Pittsburgh & Connellsville R. R. Co. v. Shaw.
A railroad company, by agreement under seal, entered into a contract to build a telegraph line for a telegraph company, from Uniontown to Connellsville, and to open a telegraph office for commercial business at Uniontown, in consideration of receiving all moneys collected for commercial messages at Uniontown to pass over any line owned or controlled by the telegraph company. The railroad company then entered into a contract under seal with the plaintiff, whereby the latter agreed to build the line in consideration of one-half of the earnings, subject to the contract with the telegraph company. Plaintiff built the line and was paid under this contract up to a certain time, when the railroad company excluded commercial business from its line. In an action of covenant for damages on account of the failure of the railroad company to continue commercial business, the defendant alleged, as a reason for discontinuing the business, that another telegraph company had purchased the telegraph company’s line, and established another office in Uniontown ; and that, in any event, recovery could be had only for moneys collected at the Uniontown office.
Held,, that plaintiff was entitled to recover one-half of what the evidence showed would have probably been received by the company, at Uniontown and other offices between there and Connéllsville, had it continued the commercial business.
In such an action, the railroad cannot set up that the contract to maintain a telegraph line was ultra vires, as a defence to the action.
Where the rights of the parties have not been affected by the mistake of the prothonotary in entering judgment on report of referee before the time was up for filing exceptions, under the Act of May 14, 1874, the supreme court will not reverse for such mistake. The necessary amendment changing the time of entry can be made in the lower court at any time, if deemed material.
May 8, 1888.
Error, No. 57, Jan. T., 1888, to C. P. Fayette Co., to review a judgment for plaintiff in an action of covenant by James L. Shaw, to use, against the Pittsburgh & Connellsville R. R. Co., at Sept. T., 1S82, No.- 105. Trunkey and Clark, JJ., absent.
*562[This case was up before, on bill in equity: 99 Pa. 177.]
The declaration alleged that the defendant covenanted with the plaintiff as follows: The plaintiff, in consideration of the maintenance and working of a telegraph line between Uniontown and Connellsville, agreed to build and equip said line of telegraph; the defendant in consideration thereof agreed to keep said line in repair, provide operatives, etc., and pay the plaintiff one half of all its earnings, subject to the stipulations in the agreement with the United States Telegraph Co. Breach of covenants, etc., were assigned. The defendant pleaded covenants performed absque hoc; also special pleas, not given.
The matter was referred to A. D. Boyd, Esq., as master, by agreement of the parties, under the Act of May 14, 1874, who reported as follows:
“ The plaintiffs sue to recover damages for breach of covenants contained in an article of agreement entered into between James L. Shaw and the defendant company on March 6, 1865. The evidence shows that an article of agreement under seal, between 'the Pittsburgh & Connellsville Railroad Co. and the United States Telegraph Co., was made and entered into on March 1, 1865, by the terms of which the said Railroad Co. agreed to build a good and substantial line of telegraph, by the route of Fayette County Railroad, connecting the terminus of the said United States Telegraph Co.’s line at Connellsville, Fayette county, Pennsylvania, with Uniontown, in said county, and have opened in Uniontown a telegraph office for commercial and railroad business; and it was further stipulated in said agreement that all money or moneys collected for messages at Uniontown, to pass over any line owned or controlled by the United States Telegraph Co., should be retained by the Uniontown office for the benefit of the Railroad Co., saving and excepting such portion of said money or moneys as should be received for other lines than those owned or controlled by said United States Telegraph Co., which were to be paid to said company.
“ The Pittsburgh & Connellsville Railroad Co., defendant, and James L. Shaw, of plaintiffs, on March 6, 1865, made and entered into a written contract, under seal, whereby the said James L. Shaw agreed and undertook to build a telegraph line from Connellsville to Uniontown, for and in consideration of the undertakings and agreement by the said railroad company, that, upon the erection and completion by the said Jas. L. Shaw of the said line of telegraph, the said railroad company would, at the proper cost and expense of said company, furnish competent and skillful operators for working the said telegraph line, as also offices, batteries and all other material needed to successfully work said telegraph line, and to keep the same in good order and repair, the natural wear and tear excepted. The said railroad company to have the privilege of transmitting all messages for the working or management of the said railroad free and without cost, and to pay to the said Shaw the one-half of all *563its earnings, subject to the aforesaid contract between the said railroad company and the United States Telegraph Co.
