Saner-Whiteman Lumber Co. v. Texas & N. O. R.

PLEASANTS, C. J. This suit was brought by appellee against the appellant and the Ca-ro Northern Railway Company to recover damages for the alleged conversion by defendants of steel railroad rails alleged to have been worth, at the time of their conversion, the sum of $65,000. Plaintiff’s petition alleges in substance: That the rails converted by defendants were leased by it to the appellant lumber company to be used in laying a track for a tram railroad operated by the lumber company in Nacogdoches county; that by the terms of said lease contract, which was executed on June 1, 1905, it might continue in force for a period of 15 years from its date, and upon its termination, either by reason of the expiration of the period of existence named therein, or by reason of any other cause in said contract provided, said lumber company became in duty bound to take up said rails and deliver same to the plaintiff at the station of Caro, in Nacogdoch-es county, in the same condition, wear, and tear excepted, as they were in when they were delivered to said lumber company in default of which, for 60 days, plaintiff should have the right to take up said rails, transport them to Caro, and charge the expense thereof to said lumber company. That the lumber company, in violation of the terms of said contract, proceeded to permit the rails leased from the railroad company to go into the track of the Caro Northern Railway Company, a railroad corporation which had been recognized by the Railroad Commission of Texas on March 25,1907, and that the lumber company thereupon voluntarily placed itself in a position where it could not comply with the terms of said contract, and thereupon became guilty as of conversion of said rails as of the time of the recognition by the Railroad Commission, and that the reasonable value of said rails at that time was $65,000. That the lumber company, under the terms of said lease, was liable for the rental of said rails at the rate of $100 per mile per annum from June 1,1917, to which date the said rent was paid, to the Railroad Company’s total damage in the sum of $7,500. The railroad company further alleges: That under said contract the lumber company on June 30,1916, notified the railroad company that on and after six months from that date there would exist no further necessity for the lease of said rails, but that it failed to take up and deliver the same to the railroad company, to plaintiff’s damage in the sum of the value of said rails at the time of the acts [270] complained of in tlie incorporation of tlie defendant Caro Northern Railway Company, in the sum of not less than $65,000. That the lumber company had an option in said contract to purchase said rails, but that, instead of exercising said option, the rails were placed in the line of the Caro Northern Railway Company and converted at the time of the incorporation of said company, to the damage of the railroad company in the sum of $65,000. That the defendant Caro Northern Railway Company, since the incorporation thereof, with the active co-operation, acquiescence, and consent of the lumber company, has used said rails as a part of its main tract, to the damage of the plaintiff railroad company as for conversion in the sum of $65,000. The railroad company further alleges the failure of the lumber company to comply with the terms of said contract, and alleges its damage as being the value of said rails as of date of the termination of said contract in the sum of $65,000, and in addition thereto the rental upon said rails in the sum of $7,-500; that the reasonable cost of taking up the rails is $5,000; the reasonable value of said rails at the time of the conversion thereof and at the time of the forfeiture of said contract by the lumber company is $65,000'; and the amount of rental due by the lumber company under said contract, $7,500. The railroad company prays (a) that it be decreed to be the owner of the title and of the right to the possession of said rails; (b) that it recover the rental under the contract in the sum of $7,500; and (c) that it recover the sum of $65,000 “as the value of said rails at the time of the termination and breach of said contract;” in the alternative, and in the event it bo held that said rails can now be taken up and delivered to the railroad company, that it have judgment for the title and possession of said rails, and for the sum of $5,000, the reasonable cost of taking up said rails, and the sum of $7,500 as rental under said contract. No answer was filed for the Caro Northern Railway Company. The defendant lumber company answered by general demurrer, numerous special exceptions, general denial, and by plea of estoppel and several pleas of limitation. The trial in the court below without a jury resulted in a judgment in favor of appellee against tlie appellant for the sum of $39,981.-99, and in favor of the Caro Northern Railway Company that plaintiff take nothing against it. At the request of appellant, the trial judge filed the following findings of fact: “(1) I find that on June 1, 1905, plaintiff, T. & N. O. R. R. Co., entered into a contract with the Whiteman-Decker Lumber Company by the terms of which plaintiff leased to the Whiteman-Decker Lumber Company 15 miles of certain steel rails for a rental of $100 per mile per annum.’ Said contract also provided that said rail shall be relay steel of about 50 pounds per yard, to be delivered to said lumber company at its station of Caro in Nacog-doches county, 15 miles of said steel to be delivered by 'June 15, 1905; that said rail shall be and remain the property of said railroad company, and be kept separate from other rails used by said lumber company so that they may be easily and conveniently identified, and that no other rail would be mixed or intermingled with the rails leased by said railroad company; that said lumber company would execute any other instrument of writing that might be deemed necessary in order to p.rotect said railroad company in the ownership of said rails, and to prevent any other person acquiring a lien or claim upon same; that said lumber company agreed that it would acquire the title for all lands on which said rails were laid, to the end that said railroad company might protect itself against having its rails laid upon lands which were not owned by the lumber company; that said rental was to be paid to the railroad company at its general offices in Houston, Tex.; that, upon failure of the lumber company to pay any annual rental, the railroad company should have the right to enter upon said tram road and remove its rails therefrom upon giving the lumber company 30 days’ notice of its.intention to do so; that said contract was to continue for a period of 15 years beginning June 1, 1905, unless sooner terminated, and should said lumber company’s supply of timber be exhausted before the expiration of said period it should have the right to terminate said contract after the expiration of 5 years by giving 30 days’ notice of its intention to do so, and thereupon it became the duty of said lumber company to take up said rails and deliver same to the railroad company at said station of Caro, in the same condition, ordinary wear and tear excepted, that they were in when delivered to said lumber company; that, if said lumber company should fail or refuse, after a period of 30 days after demand to them by said railroad company, then the said railroad company should have the right to take up said rails and transport them to said station of Caro, and charge the reasonable expense thereof to said lumber company. “Said contract further provided that said lumber company should have the privilege of purchasing said rail at any time that they might desire, at such price as might be agreed upon; said lumber company agreeing to pay cash in the event of such a purchase, and such purchase to cause the rental to cease on such rails as might be in such sale. “(2) X find as a fact that on the 15th day of March, A. D. 1913, a contract was entered into by and between the Texas & New Orleans Railroad Company and the Saner-White-man Lumber Company, wherein the Saner-Whiteman Lumber Company referred to the contract dated June 1, 1905, recited the purchase by the Saner-Whiteman Lumber Company of the properties of the Whiteman-Decker Lumber Company, and recognized said contract to be binding upon it as successor of the Whiteman-Decker Company; and it provides for the lease of two additional track miles of 50-pound relay steel rails on the same terms and conditions as contained in the contract of June 1, 1905. [271] “(3) I find as a fact that at the time said contract was entered into it was contemplated by the parties that the rails would be used in the construction of a tram or logging railroad for the use of the Lumber Co., and that said rail was to be kept together so that it could be identified. “(4) I find as a fact that 8 or 9 miles of steel was laid by the lumber company and used by it for logging its mill, when the officials of the lumber company were approached by the citizens of Bit. 'Enterprise with a view to incorporating said tram road and extending it into said town of Mt. Enterprise and converting it into a common carrier, which was done about September 1, 1906; and that the balance of said rail was delivered subsequent to the incorporation of said road, and was used for the completion of said road into Bit. Enterprise. “(5) I find as a fact that pi-ior to the incorporation of said road the officials of the lumber company had a conference with Blr. W. R. Van Vleck, who was then-vice president and general manager of the Southern Pacific lines, concerning the feasibility, of the road, the prospect for business, and the advantages to the lumber company and to the T. & N. O. R. R. Co. in in-corpox-ating said road; that thereafter, and pi-ior to said incorporation, Blr. Van Vleck sent a committee consisting of A. S. Johnson, general superintendent of the T. & N. O. R. R. Co., T. G-. Beard, general freight agent, and Charles Tanheauser, chief engineer, who made an inspection of said proposed roadbed into Mt. Enterprise. “(6) I find as a fact that plaintiff railroad company at no time contracted or agreed with the .lumber company -that it should turn over and deliver to the Caro Northern Railway Company steel rails to be used by it in the construction of its road as a common carrier, or that