Court Opinion

ID: 8801481
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:34:19.613261+00
Date Added: 2024-06-11T17:03:55.237545
License: Public Domain

WALKER, Circuit Judge
(after stating the facts as above). The terms of the motion to dismiss indicate the absence of any intention to question the sufficiency of the bill upon any ground other than its asserted failure to show the legal invalidity of the attacked lease contract, and that the plaintiff is estopped to bring that instrument into question. We shall deal with the controversy as the parties have chosen to present it, confining ourselves to a consideration of the questions raised by the motion to dismiss.
[1] The terms of the lease, and averments in the bill of circumstances attending the making of it, show that the lessee, or his personal representative or authorized assign, was to have the use for the period of 20 years, which at the tenant’s option could be extended to 40 years, of a manufacturing site containing more than five acres, presumably worth $1,000 per acre, the price stated in a stipulation evidencing a contemplated sale and conveyance of it by the lessor to the lessee, and having an annual rental value of $300 or more. The contract does not in terms provide for the payment of any rent. It is suggested that a compliance with certain obligations imposed upon the tenant by the lease is to be regarded as a substitute for money rent. The undertaking of the .lessee to save the lessor, its successors and assigns, harmless from damage, injury, or liability caused or increased by reason of the tenant’s occupancy of the leased premises and use of the spur track, could not have the effect of compensating the lessor to any extent for the use of its manufacturing site. The extent of its operation was to save the lessor from loss occasioned by the tenant’s use of the leased land and of the spur track. A compliance with the lessee’s obligations to furnish, or cause to be furnished, free of expense to the lessor, a lease to a right of way for the spur track where it ran over land not belonging to the lessor, and to allow the lessor to use that track for its own purposes, when this did not interfere with the tenant’s use of it, could not well be mistaken for the equivalent of an annual money rental of- $300 or more for the manufacturing site. The spur track belonged to the *296lessor, was constructed and maintained by it at its own expense, and was partly on its land and partly on another’s. The right of the lessor to use its own track fbr its own purposes only when this did not interfere with the tenant’s unrestricted right to use it is, to. say the least, such a contingent and equivocal benefit that its value must be little, if any, more than nominal, considering the lessor’s outlay involved. Other provisions of the lease make it plain that the parties to it did not understand or intend that a compliance with the lessee’s obligations just mentioned would amount to an agreed reasonable and adequate rental for the leased tract. The right to continue the occupation and use of the leased premises was distinctly made dependent upon the continued operation thereon of the manufacturing plant stipulated for, “or some" other business requiring the receipt and shipment of freight in volume substantially equal to such enterprise,” and upon the continued carrying out in good faith of the stipulation in regard to the routing by way of the lessor’s railway of all shipments of freight made by, to, or on account of the lessee, his heirs ’or assigns.
It cannot be supposed that the lessee would have bound himself by these stipulations if he had considered that a compliance with other obligations imposed upon him and his assigns by the lease amounted to the payment of an adequate rental. The whole tenor of the lease leaves no room for reasonable doubt that the provisions of it looking to the bringing about of a continued preferential treatment of the lessor by the tenant in the matter of the shipment of freight constituted, if not the sole, at any rate the controlling, substantial inducement to the lessor for allowing its land to be occupied and used without the payment of rent. Nor is it to be doubted that to- the extent that the tenant escaped the payment of a reasonable adequate rental there was a deduction from the sum of the tariff rates paid on shipments of freight to and from it over the lessor’s railway. It is apparent, from the terms of the lease and from the averments of circumstances attending the making of it and performance under it, that its failure to provide for the payment of rent was a concession to the lessee; and that this concession or discrimination was in respect of the transportation of property in interstate or foreign commerce by the lessor common carrier is to be inferred from the fact that it was to continue only so long as there was a continuance of shipments of that kind to and from the tenant over the lessor’s railway. The stipulations just referred to stand in the way of regarding the transaction as mérely the furnishing by a landowner of a free site for a manufacturing plant because of’the benefits expected to result from a hoped-for enhancement of property values. Here the right to use the site on the stipulated terms ends when it ceases to be occupied by a shipper of freight over the common carrier donor’s line of railway, or upon the occupant’s failure, when it is reasonably practicable to do so, to continue to route or cause to be routed by way of the donor’s railway all shipments of freight under the occupant’s control, including such shipments as might be routed otherwise.
*297[2] It is made to appear that the lease in question operated to confer a bonus or benefit on the lessee, or his assigns, as a shipper of freight, which the carrier did not and could not confer on other shippers, and had the effect of making the rates paid on shipments controlled by the tenant less than those named in the lessor’s published and filed tariffs. “By section 2 of the act to regulate commerce the carrier is guilty of unjust discrimination, which is prohibited and declared unlawful, if by any rebate or other device it charges one person less for any service rendered in the transportation of property than it does another for a like service. The Elkins Act makes it an offense for any person or corporation to give or receive any rebate, concession, or discrimination in respect to the transportation of property in interstate commerce whereby any such property shall be transported at a rate less than that named in the published tariff, or whereby any other advantage is given or discrimination is practiced.” United States v. Union Stockyard, 226 U. S. 286, 307, 33 Sup. Ct. 83, 89 (57 L. Ed. 226). Averments of facts contained in the bill show that the lease operated to violate the statutory provisions mentioned and summarized in the quotation just made. The conclusion reached that it is invalid, we think, is well supported by authority. United States v. Union Stock Yard, supra; Cleveland, C., C. & St. L. Ry. Co. v. Hirsch, 204 Fed. 849, 123 C. C. A. 145; Louisville & Nashville R. Co. v. Mottley, 219 U. S. 467, 31 Sup. Ct. 265, 55 L. Ed. 297, 34 L. R. A. (N. S.) 671.
[3] It has not been attempted in'argument to support the ground of estoppel stated in the motion to dismiss. A party to a transaction prohibited and penalized by law cannot estop himself from setting up its invalidity. McCutcheon et al. v. Merz Capsule Co., 71 Fed. 787, 19 C. C. A. 108, 31 L. R. A. 415.
In our opinion the bill was not subject to be dismissed on either of the grounds stated in the motion made to that end.
The decree appealed from is reversed.

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