Case ID: misc_72/html/0162-01.html
Source: Caselaw Access Project
Author: {"author": "Marcus, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Frank B. Baird, Plaintiff, v. Erie Railroad Company, Union Iron Company of Buffalo and Buffalo Union Furnace Company, Defendants.
    (Supreme Court, Erie Special Term,
    May, 1911.)
    Contracts — Interpretation of contract — General' rules of interpretation— Interpretation of several instruments as forming one contract.
    Easements — Change of interest in estates —Right of purchaser of dominant estate.
    Equity — Laches and acquiescence — What constitutes.
    Former adjudication — Adjudication operative as bar or as conclusive evidence — Rule that former judgment must have been on the merits — Judgment of nonsuit.
    Reformation of instruments—Right to remedy — Who may obtain relief.
    The owner of a tract of land lying on the south side of the Erie Railroad Company’s tracks and between them and other lands of said company, the tenant of the south part of said tract, which had erected and was operating a furnace upon 'the lands it occupied and contemplating the erection of another furnace on another part of the tract, .and the Erie Railroad Company entered into an agreement by which the company was given a right of way across the entire tract from its line of railroad on the north to its other lands on the south and the company agreed in consideration thereof to give reduced rates for switching cars to other railroad lines for two furnaces on said tract by whomsoever operated. In order to carry out this arrangement there was added to the draft of the contract that had previously been prepared, by which the benefit of the switching rates was only given to the Buffalo Furnace Company, the tenant, an additional clause providing that “ if the said furnaces, or either of them, shall be operated by other parties than the Buffalo Furnace Company, said parties so operating shall have the benefit of the switching rates named herein during the term of this contract.” It was thereafter held that the legal effect of the contract was not to carry out the intention of the parties which they sought to express in the clause above quoted, whereupon the assignee of the owner of the tract of land'of the Buffalo Furnace Company and of another company operating both fur- ' naces then standing on the tract in question, brought this action to reform the contract, so that it might correctly express the intention of the parties. Held:
    
      The plaintiff, though not one of the parties to the contract, could maintain the suit as assignee of the Union Iron Company, the owner of the tract of land which granted to the railroad company the right of way that formed the sole consideration for the latter’s switching agreement, although such grant was contained in a separate instrument and the grantor was not a party to the instrument containing the switching agreement.
    The switching agreement was a covenant running with the land and the plaintiff as assignee of the owner and tenant of the land had the right to maintain an action for its enforcement or for its reformation.
    The prosecution of the former action at law upon the switching agreement by the Union Iron Works in which the plaintiff suffered a nonsuit was not an election of remedies which will prevent the plaintiff from prosecuting the present action to reform the contract, nor will the judgment therein operate to bar such right.
    Nor should relief .be denied the plaintiff on the ground of laches, as distinguished from the Statute of Limitations, which implies something more than mere lapse of time, since it does not appear that the defendant has been prejudiced by the delay.
    Actioet for the reformation of a written instrument.
    Bissell & Riley (George G. Riley, Simon Fleischnann and Robert F. Schelling), for plaintiff and defendants Union Iron Company of Buffalo and Buffalo Union Furnace Company.
    Moot, Sprague, Brownell & Marcy (Adelhert Moot and Helen Z. M. Rodgers), for defendant Erie Railroad Company.
   Marcus, J.

This action is brought by plaintiff as assignee of the rights and claims of the Union Iron Company of Buffalo and of the Union Iron Works, Buffalo, N. Y., to secure the reformation of an instrument, dated February 24, 1896, granting certain switching rates, and wherein the defendant the Erie Railroad Company is named as party of the first part, and the Buffalo Furnace Company party of the second part, and for the recovery of switching charges in excess of those stipulated, paid, under protest, to the railroad company. Plaintiff asks that the clause in the second paragraph and near the beginning of said agreement, whereby the switching rates given are limited to two “ furnaces operated by the party of the second part,” shall be amplified so- as to apply to furnaces when operated by parties other than the Buffalo Furnace Company, the party of the second part, and thus accord with the last clause inserted at the end of said contract, just before its execution, which provided that, “ if the said furnaces, or either of them, shall be operated by other parties than the Buffalo Furnace Company, said parties so operating shall have the benefit of the switching rates named herein during the term of this contract.”

