St. Joseph & St. Louis Railroad v. St. Louis, Iron Mountain & Southern Railway Co.

36 S.W. 602, 135 Mo. 173, 1896 Mo. LEXIS 246
CourtSupreme Court of Missouri
DecidedJune 30, 1896
StatusPublished
Cited by32 cases

This text of 36 S.W. 602 (St. Joseph & St. Louis Railroad v. St. Louis, Iron Mountain & Southern Railway Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
St. Joseph & St. Louis Railroad v. St. Louis, Iron Mountain & Southern Railway Co., 36 S.W. 602, 135 Mo. 173, 1896 Mo. LEXIS 246 (Mo. 1896).

Opinions

Gantt, P. J.

Prior to June, 1874, the St. Joseph & St. Louis Railroad Company owned a line oi railroad from North Lexington to the city of St. Joseph, a distance of about seventy-two miles, and on the first day [181]*181of June, 1874, it leased its said railroad for a term of ninety-nine years to the St. Louis, Kansas City & Northern Railway Company.

The St. Louis, Kansas City & Northern Railway Company was afterward, in 1879, consolidated with the Wabash Railway Company, of Illinois, Indiana, and Ohio, thereby forming a corporation known as “The Wabash, St. Louis & Pacific Railway Company,” and in the further discussion of this case it will be designated the “Wabash company.” By virtue of the consolidation the Wabash became the lessee of the St. Louis & St. Joseph Railroad.

By that lease, so far as it pertains to the issues of this case, the Wabash company agreed to pay rental for the first and second years, $10,000 per annum; for the third, fourth, and fifth years, $35,000 per annum, and for each subsequent year during the term, thirty per cent of the gross earnings of the demised railroad, the Wabash company guaranteeing that said percentage should not in any year amount to less than $25,000. The Wabash company furthermore covenanted and agreed that it would put the railroad culverts, bridges, station houses, and all other demised property in such order and repair, at its own cost and charges, as to enable the road to be safely and successfully operated, at the earliest practicable clay, and operate the same, keeping it in such order and condition during the term of the lease.

It was also provided that in case of default in the payment of rent the Wabash company (but not its assigns) should pay as a penalty, in addition to the rent due, a sum equal to one tenth of one per cent on the amount due for each day during such period of default, until the lease became forfeited or the rent should be paid; and, finally, it was provided that said lease should not be assignable, or the premises under-[182]*182let, without the written consent of the St. Joseph & St. Louis Company, signed by its president and countersigned by its secretary, and authorized by a resolution of its board of directors,’and that any attempt to sublet or assign said lease without such written consent, should work a forfeiture thereof.

Second. The evidence shows that when the foregoing lease was negotiated, the parties fixed upon the very low rental of $10,000 per annum for the first two years, because of the bad condition of the property, and because of a contention on the part of the Wabash company, to the effect that it would require the earnings of the road for the first few years to put it in good repair. The evidence shows that the Wabash company did not comply with its covenant to put the road in repair, and that it did not put it in such condition at the earliest practicable day, as would enable it to be safely and successfully operated.

Third. On the first day of June, 1880, the Wabash company, to secure an intended issue of bonds to the amount of $50,000,000 (of which $17,000,000 were issued), conveyed all its lines of railroad and the income and earnings thereof, including the road from North Lexington to St. Joseph, in trust to the Central Trust Company of New York, and James Cheney of Indiana.

Fourth. On the tenth day of April, 1883, the Wabash company executed an instrument, in the granting clause of which it let, demised, and leased, unto the Iron Mountain company, all and singular, the several lines of railroad then owned, leased, or otherwise held by it, including the line from North Lexington to St. Joseph, to have and to hold said property unto said Iron Mountain company for a term of ninety-nine years. That contract contained a covenant on the part of the Iron Mountain company to efficiently work and operate [183]*183said roads, and use reasonable diligence to collect and receive the tolls, freight charges, and dues which should accrue from the operation of said property, and apply said revenues in the manner following, to wit:

(1) To the payment of the annual cost of repairing, maintaining, and perpetuating, for public use, the said railroads with their equipment and property; to the cost of any new equipment, side tracks, stations, depots, lands, and reasonable or necessary betterments from time to time deemed necessary; to premiums for insurance, and to the payment of all tases and assessments lawfully levied upon said property. (2) To the payment of the 'necessary expenses of maintaining the organization of the Wabash, St. Louis & Pacific Eail-way Company, including the expenses of its general offices in the city of New York, the expenses of a transfer agency, and of paying the interest on its mortgaged debt. (3) To the payment of interest, as the same became due, upon the mortgage bonds of said company, and the rents and other charges which the Wabash company had contracted or assumed to pay as part of the consideration upon which its lines had been acquired, and other charges of like nature which the Wabash company might authorize or direct the Iron Mountain company to pay. (4) It was to pay any surplus remaining to the Wabash company, or apply the same to the payment of interest on any other bonds thereafter issued by the Wabash company, or to such other purposes as should be determined from time to time by the board of directors of the Wabash company.

The lease also contained the following provisions:

“If the net earnings or revenue shall not be sufficient to provide for the fixed charges on the demised property, the lessee may elect to advance the funds required from time to time to pay interest on bonds [184]*184and other fixed charges, and such advances-shall be a preferred debt and lien next to the lien of the first and general consolidated mortgages and underlying or divisional mortgages, to be paid by the party of the first part; and the same is secured by the future net revenues of said first party, and such advances are hereby made an equitable lien on the demised property.
“If the lessee, however, elects not to advance any such deficit, and the interest on the first and general consolidated mortgage bonds and underlying bonds shall remain unpaid for a period of six months, the lessor company may thereupon elect to terminate this lease, and to receive back the property on the payment of any balance of indebtedness then due from it to the lessee.
“The party of the second part moreover shall and will, at all times during the hereby demised term, keep the buildings upon the lands hereby demised insured in the usual manner against loss by fire, paying the premium therefor, as aforesaid; and will keep the said demised railroad, equipment, and property in good order and repair, and will at the expiration of the hereby demised term, or other sooner determination of this lease and contract, yield and deliver up the hereby demised railroad and appurtenances in the same good, order and repair that the same are notv in, or may be put in during the hereby demised term, casualties, acts of God and the elements, and reasonable wear and tear excepted.”

Fifth. On the twenty-first day of December, 1883, the Wabash company mortgaged and conveyed to the Iron Mountain company all its lines of railroad, including the line from North Lexington to St.

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Bluebook (online)
36 S.W. 602, 135 Mo. 173, 1896 Mo. LEXIS 246, Counsel Stack Legal Research, https://law.counselstack.com/opinion/st-joseph-st-louis-railroad-v-st-louis-iron-mountain-southern-mo-1896.