Metropolitan Trust Co. v. Columbus, S. & H. Ry. Co.

Item 16 of the lease purports to bind the lessee, as a condition of enjoying the estate conveyed to it by the lease, that it .shall never extend its line into territory lying just beyond its then terminus. Item 16 does not forfeit the estate. That continues, but the effect of the clause is that, if the lessee shall extend its lines into the forbidden territory, then forever after it shall pay $12,000 a year, without the right to enjoy the estate with which it is vested by the lease. Railroad companies, by the statutes of Ohio (sections 3300 and 3306), are given the power to extend their lines, either by their own construction, qr by the purchase or lease of other lines. These provisions are for the benefit of the public, and it may admit of serious doubt whether a railway company may, consistently with public policy, disable itself from exercising such powers forever. Hartford & N. H. R. Co. v. New York & N. H. R., 3 Rob. (N. Y.) 411; Railroad Co. v. Ryan, 11 Kan. 602; Marsh v. Railway Co., 64 Ill. 414; Railroad Co. v. Mathers, 71 Ill. 592; Rail*21way Co. v. Marshall, 136 U. S. 393, 401, 402, 10 Sup. Ct. 846; Woodstock Iron Co. v. Richmond & D. Extension Co., 129 U. S. 643, 656, 9 Sup. Ct. 402. However this may be, the subsequent agreement of lease between the Columbus, Shawnee & Hocking Railroad Company and the Toledo & Ohio Central Railway certainly abrogated clause 16, in so far as that forbade an extension of the line of the Columbus & Eastern Railroad. The second lease was an express recognition of the right of the successor in title of the Columbus & Eastern Company to operate an extension into the forbidden territory; and the Toledo & Ohio Central Railway Company has enjoyed occupancy under this second lease, and rent under the first lease, for nine years, and is still enjoying them, without ever having objected to the extension. It is too late for it now to insist upon the condition as it: appears in the first lease. Rut it is contended that, even if it may have waived the right to object to the extension, it has never waived the right, hut it has continually.asserted it by written communication, to object to the use of the Columbus Branch for the transportation of coal from the forbidden territory; and this, it is said, was the purpose of the whole condition. Nor, it is said, has it ever waived its right to object to the lessee’s or its successor’s receiving coal from any other lines. It is asserted that its waiver of some of the condi lions of item 16 dees not prevent its enforcement of the remainder. In item 16 there is no inhibition of the right of the lessee company to haul coal from the inhibited territory over the demised line. Its inability to do so under the lease was merely the resultant effect-of the condition that it should not extend Its line into the territory, and should not receive coal from other lines. The permission to extend the line into the territory theretofore forbidden simply made this effect no longer a necessary one. The lessor company could not waive the light to extend the line, and still hope to insist that no coal should be carried thereon from the forbidden territory over the Columbus Branch, when there wras no such prohibition in the contract of lease distinct from the stipulation against the extension of the line. The waiver destroyed, not only the obligation in reference to extension, but also all the consequences upon which the lessor had-relied as flowing therefrom. It is well settled that, if the condition in a lease is single, it is wholly discharged by waiver. Taylor, Landl. & Ten. § 501. Nor is the restriction upon the right of the lessee company to receive coal limited to that mined in the forbidden territory for transportation over the Columbus Branch. It applies to the receiving of all coal, wherever mined, from connecting lines, to be transported over any part of the lessee’s line. It, in effect,, limits its transportation of coal to that mined on its own unextended line. Clearly, such a disabling of the lessee to perform its duties as a common carrier is iu violation of public policy and is void.

But, even if the condition can be pared down to the form in which the lessor would now enforce it, what would the case be? The lessor would have biased to a railroad company having a line extending into the southern portion of Perry county 24 miles of railroad, to be used as part of the main trac-k of the lessee company for 99 years, the term to be renewable forever, and would have imposed upon the *22lessee’s enjoyment of the estate a condition subsequent that it should not receive from shippers or connecting lines coal mined in the forbidden territory, to be-transported over the demised 24 miles of railroad. Now, it would clearly be the duty of the lessee company to receive, in the territory into- which its line extended, all coal tendered to it for transportation, either by shippers or connecting lines, wherever mined, and to transport it over its own line to the place of' destination. The leased 24 miles would be a part of its line, and it would have no more power to decline to discharge its public duties-with respect to that portion of its line than it would have with respect to that which it owned in fee. Any stipulation by which it should bind itself not to discharge its public duties as a common carrier would be void. Peoria & R. I. Ry. Co. v. Coal Valley Min. Co., 68 Ill. 489; Gibbs v. Gas Co., 130 U. S. 396, 410, 9 Sup. Ct. 553; and cases cited. Nor, as contended by counsel, would the fact that the lessee company might turn such coal over to the lessor company before the Columbus Branch was reached, and prorate the freight, under the seventeenth item of the lease, prevent this stipulation from being illegal and void. A shipper may demand from a common carrier that it carry the merchandise from the receiving point to the terminus of its line over its own road, because it is under an obligation to-render the same duties as to all parts of its road to the public. It may be again remarked, as relevant to this contention, that the condition as to receiving coal is not limited, to a restriction upon carrying-coal over the demised premises, but inhibits the carrying of coal thus received on any part of the line.

