United States v. Union Pacific Ry. Co.
160 U.S. 1 (1895)

Annotate this Case

U.S. Supreme Court

United States v. Union Pacific Ry. Co., 160 U.S. 1 (1895)

United States v. Union Pacific Railway Company

No. 334

Argued October 18, 1894

Decided November 18, 1895

160 U.S. 1

APPEAL FROM THE CIRCUIT COURT OF

APPEALS FOR THE EIGHTH CIRCUIT

Syllabus

The objects which Congress sought to accomplish by the Act of July 1, 1862, c. 120, 12 Stat. 489, granting a subsidy to aid in the construction of both a railroad and a telegraph line from the Missouri River to the Pacific Ocean, and by the Act of July 2, 1864, c. 216, 13 Stat. 356, amendatory thereof, were the construction, the maintenance, and the operation of both a railroad and a telegraph line between those two points; the governmental aid was extended for the purpose of accomplishing all these important results, and there is nothing in subsequent legislation to indicate a change of this purpose.

The provisions in those acts permitting the railroad company to arrange with certain telegraph companies for placing their lines upon and along the route of the railroad and its branches did not affect the authority of Congress, under its reserved power, to require the maintenance and operation by the railroad company itself, through its own officers and employees, of a telegraph line over and along its main line and branches.

Page 160 U. S. 2

An arrangement between the railroad company and the telegraph company, such as was permitted by the 19th section of the Act of July 1, 1862, and by the fourth section of the Act of July 2, 1864, c. 220, known as the Idaho Act, could have no other effect than to relieve the railroad company from any present duty itself to construct a telegraph line to be used under the franchises granted and for the purposes indicated by Congress. No arrangement of the character indicated by Congress could have been made except in view of the possibility of the exercise by Congress of the power reserved to add to, or amend the act that permitted such arrangement.

It was not competent for Congress under its reserved power to add to, alter, or amend these acts to impose upon the railroad company duties wholly foreign to the objects for which it was created or for which governmental aid was given, nor, by any alteration or amendment of those acts, destroy rights actually vested, nor disturb transactions fully consummated. With the policy of such legislation the courts have noting to do.

The provision in the Act of August 7, 1888, c. 772, 26 Stat. 382, requiring all railroad and telegraph companies to which the United States have granted subsidies to

"forthwith and henceforward, by and through their own respective corporate officers and employees, maintain and operate, for railroad, governmental, commercial and all other purposes, telegraph lines, and exercise by themselves alone all the telegraph franchises conferred upon them and obligations assumed by them under the acts making the grants,"

is a valid exercise of the power reserved by Congress.

Since the passage of the Act of July 24, 1866, c. 230, the provisions of which were embodied in the Revised Statutes Title LXV, Telegraphs, no railroad company operating a post road of the United States, over which interstate commerce is carried on, can bind itself, by agreement, to exclude from its roadway any telegraph company, incorporated under the laws of a state, that has accepted the provisions of that act and desires to use such roadway for its line in such manner as will not interfere with the ordinary travel thereon.

The agreement of October 1, 1866, between the Union Pacific Railway Company, Eastern Division, and the Western Union Telegraph Company gave the telegraph company the absolute control of all telegraphic business on the routes of the railway company, and consequently tended to make the Act of July 24, 1866, c. 230, 14 Stat. 221, ineffectual and was hostile to the object contemplated by Congress; and, being thus in its essential provisions invalid, it was not binding upon the railway company.

The agreements of September 1, 1869, and December 14, 1871, between the Union Pacific Railroad Company and the Atlantic and Pacific Telegraph Company were void.

The agreement of July 1, 1887, between the Union Pacific Railway Company and the Western Union Telegraph Company is illegal not only to the extent it assumes to give to the telegraph company exclusive rights and advantages in respect of the use of the way of the railroad company for

Page 160 U. S. 3

telegraph purposes, but also because, in effect, it transfers to the telegraph company the telegraphic franchise granted it by the United States, which was not permitted by the acts of Congress defining the obligations of railroad companies that had accepted the bounty of the government. While the United States might proceed by mandamus against the railway company to compel it to perform the duties imposed by its charter, it has the further right, in this suit, to ask the interposition of a court of equity to compel a cancellation of the agreements under which the telegraph company asserts rights inconsistent with the several acts of Congress, and the final decree in such a suit may require the railway company to obey the directions of Congress as given in those acts.

This suit was commenced by the United States in the Circuit Court for the District of Nebraska. A decree was there made giving the plaintiff the relief it asked for. 50 F. 28. An appeal was taken to the Circuit Court of Appeals for the Eighth Circuit, where the decree of the circuit court was reversed. 19. U.S.App. 531. From that decree the United States took this appeal. The case is stated in the opinion of the Court.

MR. JUSTICE HARLAN delivered the opinion of the court.

This suit was brought by the United States against the Union Pacific Railway Company and the Western Union Telegraph Company, under the authority of the Act of Congress of August 7, 1888, 25 Stat. 382, c. 772, supplementary to the Act, commonly known as the "Pacific Railroad Act," of July 1, 1862, 12 Stat. 489, c. 120, and to the Act of July 2, 1864, 13 Stat. 356, c. 216, and other acts amendatory of the act of 1862.

