Union Pac. Ry. Co. et al. v. Chicago, R. I. & P. Ry. Co.; Union Pac. Ry. Co. v. Chicago, M. & St. P. Ry. Co., 51 F. 309

Sanborn, Circuit Judge, after stating the facts as above, delivered the opinion of the court. The principal question in this case is whether this contract of May 1, 1890, is ultra vires oí the Pacific Company. The Union Pacific Railway Company is a consolidation, under authority of the act of congress of July 1, 1862, of the Union Pacific Railroad Company, the Kansas Pacific Railway Company, and the Denver Pacific Railway & Telegraph Company.

It has succeeded to all the rights and powders granted to the Union Pacific Railroad Company by the acts of congress of July 1, 1862, (12 St. at Large, p. 489,) July 2,1864, (13 St. at Large, pp. 356, 362,) February 24, 1871, (16 St. at Large, p. 430,) and the various acts amendatory thereof; and in determining the extent of its powers and the validity of this contract these acts of congress must be read in the light of any general legislation fairly applicable. Central Transp. Co. v. Pullman’s Palace Car Co., 139 U. S. 24, 48, 11 Sup. Ct. Rep. 478.

It is conceded that the powers thus granted, together with those fairly incidental thereto, are the only powers of this corporation, and that all powers not thus granted are reserved to the state. Corporations created under statutory authority are the creatures of the statute. ■ By it their powers are measured.

Beyond the limits of the powers there granted, and those fairly incidental thereto, they may not act; they may not agree to act. -.Their contracts for the just exercise of these powers are binding and enforceable; but their contracts beyond the scope of these granted powers are null,—are as though they had not been. They are void as against the state,, because they are unlawful usurpations of powers reserved by the state.

They are void as against other parties to the contracts, because they are bound to take notice of the law, of the limits of corporate powers there found; and no formal assent of corporations or officers, no alleged estoppel, can give validity to such contracts, or induce the courts to enforce them, against the objection of the citizen or the state. Another settled proposition is that the consideration derived by the state from the grant of a railroad franchise is the performance of the functions pertaining to the exercise of the powers so granted.

So far as the state and the public are concerned, the sole purpose of the grant is to obtain from the corporation a performance of these functions and a proper exercise of these powers; hence any contract or conveyance of the corporation by which, without legislative authority, it disables itself from the performance of those functions and from the exercise of its corporate powers is against public policy and void. Such a corporation may not accept the privilege and benefit without accepting the burden and duty imposed by the franchise.

It may not absolve itself from the performance of those duties to the public whose performance is the only remuneration to the state for the franchise granted. Thomas v. Railroad Co., 101 U. S. 71; Pennsylvania R. Co. v. St. Louis, etc., R. Co., 118 U. S. 290, 6 Sup. Ct. Rep. 1094; Oregon Ry. & Nav. Co. v. Oregonian Ry. Co., 130 U. S. 1, 9 Sup. Ct. Rep. 409; Central Transp. Co. v. Pullman's Palace Car Co., 139 U. S. 24, 11 Sup. Ct. Rep. 478. Upon these principles and authorities is based the contention that this contract is void.

The clause of the contract deemed most obnoxious is that which lets the Rock Island Company into the equal joint possession and use of the two main tracks of the Pacific Company between Council Bluffs and South Omaha for 999 years, and it is argued that by this contract the Pacific Company has attempted to abandon or fílienate a part of its franchise, and that this attempt avoids this contract. Let us examine these authorities, and see if they warrant this conclusion. In the leading case of Thomas v. Railroad Co., 101 U.

S. 79, a railroad corporation had leased its railroad and all its appurtenances and franchises, including the right to do the business of a railroad and collect the proper tolls therefor. Mr. Justice Milijsk, delivering the opinion of the court, says: “The provision, for the complete possession, control and use of the property of the company and its franchises by the lessees was perfect. Nothing was left to the lessor but the right to receive rent.

No power of control in the management of the road or in the exercise of the franchises of the company was reserved;” and the court held the lease void, because it totally disabled the lessor from performing any of the (unctions pertaining to the exercise of its corporate powers. In Pennsylvania R. Co. v. St. Louis, etc., R. Co., 118 U. S. 290, 309, 6 Sup. Ct. Rep. 1094, a lease by a railroad corporation, by special legislative authority, of its entire railroad and appurtenances to a railroad corporation having no legislative authority to take such a lease, was held void, by Mr.

Justice Miller upon the following principle, which he an-’ nounced after referring to some of the previous decisions: “As the just result of these cases, and on sound principle, unless specially authorized by its charter, or aided by some other legislative action, a railroad •company cannot, by lease or any other contract, turn over to another company for a long period of time its road and all its appurtenances, the use of its franchises, and the exercise of its powers; nor can .any other railroad company, without similar authority, make a contract to receive and operate such road, franchises, and property of the first corporation.” In Oregon Ry. & New.

Co. v. Oregonian Ry. Co., 130 U. S. 1, 23, 9 Sup. Ct. Rep. 409, a lease by the Oregonian Railway Company, Limited, of its entire railroad and all its franchises for 96 years was held void on the same ground, viz., that it disabled the lessor to perform its corporate functions. In Central Tramp. Co. v. Pullman’s Palace Car Co., 139 U. S. 26, 49, 11 Sup. Ct.