“The defendant company, in its agreement with James L. Shaw aforesaid, further agreed to account for and pay over to the said James L. Shaw, the one-half of the whole amount of the earnings of the said line of telegraph, which said railroad company was entitled to have and retain under its contract with the United States Telegraph Co. as aforesaid.
“ In pursuance of the said contract between the defendant company and James L. Shaw, the said James L. Shaw did extend, make, erect and put in complete order for use a line of telegraph from Uniontown to Connellsville, and said defendant company did, on April 1, 1865, take possession of and begin using the same according to the provisions of the said contract and agreement between the said company and James L. Shaw, and the said company has been in possession of said line of telegraph ever since and has been using the same continuously since taking possession thereof.
“ On Feb. 8, 1865, an-article of agreement was made and entered into by and between the said James L. Shaw and the parties who by themselves and their legal representatives have become the plaintiffs in this action, whereby the rights of the said James L. Shaw, under and by force and virtue of the said contract of the defendant company with said Shaw, became, for a valuable consideration, legally vested in plaintiffs in as full and complete a manner as the said James L. Shaw held the same.
“ From April xst, 1865, to Jan. 1, 1874, a period of nearly nine years, the defendant company did, in pursuance of its agreement entered into with Shaw, account for and pay over to the assignees of Shaw, the plaintiff in this suit, at stated times during the said period of nine years, the just and full sum of one-half of said railroad company’s share of the net profits of the Uniontown office of said line of telegraph from Connellsville to Uniontown, which amounted to the sum of $2,912. The defendant company have accounted for and paid over to the plaintiffs in this suit nothing whatever of the earnings or net profits of said line of telegraph since Jan. 1,1874, and, from that time on, have appropriated, controlled and managed the said line to the exclusive use, business and purposes of the defendant company.
“ It was claimed, on the part of the defendant company, that the Western Union Telegraph Co. having, on Dec. 31, 1873, established a telegraph office for general and commercial business at a point in Uniontown which, from its central location and facilities for transacting the telegraph business, deprived the Uniontown office of the defendant company of almost its entire general and commercial business. We find that, notwithstanding the establishment of the Western Union office in a more advantageous location in Union-town than that of the defendant company’s office, and the consequent decreased receipts at the defendant company’s office, yet if defendant *564company’s office had been kept open for commercial business, as it was their duty to do, they would still have received a share of the rapidly increasing telegraph business of the place. And, while the receipts for awhile after that date might not have amounted to as much as they did prior to the establishment of the Western Union Telegraph office, we are of the opinion, and so find, that the average annual receipts of the defendant company’s office at Uniontown from that date to the present time should have amounted to at least as much as they did prior to that time, when the telegraph business was in its infancy in the Uniontown locality. The one-half of the average annual receipts of the Uniontown office prior-to that time was $323.55. [The defendant company claimed that the plaintiffs, if entited to recover, were only entitled to recover a share of the receipts of the Uniontown office, and were not entitled to receive any portion of the receipts of either the Dunbar or Lemont offices. We are of opinion that the plaintiffs are entitled to recover for Dunbar and Lemont offices the same share of the receipts as for the Uniontown office.] [10] The defendant campany caused to be placed upon the poles of the Shaw line an extra wire on or about May 1, 1883, which has been in constant use by the defendant ever since for railroad and commercial business. [Under these facts, I am of the opinion that the plaintiffs are entitled to recover damages, the measure of which is the one-half of what should have been the earnings of the line of telegraph built by James L. Shaw, as aforesaid, from Jan. 1, 1874, to Jan. 15, 1887, together with interest on the same from the several times when the same should have been paid, beginning April 1, 1874, to Sept. 1, 1887.] [11] These several sums, together with the interest computed as aforesaid, amount to $11,766.17, which sum is made up of receipts and interest on the same as follows : Uniontown office, $5,821.87; Dunbar office, $5,390.78; Lemont office, $553.52; total, $11,766.17. And for this sum of $11,766.17, I do find in favor of the plaintiffs and against the defendant as of Sept. 1, 1887.”
