Southern Ry. Co v. Franklin & P. R. Co

• Decision Date: 02 February 1899
• Citation: 32 S.E. 485,96 Va. 693
• Court: Virginia Supreme Court
• Parties: SOUTHERN RY. CO. v. FRANKLIN & P. R. CO.

32 S.E. 485

(96 Va. 693)

SOUTHERN RY. CO.

v.FRANKLIN & P. R. CO.

Supreme Court of Appeals of Virginia.

Feb. 2, 1899.

Railroads— Leases—Abandonment op Operation—Injunction—Adequate Leqal Remedy—Decree.

1. A railway constructed by plaintiff to furnish a community with railway facilities was leased to defendant, the lease reciting that the ! leased line was a valuable feeder to defendant's main line. Plaintiff agreed to furnish rolling stock, defendant to pay from the receipts the annual running expense, annual rent, dividends to defendant's stockholders, and, at the expiration of the lease, to return the line in as good repair as when received. Under a statute, failure to operate the road for three years would work a forfeiture of plaintiff's charter. Held, that defendant was bound to continue the road in operation.

2. Plaintiff leased its road to the receiver of another road, the decree ratifying the lease providing that it should be valid under any reorganization of the road. On the sale of the road by the receiver, the order of sale and deed provided that the purchaser should take the property subject to leases, etc., "the purchaser to take the place of the receiver." The purchaser leased the road to one who conveyed it in trust to secure an indebtedness, the grantee assuming the lease from plaintiff. Held, that the purchasers at foreclosure of the trust deed were, as against plaintiff, bound by stipulations in the lease requiring the road to be kept in operation.

3. Where the abandonment of operation of a road by the lessee before the expiration of the term will result in loss of traffic, decay of the road, and the possible forfeiture of the lessor's charter, and the lessor's damages cannot be ascertained, the lessee may be enjoined from abandoning the road, as the lessor has no adequate legal remedy.

4. Where the lessee of a road threatens to abandon its operation, in violation of the lease, the lessor will not be denied an injunction against abandonment because it will compel the performance of a series of acts involving the exercise of skill and judgment.

5. If the lease of a road stipulates that the road shall be operated by the lessee, an injunction restraining the lessee from abandoning the road will not be denied because the road can be operated only at a loss.

6. A decree enjoining the lessee of a road from abandoning its operation is not objectionable because it requires the lessee to furnish the same train service that it had previously, since it is to be presumed that defendant used no more trains than were necessary.

7. In a suit by a lessor to enjoin the abandonment of operation of its road by the lessee, the injunction may extend to a branch line owned by the lessee, but connecting the leased line with the lessee's main line, and necessary to the use of the leased line.

8. On enjoining the lessee of a road from abandoning its operation, the court should not dismiss the case from the docket, but should detain it, for the purpose of making such further orders as circumstances may require.

Keith, P., dissenting.

Appeal from circuit court, Franklin county.

Suit by the Franklin & Pittsylvania Railroad Company against the Southern Railway Company. From a decree for plaintiff, defendant appeals. Modified.

Blackford, Horsely & Blackford and Eppa Hunton, Jr., for appellant.

Phlegar & Johnson, for appellee.

RIELY, J. The Franklin & Pittsylvania Railroad Company (hereinafter called the "Franklin Company") was incorporated by an act of the general assembly of Virginia of March 12, 1878, and authorized to construct a railroad from some point on the main line of the Washington City, Virginia Midland & Great Southern Railroad Company (hereinafter called the "Midland Company"), or any branch thereof, in the county of Pittsylvania, to Rocky Mount, the county seat of Franklin county.

On September 19, 1878, it made a lease of Its road, to take effect when the same was completed, to John S. Barbour, receiver, in the chancery suit of Graham against the Washington City, Virginia Midland & Great Southern Railroad Company, pending in the circuit court of the city of Alexandria, for the term of 34 years, at the annual rental of $7,000. The lease was made subject to the ratification of the stockholders of the Franklin Company and the approval and confirmation of the said court It was duly ratified by the former, and approved and confirmed by the latter. The road was constructed and equipped by the lessor, and delivered to the lessee on April 15, 18S0, from which date the lease was to run for 34 years.

