A railroad company, all whose stock was owned by four other
companies, whose roads connected, having obtained a lease of
another connecting railroad, and improved the terminal facilities,
made a contract with the four companies, by which they should have
the use of its tracks and terminal facilities for fifty years, each
paying the same fixed rent and certain terminal charges, and any
other company with the same terminus might, by entering into a
similar contract, acquire like privileges upon paying the same rent
and similar charges, and demanded the making of such a contract by
the receiver of another company, who previously had the use of the
road now leased, and of its terminal facilities, upon terms
Page 127 U. S. 201
agreed on between him and the company owning that road. The
receiver objected that the terms demanded were exorbitant and
oppressive and could not be assented to by him without an order of
the court which appointed him, and it was thereupon agreed that his
company should enjoy like privileges, paying the like terminal
charges as the four companies, and such rent as the judge should
award, and meantime should pay at the same rate as before. The
judge declining to act as an arbitrator, the receiver was excluded
from the use of the tracks.
Held that he had not assented,
and was not liable, to pay the same rent as the four companies,
during the time that he used the tracks and terminal facilities of
the first company.
This was a petition by an intervenor in a suit to foreclose a
railway mortgage in order to compel the receiver of the mortgaged
property to pay rent. Decree dismissing the petition, from which
the petitioner appealed. The case is stated in the opinion.
MR. JUSTICE GRAY delivered the opinion of the Court.
Pending a suit in equity by the Farmers' Loan & Trust
Company against the Chicago, Pekin & Southwestern Railroad
Company to foreclose a mortgage of its road, the Peoria and Pekin
Union Railway Company filed this intervening petition to compel the
receiver of the defendant company, appointed in that suit, to pay
to the petitioner the sum of $16,231.55 for rent of tracks and
terminal facilities at Peoria from February 1, 1881, to March 1,
1882.
From the documents in the record and the very argumentative and
somewhat conflicting affidavits of Cohr, the vice-president and
general counsel of the petitioner, and of Hinckley, formerly the
president and now the receiver of the defendant, the material facts
appear to be as follows:
Peoria and Pekin are ten miles apart, on opposite sides of the
Illinois River, and connected by two lines of railway tracks --
that of the Peoria and Springfield Railroad Company on the
Page 127 U. S. 202
east side of the river and that of the Peoria, Pekin and
Jacksonville Railroad Company on the west side of the river, and
each crossing the river on a bridge. Connecting with these at
Peoria or at Pekin are the lines of four other railroad companies
-- the Wabash, St. Louis and Pacific Railway Company, the Indiana,
Bloomington and Western Railway Company, the Peoria, Decatur and
Evansville Railway Company, and the Peoria and Jacksonville
Railroad Company.
The petitioner was organized in 1880, its whole capital stock
being owned by these four companies, one quarter by each. On
February 1, 1881, the petitioner, having obtained a lease of the
Peoria and Springfield Railroad, and acquired by purchase the
Peoria, Pekin and Jacksonville Railroad, and having improved the
terminal accommodations and facilities at Peoria, entered into a
contract in writing with the four companies aforesaid by which it
leased to them for fifty years the tracks between Pekin and Peoria,
with the use of its terminal accommodations and facilities at
Peoria, and each of the four companies agreed to pay a yearly rent
of $22,500, and a proportionate share of the expenses of
maintaining the terminal accommodations at Peoria and of terminal
services, according to the business done by each, and it was
further agreed as follows:
"Eighth. Any other railroad company whose road shall now or
hereafter run into said City of Peoria or that shall desire to
procure an entrance into said city shall be allowed to acquire the
same rights and privileges as the said several lessees, but no
other, and upon no less rental, upon entering into a like contract
hereto with the party of the first part, except as to
representation in the board of directors of the party of the first
part and ownership in its capital stock."
Before February 1, 1881, the trains of the defendant company had
been run over the road of the Peoria and Springfield Railroad
Company at a rate of compensation fixed by agreement between the
receivers of those two companies.
On February 1, 1881, Cohr, in behalf of the petitioner, demanded
of Reed, then the receiver of the defendant company, that he should
enter into or contract to pay, during his receivership, the same
rent and other charges as the four companies,
Page 127 U. S. 203
and insisted that he had no authority to allow the use of the
petitioner's tracks on any other terms. Reed objected that the
terms demanded were exorbitant and oppressive and that he had no
authority to assent to them without an order of the court, and it
was thereupon agreed that the defendant company should enjoy the
use of the tracks and the terminal facilities and should pay the
like terminal charges as the four companies, and should also pay
such rent from February 1, 1881, as should be determined by Judge
Drummond, upon an application to be forthwith made by Reed, and
that until such determination, the defendant company should pay at
the same rate as formerly paid to the receiver of the Peoria and
Springfield Railroad Company, and should pay the residue, if any,
when the judge should so determine.
