Stockton v. Cent. R. Co. of N.J.

• Decision Date: 25 August 1892
• Citation: 24 A. 964,50 N.J.E. 52
• Parties: STOCKTON, Attorney General, v. CENTRAL R. CO. OF NEW JERSEY et al.
• Court: New Jersey Court of Chancery

24 A. 964

50 N.J.E. 52

STOCKTON, Attorney General,

v. CENTRAL R. CO. OF NEW JERSEY et al.

Court of Chancery of New Jersey.

Aug. 25, 1892.

(Syllabus by the Court.)

Application by John P. Stockton, attorney general of New Jersey, against the Central Railroad Company of New Jersey, the Port Reading Railroad Company, and the Philadelphia & Reading Railroad Company, to have a certain indenture of lease made between the Central Railroad Company of New Jersey and the Port Reading Railroad Company, and also a tripartite agreement between the three defendants, decreed to be ultra vires and void; and further, to obtain a mandatory decree which shall enjoin the Port Reading Railroad Company to surrender and return to the Central Railroad Company its corporate franchises and property; and a restrictive decree to restrain the Port Reading Railroad Company from hereafter controlling and intermeddling with such franchises and property, and the three corporate defendants from all future combinations to arbitrarily increase the price of coal to the inhabitants of New Jersey. Temporary injunction continued to final hearing, with further directions that defendants refrain from further carrying into effect the lease and tripartite agreement, and that the Port Reading Railroad Company and the Philadelphia & Reading Railroad Company desist from continuing to control the road and franchises of the Central Railroad Company of New Jersey, and that the latter company refrain from permitting the Port Reading Railroad Company or the Philadelphia & Reading Railroad Company to use, control, or operate its road, etc., and that the Central Railroad Company do again resume control of all its property, franchises, etc.

The other facts fully appear in the following statement by McGill, Ch.:

On order to show cause why injunction shall not issue. Heard upon information, exhibits, and affidavits, answers of the defendants, and limited proofs taken under order of the chancellor, in conformity with the provisions of rule 121. The object of the information is to have a certain indenture of lease made between the Central Railroad Company of New Jersey and the Port Reading Railroad Company, and also a certain tripartite agreement between the Central Railroad Company of New Jersey, the Port Reading Railroad Company, and the Philadelphia & Reading Railroad Company, decreed to be ultra vires, and therefore void; and void also upon the ground of public policy, in that they tend to create a monopoly of the anthracite coal trade within the state, by stifling competition between the contracting corporations, and thereby to increase the price of anthracite coal to the inhabitants of the state. And to effectually destroy the effect of such lease and agreement, under which the property and franchises of the Central Railroad Company of New Jersey have already been delivered to the Port Reading Railroad Company, it seeks a mandatory decree which shall enjoin the Port Reading Railroad Company to surrender and return to the Central Railroad Company the corporate franchises and property, and a restrictive decree which shall perpetually restrain the Port Reading Railroad Company from hereafter controlling and intermeddling with such franchises and property, and the three corporate defendants from all future combinations to do that which will arbitrarily increase or tend to increase the price of coal to the inhabitants of New Jersey. I am asked to now issue an injunction that will, temporarily at least, effect all these ends.

