People's Trust Co. v. . Schenck

G-ray, J. I think the determination made below of the question of priority of liens, as between the appellant’s judgment and the corporate mortgage to the plaintiff, is correct. There is no question but that subsequently-acquired property may be subjected to the lien of a mortgage, (Bear Lake & R. W. W. & Irrigation Co. v. Garland, 164 U. S. 1-15), and whether the land under the waters of Jamaica bay, which was subsequently acquired by the railroad company, was comprehended within its mortgage is a matter to be determined from the language of the instrument and by the appropriateness, or the necessity to the company, of the subsequent acquisition. Was the land within the purview of the mortgage, and was it something, which, when acquired, would, in connection with the operation of the railroad, be necessary to the full enjoy *402 ment of the corporate franchises and add to the legitimate earning power of the corporation ? The company operated its franchises under peculiar conditions and circumstances; for, as the fact is found, its railroad ran, only, during the summer months and, then, mainly, to reach the waters of a great bay of the ocean and, through a connecting ferry, an ocean beach. To attract travel upon the road, it had developed its terminal properties upon the bay by the erection of hotels and of places for the amusement of visitors. The land under water was acquired and is to be used for the same purpose, to which the upland was put. The corporate project and purpose, perhaps, differed in these respects from those usually associated with the operation of railroads; but that is not the test. It may be quite true that neither the land in question, nor the upland, was necessary for the mere operation of the railroad. If they were, however, prospectively necessary, or convenient, for the uses, or purposes, of the railroad and to the enjoyment of the corporate rights and franchises, they would come within the terms of the mortgage. It is not necessary that there should be an immediate connection with the operation of the road. It is sufficient if, for the promotion of travel and the increase of the business sought to be created, the land acquired is legitimately convenient or necessary. The right to promote the comfort, convenience and pleasure of the public, who might patronize the railroad, and thus to augment its business, has been recognized as one not foreign to a railroad purpose. (See Prospect Park & Coney Island R. R. Co. v. Williamson, 91 N. Y. 552.) When we come to consider the question of convenience, or necessity, we reach a question of fact which has been conclusively determined by the unanimous affirmance of the findings of the referee. He has found as facts that the hotel and other structures were “ maintained for the business, of the railroad to attract custom” ; that “ the land upon which these stand, and all adjacent property, are needed for their purposes ” and that the company uses its upland and the land under water granted by the state “ in connection with its terminal.” He finds that *403 the “ grants of land under water, acquired after the execution of the mortgage, are all necessary, proper and convenient for the maintenance ” of the railroad and business of the company. The claim, that the location of these findings in the referee’s report made them legal conclusions, is without force. If, in formulating his report, the referee commingled facts and legal conclusions, it is immaterial. A finding of fact cannot be made a conclusion of law by labelling it. as such. What the referee was to do was to report the facts upon the question with his opinion. It is settled, therefore, that the acquisition of the land under water was convenient and necessary for the profitable maintenance of the- railroad and, in view of the peculiar character of the business sought to be built up, it is evident that the control of the land is important, if not essential, to the company; in order, not only, that the facilities, or terminal attractions, may be augmented, but that the land shall not come into the hands of those, who might be unfriendly, or whose management might affect unfavorably the character of the place. There is a further consideration, which militates in favor of the plaintiff’s contention, and that is that the right to acquire the land under the waters of the bay was appurtenant to the ownership of the upland. The land was not appurtenant to the upland and it would be incorrect to say that it passed with it as belonging to it under the term used of “ appurtenance,” (see Woodhull v. Rosenthal, 61 N. Y. 382, 390; Ogden v. Jennings, 62 ib. 526, 531); but the right to acquire it was appurtenant to the upland. This has been expressly decided. It was held that “ the power conferred on the commissioners of the land office only authorizes a conveyance of lands under water to be made to the owners of the upland.” (E. G. Blakslee Mf'g Co. v. The E. G. Blakslee's Sons Iron Works, 129 N. Y. 155, 159; N. Y. C. & H. R. R. R. Co. v. Aldridge, 135 ib. 83, 94.) In them, alone, is vested the right, or privilege, to apply for such a conveyance. While the state was the owner of the lands in Jamaica bay, *404 the railroad company, as the owner of the uplands, exclusively possessed the right to acquire them by a grant and that right would pass as appurtenance to the upland, [see above cases], whicli was included in the mortgage to the plaintiff; subject, only, perhaps, to its being, in fact, “ convenient, or necessary, for the use, or for the purposes, of the railroad.” For these reasons, 1 advise the affirmance of the judgment appealed from. Vann, Werner, Willard Bartlett, Hiscock and Chase, JJ., concur; Cullen, Ch. J., absent. Judgment affirmed, with costs.