Source: https://caselaw.findlaw.com/us-supreme-court/163/564.html
Timestamp: 2019-04-25 12:59:18+00:00

Document:
UNION PAC. RY. CO. v. CHICAGO, R. I. & P. RY. CO.
[163 U.S. 564, 566] These were petitions in equity filed by the Chicago, Rock Island & Pacific Railway Company against the Union Pacific Railway Company and the Omaha & Republican Valley Railway Company, and by the Chicago, Milwaukee & St. Paul Railway Company against the Union Pacific Railway Company, in the district court of Douglas county, Neb., January 2, 1891, to compel the specific performance of two contracts, dated May 1, 1890, and April 30, 1890, respectively, and removed on petition of the Union Pacific Railway Company to the United States circuit court for the district of Nebraska, where they were heard by Mr. Justice Brewer, and decrees rendered in favor of complainants. 47 Fed. 15. From these decrees defendants appealed to the United States circuit court of appeals for the Eighth circuit, by which they were affirmed. 10 U. S. App. 98, 2 C. C. A. 174, 51 Fed. 309. Thereupon these appeals were prosecuted.
To the contract of May 1, 1890, the Union Pacific Railway Company, the Omaha & Republican Valley Railway Company, and the Salina & Southwestern Railway Company- [163 U.S. 564, 567] were parties on one side and the Chicago, Rock Island & Pacific Railway Company and the Chicago, Kansas & Nebraska Railway Company on the other; and the contract of April 30th was between the Union Pacific Railway Company and the Chicago, Milwaukee & St. Paul Railway Company.
The Union Pacific Railway Company controlled and operated more than 5, 000 miles of railroad, and, among others, a main line extending from Council Bluffs, Iowa, by way of Omaha and Valley Station, Neb., to Ogden in Utah territory, a distance of about 1,100 miles; a main line from Kansas City, Mo., by way of Topeka and Salina, Kan., to Denver, Colo.; the Republican Valley Railroad, extending from Valley Station, Neb., by way of Lincoln and Beatrice, in that state, to Manhattan, Kan.; the Salina Railroad, extending from Salina to McPherson, in Kansas; a railroad extending from Hutchinson, in Kansas, to the southern border of that state; and other auxiliary roads.
The Rock Island Company owned and operated a line of railway extending from Chicago, by way of Davenport, to Council Bluffs, Iowa, and from Davenport to St. Joseph, Mo. As the owner of the latter line, and lessee of the Chicago, Kansas & Nebraska Railway Company and othe corporations, it controlled and operated a through line of railway from Chicago, by way of Davenport, St. Joseph, and Beatrice, Neb., to Colorado Springs and Denver, Colo.; a line from St. Joseph, Mo., by way of Horton, Topeka, and Hutchinson, to Liberal, Kan.; and other lines,-amounting in the aggregate to more than 3,000 miles of railway.
The Union Pacific Railway owned nearly all of the stock and bonds, elected the directors, and built, controlled, and operated the railroads of the Republican Valley and Salina Companies, and the Rock Island Company owned and operated the roads of the Kansas Company under a lease for 999 years, so that the Pacific Company and the Rock Island Company were practically the real parties in interest to the contract of May 1st. [163 U.S. 564, 568] The St. Paul Company was operating more than 6,000 miles of railroad, and one of its lines extended from Chicago to Council Bluffs, Iowa.
were present, five in person and one by proxy, considered and unanimously voted to approve of the contracts and authorized the president to execute them. The custom of the secretary had been not to specify in the notice of the meetings of the executive committee the subjects to be considered, and the notice of this meeting did not state that the subject-matter of these contracts would be considered. The member of the executive committee who was absent and not represented was a government director.
The preamble to the Rock Island contract described the several railways owned by the parties, and recited: That the Rock Island Company had become a domestic corporation of the state of Nebraska, and proposed to extend its railway from its terminus at Council Bluffs to a connection with its leased line, the Chicago, Kansas & Nebraska Railway, at the city of Beatrice. That the parties to the contract believed that the interests of all would be promoted by using, for a part of said extension, the main tracks of the Union Pacific Railway Company, in the cities of Council Bluffs and Omaha, the bridge over the Missouri river, and that portion of the Omaha & Republican Valley Company, owned by the Union Pacific Company, between Lincoln and the point of junction at the city of Beatrice; by a lease from the Rock Island Company to the Union Pacific Company of a portion of the railroad controlled by it, between McPherson and [163 U.S. 564, 573] Hutchinson, Kan., a distance of about 30 miles; and a lease of the right of the Union Pacific Company to operate its trains over the road which the Rock Island Company was about to build between the cities of South Omaha and Lincoln.