By the first section of the above act of 1888, it is provided that all railroad and telegraph companies to which the United States have granted any subsidy in lands or bonds or loan of

Page 160 U. S. 4

credit for the construction of either railroad or telegraph lines, and which, by the acts incorporating them or by any amendatory or supplementary act, were required to construct, maintain, or operate telegraph lines, and all companies engaged in operating such railroad or telegraph lines

"shall forthwith and henceforward, by and through their own respective corporate officers and employees, maintain and operate for railroad, governmental, commercial, and all other purposes, telegraph lines, and exercise by themselves alone all the telegraph franchises conferred upon them and obligations assumed by them under the acts making the grants as aforesaid."

The second section declares that any telegraph company, having accepted the provisions of Title LXV, Telegraphs, of the Revised Statutes, which should extend its line to any station or office of a telegraph line belonging to anyone of the railroad or telegraph companies referred to in the first section shall have the right and shall be allowed

"to connect with the telegraph line of said railroad or telegraph company to which it is extended at the place where their lines may meet for the prompt and convenient interchange of telegraph business between said companies, and such railroad and telegraph companies, referred to in the first section of this act, shall so operate their respective telegraph lines as to afford equal facilities to all, without discrimination in favor of or against any person, company, or corporation whatever, and shall receive, deliver, and exchange business with connecting telegraph lines on equal terms, and affording equal facilities, and without discrimination for or against anyone of such connecting lines, and such exchange of business shall be on terms just and equitable."

If any railroad or telegraph company referred to in the first section, or any company operating such railroad or telegraph line, refuses or fails, in whole or in part, to maintain and operate a telegraph line as provided in the act of 1888 and the acts to which it is supplementary, "for the use of the government or the public, for commercial and other purposes, without discrimination," or refuses or fails to make or continue such arrangements for the interchange of business with any connecting telegraph company, then, by the third section, application for

Page 160 U. S. 5

relief may be made to the Interstate Commerce Commission, whose duty it shall be to ascertain the facts and prescribe such arrangement as will be proper in the particular case.

The fourth section is in these words:

"In order to secure and preserve to the United States the full value and benefit of its liens upon all the telegraph lines required to be constructed by and lawfully belonging to said railroad and telegraph companies referred to in the first section of this act, and to have the same possessed, used, and operated in conformity with the provisions of this act and of the several acts to which this act is supplementary, it is hereby made the duty of the Attorney General of the United States, by proper proceedings, to prevent any unlawful interference with the rights and equities of the United States under this act and under the acts hereinbefore mentioned and under all acts of Congress relating to such railroads and telegraph lines, and to have legally ascertained and finally adjudicated all alleged rights of all persons and corporations whatever claiming in any manner any control or interest of any kind in any telegraph lines or property, or exclusive rights of way upon the lands of said railroad companies, or any of them, and to have all contracts and provisions of contracts set aside and annulled which have been unlawfully and beyond their powers entered into by said railroad or telegraph companies, or any of them, with any other person, company, or corporation."

The fifth section subjects to fine and imprisonment any officer or agent of a company operating its railroads and telegraph lines who refuses or fails, in such operation and use, to afford and secure equal facilities to the government and the public, or to secure to each of said connecting telegraph lines equal advantages and facilities in the interchange of business, as provided for, without any discrimination whatever for or adverse to the telegraph line of any or either of said connecting companies, or refuses to abide by or perform and carry out within a reasonable time the order or orders of the Interstate Commerce Commission. The party aggrieved may also sue the company whose officer or agent violates the provisions of the act for any damages thereby sustained.

Page 160 U. S. 6

The sixth section makes it the duty of all railroads and telegraph companies to report to the Interstate Commerce Commission in relation to certain matters and to file with that body copies of all contracts and agreements of every description between it and every other person or corporation in reference to the ownership, possession, maintenance, control, use, or operation of any telegraph lines or property over or upon its rights of way.

The defendant, the Union Pacific Railway Company, is a corporation formed by the consolidation, under the authority of the above Acts of Congress of July 1, 1862, 12 Stat. 489, c. 120, and July 2, 1864, 13 Stat. 356, c. 216, of the following companies: the Union Pacific Railroad Company, incorporated by the Act of July 1, 1862; the Kansas Pacific Railway Company, formerly known as the Union Pacific Railway Company, Eastern Division, which latter company succeeded to the rights and powers of the Leavenworth, Pawnee & Western Railroad Company, a Kansas corporation, that accepted the aid provided by the Act of July 1, 1862, and the Denver Pacific Railway & Telegraph Company, a corporation of Colorado.

The present suit proceeds on the ground that the Union Pacific Railway Company is conducting its business under certain contracts and agreements with the Western Union Telegraph Company that are not only repugnant to the provisions of the above act of 1888, but are inconsistent with the rights of the United States and in violation of the obligations imposed upon the railway company by other acts of Congress. The relief asked was a decree annulling those contracts and agreements and compelling the railway company to maintain and operate telegraph lines on its roadways, as required by the act of 1888.

By the final decree of the circuit court, it was adjudged, among other things, that the following agreements be annulled and held for naught:

An agreement of October 1, 1866, between the Union Pacific Railway Company, Eastern Division, and the Western Union Telegraph Company.

Two agreements, one of September 1, 1869, and one of

Page 160 U. S. 7

December 14, 1871, between the Union Pacific Railroad Company and the Atlantic & Pacific Telegraph Company, the rights of the latter company having been acquired, as is claimed, by the Western Union Telegraph Company, and --

An agreement of July 1, 1881, between the Union Pacific Railway Company and the Western Union Telegraph Company. 50 F. 28.

