Ala. Gt. Southern R. R. v. South & North Ala. R. R.

84 Ala. 570

• Court: Supreme Court of Alabama
• Decided: December 15, 1887
• Status: Published

Opinion

SOMEBYILLE, J.

The contract of April 21st, 1871, purporting to have been executed between the Elyton Land Company, the Alabama and Chattanooga Bailroad Company, and the South and North Alabama Bailroad Company, has an important bearing on the issues in this cause, and we, therefore, first Consider the objections urged by the appellant in opposition to its validity.

It is urged, in the first place,- that this contract was executed by certain officers of the Alabama and Chattanooga Bail-road Company without the written authority of that Company, and was never afterwards ratified by its board of directors or other governing body. These officers were B. C. McCalla, chief engineer, and John C. Stanton, general superintendent of the road. The contract concerns the use of the right of way of a railroad company, which is an interest in lands, and an agent who conveys such property is required by our Statute of Frauds to have “a written authority.” — Code, 1876, § 2145. If the legal title were in controversy it is evident that the best and only evidence of such agent’s authority to convey would be a resolution of the board of directors, appearing among the corporate proceedings or minutes, showing the'appointment of such agent, and investing him with the requisite authority to convey. Standifer v. Swann, 78 Ala. 88. But such, as we shall see, is not this case, it being admitted by the appellee that the appellant has the legal title to the right of way in controversy, and that the claim of the appellee can not rise to a higher dignity than a perfect equity.

There are, in our opinion, two sufficient answers to the argument that neither Stanton nor McCalla is shown to have been invested with a -written authority to convey the property in controversy. The first is found in the legal effect of the decree rendered in favor of the Elyton Land Company in August, 1881, against the appellant, and the appellee, involving this same contract. The bill filed in that suit alleged in substance the existence of this contract, and its execution by authority of the Alabama and Chattanooga Railroad Company, and sought to have the benefits of it revoked as against the appellant, the Alabama Great Southern Railroad Company, for non-performance of certain conditions subsequent, the latter company being averred to claiin under this contract as the successors of the former. The decree pro confesso taken in that case against the appellant involved an admission by it of the allegations of the bill. — Code, 1876, § 3824. The record would be admissible evidence even in favor of a stranger, as a solemn admission by the appellant of the existence of-the contract, of the fact of its claiming under the provisions of it, and of the authority of the officers by whom it was executed. — 1 Greenl. Ev. § 527a. A fortiori would it be admissible in favor of the appellee who was a party to the record as a co-defendant in the suit.

A further and equally cog'ent reason is found in the principle of- equitable estoppel, or estoppel in pais, which, we think, arises out of the facts of this case. The case of Standifer v. Swann, 78 Ala. 88, supra, relied on by appellant’s counsel, does not go farther than to hold that no legal title would pass, under the facts of that case, by the deed of Stanton, whatever equities the vendee might have, which were not considered. — Ware v. Swann, 79 Ala. 333; Swann v. Miller, 82 Ala. 530. The contrary doctrine is well settled in this State, that, notwithstanding the requirements of the Statute of Frauds, declaring void certain contracts for the sale of land unless evidenced by writing subscribed by the party to be charged, an equitable interest may be acquired in lands, without any written transfer of title, by conduct or declaration of the owner which would create an estoppel in pais on his part. — Hendricks v. Kelly, 64 Ala. 388; s. c. 57 Ala. 193; McPherson v. Waters, 16 Ala. 714. This rule applies as well to corporations as to natural persons. The fact that they must necessarily act through the instrumentality of agents, either immediate or intermediate, and can act in no other way, does not change the principle. And although an agent of a railroad, or other corporation, authorized to sell land or any interest in land, can convey no legal title or freehold estate unless his authority to sell be in writing, this being a question of actual authority, yet the directors or governing body may so act as to estop themselves from denying the existence of such written authority, and thus create an equitable estoppel in puis. — 1 Rorer on Railroads, pp. 652-665; V. & M. R. R. Co. v. Ragsdale, 54 Miss, 200; s. c. 17 Amer. R’y Rep. 435.

