New York Cement Co. v. Consolidated Rosendale Cement Co.

70 N.E. 451, 178 N.Y. 167, 16 Bedell 167

• Court: New York Court of Appeals
• Decided: April 5, 1904
• Status: Published

Opinions

Babtlett, J.

Action Ho. 1 seeks to prevent the collection of illegal canal tolls, and action Ho. 2 to restrain defendant from excluding plaintiff’s boats and freight from the canal in question. These actions were tried and argued together on one set of briefs, although there are two records.

Ho opinions were written below after the trial of the actions, but two were handed down at Special Term and one in the Appellate Division on motions for injunctions pendente lite. (37 Misc. Rep. 746 ; 38 Misc. Rep. 518 ; 76 App. Div. 285.)

. The question presented -by these appeals is an exceedingly narrow one when the facts, as settled by agreement, are carefully considered. The Delaware and Hudson Canal Company, by grant of the legislature of this state (Laws 1823, chap. 238), constructed a canal between the Delaware and Hudson rivers, a distance of about one hundred and ten miles, and operated the same for over seventy years as a common carrier of coal and other freight, charging tolls fixed by the act of 1823.

This court held, when a subsequent enlargement of the canal was in progress, that the Delaware and Hudson Canal Company possessed the power under its charter to exercise the right of eminent domain. It was also held that the canal “ though not strictly a public work, is yet of the nature of one, as much as a railroad, and is to he regarded as a public work in the same sense.” (Selden v. D. & H. C. Co., 29 N. Y. 634, 638, 641, 642.)

In 1899 the legislature amended the act of 1823 (Laws of 1899, chap. 469) in important particulars by inserting therein certain new sections. We are concerned with sections three and four. Section three reads as follows: “ Whenever it shall appear to the managers of said canal company that it is able to fulfill the aforesaid purpose of opening and of mining and bringing to market a supply of stone coal which is found in the interior of the state of Pennsylvania more economically by rail over its own or other lines than by its canal, it shall be lawful for said company, and it is hereby authorized and empowered by vote of said managers, to lease, sell or discontinue to use or maintain said canal, or any parts thereof, which in their judgment are no longer necessary for said purpose.”

The ¡managers of the canal company were thus authorized to do one of three things at their election, viz., lease, sell or discontinue to use or maintain said canal, or any parts thereof.

On the 24th day of June, 1899, the Delaware and Hudson Canal Company conveyed to the Cornell Steamboat Company, a domestic corporation, the entire canal and its appurtenances, and “ all the franchises owned, possessed, used or enjoyed by the grantor in connection with the ownership, use and operation of said canal.” The Cornell Steamboat Company continued to operate said canal in the same manner as its predecessor, charging only the tolls provided by the act of 1823 until about the 20th of March, 1902, when it conveyed, by deed similar to the one it had received, the east twelve miles of said canal, beginning at the tide lock at Eddy-ville, in the town of Ulster, county of Ulster, and ending at the easterly line of the town of Marbletown, in said county.

It is conceded that at the time of this conveyance to the defendant the remaining part of the canal, extending westerly about ninety-eight miles to Honesdale, in Pennsylvania, had been entirely abandoned.

The plaintiff and defendant are large manufacturers of hydraulic cement, their works being on the line of said twelve miles of canal; the defendant’s is located near the westerly end thereof and the plaintiff’s is about five miles from the Hudson river. .

The plaintiff corporation transported its cement by this canal to tidewater for many years and until shortly after the conveyance to the defendant corporation by the Cornell Steamboat Company on or about March 26th, 1902, paying only the tolls provided by the act of 1823, being a'fraction less than four cents per barrel.

The Cornell Steamboat Company, in conveying to the defendant corporation, reserved to itself, its successors and assigns and tó a certain person named, his heirs, legal representatives or assigns, the right at all times, so long as said canal is operated, to pass canal boats through the canal, whether light or loaded with sand, stone or- cement slag, without paying toll or charges of any kind therefor.

It appears in the agreed statement of facts that after the defendant company had acquired the twelve miles of canal aforesaid, it claimed to own that portion of the canal as a pri vate waterway, and that it kept it open and in operation for its own private use only; that it was under no obligation to allow the plaintiff or any other person to use it and to transport their goods thereon, but it offered, for the accommodation of the plaintiff, to allow it such use and transportation if it would pay therefor at the rate of sixteen cents per barrel for the cement so transported, and it claimed that unless the plaintiff would pay the sum asked by the defendant company it could be excluded from the canal. Thereupon the plaintiff, after, making tender of the legal rates of toll, began the two actions to wdiich reference has already been made, insisting that the tolls were prohibitory.

