Case Name: Dayton & Union Ry. Co. v. P., C., C. & St. L. Ry. Co.
Court: Montgomery County Circuit Court
Jurisdiction: Ohio
Decision Date: 1902
Citations: 6 Ohio C.C. (n.s.) 537
Docket Number: 
Parties: Dayton & Union Ry. Co. v. P., C., C. & St. L. Ry. Co.
Judges: Wilson, J.; Sullivan, J., and Summers, J., concur.
Reporter: Ohio Circuit Court Reports (new series)
Volume: 6
Pages: 537–556

Head Matter:
CONTRACTS BETWEEN RAILWAY COMPANIES.
[Circuit Court of Montgomery County.]
Dayton & Union Ry. Co. v. P., C., C. & St. L. Ry. Co.
Decided, 1902.
Railways — Corporations Re Jure and Re Facto — Ultra Vires Contract —Valid When Invalid Portion Can Be Eliminated — Mere Intention to Violate Corporate Ruties — Not Ground for Forfeiture of Charter — Contract for Use of Tracies a Permanent License, When ■ — Agreement to Arbitrate Roes Not Oust Jurisdiction of the Courts —Word “Road" a Generic Term — Includes Present and Future Trades and Side-trades — Right to do Local Freight Business — Test as to What Company Business Passing Over a Road Belongs.
1. A de jure railroad corporation does not by entering into an ultra vires contract with a connecting line become a corporation de facto.
2. A mere intention on the- part of a railroad company to violate its public duties, does not change the legal status of the company,-or afford ground for the forfeiture of its charter.
3. A trackage contract between railroad companies, whose tracks are parallel for a distance of fifteen miles and thereafter separate widely, is within the enumerated powers of railroads, and does not destroy but rather creates competition between them: and where in a contract of this character' an ultra vires feature is found, which can be eliminated, the remaining portion of the contract is not rendered invalid thereby, nor is ground afforded for forfeiture of the company’s charter.
4. Moreover the defense of ultra vires can not be interposed by one railroad company against another, which has been recognized as binding upon them and acted upon flor thirty-seven „ years, and the history of the arrangment and circumstances of the companies are as in this case.
5. The taking up and removal of a parallel track is a public good to the extent that the burden upon the public domain is thereby relieved, and the danger at crossings reduced, and the convenience .of the carrier promoted.
6. A valid contract between two railroad companies, whereby one is to have the use of the other’s road so long as they continue to exist as chartered corporations, is in the nature of a permanent license, and is enforceable in a court of justice notwithstanding a provision that disputes between the companies shall be submitted to arbitration. The word “road” in such a contract will be construed as a generic term including all present and future tracks, side-tracks and structural facilities in the' transaction of both locall and through business.
7. A grant by a railroad company of the use of its road for “all trains required in the prosecution of its business,” limits the licensee to the business of the grantee company, and the test as to whether the business passing over the road is that of the licensee is to be determined from the facts of the case, and not from the engines or crews used in operating the trains.
Appeal from Montgomery Common Pleas.
This ease comes before us on appeal from the decree of the court of common pleas.
The action is prosecuted by the plaintiff, to enjoin the defendant from interfering with its use of the track and side-tracks of the defendant’s road between the west bank of the Great Miami river at Dayton, Ohio, and the junction, or Dodson station (fifteen miles beyond, in a northwesterly direction), for the transaction of its business as a common carrier.
The plaintiff claims the right to so use that part of the defendant’s road under a contract entered into by it and the Dayton & Western Railroad Company oil January 14, 1863; and that its rights, under that contract, have become fixed and definite by a long course of business and user, acquiesced in by the defendant, for such length of time and with such uniformity as to have become a rule of construction of the contract between the parties. A copy of the contract is attach, d to the petition and is of such length that reference must be had thereto for a full statement of its contents. The terms which are in dispute, and which the court is called upon to construe, will be referred to in tha discussion of the ease.
