Pittsburgh, C. & St. L.R. Co. v. Baltimore & O.R. Co.

• Decision Date: 08 May 1894
• Docket Number: 127.
• Citation: 61 F. 705
• Court: U.S. Court of Appeals — Sixth Circuit
• Parties: PITTSBURG, C. & ST. L. RY. CO. v. BALTIMORE & O.R. CO. et al.

61 F. 705

PITTSBURG, C. & ST. L. RY. CO. v. BALTIMORE & O.R. CO. et al.

No. 127.

United States Court of Appeals, Sixth Circuit.

May 8, 1894

The Baltimore & Ohio Railroad Company, a corporation of the state of Maryland, filed its bill in the circuit court of the United States for the southern district of Ohio, September 30, 1886. The defendants thereto are the Pittsburgh Cincinnati & St. Louis Railway Company and the Central Ohio Railroad Company, as reorganized, both being corporations of the state of Ohio. The object of the bill was to have an accounting as to the receipts from local freights earned off that part of the line jointly owned and operated between Newark and Columbus, Ohio, and known as the Newark & Columbus Division of each road. That division was originally owned by the Central Ohio Railroad Company, which company became insolvent, and was placed in the hands of a receiver. While thus in a receiver's hands, it, under a statute of Ohio and with the approval of the court conducting the receivership, sold an undivided one-half interest in so much of its line as lay between Columbus and Newark to the Steubenville & Indiana Railroad Company. After this sale the presidents of the two companies entered into a written agreement as to the joint operation of the division so jointly owned. Subsequently the Central Ohio Railroad Company was reorganized under the laws of Ohio, under the name and style of the Central Ohio Railroad Company, as reorganized. Under the statute permitting this reorganization, the new company succeeded to all the property rights and contracts of the old company. In 1886 the Baltimore & Ohio Railroad Company, being the complainant corporation, leased the line of the Central Ohio Railroad Company, as reorganized, and succeeded to all its rights and liabilities. In 1868 the Steubenville & Indiana Railroad Company was consolidated with two other lines of road under the name and style of the Pittsburgh, Cincinnati &amp St. Louis Railway Company, being the defendant corporation herein. Under the law of Ohio, it likewise succeeded to all the rights, property, and contracts of its several constituent roads. These two companies, the Pittsburgh, Cincinnati & St. Louis and the Baltimore & Ohio, have, since the 11th of May, 1868, the date of the creation of the Pittsburgh Company, been jointly operating, maintaining, and managing the said Columbus & Newark Division of said Road.

The contention of complainant in this litigation is that a certain contract entered into between the Central Ohio Railroad Company and the Steubenville & Indiana Railroad Company, in 1865, and immediately after the sale of the one-half interest in the Columbus & Newark Division to the latter company, is still in force as originally executed. That contract and its amendments are very lengthy, and cover every possible question involved in a joint ownership and operation of a railroad. This controversy turns wholly upon clauses 13 and 15 of said contract, which are in these words: 'Thirteenth. The local freight business from and to Newark and Columbus, with stations on the line of said road between those points, to be done by the Central Ohio Railroad Company. ' 'Fifteenth. The general freight agent of the Central Ohio Railroad Company shall keep an account of the earnings arising from the local business mentioned in item thirteen, and at the end of each month shall furnish said superintendent and the general freight agent of the Steubenville & Indiana Railroad Company each with a duplicate thereof; and that for such service the Central Ohio Company shall receive sixty-five per centum thereof, and the remainder shall be divided between said companies equally.'

The bill charges that the complainant company and the Pittsburgh, Cincinnati & St. Louis Railway Company both recognized the validity and binding obligation of the said contract, and continued to act thereunder until the month of June, 1872, 'when the said defendant entered upon and commenced the business of carrying local freights between said cities and the stations on the said Columbus & Newark Division, and has continued to do so ever since, notwithstanding your orator has repeatedly objected to the said defendant engaging in such business, and has insisted that it, as the lessee of the Central Ohio Railroad Company, as reorganized, was entitled to carry all of the local freight thereon. And your orator has repeatedly offered to state an account with the said defendant, and render and deliver to it a statement of the local freights which it has during the term aforesaid carried, but the said defendant has repeatedly and persistently refused to recognize the right of your orator to have such accounting made, and has insisted that it has the right to engage in the business of carrying local freights as aforesaid; and neither the general freight agent of your orator nor of the said the Central Ohio Railroad Company, as reorganized, has been able to keep an account of the earnings arising from the business as hereinbefore stated, by reason of the refusal of the defendant to furnish the accounts as aforesaid.'

