Southern Ry. Co. v. Louisville & N.R. Co.

• Decision Date: 09 October 1941
• Docket Number: 8 Div. 28.
• Citation: 4 So.2d 400,241 Ala. 691
• Court: Alabama Supreme Court
• Parties: SOUTHERN RY. CO. v. LOUISVILLE & N. R. CO.

4 So.2d 400

241 Ala. 691

SOUTHERN RY. CO. v. LOUISVILLE & N. R. CO.

8 Div. 28.

Supreme Court of Alabama

October 9, 1941

Rehearing Denied Nov. 13, 1941.

J. T. Stokely, of Birmingham, S. A. Lynne, of Decatur, A. H. Carmichael, of Tuscumbia, Wert & Hutson of Decatur, and S. R. Prince, Jr., and Sidney S. Alderman both of Washington, D. C., for appellant.

Chas. H. Eyster, of Decatur, Robt. E. Steiner, Jr. of Montgomery, and Edw. S. Jouett and J. H. McChord, both of Louisville, Ky., for appellee.

BROWN, Justice.

This appeal is from an interlocutory decree sustaining the complainant's demurrer to the respondent's amended statutory cross-bill.

The original bill was filed April 17, 1937, under the Declaratory Judgment Act of 1935, Acts 1935, p. 777, Code 1940, Tit. 7 §§ 156-168, seeking a decretal declaration that it is entitled to a reduction of the "rent basis" provided in the contract entered into by the predecessors in title and right of the parties July 25, 1889, for the construction, maintenance and use of the "Gurnee Junction-Blocton Line" of railway, without the payment of "retirement losses."

The respondent, by answer and cross-bill, denies such right and asserts that the payment of retirement losses on a basis of wheelage is a prerequisite to complainant's right to a reduction of the rent basis as a consequence of the abandonment and junking of parts of said system.

The rent basis for the use of said system by the complainant is fixed by the contract at one-half of the capital cost of construction on which complainant and its predecessor in right payed a rental of 5% per annum. Capital losses, as applied to the parts of the system abandoned and junked, were the costs of construction less the junk value of the salvaged material. "Wheelage basis" as used in the contract is the comparative use by the respective parties of said line in the operation of their respective trains.

The assignments of error present the question of the sufficiency of the averments of the cross-bill, to warrant a decretal declaration that the complainant, under the contract of July 25, 1889, is obligated to pay to the respondent, appellant here, a portion of the "retirement loss," on a basis of wheelage, as a prerequisite to complainant's right to claim a reduction of the "rent basis."

The allegations of the original bill admitted by the answer, and cross-bill, will be read into the cross-bill and considered along with the affirmative allegations of the cross-bill made as a basis for such relief, and doubtful intendments will be resolved against the pleader. Donald v. Reynolds, 228 Ala. 513, 154 So. 530; Ashurst et al. v. Ashurst, 175 Ala. 667, 57 So. 442; Blount County Bank et al. v. Harvey, 215 Ala. 566, 112 So. 139; Kelen v. Brewer et al., 221 Ala. 445, 129 So. 23; Scharfenburg v. Town of New Decatur, 155 Ala. 651, 47 So. 95.

So considered, in the light of judicial knowledge, the cross-bill in short alleges that the contract was entered into on July 25, 1889, by and between the Brierfield, Blocton & Birmingham Railway Company, the predecessor in right and title of the appellant, and the Birmingham Mineral Railway Company, the predecessor in right of the appellee, the Louisville and Nashville Railroad Company.

The immediate predecessor of appellant was the East Tennessee, Virginia & Georgia Railway Company. The subject matter of the contract was the construction, maintenance and use of a railway line through the coal fields between what became to be known as Gurnee Junction and Blocton, Alabama, and after its construction was known as the "Gurnee Junction-Blocton Line."

The construction of the line was commenced by the Brierfield Company, was completed by the East Tennessee, Virginia & Georgia Railway Company, at capital costs, in round numbers of $502,000, and after appellant succeeded to the right and full ownership from its predecessor in title, it constructed additional branches, spur tracks and facilities for reaching and handling the coal output of the mines developed in the area, increasing the capital investment to approximately one million dollars.

