Case Name: Drew et al. versus The New York and Erie Railroad Company
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1870-05-12
Citations: 81 1/2 Pa. 46
Docket Number: 
Parties: Drew et al. versus The New York and Erie Railroad Company.
Judges: at Har'risbui’g, before Thompson, O. J., Bead, Agnew, and Sharswood, J J.
Reporter: Pennsylvania State Reports
Volume: 81 1/2
Pages: 46–57

Head Matter:
Drew et al. versus The New York and Erie Railroad Company.
1. The New York and Erie Railroad Company, by various laws of Pennsylvania, was authorized to procure rights of way and construct their road through certain counties of that State. They purchased real estate and then executed several mortgages of their property. An act was passed for the appointment of a commissioner to decide what portion of said lands were necessary for the uses of the road, and that the residue might be sold; and, upon the mortgagees releasing their mortgages as to the residue, the mortgages<should be ratified as to the other property of the corporation. The commissioner reported that lands, describing them, and containing eighty acres, were necessary for the use of the railroad, and his report was confirmed. The mortgagees released the residue. Meld, that this was an executed grant on the part of the Commonwealth, and was under the protection of the Constitution of the United States, Article I, Section 10, forbidding State laws to impair the obligation of contracts, and the Constitution of Pennsylvania, Article IX, Section 17, forbidding the passage of such laws.
2. An act of March 22d, 1869, reciting that mistakes had been made by the commissioner, authorized the appointment of another commissioner to decide what lands were then necessary for the uses of the road, and authorizing the residue to be sold and the mortgages to be released, as in the act of 1860. Meld, the act of 1869 was in derogation of their previous grant and impaired the obligation of the contract into which they had already entered.
3. The mortgages having been once ratified needed no ratification; acceptance of the legislation by the mortgagees might be an admission that the legislature and the company might withdraw other lands by subsequent proceedings.
4. An erroneous judgment or decree, when made the ground of a contract, becomes irreversible between the parties, except by consent.
5. Such contract is'in effect a release of errors on a valuable consideration. It. would.be against law and equity to unravel and reverse judicial proceedings under such circumstances.
6. The mortgagees, when they executed their release, made no mistake and are not presumed to be cognizant of any in the repon and decree of the court.
7. Bights having vested under the decree, even if it could be modified and reversed, the rights of the mortgagees would not be affected.
8. The consideration of the release of the mortgagees was that property included in the mortgages, before undefined, was reduced to certainty by metes and bounds, and under the acts the company were authorized to hold it subject to the mortgages, not only what might be necessary for the legitimate purposes of the road, but the eighty acres set forth in the report.
9. Without, the said consent of the mortgagees, or due process of law, they cannot be deprived of their title to any part of the eighty acres.
May 5th, 1870,
at Har'risbui’g, before Thompson, O. J., Bead, Agnew, and Sharswood, J J.
These proceedings were commenced in equity in the Supreme Court for the Eastern District, by bill filed 19th of August, to January Term, 1860, No. 2, auxiliary to proceedings in the courts of New York for the foreclosure of certain mortgages against the New York and Erie Bailroad Company and the sale of their property, part of which ivas in the counties of Susquehanna and Pike, in the State of Pennsylvania.
By act of February 16th, 1841 (Pamphlet L., 28), reciting the incorporation of the railroad company by the legislature of New York in 1852, to construct a railroad from the city of New York to Lake Erie; that there were serious obstacles to its construction from mountains in the State of New York, but that, by following the valley of the Susquehanna River within the limits of Pennsylvania, a level and easy route could be obtained, the railroad company were authorized to construct a portion of their road through Susquehanna County, with power to enter upon and occupy such land as might “ be necessary to make the railroad.” By a supplement to this act,passed March 26th, 1846 (Pamph. L., 179), the company was authorized to extend their road through the county of Pike, in Pennsylvania.
In procuring the right of way the company also purchased several farms, on one of which the borough of Susquehanna Depot is located, viz.: One situate in Harmony Township, in Susquehanna County, known as “ Pleasant Valley,” containing J18 acres, 48 perches, was conveyed to them June 17th, 1847; another adjoining, in the same township, containing about 120 acres, conveyed to the company on the 12th of October, 1848.
