Court Opinion

ID: 7115888
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:32:01.363017+00
Date Added: 2024-06-11T16:13:54.530128
License: Public Domain

Evans, J.
(dissenting) — I think that the decree of the' district court was right, and ought to be affirmed. A dissenting discussion has little purpose to subserve, and I will confine myself to as brief a statement as possible. The printed record before us is prodigious. It contains moré than 2,000 pages. Its consideration has imposed great labor upon each member of the court, and especially upon the writer of the majority opinion. To deal with the details of such record would be impracticable, and I shall aim to avoid them, and to state only what seems to me to be the salient facts and *80features of the case. Neither party to this controversy has been able to exhibit a technical, legal title to the subject of the litigation. Each party asks for equitable relief. To my mind, the record discloses many equities in favor of the defendant, and none in favor of the plaintiff. The effect of the majority opinion is to disturb a status quo and a possession of property which has been recognized and acquiesced in by all parties in interest for a period of nineteen years prior to the time of the commencement of this suit in 1907. It results, also, in transferring from the defendant to the plaintiff a large property built up by the defendant- at its own expense, and worth perhaps hundreds of thousands of dollars, which the plaintiff never supposed that it owned until the defects of defendant’s legal title were accidentally discovered by plaintiff’s attorney. If it was legally acquired by the plaintiff, it was so acquired without its knowledge, and its value did not enter into its contemplation as determining or influencing any consideration to be paid therefor by the plaintiff. The plaintiff claims as assignee and grantee of the Des Moines, Northern & Western Railroad Company. Such grantor was successor to other companies to which reference will be made later.
The plaintiff first acquired a block of the stock of its grantor in 1894. In 1898 it acquired all the stock and bonds of the grantor company, and caused a formal conveyance to be made by such company to itself of its property. Its claim is that the mile of railroad in dispute was a part of the property of such grantor company.
The history essential to a consideration of the ease goes back to about 1881, and involves the affairs of the Wabash Railroad Company. At that time the northern terminal of the Wabash was at Albia. It was proposed by such company to build into Des Moines, and from thence to the northwest. Three subsidiary companies were organized as a part of such plant. One company was organized to build from Albia to Des Moines; a second was organized to build from Des Moines *81to Fonda, and to include in its line a small piece of railroad already constructed between Waukee and Panora; a third was organized to build from Des Moines to Boone. These corporations were all financed by the Wabash Company, and were all constructed by the same construction company. The plat set forth in the majority opinion will be an aid to an understanding of the discussion at this point.
It will be noted from the plat that the Boone and Fonda branches came together at Clive. From Clive to Des Moines was a main line stem, which was used in common by both branches, and its cost and maintenance was apportioned equally between the two companies. The individuals who organized the various companies and conducted their transactions were Polk, Hubbell, Clarkson, Runnels, Gen. Dodge, and James F. How; the latter being the representative of the Wabash Company. Gen. Dodge’s interest appears to have been confined to the Boone line, and much of its cost was advanced by him in the first instance. It was a part of the plan agreed on by all these parties that a terminal company should ultimately be organized to do the terminal business in the city of Des Moines, and to take over so much of the mileage passing through Des Moines as should be necessary for that purpose. In January, 1882, a written contract was entered into by all the parties to that effect. This contract provided for an apportionment of the stock of the terminal company. Such contract, however, fixed the western limit of the proposed terminal company at Sixteenth “street. This would appropriate somewhat less than one mile of the stem between the Des Moines depot and Clive. The terminal company was not in fact organized until December, 1884, and it did not enter into actual operation as a terminal company until 1888. In the meantime the railroad companies had maintained the terminal facilities jointly, apportioning the cost of maintenance. Nearly $400,000 had been expended, and the amount of such expenditure had practically all been advanced by the parent company. The only books kept were kept by the *82parent company, and these are in evidence. The subsidiary companies paid for their respective properties only in the sense that the amount expended for such properties was charged against each company respectively by the parent company. The correspondence between the parties and the accounts kept by the parent company show beyond fair dispute that as early as May, 1882, Sixteenth street was abandoned as the prospective western limit of the terminal property. At that time the parent company opened a terminal account, to which was charged all expenditures within the city limits, which extended to Twenty-eighth street on the west. The Boone and Fonda lines were charged respectively with the construction of the stem from Clive to Des Moines, being five and thirty-eight hundredths miles to the western limit of the city, which was Twenty-eighth street. Neither of these companies paid or were charged with any part of the cost of construction east of Twenty-eighth street. Property was acquired between Sixteenth and Twenty-eighth streets. Some of it was taken in the name of one company, and some in the name of another, and some in the name of How, trustee; but the consideration therefor was all advanced by the parent company, and charged to such terminal account. When the defendant terminal company was put in operation in the latter part of 1887 and the first part of 1888, its financing consisted of issuing its bonds for the exact amount of the cost of its property plus interest and taxes. The amount of expenditure and cost thus provided for included every item of expense incurred in the acquisition and construction of the line between Sixteenth and Twenty-eighth streets, being the section of the road now in controversy. The terminal company leased to the railway companies the use of its terminal property for a rental based in part upon the interest charges accruing against the company through its outstanding bonds.