The defendant admits the execution of the contract, but denies the plaintiff’s right to use its road, in the manner and to the extent claimed by it; specifically denying its righi to use the side-tracks in West Dayton, and the main line, for the purpose of scheduling or detouring the trains of other roads over the same. It also denies that 'it has acquiesced in the use of its road in the manner claimed by the plaintiff. It claims further, that the contract in question is void ai initio, for the reason that the parties to it, being railroad companies operating parallel competing lines, were without the corporate power to enter into such a contract, and that the contract is against public policy, for the reason that its tendency and purpose are to stifle competition. It asks therefore that the contract may be declared void and canceled, or if not, then that the plaintiff may be enjoined from making an unwarranted use of the road under its terms.
There are but few facts in dispute ,in the case, the material facts being admitted. Those admitted or proven, found by the court necessary to be considered, in reaching a conclusion in the ease, are.the following:
1. The Dayton & Western Railroad Company was incorporated February 14, 1846, (44 O. L. L., 93). It was authorized to and did thereafter construct a line of railroad from the city of Dayton to the state line, between the states of Ohio and Indiana, passing through' the village of Dodson, fifteen miles west of the city of Dayton. On January 31, 1851, the legislature authorized it to unite with the Terre Haute & Richmond railroad (49 O. L. L., 466), thus giving it a line to Richmond, Indiana.
2. The Greenville & Miami Railroad Company was incorporated February 26, 1846, (44 O. L. L., 189), with authority to construct a line of railroad from the town of Greenville in Darke county, to any point on the Dayton & Western railroad, or to any point on the Miami, or Miami Extension, canal. On March 23, 1850, it was authorized to extend its railroad westwardly, to a point on the Indiana state line (48 O. L. L., 311). It thereafter constructed a line of railroad from Union City, through Greenville, to a point called the junction, at or near Dodson, a village on the Dayton & Western road.
3. On March 14, 1853, the Greenville & Miami Railroad Company acquired, by contract with the Dayton & Western Railroad Company, the privilege of occupying the right of way of the Dayton & Western Railroad Company, from the point of junction at Dodson, to- Dayton, for the construction of a second track, thirteen feet from center to center, parallel with that company’s line, agreeing to pay therefor six per cent, on the cost of the D. & W. road, between these points. Subsequently it acquired from the abutting landowners for railroad purposes eight strips of land, which are not continuous, but which lie alongside the Dayton & Western Railroad Company’s right of way. Under this arrangement it put down and operated, until January 14, 1863, a separate track with the then needed side-tracks, parallel with the line of the Dayton & Western Railroad Company’s line, between Dodson and the west bank of the Great Miami river, at Dayton.
4. On January 8, 1863, the Greenville & Miami Railroad Company was reorganized, under the laws of Ohio, as the Dayton & Union Railroad Company..
5. On January 14, 1863, the Dayton & Western Railroad Company, and the Dayton & Union Railroad Company, entered into the contract, attached to the petition, marked exhibit “A;” in pursuance thereof, the Dayton & Union Railroad Company took up and disposed of its superstructure, between Dodson and Dayton, and has ever since transacted its business as a common carrier, between those points, on the road of the Dayton & Western Railroad Company, paying therefor the rentals in the contract provided.
6. On January 4, 1865, the Little Miami and the Columbus & Xenia Railroad Companies leased the Dayton & Western railroad for a period of ninety-nine years, renewable forever, subject to the agreement between the Dayton & Western Railroad Company and the Dayton & Union Railroad Company, dated January 14, 1863, and agreed “to keep, perform and fulfill all and every of the covenants and stipulations of the party of the first part,” contained in -said agreement.
7. On November 13, 1868, in pursuance to article fifteen of the contract of January 14, 1863, the Dayton & Union Railroad Company, and the Little Miami and the Columbus & Xenia Railroad Companies, for a consideration of $2,Q00, annual ren tal, to be paid by the former to the latter, agreed that the former should have the privilege of using the Great Miami river bridge, and the track of the Dayton & Western railroad, from the depot grounds of the Dayton & Union east of the river to the junction near the west end of said bridge; the rights and liabilities of the parties to be determined by the terms of the contract of January 14, 1863; since which time the Dayton & Union Railroad Company has used said bridge and track in the conduct of its business and paid the rental therefor.
8. On March 18, 1869, the Columbus & Xenia Railroad Company leased to the Little Miami Railroad Company for the period of ninety-nine years, renewable forever, its line of road, together with its interest in the Dayton & Western railroad.
