Pennsylvania Co. v. Erie & Pittsburgh Railroad

Mr. Justice Clark delivered the opinion of the court February 23d, 1885. The Erie & Pittsburgh Railroad Company on the 24th day of March, 1870, by writing under seal leased its entire road, with the rollihg stock, equipments and effects, together with all its rights and franchises, to the Pennsylvania Railroad Company for a term of nine hundred and ninety-nine years, from and after the first day of March, A. D. 1870, and trans: ferred to the same company all its contracts made prior to' that date. On the first day of April, 1873, the Pennsylvania Railroad Company assigned the lease and the rights it secured to the Pennsylvania Company, the defendant in this suit, “ subject, nevertheless to all covenants in the said indenture of lease contained, which on the part of the Pennsylvania Railroad Company are to be kept or performed,” which covenants the Pennsylvania Company assumed. The line of the Erie & Pittsburgh Railroad Company runs through the lands of William Gibson, James McMasters and William Douthett, land owners in Mercer County, who in the year 1858 released the. right of way to that company. Although these releases expressed but a nominal consideration, it appears that at the time they were taken the company verbally agreed to issue to each of the persons named, annually during his lifetime a pass which would entitle him and the members of his family to a Nee passage over the line of the road. This parol agreement was in each case the consideration of the contract to release the right of way, but no such consideration was written in the release. The Erie & Pittsburgh Company, until the execution of the lease, complied with the terms of their agreement, and the Pennsylvania Railroad Company and the Pennsylvania Company, while operating the road under the lease, continued to issue the passes until the first day of January, 1874, when officers of the Pennsylvania Company having, as they alleged, consulted their contract and acquainted themselves with the nature of the claim of the landowners, declined to give passes after that date. Thereupon, three several actions were brought by the said William Gibson, James McMasters and William Douthett against the Erie & Pittsburgh Railroad Company, in the Common Pleas of Crawford County, to recover damages for the breach of the parol agreement. In these actions judgments were obtained against the said company in the aggregate amount of $4,085.90, which the Erie & [628] Pittsburgh Company have since been compelled to pay. The present amicable action is therefore resorted to, to recover from the Pennsylvania Company the ambunt of money which they have been obliged to pay by reason of the refusal of that company to issue the passes according to the parol agreement referred tó; Formal pleadings, by agreement of the parties, were dispensed with, and the right of trial by jury waived, and the case referred under the Act of 22d April, 1874. No specific form of action is designated in the agreement, no case stated for -the opinion of the court, no pleadings filed, and we are left, therefore, to conjecture as to the form intended to .be pursued. We are informed that “ the matter to be tried is the liability of the defendant to the plaintiff for the amount of three certain judgments recovered in the Court of Common Pleas of Crawford County,” particularly mentioned, “under a certain lease and contract made between the Erie & Pittsburgh Railroad Company of the one part and the Pennsylvania Railroad Company of the other part, dated the 24th March, 1870, and assigned by the Pennsylvania Railroad Company to the defendant, under which contract and assignment the defendant operates the Erie & Pittsburgh Railroad.” No express contract relation is alleged to subsist between the parties; the plaintiffs say that they have been obliged by law to pay these judgments, and that the payment was in relief of the defendant ; we therefore assume that the action is in assnmpsit for money by the plaintiff paid out and expended for the defendant’s use. That the payment was not voluntary is admitted, but whether it was made in relief of the defendant is the matter to be determined. The whole question turns upon the proper construction of the original lease or contract of 24th March, 1870, between the Erie & Pittsburgh Railroad Company and the Pennsylvania Railroad Company.- By the express words of the-assignment the Pennsylvania Company-held “under and subject to all the covenants in the said indenture of lease contained, and which on the part of the Pennsylvania Railroad Company are to be kept and performed.” The full measure of the defendant’s responsibility is set forth in the following clause of the assignment: “ And the said Pennsylvania Company, for themselves, their successors, and assigns do hereby covenant and agree with the said Pennsylvania Railroad Company, their successors and assigns that they shall and will at all times hereafter during the residue of said term well and truly keep and perform all and singular the covenants and agreements in the said indenture of lease set [629] forth and contained to be by the said Pennsylvania Railroad Company kept and performed.” . No obligations were assumed by the Pennsylvania Company other than are expressed in the contract between the original contracting parties. Referring, then, to the original contract we find that after having leased the road, its equipments and effects, together with the rights and franchises of the company, for the term mentioned, the parties of the first part, the Erie & Pittsburgh Railroad Company, “assign and transfer to the said second party all the contracts of the first party made prior to the first day of March, eighteen hundred and seventy, to have and to hold the said.....contracts for and during the term of each thereof respectively.” In consideration of the lease and transfer the Pennsylvania Railroad Company agree to work, operate and maintain the road with its equipments, to furnish funds to maintain the corporate organization; to pay interest on the mortgage bonds, taxes, &e.; to pay annually to the lessors as therein stipulated, “ and to keep, perform and fulfil all and singular the obligations and covenants of said contracts, and which the first party could be required to fulfil and perform.” What these contracts were which were to be kept and performed by the lessors, or to what they related we do not know; but we do know from the peculiar phraseology of the contract that they are the same contracts which were assigned, and no other. The releases of the right of way were certainly such contracts as were embraced in the assignment, and it cannot be questioned that the Pennsylvania Railroad Company were bound to perform and fulfil all and singular the obligations and covenants therein, if aiiy remained to be performed; but the parol agreement to provide a pass was no part of the release ; the latter was an executed contract absolute and unconditional in its terms, and a transfer of it in the absence of an express provision to the contrary carried with it - to the transferee no legal responsibility for the former. Each it is true was the consideration of the other, but they were distinct and independent, one secured a right, .whilst the other evidenced a debt, of the company. The contract for the passes was not properly the subject of assignment by the company; an assignment is a transfer by a party of an estate or right which he has, and not of a debt which he owes; the contracts referred to, and which the defendants were to perform were necessarily therefore such as' secured rights or estates to the company. • But the contract of lease contains another clause which clears up all possible doubt on this point. After the provisions [630] for the lease of the road and its equipments, and the transfer of the contracts aforesaid, it is further written as follows: “ The same to be free and clear (except the bonds of the first party secured by mortgage) from all debts, dues, claims ■and liabilities incurred or owing by the first party prior to the first day of March, A. D. one thousand .eight hundred and seventy, including the pro rata share of all accruing coupons for interest on said bonds and taxes, for which the first party could be liable up to said first day of March.” It cannot bfe doubted that the obligations of the parol agreement must be classed with the “ debts, dues, claims and liabilities ” of the Erie & Pittsburgh Company, and from these the assignment was “ to be free and clear.” It is a matter of little consequence, we think, that the Pennsylvania Railroad Company and the Pennsylvania Company for several years issued passes to the land owners, or that they took part in the defence of the actions brought after the refusal to issue them. If there was any ambiguity or uncertainty in the expression of the contract, these acts might and would furnish some evidence as to the construction which the parties themselves put upon it, but we discover no such ambiguity as would render such evidence admissible for this purpose. We are of opinion that under the evidence in the cause there is no liability on the part of the Pennsylvania Company, to the Erie & Pittsburgh Railroad Company for the judgments referred to, and that the learned referee was in error in determining otherwise. The judgment is therefore reversed and judgment is now entered for .the defendant.