With regard to the Central Ohio Railroad Company, as reorganized, the allegations of the bill are that, by the terms of the lease to the Baltimore & Ohio Railroad Company, the said Central Ohio Railroad Company, as reorganized, was entitled to receive 35 per cent. of the gross earnings of the said the Central Ohio Railroad Company, including the Columbus & Newark Division thereof, 'and including the proper proportion of the earnings of the said Columbus & Newark Division under said contract with reference to the local freights and local passengers.'

The prayer of the bill was that the total amount of local freights provided for in articles 13 and 15 of the alleged contract shall be 'ascertained, and the amount which is due to the orator determined, as well as that which is due to the Pittsburgh, Cincinnati & St. Louis Railway Company, and to the defendant the Central Ohio Railroad Company, as reorganized, as the lessor of your orator. ' It prays that an account be taken under the order and direction of the court with reference to the local freights so as aforesaid carried, 'and that your orator be allowed eighty-two and one-half per cent. of the total amount of freights carried by both of said parties, and that the defendant herein, the Pittsburgh, Cincinnati & St. Louis Railway Company, be allowed seventeen and one-half per cent. of the total amount thereof, and that thirty-five per cent. of the amount allowed to your orator be awarded to be paid as rental to said defendant herein, the Central Ohio Railroad Company, as reorganized, and that upon the taking of said account the amount which is found due to either of said parties defendant, or your orator, be directed to be paid within the time to be specified by the court.'

The Central Ohio Railroad Company answered, its answer being styled a cross petition. In this pleading it is set up that, at the time of the lease to the complainant, the contract between the Central Ohio Railroad Company and the Steubenville & Indiana Railroad Company was in full force, and that the complainant became the lessee of the said railway property subject to the terms of said contract, and that the complainant had no authority of power to make any change in said contract, 'and that, if said contract was changed or to be changed, it could be done only by the Central Ohio Railway Company, by and through its president, properly authorized. ' It further set up that by reason of said contract and lease it was entitled to receive as rental 35 per cent. of the entire earnings of the said Columbus & Newark Division in carrying local freights thereon, less 17 1/2 per cent. which, under said contract, was to be paid to the said Steubenville & Indiana Railroad Company, or its successor, the defendant herein, the Pittsburgh, Cincinnati & St. Louis Railway Company. It was further stated that since June, 1872, the defendant had received 35 per cent. of the local freights carried on said division by the plaintiff company, but had received no part of the earnings for local freight by reason of freight carried by said defendant, the Pittsburgh, Cincinnati & St. Louis Railway Company; and it says that it is entitled to receive now from the plaintiff 35 per cent. of the local freights carried by said Pittsburgh, Cincinnati & St. Louis Railway Company since June 18, 1872, and it asks that the said plaintiff be required to account to it for the same. It denies all knowledge that the Pittsburgh, Cincinnati & St. Louis Railway Company was engaged in the business of carrying local freight, and was not accounting to the complainant therefor, and that this defendant was receiving no part thereof, and avers that these facts only came to its knowledge in the past two or three years, and that it had in no manner assented or agreed with said Pittsburgh, Cincinnati & St. Louis Railway Company that it should engage in the business of carrying local freights, and in this manner impair the usefulness of said division to said defendant, and deprive it of the revenues that belong to it, and of which it is the exclusive owner, under its charter, as set out in complainant's bill of complaint.

This cross petition was answered only by the Pittsburgh, Cincinnati & St. Louis Railway Company, which denied all liability to the Central Ohio Railroad Company, or its lessee, the Baltimore & Ohio Railroad Company, and claimed that the said agreement as to the doing of the local freight business on the said Columbus & Newark Division had been abrogated June, 1872, and had never since been in force. No answer was filed by the Baltimore & Ohio Company with whom an accounting was asked.

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