But, it is asked, cannot the lessor limit the use of its own property as it chooses? It is under no obligation to lease its railroad to another railroad company at all; but, if it does so, then it can only impose upon its use by the lessee such restrictions as are consistent with the discharge by the lessee of those duties which, as a common carrier, the lessee owes to the public. Eestrictions in the nature of conditions subsequent, which, in respect to the demised premises, forbid the lessee to do its public duties as a common carrier, would, if enforced, prevent the lessee from enjoying the demised premises- at all in a lawful manner, and are therefore repugnant to- the grant and void. When one takes an estate upon condition subsequent, which is void as against public policy, or for any other reason, the estate continues in the grantee or lessee, freed from the condition. Co. Litt. 206a; Railroad Co. v. Mathers, 71 Ill. 592; 1 Story, Eq. Jur. § 288; 2 Washb. Eeal Prop. (5th Ed.) 8.

A similar question was presented in the cases of Missouri v. Bell Tel. Co., 23 Fed. 539 (a decision by Mr. Justice Brewer while Circuit Judge); State v. Delaware & A. Telegraph & Telephone Co., 47 Fed. 633; and Delaware & A. Telegraph & Telephone Co. v. State, 3 U. S. App. 30, 2 C. C. A. 1, and 50 Fed. 677. The patentees of a telephone had licensed telephone companies to use their patents for the purpose of operating public telephone lines within a given district, but prohibited such companies from serving within such district any telegraph company. The court, in each of the cases cited, by mandamus, compelled the extension of service to any one within the district de-*23mantling connection and paying established charges. The limitation upon the license was held to be void on the ground that a public telephone company was a common carrier, and as such was charged with the duty of dealing equally with all, and discriminating against none, tendering equal pay for equal service. These cases were considered by the court of appeals of this circuit in the case of the Heaton-Peninsular Button-Fastener Co. v. Eureka Specialty Co., 47 U. S. App. 146, 25 C. C. A. 267, and 77 Fed. 288. Judge Lurton, speaking for the court, after stating the cases and the ground for the decision said:

“The conclusion to be drawn from these telephone eases is this: That, when a pa1eni.ee authorizes the use of his invention by one charged with public duties and subject to regulation by law, it is not competent by a restriction on the use to deprive the licensee of the power of rendering an equal service to all who apply and tender the compensation fixed by law or regulation for the same service to others. The patentees were under no obligation to license the use of llieir inventions by any public telephone company. Having done so, however, (hey were not at liberty to place restraints upon such a public corporation which would disable it from the discharge of all the duties subject to regulation by law. It could not be a public telephone company, and could not exercise the franchise oí a common carrier of messages, with such exception in the grant. The exception, being repugnant to the grant, was void, and the rights acquired under the grant were enforced against the grantor without regard to the exception or condition.”

Shrewsbury & B. Ry. Co. v. London N. W. Ry. Co., 17 Q. B. 652; Id., 6 H. L. Cas. 115,—is a case which was so much discussed, and the point in which was held by the various courts considering the controversy to be so doubtful, that I cannot regard it as of any particular authority in the present suit.

The result of my consideration of the questions presented is that the condition which the Toledo & Ohio Railway Company is now asserting its right to enforce, and is threatening to enforce, is void, and the Columbus, Sandusky & Hocking Railroad Company is the tenant under the lease, by lawful assignment, and has the;-, leasehold freed from the condition of item 16.

Shall the preliminary injunction issue? It does not admit of doubt that to cut the railroad operated by the receiver in two by the enforcement of the condition and the stopping of the joint use of the Columbus Branch would do irreparable injury to the defendant company, the Columbus, Sandusky & Hocking Bailroad Company, and all persons interested therein. In such a case the remedy must be summary. Let the preliminary injunction go, as prayed, to continue in force till final hearing.