It will be well at this point to refer to the principal parts of the several agreements that were set aside and annulled by the final decree of the circuit court.

By the agreement of October 1, 1866, between the Union Pacific Railway Company, Eastern Division, and the Western Union Telegraph Company, the railway company agreed to pay to the telegraph company the cost of the telegraph poles that had been erected by the latter company along the railroad between Wyandotte and Fort Riley, except for such as have been already furnished and erected by said railway company, and also the cost of the wire and insulators for a telegraph line with one wire, between those points, except for such distance as the railroad company had already provided wires and insulators; to furnish and distribute along their road west of Fort Riley, as fast as the same was completed, suitable poles for a first-class telegraph line, and wires and insulators for a telegraph line with one wire; to supply and distribute suitable telegraph poles, as required from time to time; to repair and renew the line as might be necessary; to transport, free of charge, for the telegraph company, all persons engaged in and material required for the construction, reconstruction, working, repairing, and maintaining said telegraph line, and to furnish a suitable telegraph office in the depot at Wyandotte, Kansas, free of charge, and pay one-half of the salary of the operator in such office, or so much thereof as was necessary to save the telegraph company from loss at that office, such operator to be fully qualified to do the business of the railway company and to be appointed and his salary fixed by the parties to the contract.

The railway company further stipulated

"not to transport any persons engaged in or property intended for the construction or repair of any other line of telegraph along their railway

Page 160 U. S. 8

except at the usual and regular rates charged by said railway company for passengers and freight, nor give permission to nor make any agreement with any other telegraph company to construct or operate any telegraph line upon the lands or roadway of said railway company, without the consent in writing of the telegraph company. The above agreed to by said railway company so far as it has the right to do so."

The telegraph company agreed, upon its part, that it would erect poles, attach the insulators, and string the wire to be furnished or paid for by the railway company, as provided, as fast as each section of twenty miles of railroad was completed; that the first wire should belong to the railway company, and be for their use exclusively after the second wire was put up,

"but no commercial or paid business shall be transmitted by the railway company from any station where the telegraph company shall have an office without the consent of the latter;"

that if the business of the railway company should in its opinion require more than one wire, they might appropriate another wire, upon paying to the telegraph company the cost of such wire on the poles, the telegraph company to attach such other wire for the use of the company; that the business of the railway company of every kind, and the family, private, and social messages of its executive officers, should be transmitted without charge between all telegraph stations on the line of said roadway and between all such stations and St. Louis, and over all other lines in Missouri, Kansas, Colorado, and New Mexico then owned or controlled or which might thereafter be owned or controlled by the telegraph company, provided, so far as said lines in Colorado and New Mexico were concerned, and the road or roads of the Union Pacific Railway Company, Eastern Division, were at the time in process of construction towards Santa Fe or Denver, or both, all such business should be transmitted free of charge over all other lines then or thereafter to be owned or controlled by the telegraph company within the United States, to an amount not exceeding $4,000 per annum, with a rebate of one-half of regular tariff charges for all in excess of that amount; that, until a second wire was put up,

Page 160 U. S. 9

both parties could use the first wire, the business of the railway company having preference, and if either wire was interrupted or required by the United States, both parties might use the other one as far as practicable, but without delay or charge to the railway company; that the telegraph company should furnish all main batteries required for the efficient working of the telegraph line provided for, and keep the line in good working order, without expense to the railway company, except for the materials which the latter had agreed to supply.

Again, that

"the railway company may establish, at their own expense, as many offices as they require, and at all places where the telegraph company has no separate office, the employees of the railway company shall, so long as it may not interfere with the business of said railway company, receive, transmit, and deliver such commercial or paid business as may be offered at the tariff rates of the telegraph company, provided such paid business does not amount to enough to pay the expenses of a separate telegraph office, and shall account for and pay over to the latter, monthly, the amount thereof at such rates, and, concerning such business, all rules, regulations, and orders of the telegraph company applicable thereto shall be observed, but said railway company shall not be amenable in any way to said telegraph company for the acts or operations of said agents otherwise than to remedy the difficulty in future;"

that each party at its own expense, should have the right to add as many lines as its business required; that it would perform without charge for the railway company what should be decided by competent authority to be its telegraph obligations to the government of the United States, and that a telegraph line should be constructed on the road of the railway company from Leavenworth to Lawrence at such time between May 31, 1867, and September 1, 1868, as that company might decide, and upon the same terms and conditions as that west of Fort Riley.

By the agreement of September 1, 1869, between the Atlantic & Pacific Telegraph Company and the Union Pacific Railroad Company, the railroad company, in consideration of 33,000 shares of the stock of the telegraph

Page 160 U. S. 10

company (for an increase of whose stock the agreement made provision), demised and leased to that telegraph company

"all its telegraph line, wires, poles, instruments, offices, and other property by it possessed appertaining to the business of telegraphing, for the purpose of sending messages and doing a general telegraphic business,"

to have and to hold during the whole term of the charter of the telegraph company and any renewals thereof, subject to the rights of the United States, as set forth in the charter of the railroad company, and on condition that the telegraph company should fully perform all duties that were or might be imposed upon the railroad company by its charter or by the laws of the United States.