Rep. 478, the Central Transportation Company was incorporated for “the transportation of passengers in railroad ears, constructed and to he owned In' the said company.” It erected suitable buildings and entered upon the manufacture and operation of sleeping cars. After some years it made a contract with the Pullman Car Company, by which it transferred and leased to the Pullman Company all of its personal property, patents, and contracts for 99 years, and covenanted not to engage in the business for the prosecution of which it was incorporated during that time. With delightful clearness and brevity Mr.

Justice Gray reviewed the decisions of the supreme court, and held the contract void, because it deprived the transportation company for a long period of time of the power to perform its corporate Junctions.

It is idle to review the authorities referred to in these decisions in support of this proposition, or tire cases involving the telegraph i'ranchises of the Pacific Company, to which reference is made by counsel It is sufficient to,say that in every case to which the learning and research of counsel has been able to refer us, where such a contract has been held void, an attempt was made to transfer absolutely, or for a long term of years, either the entire property and franchises of the corporation, or so large and substantial a part of them that it disabled the corporation from the performance of its obligations and duties to the government and .to the public.

Clearly, the contract here in question does not come under the ban of these decisions. So far as the main line of the Pacific Company’s road from Council Bluffs to Ogden is concerned, this contract covers but about seven miles of double track on a line of 1,032 miles, part of a system of over 5,000 miles of railroad operated by this company. ■ These tracks are at one of its terminals, at the junction of three great systems of railroad, aggregating more than 14,000 miles in extent, at the crossing of the Missouri river where three large cities stand.

Courts cannot be blind to the fact that every railroad company cannot have entrance to our great cities over tracks of its own, or to the fact that railroad companies do, and every public interest requires that they should, make proper contracts for terminal facilities over tins roads of each other.

The provision in this contract that schedules of rules for the movement of engines and trains shall be made by the parties, which will accord equal rights and privileges to the trains of the same class belonging to each party, and if not agreed upon, shall be fixed by referees, disaldes the Pacific Company from the exercise of no power necessary to the discharge of ils public duties. Lt is but the usual and necessary provision commonly found In contracts for terminal facilities.

The same provision requires such rules and regulations to be “reasonable and just,” and this puts their determination peculiarly within the province! of a court of equity, where injustice will not. he done. Joy v. City of St. Louis, 138 U. S. 43, 11 Sup. Ct. Rep. 243; Brown v. Bellows, 4 Pick. 189; Gregory v. Mighell, 18 Ves. 328; City of Providence, v. St. John's Lodge, 2 R. I. 46. 57; Dike v. Greene, 4 R. 1. 285.

Only about one seventh of the capacity of these tracks was used in 1891, and the full performance of both contracts will not now exhaust their capacity or deprive the Pacific Oomjtany of any facility necessary for the discharge of its duties to the government or the public; nor will the speculative possibility that at some future day the full performance of these contracts may wrong some one prevail upon this court to do injustice to either party now.

It is by no means (dear that the tolls of the Pacific, Company between Council Bluffs and South Omaha will be diminished any more by the performance of this contract than they would be by the operation by the Rock Island Company of a parallel railroad of its own construction between those cities; while it is certain that the Pacific Company will receive under the two contracts $90,000 per annum that it would not obtain in that event.

That the term of the contract is long might weigh as an objection if it was vicious or hurtful in itself, but, if it is fair to the parties and beneficial to the public interests, its length is but an added argument in its favor. By this contract the Pacific Company does not surrender or transfer any part of its road or property; on the other hand, it retains their possession, and reserves to itself, by the express terms of the contract, the absolute control, through its own superintendent, of the operation of every train of every company that enters upon these tracks.

That the Pacific Railway Company Acts reserved to the government the preference in the use of this railroad is not material to this discussion, for two reasons: That if the entire use of the Pacific Company was subject to this charter provision, the joint and equal use, which alone that company lets, must 'be; and that the record satisfies us that with the contracts in operation the Pacific Company still retains every facility necessary to the discharge of its corporate obligations to the government and all its other patrons.

That these acts require the Pacific Company to maintain and operate the Omaha bridge as a part of a continuous line of railroad from Council Bluffs to Ogden cannot be material to the determination of this question, because this contract does not deprive it of that power;,and it cannot be successfully contended that, after the through traffic upon this continuous line is fully accommodated, it has not also authority to use this bridge or any other part of its line for local traffic.

TÍie Pacific Company in its answer offered to transport all the cars and trains of the Bock Island Company to and from all points on its lines described in the contract, and alleged that it “thereby enabled the complainant to maintain its busipess at Omaha and South Omaha, and to cany on exactly the same business that it could have carried on by the operation of its own trains, by its own engines, and by its own employes, as provided in said supposed contract.” - This would seem to reduce the contention to this: that permitting the use of these tracks of this railroad for the traction of -the trains of the Bock Island Company by its own engines is an unlawful alienation of a part of the Pacific Company’s franchise; but permitting the use of the tracks, crews, and engines of the Pacific Company for the traction of the same trains is a lawful exercise of its powers.