The issuance of the bonds of the terminal company for the amount of all expenditures within the city limits was done *83in pursuance of certain mutual resolutions between the subsidiary companies on the one hand and the terminal company on the other. These bore date November, 1887. I set forth one of such resolutions as sufficiently illustrative of all.
To the Des Moines Union Railway Company:
This is to notify you that the board of directors of the Des Moines Northwestern Railway Company, at its meeting held in Des Moines, Iowa, November 8, 1887, did pass the following two resolutions, to wit:
No. 1. Yihereas, James F. How has, prior to 1881 and since then, purchased certain property, and made expenditures on the same, as trustee for this company, the money expended for said property being furnished by the Wabash, St. Louis & Pacific Railway Company; and whereas, under an agreement between this company and the Wabash, St. Louis & Pacific Company and others, it was intended that said property, standing in the name of James F. How, trustee, should be transferred to the Des Moines Union Railway Company under certain conditions: It is hereby resolved, that James F. How is requested by this company to transfer to the Des Moines. Union Railway Company the property referred to above, so purchased, on receiving from said company a stipulation that as soon as practicable after the transfer said Union Railway Company is to deliver to him first mortgage bonds of that company to the amount of the money advanced for the payment of said property and improvements, with interest on same and taxes paid thereon, and also one-half the stock of the Des Moines Union Railway Company, said bonds and stock to be transferred by said How to the purchasing committee of the Wabash, St. Louis & Pacific Railway Company, or their successors or assigns, in lieu for the money advanced by said company to make the purchase of above property and improvements and the payment of taxes for this company.
No. 2. Whereas, Granville M. Dodge has, prior to 1881 and since, purchased certain property and made expenditures on the same, as trustee for this company, the money expended for said property being furnished by said Dodge; and whereas, under an agreement between this company and the Wabash, St. Louis & Pacific Railway Company and others, it was intended that said property, standing in the name of Granville M. Dodge, trustee, and Granville M. Dodge, individually, *84should be transferred to the Des Moines Union Railway Company, under certain conditions: It is hereby resolved, that Granville M. Dodge is requested by this company to transfer to the Des Moines Union Railway Company the property referred to above, so purchased, on receiving from said company a stipulation that as soon as practicable said Union Railway Company is to deliver to him first mortgage bonds of that company to the amount of money advanced by him for the payment of said property and improvements, with interest and taxes on the same, and also one-fourth of the capital stock of the Des Moines Union Railway Company.
In response to the resolutions of the three companies, the terminal company adopted the following resolution:
Thereupon it is resolved that, on receipt from the Des Moines & Northwestern Railway Company, and the St. Louis, Des Moines & Northern Railway Company, and the Des Moines & St. Louis Railway Company, and from James F. How, trustee, and G. M. Dodge, of deeds to this company of the property standing in their name in the city of Des Moines, that the officers of this company be authorized to issue to said James F. How and G. M. Dodge, respectively, an agreement to deliver to them, as soon as prepared, bonds for the amount of money, with interest and taxes added, which will be shown by them at that time to have been expended by or through them for or on the property referred to, the agreement for the delivery of bonds to be turned over to James F. How, trustee, to state that the same are for the benefit of the purchasing committee of the Wabash, St. Louis & Pacific Railway Company, also that the agreement issued by the officers of this company shall state that certificates can be prepared, and the officers of the company will issue to the St. Louis, Des Moines & Northern Railway Company certificates for one-fourth of the stock of the company, and' to James F. How, trustee, to be delivered to the purchasing committee of the Wabash, St. Louis & Pacific Railway Company, certificates for three-fourths of the stock of the company. Resolved, that the officers of the company, on receipt of deeds referred to in the foregoing resolution, shall place the same on record, and prepare mortgages upon all the property of this company then owned or to be hereafter acquired, to secure not to exceed eight hundred thousand *85dollars of bonds, principal and interest payable in gold, to be issued by this company, said bonds to be for one thousand dollars each, dated November 1, 1887, and falling due fifty years from date, and bearing interest at the rate of 5 per cent, per annum, payable semi-annually. Resolved that the officers of this company be authorized, on the execution of said mortgage, to cause to be prepared and executed bonds in conformity with the same, the amount required to be used in payment for the property, as provided in the foregoing resolution.