9. On December 1, 1869, the Little Miami Railroad Company leased to the Pittsburgh, Cincinnati & St. Louis Railway Company for the period of ninety-nine years, renewable forever, its line of road, including its interest in the Dayton & Western and the Columbus & Xenia railroads.
10. On January 2, 1877, the Pittsburgh, Cincinnati & St. Louis Railway Company, as lessee of the Little Miami Railroad Company, entered into an agreement with the Dayton & Union Railroa.d Company, whereby the said first-named company, for the sum of $10,000 cash to it in hand paid, settled and dismissed a suit then pending in the Superior Court of Dayton, brought to recover additional rentals, under the stipulations of the twenty-third article of the contract of January 14, 1863; and upon the further agreement of the Dayton & Union Railroad Company, thereafter, to pay to the Pittsburgh, Cincinnati & St. Louis Railway Company a fixed rental of $10,000 annually, said twenty-third article was agreed to be eliminated from said contract, and to be thereafter inoperative; but it was otherwise then and there expressly agreed, between said parties, that “all other portions of said contract of January 14, 1863, should remain unchanged and in full force, and all the rights and privileges of each party thereunder should be fully preserved.”
11. On October 1, 1890, the defendant, the Pittsburgh, Cincinnati, Chicago & St. Louis Railway Company, became and is now the successor of the Pittsburgh, Cincinnati & St. Louis Railway Company.
12. On or about November 8, 1897, the defendant notified the plaintiff that on and after December 1, 1897, the switches to its side-tracks in West Dayton, or Miami City, would be dosed and locked against the locomotives and cars of the plaintiff, unless a charge was paid therefor, and it has refused to arbitrate, under article twelve of the contract of January 4, 1863, the question whether the plaintiff has the right to use said sidetracks without charge.
13. The side-tracks, whose useds thus in dispute between the parties, were constructed by the defendant, and its predecessor in title, between the years of 1870 and 1897 inclusive, and each of said side-tracks connects with the main track of the Dayton & Western railroad; they are fourteen in number, and four of them are laid down on, and three others lead out from the right of way used by the Dayton & Union Railroad Company before it took up its superstructure. .
14. The Dayton & Union Railroad Company has used the said main track and side-tracks between said stations, for running, by schedule, and detouring thereon, trains of other railroad companies, without the permission of the defendant and against its protest. It has also received and discharged freight for other railroad companies, with which it has connection, on the east side of the river, on the side-tracks in Miami City, for switching charges only.
, 15. The nature and extent of the use, made by plaintiff of the defendant’s road, has changed, more or less, with the change of management of the roads, respectively, and the mode of use has not been, as to the matters in dispute, of that uniform character which would establish a rule of construction of the contract between the parties. At no time, however, before the commencement of this action, did the defendant question the right of the plaintiff to use its main track and the side-tracks in use at the time of the making of the contract of January 14, 1863, and provided for therein.
Wilson, J.; Sullivan, J., and Summers, J., concur.
Affirming 1 N. P.—N. S., 577, and affirmed by the Supreme Court, 67 O. S., 523.

Opinion:
I. The question whether the contract of January 14, 1863, is ultra vires, will be first considered.
It is argued by counsel for the defendant, that although the plaintiff was without authority to operate this parallel line of fifteen miles of track, for the reason that its charter did not extend over it, yet, that it was a corporation de facto, operating a line parallel with the Dayton & Western road, can not be questioned in this action. This'should not be said unmindful of the fact, and it would be more accurate to say, that it was a corporation de jure, authorized under its charter to operate a line of road from the Indiana line at Union City, through Greenville, to Dodson, the point o£ junction with the Dayton & Western road, which, apart from the fifteen miles of parallel track is, beyond question, a connecting line. If it be true, that to operate the fifteen miles of track, under the agreement made with the Dayton & Western Railroad Company in 1863, was to exceed its corporate power, and its authority had been challenged by proceedings in quo warranto, the judgment of the court would have been to oust it from doing what it had no authority to do, confining its operation to the charter limits, but not revoking its charter. It would still have continued to be a corporation de jure.
