Court Opinion

ID: 9307249
Source: CourtListenerOpinion
Date Created: 2022-12-02 17:18:04.131443+00
Date Added: 2024-06-11T17:13:58.033924
License: Public Domain

BUTLER, District Judge.
The master was appointed in pursuance of the opinion filed December 18, 1894, to ascertain the value of the property transferred and the amount of its earnings. He has found the value to he $2,552,000, and reports that no estimate of earnings can be made from the data furnished; that “the Pullman Company failed to produce, (though requested to do so,) evidence in its possession which he believes would have enabled him to state an account.” Although both parties filed exceptions, the Transportation Company now seeks a decree for the $2,552,000, with interest from January 1st, 1885, when payment of rent ceased — waiving its claim to earnings, to avoid, (as it asserts,) further delay in obtaining a settlement. The Pullman Company stands on its exceptions, claiming, in substance, first, that it is not accountable for the intangible property, such as contracts with railroads, patent rights, etc.; second, that the valuation is too high; and third, that the rents paid more than compensate for all the property received.
The matter embraced in the first exception is covered by the opinion under which the master was appointed. It is not too late, however, to revive the question and continue the discussion; but we do not desire to add materially to what has been said. The argument drawn from the invalidity of the lease — that this instrument did not transfer this description of property — seems to be fallacious. The lease did not transfer any description of property. It was ineffectual for every purpose. The acts of the parties, however, transferred the property — the intangible as fully and effectually as all other. The counsel say no railway contracts valid “and obligatory in favor of the Pullman Company, upon the railways during the original or the extended life of the Central Company, or during the continuance of any patent rights, original or extended, or for any other period whatever, were’ever received by the Pullman Company. The Central Company had definite contract rights for fixed and long periods of time, and enforceable against the railway companies. The Pullman Company did not acquire those, and the Central Company did not “part with” *217them. The Pullman Company got nothing enforceable upon the railways, either specially or by damages. It acquired at best but a precarious status, terminable and destructible at any moment by the Central Company itself cr by the state. The attempted assignments passed no title, and no legal rights whatever.”
This view was presented with force and earnestness. But the obvious answer is that the Pullman Company got the use and benefit of these-contracts as completely as it did that of all other property named in the lease, operated its cars under them in some instances, in others surrendered them and obtained new contracts, in pursuance of the rights which they secured, and thus acquired complete possession of the Transportation Company’s business, which it still holds and enjoys. It is of no consequence that the railroad companies might have refused recognition of the Pullman Company; they did not. Jake the parties to the lease, they believed it to be valid, treated the Pullman Company as lawful owner of the contracts, and accorded to it all the rights they secured. To say that the Transportation Company might immediately have resumed possession of the contracts and continued the prosecution of its business, signifies nothing material to the circumstances. The same might as justly be said respecting the cars, and other tangible property. It is not true, however, that the possession might have been so resumed. The Pullman Company would not have allowed it; and although the lease might have eventually been declared void, the property and business would have been absorbed in the meantime. Both parties firmly believed the lease to be valid; they were so instructed by eminent counsel, and were therefore justified in the belief. It was not until after the lapse of many years, when the property was irretrievably lost to the Transportation Company, that it had cause to doubt the validity of the lease. It must not therefore be visited with knowledge of the invalidity, and the consequences of such knowledge, until the Pullman Company changed its position and raised the question. To hold otherwise would work manifest injustice, by allowing the latter company, after standing on the least; until it had absorbed the property and business, to turn about and say, we had no right to it, you should not have permitted us to take it, and you therefore have no right to complain.
As respects the second exception, we think the valuation is not unjust to the Pullman Company. The assertion that it includes the value of the Transportation Company’s franchise is not well founded. It is true that the property is valued at its worth to the latter company, in view of the right to use it as the company did. This right the Pullman Company could exercise by virtue of its own franchise, and did not, therefore, need the Transportation Company. The value of the property to the Transportation Company and to the Pullman (Company was, therefore, what the former lost and the latter gained by the transfer. If the latter’s gain was less than the former’s loss, this might be, possibly, the proper measure of compensation. There is no evidence, however, that it was less; the indications are that it was not. If it was less the Pullman Company could have shown it. *218The Transportation Company's franchise was simply rendered valueless by the transfer of its property. Its business was thus lost and its power to establish another destroyed.
As respects the third exception, we think the inference that the earnings were equal to the rent paid, is reasonable, if not unavoidable. If they were not, the Pullman Company, having possession of the evidence, could have shown it. The testimony produced by the Trans-poration Company was quite sufficient to put the burden on the other side. The failure to respond to the master’s request greatly strengthens the inference. It is urged, however, that if the Pullman Company is charged with the property as of 1870, it must be treated thereafter as entitled to the earnings, and be credited with the amount subsequently paid as rent. Of course, if it is treated as owner from that date it could not justly be held accountable for earnings thereafter,, and would be liable only for the value, with interest from that date, subject to the credit stated. But it is not so treated, and cannot be,, because it would not correspond with the facts and would be unjust. The ownership of the property remained in the Transportation Company; the Pullman Company taking possession and holding it for the former, paying a stipulated price for its use up to 1885. The lease under which the parties acted was void, but this did not render the parties acts void. They chose to, and did, treat it as valid, and to the extent that its provisions wrere executed, the court will not interfere, except to prevent manifest injustice. Up to 1885 they were executed; the Pullman Company got and enjoyed the use and paid the stipulated price. Inasmuch, however, as the enjoyment of the use was granted, and the rent was paid therefor, in contemplation of a longer continuance of the arrangement, it was supposed that the rent might fall short of a just compensation for the use, or be in excess of such compensation. This was therefore considered a proper subject of inquiry. It is plain, however, that the parties substantially intended that the use and the rent should balance each other; and, in the absence of proof to the contrary, it should be presumed they did. It was not, therefore, until 1885, when the Pullman Company ceased to pay rent, and repudiated the arrangement, that it became practically responsible for a return of the property, or the payment of its value. Of course, it may be said that such responsibility actually existed from the beginning because the arrangement was unlawful. The parties, however, did not so understand, and treated it as lawful; and to the extent of what they thus did in good faith their acts will not be disturbed. It is too late now to treat the responsibility as existing in 1870, and make settlement accordingly. It would not only be in conflict with the facts, but would work manifest and very great injustice. It would enable the Pullman Company to set up the statute of limitations, as it did before the master; — and, if this failed, then to take the property for less than it agreed to pay and did pay, (interest considered) substantially as compensation for fifteen years of its use. It is the value of the property at the time it should have been returned that the Pullman Company should be charged with.
Inasmuch as this value would be difficult of ascertainment by the *219Transportation Company except by reference to the value in 1870, it was considered proper to direct the inquiry to the latter date. Presumably the value increased; the evidence fully justifies the presumption. If it decreased the Pullman Company could and should have shown it. The master’s valuation in 1870 is therefore to be taken as the value in 1885, when the property should have been returned. The payment of this sum, with interest from January 1, 1885, seems necessary to a just settlement; treating the value of the use and the rents paid prior to that date as balancing each other.
A decree may be prepared accordingly, dismissing the exceptions and confirming the report.