Society for Establishing Useful Manufactures v. Lehigh Valley Railroad

32 N.J. Eq. 329

• Court: Supreme Court of New Jersey
• Decided: March 15, 1880
• Status: Published

Opinion

The opinion of the court was delivered by

Beasley, C. J.

Under these conditions of this controversy the single question to be decided on this appeal is, whether the appellant has a right to proceed at law on the ground of this alleged invasion of its right to these waters in dispute, or must, under compulsion, seek redress in equity.

In entering upon this inquiry it is important to present to our minds, in a distinct and definite form, the question to be decided. That question is, whether this corporation can be compelled, against its will, to come into equity for relief against the wrong of which it complains. That wrong is, that being th.e riparian owner of certain lands through which a natural stream flows, a portion of such water has been diverted to its injury by the illegal act of the respondent. Such a cause of action being a legal one, unless from the presence of jurisdictional equities in the case, the appellant has a clear right to pursue his remedy before a common law court. In this case, this respondent, standing on such right, was urging its suits before such a tribunal. The question consequently is, whether it can be stopped in such pursuit by the hand of the chancellor. Such a prerogative manifestly depends on the existence, in the facts involved, of some equitable circumstance which, according to established rules, justifies the transfer of the suits at the request of the defendant in the actions at law, from the legal to the equitable forum. "When, therefore, we shall have ascertained yvhether such equitable feature exists or not, the problem before us will be solved.

I cannot think that, because the questions involved in this controversy are of magnitude, or are intricate, or difficult of solution, that therefore the courts of law can be divested of their jurisdiction over them. It does not appear that the importance of the matters in dispute has ever been regarded as affording any test of the cognizance of a court of equity. The 'claim, if admitted, would confer upon the court of chancery a prerogative jurisdiction over the entire field of all momentous and obscure controversies. No decision, so far as is known, has ever gone on such a principle. Nor is it perceived how such a jurisdiction can arise, because the suit relates to corporate franchises. When a corporation, under a legislative grant, claims the right to divert a natural stream away from a riparian proprietor, the matter in issue is purely a legal question, and it seems indisputable that, under ordinary circumstances, the person injured can pursue his remedy in an ordinary action at law, and such action, in the absence of qualifying conditions, is not amenable to equitable control.

Neither have I been able to discover a ground for equitable intervention in such cases, because of the principle that when several persons are entitled to the use in common of a stream of water, the distribution among them of their respective shares is an equitable function. That a court' of equity has jurisdiction in such eases is undeniable, and in the present case, if either the appellant or the respondent had applied for relief and a regulation of its right, to the court of chancery, there would appear to be no doubt of the right of such tribunal to take the controversy in charge. Such were the cases of Belknap v. Trimble, 3 Paige 577; Ballou v. Inhabitants of Hopkinton, 4 Gray 324; The Boston Water Power Company v. Boston &c. Railroad, 16 Pick. 512. In all these cases the equitable jurisdiction was undoubted, as it was invoked by the party injured. In such cases courts of equity and those of common law have concurrent jurisdiction, and consequently the complaining party may séek either forum. That his relief may not be as complete in the forum which he chooses, as it might have been in another forum, is a matter for his own consideration, and riot for that of his adversary. The power to take charge of the given case being co-ordinate, neither court can assume a paramount authority and compel an unwilling suitor to come to it for protection. In the ease of The Delaware, Lackawanna and Western Railroad Co. v. The Erie Railway Co., 6 C. E. Gr. 298, the party injured voluntarily came to the court of chancery for relief, and consequently that precedent has no application to the question under consideration. In the present case, if this appellant, instead of suing in the supreme court, had filed its bill in the court of chancery, the jurisdiction of the latter tribunal would have been indisputable; but this conclusion has but little tendency to show that these suits at law can be transferred to equity at the instance of the defendant in the legal proceedings.

Nor have I found any authority for the doctrine that equity should intervene in this case in order to avoid that multiplicity of suits that would be incident to the continuance of the legal jurisdiction. The rule is entirely settled, that in case of private nuisances,-the person injured may vindicate his rights by repeatedly suing the wróngAoer in a court of law. The point is too clear to be discussed.

The consequence is, that on none of these grounds can the decree in question be vindicated.

There is, however, another jurisdictional claim which, remains to be examined.

This claim grows out of the alleged existence in the case of certain circumstances which, it is contended, constitute an equitable estoppel.

