People ex rel. Healy v. Illinois Central Railroad

233 Ill. 378

• Court: Illinois Supreme Court
• Decided: February 20, 1908
• Status: Published

Opinions

Mr. Justice Vickers

delivered the opinion of the court:

The question over which the most serious contention exists in this case is whether the railroad company has the power, under its charter, to maintain and operate, or cause to be operated, the elevators in question as public warehouses of class “A.” If the prayer for a perpetual injunction is granted, the duty of the railroad company to maintain these elevators as public warehouses would thereby be legally established. There are only two methods by which the railroad company could comply with the decree if the injunction were granted. The railroad company must either operate the elevators itself, or lease them to other persons and require the lessees to comply with the decree. If the latter course be pursued, the primary responsibility would rest on the railroad company. It could not excuse itself for a failure to obey the decree by showing that it had contracted with another to perform the duty required of it.

Appellants suggest that the power of the railroad company to operate the elevators in question directly, as public warehouses, does not arise as a practical question, since by making the rentals reasonable the company would always be able to End some one who would be willing to lease the .elevators and agree to operate them in the required manner. We fail to see the force of this contention. If the railroad company does not possess the power to directly engage in the warehouse business, it would seem to be paradoxical to compel it to contract with another to carry on such business and hold it responsible for the faithful observance of the decree by such third party. In First M. E. Church of Chicago v. Dixon, 178 Ill. 260, this court held that the church, having no power to devote its real estate to secular purposes for gain, could not, by executing a lease, authorize its lessee to erect a building to be used as an office building, even though a part of such building was reserved for the use of the congregation as a place for religious worship. See, also, Thomas v. Railroad Co. 101 U. S. 71.

Appellants do not, however, seem to rest much confidence in the suggestion above referred to. Recognizing the real question to be the existence or non-existence of the power in the railroad company to own and operate these warehouses, they unreservedly assert that the company has power to both own and operate the warehouses in connection with and as a part of its railroad. The general rule in regard to' the powers of corporations, established by many decisions of this court, is, that they may exercise those powers expressly given, and such others as are necessary to carry the express powers into effect. (Rockhold v. Canton Masonic Benevolent Society, 129 Ill. 440; People v. Pullman’s Palace Car Co. 175 id. 125.) It is not contended that the power to own and operate public warehouses, as a business, is expressly conferred by the special charter of the Illinois Central Railroad Company or by any general law relating to railroads in this State. Appellants’ contention is that the power contended for is implied, because its exercise is necessary in order to enable the railroad company to accomplish its duties as a common carrier of grain. A power which the law will regard as existing by implication must be one in a sense necessary,—that is, needful, suitable and proper to accomplish the object of the grant; one that is directly and immediately appropriate to the execution of the specific powers, and not one that has but a slight, indirect or remote relation to the specific purposes of the corporation. Chicago Gas Light Co. v. People’s Gas Light Co. 121 Ill. 530; People v. Pullman’s Palace Car Co. supra.

A public warehouse is defined by the constitution of this State as follows : “All elevators or storehouses where grain or other property is stored for a compensation, whether the property stored be kept separate or not, are declared to be public warehouses.” By the statutes of the State public warehouses are divided into three- classes, designated as classes “A,” “B” and “C.” Public warehouses of class “A” include all warehouses, elevators and granaries in which grain is stored in bulk and in' which the grain of different owners is mixed together so that the identity of different lots cannot be accurately preserved. Warehouses, elevators or granaries of class “A” are only located in cities having not less than 100,000 inhabitants. The statute in relation to warehouses of this class provides that before the warehouseman shall enter upon his business he shall give a bond and take out a license to act as such public warehouseman. When he has obtained his license he is thereupon required to store grain tendered to him by the public; to care for the grain; to issue warehouse receipts therefor and cancel the same upon delivery; make regular reports of the condition of the grain, amount stored, and all other matters connected with his business as a public warehouseman of class “A.” Among the duties required of public warehouse-men by the statute is, that the warehouse shall be, in fact, what its name implies,—a public warehouse,—in the sense that it must serve the public by accepting and storing grain tendered for storage by all persons indiscriminately.