The ground upon which plaintiff seeks such reformation is that the-first of the above clauses was -left in said contract after the new clause was added, under a misapprehension by all of the parties thereto as to the legal effect of the two when read together, it being mutually understood that the newly inserted clause was intended to give the. switching rates to two furnaces, if operated by parties other than the Buffalo Furnace Company, as well as when operated by that company; and that plaintiff and his predecessors in interest did not learn of, and were not chargeable with knowledge of, the legal effect of such contract, 'as it was allowed to stand, with both clauses left in, until the courts, in an action at law, brought upon the contract as it was, to recover excessive freight charges, determined that the switching rates under the contract, as it stood, were available only to furnaces operated by the Buffalo Furnace Company, or its technical successors1, or assigns. In the action at law, a non-suit was granted, „ which was affirmed on appeal by the Appellate Division. Thompson v. Erie R. R. Co., 96 App. Div. 539.

In entering upon the consideration of this case, the court has in mind the proper and well-established rule that, to enable a plaintiff to succeed in an action for reformation, his proof must amount to more than a bare preponderance of evidence, which leaves the issue in doubt; that it must be clear, unequivocal, satisfactory and convincing. Southard v. Curley, 134 N. Y. 148, 155; Nevius v. Dunlap, 33 id. 676. A brief survey of the facts disclosed upon the present trial is necessary to afford a proper basis for a consideration of the legal effect of the evidence and its force. As there is a great similarity in the names of various parties involved, it is necessary to keep the particular title of the different companies constantly in mind.

The defendant the Union Iron Company of Buffalo has, during all these times embraced in the present litigation, been the owner of a large tract of land of about fifty-two acres in the southeasterly portion of Buffalo, and its entire tract has been known for many years as “ Union Iron Works,” more or less of the premises having from time to time been occupied by blast furnaces. These lands were bounded on the north by two main freight tracks of the ¡New York, Lake Erie and Western Railroad Company, which was afterward reorganized into the defendant the Erie Railroad Company. Immediately south of these lands was a large tract owned by the railroad company itself, known as Farmer’s Point.

Mr. Baird, the plaintiff, became interested in the Union Iron Works property prior to 1892, being connected as an officer and stockholder with the company’s operating. blast furnaces thereon, and in 1892 obtained a ten-year lease of a little less than the southerly half thereof, upon which he completed a blast furnace, thereafter known as “ Furnace A.” Later on in the same year Mr. Baird organized the Buffalo Furnace Company, one of the parties to the agreement in controversy, and assigned to it his lease. Under this lease the lessee had certain rights to use and lay tracks through, and to store material upon, the remainder of the Buffalo Furnace Company’s entire tract of land, lying north of and between its lands and 'the railroad ’company’s tracks, and practically was in possession of the entire tract until 1896.

In the latter part of 1892, negotiations were had between Mr. Baird and Mr. Brunn, the superintendent of the western division of the ¡NTew York, Lake Erie and Western Railroad Company, looking to the acquirement by the railroad company of a double-track right of wiay southerly from its freight tracks and through the entire tract of land of the Union Iron Company of Buffalo to the lands owned by the railroad company and known as Farmer’s Point, lying southerly of the said lands of the Union Iron Company of Buffalo, in exchange for favorable switching rates to be granted by the railroad company. In the course of these early negotiations, and in January, 1893, .a draft of a proposed written agreement was drawn up between the railroad company and the Buffalo Furnace Company, providing for switching rates from the works of said Buffalo Furnace Company to various railroads, which, however, was not accepted by either party, nor ever executed. Hr. Baird had no recollection of this agreement, when questioned in regard thereto upon the trial, but it is undisputed that the parties came to no agreement at the time and that negotiations in regard to the matter were dropped and abandoned on both sides for about two years and not resumed until 1894 or 1895. Hr. Baird then took up the question anew with Hr. Even B. Thomas, who wias successively first vice-president and president of the railroad company, was appointed one of its receivers in April, 1895, and became the president of the reorganized Erie. Railroad Company, the defendant herein, '¡November •14, 1895.