The truth is—and the absurdity of this position well illustrates it—that by this contract no part of the franchise is transferred or attempted so to be; the Pacific Company still retains and exercises the power to operate its trains and collect its tolls between Council Bluffs and South Omaha to the same extent as before the contract was made. The franchise to operate its trains and collect its tolls between these points, which the Bock Island Company exercises, is derived, not from the Pacific Company, but, from the state.

It had this power before the contract; it might have exercised it on a parallel railroad built by itself; being allowed the use of the Pacific Company’s tracks, it exercises it on those tracks. The, general proposition that a railroad corporation must itself exercise its powers and perform its public duties is sound in principle and settled by authority, but this rule does not require it to do every act itself that it can lawfully do, or prohibit it, after the full performance of those duties, from utilizing all the surplus property it has necessarily acquired for the purposes of its incorporation.

Thus it is within the powers of this corporation to build its own cars and engines, but it is not required so to do; it may hire them built; it may buy them; it may rent them. It is within its powers to sell all its tickets, make all its contracts for freightage, and collect all its tolls itself, but fr is not required so to do; and it is equally within its powers to delegate to other corporations or parties the right to make these contracts.

It was undoubtedly within the powers of this corporation in this case to permit the use of its engines, crews, and tracks to the Bock Island Company for the transportation of its trains over these tracks; but it was equally within those powers to permit the use of these tracks for the transfer of the same trains when propelled by the engines of the Bock Island Company, In which way in this case these powers should be exercised was left to the determination of the managers of the corporation.

It was a mere question of method, not of authority, and whether in this case these managers have determined this question wisely or not is not material to the determination of the question we are now considering.

If, in the conduct of its Corporate business, a railroad corporation necessarily acquires engines and ears that at certain seasons of the year art; not required for its own use, it is not then required to operate them; it is not required to hold them in idleness; it may rent them; it may sell them; and, if it necessarily constructs or acquires for its corporate purposes bridges, tracks, and depots at its terminals whose capacity is greater than its corporate use, the interest of its stockholders and creditors, the value of whose property will be thereby enhanced, and the interest of the public, who will be thereby provided with increased facilities for transportation, alike require; that such surplus use shall not be left to idle waste.

Brown v. Winnisimmet Co., 11 Allen, 326, 384; Midland R. Co. v. Great Western R. Co., 8 Ch. App. 841, 851; Simpson v. Hotel Co., 8 H. L. Cas. 712; Hendee v. Pinkerton, 96 Mass. 381, 886.

The result is that it is not beyond the powers of a corporation authorized to construct, maintain, and operate a railroad and its appurtenances to let by contract to a like corporation its surplus rolling stock, or the surplus use of its terminal tracks, depots, and bridges, which it has necessarily acquired for the purposes of its incorporation: provided, always, that such contract in no way disables it from the full performance of its obligations and duties to the state and the public. The contract here in question is clearly within this rule, and is not ultra rire* of the Pacific Company.

There is another ground upon which this contract must beheld to be; within the powers of this corporation. By'the first

section of the act of July 1, 1862, (12 St. at Large, p. 489,) the Union Pacific Railroad Company was authorized fo construct, maintain, and enjoy a continuous railroad and telegraph from a point on the one hundredth meridian of longitude west from (Jreenwich to the western boundary of the territory of Nevada. By the fourteenth

section of the act that company was authorized and required ‘‘to construct a single line of railroad and telegraph from a point on the western boundary of the state of Iowa, * * * so as to form a connection with the lines of said company at, some point on the one hundredth meridian of longitude aforesaid from the point of commencement on the western boundary of the state of Iowa.” Other provisions were made for eastern connections with St. Louis and Sioux City. In Railroad Co. v. Hall, 91 U.

S. 345, speaking of these provisions, the supreme court said: “Thus provisions were made for the Iowa eastern branch of the main line. It was doubtless intended to render possible a connection with any railroad that might thereafter be constructed from tlie western boundary of Iowa eastward. * * * The scheme of the act of congress, then, is very apparent.

It was to secure the connection of the main line, by at least three brandies, with the Missouri and Iowa railroads, and with a railroad running eastwardly from Sioux City, in Iowa, either through that state or through Minnesota.” And again: “From it [that is to say, the Pacific Company’s charter] may reasonably be inferred that the purpose of congress was to provide for connection of the branches of the main line of the Union Pacific road with railroads running through the states on the east of the territory, and to provide -for those connections within those states, at points at or near their western boundaries.” Page 346.

The ninth

section of the act authorized each of the corporations named therein to construct bridges over the Missouri river, and the fifteenth

section required the railroads and branches constructed under the act to be used as one connected, continuous line.