It will be observed that the information does not seek to compel the railroad company to provide warehouse facilities for such grain as it transports to Chicago as a common carrier, but the prayer is, in effect, that the company shall continue to operate, or cause to be operated, the two elevators in question as public warehouses of class “A.” Nor is there any averment in the information that aiiy shipper of grain over the railroad has been denied ample storage facilities or that there is any threat to so deny them. But it is insisted by appellants that the maintenance of such warehouses is incidental to and necessary in connection with the railroad’s duty to the public as a common carrier of grain.

The primary purpose of a commercial railroad is to carry freight and passengers for hire from one point to another on its line. Such corporations obtain valuable franchises from the State, and in return they engage to carry, without discrimination, for all persons who see proper to employ them. To enable such corporations to discharge their functions they must, of necessity, exercise various powers not expressly granted by their charters. Powers are given, by implication, to discharge all duties which such corporations owe to the public. Wherever the law exacts a duty of a corporation to the public, the existence of the duty implies the power to perform it. It would be idle for the State to impose a duty on such companies and at the same time withhold from them the power to perform it. Implied powers are never allowed to enlarge express powers, so as to warrant the corporation in devoting its capital to purposes not expressly authorized, or to engage in enterprises not directly, but only remotely, connected with its specific corporate purposes. (First M. E. Church of Chicago v. Dixon, supra.) It is the duty of every railroad corporation which shall receive any grain in bulk for transportation to any place within this State, to transport the same and deliver it to the consignee, provided such delivery can be made over any lines of road which the carrier is permitted to use, and all railroads are required to permit connections to be made and maintained with their tracks to and from any and all public warehouses where grain is or may be stored. (Hurd’s Stat. 1905, chap. 114, sec. 3.)

It will thus be seen that there is nothing in the statute imposing the duty on a railroad company to furnish public warehouse facilities or to engage in the business of public warehousing and issue receipts to meet the wants or convenience of members of a trading exchange. It may be conceded that, as incidental to their duty to transport grain in bulk, railroad companies may, under some circumstances, have the power to furnish storage room for grain at important transfer points temporarily, to enable the owner to collect enough for a cargo where the grain is to be reshipped by water, and it is well known that many railroads maintain grain elevators for such purposes; but such storage contemplates a rotation, so that no one shipper or consignee can monopolize all the storage room and hold the same indefinitely or until the market seems to justify him in selling his grain. The duty of the railroad company to the public to transport all the grain that is offered for transportation forbids the company from adopting a method of business which would permit third parties, over whom the company has no .control, to use its storerooms and warehouses indefinitely, to the exclusion of other patrons and the embarrassment of the company in the performance of its duty as.a carrier. The combined capacity of the two elevators in question is 2,500,000 bushels, which is less than ten per cent of the grain annually transported to Chicago by the Illinois Central Railroad Company. If appellants’ contention is sustained, it would be possible for one buyer of grain to monopolize all the bins in these two elevators. One person might thus become the owner of all the grain in the elevators. Appellants would compel the railroad company, or its lessees in charge of the elevators, to issue such owner warehouse receipts for the grain stored. As long as the owner is willing to pay storage charges to a public warehouse we know of no law limiting the time of storage. Under the possible condition suggested, the ability of the railroad company to serve the public would be dependent upon the will and pleasure of the owner of the grain in the elevators. While this might be a great convenience to persons engaged in trading on the board of trade, we are unable to see how the public generally will be benefited or the railroad company will thereby be the better able to discharge its duties as a carrier. The producer and consumer of grain alike require the services of railroad companies to transport grain from the former to the latter, but neither will be benefited by having the grain lodged in a public warehouse at some intermediate point for an indefinite time, in order to allow speculators to use the receipts representing such grain as a trading commodity. That a railroad company has no power, either express or implied, to own and operate a public warehouse as an incident to public purposes as a public carrier, is in our opinion supported by sound reason and authority.

