Hartford & New Haven Railroad v. New York & New Haven Railroad

Majority

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The Hartford and New Haven Railroad Company, plaintiffs and respondents, vs. The New York and New Haven Railroad Company, defendants and appellants.

Headnote

1. A contract, by the owners of a railroad to be made under an act of incorporation, with the owners df a rival railroad, not to continue such road beyond a certain point, is void as contravening public policy.

2. Such a contract does not affect a prior agreement between the owners of such road, who also owned another railroad, and the owners of another rbad adjoining the latter, to divide the through fares of passengers on such continuous* road in a certain proportion 5 although the former contains a provision to deduct an additional sum monthly from such through fares ás a consideration for

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entering into such new illegal contract; and such through fares must be divided as though such second and illegal contract had never been made.

3. The division of the through fares of passengers upon a connected line of railroad consisting of two adjoining railroads, owned by two different owners, between such owners, according to certain rules and in a certain manner, for six years, without objection, operates as a Construction or modification of any previous contract, if not a new contract between such owners, and is binding upon them, and must be presumed to continue until formally annulled or rescinded.

4. The failure of a referee to find any facts, is not a ground of exception, unless requested to find them.

6. Where there is a conflict of evidence, the court will not disturb a referee’s conclusions of fact.

(Before Moncrief, Monell and McCunn, JJ.)

Heard December 4, 1865;

decided December 30, 1865.

Appeal from a judgment entered upon the report of a referee.

The action was for an account of moneys received by the defendant for through fares on the railroad from New York to Boston. The plaintiffs owned a railroad from New Haven to Springfield; and the defendants a railroad from New York to New Haven. Other companies owned a railroad from Springfield to Boston; such railroads formed a continuous line of railway from New York to Boston.

In April, 1849,- the plaintiffs and defendants entered' into an agreement that passengers should be ticketed through between New York and stations upon the plaintiffs’ road ; that in conjunction with the roads from Springfield to Boston, a day line should be stationed between New York .and Boston, charging such through fare as should be agreed upon by all parties; that when the through fare was five dollars or more, the portion between New York and Springfield should be divided between the plaintiffs and defendants in proportion to their local fares, viz. to the plaintiffs one dollar and seventy-five cents, and to the defendants one dollar and fifty cents. When the through fare was four dollars or less, the portions of the plaintiffs and defendants were to be divided equally between them.

Under this agreement, a daily morning through line, for passengers between New York and Boston, was established on

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said railroads, and subsequently an evening daily and a Sunday line. All these lines have since been kept in operation. Passengers were ticketed through, the defendants receiving the entire through fare.

In March, 1850, the parties entered into another agreement, whereby it was agreed that in the division of the fares of passengers passing on the road of said parties, the defendants should receive from the plaintiffs the sum of one thousand dollars -per month, from March, 1850, to July, 1869, on and above the amount the defendants might be entitled to receive out of the fares under the agreement of April, 1849.

The agreement of March, 1850, as was found by the referee, and conceded by the defendants’ counsel, was void as contravening public policy. The accounts between the parties were adjusted and settled monthly, upon the basis of division fixed by the first agreement, down to August, 1856. From that time to the commencement of the action, the defendants retained, out of the portion of through fares belonging to the plaintiffs, the monthly sum of one thousand dollars, for every month between the periods before stated. This sum was retained, under the agreement of March, 1850.

In September, 1856, the plaintiffs, in advising the defendants of a draft by them for the monthly balance stated by the defendants to be due the plaintiffs, advised the defendants that the plaintiffs had “ further and other claims ” on the defendants, not covered by the draft, for which they should make further demands, before admitting a settlement of accounts with the defendants. In March, 1857, notice was given by the plaintiffs to the defendants, saving all the rights of the plaintiffs respecting the accounts rendered, from month to month, by the defendants, and for the admitted balances in which the plaintiffs drew monthly drafts on the defendants.

It was claimed by the defendants, that the agreement of April, 1849, did not provide for or fix the division of the through fares upon the evening or the Sunday lines, and that there was no agreement, express or implied, by which the division of these fares was regulated.

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There was evidence given, on both sides, of negotiations and interviews designed on the part of the defendants to fix a different rate of division of the through fares on the night and Sunday lines. But there was no evidence that any new agreement was made, or that the plaintiffs assented to any change.

The cause was tried by a referee, who found the facts and his conclusions of law thereon ; whereupon judgment was entered in favor of the plaintiffs against the defendants for $40,242.97..

It was proved that during a portion of the period embraced within the action, the through fare for passengers from New York to Boston was six dollars. „

The night and Sunday trains were established and run over the several roads by mutual consent, commencing in the spring or summer of 1850. The through fares collected on these lines were, until August, 1856, divided between the several parties in the ratio provided in their first agreements ; the portions belonging to the plaintiffs and defendants being in the ratio of their local fares.