The contract provided: 'The Pacific Company hereby lets the Rock Island Company into the full, equal, and joint possession and use of its main and passing tracks, now located and established, or which may be hereafter located and established, between the terminus of such tracks in the city of Council Bluffs, in the state of Iowa, and a line drawn at a right angle across said tracks within one and one-half (1 1/2) miles southerly from the present passenger station of South Omaha, in the state of Nebraska, including the bridge on which said tracks extend across the Missouri river, between said cities of Council Bluffs and Omaha; connections with Union Depot tracks in Omaha, the side or spur track leading from its main tracks to the lower grade of the Pacific Company's sidings and spur tracks in Omaha, and such extensions thereof as may be hereafter made; side tracks in Omaha, on which to receive from and deliver to the Rock Island Company freight that may be handled through the warehouses, or switched by the Pacific Company; the connections with the Union Stock Yards tracks in South Omaha, and conveniently located grounds in South Omaha, on which the Rock Island Company may construct, maintain and exclusively use a track or tracks, aggregating three thousand (3,000) feet in length, for the storage of cars and other purposes, for the term of nine hundred and ninety-nine (999) years, commencing on the 1st day of May, in the current year,-for which possession and use the Rock Island Company covenants, promises, and agrees to pay to the order of the said Pacific Company, monthly, during the continuance of said term, the sum of three thousand seven hundred and fifty (3,750) dollars,' and a certain portion of the expense incurred in maintaining and operating the property between Council Bluffs and South Omaha, and of the assessments and taxes levied thereon, in proportion as its wheelage should be to the entire wheelage [163 U.S. 564, 574] over the same, and also a reasonable compensation for handling its traffic in Omaha. That the Pacific Company lets the Rock Island Company into the full, joint, and equal possession and use of its tracks, stations, and appurtenances along the line of the railway of the Republican Valley Company, from a point near the northern boundary of the city of Lincoln to the point where its tracks connect with those of the Kansas Company at Beatrice, Neb., for the same length of time, for which the Rock Island Company agrees to pay the Pacific Company a certain rental, computed on a percentage of the value of the main track, and a proportion of the cost of maintenance. That the Rock Island Company lets the Pacific Company into the full, joint, and equal possession and use of its tracks and stations along the lines of the Kansas Company from McPherson to Hutchinson for the same length of time, for a rental to be computed in the same way. That the Rock Island Company lets, leases, and demises to the Pacific Company, for a like term, commencing October 1, 1890, the right to move and operate over the tracks of the railway it proposes to construct between the cities of South Omaha and Lincoln, in the state of Nebraska, its freight and passenger trains, engines, and cars of all classes for a rental based upon a mileage of the trains. That each of the parties to the contract shall take such steps as will be necessary to continue all the stipulations of the contract in force. That each contract of lease shall attach to that portion of the railway leased during the corporate existence of the owner thereof, and all extensions of such existences, by renewal or otherwise, and that the contract shall bind the parties thereto, their successors, grantees, and assigns. That 'schedules of rufes and regulations for the movement of engines and trains over the several railways hereby let and demised shall be made for each railway by the duly-authorized officers of the lessor and lessee companies by which such railways shall at the time be operated. Such schedules shall, as nearly as may be practicable, accord equality of right, privilege, and advantage to trains of the same class operated by the lessor and lessee, and to trains of a superior class operated by either a preference over trains of an [163 U.S. 564, 575] inferior class operated by the other. All rules and regulations shall be reasonable and just to both lessor and lessee, and shall secure to neither any preference or discrimination against the other. They shall be executed and all trains moved under the immediate direction of the superintendent or other officer of the lessor company. If the parties cannot agree upon the adoption of any schedule, rule, or regulation, or as to the modification of any one existing, either party may demand a decision of such controversy by referees as hereinafter provided. The referees are hereby invested with power to prescribe schedules, rules, and regulations, and to modify existing ones, and, in case of willful disregard by either party of the rights of the other, to award damages to the party injured for injuries sustained because of such willful act.' That the referees shall be appointed, when needed, by the selection of one by each party, and the appointment of a third by the two so chosen, with further provision for their action in cases of disagreement in other particulars.
The Rock Island Company, upon the construction of its pro- [163 U.S. 564, 576] posed line from South Omaha to Lincoln, obtaine , by the agreement, access to Omaha and South Omaha, and a shorter continuous line from Chicago to Denver by way of Council Bluffs, Lincoln, and Beatrice, than by its southerly route; while, by the use of the proposed road from South Omaha to Lincoln, the Pacific Company obtained a line from Omaha to Lincoln and Beatrice about 40 miles shorter than its former route by way of Valley Station, and, by its use of the road from McPherson to Hutchinson, it filled the gap between its line there, and obtained a continuous line, by way of Salina, to the southern boundary of Kansas, and a rental of $45,000 a year, and other compensation as provided.
