Rome, Watertown & Ogdensburgh Railroad v. Ontario Southern Railroad

Smith, J-: Each of the corporations, parties to the agreement of November, 1872, was organized under the general railroad act of 1850. [449] That act gives power to every corporation formed under it to cross with its track any other railroad before constructed at any point on its route, and provision is made for ascertaining and determining the amount of compensation to be made therefor, in case the two corporations cannot agree in respect to it. (Laws 1850, chap. 140, § 28, sub. 6.) That in every such case the two corporations have power to make an agreement respecting the amount of compensation, is clearly to be implied from the provision referred to. No question was made on the argument, as to the power of the president of each corporation to bind his corporation by the agreement in question. We may assume, therefore, that the agreement was not ultra vires. It secured to the Lake Shore Company a perfect right to cross the track of the Sodus Point Company, and its provisions were such that the former company was enabled to enjoy the right in perpetuity, by performing its part of the agreement. Even in case of the default of the Lake Shore Company the agreement would not have been terminated, unless the other party had chosen to consider it forfeited. (Folts v. Huntley, 7 Wend., 210.) If, therefore, the Lake Shore Company had instituted a proceeding, under the statute, against the Sodus Point Company, after the making of the agreement and while the two companies owned and operated their respective roads, it can hardly be doubted but that the agreement, and the acts of the parties under it, would have been a bar to the proceeding. Not only would the petitioning corporation have been in the enjoyment of all which it could acquire by the proceeding, but the essential jurisdictional fact of inability to agree would have been lacking. The important question, therefore, is whether the corporations now litigating, having acquired respectively the roads of the Lake Shore and Sodus Point Companies, are bound by the agreement. Had the agreement been under seal it would have been a grant of an easement, liable to be defeated by the default of the grantee to perform the covenants on its part; and in such case the semi-aimual payment reserved would have been rent ( Van Rensselaer V. Ball, 19 N. Y., 100), the right to recover which would have passed to the grantee of the servient estate. (1 R. S., 747, 748, §§ 23, 24, 25; Van Rensselaer v. Ball, supra.) So, too, the burden [450] or obligation to pay rent, as well as the benefit, would have run with the easement, both being so inseparably connected as that each would have been necessary to the existence of the other. (1 Smith’s Lead. Cases [5th Am. ed.J, 143, and cases there cited.) The same would have been true of the covenant on the part of the grantor to furnish a flagman at the crossing, and of the covenants on the part of the grantee to build a house at the crossing for the flagman to live in, and a signal pole to be used by him in signalling trains approaching the crossing, each of which conditions directly touched and affected the thing granted. (Norman v. Wells, 17 Wend., 136.) This is upon the assumption that covenants will run with inheritances incorporeal — a position which, although it has been controverted (Wheelock v. Thayer, 16 Pick., 69), seems to be supported by authority. (Bally v. Wells, 3 Wilson, 26; 1 Smith’s Lead. Cases, 161, and cases cited.) Although the agreement, not being under seal, is not at law a technical grant; yet it vested in the Lake Shore Company substantial legal and equitable rights and interests, appertaining to their road aud essential to its use. It gave them the legal right to enter upon the road of the Sodus Point Company, and there construct, maintain and use a crossing so long as it performed its share of the agreement, and that right it availed itself of and fully enjoyed, under the agreement, so long as it continued to own and operate its road. The agreement is one which a court of equity would have enforced, if performance had been withheld; and in equity part performance would supply the want of the corporate seal of the contracting parties. (Pry on Spec. Prop., 255.) The agreement being such as a court of equity would enforce, the rights of each party for that purpose, and to that extent, were capable of being transferred (Murray v. Jayne, 8 Barb., 612, 617), and would have passed, under a deed of the road of such party, as appurtenant to the road. (Id.) The appellant claims title to the road which belonged to tfie Lake Ontario Shore Railroad Company, under a mortgage executed by the latter company, which described the property and rights thereby mortgaged and conveyed, in language sufficiently broad and comprehensive to mclude the rights and interests which the mortgagor acquired under the agreement in [451] question, although executed subsequently to the mortgage. It expressly conveyed “the railroad constructed and to be constructed * * * and the rights, privileges and franchises now owned by the said company, or which shall hereafter lie owned by it, forming a part or appertaining to, or necessary or convenient to or about” said railroad By the foreclosure and sale the property, rights, privileges and franchises covered by the mortgage passed to the purchasers and to the corporation formed by them and their associates, under the name of the “ Lake Ontario Railroad Company.” (Laws 1854, ch. 282, § 1; Laws 1857, ch. 444, § 1.) That company used the right of crossing and paid at the stipulated rate for the same, pursuant to the agreement, until it was consolidated with the Rome, Watertown and Ogdensburg company. The consolidation was effected under chapter 917 of the Laws of 1869. The fourth- section of that act provides that ■upon the consummation of the act of consolidation of two or more corporations under said act, “all and singular the rights, privileges, exemptions and franchises of each of said corporations parties to the same, and all the property, real, personal and mixed * * * shall be taken and deemed to be transferred to and vested in such new corporation, without further act or deed; and all claims, demands, property, rights of way, and every other interest, shall be as effectually the property of the new corporation as they were of the former corporations,” etc. By the fifth section it is declared that “ the rights of all creditors of, and all liens upon, the property of either of said corporations, parties to said agreement and act shall be preserved unimpaired, and the respective corporations shall be deemed to continue in existence to preserve the same, and all debts and liabilities incurred by either of said corporations, except mortgages, shall thenceforth attach to such new corporation, and be enforced against it and its property to the Same extent as if said debts or liabilities had been incurred or contracted by it.” The mortgage executed by the Sodus Point and Southern Railroad Company also conveyed its railroad and all things pertaining to it 1 acquired or to be acquired ’ and they became vested in the Ontario Southern Railroad Company. That company acquired title on November 30, 1875, and its right to receive the payments provided for by the agree [452] ment in question was recognized by the Lake Ontario Railroad Company, the latter company having made the payment which fell due on December 1, 1875. By that act, the latter company recognized its liability to the same extent as if it had been a party to the agreement. The statute subjected the consolidated company to the liabilities of the Lake Ontario Company in respect to the agreement and the rights enjoyed under it, to the same extent as if such liabilities had been contracted by it. Its position was very different from that of an assignee of a vendee of land, to which it is likened by the appellant’s counsel. We think that by the operation of the several statutes to which we have referred, the appellant is bound by the agreement, so long as it enjoys the right created by it, and that it may enforce the agreement in equity, against the respondent, in case of its refusal to perform. The case is not affected by the circumstance that the road of each company was under mortgage before the agreement was made, and that the mortgages have been foreclosed. Neither the Sodus Point Company nor its successor was made a party to the foreclosure of the mortgage executed by the Lake Ontario Shore Railroad Company, nor was the latter company, or either of its successors made a party to the foreclosure of the mortgage given by the Sodus Point Company. As to the parties to this proceeding, the mortgage lien upon their respective rights and interests under the agreement are unforeclosed, and the mere existence of the lien does not affect the present question. The order should be affirmed, with costs. Mullik, P. J,, and Talcott, J., concurred. Order of Special Term affirmed, with ten dollars costs and disbursements.