The Southern Railway Company having, on June 18, 1894, duly acquired, by purchase and conveyance, the road owned by the Midland Company when the lease was made, and along with it the lease to Barbour, receiver, by the Franklin Company, plainly manifested an intention, in the summer of 1897, to abandon and cease to operate the leased road. In anticipation of such action by the Southern Railway Company, and to prevent the consequences that would result from it, the Franklin Company brought its suit in equity in the circuit court of Franklin county, charging in its bill that the Southern Railway Company intended to abandon and cease to operate under the lease the road of the complainant after July 1, 1897, and asking that it be enjoined and restrained from doing so. The Southern Railway Company filed its answer to the bill, and admitted the charge of the complainant.

Is the defendant company bound to operate the leased road during the term of the lease, or may it rightfully abandon and cease to operate it? This is the first question presented for our determination. Its solution depends upon the provisions of the lease.

It is conceded that an express covenant to operate the road during the term of the lease is not to be found among the provisions thereof, but the complainant in the court below, which is the appellee here, contends that the obligation to operate the road throughout the entire term of the lease is so plainly contemplated by its provisions that the law will enforce it as an implied covenant, as fully as if the obligation were expressed in appropriate words.

Necessary implication is, beyond doubt, as much a part Of an instrument as if that which is so implied was plainly expressed. "Although the words of a contract under seal, " says Addison in his Treatise on Contracts (volume 3, § 1400), "do not, in themselves, import any express covenant, yet the law, in order to promote good faith, and make men act up to the spirit, as well as the letter, of their engagements, will create and supply, as a necessary result and consequence of the contract, certain covenants and obligations, which bind the parties as forcibly and effectually as if they had been expressed in the strongest and most explicit terms in the deed itself."

While this is very true, courts are nevertheless justly prudent and careful in inferring covenants or promises, lest they make the contract speak where it was intended to be silent, or make it speak contrary to what, as may be gathered from the whole terms and tenor of the contract, was the intention of the parties. If however, it can be plainly seen, from all the provisions of the instrument taken together, that the obligation in question was within the contemplation of the parties when making their contract, or Is necessary to carry their intention into effect—in other words, if It be a necessary implication from the provisions of the instrument, —the law will imply the obligation and enforce it.

Before proceeding to examine critically the provisions of the lease, it is proper to observe that a court, in construing an agreement whose language leaves in doubt its meaning as to the particular matter in controversy, in order to ascertain the intention of the parties, should have regard to the occasion which gave rise to the contract, the obvious design of the parties, and the object to be attained, as well as to the language of the instrument itself, and give the agreement that construction which will effectuate the real intent and meaning of the parties as thus ascertained from the entire instrument and by reference to the circumstances attending the making of it.

It Is apparent that a principal object of the incorporators of the Franklin Company was to furnish railroad facilities to the citizens of Franklin county by connecting by rail Rocky Mount, the county seat, with the main line of the Midland Company, and thereby secure railroad communication with all sections of the state and country reached by that road and its connections. It was to this end that the county of Franklin subscribed to and paid for in its bonds $200,000 of the capital stock of the Franklin Company. And the consummation of this object was the main inducement on the part of the Franklin Company to enter into the lease with the Midland Company; while the inducement to enter into it on the part of John S. Barbour, receiver, was, as expressed in his reports to the circuit court of Alexandria, to obtain, as he believed, a valuable feeder to his line of railroad. That the lease was in the contemplation of the parties thereto at the time the Franklin Company obtained its charter is shown by the eighth section thereof, whereby it is expressly made "lawful for said company to lease its road, or any part thereof, to the Washington City, Virginia Midland & Great Southern Railroad Company, or any other railroad company chartered by the commonwealth."

It is apparent, upon a fair construction of the whole instrument, considered in the light of the circumstances under which it was made, that it was within the contemplation of the parties and their intention that the road should be maintained and operated during the entire term of the lease; and, when we come to examine its provisions critically, the obligation to do so, though not expressed in words, is plainly implied.

By the lease the Franklin Company demised to John S. Barbour, receiver,...