Bald Eagle Valley Railroad v. Nittany Valley Railroad

33 A. 239, 171 Pa. 284, 1895 Pa. LEXIS 1303
CourtSupreme Court of Pennsylvania
DecidedOctober 7, 1895
DocketAppeal, No. 171
StatusPublished
Cited by23 cases

This text of 33 A. 239 (Bald Eagle Valley Railroad v. Nittany Valley Railroad) is published on Counsel Stack Legal Research, covering Supreme Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bald Eagle Valley Railroad v. Nittany Valley Railroad, 33 A. 239, 171 Pa. 284, 1895 Pa. LEXIS 1303 (Pa. 1895).

Opinion

Opinion by

Mr. Justice Dean,

On the 22d of March, 1887, the Valentine Ore Laird Association (unincorporated), and William Stewart and Evan M. Blanchard, trustees of the Valentine Iron Company, had the legal title to and possession of a large body of iron ore lands, mining rights and other property in Centre county, on which was a large iron smelting furnace, partly built; the Valentine Iron Company proposed to lease this furnace and manufacture pig iron; then, in conjunction with the Nittany Valley Railroad Company, the latter, as yet only projected, to construct, equip and operate a railroad on the lands from the ore mines to the furnace, and also from the furnace to a connection with the Lemont Railroad, near the furnace. For the purpose of raising money, the Valentine Iron Company and the Valentine Land Association had executed a mortgage, dated August 2, 1886, [291]*291upon all the lauds, to the Fidelity Insurance, Trust and Safe Deposit Company of Philadelphia, as trustee, to secure the payment of $600,000 of first mortgage bonds; the bonds to be sold, and the proceeds used to promote the project. The Lemont Railroad Company, in aid of the enterprise, agreed to purchase at par $75,000 of the bonds; in consideration of this aid, the Land Association, the Iron Company and the Nittany Valley Railroad Company, agreed to give to the Lemont Railroad Company and the Bald Eagle Valley Railroad Company, connecting short lines of the Pennsylvania Railroad Company, and to the last named company, the traffic to and from the ore lands, furnace and railroad. The covenant in this particular was that the covenantors “ Agree, for themselves, their successors, lessees and assigns, in the nature of a covenant to run with the title of the lands held by them, that they will give all the traffic coming to or going from the property, mines and furnaces owned and controlled and to be built and operated .... by them,” to the three railroad companies, so far as these lines were available for the covenantors’ traffic, and so long as the railroad companies observed the agreement on their part. The Land, Iron and Railroad Company further covenanted that in making any grants of lands they would provide in the grants that the grantees should take subject to the covenants, and that they would not aid or encourage, in any manner, in the construction of competitive lines of railroad in the territory.

The three railroad companies covenanted they would transport the traffic thus received at fair and reasonable rates, as compared with charges on like traffic under like circumstances on other parts of their lines. It was further provided that if any dispute arose under the agreement, it should he referred to two disinterested persons as arbitrators, one to be chosen by each party to the agreement, and these thus chosen to select an umpire, if they could not agree.

The $75,000 was paid over for the bonds agreed to be taken by the Lemont Company; other of the bonds, sufficient to put the furnace and ore mines in operation, were disposed of, and all parties in observance of the agreement conducted their business until October, 1890, when, default having been made on the interest on the bonds, the mortgage was foreclosed by the trustee, and on January 29, 1891, the sheriff sold the property [292]*292to the trustee, which purchased on behalf of the bondholders, for $195,000, accepting the trustee’s receipt as a lien creditor for the purchase money. Deed was accordingly acknowledged to the trustee. On February 26, 1891, by consent of the bondholders interested, the trustee, by deed, conveyed the property to the Valentine Iron Company, a corporation organized February 6, 1891; instead of the bonds, the former holders of them accepted proportionate amounts of $634,350 in stock of the new company, issued in shares of the par value of $50.00. By this change the railroad companies, plaintiffs, became stockholders in the amount proportionate to their $75,000 purchase of bonds. The new company continued the same relations with the railroad companies from the date of its organization down to the winter of 1892-1893.

On the 11th of May, 1889, the “ Central Pennsylvania Railroad Company ” was incorporated, to construct a railroad from Mill Hall in Clinton county to Unionville in Centre county, a distance of about twenty-five miles, located with a view to form a connection with the Nittany Valley Railroad near Bellefonte, and the Beech Creek Railroad near Mill Hall. The last named railroad is, in its terminals and connections, a competitor of the plaintiff railroad companies. The plaintiff averred that the Valentine Iron Company, since the beginning of the year 1893, had encouraged the construction of the Central Pennsylvania Railroad financially and otherwise ; J. W. Gephart, the president of the iron company, being also the president of the railroad company, is also acting as superintendent of the work of construction of the competing road, and is the chief representative of the undertaking; that the Nittany Valley Railroad was leased in 1891 to the Valentine Iron Company, and is operated by the iron company. That the Valentine Iron Company threatens to give the traffic coming from and going to the mines and furnace for transportation over the Central Pennsylvania, and thence, by its connections, over the lines of competing roads.

The plaintiffs aver that the acts of defendants are in violation of their covenants in the agreement of March 22, 1887, and pray that they be restrained by injunction.

The defendants demurred to the bill:

1.. Because by the sale on the mortgage they took the property free and discharged from all the covenants of the agree[293]*293ment, the agreement having been executed subsequent to the mortgage.

2. The purchaser at the mortgage sale took the land discharged of the covenants, therefore every other party to the agreement was released.

3. That the agreement was without consideration, and is therefore void.

4. The agreement was against public policy.

5. It was in violation of article XVII. of the constitution, and is not enforceable in law or equity.

6. That the ifittany Valley Railroad did not covenant nor aid in the construction of competitive lines of railroad.

7. That the restraint of the construction of competitive lines, whether by moral support or otherwise, is illegal.

8. That to enjoin defendants from giving traffic to a common carrier, under the laws of the commonwealth, is in restraint of trade.

9. There is an adequate remedy at law.

The court below after argument sustained the 1st, 2d, 4th, 5th and 8th grounds of demurrer, and entered a decree dismissing the bill, and from that decree plaintiff appeals, assigning sixteen errors to the decree and opinion of the court.

The bill sets out the facts in substance as we have stated them, and it follows from the demurrer that defendants admit them as averred.

The opinion of the learned judge of the court below is in good part devoted to demonstrating that the covenant to transport the traffic to and from the orelands and furnace over plaintiffs’ lines, and not to aid and encourage the construction of other or rival roads to the source of the traffic, is not a covenant real which runs with the land, binding upon the heir, successor or assignee, hut is a mere personal covenant binding only upon the parties to it. Spencer’s Case, the leading ease, 1 Smith’s Leading Cases, 9th Ami ed. p.

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Bluebook (online)
33 A. 239, 171 Pa. 284, 1895 Pa. LEXIS 1303, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bald-eagle-valley-railroad-v-nittany-valley-railroad-pa-1895.