The facts embraced in this contention are those that relate to the acquisition by the present respondent of the property of tbe canal company. In this connection the present bill alleges that when the lease to the respondent was in contemplation, and when the Morris Canal and Banking Company was making application to the legislature for the requisite authority, and while the matter was pending, to the knowledge of the appellants, the governor of the latter company had a conference with the officers aud agents of the canal company, and, at the request of such governor, a proviso wms inserted in the clause of the act granting the right to lease the canal, which was in the following words: “ And provided further, that nothing herein contained shall be held to authorize the said company, or its lessee or its lessees, to do any act affecting the existing rights of the Society for Establishing Useful Manufactures.” .And the bill then avers that the society did not inform the canal company or the respondent that the old claim attempted now to be revived by the suits at law, was deemed to be one of such existing rights. The respondent also asserts that if it had been notified of such claim before the execution of the lease, such instrument would not have been taken until such claim had been settled. The appellant admits that it knew of the intended passage of the act, and procured the proviso to be inserted, and also admits that it did not give any notice to the canal company or to the respondent, of the rights now claimed and sought to be ■enforced. _

In endeavoring to measure the equitable effect of this •situation, it is of the first importance to bear.in mind that, from the beginning and all through the progress of the series of litigations which have occurred, it has ever been claimed and asserted by the Morris Canal and Banking Company that the possession by it of the waters in dispute was not only a convenience, but something very like a necessity, to the successful operation of its canal. That such right was and it is of great moment to this company, is perfectly conspicuous. The important consequence, therefore, follows, that the appellant is chargeable with the knowledge that the fact of its intention to deny the existence of such right, was a circumstance of the greatest interest to any person having in contemplation the leasing of the works of' the canal company. With such consciousness it acquiesced in the passage of the act authorizing a lease to be made, contenting itself with annexing a monition that such law was not to be construed as empowering the canal company “ or its lessees, to do any act affecting the existing rights, of the society.” Obviously, this proviso relates to the future and not to the past, and guards not against illegal acts already done, but against the possibility of the statute being-made a ground of infringing, by some act thereafter to be done, the rights of the society. So, too, it is plain that the terms “ existing rights ” were in nowise indicative that this company intended to claim the water rights in question. There is certainly, therefore, a fair ground here laid for-charging that this appellant acquiesced in this law, and, with the knowledge that a lease was about to be made, failed to give notice, either directly or by bringing suit, or putting existing suits in motion, that after such lease should be exe cuted, it was its intention to set up that the lessee would not be entitled to these essential water privileges.

But it is said, in the logical and learned brief of the counsel of the appellant, that the duty .of inquiry as to the title and rights of the lessor, was, upon general principles,, devolved upon the lessee. This is. undoubtedly so. The oases cited in the brief are authorities to this effect, and the rule is so well established that it is not necessary to look, into its foundation. But in the present case it is far from clear that the appellant is not chargeable with knowledge-that, under the conditions of things then existing, such inquirjq made with ordinary diligence and upon ordinary rules, would have failed to discover the claims which the appellant is now insisting on. If .the respondent, .at the; time of taking its lease, had investigated, what would it have discovered ? It would have ascertained that for over twenty years the canal company, from whom it was about to take title, bad been in the undisturbed possession and enjoyment'of the water rights in question, and that during that long period of time such company had, to all appearances, as of right, used such privileges; that, also, during such interval of time, it had, from time to time, as occasion required, greatly enlarged and improved its works, apparently to a great degree relying on the fact of being the rightful owner and possessor of such water rights. This is the result to which inquiry would have led, and it may reasonably be charged that the appellant was aware that such would be the result.

In the argument of the counsel of the appellant, it was claimed that the obligation to make an inquiry more extended in point of time than this, was imposed by law on the respondent, for it was assumed that the respondent, as a matter of course, would have ascertained, in the exercise of a due diligence, the records of the ancient litigations between these parties. But is not such a position of uncertain tenability ? The appellant, in its answer, refuses to treat those suits as lites pendentes, but says that, having served their purpose, they were mutually abandoned. The inquiry, there-' fore, arises, whether, according to any known practice, this respondent can be required to have searched for these timeworn litigations which had then been laid aside and relinquished for more than twenty years. It is manifest the point is worth a careful consideration.