It is to be observed that in this agreed statement of the facts it is not admitted by the plaintiff that this canal is a private waterway, and that it is kept open and in operation only for the private use of the defendant company. The statement is that this situation is claimed by the defendant company, and the one important question presented by this - appeal is whether this remaining twelve miles of canal has been in law abandoned and discontinued. There was no effort made to prove at the trial that this portion of the canal had been abandoned in conformity to the provisions of section four of the act of 1899.

The provisions of this section are most significant and disclose what the legislature had in mind when it provided for the discontinuance of the canal, or any parts thereof. Section four reads as follows: “Whenever the said company shall exercise the'power and authority granted in section three of this act to discontinue to use or maintain said canal, or any part thereof, it shall, within a reasonable time thereafter, restore the highway crossings of such part of said canal as is so discontinued to their former state, so far as the same can be done, either by the removal of the bridges thereover and the approaches thereto and filling in the bed of the canal at such crossings, or in such other way as may be found most practicable for-that purpose. It shall also be the duty of said company, in the event of such discontinuance of said canal, or any part thereof, to make such provision for the private crossings over that part of said canal so discontinued as will furnish those entitled thereto a suitable crossing thereover, either by the removal of the bridges and approaches now existing at and for such private crossings and filling in the bed of the canal thereat, or in such other way as may be found most practicable for that purpose. It shall also be the duty of said company, in the event of such discontinuance of said canal or any part thereof, to make such provision for the streams now discharging into said canal on that part of it which may be so discontinued as will restore them to their original channels; but where to make such restoration has become, or is now, impossible, such provision shall be made for the discharge of the water of such streams from said canal as the existing situation now permits, and as will avoid injury to other property. It shall also be the duty of said company, its successors or assigns, to take such precautions and make such provision for the carrying away of water that may flow into the bed of such portion of said canal as may be discontinued as will prevent such stagnant pools of water therein as are liable to become injurious to public health.” .

This section clearly contemplates that the water is to be removed from the canal; that the highways which had been carried over it by bridges of sufficient height to permit large boats to pass underneath would be lowered to their former position before the canal was constructed, either by the removal of the canal bridges and the filling in of the bed of the canal, or in some other practicable way. The same provision is made for private crossings.

The provisions as to the treatment of streams discharging into the canal, and the stagnant pools of water therein, all show that the legislature contemplated a complete discontinuance and abandonment of the prism for transportation purposes.

The situation disclosed by this record is (1) we have the Cornell Steamboat Company, the grantor of the defendant, reserving the right of its boats to navigate the-canal light or ladened without tlie payment of tolls; (2) we have the defendant offering the plaintiff to transport its product- if the latter consents to pay sixteen cents, per barrel instead of four cents; (3) in the absence of proof we are permitted to assume that this twelve miles of canal stands precisely as it has existed for year's. There was no abandonment up to the time of the trial.

The question is not involved in this case whether the defendant may, in the^ future at its option, discontinue this canal by actually doing so and complying with the provisions of section four of the act of 1899. The real question is whether the defendant, the successor in interest of the Delaware and- Hudson Canal Company in the ownership of this waterway, which has been held by this court to be a public highway, can, so long as it exists and is used for the purposes of the defendant and such third parties as it sees fit to permit, be successfully claimed to be private property.

We are of the opinion that it must be held as matter of law, under the conditions disclosed by this record, that this twelve miles of canal is a public highway and operated under the restrictions of the act-of 1823; and that if the defendant transports the product of the plaintiff to tidewater it must confine itself to the tolls provided for in the act of 1823.

If the position which has been assumed by the defendant company can be maintained, it has the liberty to use this canal as private property and charge the general public along its route, desirous of sending freight to tidewater, such rates as it sees fit. There is but one way for defendant to rid itself of the public burden imposed by this use and that is to abandon it under the provisions of the act of 1899.

We are of opinion that so long as this canal is used for the purpose of transportation, it must be regarded as a public highway, and the defendant rests under all the restrictions and liabilities imposed lipón the Delaware and Hudson Canal Company originally.