said lumber company obtained, or sought permission from said railroad company, or its duly authorized officers, to permit it to place said steel in the track of the railway company,- or that said contracts were ever modified between the parties, or that the railx-oad company, or its duly authorized agents, were informed by the lumber company that they intended to turn over and deliver the steel leased by the lumber company to the Caro Nox-thern Railway Company. “(7) I find as a fact that the officers of the Caro Northern Railway Company and the officers of the lumber company were identical, with the exception of two directors, who held one share of stock of the railway company. “(8) I find as a fact that in June, 1916, the Saner-Whiteman Lumber Company notified the T. & N. O. R. R. Co. that the contract for the rental of said rails would be terminated on January 1, 1917, and that the rentals for said rails were paid to the said railroad company until July, 1917. “(9) I find as a fact that the plaintiff railroad company had no notice that the rentals on said rails were being paid between the pei-iods of January 1, 1917, and July, 1917, by the Caro Northern Railway Company, and not by the Saner-Whiteman Lumber Company; the testimony showing that payments were made by checks against Saner-Whiteman, bankers. “(10) I find as a fact that the mill of the Saner-Whiteman Lumber Company ceased to operate in the month of December, 1916, at the time the Saner-Whiteman Lumber Company gave notice to the T. & N. O. R. R. Co. that said contract would be terminated. “(11) I find as a fact that the 2 miles of rail referred to in contract entered into between plaintiff railroad company and defendant Saner-Whiteman Lumber Company were returned to said railroad company at some time prior to the filing of this suit. “(12) I find that the 15 miles of rail referred to in the contract entered into on June 1, 1905, are at this time in the roadbed of the Caro Northern Railway Company, which was incorporated under the laws of the state of Texas about September 1, 1906, and is a common carrier. “(13) I find as a fact that about September or October, 1917, the plaintiff, T. & N. O. R. R. Co., demanded of the Saner-Whiteman Lumber Company the return of said rail, and that the said Saner-Whiteman Lumber Company refused to return said x-ail to the plaintiff, T. & N. O. R. R. Co. “(14) I find as a fact that the reason the Saner-Whiteman Lumber Company refused to return the rail to the plaintiff, T. & N. O. R. R. Co., when requested by the plaintiff, was on account of said rail being placed in the roadbed of the Caro Northern Railway Company, a common carrier, and that they were unable so to do. “(15) I find that the Saner-Whiteman Company, the successor to the Saner-Deeker Lumber Company, placed or caused to be placed the steel leased by the plaintiff in the roadbed of the Caro Northern Railway Company. “(16) I find as a fact that the placing of the rail in the roadbed of the Caro Northern Railway Company, a common earner, by the Saner-Deeker Lumber Company, or its successor, Saner-Whiteman Lumber Company, was voluntary upon their part for the benefit of said Sanei’-Decker Lumber Company, or its successor, Saner-Whiteman Lumber Company, and that the refusal to return or deliver said rail to the plaintiff, when requested or demanded by the railroad company, was a conversion of said rail upon the part of said Saner-Whiteman Lumber Company. “(17) I find as a fact that the highest market value of 1,131.74 tons of good secondhand steel, after the date of its conversion, was $55 per ton; and I find as a fact that the highest markét value of 47.098 tons of scrap steel after its conversion was $29 per ton. “(18) I find as a fact that the value of the 1,131.74 tons of steel at the time of the trial was $30 per ton; and I find as a fact that the value of the scrap steel at the time of the trial was $11 per ton. “(19) I find as a fact that the highest value of the steel that plaintiff is entitled to recover was as follows: 1,131.74 tons valued at. $39,510 90 47.098 tons valued at. 470 98 Making a total value of the steel at the time it was delivered. $39,981 S3 “(20) I find as a fact that the plaintiff was unable to take up the steel after refusal to the defendant to deliver the same to the plaintiff for the reason that said steel was then being used in the roadbed of the Caro Northern Railway Company and said railway company was then in [272] the hands of a receiver and being operated by a receiver for the purpose of preventing the taking up of said steel.” None of these findings of fact is complained of by any assignment of error presented by appellant. The first and second propositions presented by- appellant are as follows: “I. There was no conversion of the rails leased by the railroad company to the lumber company because the railroad company consented to and acquiesced in the placing of the rails in the line of the Caro Northern Railway Company. “II. The railroad -company having' had full knowledge and having acquiesced and consented to the incorporation of the Caro Northern Railway Company, and having through its attorneys and through its general freight agent -actually joined in the