The defendant presented, among others, the following points, which were refused :
“ 1. The agreement between James L. Shaw and the Pittsburgh & Connellsville Railroad Co., declared upon by the plaintiff and offered in evidence in this case, in so far as it may contemplate or stipulate for the working and operation of the telegraph line therein referred to, in the doing of a general commercial telegraph business, and the charging of tolls therefor by the said defendant, is ultra vires of the defendant corporation, and no action can be maintained thereon against the defendant for its refusal to so work and operate the said line.” [1]
“ 2. No action can be maintained against the said defendant to recover damages for its refusal or neglect to perform its alleged covenant, expressed or implied, to do a general commercial telegraph business for hire and reward, it appearing from the charter of said *565defendant that it is a corporation solely for the purpose of constructing and operating a railroad, and doing the business of a common carrier, and with no authority to undertake or engage in a general telegraph business.” [2]
“ 3. It appearing from the charter of the defendant that it is a corporation erected for the purpose of constructing a railroad, and doing the business of a common carrier, over and upon the same, without authority to undertake or engage in the transaction of a general telegraph business for the public for hire and reward, the said agreement declared upon by the plaintiff, in so far as said agreement contemplates or stipulates for the defendant engaging in such telegraph business, is illegal, null and void, and no action can be maintained thereon for recovery of damages against the said defendant for its refusal, or neglect, to so maintain and work the said telegraph line in the doing of such telegraph business.” [3]
“4. Said agreement between the said plaintiff and defendant, by the terms thereof, is made subject to the agreement between the United States Telegraph Co. and the defendant, therein referred to, and set forth in the said plaintiff’s declaration, and thereby plaintiff assumed the risk of the said United States Telegraph Co. well and truly keeping and performing its said agreement with defendant; and if the referee find, from the evidence, that the defendant’s failure to work the said telegraph line in the doing of a general commercial telegraph business, in connection with the lines of said United States Telegraph Co., resulted from, or was caused by, the said United States Telegraph Co., or its successor, the Western Union Telegraph Co., refusing to keep its said agreement with defendant, and severing the connection at Connellsville, then there can be no recovery in this suit.” [4]
“ 5. The said agreement between the United States Telegraph Co. and the defendant, subject to which the said agreement between the plaintiff and defendant was made, in so faras it contemplated orstipulated for the defendant working the telegraph line, between Union-town and Connellsville, in connection with the lines of the United States Telegraph Co., in the doing of a general telegraph business at and from Uniontown, was ultra vires of the defendant corporation under its charter, and incapable in law of enforcement by the defendant against the United States Telegraph Co.; and if the referee finds that the defendant failed to work the said telegraph line, between Uniontown and Connellsville, in the doing of a general telegraph business in connection with the lines of the United States Telegraph Co., because of the said United States Telegraph Co., or its successor, the Western Union Telegraph Co., failing to keep its said agreement with the defendant, and severing connection at Connellsville, and opening and establishing a separate office, to which it diverted all its commercial telegraph business, then there can be no recovery in this suit.” [5]
“ 7. This is, in substance, an action to enforce performance by *566the defendant of the agreement, declared upon, to do a general telegraph business, which said agreement is ultra vires of the defendant, and is null and void, and the action cannot be maintained.” [6]
“ 8. The agreement between the United States Telegraph Co. and the defendant, subject to which the agreement between plaintiff and defendant was expressly made, in so far as it may contemplate or undertake to provide for or to secure the defendant the right to do a general telegraph business over the line between Uniontown and Connellsville, in connection with the lines of the United States Telegraph Co., was ultra vires of the defendant, and incapable in law of enforcement by the defendant against the said United States Telegraph Co. or its successor; and if the breach thereof by the United States Telegraph Co. or its successor, prevented, in fact, performance by the defendant of agreement with plaintiff, and such performance was only possible by observance, on the part of the United States Telegraph Co. or its successors, of its agreement with defendant, then, after such breach by the United States Telegraph Co., or its successor, of its said agreement with defendant, performance by the defendant of its agreement with the plaintiff became and was a legal impossibility, and no action can be maintained on account thereof.” [7]
“ g. If entitled to recover at all, the plaintiff can only recover in this action one-half of the actual receipts by the defendant of moneys collected for messages at Uniontown to pass over any line owned or controlled by the United States Telegraph Co., excepting therefrom such portion of said moneys as may have been received for other lines than those owned or controlled by said United States Telegraph Co.” [8]
“ 12. Under all the evidence in this case, the plaintiff cannot recover.” [9]
On Sept. 3, 1887, the decision of the referee was filed. On the same day, judgment was entered thereon by the prothonotary. Subsequently the plaintiff presented the following request:
“ The plaintiff requests the referee to find the following facts, omitted in the report but appearing in the evidence: 1. The agreement between the P. & C. R. R. Co. and the Western Union Telegraph Co., dated May 24, 1867, and its effect upon the agreement with the plaintiff, Shaw.”