Hr. Baird testified that Hr. Thomas visited the property in question with him and that they saw Furnace A” of the Buffalo Furnace Company, and that he pointed out to Hr. Thomas where he proposed to erect a second furnace, thereafter known as Furnace B,” upon the northerly portion of the lands of the Union Iron Company of Buffalo. Hr. Baird states that he entered upon negotiations with Hr. Thomas, which finally resulted in an oral agreement, made in September, 1895, between the Union Iron Company of Buffalo, the Buffalo Furnace Company and the railroad company and its receivers, whereby it was agreed that the Union Iron Company of Buffalo, with the consent of the tenant, the Buffalo Furnace Company, should convey to the railroad company a double-tnaclc right of way from the railroad company’s main tracks, through the lands of the Union. Iron Company of Buffalo, to the railroad company’s lands south thereof, and that, in consideration thereof, the ■ railroad company should, for fifteen years, switch cars to and from two blast furnaces, located or to be located up.on the entire tract of land owned by the Union Iron Company of Buffalo, by whomsoever operated, at certain stipulated rates as to different trunk lines in Buffalo to which such switching should be done.

Mr. Baird testifies definitely and clearly as to the elements of this oral contract, which was to be reduced to writing; and Mr. Thomas does not squarely deny the arrangement as detailed' by Mr. Baird, but says that it is impossible for him, 'at this distance of time, to recall individual conversations. Mr. Thomas," however, states that, after refreshing his memory from the correspondence and papers, his recollection is that there was, at the time this arrangement was made, one furnace, and that Mr. Baird intended to build another; and he sums up the matter in the following words: “We were willing to make a switching contract to the Buffalo Furnace and to another one to be built there, but to extend that indefinitely would be to extend that to a cost which we could not-estimate, and possibly far beyond its value.” This refusal to extend the switching privileges indefinitely doubtless was in answer to Mr. Baird’s original request for rates for three furnaces.

The plaintiff claims that subsequent acts of the railroad company and its receivers, and the conduct of all parties concerned, which are entirely or substantially undisputed, corroborate his testimony as to the agreement made between Mr. Thomas, on behalf of the railroad company -and its receivers, and himself, as the representative of the Union Iron Company of Buffalo and the Buffalo Furnace Company; and, after careful consideration, the court is led to the conclusion that he sustains his position with convincing force.

[Here follows a review of the testimony leading to the following conclusion as to the principal facts involved. — Reporter.]

■S'o far as the important question of fact involved in this case is concerned, as to whether the railroad company and the Union Iron Company of Buffalo and the Buffalo Furnace Company all intended, supposed and understood that the switching agreement executed by the railroad company and the Buffalo Furnace Company, on February 24, 1896, gave the switching rates, therein provided, to two furnaces upon the lands of the Union Iron Company of Buffalo, by whomsoever operated, it seems to me that plaintiff has established this fact in his favor by clear and convincing evidence and by the inferences reasonably and necessarily to be drawn therefrom.

After the oral agreement had been made, in the fall of 1895, Mr. Baird secured an extension of the existing lease of the Buffalo Furnace Company property for five years from June 1, 1902, the termination of the existing ten-year lease; and this extension lease is dated October 4, 1895, the date of the right-of-way grant from the Union Iron Company of Buffalo to the railroad company. This lease of October 4, 1895, was surrendered on May 13, 1898, and a nine-year lease from June 1, 1902, given in place thereof. It appears that Mr. Baird, at the time of negotiating the oral agreement with the railroad company for switching rates in 1895, had an agreement or understanding with the Union Iron Company of Buffalo for a lease to him of the northerly part of the property of the Union Iron Company of Buffalo, which fact was communicated to Mr. Thomas, and that; in 1897, he actually began the construction of “ Furnace B ” on that portion of the property, although he did not obtain a formal written lease thereof until May 13, 1898, when a formal lease was executed for thirteen years from June 1, 1898, which expired a few months after the fifteen-year period of the switching agreement.

All these leases, covering the premises occupied by Furnaces “A” and B,” were, in July, 1899, assigned to a new corporation, known as Union Iron Works, Buffalo, N. Y., with the consent of the Union Iron Company of Buffalo; and this new company operated u Furnace B ” during the period in which the railroad company refused to allow to “ Furnace B the switching rates provided in the switching contract of February 24, 1896.

The railroad company allowed the stipulated switching rates to “ Furnace A,” operated by the Buffalo Furnace Company, so long as this company operated this furnace; but upon the completion of Furnace B ” and its operation by the Union Iron Works, Buffalo, N. Y., it refused to allow the stipulated rates to “ Furnace B ” and insisted upon higher rates, which were paid, under protest, during the years 1899 and 1900, and which excess over these stipulated rates amounted on the shipments made to nearly $18,000, to recover which, with interest, this action is brought upon the reformed contract.

