Hudson Canal Co. v. Pennsylvania Coal Co., 75 U.S. 276 (1868)
U.S. Supreme CourtHudson Canal Co. v. Pennsylvania Coal Co., 75 U.S. 8 Wall. 276 276 (1868)
Hudson Canal Co. v. Pennsylvania Coal Co.
75 U.S. (8 Wall.) 276
In the case of a contract drawn technically, in form, and with obvious attention to details, a covenant cannot be implied in the absence of language tending to a conclusion that the covenant sought to be set up was intended. The fact that the non-implication of it makes the contract, in consequence of events happening subsequently to its being made, quite unilateral in its advantages is not a sufficient ground to imply a covenant which would tend to balance advantages thus preponderating.
The Pennsylvania Coal Company, being engaged in mining coals from land in the northeast corner of Pennsylvania, for which they wished to get means of easy transportation to New York, and the Hudson Canal Company having a canal whose capacity was not fully employed and which would afford the transportation desired provided a railroad could be made from the Coal Company's lands to the western end, comparatively near them, of the canal, the two companies entered, under their corporate seals, into long and technically drawn articles of agreement, with recitals in the beginning and each party's covenants contained in separate parts of the instrument subsequently.
1. The recitals recited that an existing road, which brought coal to the canal, was not sufficient to employ the full capacity of the canal.
2. That if the canal should be enlarged, as it might be, its unemployed capacity would be still greater.
3. That it was for the interest of the canal company that in either event its surplus capacity should not remain unemployed, but that it should be allowed to be used at a reasonable rate of toll by any other company which might
hold lands for the purpose of mining coal, and should connect such lands by railroad or otherwise, with the said canal for the purpose of transporting coal thereon.
The canal company then covenanted and agreed with the coal company to furnish, at all times thereafter, to the boats of said coal company, all the facilities of navigation afforded by the canal to boats used by others, or by the canal company itself, charging only a certain toll per ton [a reduced toll], to be regulated each year by the market value of coal, provided, however, that the plaintiffs should not be bound to allow the quantity transported in pursuance of the agreement to exceed, in any one season, 400,000 tons unless the canal should be enlarged, and in that case, one-half its capacity of transportation.
The coal company,
"in consideration of the premises, and of acts done and investments made, with a view to the transportation of coal on the canal of the said canal company, as well as of the mutual undertakings herein contained, and of one dollar paid by the managers of the said coal company,"
promised and agreed with the canal company to use all its influence to cause the speedy construction of a railroad from its coal land to the canal at or near the mouth or the Wallenpaupack River, and that if the construction of such road should not be commenced within one year and finished within three, the plaintiffs might declare the agreement null and void.
The coal company built and put in operation the railroad, the canal company enlarged their canal so as to be sufficient for the transportation of all the coals which the coal company could mine, and the coal company put on the canal its boats, which were allowed to pass at the reduced toll agreed on. But the price of coals rising greatly during the war and after it, and the tolls on the canal (adjusted as, under the articles of agreement, they were, on a sliding scale) becoming very high, the coal company induced the New York and Erie Railroad Company, whose road led to New York, to make a branch road connecting it with the railway of the coal company at the point where this latter connected
with the canal, and on this railway the coal company now carried a large quantity of its coal.
Hereupon the canal company sued the coal company in covenant for damages, declaring on the articles and facts as above set forth and averring moreover that when the contract was made, there were no means, either existing or contemplated, by which the coal company's coal, after being brought to the canal, could be sent to market except on the canal. And the question was whether, by those articles of agreement, the coal company was bound to carry on the canal all its coal brought to it by the connecting railroad -- in other words, and more technical form, whether the declaration was sufficient and any cause of action shown.
It was conceded by the canal company that there was no express covenant by the coal company to transport even a pound of coal by the canal. The suit was founded, therefore, on the assumption that according to the true construction of the agreement there was imposed upon the coal company, in consideration of the obligations of the canal company, a correlative obligation on the coal company to send its coal by the canal alone, and that the obligation of the coal company in this respect was so plainly to be perceived in the contract that the court would enforce it as an implied covenant, and as fully as though it were expressed in words.
The court below was of the opinion there was no covenant, express or implied, on the part of the coal company that it would transport on the canal all the coal brought over their railroad connecting with the canal, and judgment being given accordingly for the coal company, a writ of error was taken hence.