Court Opinion

ID: 8743129
Source: CourtListenerOpinion
Date Created: 2022-11-26 10:56:54.289622+00
Date Added: 2024-06-11T17:00:30.911015
License: Public Domain

LOOHREN, District Judge
(orally). This is an important case,, involving a large amount of property and valuable interests. I should be glad, if I had the time, to take the case under advisement, and examine the contracts carefully, and the evidence, and the cases which have-been referred to by counsel, and those on their briefs which for *247want of time Rave not been referred to in the argument. But the pressure of business upon me is such that 1 cannot, in justice to other matters, give to the case the time I would be glad to give to it. I upiprehend there is less necessity for this, because, on account of the large interests involved, my decision will doubtless be reviewed by judges who will have the t ime to give it more careful consideration. I can say, however, that the case has been carefully and fully argued by counsel, — able counsel on botli sides; and I am, perhaps, as well able io determine it now as I shall be if I give to it íu¡ ¡her time.
The question .is as to which company is at the present time the owner of (lie telegraph system and appliances, including the telegraph rigid of way along the railway of the complainant company in the state oí Minnesota, and westward io the Pacific Coast. And this depends mainly upon the contracts which have been produced in evidence. There is considerable testimony in the case, I judge, from the printed books, which lias not been brought to my attention, very likely because it is deemed immaterial, or that the facts which are proven by the evidence have ceased to be matters of dispute between counsel. The complainant’s rights relate back to {ho rights derived from the land grant act of congress of March 3, 1857, and the act of the legislature of the state of Minnesota incorporating the Minnesota & Pacific Railroad Company, which gave it a part of that land grant. The name of that railroad was subsequently changed to the Bt. Paul & Pacific Railroad Company, and somewhere about the year 1804 the First Division of the Bt. Paul & Pací Ac Company was formed; and through a mortgage made by one of the two last-named companies, and its foreclosure, the title of the railroad company and its franchises passed to the present complainant. These charter provisions gave the railway company not only the power to build and operate a railroad, but also to build and maintain a telegraph along the railway line. The telegraph had become wet] known to he an appliance as necessary for the operation of a railroad and the transaction of railroad business with safety to passengers, and with safety as regards the appliances and rolling; stock of the railroad itself, as any oilier cosist/ruction connected, with a railroad. I have no doubt that the authority to build and operate a railroad would authorize the railroad company to construct a telegraph, to insure safety in its operation, and do any business which would be for the convenience of the public by the use of such telegraph; and it might transmit commercial messages or private messages, and would not be confined simply to railroad business, even if there were no express authority given. The authority to construct and build a telegraph line, expressly given, as in this instance, would include the authority to use it for all purposes that were not, unlawful, and especially for all purposes convenient to the public and to the transaction of business generally. I have no doubt, either, (fiat, under the authority to build and maintain a telegraph, it would have the right to contract with another party or corporation authorized to construct telegraph lines, if it saw fit to do so; and, as far as defendant’s duty to maintain such telegraph is con-*248cpmed, that could he performed by and through another corporation authorized to huild and operate the telegraph.