In pursuance of this request, the referee re-examined his report and found as follows:
“The lines, property and rights of the United States Telegraph Co. having been leased and assigned to the Western Unión Telegraph Co. about the first of March, 1866, on the 24th day of May, 1867, the before-mentioned article of agreement between the defendant and the United States Telegraph Co. of March 1, 1865, was ‘ modified ’ and explained in respect of the Shaw line, as follows, viz: ‘ Except and provided that nothing herein stated shall affect the agreement existing as to the line between Connellsville and Union-*567town, the railroad company being entitled to the gross receipts of said offices on business to points on the telegraph company’s lines, and not to points beyond.’ ”
Numerous exceptions were filed, upon which the referee reported, inter alia, as follows:
“ The twenty-first and twenty-second exceptions allege error on the part of the referee in not finding the fact of the incorporation of the defendant, the Pittsburgh & Connellsville Railroad Co., by Act of Assembly and its powers and rights under the Act incorporating it. The Act of Assembly incorporating the defendant was offered in evidence. The referee noticed it, and considered it as he would have thought himself bound to do, even if it had not been specifically offered in evidence; but the referee does not consider himself bound to make a more specific finding concerning it, and concerning the powers, duties and obligations of the defendant under it, than he has done in finding damages against the defendant, notwithstanding the defendant’s pleas, which specifically set up the said Act of incorporation, and the other written and unwritten laws of this Commonwealth, as a defence to this action. These exceptions raise the defence of ultra vires, which the referee does not consider available to the defendant in this action, as he understands the law to be set forth in the following, amongst other decided cases and authorities: Green’s Brice’s Ultra Vires, 608, and note; Oil Creek & Allegheny River R. R. v. Pa. T. Co., 83 Pa. 160; 1 Woods’ Railway Law, pp. 502, 553, 558, §§ 172, 192, 193, and p. 560, note 4; Hitchcock v. Galveston, 96 U. S. 341; Wright v. Pipe Line Co., 101 Pa. 204; National Bank v. Graham, 10 Otto, 609-702; Casey v. Galli, American Law Reg., July, 1877, p. 444; 25 Fed. Rep. 812; Kelly v. Newburyport Co., 2 New England Rep. 383; 23 Central Law J. 261; Thomas v. R. R., 101 U. S. 71; R’y Co. v. McCarthy, 96 W. U. S. 258. These exceptions are therefore overruled.
“In the 23d, 24th and 25th exceptions, the defendants allege error on the part of the referee in not specifically finding the fact that the United States Telegraph Co., or its successor, forcibly severed the connection of the Shaw line at Connellsville, with the network of telegraph wires covering an immense extent of territory, on Jan. 1, 1874, thus cutting off the profitable portion of the telegraph field, in consequence whereof the earnings of the Shaw line were reduced to a very small sum, or were altogether destroyed, and that such severance of the telegraph connection and consequent diminution of earnings formed a complete defence to the plaintiff’s action.
“The referee does find that, on or about the 1st day of March, 1866, the lines, property and rights of the United States Telegraph Co. were leased and assigned to the Western Union Telegraph Co., and that the Western Union Telegraph assumed possession and control of the said United States Tel. Co.’s property. Further than this, the referee does not consider it his duty to go, although he deems it proper to adhere to his finding, in response to the said last *568mentioned exceptions, that, by thus coming into the room and stead of the United States Telegraph Co., the Western Union Telegraph Co. became liable to perform all contract duties and obligations incumbent upon the United States Telegraph Co., and among these duties and obligations the Western Union became liable and bound to afford to the defendants the same telegraphic facilities at Connellsville which the U. S. Tel. Co. were bound to furnish, and that in point of fact the Western Union always held itself ready to do so. The referee further finds that no effort to secure such communications after Jan. i, 1874, appears by the evidence ever to have been made by the defendant, although it seems that a simple request would have accomplished it.
“ The principal ground, however, upon which the referee omitted to make the specific findings, indicated in the said exceptions, and upon which he now declines to include them in his finding, is that the defendant was bound by the article of agreement with Shaw, of March 6, 1865, for all that appears in the evidence, to keep and maintain Shaw and his assigns in the use, enjoyment and possession of the same telegraphic facilities which existed when that contract was made, and that the action of the Western Union Telegraph Co. in severing the connection at Connellsvllle is no defence to the Pittsburgh & Conncllsville Railroad Co. in this action, and is not relevant' nor material to the issue in this case. The said exceptions Nos. 23, 24, and 25, are therefore overruled: Pollard v. Shaffer, 1 Dallas, 210; Atkinson v. Ritchie, 10 East, 533 ; Beale v. Thompson, 3 Bos. & Pul. 420; B. & A. Canal v. Pritchard, 6 T. R. 750-1-2; Bullock v. Dommitt, 6 T. R. 650; Belfour v. Weston, 1 T. R., 310; Selw. N. P. *469; Shubrick v. Salmond, 3 Burr. 1637-1640.