The defendant comes within the principle decided by the Supreme Court of the United States in Munn v. Illinois (94 U. S. 113, 125, 130). Mr. Justice Waite, referring .to the police powers, says (p. 125): “Under these powers the government regulates its citizen, one toward the other and the manner in which each shall use his own property when such regulation becomes necessary for the public good. In their exercise it has been customary in England from time immemorial, and in this country from its first colonization, to regulate ferries, common carriers,'etc., and in so doing to .fix a maximum charge to be made for services rendered, for accommodations furnished and articles sold.” The learned judge further states (p. 130) : “ Common carriers exercise a sort of public office and have duties to perform in which the public is interested. (New Jersey Steam Navigation Co. v. Merchants’ Bank, 6 How. U. S. 382.) Their business is, therefore , effected with the public interest ’ within the meaning 'of the doctrine which Lord Hale has so forcibly stated.”

We have already pointed out that this court held in regard to the canal that while it is not strictly a public work, yet it is in the nature of one, as much as a railroad, and is to be regarded a public work in the same sense. (Selden v. D. & H. C. Co., 29 N. Y. 634, 638, 641, 642.)

•The precise point .decided in the Múnn Case {supra) was that when the owner of property devotes it to a use in which the public has' an interest, he in effect grants to the public an interest in such use, and' must to the extent of that interest submit to be controlled by the public for the common good as long as he maintains the use. He may withdraw his grant by discontinuing the use. (See, also, People v. O' Brien, 111 N. Y. 1 ; Que v. Tidewater Canal Co., 24 How. [U. S.] 257 ; MacEntee v. Kingston Water Co., 165 N. Y. 27.)

The defendant raises the point that a bill in equity praying for a perpetual injunction restraining the defendant from imposing illegal tolls and excluding the plaintiff’s boats and freight from the canal, is not the proper remedy. The remedy suggested is mandamus, but we are of opinion that under the facts it was competent for the plaintiff to seek the restraining power of a court of equity to prevent the exaction of illegal tolls and exclusion from a public highway. An action can be, maintained, although the matter is one of common right, where damage peculiar and personal to plaintiff is shown.

In discussing the general question whether the restraining powers of a court of equity will be exercised in favor of the plaintiff corporation in the case at bar, we are to keep in mind the precise situation. This is not the case where the general rights of the public alone are involved and the plaintiff received only such injury as is common to other citizens interested in the maintaining of this canal. We have here a state of facts that shows the plaintiff to have been specially damaged. This canal had been in operation for a period of nearly seventy years when sold to the Cornell Steamboat Company. Before that sale the plaintiff had erected expensive cement works on the banks of the canal five miles from tidewater where the canal locks its boats into the Hudson river at Rondout. This expenditure of money we are bound to infer from these facts was made in view of the existence of the canal, and the further fact that the rate of tolls was fixed by the charter of the canal company under the laws of Pennsylvania and Hew York. In other words, the plaintiff company proceeded upon the assumption that its product could be conveyed to tidewater at rates fixed by law that would enable it to compete with other cement companies contending for the market.

Mr. Morawetz in his work on Corporations, second edition, § 1042, says: “ It is well settled that a court of chancery has jurisdiction to grant equitable relief against a corporation at the suit of an individual whenever a sufficient cause for the relief is shown upon the ordinary principles of equity jurisprudence ; and the fact that the act of the corporation against which relief is sought involves an unauthorized exercise of corporate powers, or other breach of the law, is wholly immaterial under the circumstances.”

In the case of Delaware & Raritan Canal Co. v. Camden & Atlantic R. R. Co. (16 N. J. Equity, 321) it was held that where, by the act of the legislature, the plaintiff companies were fully and effectually protected until a certain date from railroad competition between the cities of Yew York and Philadelphia, an injunction was the proper remedy to secure to the plaintiffs the enjoyment of a statutory privilege.

In Rowe v. Granite Bridge Corporation (21 Pick. [38 Mass.] 344), it was held that although indictment is the proper remedy in the case of a public nuisance where it is absolutely necessary that such" a nuisance should be immediately suppressed, a court of chancery may interfere by injunction until the slower process of indictment can be put in motion. This case discloses the dual remedy 'and illustrates the legal principle that equity will lay hold of a corporation to enforce not only public but private rights.

We have been cited in support of the proposition that equity will not interfere in such a situation as is now presented to the case of Knickerbocker Ice Co. v. Shultz (116 N. Y. 382, 389). This case involves the construction of a dike on the Hudson river shore that rested upon land under water, the title to which was still in the state. The plaintiff had for many years before the construction of the dike been accustomed to cutting ice in the Hudson river and drawing it over the premises in question to the shore. The dike interfered with this mode of harvesting ice, and the plaintiff thereupon brought an action to restrain the defendant from erecting or maintaining it. The court held that this was a purpresture, that is, an invasion of the right of property in the soil while the title to the same remained in the People. A nuisance in such a case as this is an injury to the common right of the public in navigating the river, and these questions can only be tested in an action at the suit of the People.