The Rock Island proceeded with the construction of its road from South Omaha to a connection with the tracks of the Republican Valley in Lincoln, and secured depots and yards in Omaha and South Omaha, and made an arrangement with the Pacific Company for the contruction of freight and passenger stations and a yard on the ground of the Republican Valley road in Lincoln, to be used by the Rock Island and Pacific Companies jointly. Prior to December 1, 1890, it had expended in such construction between South Omaha and Lincoln over $1,400,000. All this was done in reliance upon the contract, and the railway and buildings erected could be used- [163 U.S. 564, 577] for the principal purpose for which they had been constructed only in connection with the tracks of the Union Pacific at and between Council Bluffs and South Omaha and at and between Lincoln and Beatrice. The work at Lincoln had commenced on December 1st, when the Pacific Company notified the Burlington & Missouri Company, whose depot it had theretofore been using, that after December 31st it would abandon such use. This notice was given with the intention of entering into the joint use of the Rock Island depots and tracks.
'III. That the defendants, the Union Pacific Railway Company and the Omaha & Republican Valley Railway Company, are commanded severally to specifically perform, keep, and observe the several covenants, promises, and agreements in said contract set out, to be by them, either jointly or severally, observed, kept, or performed; and that said rail- [163 U.S. 564, 579] way companies, and the officers, agents, attorneys, and employes of each, are hereby commanded and enjoined to wholly refrain from directly or indirectly interposing any obstacle, interference, hindrance, or delay to the performance of the several promises, covenants, and agreements in said contract set out, or to the enjoyment of any of the rights or privileges by said contract granted, concerning the railway and railway property above described, by any and all of the parties to said contract, or by any of the officers, agents, attorneys, or emplyees of said parties, or any of them; and especially from in any manner obstructing or interfering with said complainant in restoring and maintaining the connections which have heretofore been constructed, or in constructing and maintaining, at such point or points as may be determined under the contract, additional necessary connections between the railways of the Chicago, Kansas & Nebraska Railway Company and the Omaha & Republican Valley Railway Company at Beatrice, and between the railway of complainant and that of the Omaha & Republican Valley Railway Company at Lincoln, in the state of Nebraska, and between the railway of complainant and the railway of said Union Pacific Railway Company, at South Omaha and Omaha, in the state of Nebraska, and the city of Council Bluffs, in the state of Iowa; and from doing any act or thing, or permitting the doing of any act or thing, if it shall have power to prevent the same, whereby said complainant may be prevented from enjoying any and all of the benefits and advantages secured to i by said contract, or doing any act or thing which the complainant by the terms of said contract is authorized to do, from interfering with the use of, and from removing, injuring or destroying, buildings or other structures erected by the complainant upon the grounds of the defendant the Omaha & Republican Valley Railway Company, in the city of Lincoln, in the state of Nebraska, without the consent of said complainant.
'IV. That each and every party hereto is commanded to refrain from interposing any obstacle or hindrance to the establishment, or alteration, or amendment in the manner provided- [163 U.S. 564, 580] by said contract, of time cards, rules, and regulations governing the operations of engines, cars, and trains over said railways and every part thereof, or to the execution and enforcement of such time cards, rules, and regulations, when so established, altered, or amended, otherwise than by apt proceedings in a court having competent jurisdiction.
The questions to be considered are whether these contracts were within the corporate powers of the parties, were duly [163 U.S. 564, 581] authorized as respects the Union Pacific Railway Company, were such contracts as a court of equity can specifically enforce, and were properly enforced on the merits.
The general rule is that a contract by which a railroad company renders itself incapable of performing its duties to the public, or attempts to absolve itself from those obligations without the consent of the state, or a contract made by a corporation beyond the scope of its powers, express or implied, on a proper construction of its charter, cannot be enforced, or rendered enforceable by the application of the doctrine of estoppel. Thomas v. Railroad Co., 101 U.S. 71 ; Central Transp. Co. v. Pullman's Palace Car Co., 139 U.S. 24 , 11 Sup. Ct. 478.
But where the subject-matter of the contract is not foreign to the purposes for which the corporation is created, a contract embracing 'whatever may fairly be regarded as incidental to, or consequential upon, those things which the legislature has authorized, ought not, unless expressly prohibited, to be held by judicial construction to be ultra vires.' Navigation Co. v. Hooper, 160 U.S. 514, 525 , 16 S. Sup. Ct. 379; Attorney [163 U.S. 564, 582] General v. Railway Co., 5 App. Cas. 473, 478; Brown v. Winnisimmet Co., 11 Allen, 326, 334.
Taking up the contract with the Rock Island Company, what is the nature of the undertaking of the Pacific Company? In several places in this instrument, it is called a 'lease,' and the parties are called 'lessor' and 'lessee'; while, on the other hand, in the record of the proceedings of the executive committee of the Pacific Company and of its stockholders, it is called an agreement 'granting trackage rights' between Council Bluffs and South Omaha. But what it was styled by the parties does not determine its character or their legal relations, and in its interpretation the rule applies that 'the court is not only at liberty, but required, to examine the entire contract, and may also consider the relations of the parties, their connection with the subject-matter of the contract, and the circumstances under which it was signed.' Chicago, R. I . & P. Ry. Co. v. Denver & R. G. R. Co., 143 U.S. 596, 609 , 12 S. Sup. Ct. 479.