Now, it appears by the testimony that on September 21, 1863, and before any railroad was built in the state, — at any rate, any railroad of the predecessor of this company (and I think the predecessor of this complainant built the first railroad that was built in the state), — a contract was made between Smith & Simmons and the St. Paul &■ Pacific Railroad Company by which Smith & Simmons agreed to build a telegraph line from St. Paul to Watab, upon terms which are described in that contract. There is no need of referring to all of its provisions. It required the payment of a certain amount per mile by the railroad company, and there was an agreement with reference to the free transportation of material and the persons constructing the telegraph lines, and the free usé of the telegraph by the railroad company to carry messages, and also a grant of the right of way to Smith & Simmons upon the line described; for the uses and purposes of the line of telegraph; and in the eleventh paragraph there is a further provision that as the St. Paul & Pacific Railroad Company shall further extend, construct, and operate its said road, the said 'Smith & Simmons may and shall continue the same line of telegraph along the extended lines of' said road upon the same terms and conditions as thereinbefore mentioned. It seems to me that this is a grant of a perpetual easement or right to establish, construct, and continue in the operation of a line of telegraph along the line specified in the contract, and along such further lines of railroad as shall be constructed by the St. Paul & Pacific Railroad Company, and that it became a vested property right at that time. It is not, perhaps, necessary to refer to the contract that was made Detween Farley, as receiver, and the Northwestern Telegraph Company. It appears that prior to the time of that contract Smith & Simmons, or at least Simmons and persons named therein as successors to Smith, by a somewhat informal writing assumed to transfer all the interest of Smith & Simmons in that contract to the Northwestern Telegraph Company. The Northwestern Company had a line of telegraph, constructed between St. Paul and Watab, or between St. Paul and St. Cloud, prior to the time of the commencement of the foreclosure of the railway company’s mortgage, in which foreclosure Farley was appointed receiver. How much more was then constructed, I do not know, but it extended as far as the railroad was then built. It was stated by Judge Young in his argument that the pleadings in the case admit that all of this construction of telegraph was done, up to July 1, 1882, under the contract called “Contract A,” of October 15, 1879. But it appears that there was this line of telegraph in operation on all extensions of the railroad prior to the contract entered into by Mr. Farley with the Northwestern Telegraph Company on April 16, 1878, which contract has been read in evidence, and was acted upon during the administration of Mr. Farley, during which time a considerable portion of the line was built from some point near Breckenridge to St. Vincent, in order to save the land grant, for reasons explained in the argument. A line of telegraph was also constructed by the Northwestern Company *249at the same time along this new extension of the railway by the receiver, and operated by the Northwestern Company under the Farley contract. It seems to me that the right of way for the telegraph along this extension constructed by Farley was conveyed before to the predecessors of the Northwestern Company in the Smith & Simmons contract, for reasons which I will refer to later.
On October 15,1879, after the formation of the Manitoba Company, the present complainant, a contract was entered into between that company and (he Northwestern Telegraph Company, which then operated and claimed to own the telegraph lines as far as they were constructed, which contract provided the terms on which that operation should be carried on, and in respect to the further expense of construction, and of the maintenance of the lines; and the contract itself assumed to grant the right of way. It says “that said telegraph company shall have the right of way on and along the line of the railroads of (lie said railway company for the construction and use of telegraph lines for commercial business or public uses and business”; and the railway company covenants that it will not transport upon its railroads any men or material for competing lines, except at the usual rales. Although that clause does not employ the technical language that is ordinarily used in a deed of land, or in a grant of any easement of land, still the language used, if fairly interpreted, conveys this easement. It does not fix any future time when it shall go into operation, and, although the words used are in the future tense, still it seems to ine it would take effect immediately, in the nearest instant of the future after it was executed. But that language does not appear to me to be more than a further assurance of the title that the Northwestern Telegraph Company had already obtained through the Smith & Simmons contract. Without reference to whether the right, of way was conveyed in a formal manner in this contract of October 15, 1879, it was conveyed in such a manner as to show that the other party to the contract, the Manitoba Company, which had succeeded to the rights of the St. Paul & Pacific Company, recognized the Northwestern Telegraph Company, as authorized to build, maintain, and operate those lines of telegraph. The grant of the right of way for lines of telegraph by the St. Paul & Pacific Railroad Company to Smith & Simmons by the seventh and eleventh paragraphs of the contract of September 21, 18(33, was a then present and vested grant, covering not only the line then particularly described, but equally the right of way along the railways thereafter to be built by that company. This grant was effective, although the locations in the future would be fixed definitely by the locations of the railroad. All this grant of right of way was prior to the mortgage, and not disturbed by the foreclosure, to which neither Smith & Simmons nor the Northwestern Telegraph Company were parties; and these rights appear to have been recognized by the court and the receiver during the fore-, closure, and by the Manitoba Company immediately afterwards and thenceforward. And while there might have been a right on the part of Smith & Simmons, or whoever represented them, to question the informal transfer to the Northwestern Company, I think, after such a recognition by the Manitoba Company, and expenditures by build*250ing and maintenance of the lines of telegraph by the Northwestern Company, that, as long as no one else questioned the right of the Northwestern Telegraph Company to build and operate these lines, the railroad company could not question its rights.