By act of congress approved March 24, 1871, (16 St. at Large, p. 430,) it is provided: “That for the more perfect connection of any railroads that are, or shall be, constructed to the Missouri river, at or near Council Bluffs, Iowa, and Omaha, Neb., the Union Pacific Railroad Company be, and it is hereby, authorized to issue such bonds, and to secure the same by mortgage on the bridge, and approaches and appurtenances, as it may deem needful to construct and maintain its bridge over said river, and the tracks and depots required to perfect the same, as now authorized by law of congress; and said bridge may be so constructed as to provide for the passage of ordinary vehicles and' travel, and said company may levy and collect tolls and charges for the use of the same; and, for the use and protection of said bridge and property, the Union Pacific Railway Company shall be empowered, governed, and limited by the provisions of the act entitled ‘

An act to authorize the construction of certain bridges, and to establish them as post roads,' approved July twenty-five, eighteen hundred and sixty-six, so far as the same is applicable thereto.” The act of July 26, 1866, (14 St. at Large, p. 244,) provided by its first section: “That it shall be lawful for any person or persons, company or corporation, having authority, from the states of Illinois and Missouri for such purpose, to build a bridge across the Mississippi river at Quincy, Illinois, and to lay on and over said bridge railway tracks, for the more perfect connection of any railroads that are or shall be constructed to the said river at or opposite said point; and that when constructed all trains of all roads terminating at said river at or opposite said point shall he allowed to cross said bridge, for reasonable compensation to be made to the owners of said bridge, under the limitations and conditions hereinafter provided.” By sections 4, 5, 6, 7, 8, 9, and 10 of this act certain parties are authorized to construct bridges at Burlington, Iowa, Hannibal, Mo., Prairie du Chien, Wis., Keokuk, Iowa, Winona, Minn., Dubuque, Iowa, and Kansas City, Mo., on the same terms and subject to the same restrictions.

By act of congress approved February 21,1868, (15 St. at Large, p. 37,) the Southern Minnesota Railroad Company-was authorized to build and operate a railroad bridge across the Mississippi river, subject to the provisions of the act of 1866. On June 30,1870, (16 St. at Large, p. 173,)

an act authorizing a railroad bridge across the Niagara river provided that “all railway'' companies desiring to use the said bridge shall have and be entitled to equal rights and privileges in the passage of the same, and in the use of the machinery and fixtures thereof, and of all the appreaches thereto.” And in the Statutes at Large, from the seventeenth volume to the present time, is found a large number of statutes of this character, in nearly, if not quite, all of which this or a similar provision is found. By

an act of congress approved June 15, I860, (14 Si. at Largo, p. 66,) it was provided: “That every railroad company in the United States whose road is operated by steam, its successors and assigns, be, and is hereby, authorized to carry, upon and over its road, boats, bridges, and ferries, all passengers, troops, government supplies, mails, freight, and property on their way from any state to another state, and to recen e compensation therefor, and to connect with roads of other state's so as to form continuous lines for the transportation of the same to the place of destination.” An examination of these statutes clearly shows that the purpose and policy of the congress has been constantly to promote, and often io require, the formation and operation of continuous lines of transportation; that almost without exception it has authorized, and generally has required, the owners of railroad bridges built under its authority to allow' the use of their bridges and tracks for the passage of trains of connecting companies.

Tt is seen that the bridge act of 1866, by which the Pacific Com]¡any, so far as the, same was applicable, was “empowered, governed, and limited” for the use and protection of its Omaha bridge, was

an act whose restrictions and conditions have been made applicable to at least eight bridges; and that the expressed purpose of the act of February 24, 1871, was “for the more perfect connection of any railroads that are or shall be constructed to the Missouri river.” in Union Pac. Ry. Co. v. U. S., 117 U. S. 355, 361, 6 Sup. Ct.

Rep. 772, the supreme court, speaking of the act of 1871, which they there held did not change the rates of compensation expressly fixed in the act of 1862 for the transportation of mail, troops, and government supplies across the Omaha bridge, said: “The reference in the last-named act to the act of 1866 was for the purpose of extending the provisions of the latter act as far as necessary to confer additional powers upon the railway company for the use and protection of the bridge. ” In Pittsburgh, etc., Ry. Co. v. Keokuk & H. Bridge Co., 131 U. S. 371, 9 Sup. Ct. Rep. 770, Mr.

Justice Okay, speaking for that court, says: “ Where the charter of a railroad corporation, or the general laws applicable to it, manifest the intention of the legislature for the purpose of securing a continuous line of transportation, of which its road forms a part, to confer upon it the power of making contracts with other railroads or steamboat corporations to promote that end, such contracts are not ultra viren.” Green Boy & M. R. Co. v. Union Steamboat Co., 107 U. S. 98, 2 Sup. Ct. Rep. 221.

The great purpose of the contract here in question was to fill the gap in the line of the Rock Island Company between Council Bluffs and Beatrice, and thus establish a continuous line of railroad from Chicago, by the way of Omaha, and Beatrice, to Denver, Colo.

It is true that that line would be a competitor of tire Pacific Company, hut the course of legislation and decision, the public policy of this nation, is to foster, not repress, competition; it is to promote, not repress, continuous lines of transportation; and, reading the charter of this company in the light of the general legislation to which we have referred, we are constrained to hold that the Union Pacific Railway Company was thereby fairly empowered to make this contract.

The second defense to this suit and objection to this decree is that this contract was never authorized to be executed by proper action of the board of directors of the Pacific Company.

