Pittsburgh, C., C. & St. L. Ry. Co. v. Keokuk & H. Bridge Co.

WOODS, Circuit Judge, after making tke foregoing statement, delivered tke opinion of tke court. Tke bill of tke appellants, if intended as a bill for review on the ground of newly-discovered evidence, should have keen brought in tke court in which the decrees that it was sought to have reviewed were rendered; leave therefor being first obtained of the supreme court and of this court, by which the decrees had been affirmed. Southard v. Russell, 16 How. 547, 570, 14 L. Ed. 1052; Kingsbury v. Buckner, 134 U. S. 650, 671, 10 Sup. Ct. 638, 33 L. Ed. 1047; Bank v. Taylor, 9 U. S. App. 406, 447, 4 C. C. A. 55, 53 Fed. 854; Seymour v. White Co., 34 C. C. A. 240, 92 Fed. 115. As a hill for relief on the ground of fraud in the obtaining of the decrees it is [786] upon its face' insufficient, and its defects are in no manner supplemented by the proofs. It is not shown how the appellants were put upon inquiry into the facts, by what means they learned them, nor why the discovery might not just as well have been made at the commencement of the litigation, if, in obedience to the dictates of ordinary prudence, inquiry had been then instituted. No concealment .or misrepresentation is alleged. The semiannual statements did not profess or purport to be based on the schedule rates. The bringing of the suits was notice to the appellants to prepare for defense, and “if they took anything for granted it was at their own risk.” Embry v. Palmer, 107 U. S. 3, 2 Sup. Ct. 25, 27 L. Ed. 346. Such relief as is sought, though the power to grant it extends to cases of accident and mistake, as was said in Brown v. Buena Vista Co., 95 U. S. 157, 24 L. Ed. 422, “is never given upon any ground of which the complainant, with 'proper care and diligence, could have availed himself in the proceeding at law.” See, also, Avery v. U. S., 12 Wall 304, 20 L. Ed. 405; Crim v. Handley, 94 U. S. 652, 24 L. Ed. 216. The rule as stated by Chief Justice Marshall in Insurance Co. v. Hodgson, 7 Cranch, 332, 336, 3 L. Ed. 362, 363, is “that any fact which clearly proves it to be against conscience to execute a judgment, and of which the injured party could not have availed himself in a court of law, or of which he might have availed himself in a court of law, but was prevented by fraud or accident, unmixed with any fault or negligence in himself or his agents, will justify an application to a court of chancery.” The fraud alleged to be available must be extrinsic; that is to say, “not in the subject of the litigation, not in anything which was involved in the issues tried, but fraud practiced upon the party or upon the court, during the trial or in prosecuting the action, or in obtaining the judgment.” U. S. v. Throckmorton, 98 U. S. 61, 25 L. Ed. 93; Marshall v. Holmes, 141 U. S. 589, 12 Sup.. Ct. 62, 35 L. Ed. 870; Graver v. Faurot, 46 U. S. App. 268, 22 C. C. A. 156, 76 Fed. 257. Of course, one who seeks relief from a decree in equity must be likewise free from fault or negligence. Touching the decree upon the cross bill, the contentions of the appellants are — First, that by reason of the reduction in the rates and tolls charged during the period covered by the decree they were released from all liability; and, second, that, if liability be conceded, the accounting reported by the master Was based upon an erroneous theory, and improperly included charges for counsel fees and other expenses of the bridge company in this suit and in the suit which ended in the decree of December 9, 1892. The appellee insists that these matters were involved in and therefore finally determined between the parties by the decrees rendered in the prior suits. We are unable to see that that is so. Those decrees, of course, determined that' the reduced rates theretofore charged were proper, or 'for some reason constituted no defense to those suits, and that the charges then made for counsel fees were also proper; but it does not follow that any question of the rightfulness of the rates and tolls collected since March 1, 1892, and of the items of account now disputed, is foreclosed. What was done before may have been doné [787] with, the approval of the railroad companies, while what has been done since the second decree may have been without their knowledge or against their protest. The suits, it is true, have all been between the same parties, and upon causes of action arising out of one and the same contract, and yet each has been upon a separate and distinct cause of action, covering a distinct period of time, within which the facts determinative of the attitude and rights of the parties may or may not have been the same. Cromwell v. Sac Co., 94 U. S. 351, 24 L. Ed. 195; Nesbit v. Riverside Disk, 144 U. S. 610, 12 Sup. Ct. 746, 36 L. Ed. 5-62; Bissell v. Spring Valley Tp., 124 U. S. 225, 8 Sup. Ct. 495, 31 L. Ed. 411. Of course, whatever was determined in the earlier suits, either expressly or by necessary implication, as that the appellants are in effect parties to and bound by the bridge contract and amendments, and their liability thereon unaffected by the eviction of the Pittsburgh Company from the possession of the railroad of the Columbus Company, must be considered as having-been put at rest; but to extend the estoppel as proposed wrould, we think, be unreasonable and without precedent. The contention of the appellants that, by reason of the rates and tolls charged during the period covered by the cross bill having been less than the stipulated rates, they are released from all liability for the deficiencies accruing during that period, seems to be without substantial merit in fact, whatever the proper construction of the contract. The idea of making a defense on that ground is an afterthought, disclosed