The contract provided that the Pacific Company hereby 'lets the Rock Island Company into the full, equal, and joint possession and use of its main and passing tracks.' The possession here spoken of was such possession as the Rock Island Company would have when its engines, cars, and trains were running over the tracks. The company had no possession before its trains came on the tracks, or after they had run off of them; and while its trains were on the tracks, its possession was only of the particular part occupied temporarily while running over them. Moreover, all trains were to be moved under the direction of an officer of the Pacific Company. [163 U.S. 564, 583] The Rock Island trains, coming upon a Pacific track, immediately passed from the control of the Rock Island Company into that of the Pacific, and its officials were subjected to the orders of the Pacific's officers. And throughout the whole contract there does not appear to be a single provision which looks to any actual possession by the Rock Island of any of the Pacific property beyond that which was involved in its trains being run over the tracks under the direction of the other company. The contract in this regard was really an agreement for trackage rights, for running arrangements,-a 'terminal contract' with compensation on a 'mileage' or 'wheelage basis,' rather than a lease.
The Pacific Company, in its answer, said that it had offered and now offered 'to accept and transport all the cars and trains of the complainant, freight and passenger, to and from all points on the line of the said defendant described in said supposed contract, and thereby enable the complainant to maintain its business at Omaha and South Omaha, and to carry on exactly the same business that it could have carried on by the operation of its own trains by its own engines and by its own employees, as provided for in said supposed contract; and it says that it had offered, in the utmost good faith, to perform this service, immediately and at all times, for the said complainant, at a reasonable compensation, to be fixed in any fair, usual, and ordinary manner.' It thus appears that the Pacific Company could do what it had co tracted to do, and that the contention resolves itself into the proposition that there is a fundamental legal difference between authorizing the Rock Island to haul its trains with its own engines, and agreeing to haul them with the Pacific Company's engines, though in either event they were to be moved under the train dispatchers of the Pacific Company,-a difference we find ourselves unable to admit.
In Lake Superior Ry. Co. v. U. S., 93 U.S. 492 , Mr. Justice Bradley adverts to and comments on the fact that, in England and in this country, railroads, when first constructed, were by the legislatures and the people regarded and treated as public highways for the use of all who had occasion to run their vehicles thereon; and this is certainly so far true, in modern acceptation, that, being for are ordinarily competent to make contracts are ordinarily competent to make contract which will subserve such use.
But the determination of the existence of the power to grant running rights in this instance does not rest on these [163 U.S. 564, 586] considerations alone. For the provisions of the Pacific Railroad acts relating to the bridge over the Missouri river, its construction and operation, imposed on the Pacific Company the duty of permitting the Rock Island Company to run its engines, cars, and trains over the bridge and the tracks between Council Bluffs and Omaha, and we think that South Omaha was included.
The common object of both these acts plainly was the more perfect connection of roads running to the bridges on either side of the river. And this is in harmony with numerous acts of congress referred to in the opinion of the circuit court of appeals (15 Stat. 37; 16 Stat. 121, 173, 185, 473, 599; and many others); all of them indicating a settled policy that all structures of this character should allow connecting roads to cross them with their cars, trains, and engines. It is said that the reference to the act of 1866 should be confined to its second and third sections; but, as the matters provided for in those sections were fully otherwise covered in the Pacific Railroad acts, that does not commend itself to us as a reasonable construction. But it is argued that, even if the Pacific Company were authorized to grant to the Rock Island Company the right to run its trains, with its engines, over the bridge, it was not empowered to grant the same rights over the tracks. The evidence shows [163 U.S. 564, 588] that the tracks east of the bridge were upon the approach to the structure proper, and it appears from the maps that the depot at the west end of the bridge was more than half a mile distant. The act of 1871 provided that, for the more perfect connection of the roads east of the river with those west of it, the company might issue bonds, and secure the same by mortgage 'on the bridge and approaches and appurtenances'; and it would seem to be clear that the approaches on the west side, as well as on the east, must be regarded as part of the structure. Moreover, the act refers to 'the tracks and depots required to perfect the same.' A railroad bridge can be of no use to the public unless united with necessary appurtenances, such as approaches, tracks, depots, and other facilities for the public accommodation. And we consider Council Bluffs, Omaha, and South Omaha, under the facts, as necessarily embraced in the intention of congress. It is true that it appears that, from the depot to the point in South Omaha where the tracks of the companies connected, is about four miles; but the scheme of congress was to accomplish the more perfect connection 'at or near Council Bluffs, Iowa, and Omaha, Nebraska,' and we think this distance reasonably within the terms of the act of 1871, liberally construed, as the act should be.