The contention is that in the board of directors was vested the whole charge and management of the property and effects of the Pacific Company; that the action of the executive committee of the board was futile, because the power to make this contract could not be delegated; that the action of the stockholders’ meeting was futile, because the action of the body of the stockholder’s is never a substitute for the action of the board of directors where the power of management has been vested in that board; that this rule applies with peculiar force to this case, because, by the charter of the Pacific Company, 5 of its 20 directors are appointed by the government, and are not stockholders; and that, in any event, the action of the meeting of the executive committee and of the stockholders’ meeting on this subject was void, because the calls for those meetings gave no notice that the subject-matter of this contract would be there considered.

Section 13 ofthe act of July 2,1864, (13 St. at Large, p. 361,) provides that 5 of the 20 members of the board of directors of the Pacific Company shall be appointed by the government, and that at least one of the government directors shall be placed on each of the standing committees.

The fact that the congress, when it had the power to control this corporation by the appointment of.a majority of this board, refused to exercise .that power, and limited the number of government directors to so powerless a minority, strongly indicates that in the management of the affairs of the corporation their power was not intended to be much greater than that of a corps of observation.

Much has been said in argument of the rights and privileges of these government directors, much claimed from the fact that the government director who was a member of the executive committee was absent when that committee approved of this contract; but there is no provision of the Pacific Railway Acts which gives any greater power to the act or vote of a government director than to that of any other director, or that declares that the action of the corporation, its board of directors or executive committee, shall be governed by any other than the general rules of law applicable to such cases because of the presence or absence of such director.

Hence this unique “feature of this charter, is not material to the determination of the questions now to be considered, and it will not be further noticed. The administration of the corporate powers of this company was vested in the body of the stockholders, unless it had been delegated to some other body. Dartmouth College Case, 4 Wheat. 518, 677; Attorney General v. Davy, 2 Atk. 212; Angell & A. Corp. §§ 277, 327; Grant. Corp. p. 68. By

section 1 oíihe act of July 1, 1862, (12 St. at Large, p. 491.) provision was made for the incorporation of the Union Pacific Railroad Company, the receipt of subscriptions to the capital stock, and a meeting of the subscribers for the purpose of electing IB directors, and then the

section provides that “thereafter the stockholders shall constitute the body politic and corporate. ” The only powers granted by the act to the hoard of directors arc to appoint engineers, agents, and subordinates to do all acts and things touching the location and construction of said road and telegraph, and to require payment of subscriptions to the capital stock. Not only this, but the same

section provides that “said company, at any regular meeting of the stockholders called for that purpose, shall have power to make by-laws, rules, and regulations as they shall deem needful and proper touching the disposition of the stock, property, estate, and effects of the company not inconsistent herewith, the transfer of shares, the term of office, duties, and.conduct of their officers and servants, and all matters whatsoever which may appertain to the concerns of said company.” Thereupon the body of the stockholders made a by-law which provided that “ the board of directors shall have the whole charge and management of the property and effects of the company, and they may delegate power to the executive committee to do any and all acts which the board is authorized to do, except such acts as by law or these by-laws must be done by the board itself.” The same body made another by-law, which provided that “the executive committee shall have, and may exercise by a majority of its members, all the powers and authority which from time to time may be delegated to said committee by the board of directors.” The only acts that by any law or by-law “must be done” by the board itself were the appointment of engineers, agents, and subordinates, the acts and things touching the location and construction of said road and telegraph, and the collection of the subscriptions.

The charter, therefore, vested the power to consider and act upon this contract in the body of the stockholders, with authority, through the enactment of. bylaws, to delegate that power. By the by-laws cited above that body did delegate this power to the board of directors, and in the same by-laws expressly authorized that board to substitute for itself the executive committee in the execution of this and every other power delegated to the board. No words more apt to grant this complete power of substitution could have been used.

Under this authority, in the year 1880, and annually thereafter, the board of directors passed a resolution, which provided that, “'while the hoard of directors is not in session, the full power thereof, under the charter and by-laws of the company, be, and is hereby, conferred upon the executive committee; ” and the executive committee has constantly exercised that power since that date whenever the board was not in session.

This resolution, through the power of substitution cited, effected a lawful delegation to the executive committee of the entire power of the corporation to consider and authorize the execution of this contract; and since the executive committee and the body of the stockholders at their respective meetings approved and ratified the same and its execution, the defense that the corporation is not bound by this contract, because no formal resolution of the board of directors to the same effect was passed, cannot be maintained. • There is another reason why neither this defense nor the objection that the calls for the meetings of the committee and stockholders gave no notice that this subject would be there considered is not now open to the Pacific Company.

This contract was within the general powers of the corporation; the charter originally vested the power to authorize it in the body of the stockholders; the Pacific Company, by its action and by .its acquiescence, induced the complainant to believe, and to act on the belief, that its execution of this contract was duly authorized.

No corporation can, by the formal execution and delivery of a contract' within its corporate powers, by long acquiescence therein, and by itself entering upon the performance and taking the benefits thereof, induce the other party to the contract, to expend large sums of money or incur onerous liabilities, otherwise unnecessary, in reliance upon, and in part performance of, the contract, and then repudiate it, and escape liability thereon, on the ground that in obtaining authority for its execution it did not itself comply with some formal rule or regulation, Avith Avhich it might have complied, but which it chose to disregard.