It was further stipulated in that agreement that the telegraph company should proceed at once, as soon as arrangements were perfected for extending its line to San Francisco, to put two additional wires, fully equipped and furnished, on the poles demised along the whole length of its line, the railroad company to maintain and keep in repair such poles, wires, and equipments at its expense during the period of such demise, until, from age or other cause, they were required to be renewed, in which case the telegraph company should meet the cost of renewal; that the railroad company should at its own expense employ, during a period of twenty-five years, suitable persons to operate said telegraph at its own stations, other than at Omaha and such other stations as required, for the business of both parties, operators in addition to those needed by the railroad company; that the railroad company should have the right, free of expense, to the constant and perpetual use of two of the wires when required for its business, and the free use for its business of the whole line of telegraph, which should then or thereafter belong to or be controlled or operated by the telegraph company, to and from all parts of the United States, for all purposes connected with the management of the road or its business; that the telegraph company should have such preferential privileges and facilities for its business as are usually granted by railroad companies in contracts of connection with telegraph companies, and that the railroad company should

"afford all other telegraph companies

Page 160 U. S. 11

only such facilities as by law they now are or may hereafter be required to afford as common carriers or otherwise, in which shall not be included the privilege of using handcars or of stopping trains except at regular stations, or transporting the officers or servants of such companies, except on regular passenger trains at regular rates of fare, or of transporting material for such companies or persons (other than the parties of the first part), except on regular freight trains, and at the usual rates of freight, unless the facilities aforesaid, or some of them, shall be required by law to be afforded such companies or persons."

These companies entered into a supplementary agreement on the 14th day of December, 1871, by which the original contract was modified in certain particulars that need not be set out, and which provided that, for all the purposes of both the original and supplementary contract, the road of the railroad company

"demised by said original contract shall be deemed and taken to terminate at the junction of the Union Pacific Railroad Company with the Central Pacific Railroad Company, as now established, which junction is at a point about five miles west of Ogden, and all the rights of the parties under said contract and supplement shall be made to conform to this modification."

The agreement between the Western Union Telegraph Company and the Union Pacific Railway Company of July 1, 1881, recites that the former corporation had acquired all of the property, rights, and franchises of the Atlantic & Pacific Telegraph Company, and was in possession of and operating a separate line of poles and wires along the main line of the Union Pacific Railway Company between Omaha and Ogden; that the parties were then, and for some time past had been, operating lines of telegraph along various roads of the railway company under sundry contracts, thirteen in number, including the above agreements of 1866, 1869, and 1871, and made between the railway company or companies formerly in possession of lines of railroad then controlled by and forming part of that company and the Western Union Telegraph Company or other telegraph companies that had become

Page 160 U. S. 12

merged into the latter company, and that it was desirable to terminate existing disputes and embody the agreement of the parties in one new contract in lieu of said existing contract.

The expressed purpose of this agreement was to provide telegraph facilities for the parties, and to maintain and operate the lines of telegraph along all the railway company's roads in the most economical manner in the interest of both parties, as well as to fulfill the obligations of the railway company to the government of the United States and the public in respect to the telegraphic service required by the Act of July 1, 1862, and its amendments.

Among other provisions of the above agreement are the following:

"Third. The railway company, so far as it legally may, hereby grants and agrees to assure to the telegraph company the exclusive right of way on, along, upon, and under the line, lands, and bridges of the railway company and any extensions and branches thereof, for the construction, maintenance, operation, and use of lines of poles and wires, or either of them, or underground or other system of communication for commercial or public uses or business, with the right to put up from time to time, or cause to be put up or constructed, under the provisions of this agreement, such additional wires on its own or the railway company's poles, or such additional lines of poles and wires, or either, as well on its bridges as on its right of way, or to construct such underground lines as the telegraph company may deem expedient, doing as little damage and causing as little inconvenience to the railway company as is practicable, and the railway company will not transport men or material for the construction or operation of a line of poles and wire or wires or underground or other system of communication in competition with the lines of the telegraph company, party hereto, except at and for the railway company's regular local rates, nor will it furnish for any competing line any facilities or assistance that it may lawfully withhold, nor stop its trains, nor distribute material therefor at other than regular stations, provided always that, in protecting and defending the exclusive rights

Page 160 U. S. 13

given by this contract, the telegraph company may use and proceed in the name of the railway company, but shall indemnify and save harmless the railway company from any and all damages, costs, charges, and legal expenses incurred therein or thereby."

"Fourth. It is mutually understood and agreed that all of the telegraph lines and wires covered by this contract, whether belonging to or used by the telegraph company or the railway company for the purpose of this contract, as herein provided, shall form part of the general system of the telegraph company. The railway company further agrees that its employees shall transmit over the lines owned, controlled, or operated by the parties hereto all commercial telegraph business offered at the railway company's offices, and shall account to the telegraph company exclusively for all of such business and the receipts thereon as provided herein. No employee of the railway company shall, while in its service, be employed by or have any connection with any other telegraph company than the telegraph company, party hereto, and the telegraph company shall have the exclusive right to the occupancy of and connection with the railway company's depots or stationhouses for commercial or public telegraph purposes as against any other telegraph company, provided that if any person or party, or any officer of the government, tender a message for transmission over the railway telegraph lines between Council Bluffs and Ogden at any railway telegraph station between those points, and require that the service be rendered by the railway company, the operator to whom the same is tendered shall receive and forward the same, accordingly at rates to be fixed by the railway company, to the point of destination, if not beyond its own lines. If the destination of said message be beyond said railway company's lines, the telegraph company, when receiving the same at the point at which it leaves the said railway lines, may demand the prepayment of tolls for the service of forwarding the message on its own lines, provided however that the local receipts of the railway company on such messages shall be divided between the parties hereto in the same manner and subject to

Page 160 U. S. 14

the same conditions as provided in the tenth clause of this agreement. . . ."