By 9th section of act of April 28th, 1852, it was enacted that “ the title to certain lands of the (company) for the purposes of obtaining the right of way, water-privileges, and erecting machine shops, buildings and fixtures in the counties of Susquehanna and Pike, is hereby confirmed and made valid,” and the company were authorized and required to sell, etc., such portion of said lands as may not be necessary for the'legitimate purposes of the railroad; and the company were forbidden to hold, after the 1st day of January, 1854, more than fifty acres in any one county.
Whilst thus seized of these premises, the company made two mortgages of all'their property, etc.; one dated March 1st, 1849, and one dated March 1st, 1853. An activas passed April 18th, 1853 (Pamplh. L., 510), by the legislature of Pennsylvania, authorizing the railroad company “ to hold and possess an additional quantity of fifty acres of land in Susquehanna County fo,r the purposes mentioned in the 9th section of the act of 1852, and the period limited in that section was extended until January 1st, 1856; they were also authorized to sell such lands as they held'in Pike County for other purposes than those mentioned in that section. By the act of April 27th, 1855 (Pamph. L., 646', the timé limited for the sale of lands mentioned in the 9th section of the act of 1852 was extended to the 1st of January, 1860. On the 15th of August, 1857, the company made a third mortgage, on the 1st of June, 1858, a fourth, and on the 12th of August, 1859, a fifth. James Brown and J. C. Bancroft Davis were the trustees under the third, fourth, and fifth mortgages; Joseph Walker, Uriah J. Smith, and William T. Hooker were trustees under the second mortgage.
Default having been made, proceedings were instituted by Brown aud Davis in the Supreme Court of New York and also in the Supreme Court of Pennsylvania, as auxiliary to the New York proceedings, to foreclose the fourth and fifth mortgages. Nathaniel Marsh was appointed receiver, August 19th,1859.
On the 22d of March, 1860 (Pamph. L., 223), an act was passed enacting that the purchaser of the railroad, franchises, property, and estate of the New York aud Erie Railroad Company, at any sale which might be decreed by the courts of New York, under the third, fourth, and fifth mortgages, should, on complying with such terms of sale, etc., as the Supreme Court of this State might make, and subject to incumbrances, become vested with all the railroad, franchises, estate, real and personal, etc , aud subject to the duties, penalties, taxes, etc., of the laws of Pennsylvania relating to said company ; and also subject to the liens on the premises and franchises created by the State of New York, and by such mortgages, made prior to the mortgage on which the decree might, be made, as had beeu recorded in Pennsylvania, “ which said mortgages- are hereby ratified and confirmed,” and the purchasers might convey the prop erty, franchises, etc., to any new corporation organized by New York; “and said new corporation may mortgage the same as allowed by the laws of New York, etc.; provided, that said mortgages shall not include or incumber the residue of said land hereinafter pi’ovided to be released from the present mortgages.”
By section 3d, it was enacted that the Supreme Court of Pennsylvania, on notice to the trustees of the mortgages and the receiver, should appoint a commissioner in said suit pending in that court, who, after hearing the trustees, receiver and witnesses, shall decide what real estate “ in and about Susquehanna Depot is reasonably necessary in reference to the present and future use aud operation of said railroad, depots, tracks, roadbed, machine shops, water stations, and other property of said New York and Erie Railroad, and the future owners, occupiers, or operators thereof, and so that the purchaser aud any future corporation may conveniently maintain and operate the said road, and use all the shops and other depots, stations and turnouts, woodsheds and wood-yards, as the same may have been hitherto used, and hereafter become necessary for the business of the said railroad, and shall report the same to the court by metes and bounds.” The court might hear the trustees and receiver in reference to said report aud change, etc., the report and boundaries, and establish and confirm the same, and the purchaser might hold the residue of the property and sell the same, etc.