It must be conceded, we think, that if this parallel track had never been built, and the contract of January 14, 1863, had been entered into, under the other existing conditions, the roads contracting would, in contemplation of law, have been connecting lines, authorized, under the statute, to enter into a trackage arrangement for their common benefit.
This contract looks to a return to just that condition. It was made, in part, for the purpose of enabling the plaintiff to take up its parallel line, which, it is said, it was operating ultra vires, and substitute therefor a trackage contract, which would be within its enumerated powers. Having taken up its parallel track, or agreed to do so, it became and was simply a corporation de jure, owning and operating a connecting line of railroad, within the meaning of the statute.
The fact that the parties stipulated, in the contract, that the Dayton & Union Railroad Company might, if the contract was terminated, return to the use of the parallel track, did not make it otherwise. No mere intention, or purpose, on the part of a corporation, to violate its duty, can constitute ground for the forfeiture of its charter, or change its legal status. Commonwealth v. Railway Co., 58 Pa. St., 26.
The language of the statute in force at the date of the contract was:
"Any two or more railroad companies, whose lines are so connected, may enter into an arrangement for their common benefit, consistent with and calculated to promote the objects for which they were created." S. & C., 281.
The language of the present statute is:
"Any two or more companies whose lines are connected and not competing, may enter into an arrangement for their common benefit consistent with, and calculated to promote the objects for which they were created." Section 3300, Revised Statutes.
The intendment, of the law is not changed by the addition of the words "and not competing." It ivas the original purpose of the statute to preserve competition for the benefit of the public, and that is the settled policy of the law.
There are provisions in the contract in question which look to the stifling of competition, but they have never been acted upon. The parties have each, under the arrangement, carried on the business of a common carrier, without invoking the aid of these provisions. It can not be said, therefore, that the contract would not have been entered into' without them. It will be time enough to pass upon their legality when the contracting parties undertake to enforce them. The contract is operative .and binding without them, and if found to be unlawful, they can be eliminated, leaving the other provisions of the contract to stand. Without them, the contract creates competition and is not, for that reason, against public policy. If the business of the public can be done as well on one track as on two. it was not only for the benefit of the companies, but of the public as well, to remove one of the tracks, The inconvenience of doing business with one road across the track of the other, is obvious, and every additional track is an increased burden on the public domain, and an enhancement of the danger to the public, and to property. It is the policy of the law to mitigate these necessary evils by doing away with unnecessary tracks. Vide, Sections 3338, 3339, 3340 and 3341, Revised Statutes.
- We find, therefore, that the companies, entering into this contract, had the corporate power to so do, and that the contract is not against public policy. If this were not so, we would question the right of the defendant to plead the ultra vires of the contract, as a defense in this action. It is said in Rawle's Bouvier, 1154:
"It is a much disputed question, whether unauthorized contracts, neither malum in se nor malum prohibitum, or where the restriction is implied from the grant of specified powers, are absolutely void and non-enforceable, even where the party has received the consideration for the promise."
It would seem that the. Sup reme Court of the United States is committed to the doctrine that such contracts are absolutely void, and that no relief can be had under them'.
In the case of Central Transportation Co. v. Car Co., 139 U. S., 24, 60, Mr. Justice Gray says:
1! When a corporation is acting within the general scope of the powers conferred upon it by the Legislature, the corporation, as well as persons contracting with it, may be estopped to deny that it has complied with the legal formalities which are prerequisites to its existence or to its action, because such requisites might in fact have been complied with. But when the contract is beyond the powers conferred upon it by existing laws, neither the corporation, nor the other party to the contract, can be estopped, by assenting to it, or by acting upon it, to show that it was prohibited by those laws."
It will be found that the doctrine of this case is supported by numerous other cases, preceding, as well as following, in that court. It is said, however, in the notes to the case of Miller v. Insurance Co., 20 L. R. A., 765 (92 Tenn., 167) :
"On the other hand, it has come to be the settled doctrine of many states that a corporation may be estopped to deny its authority to enter into a contract which has been executed, and from which it has derived the benefit which it thereby sought. There is undoubtedly a growing tendency to the latter doctrine in modern decisions of this country, and of England."