In November, 1900, both Furnaces A and B were sold to a new company known as the Buffalo Union Furnace Company, whereupon, the railroad company allowed the stipulated switching rates to both Furnaces A and B ” until about the year 1906, when the Hepburn Interstate Commerce Law was passed, under which the railroad company has since claimed it has no right longer to allow such rates to either furnace.

In December, 1901, the receiver of the Union Iron Works, Buffalo, N. Y., into whose hands the company bad passed, began an action at common law upon the switching contract, as it stood unreformed, to recover the amount of the excess of switching charges that had been paid under protest. The plaintiff in that action sought, upon the trial, to show, by parol evidence, that the clause making the switching rates applicable to two furnaces by whomsoever operated was understood and intended to apply to Furnace B,” notwithstanding the clause in the beginning of the contract, limiting such rates to furnaces operated by the Buffalo Furnace Company. The trial court held that parol evidence was not admissible in an action at law, for that purpose, and that the restricted clause at the beginning of the contract must be given force and effect and would not be deemed modified or extended by the clause at the end of the contract. The plaintiff was non-suited and appealed to the Appellate Division, Fourth Department, where the judgment was affirmed and no further appeal taken. Thompson v. Erie R. R. Co., 96 App. Div. 539.

An examination of the opinion in the Appellate Division will show that that court, in the first place, did not regard the parol evidence sought to be introduced admissible under the complaint as it stood, and that the contract, “ measured and tested alone by its written terms,” did not secure the switching rates for “Furnace B.” The com-fc did not have before it the history of the development of this switching contract and its various clauses,' but simply the instrument in its entirety, and, taking it as it stood, conjectured that “ the object of the draftsman in formulating said clause (the Wilbur final clause) probably was to emphasize the idea that the benefits of said contract should be extended to any person who might be operating a furnace as assignee of the Corporation named ” (meaning the Buffalo Furnace Company).

The evidence now produced and admissible in the present action for reformation clearly shows that this surmise did not accord with the facts as now disclosed, but that, on the contrary, this clause was added after the remainder of the contract had been written out, and that its express purpose was to extend the benefits of the switching rates, not merely to successors or assigns of the Buffalo Furnace Company, the corporation named, as there was already a clause in the contract extending its privileges to such successors and assigns, but' that such final clause, prepared by Mr. Wilbur, was expressly intended and understood to extend such privileges to two furnaces when operated by parties other than the Buffalo Furnace Company, and that the parties misapprehended- the legal effect of the new clause added at the end thereof, when it should he read in connection with the original clause at the .beginning thereof, limiting its privileges to furnaces operated by the Buffalo Furnace Company.

Various incidental proceedings were had in the action at law, subsequently to its determination by the Appellate Division, and the action at law was not finally disposed of until the fall of 1905. The Union Iron Company of Buffalo and the Union Iron Works, Buffalo, N. Y., then formally assigned all of their rights to the plaintiff, Mr. Baird, who thereupon commenced the present action on September 12, 1905, within ten years of the date of the right of way grant and switching agreement, and within six years of the time of the payment of the excess switching rates under protest, so that plaintiff is well within the Statutes of Limitations applicable to the suit, either on its equitable" or legal side.

The vital question of fact being thus resolved in favor of the plaintiff, and -the equities, as well as the legal rights of the plaintiff, under the contract as it is sought to be reformed, addressing themselves with persuasive force to the court, it only remains to be considered whether there are any substantial legal or controlling technical grounds for denying relief to plaintiff.

The railroad company contends that there can be no reformation of the contract in suit, because neither the plaintiff nor his assignors were parties to it. While this is doubtless a correct statement of an abstract principle, it does not seem to me to be applicable to the situation in this case^ for various reasons.