first in the amended bill, which was not filed until near twenty months after the bringing of the suit, fifteen years after the bringing of the first suit against them by the bridge company, and twentydwo years after they first denied liability upon the contract. The proof is that from July 1, 1885, to February 1, 1889, a discount of 25 per cent, from schedule rates was allowed, and from the latter date to the time of the hearing a rebate of 15 per cent, had been allowed, and these deductions or discounts were shown upon returns submitted to agents and experts of the appellants for examination. In view of the well-known course of business, the certainty that any change of rates over one line or system of railroads will be very soon felt and known upon other lines, and especially in view of the direct interest of the appellants in the rates charged for crossing this bridge, it is impossible to believe that they were without knowledge of the rates charged; and this conclusion is not affected by the testimony of individual officers that they each had no such information. The interchange of business through a course of years necessarily carried to all concerned a knowledge of the rates being charged, and the long-continued failure of the appellants to object to the reduced rates imports consent. The reductions made are shown, without dispute, to have been not only reasonable, but necessary, to prevent the diversion of traffic and income. There is no ground whatever for the charge in the amended bill that the deficiencies were caused or enhanced by the reductions. The contrary is true. The rules governing contracts of suretyship or guaranty are not applicable. While the purpose of the parties was to provide a fund [788] for the payment of interest upon the bonds which it was contemplated should be issued by the bridge company, the railroad companies which-entered into the contract had a direct interest in the construction and operation of the bridge, and cannot assert the right of a surety or guarantor to insist that' any departure from the letter of the contract by the bridge company, however slight, and even though beneficial, has worked their discharge. Bank v. Gay, 57 Conn. 224, 3.7 Atl. 555, 4 L. R. A. 343; Richardson v. Draper, 87 N. Y. 337; Kernochan v. Murray, 111 N. Y. 306, 18 N. E. 868, 2 L. R, A. 183. By its charter — the act of congress under which it was organized — the bridge company was authorized to collect only reasonable tolls, and if the rates originally agreed upon became unreasonable it became its duty to change them, and the duty of the appellants to consent to the -change, and, it being clear that the changes made were reasonable and necessary, it ought perhaps on that ground alone to be held that the liability of the appellants was not affected by the reduction; but -it is to be observed that the Columbus Company, to whom as the representative of the appellants the bridge company was under engagement to give whatever notice was necessary, had gone out of existence, and the appellants had repudiated the contract before the reductions in rates were made; so that notice'to the appellants, if required by the contract, and a request for their consent to the changes proposed, would have been useless, and the failure to give the notice and to obtain the consent should therefore be of no consequence. The objection that the decree should not have included the fees paid to attorneys and an officer of the bridge company, and other expenses incurred in the litigation, is, we think, well taken. The clear effect of the original contract and first amendment was to bind the appellants to make good to the bridge company one-fourth of the deficiency of net income from “railroad freight traffic” for every period of six months, if the amount fell below §40,000. There is nothing in the second amendment to affect this obligation. That amendment has reference to revenues .from all sources, and provides that after payment of interest upon the bonded debt and capital stock of the bridge company, and the cost of “repairs, maintenance, and all expenses connected therewith,” the surplus “shall belong to the railroad companies parties hereto.” The phrase, “all expenses connected therewith,” it is clear, includes all expenses which must be taken into account in determining “the net revenues from all sources,” and manifestly includes more than can be' considered in determining the “net earnings from freight in any one year,” or for any period of six months. For deficiencies in receipts from freight traffic only did the railroad companies become responsible. That obligation is expressly affirmed by the second amendment, but it is not enlarged or in any way modified. It is urged that the semiannual statements, made up from the monthly reports of the railroads using the bridge, were not competent evidence of deficiencies under the contract; but the objection is not sound. There has been no suggestion that the statements do not show the actual receipts of the bridge company from the [789] railroads using the bridge. They were certainly competent for that purpose; and if it be true, as pointed out, that better means might have been employed to obtain true and reliable monthly reports, the fact is irrelevant, unless in the accounting the bridge company should be charged with what it ought to have received in addition to actual receipts; and even upon that theory the fact might affect the weight, but not the competency, of the evidence. The total of the items improperly charged seems to be $36,833.39, one-fourth of which, or $9,208.35, with a proper addition for interest, should be deducted from the decree, and, so reduced, the decree will be affirmed, each party paying one-half the costs of the appeal.