Afterwards, and while this Contract A, of October 15, 1879, was in operation, the lease was made by the Northwestern Company to the other defendant here, the Western Union Telegraph Company, dated May 7, 1881. Now, that instrument, on its face, purports to be a lease. It does not purport to be a sale of the property. It has all the attributes of a lease. It has a termination. It provides at the end of the term for the return of the property, having at the same time a provision that the property shall be kept up and that the contracts shall be carried out (the contracts being transferred for the purpose of being carried out), and also that the improvements and replacements shall remain during the term of the lease, and the property returned in as good condition at the end of the lease as at the time the demise took effect. It is made upon a valuable consideration, — indeed, a large and ample consideration. When we consider the mortgage which the lessee was required to take care of, as far -as interest upon the bonds was concerned, and the dividends to be paid to the stockholders during the term, and the final' payment of the principal of the mortgage debt, there was a large amount of continued periodical payments to be made upon this lease, with the right of re-entry in case of default. Now, whether the Northwestern Telegraph Company had the right to assign its contracts with the railroad company or not, the lease and the.assignment of the contracts came to the knowledge of the complainant here, the Manitoba Company, and it debit with the Western Union Telegraph Company as entitled to the rights and bound by the obligations of the Northwestern Company. It required the Western Union Telegraph Company, under the contract that it then had with the Northwestern Telegraph Company, to go on and build telegraph lines on the new railroad extensions; and it proceeded to deal with it in all respects as the lessee of that company, or at least as having authority *to manage the constructed lines, and build and manage, as far as new lines were concerned, the lines of telegraph along this railway, as far as the railroad had been built or was being extended. That was the condition of things up to the time when the contract of July 1, 1882, was entered into; and one principal question in the case is, what was the effect of that contract? The claim on the part of the complainant is'that it was substituted instead of the previous contracts, — expressly substituted instead of the contract immediately preceding it, of October 15, 1879, and also, in general terms, instead of all the previous contracts with the telegraph company or any of its predecessors.
What was the effect of that contract, supposing such to be its purport, is one serious question now to be determined. If the effect of the contract of July 1,1882, was to leave the defendant, the telegraph company, without any property or rights at the expiration of the 10 years, it would seem to be a hard contract. It would leave the Western Union Company still saddled with its obligations to the Northwestern Company to pay the accruing interest on the mortgage *251bonds, and the bonds at maturity, and the stipulated dividends to stockholders, and return the leased property to the lessor, with all additions, at the end of the term of Oil years, and comped the Western Union Company during the term of 10 years to build at its own sole cost telegraph lines along all extensions of the railroad, a large amount of which was actually built but a very short time before die expiration of the term, when, according to the claim of the complainant, all the telegraph property would pass immediately to the complainant, by reason of the lapse of these contracts, and of the rights of the telegraph company under them, at the end of the 10 years. But supposing that on July 1, 1882, instead of entering into the contract of that date, the parties had simply, by a writing under seal of the two companies, abrogated all contracts between the parties, and entered into no new or further contract, what would he the condition in which (hat would leave each of these parties in respect to the right: of property in these telegraph lines? Would they Immediately pass to the railroad company, or would the telegraph company remain the owner of the lines? The lines were built by the telegraph company, or by its lessors; and the railroad company had, perhaps, some rights in respect to wires strung by it for its separate use under the contracts. The telegraph lines were built upon the right of way which was granted by the railroad company and its predecessors to ¡he predecessors of the telegraph company. That right of way ⅛ an interest in land. Abrogating the contracts would not be a reconveyance of the title which liad been granted to the telegraph companies. It seems to me that the only effect of such abrogation would be to put an end to the particular stipulations in relation to repairs and to the cosí of cons!rueíion of new telegraph lines, and in relation to the use of the telegraph as between the companies. The railroad would be no longer obliged to carry free the material or the men required for the building of the telegraph lines, or to supply labor in the repair of ¿hem, and the telegraph company would, be no longer obliged to send messages free for the railroad company. ¡None of those executory provisions would remain obligatory after ¡he contract was abrogated. But the abrogation of the contract would not affect the provisions which had been executed, and which had already vested property-rights in the one party or the other. ⅝ that my impression is that it would leave the ownership of the right of way of the telegraph lines in the telegraph companies. It does not matter whether the title would be in the Northwestern Company or the Western Union Company, as there is no contest between those two companies. Besides, Ae Western Union Company could not by any contract affect the property rights of its lessors, the Northwestern Company. It does not seem to me. therefore, that I need consider the effect of the acts of congress with respect to the rights of the railway and telegraph companies, — neither the act of July 24, .18(56, nor any other of the acts of congress referred to on the argument. The case may be disposed of simply upou Ae contracts between the parties themselves.