In pursuance hereof, the terminal company paid, as already indicated, the entire expenditures ' within the city limits.
From such time forth all the individuals interested in the various companies considered the property of the terminal company as extending west to the then city limits at Twenty-eighth street. All future business was done upon that basis, including the fixing of the rate of rentals to be paid by the different companies. No fraud was possible at this point for two reasons: (1) Because it is not claimed that the property thus taken over had any greater value than its cost; and (2) the subsidiary companies owned the stock of the terminal company in substantially the same proportions as they owned the property which they turned over to it. To put it in another way, before the terminal company was organized and in operation, the property was already in existence and in control of the various companies. The owners of the property organized the terminal company. Such owners had already used the terminal property as such for several years, and their main switch yard, as they- used it jointly, had already extended west of Sixteenth street before the terminal company began its operations.
II. The Chicago, Milwaukee & St. Paul Railway Company, the plaintiff and appellant herein, acquired its first interest, if any, in the subject of this litigation in 1894. As an inducement to favorable traffic arrangements, it received as a donation 40 per cent, of the Des Moines & Northwestern *86Railroad Company, which represented consolidation of the Boone and Fonda companies hereinbefore referred to. Its business was conducted at that time, and since on its behalf, by its president, Roswell Miller. The Des Moines & Northwestern Railroad Company owned at that time one-fourth of the stock of the terminal company. Roswell Miller learned at that time that the Des Moines & Northwestern Railroad Company only claimed to own its mileage as- extending from Twenty-eighth street west, and learned, also, that the terminal company was claiming to own up to Twenty-eighth street. In 1898 the plaintiff acquired all the stock and bonds of the Des Moines & Northwestern Railroad Company, and caused a formal transfer to be made to itself by such company of all its property. From 1894 to 1898 more than twenty letters passed between Miller on the one hand and Hubbell, as representing the terminal company, on the other. Sufficient of these letters are set forth in the majority opinion to show that Miller understood that the terminal company's property extended to Twenty-eighth street. He so wrote distinctly in one of his letters. The letters of Hub-bell were explicit on the same point. The deed executed to the plaintiff by the Des Moines & Northwestern Railroad Company was formulated by Miller and his counsel, and it specifically described the line of the granting company as terminating at Twenty-eighth street. This was in accord with Miller’s understanding since 1894, when he received for his company the first gift of stock. This was his understanding when he acquired for his company the rest of the stock and the bonds of the Des Moines & Northwestern. It was upon this understanding that he agreed upon the consideration to be paid, and upon this understanding he paid such consideration. For nine years thereafter he acquiesced in it before the bringing of this suit. In the meantime large expenses were incurred by the terminal company in the development of its property.
If the claim qf the officials of the terminal company to *87the property in dispute was in good faith, and if in such good faith they expended large sums of money in the improvement of the property, with the knowledge and acquiescence of the plaintiff, there can be no doubt, I take it, but that the plaintiff would be estopped from maintaining its present suit. This point is disposed of by the majority, with the suggestion that the claim of ownership was in bad faith, because the officials knew that they were without legal title.
This suggestion seems to me somewhat to beg the question. I apprehend that the officials of the defendant company will not be conscious of the knowledge thus imputed to them until the filing of the prevailing opinion herein. This suggestion of bad faith is aided by another suggestion that Roswell Miller, president of the plaintiff company, was wanting in vigilance in failing to discover the extent of his purchase in 1898. It was only necessary for him, in the protection of his company, to limit the purchase price to the dimensions of the property he supposed he was purchasing, and this is exactly what he did. By his purchase he acquired one-fourth' of the stock of the terminal company as a part of the property of the granting company.
Whatever defects of method may appear in the making of transfers, I see no room to claim on the record that there was any bad faith on the part of the officials of the terminal company in claiming its property as extending to Twenty-eighth street. It so reported- its mileage to the executive council prior to 1898 and ever since. And consistent therewith was the report of the consolidated company, which reported its mileage only as extending from Twenty-eighth street. Since 1898 the plaintiff has operated its trains over the disputed section of road under lease from the terminal company. For ten years prior to 1898 its grantor and its predecessors did likewise. No complaint or claim of fraud was ever made by any party in interest until the beginning of this suit in 1907. I incline to the view that the terminal company has exercised the open, notorious, and exclusive *88dominion over the disputed section of the road for more than ten years prior to the beginning of this suit, and that the pleas of limitations and laches are good. But what seems clear to me is that the possession and claim of the defendant company have been without fraud or bad faith, and that the plea of estoppel is well taken.