Mining v. West Va. Northern R.R. Co.

• Decision Date: 02 October 1928
• Docket Number: (No. 6240)
• Court: West Virginia Supreme Court
• Parties: Carleton Mining & Power Company v. West VirginiaNorthern Railroad Company

106 W.Va. 126

Carleton Mining & Power Company

v.West Virginia

Northern Railroad Company

(No. 6240)

Supreme Court of Appeals of West Virginia.

Submitted September 12, 1928.

Decided October 2, 1928.

1. Railroads Proposed, Railroad Trackage Extending Into New

Territory Not Theretofore Served Held "Extension of Railroad," Requiring Certificate of Convenience (Commerce Act, § 1, par. 18, as added by Transportation Act of 1920, 49 USCA § 1 (18).

Where proposed railroad trackage that will be employed in interstate commerce extends into territory not theretofore served by the carrier proposing the new trackage, the purpose and effect thereof, under the new Congressional policy, are of national concern, and the same is to be deemed an extension of the railroad within the meaning of paragraph 18 of section 1 of the Commerce Act as added by the Transportation Act of 1920. (p. 130.)

(Railroads, 33 Cyc. p. 40.)

2. Samei Proposed Trackage Constituting Extension of Car-

rier Requires Certificate of Convenience, Though Trackage is Not Actually Connected With Existing Line of Railroad and Can be Reached Only by Intervening Trackage Not Controlled by Carrier; to Hold Carrier Liable on Contract to Acquire Extension, Certificate of Convenience Authorizing Acquisition Must be Obtained (Commerce Act, § 1, par. 18, ar, added by Transportation Act of 1920, 49 USCA § 1 (18).

Though such proposed trackage is not actually connected with an existing line of railroad of the carrier and can be reached only by the use of intervening trackage not owned or controlled by the carrier, it is nevertheless within the purview of the Transportation Act, and before the carrier can be held liable on its contract to acquire such extension, there must be obtained from the Interstate Commerce Commission a certificate of public convenience and necessity authorizing such acquisition. (p. 130.)

(Railroads, S3 Cyc p. 40.)

3. Same Carrier Cannot be Held Liable For Purchase Price

of Proposed Extension After Refusal of Interstate Commerce Commission to Award Certificate of Convenience.

A carrier cannot be held liable in an action for accrued installments of the purchase price of such proposed exten- sion where it appears that the Interstate Commerce Commission has refused to award a certificate of public convenience and necessity authorizing the construction or purchase of such new trackage. (p. 132.) (Railroads, 33 Cyc. p. 40.)

4. Same Bad Faith of Carrier in Presenting Application For Certificate of Convenience Held Immaterial as Respecting Liability For Purchase Price of Proposed Extension (Commerce Act, § 1, par. 18, as amended by Transportation Act of 1920, 49 USCA § 1 (18).

Where, in such action, the plaintiff charges the carrier with bad faith in the presentation of its application to the Interstate Commerce Commission for a certificate of convenience and necessity, such charge need not be determined in an action for the purchase price under the contract; because, even if sustained, it would not defeat the national policy that the construction and acquisition of extensions which are to be employed in interstate commerce shall be under the control of the federal commission. It would not be in conformity with the federal policy of efficiency and economy in interstate transportation that the carrier, even though acting in bad faith, should be required to pay for an extension which it cannot acquire. (p. 132.)

(Railroads, 33 Cyc. p. 4 0.)

(Note: Parenthetical references by Editors, C. J. Cyc. Not part of syllabi.)

Error to Circuit Court, Preston County.

Action by the Carleton Mining & Power Company against the "West Virginia Northern Railroad Company. Judgment for plaintiff, and defendant brings error-

Reversed and remanded.

P. J. Crogan and John E. Cupp, for plaintiff in error. Gibson & Mattingly and F. E. Parrach, for defendant in error.

Maxwell, Judge:

The defendant in the above styled action in assumpsit prosecutes the present writ of error to a judgment for the plaintiff in the sum of $9,600.37, being a portion of the amount claimed by the plaintiff to be due to it on a contract of sale between the parties.