This contract of July 1, 1882, while it purports to supersede all previous contracts, and cancel especially the contract of October 15, 1879, does not seem to contain any provision that can affect the rights *252of property as they were vested at that time, and before that last contract was entered into. There is no conveyance, and there is no provision that there shall be any change of title or possession at the end of the 10-year term. There is a provision which grants the telegraph company during the existence of that contract for those 10 years an exclusive right of way on, along, and upon or under lines and.bridges of the railway, and on any extensions or branches thereof, during that 10-year term; but that does not seem to be inconsistent with the fact that it had a right of way before, or that its lessor had a right of way not exclusive before. This grant is something additional and not inconsistent with the other, and, as both would be for the benefit of the grantee, it would be presumed that it would retain both of them. There is nowhere in that contract any provision that at the end of 10 years the telegraph company shall abandon the line of telegraph or its use, or turn over the possession of it to the railway company. How, looking at that contract carefully, it seems to me that it only abrogated the operating and executory provisions of the previous contracts; and that must be its only effect, unless it operates as a conveyance of property rights, and that it does not do. There are no words in it from which any such intention can be inferred, nor can it be from anything that appears outside of the contract. When we consider the situation of the parties and their interests, there appears to be nothing either in the language of the contract or in the surrounding circumstances from which that intention can be inferred; and, as I said before, there is no provision that at the end of the term the existing rights of property shall not continue. This particular contract authorizes the building of extensions and the operation of the same by the telegraph company like the telegraph lines before constructed, and as part of the general system of the telegraph company. Considerable changes are made in its provisions from those contained in the previous contracts as to many other matters. This contract gives the railroad company the right to use the entire telegraph system of the Western Union Company, — a system which extends, according to the statement of' counsel, throughout all the states, or, at any rate, far beyond the limits of these telegraph lines that were being built in connection with this railroad. It relieves the railroad company from paying half of the cost or expenses of building the extensions of the lines of telegraph that were to be constructed. So this contract for its term of lfi years, while it contains some conditions that are more favorable to the telegraph company than those contained in the previous contract, leads me to think that the changes are far more considerably in favor of the railroad company than of the telegraph company, and that it contains nothing that can be regarded as a consideration for the giving lip or the abandonment of this valuable property. The facts that under the last contract the telegraph lines were operated substantially as before, while, the entire cost of all new construction was to be borne by the telegraph company, and that the contract contains no language from which thé intention now claimed by the complainant can be inferred, lead me to the conclusion that the telegraph companies still own the telegraph property the same as they did before the contract was made, and have *253the same interests in that property which they had at any prior time, and the railroad company has (he same interests therein which it had before that contract was made, and no greater.
A decree may be drawn to conform with the conclusions indicated. This seems to have been an amicable action, commenced with the consent of all the parties, and for the purpose of determining the rights of the parties; and therefore it is an action in which no costs should be allowed. I think that perhaps I have said enough to enable counsel to draw the proper decree in the case. Its terms, if not agreed to, may be settled upon two days’ DOtiee.