Reynolds v. Louisville, New Albany & Chicago Railway Co.

• Decision Date: 02 April 1895
• Docket Number: 17,217
• Parties: Reynolds et al. v. Louisville, New Albany and Chicago Railway Co. et al
• Court: Indiana Supreme Court

40 N.E. 410

143 Ind. 579

Reynolds et al. v. Louisville, New Albany and Chicago Railway Co. et al

No. 17,217

Supreme Court of Indiana

April 2, 1895

Petition for Rehearing Overruled January 30, 1896.

From the Putnam Circuit Court.

The judgment is affirmed.

F. M Trissal, D. E. Williamson and W. R. Fertig, for appellants.

F. C Field, G. W. Kretzinger, C. C. Matson, Orsborn & Lynde and W. P. Kappes, for appellees.

OPINION

McCabe, C. J.

This appeal is from a judgment in favor of the appellee, The Louisville, New Albany and Chicago Railway Company, on its separate demurrer to the appellants' complaint, and in favor of the other appellees, Porter Skinner and The Fort Wayne, Terre Haute and Southwestern Railroad Company upon motions made by them to quash the process. The principal error alleged and discussed is that the circuit court erred in sustaining the demurrer to the several paragraphs of the complaint alleging insufficiency of the facts. Four paragraphs of complaint were filed, but the second was dismissed by the appellant. In the first paragraph it is averred, substantially, that the appellants, Benjamin Reynolds, John H. Reynolds and Elisha P. Reynolds, Senior, were co-partners, engaged in the business of building railroads, under the firm name of E. P. Reynolds & Co.; that in September, 1892, Elisha P. Reynolds, Senior, departed this life, testate, leaving a last will and testament, naming Elisha P. Reynolds, Jr., as executor, in which capacity he is now acting, and, as such, represents the interests of said testator's estate, and the other appellants are surviving members of said firm; that the Louisville, New Albany and Chicago Railway Company is now, and at all the times mentioned in the complaint was, a railroad corporation organized and existing under the laws of the State of Indiana; that it was reorganized in 1872, under and pursuant to the provisions of sections 3946, 3948, 3949, 3950 and 3951, of the Revised Statutes of Indiana, being an act of the General Assembly of March 3, 1865, entitled, etc.; that the Fort Wayne, Terre Haute and Southwestern Railroad Company, on and for some time prior to the third day of December, 1890, was a corporation created under the laws of the State of Indiana, for the purpose of constructing, owning and operating a line of railway between a point of intersection with the railway of the Louisville, New Albany and Chicago Railway, at or near the town of Bainbridge, in the county of Putnam, and a point at or near the town of Carbon, in the county of Clay, a distance of thirty-three miles, but had no assets nor capital or credit whatever to enable it to build its said contemplated road, but had entered into certain negotiations with the defendant, The Louisville, New Albany and Chicago Railway Company, to provide the means by which the same might be built and operated by and for the use and benefit of said Louisville, New Albany and Chicago Railway Company, to the end that the latter might acquire great advantages and benefits by increased traffic from the shipment of coal and stone over its railways, and by enabling it to secure a sufficient and continual supply of fuel for the use of its railways at low cost, from the large coal fields in the counties of Clay and Parke, along the line of said contemplated railroad, and adjacent to the road of said Louisville, New Albany and Chicago Railway Company; that said negotiations had, at the date last aforesaid, so far progressed as that said two corporations had agreed upon the terms and stipulations that should be set forth in writings thereafter to be drawn, expressing their intentions and purposes, and it was then agreed between them that preliminary to the preparation of said written agreements, said Fort Wayne, Terre Haute and Southwestern Railroad Company should first award the contract for the building of said line of road, and that to induce the party to whom the contract was awarded to undertake the work of building the road, provisions for securing payment should afterwards be stipulated for and expressed in said written agreement between said corporations so to be subsequently drawn, and said defendant, the Louisville, New Albany and Chicago Railway Company, should be thereby obligated and bound to pay an amount equal to the interest at five per cent. per annum, payable semi-annually, upon certain first mortgage bonds, to be issued by said Fort Wayne, Terre Haute and Southwestern Railway Company, also a sum in addition to said interest each year, beginning five years after the date of December 19, 1890, which, in the aggregate, with accrued interest, should equal an amount sufficient to pay the principal of said bonds at maturity, and that the covenant to pay said sums should be endorsed upon said