application for the recognition of the railroad company as a common carrier by the Railroad Commission of Texas, and having at all times had full knowledge of the use to which the rails were put, and having issued joint tariffs and maintained joint depots and employed joint agents, and having stood silently by without having raised any objection of any kind or character, it is equitably es-topped from setting up that the rails in question were converted by the act of - the lumber company in permitting them to be placed in the line of the Caro Northern Railway Company.” Neither of these propositions presents any sound reason for reversing the judgment of the trial court. We agree with appellant that the fact that it permitted the rails, or at least a portion of them, to remain in the track of the tram railroad after such railroad had been incorporated as a railway, and had been recognized by the State Railroad Commission as a common carrier, was not in itself a conversion ,of the rails by appellant. The evidence discloses that the railway company kept and used the rails with a full knowledge and recognition of appellee’s ownership thereof, and paid to appellant the rental therefor, which appellant continued to pay to appellee up to July 1, 1-917. It is clear from these facts that the Caro Northern Railway Company acquired no title to of right of possession of the rails against appellee inconsistent with appellant’s contract with appellee, and we agree with appellant’s contention under its eleventh proposition that “there is nothing in the Constitution or statutes or laws of this state to prevent the railway company (appellee) from removing its rails now in the tracks of the Caro Northern Railway Company,” nor it there anything in the Constitution or laws of this state to prevent appellant from removing the rails. The learned triai court evidently construed article 6625, Vernon’s Sayles’ Ann. Civ. St. 1914, as a restriction of appellee’s right to take possession of or recover its property. This court refused to so construe that article in the case of Railway Co. v. Kinkead, 60 S. W. 468, in which we held: “It [the article cited] cannot, by any reasonable intendment, be held to restrict the right of a citizen to recover Ms property from a railroad company that has wrongfully taken possession of same,” We are not inclined to doubt the soundness of that holding, and it applies .with equal force to the railroad company that wrongfully withholds from the citizen his property. Under this view of the law, the conversion of plaintiff’s rails occurred when appellant and the Caro Northern Railway Company, which held possession of the rails under it, refused to return them to appellee. If we are wrong in our conclusion that -the rails could have been removed from the track of the Caro Northern Railway, the appellant nevertheless should be held to have converted them by voluntarily, and without the consent or knowledge of appellee, placing them where it was beyond the power of appellee or appellant to recover them. In the sixth conclusion of fact before set out, the ¡trial court finds that appellee never agreed that its rails should be turned over to the Caro Northern. Railway Company to be used by it in the construction-of its road as a common carrier, nor did the appellant obtain or seek to obtain permission from appellee to place the rails in the track of said railway, or even inform appellee of its intention to deliver the rails to the Caro Northern Railway Corapany. As before stated, this finding of fact is not complained of in any assignment presented by appellant, and is therefore binding upon .this court, regardless of what the evidence may be on the issue. The fact that the appellee may have known that its rails were in that portion of appellant’s tram road which became a part of the Caro Northern Railway after that corporation was organized, and, with such knowledge, assisted appellant in obtaining recognition of said railroad as a common carrier by the State Railroad Commission, would not as a matter of' law estop it from claiming that appellant, by permitting the rails to remain in said railroad and refusing to recover and deliver them to ¿ppellfee, as it had -contracted to do, was chargeable with conversion of the property and liable to appellee for its value. It may well be doubted whether the evidence raises any issue of estoppel, but, under our view of the law above expressed, that the rails could be taken from the tracks of the Caro Northern Railway Company, the question of estoppel raised by appellant becomes immaterial. Propositions 3 to 6, inclusive, presented b£ appellant, raise issues of limitation which are predicated upon the contention that, if there was a conversion of the rails by appellant at the time they were placed in the track of the Caro Northern Railway Company, plaintiff’s suit for damages for such conversion having [273] been brought more than four years thereafter, the cause of action was barred, and the further contention that the amended petition upon which the cause was tried, which was filed September 1, 1921, and alleges the conversion of the rails at the time appellant refused to deliver them to appellee, set up a new and