Some of the leading cases upholding it are, Whitney Arms Co. v. Barlow, 63 N. Y., 62; Manchester & L. Ry. v. Railway Co., 66 N. H., 100 (20 Atl. Rep., 383); Wright v. Hughes, 119 Ind., 324; Bradley v. Ballard, 55 Ill., 413.
The courts of many other states are in-line with these authorities. Among the very recent decisions to that effect are, Boyd v. Carbon Black Co., 182 Pa. St., 206 (37 Atl. Rep., 937); Bath Gas Light Co. v. Claffy, 151 N. Y., 25 (45 N. E. Rep., 390). In the latter case it is held:
"2. A contract made by a corporation without legislative sanction, and hence in excess of its powers, but involving no moral turpitude, and offending against no express statute, is not necessarily 'illegal' in such a sense as to prevent the maintenance of any action upon it."
This is a strong statement of what is called the new doctrine.. Our own Supreme Court would seem to hold with these later authorities.
In the case of Hays v. Light & Coal Co., 29 Ohio St., 330, 340, Judge Boynton says:
"The rule seems well established that where a contract has been executed and fully performed, on the part either of the corporation or of the other contracting party, neither will be permitted to insist that the contract and such performance by one party were not within the corporate power of the company."
In the case of Larwell v. Savings Fund Soc., 40 Ohio St., 274, 285, Judge Dickman makes the same statement substantially. In both of these cases Whitney Arms Co. v. Barlow, supra, is cited with approval; and in that case it is held, page 506:
"The plea of uUra vires should not, as a general rule, prevail, whether interposed for or against a corporation, when it would not advance justice, but on the contrary would accomplish a legal wrong."
The contract against which the defense of ultra vires is sought to be interposed in the case at bar, has been recognized as binding and acted upon by the parties for more than the third of a century. In pursuance to its provisions, the plaintiff has taken up its track, and the defendant has constructed side-tracks, and other business facilities, on the right of way the plaintiff once occupied, and is claiming the right to exclude the plaintiff from their use in its business. The defendant expressly ratified its terms fourteen years after its execution, in order that it might receive the increased rentals commensurate with the growth of business. Its treasury has received more than $350,000, the fruits of its enforcement. These facts, we think, call for the application of the doctrine of the cases we have last cited, and which, we understand, meets the approval of the Supreme Court of Ohio; and independent of the question whether or not the contract was, and is, ultra vires, we hold it would be inequitable and unjust, at this late day, to permit that defense to be interposed.
If we should follow the contrary doctrine, as held by the Supreme Court of the United States, the defendant does not. in its answer, justify the plea. It admits it threatens to. and will, unless restrained by the court, lock its switches to the sidetracks in Miami City, against the plaintiff, and dispossess it by force of the use of the property it claims under the contract.
The defendant asks that tbe contract may be declared void and canceled, but it does not propose, or seek, a settlement of tbe rights and equities which may have grown up under the long acquiescence in, and execution of the contract for thirty-seven years. It simply claims the right to seize the property and dispossess the plaintiff, because the contract is void. Such seizure at once, by force and without adjustment, would leave the plaintiff practically without the facilities to carry on its business. Relying upon the terms of this contract, the agreement for the use of the C., H. & D. bridge has been canceled. Its right to use the defendant's bridge must stand or fall with the contract which is sought to be avoided. And if it falls the plaintiff might be shut off entirely from Dayton, east of the river.
Numerous other inequalities might arise, growing out of the execution of the contract in the past.
"A court of equity will enjoin the seizure of property, and the ejectment of the possessor, although the same may have been acquired under an illegal contract, until an application has been made for the cancellation of such contract, and a full and fair settlement of all accounts growing out of its execution in the past." Western Union Tel. Co. v. Railway Co., 1 McCrary, 565 (3 Fed. Rep., 430, 434).
Judge McCrary, on page 569, says:
"What I wish to emphasize in this ease, as well as in other similar cases, is that the defendants have no right to take their remedy into their own hands. If they have the right to seize this, property by force, upon the ground that they hold the contract void, according to the same reasoning the plaintiff would have the right to adjudge the contract valid, and by force retake the property. In other words, force and violence would take the place of law, and mobs would be substituted for the process of courts of justice. The strongest litigant, the one commanding the largest force of men and the most money, would succeed.