In the first place, the Union Iron Company of Buffalo, •the owner of the land and one of the plaintiffs assignors, is to be regarded as a party to the entire agreement made, as it, in fact, was between it and the furnace company and the railroad company. Indeed^ there could have been no such agreement without the- Union Iron Company of Buffalo as a party thereto, as that is the company that owned the land and deeded the right of way through its land to the railroad company. This is further shown by the fact that the Union Iron Company of Buffalo is one of the parties specifically named, in and who executed -that part of the entire agreement between the parties by which the right of way was granted to the Erie. Railroad Company, and which instrument was delivered to, received and recorded by the railroad company. The Union Iron Company of Buffalo is, thus, the party to the entire agreement which furnished substantially the whole of the valuable consideration for that part thereof represented by the switching contract of February 24, 1896. It was, therefore, unnecessary for the Union Iron Company of Buffalo to sign that part of the agreement embodied in the switching contract, so long as that instrument shows, by its terms, that it was intended for the benefit of the Union Iron Company of Buffalo, as well as for the Buffalo Furnace Company, .as it was intended to show and will show, when reformed. It is elementary law that all of the papers constituting or intending to constitute a written agreement must be read and considered together and as one, and are to be construed in their entirety and with reference one to another. Thompson v. Erie R. R. Co., 96 App. Div. 539, 542; Juilliard v. Chaffee, 92 N. Y. 536; 1 Greenl. Ev., § 284a; Hutchins v. Hebbard, 34 N. Y. 24; Coddington v. Davis, 1 id. 186; Hathaway v. Payne, 34 id. 92, 100; Wright v. Douglass, 7 id. 564, 573; Miller v. Carpenter, 68 App. Div. 346, 348.

Even if the switching agreement of February 24, 1896, be considered as an instrument by itself, it seems- to me that, when reformed, it will inure to the benefit of the Union Iron Company of Buffalo and its successors and assigns, including its tenant, the Union Iron Works, Buffalo, N. Y., upon the well-established doctrine that a contract between parties therein specifically named may be enforced by a third party or parties for whose benefit it shows it was made, although such third parties do not execute it nor are designated therein by name, provided they are indicated so as to be capable of identification and bear a certain relationship to the parties named entitling them to its benefits. The relationship of the Union Iron Company of Buffalo to the parties named in the switching contract and its subject-matter is clear.

It, ias has been shown, furnished the large and valuable consideration for the switching contract. It also appears that, under -the lease from the Union Iron Company of Buffalo to the Buffalo Furnace Company, in existence at the time the switching contract was made, the Buffalo Furnace Company not only had rights to the premises specifically leased to it, but also had trackage and storage rights through and upon that portion of the premises of the Union Iron Company of Buffalo thereafter leased to the Union Iron Works, Buffalo, N. Y., and occupied by “ Furnace B,” and that the landlord was to have an increased rental above that regularly provided, if the price for the produce of “ Furnace A” should exceed a given amount per ton. The tenant also paid the taxes and assessments upon the entire property. Under all of these circumstances, the Union Iron Company of Buffalo was related to and in privity with the parties specifically named in the switching contract, so that, under the general reference therein to third parties, it and its tenants were entitled to the benefit thereof, when reformed, as it seems to me, under a long line of well-established authorities in this State. Lawrence v. Fox, 20 N. Y. 268; Pond v. New Rochelle W. Co., 183 id. 330; Vrooman v. Turner, 69 id. 280; Dilcher v. Nellany, 52 Misc. Rep. 364; affd., 129 App. Div. 932, without opinion, and in Court of Appeals without passing directly on merits; Coster v. City of Albany, 43 N. Y. 399, 411; Barlow v. Meyers, 64 id. 41, 43. It is doubtless the law, however, that the fact that the Union Iron Company of Buffalo paid the consideration for the switching privileges granted by the Erie railroad gives it direct rights under the switching contract, as being, in effect and in law, a direct party to that agreement, so that it need not invoke the third party doctrine at all; though its claim can doubtless be sustained upon that theory, with a large margin in its application in its favor.

The right of the plaintiff, as the assignee of the Union Iron Company of Buffalo and of the Union Iron Works, Buffalo, N. Y., to recover under the contract, when reformed, can also be sustained, it seems to me, upon the theory that the covenant for the switching rates was one running with the entire tract of land of the Union Iron Company of Buffalo. This company has at all times been the owner of the entire tract in question and granted the right of way to the railroad company through its entire tract, and was a party to the instrument granting such right of way. All of the parties to the entire contract, viz.: The railroad company, the Buffalo Furnace Company and the Union Iron Company of Buffalo, by the practical construction put by them upon the agreement, even as it stands unreformed, have agreed that the switching rates applied to two furnaces, wheresoever located upon the entire tract of the Union Iron Company of Buffalo, provided, only, that they were operated by the Buffalo Furnace Company or its assigns, as these switching rates were given to “ Furnace B ” for about six years after 1900, from which time Furnace B ” was operated by the newly-organized company, the Buffalo Union Furnace Company, which had acquired, by assignment, the rights of the switching contract from the Buffalo Furnace Company. In view of this fact, there can be no doubt as to the geographical extent of the switching covenant and that it was to apply to two furnaces, wheresoever located upon this entire tract. With the contract reformed, so as to give the benefits of the switching rates to two furnaces, so located! anywhere upon this entire tract and by whomsoever operated, it must be clear that, if the covenant was originally one running with the entire land, with the single proviso that the furnaces must be operated by the Buffalo Furnace Company or its assigns, the covenant will simply be amplified, without changing its character, under the contract as reformed, so as to inure to the benefit of two furnaces, so located, by whomsoever operated.

