July 2, 1864 (13 Stat. 356, c. 216). Under the provisions of these acts said railroad was constructed from the initial point designated by the President of the United States on the western boundary of the state of Iowa. Between the state of Iowa and the then territory of Nebraska to the west flowed the Missouri river, which was for several years crossed by said railroad by means of a ferry. Desiring to construct a bridge across the Missouri river, and not having sufficient means for that purpose, said railroad company applied to Congress for authority to issue its mortgage bonds upon the bridge and its approaches for that purpose, pursuant to which request Congress passed an act of date February 24, 1871 (16 Stat. 430, c. 67). On January 26, 1880, said Union Pacific Railroad Company consolidated with certain other railroads, and formed one consolidated company, under the name of the Union Pacific Railway Company; such consolidated company succeeding to all the property and rights of said Union Pacific Railroad Company, and assuming all of its burdens and obligations. May 1, 1880, the said Union Pacific Railway Company and the Chicago, Rock Island & Pacific Railway Company entered into a contract by the terms of which the said Chicago, Rock Island & Pacific Railway Company was granted the right for a term of 999 years to use the said bridge and approaches across the Missouri river from Council Bluffs to South Omaha for the movement and operation of its engines, cars, and trains between said points. A similar contract was entered into on the 30th day of April. 1890, between said Union Pacific Railway Company and the Chicago, Milwaukee & St. Paul Railway Company. After the parties had operated and acted under said contracts for a period of time, said Union Pacific Railway Company repudiated the contracts upon the claimed ground that each was ultra vires, being a contract not within the power and authority of the Union Pacific Railway Company, under its charter, to enter into. Suits were thereupon instituted by the Chicago, Rock Island & Pacific Railway Company and the Chicago, Milwaukee & St. Paul Railway Company for the specific performance of said contracts, which actions resulted in a decree being entered by this court as prayed. 47 F. 15. An appeal was taken to the Circuit Court of Appeals, and the decree affirmed (51 F. 309, 2 C.C.A. 174), and on appeal to the Supreme Court was again affirmed (163 U.S. 564, 16 Sup.Ct. 1173, 41 L.Ed. 265).

Commencing in 1893, various proceedings were had, seeking a foreclosure of various mortgages which had been given pursuant to the provisions of the said several acts of Congress before specified. Such proceedings were had that said mortgages were foreclosed, and all of the property and franchises owned and controlled by said Union Pacific Railway Company were sold under the decree of foreclosure, . . . as trustees. Whereupon the present Union Pacific Railroad Company, respondent in this action, was organized under the laws of the state of Utah, and became and now is the owner of the property and franchises so sold at such foreclosure sale. After its organization and acquiring of the property, the present Union Pacific Railroad Company entered into contracts whereby the Chicago, Rock Island & Pacific Railway Company and the Chicago, Milwaukee & St. Paul Railway Company and the Chicago & Northwestern Railway Company and other roads are given the use of said bridge, its approaches and tracks, over which the trains of said several railroads are run and operated between the cities of Council Bluffs, Iowa, and South Omaha, Neb. The complainant is a corporation owning and operating a railroad having its present western terminus at Council Bluffs, in the state of Iowa, and seeks to connect with and use the said bridge, approaches, and tracks of respondent between the said city of Council Bluffs and South Omaha, Neb., upon the same terms and conditions as a like use is granted to the other roads. Respondent refusing to grant such use to complainant, this action was brought, asking for the mandatory order of this court requiring respondent to grant to complainant the use of such bridge and tracks between Council Bluffs and South Omaha on the same terms and conditions as are given such other railroad companies.

On behalf of complainant it is asserted that it is entitled to the relief asked, first, because the right is granted by the said act of Congress of February 24, 1871; second, because of the terms of a certain tripartite agreement entered into between the city of Omaha, the county of Douglas, and said Union Pacific Railroad Company, and shown by what is known as the 'Saunders Deed' of date,--, introduced in evidence. Respondent denies that the act of Congress of February 24, 1871, required the original Union Pacific Railroad Company to afford to complainant the same use of its bridges and tracks as it gave to other railroad companies, and, further, if it did, it alleges that the title it (respondent) acquired by the foreclosure sale was freed from any such servitude, and that it is free to contract with such companies for the use of the bridge and tracks as it may see fit, and, further, that complainant has no such rights under the tripartite agreement embraced within the Saunders deed. Counsel for complainant contend that its right under the act of 1871 to the use of said bridge and tracks as against the original Union Pacific Railroad Company and the consolidated company was adjudicated and settled in the Rock Island Case, supra. If that be so-- if the act has been so interpreted by the Court of Appeals and the Supreme Court-- then what is the proper construction of the act is not an open one for this court, but those decisions must be followed.

In the Rock Island Case the validity of the contract then under consideration was sustained in this court in an opinion by Mr. Justice Brewer, based upon the sole consideration that at common law, and without express statutory authority, one railroad company could enter into a valid lease with another railroad company for the joint use of its tracks, when such joint use did not impair the power of the lessor company to perform the functions and duties which it owed to the public or the sovereignty from which it derived its authority. The Circuit Court of Appeals, through Judge Sanborn, approved the doctrine thus announced by Justice Brewer, and, as a further ground for holding the contract valid, construed the bridge act of 1871 in the light of other similar legislation by Congress, and held that statutory authority was given the Union Pacific to enter into such a contract. While Judge Sanborn did not in express terms say that the first section of the act of July 25, 1866, c. 246 (14 Stat. 244), was applicable to the bridge act of 1871, and hence to be read into it as a part thereof, yet a careful reading of his opinion leaves no doubt in my mind that such was the understanding of that court in its interpretation of the 1871 act. If we exclude the first section of the act of July 25, 1866, from the act of 1871, as not applicable thereto, then it is impossible to find express statutory authority for the Union Pacific Company to have made the contract with the Rock Island Company; and I am clearly of the opinion that the holding of the Circuit Court of Appeals was not only that the contract in question was valid, as the proper exercise of the common-law right to contract, but equally as authoritative that the right was given under a proper construction and interpretation of the bridge act of 1871, and that the first section of the 1866 act was applicable to the act of 1871.

While the Court of Appeals, in construing the act of 1871 with the first section of the act of 1866, as applicable thereto, decided that authority was therein given to enter into the contract then in question, they did not in express language say that the act made it mandatory upon the Union Pacific Company to grant the use of said bridge and tracks to other railroad companies. That court took one step in advance of that taken by Justice Brewer, and held that the statute authorized the making of the contract. When the case reached the Supreme Court, the Chief Justice, in pronouncing the decision of the majority, took a step in advance of that taken by the Circuit Court of Appeals, and said:

'For the provisions of the Pacific Railroad acts relating to the bridge over the Missouri river, its construction and operation, imposed on the Pacific Company the duty of permitting the Rock Island Company to run its engines, cars, and trains over the bridge and the tracks between Council Bluffs and Omaha, and we think that South Omaha was

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