The general rule is that agents of a corporation, except for the sale or alienation of land, need not be appointed by a vote of the directors, or in writing. Nor need such appointment usually be evidenced by the corporate proceedings or minutes. Both the fact of the appointment and the authority of the agent may be inferred from his being held out to the public as apparently invested with such authority, or from the subsequent recognition or confirmation of his acts, whether originally authorized or not. — 1 Wood’s Railway Law, pp. 444-447, § 163; Ala. & Tenn. R. R. Co. v. Kidd, 29 Ala. 221; Angell & Ames on Corp. § 284. If the act done by the agent be one of so public and notorious a character as that ignorance of it would be gross negligence on the part of the principal, the inference is the stronger that it must have been known to the principal, and that his failure to expressly dissent in a reasonable time is a ratification of the act, especially where the principal derives a benefit from it.

The testimony shows that John C. Stanton was the general superintendent of the Alabama and Chattanooga Bailroad Company, and that B. C. McCalla was its chief engineer. The contract in question was signed by them both. Its purpose was to provide for depot facilities and locations for machine shops, with rights of way through a space agreed on for the crossing of two great and important railways — the site of a future prosperous city; and to secure to one of the roads, then in progress of construction, a suitable and convenient place of crossing. It is shown that Stanton had been intrusted with full power to build the road, equip, manage, and run it, as its general superintendent, exercising authority over all intermediate agents. There was no other person representing the company who had any authority of a cognate character. He was exercising this power so notoriously and openly that it would be gross negligence for the directors to be ignorant of his conduct. The presumption is that they knew what he was doing incident to the customary duties of his position, It may be regarded as matter of common knowledge that such powers are usually exercised by such officers, as necessary to the continued life and existence of the company. — 1 Wood’s Eailway Law, p. 439-440, § 162. The failure of the company, moreover, to object to the open and notorious occupany of the right of way for nearly nine years, under the terms of the contract, is persuasive to show the conferring of original authority, or else the ratification of the act of their agent in making it. The existence of this authority is also corroborated, if it is not, as we have above said, established solely by the decree -pro confesso in favor of the Elyton Land Company rendered against appellants on issues growing out of this same written agreement.

The inference thus being that this authority was'conferred, although it may have been oral, and its exercise being so long acquiesced in, and the appellee, the South & North Alabama Bailroad Company, having, as it appears, located its machine-shops, tracks and depots with a view to the right of way acquired under this contract, and the land in controversy, as so occupied by it, having risen in value perhaps a hundred fold, it would be inequitable and unconscientious to allow these affirmations of the agent’s authority now to be denied or disproved. It is a sound and honest rule of equity, supported by principles of justice as well as of public policy, that if one knowingly though passively suffers another to purchase and spend money on land, under circumstances which induce an erroneous opinion or mistaken belief of title, without making known his claim, he shall not afterwards, in a- court of conscience at least, be permitted to successfully assert any right or title against the purchaser. — Hatch v. Kimball 16 Me. 146; Marshall v. Pierce, 12 N. H. 136; Wendell v. VanRenssalaer, 1 Johns. Ch. 354; Blake v. Davis, 20 Ohio 231. The facts of this case, it seems to us, fall within this rule, and if they do not constitute an estoppel in pais the whole doctrine might as well be blotted from our system of jurisprudence.

It is further urged that the contract in question is not supported by any sufficient legal consideration. The agreement is tripartite, between the Elyton Land Company and the two railroad companies. The rights conferred by the land company upon the appellant, and the abandonment by the appellee of another crossing which had been determined on, would be a sufficient consideration, the first being beneficial to tlie appellant and the latter being detrimental to the appellee.