We are of opinion that it was within the powers of the Pacific Company to enter into contracts for running arrangements, including the use of its tracks, and the connections and accommodations provided for; and we cannot perceive that this particular contract was open to the objection that it disabled the Pacific Company from discharging its duties to the public. By the contract the Pacific Company parted with no franchise, and was not excluded from any part of its property or the full enjoyment of it. What it agreed to do was to let the Rock Island into such use of the bridge and tracks as it did not need for its own purposes. This did not alien any property or right necessary to the discharge of its public obligations and duties, but simply widened the extent of the use of its property for the same purposes for which that property was acquired, to its own profit so far as that use was concerned, and in the furtherance of the demands of a wise public policy. If, by so doing, it may have assisted a competitor, it does not lie in its mouth to urge that as rendering its contract illegal as opposed to public policy. Ability to perform its own immediate duties to the public is the limitation on its jus [163 U.S. 564, 590] disponendi, we are considering, and that limitation had no application to such a use as that in question.
The leading cases of Thomas v. Railroad Co., 101 U.S. 71 ; Pennsylvania R. Co. v. St. Louis, A. & T. H. R. Co., 118 U.S. 290 , 6 Sup. Ct. 1094; Oregon Ry. & Nav. Co. v. Oregonian Ry. Co., 130 U.S. 1 , 9 Sup. Ct. 409; Central Transp. Co. v. Pullman's Palace Car Co., 139 U.S. 24 , 11 Sup. Ct. 478; St. Louis, V. & T. H. R. Co. v. Terre Haute & I. R. Co., 145 U.S. 393 , 12 Sup. Ct. 953; U. S. v. Union Pac. Ry. Co., 160 U.S. 1 , 16 Sup. 190,-arose upon instruments which dispossessed the corporations of all their property and of all capacity to perform their public duties. But we have no such case here.
The argument is pressed that the Pacific Company might become disabled by reason of the increase of business in the future, but the defendant asserts, in its answer that it is able to carry on the business of hauling complainant's cars 'immediately and at all times,' if it may do so with its own engines and on its onw terms, and be permitted in the meantime to repudiate this contract. The proof wholly fails to establish that the contract involves any present inability, or any existing ground for apprehension in that regard, and shows that the bridge and tracks of the Pacific Company and fully adequate to meet much larger demands than are now, or within any reasonable time can be expected to be, made upon them under the contract. The country, as was said below, will grow in population and business, and the business of this particular corporation will increase, but with the increased volume of business come increased facilities for its transaction. Moreover, increase in the same ratio for the future as in the past is not to be expected, for new roads are constantly being built and other channels of transportation opened; and it cannot be conclusively assumed that the common means of transportation 20 years hence may not be quite different from what they are at present. It will not do to hold this contract void, and allow defendant to escape from the obligations it assumed, on the mere suggestion that at some time in the remote future there is a possibility that the suggested contingency might arise. Should it happen, however, the courts are competent [163 U.S. 564, 591] to relieve from the consequences of so radical a change of condition.
We do not feel called upon to enter at length upon other objections urged by appellants' counsel. One of them was that the Rock Island and St. Paul Companies derived no power from the laws of Nebraska to enter into the alleged contract, because they had not complied with the statutes of the state in that behalf. After the testimony was closed, and as the final hearing commenced, defendants moved the court to permit the introduction of the evidence upon which this contention is based. This was objected to by complainants, the objection sustained, and defendants excepted. We concur in the view of the circuit court of appeals, which held that there was no abuse of discretion in the court below in denying the motion, and did not consider the rejected evidence or the argument based upon it. The Rock Island Company built its road from South Omaha to Lincoln as vested with the corporate power to do so, and it contracted as in the possession of the power as a corporation existing in [163 U.S. 564, 592] and under the laws of Nebraska. The state appears to have been content, and the contract, not being necessarily beyond the scope of the powers of the corporation, must, in the absence of proof to the contrary, be deemed valid.
It is also said that the contract was void so far as the Republican Valley Railroad Company was concerned, because without consideration, inasmuch as the Rock Island Company was to pay the Pacific Company for the possession and use of the railway and appurtenant property between Lincoln and Beatrice to the Pacific Company, and so the Valley Company, as an independent corporation, received no compensation. But the stockholders of the Valley Company entered into the covenants in question, and as each of its incorporators was an officer or employ e of the Union Pacific Company; its road was built with the funds of that company; every share of its stock ever issued was taken, held, or voted by some officer or employ e of that company in trust for it; the officers of the two companies had always been the same, and in their operation no distinction had ever been made between the two roads; and their earnings had gone into, and their expenditures been paid from, a common treasury,-we think there is no merit in the objection that, for the reason given, the Valley Company was not bound by its covenants.
But it is earnestly contended that the Pacific Company had n power, under its charter as a federal corporation, to operate any other line of road than those lines which it was specifically authorized by congress to construct, and that it was prohibited, under the constitution and laws of Nebraska, from [163 U.S. 564, 593] doing so, and therefore that it could not obligate itself to use, and to pay to the Rock Island Company compensation for the use of, the road between South Omaha and Lincoln.
