Pittsburg, Johnstown, Ebensburg & Eastern Railroad v. Altoona & Beech Creek Railroad

Opinion by Mr. Justice Brown, The Altoona and Beech Creek Railroad Company, on its cross-bill hied, was entitled to affirmative relief, but not of the summary character granted by the court below. By the decree made, the lease between the appellee and the Pittsburg, Johns-town, Ebensburg and Eastern Railroad Company and the Altoona, Beech Creek and Terminal Railroad Company was declared to be null and void, on the ground that its execution had been ultra vires as to the parties to it. The learned judge was led to this conclusion under what he regarded as “ the great weight of authority, ” citing, in support of the view he expressed, Pittsburg and Connellsville R. R. Co. v. Bedford and Bridgeport R. R. Co. et al., 81* Pa. 104, and Van Steuben v. The Central R. R. Co., 178 Pa. 367. In the former case, Mr. Justice Sharswood, delivering the opinion of the court, said: “ The principal question which has been raised and discussed upon this motion to dissolve the preliminary injunction heretofore granted is, whether the Bedford and Bridgeport Railroad Company have any right to execute a lease to the Pittsburg and Connellsville Railroad Company, as proposed by the resolution offered in the board of directors at their meeting of October 13, 1870. If it shall appear that no such right exists, then it will be altogether unnecessary to consider and determine two other questions which have been the subject of much earnest contention before us.” The question there was, not whether a [467] contract already executed, as the one -before us, should be declared null and void and set aside as being ultra vires, but whether one, manifestly so, should, in the face of a complaining stockholder, coming into court before its execution and asking for equitable relief, be executed by the officers of the corporation. In the second case, the Central Railroad Company of New Jersey sought to evade responsibility for its negligence by shifting it upon an alleged 'lessee; but, as no valid lease had been made — as the company had executed no valid agreement under which it could cast upon another the duty of carefully and properly operating the road — it, and it alone, was held to be liable. This is all that was decided by our Brother McCollum. There is a marked distinction between these cases, relied upon by the learned judge below, and the one we are now considering. In the present case, the cry of ultra vires is made by a party to the contract — to the executed agreement from which it has already derived some benefit. If it is ultra vires now, it was ultra vires then, when the contract was solemnly entered into by this appellee, with the full knowledge that there was no connecting line, and equity will turn a deaf ear for relief from a compact intelligently and deliberately made when prayed for by a party to it, whose conscience has become quickened only when hopes are disappointed and expectations not realized. If we are asked to give equitable relief to extended hands, they must not only be clean, but unfettered by a contract of their own making. No one injured by this alleged illegal lease is here complaining, and the commonwealth that gave life and being to its creatures, retaining the right to at all times supervise their conduct, is not challenging the proper use of the powers and privileges conferred. Conscience, which is the source of equity, says to this appellee that its prayer for relief cannot be granted, and, if authority should be asked for, it will be found in the following and the many other utterances of our own court to which we could turn. “ The law never sustains a defense of this nature out of regard for a defendant; it does so only where an imperative rule of public policy requires it. The instances are rare in which a corporation or individual has been permitted to set up its own wrong in order to retain both the property and its price. ... It would be difficult to imagine [468] a defense with less merit, and the law would be exceedingly impotent, were it to allow it to succeed: ” Wright v. Pipe Line Co., 101 Pa. 206. To the foregoing we may add Oil Creek and Allegheny River Railroad Co. v. The Pennsylvania Transportation Company, 83 Pa. 160, in which Chief Justice Paxson says: “ It does not appear to have occurred to the defendants below that the contract of July 26, 1871, was ultra vires until it became apparent that, by their subsequent modification of it, they had made a bad bargain. They then attempted to repudiate the modification and fall back upon the original agreement of July 26. Yet, the illegality, if any existed, was to be found in the original contract; assuming that to be legal, the modification of it was equally so. We do not think the defendants are in a position to defend upon the ground of the illegality of the contract.” Though we cannot agree with the learned judge below that the lease was null and void, as between the parties to it, we do not differ with him as to the dereliction of the lessee, Langdon, and his assigns, in the discharge of the obligations assumed; but, as the penalty imposed was forfeiture, we feel that, under all the facts developed and most carefully reviewed, we ought to mitigate it. That portion of the decree of the court below enjoining the collection of the rent alleged to be due, by process of distress, is affirmed; and it is ordered, adjudged and decreed that, if on or before July 1, 1900, the appellants pay the rental due to the appellee, as found by the court below, to wit: 1800 due December 8, 1899, and all subsequently accruing rent, and that on or before January 1, 1901, appellants construct the railroad and make the connections contemplated and provided for in the agreement of lease, the bill of complaint and the cross-bill be dismissed; and, upon failure to so pay the said rent, or to so construct the said railroad and make the said connections, that thereupon the appellants shall forthwith surrender possession of the railroad property and franchises leased and mentioned in said lease, unto the appellee, one half of the costs of the proceedings in the court below and on this appeal to be borne and paid by the appellants and the other half by the appellee.