• The uncertainty o£ the contract is also urged as a .reason why it shall not be enforced. This feature is supposed to be found in the provision that “the party of the third part shall have the perpetual and free use of the right of way of the party of the second part in a manner to be hereafter determined by deed." This, it is said, left open for future adjustment one or more important terms of the'contract, and no such deed has ever been executed. The appellee was, however, placed 'in possession of the right of way of appellant, and has continued in its daily use for over nine consecutive years, with the knowledge of the appellant and those under whom it derives title. The conduct of the parties, and uniform usage, thus acquiesced in, has supplemented this alleged uncertainty. The failure on the part of the Alabama & Chattanooga Bailroad Company to require a deed of the character stipulated for, followed by a dissolution of that corporation, and the acquiescence for so long a time in the mode of use adopted by the appellee, must be deemed a waiver of this feature of the contract, as well as an agreed interpretation of it. This is an identification of the thing contracted for,, so far as qualified by its mode of use, not by declarations but by the acts of the parties, which can be proved by parol evidence. In fact it is both a construction, and an execution of the contract as to the only clause of it open to the charge of uncertainty.

The last objection relied on is the fact that the appellant claims title under a mortgage, or deed of trust executed by the Alabama & Chattanooga Bailroad Company to the State in December, 1868, several years prior in point of time to the contract in question, which was not made until April, 1871, and that, for this reason, its title is paramount to that of the appellee. The argument is that the railroad, being a mortgagor in possession, could make no contract disposing of any portion of its right of way, which was subject to the incumbrance of the mortgage. This may be admitted to be the ordinary rule governing the rights of the mortgagor and mortgagee of property, whether real or personal. Being the owner of the equity of redemption only, the exceptions are rare in which the mortgagor can confer on another any greater rights than those which he possesses. Nor usually would the silence of the mortgagee in standing by and permitting a purchaser from the mortgagor, having notice of the mortgage, to put valuable improvements on the property, estop him from asserting his prior claim under the mortgage. Without deciding this point we may hypothetically admit its correctness. — 1 Jones on Mort., § 681; Steele v. Adams, 21 Ala. 534; Booraem v. Wood, 27 N. J. Eq. 371; Frost v. Beekman, 1 Johns. Ch. 288.

But the proposition urged by the appellee as an answer to this is, that the right of the two railroads to make the crossing, and therefore to appropriate to such purpose a reasonably convenient portion of each others right of way, is paramount to the mortgage, or any other lien under which appellant claims. This mortgage, or deed of trust, was executed in the year 1868, and the bonds secured by it were issued under the provisions of the act of February 19th, 1867, incorporated in the Revised Code of 1867, as sections 1417 to 1439, inclusive, authorizing the indorsement by the Governor, in the name of the State, of the first mortgage bonds of certain railroads. The making of such indorsement secured to the State a first lien upon the road with all its property and equipments including its right of way. Rev. Code, 1867, § 1624, It is under a foreclosure of this lien, as well as of the mortgage executed to certain trustees to secure these bonds that the appellant claims title.

The inquiry is, did the law, which authorized this indorsement, and secured this lien, make a reservation of the right of way for crossing and union purposes, such as would cover the present case? It is contended that section 1435 of the Revised Code, which constituted a portion of that law, accomplishes this end. That section, so far as germane to this inquiry, reads as follows:

“The railroad companies receiving the benefits of this article, and all other railroad companies incorporated in this State, may construct their roads so as to cross each other if necessary, by the main track or brandies, or unite with each other or the branches of each.” — Rev. Code, § 1435.

This provision being in the law which authorized the indorsement of the bonds was a part of the contract of indorsement, and the acceptance of the benefits of the law by the railroad company made it as binding on all parties concerned as if it had been specially incorporated in the contract. ■ And all persons dealing with the bonds were charged with notice of the law under which they were issued. — Morton v. N. O. & S. Railway Co., 79 Ala. 590. The company thus, by consent of the State, of the bondholders and mortgagees, ex-ceptecl from any lien or conveyance so much of its right of way as was necessary and convenient to make a crossing or union with the South & North Alabama railroad or any other railroad in Alabama, and dedicated it to the use designated by the statute. This provision was a wise and necessary one in view of the fact, that, without its incorporation in the statute, it would have been practically impossible for the managers of railroads, encumbered by mortgages, ever to have made any contract .for crossing which would have been binding on bondholders, many of whom would be unknown, and others subject to the disabilities of coverture, infancy, or of being non compos, so that they could not bind themselves. The details of such an arrangement were necessarily devolved by implication upon the managing authorities of each road, subject only to the limitation that.it should be made in a bona fide and reasonable exercise of the authority conferred. To this every one concerned must be conclusively held to have assented.