different cause of action from that alleged in the original petition, and the conversion therein alleged was barred by the two and four years’ statutes of limitation. There is no merit in any of these propositions. The original petition, which was brought up as a part of the transcript, was not introduced in evidence in the court below and is not properly before us. If, however, we should consider that petition, we cannot agree with appellant that it alleges a different cause of action from that set up in the amended petition. Both petitions seels to recover of appellant the rails leased it under the contract which forms the basis of this suit, and the cause of action set up in both is predicated upon the refusal and failure of appellant to deliver the rails as it had contracted to do. The substance of the cause of action is the same in both petitions.. Appellant’s next complaint is that there is neither pleading nor evidence to support the trial court’s finding of the value of the rails at the time of their conversion. Plaintiff’s petition contains the following allegations: “That the defendant company violated the terms and provisions of said contract in failing to keep said rail separate from other rail used by it, and in permitting said rail to become a part of the main line of the defendant railway company, and in failing to pay the annual rental charges due from and after the 1st day of June, 1917; in failing at the termination of said contract by reason of the exhaustion of its supply of timber, after notice given by it of its intention to terminate said contract within six months from the date of said notice, to take up and deliver said rail to the plaintiff; that the intent and purpose of said contract was that, the date fixed therein for its termination, or for other cause provided for therein, said rails should be taken up and delivered back to the plaintiff, or should be left in such condition as to identification, possession, and claims as that it might take same up and charge the cost thereof to said defendant, the annual rental thereon to be paid up to and including the time of the redelivery of said rails to this plaintiff; that defendant, by its acts and conduct and the breaches hereinbefore set out, has violated the express terms and purposes of said contract, and by reason thereof plaintiff has been damaged to the value of said rails in the sum of $65,000, being the reasonable value of said rails at the time of the conversion thereof and at the time of the forfeiture of said contract by said defendant lumber company.”. We think this allegation sufficiently charges a conversion of the rails when appellant failed and refused, after demand by appellee, to pay further rental therefor, or to take them up and deliver them to appellee. The claim for damages for such conversion in the sum of $65,000 is a sufficient allegation to admit proof of the value of the rails at the time of the conversion. There is ample evidence to sustain the finding of the trial court of the value of the-rails so converted. Appellant further' contends that the contract under which appellee seeks to recover is wholly void because violative of the antitrust statutes of this state (Rev. St. 1925, art. 7426 et seq.). We cannot concur in this contention, which is predicated upon the following provision of the contract by which appellee leased the rails to appellant: “And further agrees to ship out over said railroad company’s line all of the output of said sawmill plant except so much as may be sold to local customers at Oaro, and further agrees that said shipments over said railroad company’s line shall be not less than one million feet per month.” If the suit was brought for a violation of this provision of the contract there might be some force in appellant’s contention, though we are not inclined to hold under the facts of this ease the quoted provision violated the provisions of our anti-trust statute. The undisputed facts show that appellee was and is the only line of railway over which the output of appellant’s mill could be shipped except such as might have been shipped to Mt. Enterprise after the extension of the Oaro Northern Railroad to that place, and, as lumber for that place could not be shipped over appellee’s railway, the contract should not be construed as preventing the shipment over the Oaro Northern. If, however, this provision of the contract should be held void, its illegality could not defeat appellee’s right to recover its rails delivered to appellant under other lawful provisions of the contract. The several provisions of the contract are not so interdependent that the illegality of one provision should be held destructive of the entire contract and all rights secured thereby. Appellant having failed to deliver the rails to appellee upon demand after the termination of its lease, and not being prevented from so doing by operation of law or vis major, its failure so to deliver them was in law a conversion, and rendered it liable for their value. Young v. Lewis, 9 Tex. 73; Nelson v. King, 25 Tex. 655; Warehouse Co. v. Rice Co. (Tex. Civ. App.) 164 S. W. 396. We are of opinion that the judgment should be affirmed, and it has been so ordered. Affirmed.