"Such a doctrine, if recognized by the courts, as a proper mode of adjusting disputes concerning property rights, would lead at once to anarchy.
"If the defendants, after years of acquiescence in the contract in question, after receiving its benefits, and after a property had been built under it to which others made claim, became suddenly convinced that it was a void contract,, it was their duty to apply to the courts for relief, praying a cancellation of the contract, and a full and fair settlement of all accounts growing out of its execution in the past.
"Until they seek some such remedy, and until a fair settlement upon a full accounting can be had, they will be enjoined from attempting to eject the. plaintiff, or to seize the property. ' '
Under any view of the law, therefore, the defendant is not entitled to interpose the defense of ultra vires, simply, to the plaintiff's suit, to enjoin it from forcibly seizing the property and rights which are in dispute under the contract.
II. The contract is in the nature of a permanent license, securing to the plaintiff the right to use the road of the Dayton & Western Railroad Company in the manner prescribed by its terms, as long .as the contracting parties shall continue to exist as chartered corporations.
The defendant succeeds to the use and control of the Dayton & Western road, subject to the terms of this contract, which its predecessor, for a valuable consideration, agreed to perpetuate and perform. It is not precluded from defending under the contract, because of the stipulation therein, to arbitrate.
"A mere agreement to arbitrate does not preclude a resort to a court of justice; and it can not be pleaded in bar. Such agreements will not be specifically enforced, nor will the arbitrators be compelled to act." McGunn v. Hanlin, 29 Mich., 476.
It only remains, therefore, to construe the contract.
The authority given to the Dayton & Union Railroad Company, to enter into the contract, jis expressed in the agreement, of the reorganizing creditors and stockholders of the Greenville & Miami Railroad Company, was to contract "for the use of so much of the road of said Dayton .& Western Railroad Company as lies between Dodson and the city of Dayton."
The incentive to the contract is declared in the preamble to be "the mutual interest of both companies." Its purpose was "by proper comity" to arrange "for the convenient"dispatch of the business of both companies, upon a single track common to both."
The Dayton & Union Company had the opportunity; and desired to dispose' of its superstructures, between the village of Dodson, and the city oí Dayton. But before it would do so it desired to first acquire from the Dayton & Western company "the permanent right to enter upon its railway track from time to time, and at all times, at either of said points, with the locomotives, cars and trains of the said party of the second part." The Dayton & Western Railroad Company was willing to make such permanent grant.
"To carry out this agreement, and to grant and assure, t© the said party of the second part, the permanent right and full use of the said railway track and the side-tracks thereof between said points," the contract was entered into.
Such in substance is the preamble,
The grant is expressed in the first and second articles which are as follows:
_ ' ' First. For the consideration hereinafter stated, the said party of the first part hereby grants and assures to the said party of the second part the permanent right to enter upon the main track of the party of the first part, without delay or hindrance, by properly constructed switches at the junction, and near the west end of the bridge over the Great Miami river, and with all the trains of the said party of the first part, and in such manner as will fully allow to the party of the second part all reasonable means and facilities for the prompt and convenient dispatch of its business.
"Second. While it is the intention of the said contracting parties to make the main track and side-tracks of the party of the first part, between the said points, common to the use of both companies, as aforesaid, it is hereby distinctly stipulated that the free use thereof by the said party of the second part shall be at all times subordinate to the necessary use thereof by the said party of the first part, except as hereinafter qualified."
It will be observed that what the Dayton & Union company was authorized to contract for, was the use of the road of the Dayton & Western company between these points. Road is a generic term, and must be held, ordinarily, to include all structural facilities, which appertain to the road proper. That term is not used in the first and second articles of the contract. What is substituted therefor, is main track and side-tracks * # *. Other articles in the agreement assure to the plaintiff the use of the switches and water stations. These together practically constitute the road, in the sense the plaintiff has the right to use the same.
That they were intended to be such equivalent, is apparent from the language of article thirteen, wherein it is provided that the payment of rent shall begin "at the time the party of the second part enters on the use of the road of the party of the first part;" and from article twenty, in which it is provided, that "the party of the second part shall be liable to individuals and the public, for any damage done, to persons or property, by its trains in using the road of the party of the second part."