The record presents nothing which justifies the conclusion that the right of way granted to the appellee was not of this character. The contention of the appellant that the statute limited the right of crossing to a perpendicular crossing, and not to one in any degree longitudinal, can not, in our judgment, be sustained. The statute must have intended to require imperatively a crossing at right angles, or else it permits one intersecting at an acute angle. It would be a strict and unreasonable construction to hold that no discretion should be allowed in regulating such an arrangement. Nor can any rule be stated by which to determine the exact size of the angle. We might well say that in an open plain, where no marsh, river, mountain, or declivity intervened, that an intersection at such an angle as to occupy ten miles of track would be unreasonable, while the occupancy of a few hundred yards might not be. The argument is manifestly unsound that places on the same basis these two categories. The power to do an act means the power to do it in a mode that is just, reasonable and satisfactory, taking into consideration the peculiar circumstances of each case. It is here shown that about four thousand feet, less than a mile, of the appellant’s track was appropriated for the purpose of a crossing of the two railroads. The circumstances of the case were peculiar. It was no ordinary crossing. It was reasonably contemplated that the site would be occupied by a large and prosperous city in the future, a plat of which, with its appropriate streets, avenues, and dedication to public uses, liad already been surveyed and mapped out. It was reasonable to expect that such a city would embrace within its limits this mile of highway. It would be convenient to the public, as well as mutually to both roads, to have the tracks adjacent for this particular distance. It would lessen the frequency and hazard of crossing the track with vehicles of all lands; and would greatly facilitate the interchange of both freight and passenger cars passing from one road to the other in the process of transportation, especially when accomplished by protracted switching so often necessary in such cases, and growing more dangerous with the daily increasing density of a growing city’s population. These reasons satisfy us that the contract of April 21, 1871, under which the appellee is shown to have occupied the four thousand feet of the right of way of the Alabama & Chattanooga Railroad Company was authorized by law, and was binding on all persons concerned, including the appellant. Section 1424 of the Revised Code, 1867, which confers the priority of lien on the State, does not conflict with the foregoing views in the least. The section under discussion (§ 1485) excepts from the operation of this lien, as we have said, so much of the right of way as may be necessary or proper for a crossing with other roads. The case of The Illinois Central Railroad Co. v. The Chicago, Burlington & Northern R. R. Co., but recently decided by the Supreme Court of Illinois, is, in our opinion, perfectly reconcilable with these views. It was there held that under the facts of that case, one railroad had no authority, in exercising the right of crossing, to condemn under the statute a crossing which had appropriated ten miles of another’s railroad track, which had already been condemned as a public highway. That conclusion was probably correct, although two of the judges dissented. — Anniston & C. R. R. Co. v. Jacksonville, etc., R. R. Co., 82 Ala. 297.

That the contract in question conferred the use of the right of way free from future pecuniary compensation seems to us quite clear. The right conferred is the “perpetual and free use of the right of way” in question. The consideration for this grant was given both by the Elyton Land Company and the appellee, as we have heretofore shown. Its use by the appellee was of great advantage to the other road. The word free must here be construed to mean free of compensation, not merely uninterrupted use, as insisted by appellant’s counsel. This construction is corroborated by the fact tliat no compensation was ever claimed for such use, until tlie bringing of tbe action of ejectment souglit to be enjoined by the present bill — a period of more than nine years from the making of the contract.

It results from the foregoing views that there is no error in the decree of the chancellor of which appellant can complain. The compensation required by the decree to be paid for the land, if erroneous, was error without injury.

The decree is affirmed.

Clopton, J., not sitting.