Rensselaer & Saratoga Railroad v. Delaware & Hudson Co.

Headnote

Rensselaer & Saratoga R. R. Co. v. D. & H. Co., 168 App. Div. 699 , affirmed.

Appeal from a judgment, entered August 26, 1915, upon an order of the Appellate Division of the Supreme Court in the third judicial department, which reversed an interlocutory judgment of Special Term overruling a demurrer to the complaint and directed a dismissal of the complaint. In 1871 the defendant became the lessee of all of the railroad lines of the plaintiff, and thereupon entered into the operation of such railroad Unes and has ever since operated them as a part of its railroad system. The defendant, as lessee, among other things, covenanted to operate and maintain all of the railroads of the lessor

and to pay, by way of rental therefor, the interest upon certain mortgage bonds of. the lessor, and also dividends at a" certain rate upon the capital stock of the lessor, and also a sum not to exceed $1,000 annually to defray the expenses of the legal organization of the lessor; it also made covenants concerning taxes, and further guaranteed to pay directly to the bondholders and stockholders of the plaintiff said interest and dividends, and to stamp such guaranty upon the bonds and certificates of stock. This action is brought upon the theory that the plaintiff, having had an income tax assessed against it by the Federal government and having paid such tax, is entitled to recover the amount thereof from the defendant.