It only remains to be determined, therefore, whether the switching covenant is to be regarded as one running with the land and, as to that, it seems to me, there can be no reasonable doubt. That being so, the Union Iron Works, Buffalo, N. Y., .as the lessee of a portion of the lands of the Union Iron Company of Buffalo, was entitled to the benefits of the switching covenant, and the plaintiff, as assignee of both, succeeds to these rights.

In Anderson’s Law Dictionary, it is said, that a covenant runs with the land when, either the liability to perform it, that is, its burden, or the right to take advantage of it, that is, its benefit, passes to the assignee of the land.” It is not necessary to enter upon a lengthy discussion to show that the covenant in question is, without doubt, one running with the land, and a mere citation of some of the leading authorities sustaining this position will suffice. Cockson v. Cock, Cro. Jac. 125; 1 Smith L. C. 180 and notes; Avery v. N. Y. C. & H. R. R. R. Co., 106 N. Y. 142; Dexter v. Beard, 130 id. 558; Aikin v. A. V. & C. R. R. Co., 26 Barb. 289; Port v. West Shore R. R. Co., 50 Hun, 301. And it is well settled that such a covenant, being incident to the land, is binding upon and runs in favor of those who subsequently acquire an interest in such lands, even where such subsequent parties are not named in the covenant and without any assignment thereof to them. Norman v. Wells, 17 Wend. 149; Woolcroft v. Norton, 15 Wis. 198; Durnherr v. Rau, 135 N. Y. 219; Root v. Wright, 84 id. 72; Burr v. Beers, 24 id. 178. The railroad company, in accepting the right of way grant, even if it had not signed the same, became bound to perform whatever conditions were annexed to the grant and which constituted its consideration in whole or in part. See Avery, Aikin and Post cases, above cited. These conditions were formulated in the so-called switching agreement of February 24, 1896, but doubtless inured to the benefit of the Union Iron Company of Buffalo, when that company furnished and delivered the consideration therefor to the railroad company, which it did by the right of way grant of October 4, 1895. In this connection, it is to be remembered, though not vital to the validity of the claim of plaintiff as the assignee of the rights of the Union Iron Company of Buffalo, that it was shown upon the trial that a duplicate original of the switching contract of February 24, 1896, was, upon its execution, delivered to the Union Iron Company of Buffalo.

Having in mind, in this connection, that the original grant of right of way and the switching agreement are to be considered as one entire agreement to which the Union Iron Company of Buffalo was a party, there was no necessity for the execution of the switching agreement by any of the parties other than the railroad company, which created the covenant for the benefit of the land; whereas, the signatures of the Union Iron Company of Buffalo and of the Buffalo Furnace Company were necessary to the granting of the right of way instrument, they being the owner and tenant, respectively, of the premises granted, and both of these parties did execute said grant. As the switching agreement, when 'reformed, will make the rates thereby provided applicable to two furnaces upon the entire premises, by whomsoever operated, it was not necessary to designate, by name, the parties for whose benefit this covenant, was made, as, indeed, could seldom be done in the case of continuing covenants running with the land. It must follow that, whoever so operated the furnaces in question, through rights acquired from the owner of the land for whose benefit the covenant was made, will be entitled to the advantages thereof, as a covenant running with the land.

Even if the switching contract of February 24, 189'6, as reformed, be considered a contract by itself, it doubtless, for other reasons, creates a covenant running with the entire tract of land owned by the landlord, the Union Irop. Company of Buffalo. A's has been shown, the Buffalo Furnace Company, one of the parties executing this contract, at the time of its execution and prior thereto, held a lease of the southerly portion of the entire premises, which lease, however, gave to this company certain permanent trackage rights and terminable storage privileges over the remainder of the lands of the Union Iron Company of Buffalo, afterward occupied by “ Furnace Band it further appears that the Buffalo Furnace Company was in actual possession of the entire tract at the time the switching contract was made and for some time thereafter. Under the authorities, as I interpret them, the Buffalo Furnace Company, therefore, had sufficient interest in that portion of the premises upon which Furnace B ” was thereafter constructed and operated, under its existing lease with the Union Iron Company of Buffalo, to procure for the entire premises a covenant running with the land, which would thereafter inure to the benefit of the landlord and his future tenants; and the force of this .argument is enhanced by the fact that the landlord furnished the consideration for such covenant in the right of way granted, and which traversed the landlord’s entire premises.