The assignments of error specified, 1-9, the refusal of defendant’s points as above, quoting them; 10, xi, the portions of the decision in brackets, quoting them; 12, that the referee erred in not stating separately and distinctly the facts found, and his conclusions of law thereon; I2j^, in not finding the facts put in issue by the pleadings and shown by the testimony in the cause; 13, in finding in favor of the plaintiff in the sum of $11,766.17, as of September 1, 1887, and ordering judgment to be entered for said sum against defendant; and, 14, in entering judgment upon his decision on Sept. 3, 1877.
Johns Me Cleave, with him N L. Mestrezat, for plaintiff in error.
The findings of fact should have been separate and distinct from the conclusions of law: Marr v. Marr, 103 Pa. 463 ; Harris v. Hay, III Pa. 562.
It was error to enter judgment on the report before giving thirty days for filing exceptions: Act of May 14, 1874. In Marr v. Marr, 103 Pa. 463, judgment was reversed for this reason, among others.
The agreement of May 24, 1867, with a third party, entitling defendant to the receipts of all the offices between Uniontown and *569Connellsville, cannot affect the plaintiff’s contract: 99 Pa. 177.
May 21, 1888.
The contract was illegal as being outside of the corporate powers of the company: Act of April 3, 1837, L. 185 ; Art. xvi, § 6, Art. xvii, § 5, Const, of Pa.; Telegraph Co. v. Rich., 19 Kan. 517; Fowler v. Scully, 72 Pa. 456; Bank v. Owens, 2 Peters, 538. And such contracts, when executed, cannot be enforced: Thomas v. R. R., 101 U. S. 71; Parrish v. Wheeler, 22 N. Y. 494; R. R. v. Allegheny Co., 79 Pa. 210; Davis v. R. R., 3 Am. & Eng. R. R. Cas. 543 ; R. R. v. R. R., 20 N. J. Eq. 542; Bisseíl v. R. R., 22 N. Y. 285.
Wright v. Pipe Line Co., 101 Pa. 204; Oil Creek & Allegheny R. R. v. Pa. Trans. Co., 83 Pa. 160; Parish v. Wheeler, 22 N. Y. 506, are distinguishable from this case. The rule there established is that where a corporation has borrowed money, or purchased property or services ultra vires, it cannot keep the property or services and defend on this ground. But here no property passed from plaintiff to defendant. The suit is upon the engagement itself, which cannot be maintained: Green’s Brice’s Ultra Vires, 716-17.
Our agreement with Shaw is expressly subject to the agreement with the telegraph company, which was recited to be “ in consideration of the mutual covenants hereinafter mentioned.” There was no covenant to maintain the connection, therein mentioned.
Edward Campbell, for defendant in error.
The inadvertent entry of judgment harmed no one and can be corrected now; it is at best a harmless error for which judgment will not be reversed: Bomberger v. Nash, 37 Leg. Int. 425 ; Chase v. Hubbard, 39 Leg. Int. 273 ; Dotts v, Fetzer, 9 Pa. 88; Carman v. Noble, 9 Pa. 372; Scarborough v. Thornton, 9 Pa. 451; Morgan v. Wier, 25 Pa. 119.
The company having accepted the benefits of the contract cannot now claim that it was ultra vires : R. R. v. Transportation Co. 83 Pa. 160; Green’s Brice’s Ultra Vires, 608 and note; Wood’s Railway Law, 502, 553, 558, §§ 172,192,193, p. 560, note 4; Hitchcock v. Galveston, 96 U. S. 341; Wright v. Pipe Line, 101 -Pa. 204; Bank v. Graham, 100 U. S. 609 ; Casey v. Galli, Am. Law Reg. 1877, p.444; Kelly v. Newburyport, 2 New Eng. Rep. 383; Thomas v. R. R., 101 U. S. 71; R. R. v. McCarthy, 96 U. S. 258.
Under the contracts involved, the telegraph company was to carry on the business: 99 Pa. 179. There is nothing ultra vires in this.