The perpetration of such an injustice is no more permitted to a corporation than to an individual. In Zabriskie v. Railroad Co., 23 How. 381, the defendant corporation indorsed its guaranty upon certain bonds of another railroad company, acting under authority of

an act of the legislature of Ohio, Avhich provided that any existing company might accept of any of its provisions,’ and when so accepted, and a certified copy of their acceptance filed Avith the secretary of state, those portions of their charters inconsistent Avith the provisions of the act should be repealed. The defendant corporation had never accepted this act,- or filed any acceptance thereof, and the call of the stockholders’ meeting, at AA’hich the corporation Avas authorized to make the guaranty, did not .give notice that this matter Avonld be there considered.

On these grounds the plaintiff, Avho Avas a stockholder, claimed the guaranty Avas void, and sought to enjoin the corporation from paying interest thereon. Some of the holders of the bonds Avere joined as defendants. Mr.

Justice Campbell, speaking of the first objection and the corporation’s failure to accept the provisions of the act of the legislature, said: “The corporation have executed the power and claimed the privilege conferred by them, and they cannot exonerate themselves from the responsibility by asserting that they have not filed the evidence required by the statute to evince their decision.” Page 397. After reviewing the facts regarding the call for the stockholders’ meeting, he said: “But we are to regard the conduct of the corporation from an external position.

The community at large must form tlieir judgment of it from the acts and resolutions adopted by the authorities of the corporation and the meeting of the stockholders, and by their acquiescence in them. These negotiable securities have been placed on sale in the community, accompanied by these resolutions and votes inviting public confidence. They have circulated without an effort on the part of the corporation or the corporators to restrain them or to disabuse those who were influenced by these apparently ofúcial acts. Men have invested their money on the assurance they have afforded.

A corporation, quite as much as an individual, is held to a careful adherence to the truth in their dealings with mankind, and cannot, by their representations or silence, involve others in onerous engagements, and then defeat the calculations and claims their own conduct had superinduced.” Pages 400, 401. The Pacific Company delivered this contract, signed by its president and secretary, and sealed with its corporate seal, to the Rock Island Company. This was prima facie evidence that it was executed on behalf of the corporation by lawful authority. Burrill v.

Nahant Bank, 2 Metc. (Mass.) 168, 166, 167; Canandarqua Academy v. McKechnie, 90 N.Y. 618, 629; Wood v. Whelen, 93 Ill. 153, 162; Southern Cal., etc., Ass’n v. Bustamante, 52 Cal. 192. It delivered to that company a formal resolution, unanimously passed by the body7 of its stockholders at their annual meeting, at which two thirds of its stock was represented, approving the contract and ratifying its execution.

This resolution was presumptive evidence that the meeting at which it was adopted was legally called, and that the action of the executive committee therein referred to and ratified was at a meeting legally called. Chouteau Ins. Co. v. Holmes, 68 Mo. 601; Sargent v. Webster, 13 Metc. (Mass.) 497, 504; Lane v. Brainerd, 30 Conn. 565, 577; People v. Batchelor, 22 N. Y. 128. On May 17,1890, the Pacific Company requested, and shortly after obtained, and until January, 1891, continued to enjoy, the use of the lino of the Rock Island Company from McPherson to Hutchinson under this contract.

No note of warning, no notice that this contract was executed without authority, came from the Pacific Company for seven months. “When a contract is made by any agent of a corporation in its behalf, and for a purpose authorized by its charter, and the corporation receives the benefit of the contract, without objection, it may be presumed to have authorized or ratified the contract of its agent.” Pittsburgh, etc., Ry. Co. v. Keokuk & H. Bridge Co., 131 U. S. 381, 9 Sup. Ct. Rep. 770; Bank of Columbia, v. Patterson, 7 Cranch, 299; Bank of United States v. Dandridge, 12 Wheat. 64; Zabriskie v.

Railroad Co., 23 How. 381; Gold Min. Co.v. National Bank, 96 U. S. 640; Pneumatic Gas Co. v. Berry, 113 U. S. 322, 327, 5 Sup. Ct. Rep. 525. On this contract, this resolution, this action and acquiescence of the Pacific Company, the Rock Island Company had a right to rely.

In reliance thereon it constructed during those seven months the proposed railroad from South Omaha to Lincoln, mentioned in the contract, at an expense of over a million dollars, and, under a joint arrangement with the Pacific Company, it constructed a depot at Lincoln, oil the grounds of the Republican Valley Company, to be used at the junction of this new road with the Pacific Company’s line at that point.

The great purpose of this expenditure was, by the use of this road and in the performance of this contract, to obtain a continuous line from Chicago to Denver, and the repudiation of the contract would frustrate this purpose, and greatly depreciate the value of this new road and its appurtenances. Under these circumstances, to permit this company now to repudiate this contract would violate every principle of equity and fair dealing.