In Franklin Nat. Bank v. Whitehead, 149 Ind. 560, (39 L. R. A. 725,) it was held that only corporations organized for the purpose of carrying on the business of ware-housemen were authorized to take out a license to conduct a general warehouse business, notwithstanding the statute of that State' provided that “any person or ■ incorporated company” might obtain a permit to keep a public warehouse. In that case a corporation for manufacturing purposes applied for and obtained a license to keep a public warehouse. It issued warehouse receipts upon its own products on hand and pledged such receipts as security to the bank. It was held that the warehouse receipt was void and conferred no rights upon the bank, for the reason that the corporation issuing such receipt was not incorporated for the purpose of conducting a warehouse business.

Louisiana v. Southern Pacific Ry. Co. 52 La. Ann. 1822, is a case very much like the one at bar. In disposing of the case then before the court the Supreme Court of Louisiana said: “We are of the opinion that the defendant company is not authorized to receive for storage, for hire, in warehouses, goods or produce which have not been received by it under and from shipments by its road or for shipments upon its road. We think it authorized to receive them for storage in warehouses under and from shipments upon its road and for shipments by its road, to the extent that such storage is in fulfillment of its obligations as a common carrier, and not otherwise and no longer. We do not consider that storage of such goods and merchandise by defendant in warehouses, for hire, is incidental to its business as a railroad corporation and common carrier when the storage is made under either an express or implied, special or general, agreement with shippers or consignees, either before or at the time of shipment or on receipt of goods, that they should be received and held for storage, for hire, either for a fixed time or at the will of the shippers or consignees. We have already stated that, permanence in the storage is, in our opinion, inconsistent with the idea of its being incidental to the operation of a railroad corporation or necessary for its business as a common carrier. The fact that by availing itself of its control of switches, tracks and superior terminal facilities defendant may offer special advantages and accommodations to shippers in storing their goods, and thereby obtain increased revenues as a corporation, is not at all determinative of the question whether the storage is incidental to its business as a railroad corporation or the revenues received therefrom accrue to it as a common carrier. We think that the storage of goods by a railroad in its warehouses, as a matter incidental to its business as such, contemplates and looks to a rotation of storage as immediate and prompt as the railroad corporation can make it. If storage for hire be made by the railroad corporation, it should only be under an enforced storage resulting from the fact that shippers have failed to receive promptly, as they should do, the shipments carried over the road, and from this enforced storage the corporation itself should rid itself as quickly as possible. Inasmuch as the continuity of the relations between the parties have, by novation, been broken, and changed from those of shipper or consignee and common carrier to those of bailors and bailees, and the railroad company receives for the storage a consideration other than the regular freight rate, the storage takes on a different form and character from that which it' would otherwise have; and becomes a substantive, independent and not an incidental business. To be incidental business the storage must be preliminary, either to immediate transportation or immediate removal.”

In the case of State of Maryland v. Baltimore and Ohio Railroad Co. 48 Md. 49, the court, in discussing a similar question to the one now under consideration, used the following language: “And this brings us to the question, what are the buildings and works necessary and expedient to the operation of the road, within the meaning of the appellee’s charter ? And here we are met with the argument that ‘necessary’ means buildings and works indispensable to the road. This, however, is not a mere dictionary question, but one involving the construction of a power granted to a railroad company to enable it to accomplish the objects for which it was chartered; and as used in this connection it is clear the legislature meant such buildings and works as were reasonably convenient and appropriate to the maintenance and operation of the road. Construed in this sense, the question is whether ‘necessary’ buildings embraces the elevators, wharves, piers and docks owned by the appellee. Now, one of the main objects in chartering this company was to bring the western trade to the port of Baltimore,— not merely to supply a local demand, but for the purposes of transhipment as ocean commerce. These buildings and structures are therefore necessary for the business of the appellee as a common carrier, for the purposes of receiving and storing grain and freight shipped over its road after the same have reached the place of destination and previous to delivery to the consignee or owner. But the rights of the appellee in this respect are such as pertain to its functions as a common carrier, and as such it has no right to own and use the structures for the storage of grain and freight after the owner or consignee has had a reasonable time to remove the same. The act of 1826 does not certainly authorize the appellee to carry on the general and ordinary business of a warehouseman, and, however closely such business may be connected with that of a carrier, it is in no sense necessary to the exercise of the rights and privileges granted to the appellee as a railroad company.”