"Sixth. Each party hereto shall pay one-half of the entire cost of all poles, wires, insulators, tools, and other material used for the maintenance, repair, and renewal or reconstruction of existing lines and wires along all of the railway company's railroads, and for the construction, maintenance, repair, and renewal or reconstruction of such additional wires or lines of poles and wires as may be required for commercial or railroad telegraph purposes along said railroads, and along future branches or extensions thereof, and along new railroads constructed or acquired by the railway company, until the total number of wires shall amount to three for the exclusive use of each party hereto between Council Bluffs and Ogden, two for the exclusive use of each party hereto between Kansas City and Denver, and one for the exclusive use of each party hereto on all other portions of the railway company's railroads, branches, and extensions. Each party hereto shall pay the entire cost of the construction, maintenance, repair, and renewal or reconstruction of wires for its exclusive use in excess of the number hereinbefore mentioned, the material of the telegraph company for additional wires to be transported free of charge by the railway company over its own lines, as hereinafter provided. The telegraph company agrees to furnish at its own expense all blanks and stationery for commercial or other public telegraph business and all instruments, main and local batteries, and battery material for the operation of its own and the railway company's wires and offices. . . ."

"Seventh. . . . The telegraph company agrees to furnish, free of charge, for the railroad business of the railway company, a direct wire connecting the railway company's office in Omaha, Nebraska, with its office in Kansas City, Missouri, and with the railway company's offices at intermediate railroad stations of the railway company along the Missouri River, including Council Bluffs, and the telegraph company will receive, transmit, and deliver, free of charge at and from its offices at said intermediate stations of the railway company, such messages on the railroad business of the railway company

Page 160 U. S. 15

as may be offered by its agents and officers for points on the railway company's roads, provided that the telegraph company may use said wire for the transaction of commercial or public telegraph business when not in use for railroad business. . . ."

"Eighth. All messages of the officers and agents of the railway company pertaining to its railroad business may be transmitted free of charge between all telegraph stations on the lines of its various railroads over wires set apart for railroad business. . . . It is understood and agreed that the free telegraphic service herein provided for is for the transmission of messages concerning the operation and business of the railway company's railroads, and shall not be extended to messages ordering sleeping car, parlor car, or steamer berths or other accommodations for customers of the railway company, the tolls on which messages should properly be chargeable to such customers."

"Ninth. The railway company agrees to transport free of charge over its railroads, upon application of the superintendent or other officer of the telegraph company, all officers of the telegraph company when traveling on its business and all employees of the telegraph company when traveling on the telegraph company's business connecting with or pertaining to the lines or wires and offices along any of the railroad company's railroads. And the railroad company further agrees to transport and distribute free of charge along the line of any and all its railroads all poles and other materials for the construction, maintenance, operation, repair, or reconstruction of the lines and wires covered by this agreement, and of such additional wires or lines of poles and wires as may be erected under and in pursuance of the provisions of this agreement; also, all material and supplies for the establishment, maintenance, and operation of the offices along said railroads, it being understood that no charge shall be made for the transportation of poles or other materials over any of the railway company's railroads for use on any other of its railroads."

"Tenth. The telegraph company agrees to supply instruments and local batteries and blanks and stationery for commercial telegraph business, as hereinbefore provided at offices

Page 160 U. S. 16

established and maintained by the railway company. At all telegraph stations of the railway company, its employees shall receive, transmit, and deliver such commercial or public messages as may be offered, and shall render to the telegraph company monthly statements of such business, and full accounts of all receipts therefrom, and the railway company shall cause all of such receipts to be paid over to the telegraph company monthly."

"As compensation to the railway company for the services herein provided for, the telegraph company agrees to pay or return to the railway company monthly one-half of the cash receipts at telegraph stations maintained and operated by and at the expense of the railway company, tolls on ocean cable messages, and tolls for lines of other companies excepted, all of which shall be retained by the telegraph company, it being understood that the railway company shall not be entitled to any portion of the tolls on ocean cable messages or tolls belonging to lines of other companies or to any portion of amounts checked against other offices. . . ."

"The railway company agrees that its employees shall not compete with the telegraph company's offices in the transaction of commercial telegraph business at any point where the telegraph company may now or hereafter have an office separate from the railway company's office, by cutting rates or by active efforts to divert business from the telegraph company. . . ."

"Twelfth. It is further agreed that the management of the wires, the repairs of all the lines along the railway company's railroads, and the distribution of all materials for use on said lines shall be under the supervision and control of a competent superintendent, who shall be appointed and paid jointly by the parties hereto and whose salary shall be fixed by mutual agreement, and said superintendent shall be equally the servant of each of the parties hereto, and shall, as far as practicable, protect and harmonize the interest of both parties hereto in the transaction of the railroad and commercial telegraph business along the railway company's railroads. . . ."