By the contract the Rock Island Company gave the Pacific Company 'the right and privilege to move and operate its [163 U.S. 564, 594] trains over the tracks,' and nothing more, and it was provided that the Pacific Company should do no business at intermediate points. The Pacific Company was to run its trains over the Rock Island tracks 45 miles, and it agreed to pay a fair compensation for doing so. It was perfectly competent for the Pacific Company to contract to deliver at Lincoln freight and passengers taken up at Omaha; and, in carrying out such contract, it could make deliveries in car loads, just as well as in small parcels. It follows that its cars might be run through, and the fact that, under this contract, the Pacific Company would haul its cars with its own engines amounts to no more than a mere method of doing the business. And as, when it contracts for deliveries beyond its own line, it must pay the connecting company for its services, that compensation might be fixed by the parties upon any basis they agreed to. Here it agreed to pay a certain sum per mile for the mileage over which its trains run, and the difference between that and any other mode of payment did not go to the powers of the company. Where a corporate contract is forbidden by a statute, or is obviously hostile to the public advantage or convenience, the courts disapprove of it; but when there is no express prohibition, and it is obvious that the contract is one of advantage to the public, the rule is otherwise. As remarked in Navigation Co. v. Hooper, 160 U.S. 514 , 16 Sup. Ct. 379: 'Although the contract powers of railroad companies are to be restricted to the general purposes for which they are designed, yet ther are many transactions which are incidental or auxiliary to its main business, or which may be useful in the care and management of the property which it is authorized to hold, and in the safety and comfort of the passengers which it is its duty to transport. Courts may be permitted, where there is no legislative prohibition shown, to put as favorable construction upon such exercise of power by railroad companies as is necessary to promote the success of the company within the powers of its charter, and to contribute to the comfort of those who travel thereon.' And that principle is applicable to the transportation of through freight and passengers over connecting lines. [163 U.S. 564, 595] Under the laws of Nebraska, railroad companies are clothed with ample power to make leases, or any arrangements for their common benefit, consistent with and calculated to promote the objects for which they are created. Comp. St. Neb. 1887, p. 248, c. 16, 94. There is nothing in the charter of the Pacific Company that prohibits such an arrangement as this in controversy, unless by implication; and as by it the public interest was subserved, that company reached its own lines by a shorter route, and accommodated its own through freight and travel, we are not prepared to hold that it was invalid.
These observations also apply to the clause of the contract in respect of the road between McPherson and Hutchinson, but it should be added that that reach of road was held and operated by the Kansas Company, which was a Kansas corporation. The Union Pacific Railway Company was formed by the consolidation of the Union Pacific Railway Company, a federal corporation, the Denver Company, a Colorado corporation, and a corporation originally named the Leavenworth, Pawnee & Western Railway, afterwards called the Union Pacific Railway, Eastern Division, and lastly the Kansas Pacific Railway. The latter company, by its first name, was incorporated under the laws of the territory of Kansas, and upon the admission of Kansas into the Union became a corporation of that state. The acts of congress of 1862 and 1864 clothed it with new franchises, but did not deprive it of its powers as a state corporation, which could be exercised by the consolidated company in Kansas so far as not in derogation of its federal powers. And Kansas corporations were duly empowered to enter into leases and the like by the state laws. 1 Gen. St. Kan. p. 443, c. 23, 112.
2. Was the contract, if within its powers, duly authorized by the Pacific Company? No question arises but that the contract was executed in due form, and, as to the manner in which its execution was authorized, the facts appear to be: On April 22, 1890, the executive committee passed the resolution approving the contract, and authorizing the president of the company to execute it, and on the 30th of the same [163 U.S. 564, 596] month the stockholders, at their regular annual meeting, voted to approve the contract and the action of the executive committee relative thereto. The board of directors never formally acted. As soon as the contract was executed, the Pacific Company required the Rock Island Company to make proper connections between McPherson and Hutchinson, which was done, and the Pacific Company commenced to run over those tracks, and continued to do so until after the disputes between the two companies became flagrant. On the other hand, the Rock Island Company commenced the construction of its road between South Omaha and Lincoln, and of the stations and yards at Lincoln, on the lands of the Republican Valley Company. Appellants contend that the action of the stockholders and the executive committee was ineffectual, because the board of directors was the only body that could authorize the president and secretary to make the contract. The contract appearing on its face to have been duly executed, and the parties having entered upon its execution, necessarily with full knowledge on the part of the board of directors of the Pacific Company, the board would be presumed to have ratified it, alth ugh it in fact took no affirmative action in the matter. Pennsylvania R. Co. v. Keokuk & Hamilton Bridge Co., 131 U.S. 371, 381 , 9 S. Sup. Ct. 770.