In Attorney General v. Great Northern Railway Co. 29 L. J. Ch. (N. S.) 794, vice-chancellor Kindersley was called upon to determine whether dealing in coal by the railway company was illegal, because incompatible with its duties as a public carrier and calculated to inflict an injury upon the public. It was there determined that the act of parliament granting the charter to operate the railway implied a prohibition against the company’s engaging in any other business, and the reason for the rule there laid, down was thus expressed (p. 798) : “These large companies, joint stock companies generally, for whatever purpose established, and more particularly railway companies, are armed with powers of raising and possessing large sums of money,—large amounts of property,—and if they were to apply that money or that property to purposes other than those for which they were constituted, they might very much injure the interests of the public in various ways.” The vice-chancellor further said, on page 799: “If they can do that with regard to coal, what is to prevent their doing it with every species of agricultural produce all along the line? Why should they not become purchasers of corn, of all kinds of beasts, and of sheep, and every species of agricultural produce, and become great dealers in the supply of edibles to the markets of London ? And why not every other species of commodity that is produced in every part of the country from which or to which their railway runs ? I do not know where it is to stop if the argument on the part of the company is to prevail. There is, therefore, great detriment to the interests of the public for this reason, talcing merely the article of coal.” The doctrine of this English case is quoted with approval in New York, New Haven and Hartford Railroad Co. v. Inter-State Commerce Commission, 200 U. S. 361.

■ In the matter of Swigert, 119 Ill. 83, this court had occasion to determine whether a grain elevator belonging to the Illinois Central Railroad Company, located on a lot o.f ground belonging to the company on the Ohio river and within the limits of the city of Cairo, was- exempt from taxation ■ for other than State purposes. The elevator was within fifty feet of the main track of the company’s road leading into the city and was connected therewith by sidetracks. It was so constructed as to receive and discharge grain both by rail and river. The elevator in question was leased by the company to Halliday Bros., who had the exclusive control of it. In holding that the elevator could not be exempt from taxation under the general power of the company to purchase, hold and use all such real estate and other property as may be necessary for the construction of its railway and stations and other accommodations, which property, under the charter, was exempt from local -taxation, this court, speaking by Mr. Justice Mulkey, on page go, said: “It [the warehouse or elevator in question] has no direct connection with the road or its operation, yet when shipments of grain are made, either to or from it, over the company’s road, it is very clear the company can handle the grain thus shipped with more ease and greater facility, and hence can, by means of it, do a greater amount of business. But this is purely incidental, and falls far short of establishing the proposition that a vast elevator like this, costing $200,000 or $300,000, is a necessary appendage of a railroad, or that the legislature, in granting the company’s charter, intended to exempt such a structure from taxation. * * * As a mere carrier the company has no right to put a bushel of grain in it, except when directed to do so by the shipper or consignee. This necessarily results from the fact that all grain, as is shown by the testimony, is stored in it according to grade, and not according to ownership. * * * On the arrival of a consignment of goods the company has the right to at once store them in its own warehouse. The company is bound to carry grain in bulk and deliver the same from cars or other convenient place of storage, without extra charge, now, just the same as it was before the elevator was built, if so required; and the company has no right to mix one man’s grain with others unless permitted to do so by the owners. It is clear, therefore, outside of the incidental benefits resulting to the company from a law of business, rather than from any municipal regulation, the elevator has no necessary connection with the construction, maintaining or operation of the company’s road, and such being the case, it clearly does not come within the exemption. If the elevator was used exclusively by the company in receiving grain for shipment, or for storing it after shipment, without any additional charge therefor, except where the owner neglected to take it away within a reasonable time after its arrival, the property would then be clearly exempt from taxation. But such is not the case. Buildings used for the storage of grain for compensation are indifferently called warehouses, granaries and elevators. Vast amounts of capital are invested in them, and, like railroads and other quasi public property, are under legislative control. Their construction and operation constitute a distinct business in the State, of vast magnitude. They are a great convenience to the community in which they are situated, and particularly to the owners of the railways with which they are almost universally connected.”

