Pullman Palace Car Co v. Missouri Pac Ry Co

• Decision Date: 07 December 1885
• Parties: PULLMAN'S PALACE CAR CO. v. MISSOURI PAC. RY. CO. and another. 1 Filed
• Court: U.S. Supreme Court

6 S.Ct. 194

115 U.S. 587

29 L.Ed. 499

PULLMAN'S PALACE CAR CO. v. MISSOURI PAC. RY. CO. and another.¹

Filed December 7, 1885.

This is a suit in equity brought by Pullman's Palace Car Company to enjoin the Missouri Pacific Railway Company and the St. Louis, Iron Mountain & Southern Railway Company from discontinuing the use of the drawing-room cars and sleeping cars of the Pullman Company on the line of the St. Louis, Iron Mountain & Southern Company; from refusing to haul such cars on passenger trains running on such line; and from contracting with any other person for supplying like cars for that use. The court below dismissed the bill on demurrer, and from a decree to that effect this appeal was taken.

The case made by the bill is in substance this: On the eighth of March, 1877, the Missouri Pacific Railway Company was a Missouri corporation, owning and operating a railroad between St. Louis and Kansas City, and Pullman's man's Palace Car Company, an Illinois corporation, engaged in the business of manufacturing drawing-room cars and sleeping cars, and hiring them to, or otherwise arranging with, railway companies for their use upon railroads under written contracts for a term of years. By a written contract entered into on that day the Pullman Company agreed to furnish the Missouri Pacific Company, for 15 years, upon certain specified terms, with drawing-room and sleeping cars sufficient to meet all the requirements of travel, and the Missouri Pacific Company agreed 'to haul the same on the passenger trains on its own line of road, and on all roads which it now controls, or may hereafter control, by ownership, lease, or otherwise.' The railway company also agreed that the Pullman Company 'shall have the exclusive right, for a term of fifteen years from the date, * * * to furnish for the use of the railway company drawing-room or parlor and sleeping cars on all the passenger trains of the railway company, and over its entire line of railway, and on all roads which it controls, or may hereafter control, by ownership, lease, or otherwise, * * * and that it will not contract with any other party to run said class of cars on and over said lines of road during said period of fifteen years.' Some time during the summer or autumn of 1880, and as early as October 7th, the Missouri Pacific Company 'consolidated with itself certain other companies, under the laws of Missouri, retaining its former name; and * * * said consolidated company assumed all the obligations of the separate consolidating companies, and continued to use and operate the former road, together with other consolidated lines.' The St. Louis, Iron Mountain & Southern Railway Company is, and for many years has been, a corporation owning and operating a railroad from St. Louis, in a south-westerly direction, to Texarkana. On the twentieth of November, 1871, that company entered into a contract with the Pullman Company, similar to the one with the Missouri Pacific Company, for the hauling of the Pullman cars on its line until November 20, 1881.

In or about the month of December, 1880, the Missouri Pacific Company 'acquired and became the owner of more than a majority of the stock of said St. Louis, Iron Mountain & Southern Railway Company,' and this, as the bill alleges was done 'with the intent and purpose of controlling the management and administration of the said St. Louis, Iron Mountain & Southern Railway Company, and for the purpose of subordinating, in effect, the said St. Louis, Iron Mountain & Southern Railway Company and the Missouri Pacific Railway Company to the same management and control, and of running and operating said roads as one line and in the interest of the Missouri Pacific Rail way Company.' Since that time the Missouri Pacific Company has acquired all but about 1,795 of the 220,682 shares of the capital stock of the St. Louis, Iron Mountain & Southern Company. Five of the directors of the Missouri Pacific are also directors in the St. Louis, Iron Mountain & Southern Company, and the two roads are operated under the same general management. The general offices of the two companies are kept together, and both roads are managed substantially by the same persons. All this was brought about and done, as is alleged, in pursuance of an arrangement between the Missouri Pacific Company and persons who were at the time the holders of nearly all the stock of the St. Louis, Iron Mountain & Southern Company 'for the transfer of the ownership and control of the franchises, property, and business of said last-named corporation to the said Missouri Pacific Railway Company,' it being part of the arrangement that the 'stockholders of the said St. Louis, Iron Mountain & Southern Railway Company should not divest themselves altogether of their interest in the franchises, property, and business thereof, but that they should place the same under the control and management of the said Missouri Pacific Railway Company, by the method of the transfer of their stock in said St. Louis, Iron Mountain & Southern Railway Company to the said Missouri Pacific Railway Company, and retain their interest therein by receiving in exchange therefor the stock of the said Missouri Pacific Railway Company, in the proportion of three shares of the stock of the Missouri Pacific to four shares of said St. Louis, Iron Mountain & Southern; and it was understood that, as a part of said arrangement, the stock of said Missouri Pacific Railway Company received in exchange for said stock of said St. Louis, Iron Mountain & Southern would represent in the hands of its holders a combined interest in the properties of both of said corporations; and that the stock of said St. Louis, Iron Mountain & Southern which was by the arrangement aforesaid, held, and used by said Missouri Pacific Railway Company should be retained, held, and used by it to control the franchises, property, and business of the said St. Louis, Iron Mountain & Southern Railway Company, in pursuance and execution of the purpose aforesaid, through the authority of the board of directors of said Missouri Pacific Railway Company, and in the interest of all persons so holding as aforesaid stock of the Missouri Pacific Railway Company.'

And this, it is further alleged, was done in pursuance 'of a general purpose to place the affairs aforesaid of said St. Louis, Iron Mountain & Southern Railway Company under the control of the said Missouri Pacific Railway Company, that they might be operated together as one institution as nearly as possible, and was a mode adopted to that end in lieu of various other methods and modes proposed and considered, namely, by consolidation, by lease, and otherwise, as being least subject to objection, based upon considerations of policy or legality.' At the expiration of the contract between the Pullman Company and the St. Louis, Iron Mountain & Southern Company, the president of the last-named company notified the Pullman Company that the further right of that company to have its cars hauled over the line of the St. Louis, Iron Mountain & Southern road was denied, and that the railroad company would cases to operate its road with the cars of the Pullman Company.

As a ground of equitable relief, the bill contains the following allegations: 'Your orator further shows that the refusal to operate your orator's cars upon the St. Louis, Iron Mountain & Southern Railway, and the denial of your orator's right as aforesaid, is a plain and palpable violation of the provisions of the contract between your orator and said Missouri Pacific Railway Company; that such contract cannot be violated without the great- est and most irreparable damage to...