Court Opinion

ID: 8012185
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:59:29.937097+00
Date Added: 2024-06-11T16:36:08.134251
License: Public Domain

ON MOTION FOR REHEARING.
Gantt, P. J.
We have been moved to grant a rehearing herein.
We still adhere to the view originally expressed that the litigated instrument was not a lease but simply (for want of a better expression) “an operating contract.” We attach no importance to the fact, for reasons already given, that the parties to that contract denominated it a lease. Nor is the defendant concluded by the admission in its answer that it was a lease since the admission was accompanied by profert of the instrument on which its admission was based. Such an admission can not “in the smallest degree alter or affect the tenor of such instrument.” This could no more be done than could the jurisdiction of a court be defeated by a failure to deny the charge that no jurisdiction existed. Edmonson v. Phillips, 73 Mo. 57. This principle is also illustrated by that class of cases which hold that where the truth plainly appears on the face of a deed there is no estoppel. Bigelow on Estoppel, [5 Ed.], 361.
And while on the subject of what the instrument really is it may not be altogether inappropriate to recall a saying of Loud Brougham that he remembered a case wherein Lord Eldon referred it in succession to three courts to decide what a particular document was. The court of Kings Bench decided it was a lease in fee; the *199common pleas, that it was a lease in tail; the Exchequer, that it was a lease for years. Whereupon Lord Eldon, when it came back to him, decided for himself that it was no lease at all. Green Bag, April, 1896, p. 181.
Omitting, for the present, further discussion of the character of the instrument, we come to the pith of the motion for rehearing, namely, that this court ought not to hold said instrument a valid operating contract because such an agreement was ultra vires as to the Wabash railroad.
What corporations may lawfully do is summed up in a few words by Judge Thompson in his recent commentaries on the Law of Corporations, volume 4, section 5645, where he says: “In respect of the power of corporations to make contracts, two propositions may be stated: — 1. That they have, by mere implication of law and without any affirmative expression to that effect in their charters or governing statutes, and of course in the absence of express prohibitions, the same power to make and take contracts, within the scope of the purposes of their creation, which natural persons have; 2. That this power, on the other hand, is restricted to the purposes for which the corporation has been created, and can not be lawfully exercised by it for other purposes.”
This statement of the law accords with the general current of authority on this subject.
In Barry v. Merchants Exchange Co., 1 Sandf. Chcy. 280 (loc. cit. 288, 289), a case decided over a half century ago, and elaborately considered, it was said: “Every corporation, as such, has the capacity to take and grant property, and to contract obligations in the same manner as an individual. * * * And every such corporation has power to make all contracts which are necessary and usual in the course of the business it *200transacts, as means to enable it to effect such object, unless expressly prohibited by law, or the provision of its charter.”
This court has frequently announced similar views. Baile v. Ins. Co., 73 Mo. 371; Liebke v. Knapp, 79 Mo. 22; Detweiler v. Breckenkamp, 83 Mo. 45.
As instances of the application of this doctrine, it has been held that a railroad corporation may purchase a tract of land containing gravel in furtherance of a contract between it and a third person whereby the gravel is to be excavated and hauled over its road to a distant place for which it is to receive compensation, and the court decreed specific performance of the contract. Railroad v. Evans, 6 Gray, 25. And, though frequently doubted whether it could be legitimately done, it is now abundantly settled that an implied power exists in a railroad company to contract with another railroad company or other corporation to carry goods or passengers beyond the terminus of its own lines even though the transit be accomplished in whole or in part by water. Railroad v. McCarthy, 96 U. S. 258; Perkins v. Railroad, 47 Me. 573.
Eeciprocal contracts of this nature have not infrequently been recognized by this court. Wiggins Ferry Co. v. Railroad, 73 Mo. 389; Ibid v. Ibid, 128 Mo. 245.
In other cases this court has held a railroad company liable for loss of goods contracted to be transported beyond its own terminus. McCann v. Eddy, 133 Mo. 59.