"Thirteenth. The railway company shall have the right to the free use of any telegraphic patent rights or new discoveries or inventions that the telegraph company now owns

Page 160 U. S. 17

and uses in its general telegraph business or which it may hereafter own and use as aforesaid so far as the same may be necessary to properly carry on the business of railroad telegraphing on the line of said railroads as provided for herein."

"Fourteenth. The telegraph company hereby promises and agrees to assume and protect the railway company from the payment of all taxes levied and assessed upon the telegraph property belonging to either of the parties to this agreement."

"Fifteenth. The provisions of this agreement shall extend to all railroads and branches or extensions thereof now or hereafter owned or controlled by the railroad company, provided, however, that in case the railway company shall hereafter acquire the ownership or control of any railroad upon which the telegraph company may already have a line of telegraph in operation, the provisions of this contract shall not apply to such railroad and telegraph line without the mutual consent of the parties hereto at the time of such acquisition."

The contract of 1881 was, by its terms, to continue in force for twenty-five years, and existing contracts with other companies, and in respect to other roads, were to be deemed superseded so long as the last contract was fully observed on the part of the railway company, but to be again in force, for the protection of the Western Union Telegraph Company, in case this contract should not be kept in good faith by the railroad company for the full term of twenty-five years.

By the decree of the circuit court, it was further adjudged that the Union Pacific Railway Company

"at once put an end to all relations between it and the defendant the Western Union Telegraph Company not equally allowed to all other persons or corporations operating, owning, or using the telegraph as a means of communication, and also at once resume possession of its offices, poles, wires, instruments, and all its other property belonging or appertaining to the business of telegraphy along such of its main and branch lines as were aided by the government under the Act of July 1, 1862, and acts amendatory and supplemental thereto, and henceforth, by and through its own corporate officers and employees, maintain and operate, for railroad, governmental, commercial, and

Page 160 U. S. 18

other purposes such telegraph lines and instruments, and in all ways exercise by itself alone all the telegraph franchises conferred upon it and obligations assumed by it under the several acts granting subsidies in land or bonds or loan of credit to it and to its constituent companies, or the acts amendatory of or supplemental thereto, and in all cases where the said defendant company has not now adequate facilities to enable it to thus conduct the telegraph business and afford equal facilities to all without discrimination in favor of or against any person, company, or corporation whatever, and to receive, deliver, and exchange business with connecting telegraph lines and all companies desiring to make such connections on equal terms and afford equal facilities to all, and without discrimination for or against anyone of such connecting lines, and upon just and equitable terms (all of which said defendant is required and directed to at once proceed to do), then said defendant shall at once construct and provide such facilities as are necessary to carry out the provisions of this decree and the several acts of Congress creating or aiding said defendant company or its constituent parts and all acts amendatory and supplemental thereto."

It was further adjudged that the Western Union Telegraph Company

"at once vacate all the offices of said railway company without interference or damage to the same, and without removing, until the further order of this court, any property therefrom or from the line of said railway company which has heretofore been jointly used by the two companies, or the ownership of which is in dispute or is so connected with or mixed with the property of the railway company as to make it difficult of identification, or the removal of which will interrupt or interfere with the discharge of the duties of the defendant railway company, as herein set forth and enjoined,"

this decree, however, not to be construed as preventing the railroad company from leasing to the telegraph company

"the right to occupy with its wires, instruments, batteries, and operators, upon reasonable and proper terms, any of its poles along the right of way and space in the depots or stations of the said the Union Pacific Railway Company not required by the railway company for the transaction of its business. "

Page 160 U. S. 19

Sixty days after the entry of the decree were given to make such necessary arrangements, adjustments, and changes as might become necessary by reason of the annulling the above agreements, and in order that the provisions of the decree might be carried into effect. And the right was reserved to the telegraph company to apply for and have stated an account between the defendants in respect of the value of the telegraph property along the line of the railway company, the cost of maintenance and profits of the telegraph lines, the amounts contributed thereto by the respective defendants or their assignors or predecessors in title, and all matters affecting the equities of the defendants, the United States to have the right to intervene on such accounting for the protection of its interests and those of the public. 50 F. 28.

Upon appeal by the defendants to the United States circuit court of appeals, the decree of the circuit court was reversed and the cause remanded with directions to enter a modified decree adjudging, among other things, that the agreement of October 1, 1866, was a lawful and binding contract, and continued in force until it was superseded by the agreement of July 1, 1881; that the agreements of September 1, 1869, and December 14, 1871, were beyond the powers of the Union Pacific Railroad Company, and must be annulled; that the equities arising out of the two last-named agreements were adjusted and settled by the parties interested when they made the contract of July 1, 1881, and that the last-named agreement was valid and binding in all respects except that the third and fourth paragraphs were null and void to the extent, and only to the extent, that they secured or granted or were intended to secure and grant to the Western Union Telegraph Company any exclusive rights, privileges, or advantages whatsoever. 59 F. 813.

Before examining the provisions of the agreements that were annulled by the decree of the circuit court, it is necessary to ascertain the nature and extent of the obligations imposed upon the Union Pacific Railroad Company and the other constituent companies of the Union Pacific Railway

Page 160 U. S. 20

Company in respect of the construction, maintenance, and operation of telegraph lines along the routes of their respective roads. If it be found that the Union Pacific Railway Company, in the exercise of the rights and powers of its constituent companies, was not, prior to the passage of the Act of August 7, 1888, under any legal duty, in addition to the construction of a railroad on the routes prescribed, to maintain or operate telegraph lines on or along its roadways, the question will arise whether it was competent for Congress to require that company, through its own officers and employees exclusively, to maintain or operate telegraph lines on or over its roadways, to be used for railroad, governmental, commercial, and other purposes, and itself alone exercise the telegraph franchises conferred by the acts of Congress.

