Court Opinion

ID: 4909487
Source: CourtListenerOpinion
Date Created: 2021-09-09 00:29:57.33089+00
Date Added: 2024-06-11T08:13:20.503008
License: Public Domain

*340Opinion.— All the questions presented by the record arise out of the sustaining of appellee’s general and special exceptions to the appellant’s petition.
Preliminary to the determination of these questions, it may be assumed as settled law that the consolidation of the Indianola Eailroad Company, under the name and style of “ The G-ulf, Western Texas & Pacific Eailway Company,” by virtue of an act of the legislature passed the 4th day of August, 1870, renders the consolidated company liable for all the valid contracts and liabilities of the two companies thus consolidated, Stephenson v. Texas & Pacific R’y Co., 42 Tex., 166; T. & P. R’y Co. v. Murphey, 46 Tex., 360. Was the purported consideration of the contract or bond paid' or furnished by the city of Indianola illegal ?
Our statute then in force -was in effect that the railway company could use any of the publjc streets or alleys without paying compensation therefor, and, in the event of a disagreement between the railway company and corporation, the dispute could be settled by the state engineer or such person as the governor may appoint.
From Paschal’s Digest, articles 4936, 4937 and 4941, it will be observed that the statute does not give the company the right to occupy such streets and alleys as it may select in opposition to the will of the authorities of the town or city. Prior to the execution of the contract under consideration the railway company applied to the city authorities for permission to occupy certain streets and alleys as a road-bed, but this application was refused.
When this was done the company could, under the statute, have had their remedy; but in this dilemma the company preferred to settle the matter by agreement, and compromised with the city rather than risk a designation by the state engineer; that is, the company chose to pay the city for the right of way on the line desired, rather than accept that which might be designated by the state engineer, without compensation having to be made. There is noth*341ing in the law that would prevent the company from making such contracts with respect to its right of way upon the one hand, or the city upon the other, from contracting with regard to its streets and alleys to be used as a road-bed.
It is plainly inferable, from the provisions of the statute cited above, that railway companies and the cities or towns could settle such matter by agreement between themselves, and instead of being prohibited it appears to us that such agreements are authorized by the'spirit of the law. We conclude that the consideration paid and furnished by the city of Indianola .for the contract sued on is not illegal,' and thus the city authorities had power over the subject-matter of the contract.
Appellee insists that the railroad company had no power to make the contract sued on. Upon this point Mr. Pierce, in his work on Railroads, pages 499 to 501, makes use of this language: “Corporations have an implied power to make such contracts as are usual and necessary for carrying into effect the purposes for which they were created.35
The contracts of a corporation are presumed to be within its powers, and the burden of showing its incapacity by the terms of the charter is on the party who denies their validity.
In respect to the question of ultra vires, after a careful examination we conclude that the contract under consideration is not ultra vires as to the railroad company.
Bor do we think this contract is illegal for want of power in the city authorities to make the same. See People v. Kerr, 27 N. Y., 188; In re Boston & Albany R'y Co., 53 N. Y., 574; City of Clinton v. Cedar Rapids & Missouri R. R. Co., 24 Iowa, 455.
This brings us to the consideration of the only remaining question presented by the record, to wit: Is the amount naiped in the bond or contract sued on stipulated damages or a penalty? The authorities generally concur that in construing this class of contracts, as well as all others, the courts are governed by the intention of the parties; such *342intentions generally to be arrived at by a consideration of the language employed and the subject-matter of the contract. Sedgwick on the Measure of Damages, 419; Field on Damages, 136.
Looking to the substance of this contract, without regard to its form, it appears to us to be an alternative agreemént that, in consideration of the consent of the city to the occupancy of its main business streets by the road, the company bound itself to construct the road as named, or in the alternative to pay the city the said sum of §50,000. '
Acting upon the well-settled rules of construction hereinbefore noticed, we have no hesitation in holding that the amount named in the bond is stipulated damages, and recoverable as such, taking the allegations of the petition as true. We conclude that the general and special exceptions to appellant’s petition were erroneously sustained by the court, and that the judgment ought to be reversed and the cause remanded.
¡Reversed and remanded.