To all the through trains run over the roads,' as well the morning as the evening and the Sunday trains, the referee applied the rule of division fixed by the agreement of April, 1849, and to the six dollar fare, the rateable proportion that the local fare of each road bore to the whole fare.

A motion was made to dismiss the complaint, which was denied, and the defendants excepted. -The defendants also excepted to several findings of fact, and to some of the conclusions of law.

Upon the argument of the appeal, the defendants abandoned all exceptions taken to the admission or rejection of evidence.

Wm. Tracy, for the appellants.

W. M. Evarts, for the respondents.

The real question in controversy in this case is, whether the defendants could retain, out

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of the portion of through fares belonging to the plaintiffs, the monthly sums agreed to be paid by the plaintiffs, to the defendants, under the contract of March, 1850. All the other questions are of minor importance, as they relate solely to a small diminution of the recovery.

It is conceded by both parties that the contract of March, 1850, is void, as being opposed to public policy. An inspection of the contract, satisfies me it is so. It is a compact between the parties, intended to affect the facilities for public travel,over a route of railroad, which had been, or might be authorized by law. The defendants were lessees of the New Haven and Northampton railroad, then in part constructed. The lessors had covenanted not to extend the road northerly beyond Granby station, (a point a little north of the Connecticut line,) without the consent of the defendants, and had given over to the defendants all the franchises and corporate powers of such lessors, for the purpose of locating or constructing any railroad or extension of any railroad northerly from Granby station. By the agreement with the plaintiffs of March 16, 1850, the defendants covenanted to hold the franchises and . corporate powers conveyed to them by such lease, until the 1st of July, 1869, and during such time, not to' extend such railroad north of Granby station. Such an arrangement was intended to prevent the extension of the New Haven and Northampton railroad, to any .point north of its terminus at Granby ; and to prevent any competition in travel, detrimental to the interests of the plaintiffs’ road; which had a monopoly of the carrying trade from Springfield and points north of Springfield via the Northampton and Springfield road, which such extension might afford. The completion- of the New Haven and Northampton railroad to Northampton, would open a new line for travel southward, and would be a competitor and rival of the road of the plaintiffs. Such competition and rivalry it was not lawful for these parties to prevent, or attempt to prevent ; and any contract to effectuate such a purpose is void. Public policy is opposed to any infringement of the rights of travel, or of apy of the facilities which competition may fur

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nish; and the law will not uphold any agreement which does, or may injuriously affect such rights or facilities. (Doolin v. Ward, 6 John. 194 . Hooker v. Vandewater, 4 Denio, 349 . Stanton v. Alten, 5 id. 434 . Shrewsbury and Birmingham R. R. Co. v. Lond. and N. W. &c. R. R. Co., 21 Eng. L. & E. Rep. 319. State v. Hart. and N. H. R. R. Co., 29 Conn. R. 538. Hood v. The same, 22 id. 502.)

The contract of March, 1850, being void, none of its stipulations can be enforced by either party. Ex turpi contractu actio non oritur.

But the defense is, ■ that the defendants had the right to retain the monthly sum, agreed to be paid, and apply it as a payment. If it had been so retained and applied with the assent of the plaintiffs, the position of the defendants would be sound. Had the plaintiffs voluntarily paid the sum, no action would lie to recover it back. So the plaintiffs would be concluded, if they assented to the retention and application of the money. Such, however, is not this case. The plaintiffs’ action is not upon the void contract, but upon another and entirely different contract. They sought to recover moneys received by the defendants to the use of the plaintiffs. Such moneys did not come to the hands of the defendants under, by reason, or in pursuance of the illegal agreement;. Under a perfectly legal contract, the defendants sold through tickets, over the connected roads of both parties ; and for the portion of the passage money which the plaintiffs are entitled to receive under such contract, it seems to me, the defendants are clearly liable.

The finding of the referee, that the plaintiffs did not agree, to the retention or application of the monthly sum, is, I think, fully sustained by the evidence. The notices from the plaintiffs to the defendants of September, 1856, and March, 1857, were sufficient to preserve the right of the plaintiffs to object to the allowance. The deduction, therefore, of the monthly sums, being without legal justification, it is no defense to the action of the plaintiffs.

It being conceded that the contract of March, 1850, is

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void, I have not deemed it necessary to examine the allegation in the complaint, or the evidence relating thereto, that the defendants had failed to perform such contract.