By section 4th, it was enacted that no one of the mortgages should “ be held to be ratified and confirmed hereby, until and unless the trustees therein named severally and respectively, etc., shall release from the lien of the mortgages given to them the residue of the said real estate at Susquehanna Depot not required for said company, as hereinbefore provided, and which release they are hereby authorized to make without personal liability.” The Supreme Court might make such decree as they might deem advisable for the sale of the road in the State of New York, etc.
On the petition of the New York and Erie Railroad Company, the defendants in the bill, the court afterwards appointed William II. Jessup commissioner in pursuance of the act of 1860.
He subsequently reported that he gave notice to the receiver and the trustees in the mortgages of the time and place of hearing ; that they were present by their counsel at the hearing, and, after a full examination and hearing of all the parties, decided that certain real estate, containing eighty acres, which he described by metes and bounds, in and about Susquehanna Depot, was reasonably necessary in reference to the present and future use and operation of the railroad, depots, roadbed, machine shops, water stations, and other "property of the New York and Erie Railroad Company, etc. To the report was annexed a draft of the land designated. •
The report was presented to the Supreme Court, September 15th, 1860, and the court decreed that the “report and the metes and bounds of the real estate therein, and in the plan thereto annexed, mentioned, and described, be and the same are hereby established and confirmed.”
The Supreme Court of New York having by its decree of June 15th, 1860, directed the sale of the mortgaged premises, subject to the said several mortgages, which it declared to be valid and subsisting liens on them, the Supreme Court of Pennsylvania, on September 15th, 1860, decreed a sale of the property in Pennsylvania, and adjudged that the “purport and effect of the several mortgages and rights of the parties as recited in” the New York decree “were correct,” and directed that the sale should be made as thereby ordered, and should embrace especially the lands at Susquehanna Depot found to be necessary to be retained, describing them by metes and bounds “ as a portion of the premises mortgaged within the State of Pennsylvania.”
The sale was made January 28th, 1851, to the Erie Railway Company; the lands át the Susquehanna Depot were sold by special description by metes and bounds, expressly' subject to the mortgages. A conveyance in form, etc., as 'directed by the New York court, was executed to the purchasers, December, 28th, 1861, and the sale and conveyance were duly reported and confirmed.
On the 18th of November, 1862, by an instrument of writing of that date, reciting the act of Assembly, the report of the commissioner and its confirmation by the Supreme Court; also that the trustees in the mortgages were authorized to release the lien of the mortgages on such lands as were not by the report of the commissioner to be retained for the use of the roads ; and that it was “ important for the due protection of the interests of the bonds secured by said mortgages, that the said mortgages should be confirmed and established by said act, and such is not to be the effect thereof unless the release therein authorized is enacted and made by the said trustees,” the trustees under the second, third, fourth, and fifth mortgages released the 1-ien and incumbrance of these several mortgages, as to all the land formerly held by the said company at Susquehanna Depot, except as to the portion of the lands which were authorized by the report to be retained for the use and operation of the railroad for depots, etc., and for other purposes specified in the report.
A supplement to the act of 1860 was passed March 30th, 1869 (Pamph. L., 587).
It recited the appointment of the commissioner under the act of 1860, and further: “ That owing to the unsettled condition of the affairs and business of said company, and the temporary character of their buildings, the said, commissioner has included in his report some land in and near Susquehanna Depot which has been found to be unnecessary for the use and operation of the Erie Railway Company, who have become the purchasers of the property,” etc.