By its presentation to the Rock Island Company of this contract, and this resolution, acts apparently official, .by its acceptance of a part of the benefits of the contract, by its silence for seven months while this large expenditure of money was being made in reliance on this contract, it is estopped to declare it void, either because its board of directors failed to pass a formal resolution approving it, or because its secretary failed to state in his calls that this contract would be considered at the meetings that unanimously authorized and ratified it. The Pacific Company is bound by the contract. St.

Louis, V. & T. H. R. Co. v. Terre Haute & I. R. Co., 12 Sup. Ct. Rep. 953, 956; Central Transp. Co. v. Pullman's Palace Car Co., 139 U. S. 60, 11 Sup. Ct. Rep. 478; Beecher v. Rolling Mill Co., 45 Mich. 103, 109, 7 N. W. Rep. 695; Davis v. Railroad Co., 131 Mass. 258, 260; Thomas v. Railway Co., 104 Ill. 462, 467. The third objection urged is that this contract is ultra vires of the Rock Island Company.

The contention is that the Rock Island Company had. not complied with the statutes of the state of Nebraska, with which it must comply in order to derive power to operate a railway in that state as provided by the contract; that on this account the contract could not be enforced against the Rock Island Company; and therefore that company cannot enforce it against the Pacific Company. After the testimony had been closed, and at the final argument, the defendants moved the court to permit the introduction of the evidence on which alone this contention is based.

The complainant objected on the grounds that the testimony had been closed, that no good reason was shown for its introduction • at that time, and that it was incompetent, irrelevant, and immaterial. The court overruled the motion, sustained complainant’s objections, and defendants excepted.. It was discretionary with the court below to grant or refuse this motion. To refuse it was certainly no abuse of this discretion, and we do not feel authorized to consider this rejected evidence, or the argument based upon it.

Without the rejected evidence, the record proved this contract to be within the powers of the Rock Island Company. Railway Co. v. McCarthy, 96 U. S. 267. The fourth objection is that this contract is void because the charter of the Rock Island Company expires by its terms in 1930, and that company could not contract beyond the stated period of its own existence. This objection cannot be sustained. A lease for a time certain, if the lessee shall live so long, has always been held valid, and a lease for 999 years, if the lessee shall be in existence so long, is likewise valid.

Wood Landl. & Ten. § 61, p. 144; Gere v. Railway Co., 19 Abb. N. C. 193, 203. Again, this contract provides that it shall attach to that portion of each railway leased, and shall bind the grantors, and the assigns and suecessors of each party to it, during the existence of their several corporate existences, and that each party shall take such steps as may be necessary to continue the contract in force.

The charter of the Rock Island Company provides that its existence “ may be renewed from time to time as may be provided by the laws of the states of Illinois and Iowa.” The contingency that this corporation will cease to exist, and leave neither assigns nor successors, is far too remote to have any influence upon the validity of this contract. Nor can the fifth objection urged to this contract be sustained. It is that the contract is void as to the Republican Valley Company, because it does not provide for the payment of any consideration to that company for the use of its railroad.

The contract, however, does provide that the consideration for .the use of this railroad shall be paid to the ."Pacific Company. Now a contract by an individual to perforin certain services for B. for a consideration to be paid to 0. is a valid contract. The only reason why such a contract by the officers of a corporation on its behalf may not be valid is because they are the trustees of the stockholders of the corporation, and they may not make a contract on its behalf depriving it of any right or property, uidess the benefit therefrom inures to their cestwis que Irudent.

In this case the Pacific Company had furnished the money to construct the railroad of the Republican Valley Company; it owned substantially all its bonds; it owned substantially all its stock,—all of it that had ever bean represented at any stockholders’ meeting; and from the construction of its railroad to the date of this contract the Pacific Company controlled and operated, as the sole owner of its stock and bonds, the railroad of the Republican Valley Company.

Under these circumstances, the Republican Valley Company and Its officers held all the property of that corporation in trust for the Pacific Company,.and that they reserved the consideration of this contract to their cestui que trust, to whom it belonged, and to whom the law required it to be paid, instead of to that corporation, is no objection to its validity. When the reason ceases, the rule also ceases.

That at some future time the ownership of this stock, and the right to receive this rental, may become separated, is not material here, tt is sufficient that now the contract provides that the consideration shall be paid to the party to whom it belongs, and the presumption is that any future seller or purchaser of the stock or the right to this rental will make his price with clue regard to the terms of this contract.

The next objection made to this decree is that this contract is not one of which specific performance can be enforced in equity; that the acts to be performed under it are so numerous and complicated, and their performance is to extend through so long a term of years, that it would be impracticable for any court to supervise and enforce such performance. The question here presented is no longer open for consideration in the federal courts. It is settled adversely to the appellants by the decision in Joy v. City of St. Louis, 138 U. S. 1, 11 Sup. Ct.

Rep. 248, and we affirm, and adopt upon this question, the following quotation from the opinion of Mr. Justice Biuswer, in the case at bar: “Third. Is this contract one of which a court of equity may compel specific performance? Fortunately, a recent decision of the supreme court in the, ease of Joy v. City of St. Louis, 138 U. S. 1, 11 Sup. Ct. Rep. 243, relieves from any embarrassment. That case was originally heard before me while I was circuit judge; and after a careful examination, and though in the face of seemingly adverse precedents, I decreed specific performance of a contract for the joint use of track.