Even if neither the Union Iron Company of Buffalo nor the Buffalo Furnace Company had any interest or rights in the lands adjoining those of the Buffalo Furnace Company, it appears to be settled that the Buffalo Furnace Company could, nevertheless, merely as a tenant of the premises occupied by it, secure a permanent easement, for its own benefit and that of the landlord, over the adjoining lands in which neither had any interest, which easement would, upon the expiration of the tenancy, inure to the benefit of the landlord as a covenant running with the land. Dempsey v. Kipp, 61 N. Y. 462, and cases there cited. Such claim would, obviously, be stronger in favor of the common owner of both parcels of land involved.

I am, therefore, satisfied that, under the facts and circumstances of this case, the contract between the parties, as it was intended and as it is to be reformed to conform to such intention, creates a covenant running with the entire lands of the Union Iron Company of Buffalo and was for .the benefit of two furnaces located anywhere upon said lands and by whomsoever operated, where such operating parties acquired their rights as tenants or otherwise from the owner of the lands, the Union Iron Company of Buffalo, and that the Union Iron Works, Buffalo, N. Y., as such tenant and operating company, was entitled to the benefit of the switching rates provided for in this covenant, and that plaintiff, as the assignee, succeeded to these rights.

The railroad company contends that the bringing of the original action at law by the receiver of the Union Iron Works, Buffalo, N. Y, upon the switching contract as it stood unreformed, amounted to an election of remedies which bars the present action for reformation and relief under the reformed contract, citing, in support of its position, Steinbach v. Relief Fire Ins. Co., 11 N. Y. 498, affg. 12 Hun, 640; Washburn v. Great Western Co., 114 Mass. 176; and other cases in other jurisdictions. I have carefully examined these authorities and am satisfied that they are based upon the theory of res adjudicaba, rather than the doctrine of election of remedies, as it appears in those cases that the plaintiff insisted on forcing the actions to a decision upon the merits, as distinguished from suffering merely a non-suit, as was the case in the action at law between the parties- now before this court. On the contrary, it appears to be well settled, that the bringing of an action at law upon a. contract, which results in a non-suit or a discontinuance or anything short of a determination upon the merits after both sides rest, will not be á bar to a subsequent action to reform the contract and for relief upon the reformed contract. Equitable Co. v. Hearne, 20 Wall. (U. S.) 494; Northern Assr. Co. v. Grand View B. Assr. Company, 203 U. S. 106; Spurr v. Home Company, 40 Minn. 424; Hillerich v. Franklin Co. (Ky. 1901), 63 S. W. Rep. 592; Fisher v. Brown, 111 Ill. App. 492; McCloskey v. McCormack, 44 Ill. 336; Neuenberger v. Neuenberger, 29 S. W. Rep. 617; Steinback v. Murphy (Mo. 1910), 128 S. W. Rep. 207; Anchor Co. v. Walsh, 20 Mo. App. 107; Johnson Co. v. No. P. R. R. Co., 126 Mo. 344.

While some of the authorities, in holding that an adverse judgment in an action at law upon a contract bars a subsequent suit for reformation, use expressions tending to show that the doctrine of the election of remedies was in the mind of the court, a careful examination of these cases will, I think, show that they were decided upon 'the ground that the judgment in the prior action was one upon the merits, and that a new action, under these circumstances, for reformation was inconsistent with the adjudication in the prior action which, when so crowded to final determination upon the merits, constituted, in a sense, a conclusive election of remedies.

The theory of the technical doctrine of election of remedies is that a party chargeable therewith must, at the time the election was made, have had knowledge of the facts from which the coexisting inconsistent remedial rights arise, and it is held that the bringing of an action which he erroneously supposes affords him remedial right and in which plaintiff is defeated, because of the error, does not constitute a conclusive election, so as to preclude the bringing of a subsequent suit which will afford him a remedy. 15 Cyc. 261, and cases there cited; Sullivan v. Ross, 71 N. W. Rep. 634; 76 id. 309; Spread v. Morgan, 11 H. L. Cas. 599, 615; 11 Eng. Reprint, 1461.