But again, on the hypothesis claimed, and on the-assumption that the respondent had ransacked these records, and is, therefore, to be held responsible for tbe knowledge thus-acquired, what would be the position of the equities of this branch of the case ? It is said that the respondent would thus have known that the society was entitled to the rights a riparian owner in the waters in dispute, and that the court of chancery had so adjudged, and that the lessor of the respondent had never disputed them, but had merely-denied that its works occasioned any diminution of such water. In short, the contention is, that the respondent would-thus have been informed that, at 'all times, the canal company had admitted the rights of the appellant, as now claimed, and that, in the language of counsel, “ the canal company had always disavowed any right .to divert the waters of the Passaic. But it seems to me that this statement, as an expression of the attitude which had always been assumed by the canal company, is imperfect, as it leaves out an essential element of the claim actually made by such company. That claim, it is true, involved an admission of the riparian rights of the appellant, and a denial that the use of the water made by the canal company injuriously impaired such rights; but, at the same time, it asserted the existence of a paramount right in the canal company, by virtue of its charter, to take. and retain such waters. In the answers filed by it, it virtually said, “ I take this water of right; I deny that you are injured; if you deem you are, my charter gives you a right to claim compensation by suit. This, certainly, gives quite a decided aspect of hostility to the claim made to these waters; and, consequently, the question that would here arise would be, whether the respondent, the lessee of the canal company, with a knowledge as to such an attitude of its lessor, and of an apparent submission to such claim for over twenty years by the appellant, had not the right to conclude that the contest for these waters had been entirely abandoned by the latter company.

In addition to these features of the case it should likewise be remembered that, for six years after the execution of this lease and possession of the canal had been taken under it, the respondent was suffered to proceed under such lease and make large outlays of money and incur many obligations of great magnitude, without receiving any intimation, from the appellant of its present momentous claim. •

It would not be proper, at this stage of these proceedings, to decide definitively that the foregoing circumstances constitute inevitably an equitable estoppel, for such circumstances may be deprived of some of their intrinsic force from' other facts which the case embraces and which will be more fully developed in the progress of the suit; but it seems to me that, as matters now stand, it cannot be denied that substantial ground is here laid for a claim on the part of the respondent that an equitable estoppel against the further prosecution of the suits at law, is manifested. On such an admission the right of a court of equity to intervene and to put an end to the legal actions, is undoubted. Such a power is one of the original and inherent prerogatives of the jurisdiction of a court of conscience. Nor can the circumstance that estoppels of this character are now, in a degree, given effect to in the common law courts, affect such equitable jurisdiction, for it is the well-settled rule that such a jurisdiction cannot be taken away in such an incidental manner. The rule is stated by Judge Story and other text writers, and is so familiar that I shall cite no authorities in its support. It is true that the doctrine of estoppel in pais has been, by the modern decisions, so greatly enlarged as now to embrace many acts and conditions of affairs which were originally unknown to it, many of such facts and conditions being of a character so definite and simple, and being purely defensive in their nature, as to be susceptible of being readily dealt with at law, and it may well be that some of such novel defences will not afford a foundation for equitable jurisdiction. But with respect to estoppels seated in such considerations as are above indicated, there can be no question of their jurisdictional capacity, as they plainly belong to the class that have been always cognizable in a court of equity. That when an estoppel of this kind exists against the claim set up at law, a court of equity has the competency to assume control over the ease, is evidenced fully by the precedents, both ancient and modern. In the case of Short v. Taylor, briefly reported in 2 Eq. Cas. Abr. 522, the facts are thus stated : “ Short built a‘ house; Taylor began to build another, but laid part of his foundation on Short’s land. Short, seeing this, did not forbid him, but, ou the contrary, very much encouraged it; and when the house was built be brought an action,” and Lord Somers granted an injunction and said it was just and reasonable. There is another case, reported in connection with this, in the same work? and which is to the same purpose. And it was principally upon the authority of these two cases that Lord Cottenbam granted a similar injunction in the case of Williams v. Earl of Jersey, 1 Cr. & Ph. 95. Referring to these authorities he says : “ I think it impossible, after those two cases, to say that a party may not so encourage that which he afterwards complains of as a nuisance, as not only to preclude him from complaining of it in this court, but to give the adverse party a right to the interposition of this court in the event of his complaining of the nuisance at law.” These cases are sufficient to exemplify the principle above stated, that when, from equitable considerations of a certain character, it would be unconscientious in a litigant to prosecute a claim, and such party is striving to do so in a suit at law, a proper ground is afforded for enjoining such legal proceeding. On this foundation I think the chancellor was authorized to proceed as he has done, and to require this controversy to be settled in his court, where alone it is plainly evident that it can be properly investigated and decided.

For affirmance—Beasley, C. J., Depue, Reed, Scudder, Clement, Dodd, Wales—7. For reversal—Dixon, Knapp—2.