That decree was affirmed by the unanimous opinion of the supreme court. All the objections which are here made were presented there and overruled, and the necessity of the interposition of a court of equity in cases of this kind clearly shown by Mr. Justice Blatciiford in the opinion of the court. The spirit of that decision is expressed in this quotation: ‘ Railroads are common carriers, and owe duties to the public.

The rights of the public in respect to these great methods of communication should be fostered by the courts; and it is one of the most useful functions of a court of equity that its methods of procedure are capable of being made such as to accommodate themselves to the development of the interests of the public, in the progress of trade and traffic, by new methods of intercourse and transportation!’ ” 47 Ted. Rep. 25.

The general rule invoked by counsel for the Pacific Company that an agreement to submit a controversy to arbitration cannot be specifically enforced in equity has no application to this case, because the stipulations in this contract to submit to referees are not the essence of the agreement, but relate to minor details of its performance, and are merely auxiliary to the principal contract, and because the contract has been partly performed, the Pacific Company has accepted some of its benefits, the Rock Island Company has made large expenditures in reliance upon it, and a failure to enforce it would result in gross injustice.

Tscheider v. Biddle, 4 Dill. 55, 60, 61; Gregory v. Mighell, 18 Ves. 333; Black v. Rogers, 75 Mo. 441, 449; Coles v. Peck, 96 Ind. 333, 341; Jackson v. Jackson, 1 Smale & G. 184. Finally, we are urged to reverse this decree because it is said that the contract was improvident!}^ made, and is inequitable, and a court of equity ought not to enforce it.

There is no doubt that the powers of a court of equity ought not to be exercised to enforce a contract that is hard and unconscionable, where such action would work great injustice to the defendant, although he may have been guilty of a breach of the contract; but in this case we are satisfied that this contract was just and fair, and that it was deliberately made on behalf of the Pacific Company by men of exceptional intelligence and familiarity with its subject-matter.

The tw'o great corporations ■ that brought these suits in a great measure controlled the carrying trade that was done over the Omaha bridge; they were raising the money to construct a rival bridge and railroad at Omaha. The construction of such a bridge meant a diversion from the bridge of the Pacific Company of the traffic the complainants controlled. To avert the construction of this bridge and the diversion of this traffic was the great purpose of this contract on the part of the Pacific Company.

At its request the complainant companies desisted from their efforts to construct their bridge, and made this contract. All the ■carrying trade of all these railroads at Omaha had been passing over the bridge of the Pacific Company for years. The officers of that company had the host means of information and undoubtedly the most accurate knowledge regarding the subject-matter of this contract. They were men of high intelligence, whoso long experience in railroad management had ripened their judgment and peculiarly fitted them to deal wisely with the subject here presented.

They fixed their own price for the use of their bridge and tracks at Omaha, and that price was inserted in the contracts. In their opinion, the contracts were fair and just; the best interests of the Pacific Company demanded their execution; they advised sind caused their execution by that company; and, in our opinion, the evidence in this case amply vindicates their judgment. The result is that the Pacific Company has accomplished its great object in making this contract; it has prevented the construction of the rival bridge; it has averted a diversion of the traffic from its own bridge and tracks.

The main object of the Rock Island Company in making the contract was to get the use of the Pacific Company’s bridge from Council Bluffs to Omaha, and its tracks from Council Bluffs to ¡South Omaha, and from Lincoln to Beatrice, to fill the gap in its continuous line from Chicago to Denver.

To accomplish its purpose, the Pacific Company made this solemn contract to permit this use; it delivered that contract to the Rock Island Company with a formal resolution of the body of its stockholders, showing its apparently official character; it demanded, obtained, and enjoyed a part of the benefits of the contract for seven months; it gave no warning or notice that it would, not perform its contract on account of its invalidity or for any other reason until the Rock Island Company had built its proposed railroad from South Omaha to Lincoln, to be used as a part of its continuous line, at an expense of more than a million dollars, and then, for the first time, it utterly refused to perform its contract, and left the Rock Island Company without a bridge or the use of one, without its continuous line, with nothing but this fragment of a road from South Omaha to Lincoln, and even that the Pacific Company prohibited it from connecting with its tracks.

For such a breach of such a contract no jury, no court, could justly measure the damages; no action at law could give adequate remedy. There was but one effective remedy, and that was the enforcement of this contract. That this remedy should be here applied, the wrongs of the Rock Island Company, the interest of the public in rapid and speedy transportation over continuous lines at the least expense, and its higher interest in that wise administration of complete justice, which is the great safeguard of civilized society, alike demanded.

To have refused it, and left these wrongs unredressed, would have been neither just nor equitable. The contract was within the corporate powers of each of the parties to it; each of them by its own acts became legally bound to perform it; the powers of the court below wore ample to enforce it; those powers were wisely exercised in granting its decree; and that decree is hereby affirmed, with costs. The questions involved in the ease of the Union Pacific Railway Company, Appellant, vs. Chicago, Milwaukee & St.

Paul Railway Company, Appellee, are decided by the foregoing opinion, and the decree in that case is also affirmed, with costs.