It was then enacted that the Supreme Court might, on the petition of the Erie Company or any one interested, on notice to the company and to the trustees in the mortgages, refer the report back to the same or another commissioner, who, upon notice to the trustees and the Erie Railway Company, and, after hearing, should decide what real estate in and about Susquehanna Depot was reasonably necessary in reference to the present and future use and operation of said railroad, etc. (in the words of the act of 1860); and the court should hear the trustees and company in reference to the report and boundaries, and modify, etc., and establish and confirm them, and the Erie Company might “ hold the residue of said property, and sell and dispose of the same;” and that the trustees in the mortgages should release from the lien of the mortgages the residue of the real estate at Susquehanna Depot not required by the company, etc.; — as in the act of 1860. '
The Erie Company afterwards petitioned the court, setting out the former proceedings and the passage of the act of 1869, etc., praying the court to refer the report to the same or another commissioner, “ that the same may be corrected, etc.; that upon his report of the same it may be confirmed agreeably to the provisions of said statute.” ■
The' petition, on notice to the trustees under the second, third, and fourth mortgages, was heard by the Supreme Court, October 21st, 1869,and Huntting C. Jessup appointed commissioner under the act of 1869. He gave notice to the parties interested that he would hear them in relation to the matters referred to him on the 25th of February, 1870. At that time the counsel, wi th the trustees of the second mortgage, attended and gave notice to the commissioner that he appeared for the purpose of objecting to the jurisdiction of the Supreme Court of Pennsylvania to authorize the proceedings, and to the jurisdiction of the commissioner; and claimed that the trustees of the second mortgage and the lien, of that mortgage were unaffected by the proceeding.
The commissioner reported that he met and heard the parties, and made an examination of the lands in and about ¡Susquehanna Depot; the' counsel of the trustees having appeared by counsel to object to the jurisdiction of the court and commissioner. He found :
“ That at the date of the report of the former commissioner in this case, the affairs and busiuess of the New York and Erie Railroad Company were in an unsettled state, that the depots, water stations, yards, shop3 and other buildings were of a diminutive and temporary character, and that by reason thereof he could not correctly determine what land was necessary for the said railroad purposes, and by reason thereof has included more land in his said report than was and is reasonably necessary for the use and business of said railroad ; he further finds that the depots, oil and water stations, yards, shops and other buildings, have been enlarged, rebuilt and rearranged in the most permanent and substantial manner, and that all the land late of the New York and Erie Railroad Company of which the nature of the ground -will permit, is occupied for railroad purposes as aforesaid, and the residue thereof is wholly unnecessary and inconvenient for said railroad purposes under any circumstances ; and after a full examination and hearing of all the parties appearing before him, decides that the following real estate in and about Susquehanna Depot, in the county of Susquehanua, is reasonably necessary in reference to the present and future use and operation of said railroad, depots, tracks, roadbed, machine shops, water stations and other property of the said Erie Railway Company, and the future owners, occupiers, or operators thereof, and' so that the said Erie Railway Company, or any future corporation, may conveniently maintain and operate the said road, and use all the shops and other depots, stations and turnouts, wood-sheds and wood -yards as the same have been hitherto used, or hereafter may become necessary for the business of said railroad.”
Then followed a minute description of the real estate, designated by metes and bounds, etc.; a draft of the ¡property was annexed to the report. He also reported that he gave notice to the Erie Railway Company and the trustees that his report would be presented to the court on the 23d of March then next for confirmation.
The trustees under the second mortgage filed exceptions as follows:
1. They were not parties 'to the ease in which these proceedings were had.
2. Under the act of 1860, the proceedings were solely for the purpose of deciding what real estate at Susquehanna Depot was necessary for its use, etc., under that act, and the act had no reference to any issue raised in the original action; that the notice to the exceptors was to ascertain what lands should be released from their mortgage in order to perform the condition on which it should be ratified.
3. After the confirmation of the report the exceptors did release from the lien of their mortgage on the residue of the property at Susquehanna Depot but not required by the Erie Company, whereby the mortgage was ratified, and in respect to it the power of the court was exhausted.
4. By the proceedings had, the prior lien of the second mortgage was recognized, and by the final decree of the Supreme Court, September 15th, 1860, that mortgage was adjudged by this court, by which and by the release the right of second mortgage trustees as to all the mortgaged premises not released was vested in them.
5. The act of 1870 so far as it affects the lien of the mortgage impairs the validity of a contract, and is repugnant to'the Constitution of the United States.
6-8. The court and commissioner had no jurisdiction in the proceedings.
9. The report is not in any suit or proceeding in which any further order can be made affecting the second mortgage or its trustees.