The Union Pacific Railroad Company was created by the above act of Congress of July 1, 1862, 12 Stat. 489, c. 120. Its title indicated that the subsidy granted was to aid in the construction of both a railroad and telegraph line from the Missouri River to the Pacific Ocean, and to secure to the government the use of the same for postal, military, and other purposes.

Proceeding under that act, the company began in 1865, and in 1869 completed, the construction of a railroad from Omaha to Ogden, making connection at the latter place with the Central Pacific Railway, extending from Ogden to San Francisco. It also constructed, on the north side of its right of way, a telegraph line between Omaha and Ogden.

By the first section of the above Act of July 1, 1862, the Union Pacific Railroad Company was authorized and empowered "to lay out, locate, construct, furnish, maintain, and enjoy a continuous railroad and telegraph" from a named point in the then Territory of Nebraska to the western boundary of Nevada territory; by the second section, a right of way through the public lands was given "for the construction of said railroad and telegraph line;" by the third section, a grant of public lands was made "for the purpose of aiding in the construction of said railroad and telegraph line;" by the fourth section, patents for lands granted were to be issued

Page 160 U. S. 21

upon the certificate of commissioners appointed by the President, when it appeared that forty consecutive miles of the "railroad and telegraph line" had been completed and equipped in all respects as required, and were ready for the service contemplated by the act; by the fifth section, provision was made for issuing to the company bonds of the United States that should constitute a first mortgage on the whole line of "the railroad and telegraph, together with the rolling stock," such bonds to be issued when the commissioners certified to the completion and equipment of forty consecutive miles of "railroad and telegraph," in accordance with the provisions of the act; by the sixth section, the grants of lands were declared to be made

"upon condition that said company shall pay said bonds at maturity, and shall keep said railroad and telegraph line in repair and use, and shall at all times transmit dispatches over said telegraph line,"

etc.; by the seventh section, the company was required, within one year after the passage of the act, to file its assent to its provisions, and complete said "railroad and telegraph" from the point of beginning, as provided, to the western boundary of Nevada Territory, before the first day of July, 1874; and, by the eighth section, "the line of said railroad and telegraph" was prescribed.

The ninth section authorized the Leavenworth, Pawnee & Western Railroad Company (which, prior to January 1, 1862, had located its line of road from Leavenworth to Fort Riley) to construct a railroad and telegraph line from the Missouri River at the mouth of the Kansas River, on the south side thereof, so as to connect with the Pacific Railroad of Missouri at the aforesaid point, on the hundredth meridian of longitude west of Greenwich, upon "the same terms and conditions in all respects" as were provided in the act for the construction of the railroad and telegraph line first mentioned, and to meet and connect with the same at the meridian of longitude named. The same section authorized the Central Pacific Railroad Company, a California corporation, to construct "a railroad and telegraph line" from the Pacific coast at or near San Francisco or the navigable waters of the Sacramento River, to the eastern boundary of that state,

"upon the same

Page 160 U. S. 22

terms and conditions in all respects as are contained in this act for the construction of said railroad and telegraph line first mentioned, and to meet and connect with the first-mentioned railroad and telegraph line on the eastern boundary of California."

The tenth section authorized the Kansas and California companies, or either of them, after completing their roads, to unite upon equal terms with the first-named company in constructing so much of said "railroad and telegraph line and branch railroads and telegraph lines" in the act mentioned, through the territories from the State of California to the Missouri River, as shall then remain to be constructed, on the same terms and conditions as provided in relation to the said Union Pacific Railroad Company. And the Hannibal and St. Joseph Railroad, the Pacific Railroad Company of Missouri, and the first-named company, or either of them, on filing their assent to the act, were authorized to unite upon equal terms with the said Kansas company in constructing said railroad and telegraph, to said meridian of longitude, with the consent of the said State of Kansas,

"and, in case said first-named company shall complete its line to the eastern boundary of California before it is completed across said state by the Central Pacific Railroad Company of California, said first-named company is hereby authorized to continue in constructing the same through California, with the consent of said state, upon the terms mentioned in this act, until said roads shall meet and connect, and the whole line of said railroad and telegraph is completed, and the Central Pacific Railroad Company of California, after completing its road across said state, is authorized to continue the construction of said railroad and telegraph through the territories of the United States to the Missouri River, including the branch roads specified in this act, upon the routes hereinbefore and hereinafter indicated, on the terms and conditions provided in this act in relation to the said Union Pacific Railroad Company, until said roads shall meet and connect, and the whole line of said railroad and branches and telegraph is completed."

By the eleventh section, it was provided, in respect of bonds

Page 160 U. S. 23

issued in aid of the construction of the most mountainous and difficult parts of the road, that "no more than fifty thousand of said bonds shall be issued under this act to aid in constructing the main line of said railroad and telegraph;" by the twelfth section, that

"the whole line of said railroad and branches and telegraph shall be operated and used for all purposes of communication, travel, and transportation, so far as the public and government are concerned, as one connected, continuous line;"

and by the fourteenth section that the Union Pacific Railroad Company should construct a single line of railroad and telegraph from the western boundary of Iowa at a point to be designated by the President, so as to form a connection with that company's line on the said hundredth meridian of longitude upon the same terms and conditions prescribed "for the construction of said railroad and telegraph first mentioned," and, whenever a railroad was constructed through Minnesota or Iowa to Sioux City, then the above company should construct a railroad and telegraph line from Sioux City to connect with the Union Pacific Railroad.