Acting under the authority conferred upon them by the charter, the stockholders of the Pacific Company adopted by-laws for the government of the corporation and for the regulation of its business affairs. By section 2 of article 4 of the by-laws it was provided: 'The board of directors shall have the whole charge and management of the property and effects of the company, and they may delegate power to the executive committee to do any and all of the acts which the board is authorized to do, except such acts as by law and these by-laws must be done by the board itself.' Thus, the stockholders authorized the board of directors to delegate the power to the executive committee to do any and all acts which the board itself was authorized to do. The executive committee derived its authority from the stockholders through the board of directors. By section 2 of article 5 of the by-laws it was provided: 'The executive committee shall have, and may exercise by a majority of its members, all the powers and authority which from time to time may be delegated to said committee by the board of directors.' As early as March 15, 1877, the board of directors adopted a resolution, 'that while the board of directors is not in session, the full power thereof, under the charter and by-laws, is hereby conferred upon the executive committee, and the proceedings of said committee at its last meeting are hereby ratified and* con- [163 U.S. 564, 598] firmed.' In 1879 the form of resolution adopted by the board was as follows: 'Resolved, that while the board of directors is not in session, the full power under the charter and by-laws be, and it is hereby, conferred upon the executive committee.' Similar resolutions were passed every year up to April 30, 1890, when the board of directors passed substantially the same resolution which they had been in the habit of adopting from year to year. It was shown that the meetings of the executive committee were frequent, but that the board usually met only twice a year, the business of the company being more conveniently transacted by the committee.
We see nothing in the provisions relating to government directors which makes it indispensable that the board should formally authorize such contracts as the one under consideration. Congress did not vest in the government directors any peculiar powers. They had the same powers as other directors, and no more; but, as government directors, they were to make reports to the secretary of the interior in respect of the affairs and matters mentioned in the act of 1864. They could not, either by a negative vote, or by absenting themselves from the meetings, prevent the transaction of the necessary business of the company, in which they were entitled to participate on the same terms as their associates. Congress did not look to any action of theirs for the protection of the public interests, but sought to secure those interests by specific legislation. Thus, it was provided, by the act of 1862, that patents for lands and government bonds should not be issued to the company until the road had been constructed, examined, and approved by the commissioners, and the facts certified to the president and secretary of the treasury; and a forfeiture of the rights belonging to the company and the lands granted to it, in case of default on its part to redeem the bonds, or any of them, when required to do so by the secretary of the treasury, in [163 U.S. 564, 600] accordance with the provisions of the act, was also provided for.
The joint resolution for the protection of the interests of the United States (16 Stat. 56); the appropriation act of March 3, 1873 (17 Stat. 485, 508); the Thurman act (20 Stat. 56); the act amendatory of the fifteenth section of the act of 18 2 (18 Stat. 111); the act providing for a commission to investigate the transactions of the company (24 Stat. 488),- are examples of such legislation. And it was through them, and not through the agency of the government directors, that congress sought to protect the interests of the government and the public. We regard the position as wholly untenable that this provision for government directors took the corporation out of the general rule that, except in cases where the charter imposes a limitation, the stockholders are the proper parties to take final action in the management of the corporate affairs.
It must not be forgotten that, in the increasing complexities [163 U.S. 564, 601] of modern business relations, equitable remedies have necessarily and steadily been expanded, and no inflexible rule has been permitted to circumscribe them. As has been well said, equity has contrived its remedies 'so that they shall correspond both to the primary right of the injured party, and to the wrong by which that right has been violated,' and 'has always preserved the elements of flexibility and expansiveness, so that new ones may be invented, or old ones modified, in order to meet the requirements of every case, and to satisfy the needs of a progressive social condition, in which new primary rights and duties are constantly arising, and new kinds of wrongs are constantly committed.' Pom. Eq. Jur. 111.
We regard the case of Joy v. St. Louis, 138 U.S. 1 , 11 Sup. Ct. 243, as determining that this contract was one within the control of a court of equity to specifically enforce. In that case the St. Louis, Kansas City & Colorado Railroad Company acquired by succession, under a contract, the right of running its trains over the line of the Wabash Company from a point on the northern line of Forest Park, through the park, and into the Union Depot at St. Louis, together with the right to use side tracks, switches, turnouts, and other terminal facilities. It was a continuing right, and unlimited in time; and the contract contained provisions regulating the running of trains, and prescribing the duties of superintendents, trainmasters, and other offiers. The objections that are urged against the specific performance of the contract under consideration were urged against the specific performance of that contract, and were severally overruled; and it was held that nothing short of the interposition of a court of equity would provide for the exigencies of the situation.