It is, indeed, settled in this State that, to constitute a conclusive election of remedies as to the legal effect of an instrument, the party chargeable therewith must be shown, at the time he brings an action at law thereon, to have had full knowledge of such legal effect, to deprive him of the right to maintain a subsequent action to reform said instrument upon the ground of mutual misapprehension as to its legal effect. The knowledge of such legal effect of the instrument, as it stands, is, in itself, deemed a fact, with knowledge of which the party seeking relief is not chargeable until such legal effect has been determined in the first action. Barnard v. Gantz, 140 N. Y. 249; Henry v. Herrington, 193 id. 218, 222. If this were not the law and a person were always chargeable with knowledge of the legal effect of an instrument from the moment he executed it, there could never be an action to reform such an instrument upon the ground o°f the mutual misapprehension of its legal effect, and this entire and well-recognized ground of equitable jurisdiction would, itself, disappear. So far as the form of the judgment of non-suit in the prior action at law is concerned, that could not be a bar to any subsequent action, even were the cause of action the same; as it is provided, by section 1209 of the Code of Civil Procedure, that a final judgment dismissing the complaint does not prevent a new suit for the same cause of action, unless it was upon the merits. While the doctrine of the election of remedies is a common-law doctrine, doubtless applicable in proper cases, notwithstanding the above Code provision, I am satisfied, for the reasons stated, that there was no such conclusive election of remedies in this case as to constitute a legal bar to the present suit.

The railroad company also claims that relief should be denied plaintiff on the ground of laches, as distinguished from the technical defense of the Statute of Limitations, claiming that the contract sought to be reformed was executed in February, 1896, and that this action "was not begun until nearly ton years thereafter, the period of the Statute of Limitations applicable thereto. It appears, however, that the switching rates were not denied to “ Furnace B ” until 1899 and 1900, and that the action at law was begun in 1901, with reasonable promptness, and the present action, in turn, was likewise speedily instituted after the action at law and the consequent proceedings therein were terminated.

However, the doctrine of laches as a defense to a suit in equity implies something more than mere lapse of time, and, to constitute a defense, it must be unreasonable. The" question of laches is to be decided upon the particular circumstances of each case; and a suit in equity for reformation may he brought at any time-within the statutory limit of ten years, unless the delay has resulted in prejudice to the adverse party, or such a change of situation as would make it inequitable to grant relief. 16 Cyc. 152; Platt v. Platt, 2 T. & C. 25; affd., 58 N. Y. 646; Avery v. Equitable Life Assr. Society, 117 id. 451. In view of these general principles, it seems to me that the plaintiff and his assignors have not been guilty of laches, depriving them of the relief sought in this action.

In reaching the conclusion that the plaintiff is entitled to recover in this action, the court, sitting as- one in equity, is impressed with the justice of plaintiff’s claim, the conclusion being quite irresistibly forced upon the mind, from -the evidence in its entirety, that all of the parties to the switching contract, at the time it was executed, intended and understood that the switching rates should inure to the benefit of two furnaces upon the entire tract of land of the Union Iron Company of Buffalo, by whomsoever operated, in consideration of the right of way obtained by the railroad company from the common owner and landlord, and that the refusal of the railroad company to accord these privileges to “Furnace B,” when it came into existence in 1899, was an afterthought -and based upon a technical construction of the early clause of the switching agreement, limiting the privileges to two furnaces to be operated by the Buffalo Furnace Company, or its successors and assigns, and which clause, it seems to me, the plaintiff has clearly established, was inadvertently allowed to remain in the form in which it stood, after the clause giving such right to two furnaces by whomsoever operated had, upon the insistence of Hr. Baird and Hr. Wilbur, been added to the instrument at the end thereof, upon the mutual understanding and statement that this new clause formulated the original contract and intention of the parties on this point and under a mutual misapprehension of -the legal effect of said two clauses, when read together.

The conclusion having been thus reached, that the merits of the controversy are with the plaintiff and that there are no legal obstacles in the way of affording him relief, and there being no dispute as to the amount in controversy, it follows that judgment must he ordered in favor of the plaintiff for the amount claimed in the complaint, with interest and costs.

Judgment for plaintiff.