The fifteenth section declared that any company then or thereafter incorporated should have the right to connect its road with the road and branches provided by the act at such places and upon such terms as the President might prescribe. But by an Act of Congress passed June 20, 1874, 18 Stat. 111, c. 331, the following addition was made to this section of the Act of July 1, 1862, 12 Stat. 489, 496, c. 120:

"And any officer or agent of the companies authorized to construct the aforesaid roads, or of any company engaged in operating either of said roads, who shall refuse to operate and use the road or telegraph under his control, or which he is engaged in operating for all purposes of communication, travel, and transportation, so far as the public and the government are concerned, as one continuous line, or shall refuse, in such operation and use, to afford and secure to each of said roads equal advantages and facilities as to rates, time, or transportation, without any discrimination of any kind in favor of, or adverse to, the road or business of any or either of said companies, shall be deemed guilty of a misdemeanor, and, upon conviction thereof,

Page 160 U. S. 24

shall be fined in any sum not exceeding one thousand dollars, and may be imprisoned not less than six months, . . . and it is hereby provided that for all the purposes of said act and of the acts amendatory thereof, the railway of the Denver Pacific Railway and Telegraph Company shall be deemed and taken to be a part and extension of the road of the Kansas Pacific Railroad to the point of junction thereof with the road of the Union Pacific Railroad Company at Cheyenne, as provided in the Act of March third, eighteen hundred and sixty-nine."

The sixteenth section of the act of 1862 further provided that all of the railroad companies mentioned in the act, or any two or more of them, might form themselves into one consolidated company, the latter company to proceed thereafter "to construct said railroad and branches and telegraph line upon the terms and conditions provided in this act." The seventeenth section provided that in case said company or companies failed to comply with the terms and conditions of the act

"by not completing the said road and telegraph and branches within a reasonable time, or by not keeping the same in repair and use, but shall permit the same, for an unreasonable time, to remain unfinished, or out of repair, and unfit for use, Congress may pass any act to insure the speedy completion of said road and branches, or put the same in repair and use, and may direct the income of said railroad and telegraph line to be thereafter devoted to the use of the United States, to repay all such expenditures caused by the default and neglect of such company or companies."

The eighteenth section provided that whenever it appeared that "the net earnings of the entire road and telegraph," including the amount allowed for services rendered for the United States, after deducting all expenditures, including repairs, and the furnishing, running, and managing of said road, shall exceed ten percentum upon its cost, exclusive of the five percentum to the United States, Congress could reduce the rates of fare thereon, if unreasonable in amount, and fix and establish the same by law. And

"the better to accomplish the object of this act, namely, to promote the public interest and welfare by the construction of said railroad and

Page 160 U. S. 25

telegraph line, and keeping the same in working order, and to secure to the government at all times (but particularly in time of war) the use and benefits of the same for postal, military, and other purposes, Congress may at any time, having due regard for the rights of said companies named herein, add to, alter, amend, or repeal this act."

The Act of July 1, 1862, was amended, in various particulars, by the Act of July 2, 1864, c. 216. 13 Stat. 356. By the tenth section of the latter act, the former was so amended that the Union Pacific Railroad Company, the Central Pacific Railroad Company, and other companies authorized to participate in the construction of the proposed lines of road, could

"issue their first mortgage bonds on their respective railroad and telegraph lines to an amount not exceeding the amount of the bonds of the United States,"

and

"the lien of the United States shall be subordinate to that of the bonds of any or either of said companies, hereby authorized to be issued on their respective roads, property, and equipments,"

except as to those provisions of the act of 1862 relating to the transmission of dispatches, and the transportation of mails, troops, munitions of war, supplies, and public stores of the United States.

Section fifteen of the same act was in these words:

"That the several companies authorized to construct the aforesaid roads are hereby required to operate and use said roads and telegraph for all purposes of communication, travel, and transportation, so far as the public and the government are concerned, as one continuous line, and, in such operation and use, to afford and secure to each equal advantages and facilities as to rates, time, and transportation, without any discrimination of any kind in favor of the road or business of any or either of said companies, or adverse to the road or business of any or either of the others, and it shall not be lawful for the proprietors of any line of telegraph, authorized by this act, or the act amended by this act to refuse, or fail to convey for all persons requiring the transmission of news and messages of like character, on pain of forfeiting to the person injured for each offence, the sum of one hundred dollars, and such other damages as he may have suffered on account of said refusal or failure,

Page 160 U. S. 26

to be sued for and recovered in any court of the United States, or of any state or territory of competent jurisdiction."

The sixteenth section provided that any two or more of the companies authorized to participate in the benefits of that act might at any time unite and consolidate upon such terms and conditions as were not incompatible with such act or the laws of the state or states in which the roads of such companies were, and such consolidated company should be entitled to receive from the government all the grants, benefits, and immunities that the respective constituent companies were entitled to, subject to all the restrictions imposed upon them.

By the twenty-second section, it was declared that "congress many at any time alter, amend, or repeal this act.

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