This case was cited with approval in Franklin Tel. Co. v. Harrison, 145 U.S. 459 , 12 Sup. Ct. 900. The contract there was one for the use by Harrison Bros. & Co. of a wire of the Franklin Telegraph Company between Philadelphia and New York. It appeared that Harrison Bros. & Co. had been in the possession of a certain valuable contract with the Insulated Lines Telegraph Company, to the ights of which company the Franklin Telegraph Company had succeeded. Desiring to [163 U.S. 564, 602] have that contract terminated, the Franklin Company entered into a new contract with Harrison Bros., by which the Franklin Company agreed to allow Harrison Bros. the right to put up, maintain, and use a telegraph wire on the poles of the Franklin Company. At the expiration of ten years thereafter the wires were to become the property of the telegraph company, after which time the telegraph company was to lease the same to Harrison Bros. for $600 per annum, payable quarterly, and with all the other terms and conditions as they existed before. The ten years having expired, Harrison Bros. continued to use the wire, paying the stipulated sum of $ 600 per annum therefor; but, after this had gone on for about three years the telegraph company served notice on Harrison Bros. putting an end to the agreement, whereupon Harrison Bros. filed a bill to restrain the telegraph company from terminating the contract, and to have the same specifically enforced, and this court held that the contract was one proper for specific performance.
To make arrangements with other railroad companies, whereby they are permitted to make use of the Missouri River bridge, and of the tracks and station houses within the cities of Omaha and South Omaha, may be fairly held to be within the range of the general authority of the Union Pacific Railway Company. Such contracts are not unusual, and are calculated to promote the convenience of the public and the welfare of the railroad companies which enter into them; and, if the contracts in question presented such a case, I should have no difficulty in affirming their validity. But, as I read [163 U.S. 564, 605] them, they go far beyond such supposed arrangements, and contain covenants and stipulations which bring them within the condemnation of our previous decisions.
The legal effect of these contracts is to create a joint ownership, for 999 years, of an important portion of the Union Pacific's railroad and appurtenances, 'a full, equal, and joint [163 U.S. 564, 606] possession of its tracks,' and a subjection to rules and regulations prescribed by the duly-authorized officers of the lessor and lessee companies, and, in case of disagreement, subjection to the decision of referees, mutually appointed, invested with power to prescribe schedules, rules, and regulations, and to modify existing ones.
These contracts, in my opinion, are plainly void, within the principles of the following cases: Thomas v. Railroad Co., 101 U.S. 71 ; Branch v. Jesup, 106 U.S. 468 , 1 Sup. Ct. 495; Pennsylvania R. Co. v. St. Louis, A. & T. H. R. Co., 118 U.S. 290 , 6 Sup. Ct. 1094; Oregon Ry. & Nav. Co. v. Oregonian Ry. Co., 130 U.S. 1 , 9 Sup. Ct. 409; Central Transp. Co. v. Pullman's Palace Car Co., 139 U.S. 24 , 11 Sup. Ct. 478. The doctrine of those cases may be sufficiently expressed by the following paragraph, taken from the opinion of Mr. Justice Miller in the case of Pennsylvania R. Co. v. St. Louis, A. & T. H. R. Co., 118 U.S. 309 , 6 Sup. Ct. 1094.
I am unable to so read any provision of the contract. On the contrary, as already stated, it is expressly stipulated that 'the schedules of rules and regulations for the movement of engines and trains over the several railways hereby let and demised shall be made for each railway by the duly- authorized officers of the lessor and lessee companies by which such railways shall at the time be operated'; and, if the parties cannot agree upon such rules and regulations, then mutually appointed referees shall exercise authority to 'prescribe schedules, rules, and regulations, and to modify existing ones.' The plain meaning, as I think, of these contracts, is that the Union Pacific Railway Company has thereby parted with its sole and absolute control of those portions of its road and tracks that are embraced within the scope of the contracts, and with the sole and absolute power to exercise its franchises to occupy, possess, and operate such portions of its road, and has agreed to participate, for a period of 999 years, with other railway companies, in the full, joint, and equal possession of those portions of its road, in their physical aspect, and to confer upon such other companies the right to join, on equal terms, in the making of all rules and regulations pertaining to the use and management thereof. When a contract provides for the possession of a railroad, and for its operation by rules and regulations, it has covered everything that exists,-the road as a physical structure, and the franchises to operate it by rules and regulations.
It is true that the contract provides that the rules and regulations 'shall be executed, and all trains moved under the immediate direction of the superintendent or other officer of the lessor company.' But the duties of such an officer are subordinate. He is to carry out the rules and regulations prescribed jointly and equally by the lessor and the lessee companies, and the meaning and effect of the provision in question is to prevent the confusion that would result if there were two superintendents to enforce the same rules over the same portions of railroad. [163 U.S. 564, 609] The opinion of the court disposes of the cases hereinbefore cited by the observation that they arose upon instruments which dispossessed the corporations of all their property, and of all capacity to perform their public duties, and that such is not the case here.
The Union Pacific Railway does not hold and exercise the [163 U.S. 564, 610] powers conferred on it by congress, subject to the control and approval of the courts. Nor is it competent for the courts to enforce or relax, at their will, and according to their views of expediency, the obligations of contracts into which the railway company may have entered.

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