We conclude, therefore, that the language of the general grant is broad enough to include all tracks and side-tracks, which were then or have since become a structural part of the road, and must be held to so do, unless there can be found words of limitation in the other provisions of the contract, which necessarily modify its meaning.
It is argued that such limitation is necessarily implied from the provisions of article three of the contract. We do not so interpret it. It reads:
"Third. It shall be the duty of the party of the first part to provide at Higgins station and at Brookville station, necessary side-tracks for the convenient passing of trains and dispatch of business at those points, and to keep the same in good repair, and also the main track, culverts, crossings, bridges, etc., between the west side of the Miami river and the junction; and in addition to the side-track, for the purpose of passing trains at Brookville, there shall be additional siding and track for the accommodation of freight."
This stipulation was made necessary, for the reason the roads could not operate under the contract until side-tracks were provided for the passing of trains, and the accommodation of freight at the villages on the line, it being a part of the agreement that the party of the second part should be permitted to take up its whole superstructure. The limitation which it implies is, that the party of the second part could not then require the party of the first part to build any side-tracks other than as therein provided. For others than these, it must rely on the necessity that would compel the party of the first part to build, in order to accommodate its own business.
If the plaintiff believed, and had the right to believe, that it would be entitled to use in common the side-tracks which the defendant would thus be compelled, by the demands of its own business, to build, there is no significance in the fact that other side-tracks are not expressly provided for in the contract. They would come only with the increase of business, true, but would be sure to come if needed.
It was provided that the increase of business to the plaintiff, beyond $100,000 per annum, should bring a correspondingly in creased rental to the defendant; and in that way the defendant was to be compensated, not only for the additional wear and tear, but for the outlay it would make in providing the additional facilities for conveniently dispatching promptly, the business of both companies on one line common to both.
If anything does, it is the fixed rental of the contract of 1877 that prevents the compensation from being always commensurate with the cost of placing and maintaining the road in a condition equal to the demands of the business of both roads.
This modification of the original contract was made by the defendant's immediate predecessor, to all of whose rights and liabilities it has succeeded.
The provisions of article twenty-three, for the increased rental, proportionate to the increase of business, indicates that the parties had in mind the growth of business, and growth of business means additional facilities — more side-tracks. '
I.n view of the fact that the arrangement was to be permanent, lasting as long as the companies retained their charters, it would not be for the mutual interest of both companies, as is said iri the preamble, nor making the use of the main track and side-tracks -common to both; as is the declared intention, nor equitable, as is the rule prescribed in article twenty-four, to limit the plaintiff to the use of the side-tracks existing at the lime, or expressly provided for in the contract.
The true measure of its right, in the language of the contract, is, "to occupy and use between said points, the main railway track and side-tracks of the said party of the first part; and in such manner as will fully allow, to the party of the second part, all reasonable means and facilities for the prompt and convement dispatch of its business."
To put upon the use the restrictions for which the defendant contends, would be to make it partial, not "full," unreasonable, not "all reasonable," and to retard, not render "prompt," the dispatch of its business.
It is contended by counsel that article twelve, which is constructional in its character, clearly defines the scope of the whole contract. It provides:
"In giving construction to the contract, due consideration shall be given to the main object sought to be accomplished by its formation: (1) the use of one track instead of two, between Dayton and the junction; (2) the manner in which the party of the second part may use the tracks of the party of the first part; •and (3) the amount of compensation to be paid therefor."
It is said this simply means to give the Dayton & Union Railroad Company the use of the main track and side-tracks, for the prompt and convenient moving of its trains between said points, and that it obtains no other right under the' contract.
This construction seems to us to be too narrow. It has the right to do a freight business over this line. In order to do a freight business, it must have tbn facilities for reaching out, and gathering up the freight. That is the purpose of these sidetracks. The "prompt and convenient moving" of empty trains would be a barren ideality; and the words of the contract would be as "sounding brass and tinkling cymbal" if they meant nothing more than that.
It is not true, we think, that the local business between Dayton and the junction was not provided for in the annual compensation to be paid by the plaintiff. The right to do a local business is included in the general grant.