' A further defense is, that the contract of April, 1849, is also void; and the parties being in pari delicto, no action lies upon it by either party. That contract was formed for the mutual benefit of the parties, as well as for the convenience of the traveling public. The object was, to establish through connected railroad lines from New York to Boston. To effect that, it was agreed the parties should make suitable connections at New Haven; that passengers should be ticketed through between New York and stations upon the road of the plaintiffs ; and that each party should receive its local rate of fare. Such an arrangement was calculated to facilitate travel; quicken the transit from New York to Boston ; lessen the expenses, and increase the receipts of the respective companies ; and prevent delays.

Although the contract contains many other provisions, not relating to the establishing of through lines of railway travel, yet I am unable to discover in any of them any thing which contravenes public policy. Besides, I am not prepared to say, that the part of the agreement concerning the through' lines may not be upheld, although the other provisions may be void. The consideration for that part being, as I think, independent of the consideration for the others. (Pepper v. Haight, 20 Barb. 429 .)

There were also two other contracts between the defendants and the Northampton and New Haven Railroad Company, dated respectively in January, 1848, and January, 1849 ; and it was contended by the appellants’ counsel, that all the contracts as well those between these parties, as those between the defendants and the Northampton and New Haven Railroad Company, were to be taken as one contract, and that all were void. There is no force in the suggestion. The contract of April, 1849, is independent of all the other contracts. And the several other agreements are as distinct from each other as language, and the clear intent of the parties, could make

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them. They were executed at different times, and designed to effect different purposes ; and either may and must stand or fall, without resort to the other. I can, therefore, see no difficulty in enforcing the provisions of. the agreement of April, 1849. Nothing in that agreement contravenes public policy; and any vice inherent in either of the other agreements, can in nowise affect the former, nor relieve the parties from its obligations.

So far as the rule adopted by the referee in making the division of the fares, relates to the day line of through travel, there is no disagreement, except as relates to the pro rata division of the increased through fare beyond the rate named in the contract. The difference arises in respect to through fares on the night and Sunday lines.

For a part of the period the through fare was $6. In dividing that sum, the referee has given the plaintiff the proportion which $1.75 cents bears to $5. This I think was right. The agreement is clear. It says, “ When the through fare is five dollars, or more, that portion which is due to that part of the line between Springfield and New York, shall be divided between the parties, in proportion to their respective local fares, to wit, one dollar and seventy-five cents between New Haven and Springfield, and one dollar and fifty cents between New Haven and New York.” It is manifest that the parties did not intend to divide ratably in proportion to the number of miles in their respective roads ; but that they meant the division should be upon the rate which $1.75 and $1.50 bore to the whole amount due to that part of the line between Springfield and New York. They were to receive “in proportion” to their “local fares” not in proportion to the miles of road.

The night and Sunday lines were established and operated several years prior to August, 1856, and up to that time the fares had béen divided between the parties.

It is claimed for the defense, that as respects those lines, the pro rata division as fixed by the contract of April 30,1849, has no application. Without any express agreement, the

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parties established an evening and Sunday connected through line, and continued to operate it for several years, dividing the passage money in a ratio mutually satisfactory. This arrangement was terminable at' the pleasure of either party. The defendants could discontinue the evening or Sunday train, or both, and end the connection.

There was evidence given that the defendants did seek to alter the ratio of division, and claimed that they were entitled to a larger proportion of the through fares than they had previously received. But the referee has found that the plaintiffs did not assent to such change, but insisted that if such lines were continued to be run, it should be upon the previous and existing basis of division. Under such circumstances, the continuance of these lines by the defendants, was an affirmance of the arrangement then existing, and was binding upon them. The declarations and acts of the parties put a construction upon the agreement, by which they must abide.

The referee committed no error in dividing the through fares on the night and Sunday lines, upon the basis of division which the parties had previously adopted and sanctioned.

The referee has found all the facts necessary to sustain his conclusions of law. He was not bound to find any other. I cannot discern that any of the findings are wholly unsupported by evidence ; and where there is a conflict of evidence, this court will not disturb the conclusions of the referee. (Hoog land v. Wright, 7 Bosw. 394 . Ball v. Loomis, 29 N. Y. Rep. 412 .)

There were no requests made to the referee to find otherwise than he has found ; and his failure to find certain facts, which the defendants now insist he should have found, is not ground of exception. (Ashley v. Marshall, 29 N. Y. Rep. 494 .)

The views which I have above expressed, (and which, possibly, I may have expressed too generally,) cover, it seems to

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me, all the objections pf the defendants. If they are sound, no error was committed by the referee.

I am for affirming the judgment with costs.

Judgment affirmed.

Cases cited

Pepper v. Haight 20 Barb. 429 N.Y. Sup. Ct. 1854-09-04 p. 417
Hoogland v. Wight 7 Bosw. 394 N.Y. Super. Ct. 1860-11-10 p. 419