The defendant is a common carrier, owning and operating a railroad 10.97 miles in length, extending from Tunnelton, on the main line of the Baltimore & Ohio Railroad, to the town of Kingwood. From a point on defendant's line near Tunnelton a line of railroad 5, 612 feet in length, commonly called the Atlantic Branch, extends to the coal operations of the Atlantic Coal and Coke Company. Prior to the year 1919, the plaintiff owned a right of way 4, 238 feet in length, connecting with the terminus of the Atlantic Branch and extending to its coal properties. Some time late in that year, negotiations were entered into between the president of the plaintiff and one or two of the officers of the defendant, contemplating the construction of a line of railroad herein referred to as the Carleton extension. The general terms of this agreement seem to have been arrived at "some time between August First and October Twenty-Fifth," 1920; and the construction work began shortly thereafter.

In February, 1921, the defendant made application to the Interstate Commerce Commission, pursuant to the provisions of the federal transportation act, for authority (1) to acquire, rehabilitate, and operate an existing branch extension of its railroad, connecting with its main line near Tunnelton, and extending to the coal mine of Atlantic Coal and Coke Company in Preston County, West Virginia, now known as the Atlantic Branch; and (2) to operate, or engage in transportation over a privately owned extension of the above named Atlantic Branch. At the hearing on the application, in August, 1921, when it became evident that the purpose of the defendant was finally to acquire the Carleton branch, it was the opinion of the Commission not to pass upon the application to operate that branch until it had before it the contract under which the same was to be operated, not then fully formulated. Defendant's counsel then withdrew that portion of the application, and reserved "the right to let stand any evidence taken in support of the necessity for that extension at such times as details can be perfected to take it over.'' Whereupon the hearing was adjourned.

A second hearing was had September 6, 1922, at which time the defendant amended the part of its application re- lating to the Carleton branch to read as follows:" To acquire and operate an existing privately owned railroad in Preston County, West Virginia, connected with the western terminus of the railroad mentioned in subdivision (1) hereof," etc. By the terms of the contract on which this action is predicated, the plaintiff, in consideration of one dollar in hand paid, and the sum of $32,416.34 to be thereafter paid to it, undertook to transfer to the defendant the right of way in controversy, together with all improvements thereon, and covenanted to execute contemporaneously therewith a sufficient deed for the property. The defendant agreed to pay to plaintiff, beginning on the first day of February, 1922, and on the first day of February of each year thereafter, a sum equal to twelve and one-half cents for each and every gross ton of coal and other freight transported over the Carleton extension, until the full purchase price of $32,416.34, with interest, was fully paid.

On the defendant's application and the evidence introduced in support thereof, the Commission found that the Atlantic Branch, built in 1902 and 1903 at a cost of $25,706.77, was operated by the Atlantic Coal Company as an industrial siding until the year 1912, when operations ceased; that the coal company rehabilitated the road in 1921, at a cost of $65,346.06, and that the applicant proposed purchasing the property at a price of $91,052.83, the sum of the original and rehabilitation costs; that probably the greater part of the cost of rehabilitation was for replacement of parts of the original construction; that the defendant had an accumulation of loss amounting to more than three times the cost of its road and equipment; and therefore the commission was of opinion that the results of past operation did not justify the addition to its capital account of the large sums proposed to be paid for the Atlantic Branch and the Carleton extension, and the application was denied.

The present action was instituted for the recovery of installments due under the contract of July 10, 1922. The main defense interposed to the action is that this contract is illegal and unenforceable in the absence of a certificate of public convenience and necessity from the Interstate Com- merce Commission authorizing the defendant to acquire and operate the Carleton extension.

Paragraph 18 of section one of the Commerce Act, added by the Transportation Act of 1920, 41 Stat. L. 477, provides that no carrier by railroad "shall undertake the extension of its line of railroad, or the construction of a new line of railroad, or shall acquire or operate any line of railroad, or extension thereof, or shall engage in transportation under this Act over or by means of such additional or extended line of railroad," until it shall have first obtained from the Commission a certificate of public convenience and necessity authorizing it to do so. Paragraph 22...