A similar question to the one decided in the foregoing case was decided in Illinois Central Railroad Co. v. People, 119 Ill. 137. In disposing of the question of exemption in the last case above cited, this court, speaking by Mr. Justice Scholfield, on page 140, said: “That freight houses, elevators, etc., constructed and used solely for the purpose of enabling the company to perform its duty as a common carrier, are exempt from taxation we think is beyond question; but the company has no more authority, under its charter, to enter upon the business of warehousing, generally, than it has to enter upon that of merchandising, and property, therefore, devoted to such a use, not being within the contemplation of its charter, cannot be within the exemption.”

While these two cases deal with the question of exemption from local taxation, the holding that the elevator was liable to taxation is based on the ground that the power to operate the elevator could not be sustained as implied or incidental to the power to own and operate a commercial railroad. We regard these cases as authorities against appellants’ contention in the case at bar.

Appellants contend that the railroad company having devoted these elevators for a long term of years to' use as public warehouses, they have thereby become impressed with a public use,—that is, with the right of the public to have that use continued. If this argument were limited to the duty of the railroad company to maintain these elevators-for the use of shippers and buyers of grain who had for a long term of years enjoyed the right of temporary storage therein, and it were shown that such storage was in furtherance of the usual and ordinary business of transportation of grain, there would be more force in it. But the argument is not so limited. It goes to the full length of the right claimed by the prayer of the information. The fallacy in this contention consists in a failure to distinguish between the rights of the public and the rights of certain members of the Chicago Board of Trade. We have already pointed out that the public interest did not seem to demand the permanent storage of grain in regular public warehouses, and the issue of warehouse receipts in the manner and for the purposes provided by the rules of the board of trade. If all the public warehouses in Chicago of class “A” should cease to be regular,—that is, cease to comply with the rules of the board of trade, by force of which their receipts would not be receivable on contracts for grain sold for future delivery,—we are not prepared to say that any public injury would result. True, it would no doubt affect the business of persons engaged in dealing in grain for future delivery. In no event can it be admitted that the railroad companies of the State owe any duty to the Chicago Board of Trade on the theory that the members of that corporation are the public, in the sense that property once devoted to a use which serves the purposes and convenience of the members' of that exchange is thereby impressed with a public use and cannot for that reason be withdrawn from such use.

It seems to us that the interest of the public is not so great in the outcome of this litigation as appellants’ counsel seek to make it appear. From the year 1900 to 1906, both inclusive, the Illinois Central Railroad Company transported to Chicago 237,786,139 bushels of grain. During the same time the two elevators in question handled 13,280,000 bushels of grain, or about five per cent of, the total quantity transported by this railroad. If the elevators in question handled only five per cent of the grain, the other ninety-five per cent must have passed through this market without the use of these elevators. If the interest of the public requires that this railroad company shall maintain these two elevators, and if it is the duty of the railroad company, as an incident to the transportation of grain, to maintain these warehouses, then it logically follows that appellants should insist on the carrier building and maintaining an additional number of elevators sufficient, in capacity, to take cqre of the other ninety-five per cent of the grain hauled. It is not even certain that all or any part of the five per cent of the grain which actually passed through these elevators was hauled to market by the Illinois Central Railroad Company. While it is charged that these elevators are on - the line of the Illinois Central railroad, still it does not follow, and is not so charged in the information, that the grain was delivered to the elevators over this particular road. It is a fact so well known that we think it may be, judicially noticed, that in the regular course of business grain going to Chicago over any line of road may be readily switched, by means of the outer and inner belt lines, to any warehouse in any part of the city. It is therefore not impossible that a large part of the five per cent of grain handled by these elevators may have come to the city over any one of the many lines of railroad centering there. However this may be, it is certain, under the facts averred, that ninety-five per cent of the grain hauled to Chicago by the Illinois Central railroad in the last seven years has not gone into either of the elevators in question. A similar condition exists in respect to the elevators on the other railroads against which informations are pending.

After giving the questions involved in this litigation that careful consideration which their importance seems to demand, our conclusion is that the information is entirely barren of facts upon which a decree granting the relief sought, or any other relief, could be predicated.

The decree dissolving the injunction and dismissing the information for want of equity will be affirmed.

Decree affirmed.