In Railroad v. Ayres, 140 Ill. 644, in a sentence which embodies the whole decision, it was said: “Without attempting to determine whether, as a general proposition, corporations may contract joint obligations, there can be no doubt, we think, of the power of two or more railway companies, whose railways form a continuous line, to enter into a joint arrangement for *201operating their railways as one ‘line,’ and to become jointly liable for money borrowed to be used in furtherance of the business of such dine.’ ” See, also, Railroad v. Union Steamboat Co., 107 U. S. 98; 5 Thomp. Corp., secs. 5872, 5873.
So, too, where a railroad company was engaged largely in the shipment of cotton it has been ruled to be one of its implied powers to enter into a contract with a steamship company for a specified amount of space on its ships for the shipment of cotton across the ocean to be delivered at specified times at the point of shipment. Railroad v. Shippers’ Compress Co., 83 Va. 272. There are many other cases to the same effect. 5 Thomp. Corp., sections 5872, et seq.
These illustrations serve to show that the vigorous rule announced by counsel, “that a railroad company possesses only the powers specified in its charter and such others as are absolutely necessary to the exercise of those powers,” states the doctrine too broadly and can not be reconciled with current and prevalent modern authorities. On the contrary it would seem from these authorities that in regard to implied powers of corporations such powers, in the absence of express prohibitions, may well be held to result from those specifically granted, provided always they be within the scope and purposes of the creation of the corporation and fall within the reasonable contemplation of the charter. Within these bounds a corporation is no more restricted in the exercise of its implied contractual power than a natural person.
Plaintiff urgently insists that the instrument is a lease because it is the only instrument authorized to be made by one railroad to another by the provisions of section 2568, Revised Statutes, 1889, and therefore it must be a lease.
If this section were the only one to be looked to *202there might be considerable force conceded to this contention on the principle of expressio unius, but section 2588 of the same article and chapter provides that, “all railroad corporations may contract with each other, or with other corporations, in any manner not inconsistent with the scope, object, and purpose of their creation and management.’7
A brief history of this section in its former and in its present condition may be worthy of preservation. In its original legislation on this subject the general assembly only permitted railroad companies to contract with each other for the transportation of persons and property over their respective roads. Laws 1860 [Extra Sess.], p. 27. In 1864 a doubt having been intimated in the Mo. Coal & Oil Co. v. Railroad, 35 Mo. 84, whether a railroad company could contract with a steamboat company whereby the latter could be bound to deliver freight for the former, the legislature soon after said opinion amended the statutes, so as to make it read as it does at present. General Statutes, 1865, page 341, section 32; Revised Statutes, 1879, section 801.
This section in its present shape may well be regarded as conferring the requisite authority to make the “operating contract77 under discussion. In fact that section is simply declaratory of the principle announced in the decisions already cited and quoted. Indeed, section 2588 would seem to expand the result even of the advanced cases because it legitimates any contract between two railway companies “not inconsistent,77 etc., so that under this section the given transaction need not be “absolutely necessary77 nor indeed “‘necessary”. It is only obnoxious when it is found to be inconsistent with the purposes of the creation and management of the corporations.
The previous history of section 2588 both legisla*203tive and judicial would seem to indicate an intention on the part of the state to further and foster transportation of freight and passengers on through lines, and certainly such inter sese arrangements between railway and other transfer 'corporations must greatly tend to the public convenience and prevent delays otherwise incident to travel and transshipment. Under this section the contract between two railway companies may be a lease, or an operating contract, or a temporary permission or parol license, to use and occupy the line of one company to expedite the trains • of another Ibecause of some disaster or accident, or otherwise, provided always that the matter contracted about and the end sought is “not inconsistent” with the purposes for which the railroad is chartered.
In making this contract the Wabash railroad, embarrassed by debt, was providing for the performance by another railroad of those duties for which it was created, duties not only not inconsistent, but duties absolutely imposed upon it. By no word or stipulation did it relieve itself of its obligations to the public, and its contract was in our opinion intrco vires under the express terms of the statute.
In conclusion we have no doubt that the result reached by us in the original opinion is correct and we are fortified in this view by the additional reasons herein given. Accordingly a rehearing is denied.