It will be observed that in this case the plaintiff had no absolute vested property right which it was seeking to protect, but invoked a remedy which, under the conditions disclosed, rested in the People and could only be invoked by the attorney-general. ■ ■'

Two other cases have been cited to us in this connection, viz., Lansing v. Smith (8 Cowen, 146 ; S. C. on appeal, 4 Wend. 25) ; also case of Buck Mountain Coal Co. v. L. C. & N. Co. (50 Penn. St. 91).

In 8 Cowen it was held that in the ease of erections working a common injury to the owner of docks, etc., and unauthorized by statute, no action would lie at the suit of an individual unless there was some injury from the erection peculiar and personal to him.

In 50 Penn. St. it was held that a bill in equity to enforce the performance of public duties by corporations could not be maintained by a private party in the absence of special right or authority.

In Milhau v. Sharp (27 N. Y. 628) this court said: “ To entitle a party to relief by injunction who is sustaining or about to sustain a peculiar injury from a public nuisance, it is also necessary that the injury should be such as cannot be well or adequately compensated in damages at law, or such as, from its continuance or permanent mischief, must occasion a constantly recurring grievance, which cannot be otherwise prevented but by .injunction.”

The principle which we are now considering is applied not only in cases of public nuisance, but to those involving similar situations to the one at bar. (See, also, Mudge v. Salisbury, 110 N. Y. 413 ; West Point Iron Co. v. Reymert, 45 N. Y. 703 ; Corning v. Troy I. & N. Co., 40 N. Y. 191 ; Mills v. Hall, 9 Wend. 315 ; Ogden v. Gibbons, 4 Johns. Ch. 150 ; Covington Stock-Yards Co. v. Keith, 139 U. S. 128 ; Butch ers’ and Drovers' Stock-Yards v. L. & N. R. Co., 67 Fed. Rept. 35.)

In 139 U. S. (supra) a bill in equity was filed against a Kentucky railroad company to foreclose a mortgage and to appoint a receiver. After the appointment of the receiver a petition was filed in the foreclosure proceeding requiring the receiver to show cause why he should not deliver to the plaintiff live stock consigned to him at some suitable place outside of the yards of the company. The Supreme Court of the United States held that a railroad company holding itself out as a carrier of live stock is under a legal obligation, arising out of the nature of its employment, to provide suitable and necessary means and facilities for receiving live stock that may be offered for shipment over its road and connections as well as for discharging said stock after it reaches the place to which it is consigned. A final decree issued compelling the company to provide such facilities.

The defendant raises the further point that the exercise by the Consolidated Eosendale Cement Company of the franchise granted by the state to the Delaware and Hudson Canal Company would be ultra vires. This is a question between the defendant and the state of Hew York, with which the former has no concern, as it is estopped from raising it by voluntarily assuming the position which it now occupies. So long as the state of Hew York raises no objection in the premises the defendant will not be heard to complain.

A new point has been raised in this court which seems to have escaped the vigilance of counsel, as their briefs are silent concerning it. It is urged that we have, in each of the cases that have been argued together, a situation which is absolutely fatal to the plaintiff’s appeal, as the decision of the learned trial court is in the short form and the judgment in favor of the defendant was unanimously affirmed; that in such a situation the decision of the trial court has the same effect as the verdict of a jury, and all the facts must be deemed to have been found in favor of the successful party.

In each of the cases, so far as the proceedings at the trial are concerned, a similar situation is disclosed by the record, which includes the clerk’s minutes, as follows: The cases were duly called for trial in the city of Kingston, Ulster county, and it was agreed that they should be tried together. A jury was duly impaneled and the counsel for tire plaintiff, after opening his case, introduced in evidence an agreement between the Delaware and Hudson Canal Company and the Cornell Steamboat Company, also a deed of the Cornell Steamboat Company to the Consolidated Eosendale Cement Company. It was then agreed between counsel that certain undisputed facts were involved in the actions, which were spread upon the ree ord in full and duly appear in the cases now before us on this appeal. Thereupon the plaintiff rested, and counsel for defendant, without offering' any evidence, moved in each case to dismiss the complaint on the ground that facts had not been proved sufficient to constitute a cause of action. The motion in each case was granted and plaintiff duly excepted.

There could be no decision in a jury case, with the facts stipulated, in the short or long form, and, consequently, no presumption of facts found in favor of the successful party.

The judgments appealed from should be reversed and new trials granted in each case, with costs to abide the event.