The contract stipulated that the owner should operate and control said line by its own agents and servants, whose selection should be satisfactory to the Birmingham Mineral Railroad Company, and said Birmingham Mineral Railroad Company should have the joint use of said line for the operation of its trains in hauling the coal and other freight along the same. For this use it agreed to pay "as and for an agreed rent, a sum equal to 5 per cent (5%) per annum" of one-half of said total cost.

It was further stipulated in paragraph "4" of the contract: "It is agreed that the costs of renewals, repairs and maintenance, including taxes and any other charges of or pertaining to said portion of said railroad, and sidings, spur tracks, and appurtenances, is to be borne by the parties hereto on the basis of wheelage, and the Birmingham Mineral Railroad Company agrees that it will, during the continuance of this contract, pay over to the Brierfield, Blocton & Birmingham Railway Company in monthly installments its full proportion of said cost when divided between the parties hereto upon the said basis of wheelage." [Italics supplied.]

In the beginning of its use by the Birmingham Mineral Railroad Company, it paid rent, therefor, on the ascertained basis of the original capital investment, $502,000, and when the capital investment was increased by the construction of the additional branches, spurs and facilities, the rent basis was increased to approximately one million dollars, and complainant and its predecessor in right paid rent on this increased basis.

The complainant and its predecessor in right has never claimed or had possession or control of said line, but has had the use thereof jointly with the owner in consideration of rent paid annually, and maintenance cost, paid monthly, each of the parties operating their own trains by their own employees, under the superintendence and control of the owner's employees.

The term of the contract is for 99 years, and the parties have been operating thereunder beginning in the year, 1890, for a period of 47 years before the bill in this case was filed, April 17, 1937.

The cross-bill alleges: "It is admitted that subsequent to respondent's acquisition of said properties of the East Tennessee, Virginia & Georgia Railway Company, respondent, pursuant to said contract and with mutual consent of the parties and for their joint benefit, has made certain additions and betterments to the main Gurnee Junction-Blocton line and has constructed certain additional spur tracks, branches, connections and other facilities which entered into and became part of the joint venture under said contract, and the total agreed actual cost to respondent of all of which was, by mutual consent, and as contemplated and required by said contract of 1889, written into and added to the rental base and thereby increased the 'agreed rent' payable and paid by complainant. It is admitted that, as the result, the rental base has been expanded, pursuant to said contract, until complainant has been obligated to pay and has been paying for many years past, as required by said contract, rental upon a total agreed cost to respondent, or rental base, of approximately but somewhat less than one million dollars, none of which cost was paid for either by complainant or its predecessors otherwise than by paying interest rental on one-half thereof, but the whole of which has been paid for either by respondent or its predecessors in title, all as contemplated by the contract. It is admitted that no demand has been made on complainant or its predecessors to bear or pay any part of such original construction cost otherwise than by paying interest rental on one-half thereof, as provided by said contract." [Italics supplied.]

The cross-bill, in paragraph 5, alleges: "The said contract provided for a sharing between the parties of total costs. Each party was to and did perform its own train operations, bearing its own costs thereof. The original investment cost laid out by the owning Brierfield Company and its successors in construction of the facilities covered by the contract was to be shared by the joint adventurer Birmingham Mineral Company and its successors by the payment, for the life of the contract, of an agreed rental equal to five per cent per annum on one-half of the total actual cost to the Brierfield Company and its successors of the properties built pursuant to the contract, including all extensions, additional branches and other facilities built by mutual consent for joint use. All other costs or charges were to be divided and borne by the respective parties on a wheelage basis." [Italics supplied.]

The allegations of the cross-bill referred to in the answer and relied on in the cross-bill to support the conclusion of the pleader as establishing a uniform practice of adjustment of accounts between the parties, through their respective accounting departments, involving numerous items, including items of "retirement losses," are:

"The question as to the proper method of handling and accounting for retirements and losses on retirements accordingly first arose between the parties in 1922, as follows: During the period from about 1904 to the federal control of railroads during the World War a large number of controversies, small in individual items but attaining substantial proportions in total, arose between complainant and respondent in connection with said joint trackage arrangement, and accumulated and remained unadjusted for a number of years, and their adjustment was further delayed by federal control, during which properties of both were in the possession of...