The trustees under the subsequent mortgages filed exceptions as follows :
1. The lands now sought to be released from the lien of the mortgages were by the report of the former commissioner and its confirmation ascertained to be necessary for the railroad; the trustees executed a release of the land reported not to be so necessary, and the mortgages thus and by the decree of September 15th, 1860, were ratified and became valid lien's on the property covered by them, including that now sought to be released.
5-6. The premises now sought to be released were, on the 28th of January, 1861, sold as part of the railway under the ' direction of the court, and conveyed expressly subject to the lien of the mortgages and terms, forms of the conveyance having been passed upon and directed by the court.
7. The ground upon which the former proceedings were sought to be modified was not any error of facts then existing, but that the facts have changed and that the lands then found to be necessary were not now used for railway uses.
8. Neither the Commonwealth of Pennsylvania nor the Supreme Court could impair or discharge the lien of the mortgages.
9, 10-12. If the mortgages were originally no liens on the lands in question, but became so only by the statutes of Pennsylvania, the proceedings were to determine what lands should be retained, were executed and completed, and neither the Commonwealth nor the Supreme Court has power or jurisdiction to order or release other lands on the grounds of the error claimed of at all.
13. The act of 1869, so far as it operates to affect the mortgages in which the exceptors are trustees impairs the obligation of their contract, is repugnant, to the Constitution of the United States, and is invalid.
W. Allen Butler (New York], for trustees of second mortgage, and J. P. Lowrey, for trustees of second mortgages, for exceptions.
The mortgages were originally valid without any express authority from the Pennsylvania statute: 2 Kent Copa. 481. If not so, by the act of 1860 they became so. A concession on terms, upon the fulfilment of the conditions becomes an absolute grant: United States v. Clark 9 Peters, 168 ; Fletcher v. Peck, 6 Cranch, 87. The power of the court and the Commonwealth by the proceedings under the act of 1860 was spent. The purchaser by a decree having a conveyance subject to the mortgages cannot have the premises released without compensation or contribution, nor can he whose only claim is under the decree have it modified in a suit terminated finally five years since. The reason that affairs have so changed since 1860 is no reason for opening the decree. No error is assigned in the finding of the facts as they then appeared.
W. II. Jessup for the confirmation of the last report.
The first commissioner made a mistake by including in his l’eport lands not necessary for railroad purposes, which it was not the intention of the legislature or court should be bound by the lien of these mortgages ; to correct this mistake the report was referred to the' second commissioner. The general equity power of the court will permit this: Miller v. Rusforth, 3 Green Ch., N. J., 174; 2 Daniel’s Ch. Pr. 1044, Note 4 ; Spearring v. Lynn, 2 Vernon, 376. If the court be satisfied that the new matter is relevant and might have occasioned a different determination, a review will be permitted: 2 Daniel, 1612; Note 5; O’Hara v. Shepard, 3 Maddock, 306. There was no grant here; the legislature merely validate a mortgage of a foreign corporation on cer tain terms; by reason of mistake the terms have not been complied with, there can therefore be no executed contract.

Opinion:
Mr. Justice Sharswood
delivered the opinion of the court May 12th, 1870.