Article five, which is also constructional, says:
"This agreement shall not be so construed as to prohibit the said party of the- second part from carrying freight or passengers to or from Dayton and the junction, or to or from any intermediate station. ' '
The implication is, this right has already been granted, but there is danger that it may be misconstrued.
It is not fairly inferable from article twenty-four that the compensation agreed upon was not in payment for the right to do a local business. That section reads:
'1 The superintendents of the companies here contracting shall agree upon some convenient and equitable mode of doing the local freight business between Dayton and the junction, and equitably dividing the receipts for the same. ' '
As we understand this provision, it is that the superintendents of the two companies shall agree upon some joint, convenient and equitable mode of doing the local freight business, which each party has the right to do, singly, over one track; that is, while the train service must necessarily be separate, yet the freight, and the moneys received therefrom, may be handled jointly by one set of agents, at one line of freight depots, agreeing thát the receipts for the same'may be equitably divided, accordingly as the parlies furnish the train service, the stations, and pay the agents for handling the business. It is another means of economy, which is the connecting thread, running clear through the contract. But whether the plaintiff does its own local business, or agrees with the defendants on a convenient and equitable mode of doing it jointly, it all the time has the right to do it, or the right to an equitable division of the receipts — the one or the other — because it'pays the stipulated compensation for the use of the road.
It is misconstruing this provision to conclude from it that the right to do a through business was to be paid for by the annual rental, and the right to do a local business was to be paid for by a division of the receipts therefrom. The receipts pay for doing the business, not for the right to do it, over the line. The annual rental pays for the right to do both kinds of business, through and local.
The argument, therefore, that the side-tracks are not included in the contract, because the right to use them is not paid for by the compensation stipulated for in the agreement, falls to the ground.
As was said by the learned judge who decided the case below, article eleven, which grants to the plaintiff the right to use the track to remove its. superstructure free of charge, was not made necessary because the plaintiff's use was limited to any of the tracks, but because it was limited to doing the business of the company as a common carrier.
Confessedly the plaintiff had the right to use all the tracks then existing, for the transaction of its business proper, and none other could be used to remove its superstructure,
We find in the contract no words of limitation and no provisions, or stipulations, which deny or circumscribe the plaintiff's right to use the road of the Dayton & Western Railroad Company, including its main track, all side-tracks constructed, or to be constructed as a part thereof, switches and water stations, between the junction at Dodson and the west bank of the Great Miami river at the city of Dayton, for the legitimate transaction of its business as a common carrier; subordinate only to the defendant's preferential right to the necessary use thereof, for the trasaetion of its business, as a common carrier, as provided in article two of the contract.
The use of the road by the plaintiff, however, is limited to "all the trains required in the prosecution of its business." as is stipulated in the first article of the contract.
It may "use said railway between said points, with the locomotives, cars and trains of the party of the second pari," as is said in the preamble. It has not the right to license other railroad companies, in the prosecution of their own separate business, to run their trains, freight or passenger, scheduled or detoured, over this line for hire, without the consent of the defendant.
It has not the right to receive and discharge freight belonging exclusively to the business of other railroad companies, on the side-tracks of the defendant, in West Dayton, for switching charges, except as it may be authorized by the defendant.
What, of right, it may do over this line, is its own business as a common carrier, according to the general meaning and acceptation of that term.
All is well said by counsel for the plaintiff, in his brief, the test is not whose engines, or whose crews are operating, but whose business is being done on the line. Whatever comes to the plaintiff, under the widest comity between connecting and forwarding lines, and whatever it is required, under the law, to receive from other roads, and carry, is its own business, as much as what it may solicit along the line. But it is not authorized to burden this track, or these side-tracks, with special privileges, granted by it to other roads; and this, because it is itself a licensee.
Nevin, Nevin & KaTbfus, for plaintiff.
Charles Darlington, for defendant.
Accordingly a decree may be entered, enjoining the defendant from in any way interfering with the plaintiff's right to use the track and side-tracks in question, to the extent, in the manner, and for the purpose hereinbefore stated; enjoining the plaintiff from the unauthorized use as herein defined. Each party will pay half the costs.