Pursuant to this agreement, Reed made an application in writing
to Judge Drummond, who, as Cohr testifies, in December, 1881, or
early in 1882, informed him that he declined to decide upon it, and
that unless the defendant settled with the petitioner by March 1,
1882, the petitioner might shut out the defendant from its tracks.
Upon notice to that effect, Reed declined to pay, and on March 1,
1882, ceased to use the tracks of the petitioner.
The defendant paid the petitioner, for the use of its tracks and
terminal facilities from February 1, 1881, to March 1, 1882 at the
same rate as previously paid to the receiver of the Peoria and
Springfield Railroad Company, amounting to $17,537.83. The
petitioner claimed for the same period the sum of $9,394.38 for
terminal expenses, and the sum of $24,375 for rent, and applied the
sum received from the defendant to the payment in full of the first
of these claims, and in part of the second, leaving $16,231.55,
which the petitioner now sought to recover.
The master to whom the petition was referred reported that there
was nothing before him which enabled him
"to report the amount of compensation which the petitioner
should have except as the result of the conditions upon which the
receiver continued to use the property after the attempted making
of a contract between the parties resulting in the notice
Page 127 U. S. 204
referred to,"
but found "from their relations and the implied understanding
upon the part of the receiver arising from them" that the sum
claimed was due from the defendant to the petitioner. The circuit
court sustained exceptions taken by the defendant to the master's
report, and dismissed the petition. Its opinion, which is not made
part of the record, is reported in 18 F. 484. The petitioner
appealed to this Court.
The only matter in dispute is whether the defendant is liable to
the petitioner, by way of rent, from February 1, 1881, to March 1,
1882, for anything more than has already been paid. There is no
more ground for implying an assent by the defendant to the claim of
the petitioner than for implying an assent of the petitioner to the
position of the defendant. When the petitioner demanded of the
receiver of the defendant the like rent, as well as the like rate
for terminal expenses, as was to be paid by the four companies, the
receiver of the defendant declined to assent to the demand without
an order of the court whose officer he was. The parties thereupon
came to a temporary arrangement by which the defendant agreed to
pay the terminal expenses demanded and the parties submitted the
question of rent to the circuit judge as an arbitrator, and it was
agreed that until his determination, the defendant should continue
to pay the same charges that it had paid before February 1,
1881.
By the terms of that agreement, then, the amount of rent to be
paid by the defendant was left uncertain, and dependent upon the
award of the judge. The affidavit of the petitioner's own witness
shows that the judge, after some delay, declined to act as an
arbitrator. The judge's view upon the subject appears in the
opinion afterwards delivered by him in the circuit court, in which
he said:
"On looking into the question at the time, the judge was of the
opinion that the contract which was demanded of the receiver by the
Peoria and Pekin Union Company was oppressive in its terms, and
doubted whether the receiver could afford to pay the prices then
demanded; but at the same time, admitting that the Peoria and Pekin
Company was the owner of the property and that it had
Page 127 U. S. 205
the right to prescribe on what terms the receiver should do his
railroad business between Pekin and Peoria and in the latter city,
stated that if the receiver would not accept the terms, he could
not be permitted to have the use of the property of the Peoria and
Pekin Union Company."
The judge, while he recognized the right of the petitioner, as
owner of the property, to exclude the defendant from its use if the
defendant would not accept the petitioner's terms, in no way
intimated that upon the facts of the case the defendant could be
held to have accepted those terms.
There is no evidence tending to show that the sum paid by the
defendant is not all that its use of the property was fairly worth.
The rent which each of the four companies, who owned all the stock
of the petitioner company, agreed by express contract to pay that
company affords no test of what is a reasonable rent as between the
petitioner and a stranger like this defendant, who had no interest
in its stock and was no party to that contract. As observed in the
opinion of the circuit court:
"The Peoria and Pekin Union Company was really owned by the
other companies which made the agreement with it, and consequently
they were substantially owners of the property of the Peoria and
Pekin Company. It was substantially a contract, therefore, made by
one party with itself, which it was insisted should be the test of
payment by the receiver."
Decree affirmed.