The bill in this case was originally filed in this court as auxiliary to proceedings in the courts of the State of New York for a foreclosure and sale, under certain mortgages, of so much of the road and franchises of the defendants as was within the limits of this State ; and by an act of Assembly of this Commonwealth of March 22d, 1860 (Pamph. L., p. 223), the. legislature declared that the purchaser or purchasers under the decree of the courts of the State of New York should be vested with all the railroad and roadbed, estate real and personal, property, rights, powers, privileges, and franchises which the said company now possess or hold in the State of Pennsylvania, — subject to the liens upon the said premises. It was further provided by the third section that the Supreme Court of this State should appoint a commissioner in said suit pending in said court, who was to report " what real estate in and about Susquehanna Depot, in the county of Susquehanna, is reasonably necessary in reference to the present and future use and operation of said railroad, depots, tracks, roadbed, machine shops, water station, and other property of the said New York and Erie Railroad ;" and it was also declared by the fourth section that "no one of the mortgages of the said New York and Erie Railroad Company shall be held to be ratified and confirmed hereby until and unless the trustees therein named severally and respectively shall release from the lien of the mortgages given to them respectively the residue of the said real estate not required for said company as hereinafter provided." A commissioner was accordingly appointed, who made a report, which was confirmed by this court September 15th, 1860, finding all but about eighty acres, particularly described therein, not to be necessary. On the 13th of November, 1862, the trustees executed a release as required, which was accepted by the company. Now considering this legislation and the proceedings following it as a transaction between the State and the company, on whose motion the State acted on the one hand, and the trustees of the several mortgages in question on the other, it amouuts simply and practically to this: The State says to the trustees, there may be some doubt whether, without express authority from the legislature, the company have power to mortgage so much of the road as they were authorized to construct in this State by the acts of February 16th, 1841 (Pamph. L., p. 28), and March 24th, 1846 (Pamph. L., p. 179). By the acts of April 28th, 1852 (Pamph. L., p. 476), and April 18th, lfc53 (Pamph. L., p. 510), we confirmed the title of the company to certain lands purchased by them, and authorized them to hold so much as might be necessary for the legitimate purposes of the railroad not exceeding one hundred acres ; we have now directed a proceeding in court to ascertain and settle certainly and finally how much is included in this grant; if, then, you will release all your right and title under your mortgages to so much of the lands as may be found to be unnecessary, so that a perfect title thereto may be made by the company clear of any doubt or suspicion, we will ratify and eon firm your mortgages. Thereupon the trustees accede to the proposition and execute the stipulated release. If this is not a contract, or executed grant on the part of the Commonwealth, it is not easy to see how there can be such a thing. That a grant of this nature is under the protection, as well of Art. 1, sect. 10 of the Constitution of the United (States as of Art. IX, sect. 18 of the constitution of Pennsylvania, is so clear and well settled that it is no longer to be made the subject of contention. As well might the State undertake to repeal a solemn grant of vacant land by patent under the great seal. It is evident, then, that when the legislature undertook by the act of March 30th, 1869 (Pamph. L., p. 587), to reopen the inquiry as to what lands were necessary, to authorize the court to refer the matter to the care of another Commissioner, and to provide for auother release from the trustees of what other land should be found by this additional report not to be necessary upon the same conditions as to the ratification of said mortgages as in the act of 1860, they were derogating from their own previous grant and impairing the obligation of the contract into which they had already entered. It is very clear that the mortgages having once been solemnly ratified stood'in need of no further or other ratification, and would be no better, but rather worse, if the trustees should accept it; for it would be an admission that the legislature and company might go on and withdraw other lands by subsequent proceedings from the lien of the mortgages upon the same condition of a new ratification.
It is gravely maintained, however, that the original report of the first commissioners and the decree of confirmation were founded upon a mistake, and that it was competent to the legislature by the act of 1869 to authorize the court to re open the decree and rectify that mistake. But an erroneous judgment or decree of a court, when made the ground of a contract between parties, becomes, so far as those parties are concerned, inviolable, unless by their consent. It is in effect a release of errors founded on a valuable consideration, and it would be against law and equity to unravel and raise judicial proceedings under such circumstances. Our laws recognize this equity by not allowing the title of a purchaser at sheriff's sale under proceedings upon an erroneous judgment to be affected by the reversal of that judgment. The trustees, when they executed their release, made no mistake, and are not to be presumed cognizant of any in the report of the commissioner and the decree of the court. If it was a mistake at all, it was a mistake of judgment upon a question of fact — like a wrong verdict of a jury — but no mistake in the form or substance of the decree or judgment upon it. Nights having vested under it, even if it could, be subject to review, and modified and reversed, their rights cannot be affected. The consideration of the release of the trustees was that the property included in the mortgage, before undefined and uncertain, was now reduced to certainty, and described by metes and bounds, and that, under the provisions of the acts, the company were authorized to hold, of course, subject to the mortgages, not merely what might be necessary for the legitimate purposes of the road, but eighty acres of land, more or less, as particularly set forth. Without their free consent, or due process of law, the trustees cannot be deprived of their title to any part of their eighty acres.
Motion refused.