The Central Railroad Company of New Jersey was incorporated by special act of the legislature of this state, entitled "An act to incorporate the Somerville & Easton Railroad Company," approved February 26, 1847. Before then—on the 9th of February, 1831—the Elizabethtown & Somerville Railroad Company had been incorporated, with power to construct a railroad from Elizabethtown to Somerville. The Somerville & Easton Railroad effected a continuation of railroad communication from Somerville to Phillipsburg, on the Delaware river, opposite Easton, Pa. By a supplement to the charter of the Somerville & Easton Railroad Company, approved February 22, 1849, that company was authorized to purchase the Elizabethtown & Somerville Railroad, and it was provided that the two railroads should be controlled by the charter of the Somerville & Easton Railroad Company, and that the controlling company should thereafter be called the Central Railroad Company of New Jersey. The purchase was consummated on the 1st day of April, 1849. In 1860, by another legislative act, the Central Railroad Company was authorized to extend its road to the New York bay, at or south of Jersey City. From time to time, by legislative act, the capital of the company was increased, until now the stock outstanding amounts in round figures to about $22,500,000 of an authorized capital of $30,000,000. Besides this large capital, the company has an indebtedness of upwards of $45,000,000. It owns, leases, or controls more than 40 tributary railroads. It has a large and prosperous business, and earns a respectable dividend upon its capital stock beyond the payment of the interest upon its indebtedness and its other fixed charges. Its assets exceed in value its outstanding capital stock and its indebtedness, which together aggregate, as has been indicated, more than $67,000,000. In 1871 it leased the Lehigh & Susquehanna Railroad, running from Wilkesbarre to Easton, in Pennsylvania, from its owner, the Lehigh Coal & Navigation Company, a corporation of Pennsylvania, and also purchased the rolling stock and other equipment of that road. This leased railroad extends through a valuable portion of the anthracite coal region in Pennsylvania. About the same time the Central Railroad Company also invested in coal lands, by organizing, or causing to be organized, the Lehigh & Wilkesbarre Coal Company, and becoming the owner of all, or substantially all, of its capital stock. This coal company issued bonds, which the Central Railroad Company guarantied. In virtue of its interests in the anthracite coal region and the advantageous location of its roads the Central Railroad Company has become a considerable coal carrier, not only from the mines of the company in which it is interested, but also from the mines of other miners not having railroad facilities, in and through the states of New Jersey and Pennsylvania to the New York harbor, which is the greatest distributing point for anthracite coal in the United States. The Philadelphia & Reading Company, a corporation of the state of Pennsylvania, is also possessed of railroads running into the anthracite coal region of Pennsylvania, and is an extensive coal carrier. Save a few shares, used to qualify directors, it is the owner of the entire capital stock of the Reading Coal & Iron Company, which, in the year 1891, produced from its collieries 8,203,465 tons of coal, being one fifth of the total produce of anthracite coal from Pennsylvania during that year. Along the lines of the Philadelphia & Reading Railroad there are also other coal miners, who find a market for their coal by the means of transportation it affords. The capital stock of the Philadelphia & Reading Company, at par, amounts to about $40,000,000, and its indebtedness to more than $160,000,000, all of which is balanced by assets alleged to be of equal value. The annual report of the directors of this company for the year ending November 30, 1891, referring to the coal lands controlled by that company, contains this statement: "The coal lands comprise in extent about thirty-two per cent. of the entire anthracite coal fields of the state, and, taking into account the aggregate thickness of the veins on the company's lands, and the greater proportionate depletion of the estate in the other regions, which has been going on for many years, it must be conceded that we have at least fifty per cent. of the entire deposit remaining unmined." Throughout this report, and reports similar, whenever the lands of the Reading Coal & Iron Company are alluded to, they are spoken of as the property of the Philadelphia & Reading Railroad Company, and that company itself as the property of the railroad.

It appears also that the Philadelphia & Reading Railroad Company has become the lessee of the Lehigh Valley Railroad Company, a corporation of the state of Pennsylvania, which, in turn, is the lessee of the Easton & Amboy Railroad Company, a corporation of this state, having a line of railroad from Easton, Pa., to Perth Amboy. The Lehigh Valley Railroad Company is a miner of coal to some extent, and possesses a railroad which runs through the anthracite coal region of Pennsylvania, and affords facilities for transportation of coal there mined to markets in this and adjoining states. For several months past competition between these three roads in the procuration and transportation of coal, and between each of them and the Delaware, Lackawanna & Western Railroad Company, the Delaware & Hudson Canal Company, and the Pennsylvania Railroad Company, each of which is possessed of interests in the anthracite coal region, and the means of transportation of coal therefrom, has materially reduced the price of coal to consumers in this state and elsewhere, to the loss of considerable profit to each of the companies named, which would not have been suffered if competition between them had not existed. It further appears that anthracite coal is a necessity to the people of New Jersey, being the fuel that is most abundantly and cheaply obtainable, and most universally used in their homes and manufactories. The Philadelphia & Reading Railroad Company operates in this state, among other railroads, the Delaware & Bound Brook Railroad, which extends from Bound Brook to the Delaware river at Yardleyville, a few miles above Trenton, connecting with railroads to the anthracite coal region. It possessed and operated this road...