bonds and be taken and deemed to run in favor of the holders thereof; that thereupon, in pursuance of said agreement, the contract for constructing said railroad was awarded to said firm of E. P. Reynolds & Co., said preliminary construction contract being in writing in two parts and a copy thereof being filed with and made a part of the complaint identified as "Exhibit A"; that by the terms of said preliminary construction contract there was to be paid to said firm for the construction of said road $ 25,000.00 per mile in said corporate bonds to be issued and secured by a first mortgage upon said railroad, bearing interest at the rate of five per cent. per annum, payable semi-annually, in the amount of $ 25,000.00 per mile, said bonds to mature fifty years after the date thereof and to be payable in gold; that afterward, to-wit, on the 19th day of December, 1890, said agreement previously contemplated between said two corporations was duly executed and a copy thereof is filed with and made a part of the complaint marked "Exhibit B"; that afterwards, to-wit, on the 15th day of January, 1891, in pursuance and in further consummation of the previous agreements aforesaid, another written agreement was entered into between said corporations which is exhibited as "Exhibit C"; that said three agreements, although bearing different dates, all relate to and are connected with each other and form parts of one and the same transaction; that immediately after the execution of said writing of December 19, 1890, said E. P. Reynolds & Co. accepted the provisions therein made for their benefit and in good faith relying thereon and depending upon the provisions therein made for payment for said work of building said road, did, with the knowledge and consent of said New Albany Company, for its use and under the directions of its president and engineers, proceed with the work of constructing said road in accordance with the contracts aforesaid, and according to the plans and specifications furnished by said New Albany Company, relying wholly and solely, as said defendant knew, upon its obligations to endorse, guarantee and pay the bonds at the rate of $ 25,000.00 per mile to be issued by said Fort Wayne, Terre Haute and Southwestern Railroad Company to pay for said work, and having, as said New Albany Company knew, no other means to rely upon for their security and payment; that if said bonds had been at any time heretofore issued, and the provisions for the payment of interest thereon, and the principal thereof made as in said obligations and contracts required, their actual and market value would, at all times hitherto, have been the par or face value thereof, but that after said firm had fully completed ten and three-fourths miles of said road, in the manner required by said New Albany Company, and by said contracts, and had actually and necessarily paid out in cash in so doing the full sum of $ 285,000.00, and had done and paid for other work on the remaining part of said line, amounting to, and of the value of, $ 30,000.00, said New Albany Company, with full knowledge of all the facts, after it had accepted and received said ten and three-fourths miles of road, gave notice, both verbally and in writing, to said Fort Wayne Company and to said firm of E. P. Reynolds & Co., while the work was being carried on, that said work should be stopped, and that it repudiated and would not perform or carry out the provisions of said contract on its part, relating to the payment of said bonds, or the interest thereon, nor in any other respect; that up to the time of the notices aforesaid, both said Fort Wayne, Terre Haute and Southwestern Railroad Company and said firm of E. P. Reynolds & Co. had fully performed all the obligations of said contracts upon their part, and were at all times thereafter ready and willing to continue to perform the same.

It is further averred that the said firm of E. P. Reynolds & Co., relying upon said contract of December 19, and upon the recitals therein to the effect that said New Albany Company desired to secure said railroad for its own use and operation; and that it desired to secure the right to ship stone and purchase all the coal needed for the use of its line of railroad from the mines to be operated in and upon deposits of coal along the same, were induced to, and with the knowledge of said New Albany Company did expend $ 89,400.00 in purchasing, leasing and developing stone quarries and coal mines along the line of said road, but in consequence of said road not being completed and operated as by said contract stipulated, they have no markets at their mines and quarries nor railroad facilities by which said stone and coal can be sold and shipped, and their expenditure of said last named sum of money has thereby been entirely lost to them. * * *

It was further averred that the writing identified as "Exhibit A" had been by their firm heretofore assigned without endorsement thereon to the appellee Porter Skinner...