Boston, Concord & Montreal Railroad v. Boston & Lowell Railroad

The first of the three suits is a bill in equity, in which the plaintiffs ask a decree against the validity of the contract by which they undertook to lease their road to the Lowell in 1881. In 1883 the legislature had given all the authority they could give for leasing the road upon certain conditions. "Any railroad corporation may lease its road . . . to any other railroad corporation upon such terms and for such time as may be agreed to by the directors, and as may be . . . approved by two thirds of all the votes cast on that subject by the stockholders. . . . No competing railroads, now prohibited by law from leasing or uniting, shall have a right under the provisions of this act to . . . lease each other, unless said roads, or one of them, has heretofore leased or united with some other road or roads, for the purpose of forming a continuous line, or shall hereafter, or at the time of such lease . . . unite with or lease some other road for such purpose. . . . Railroad corporations created by the laws of other states, operating roads within this state, shall have the same rights for the purposes of leasing . . . other roads as if created by the laws of this state." Laws 1883, c. 100 ss. 17, 18. The first question is, whether the lease of the Montreal road to the Lowell company complied with all the terms prescribed by law as conditions of the state's assent.

The lessees are a Massachusetts corporation. Were they "operating" a railroad in this state, within the meaning of s. 18? In the literal and ordinary sense of the word, they were operating the Manchester Keene road. They and the Concord company had bought it. Each of the corporate purchasers had a deed of an undivided half. In a practical and equitable sense, they were joint proprietors of the road. The Lowell were operating it for themselves and the Concord. For many of the purposes of responsibility, the Lowell were proprietors (State v. Railroad,58 N.H. 410); and if they were operating it legally, under a good title or valid contract, with the consent of the state and of all parties in interest, it is not material who had the profit and loss.

The Manchester Keene company had mortgaged their road under authority given by c. 143, Laws 1873. In 1881, an act (c. 232) had been passed, entitled "An act in relation to the foreclosure of the Manchester Keene Railroad." The legal meaning of parts of this act is materially affected by the peculiar circumstances of disaster and danger for which the act shows the legislature intended to provide. The contemplated foreclosure indicated the bankruptcy of the Manchester Keene company, and their inability to perform their public duty of transportation in the district their road was designed to accommodate. The third section of the act recognizes the need of powers of sale and purchase specially adapted to secure the completion and effective operation of the road. The legislature evidently understood there was reason to fear that whatever might be the prospect of a sale of some part or parts of the road, there would be difficulty in finding a purchaser willing to pay all the debts, and take the road with an obligation to complete, maintain, and operate the whole of it. The stipulation, that "nothing in this act contained shall be construed to authorize the discontinuance of any portion of said road," reveals an apprehension that the authority given the trustees to sell it "as a whole or in suitable parts," and the authority given the purchasers to sell "the whole or any part thereof at private sale, if they think such sale best calculated to secure the effective operation of the whole road," might be construed as an assent to a discontinuance of some part that would not pay the expense of operation. While the bankruptcy of the corporation and the losses of the stockholders might be irretrievable, a sale under a prohibition of discontinuance might save something for the creditors without subjecting the public to the loss of any part of the road.

The act discloses no purpose to withhold from nonresidents the privilege of bringing their money into this jurisdiction, and devoting it to public use in this unpromising enterprise. It contains no allusion to the subject of their laboring under a peculiar disability, and suggests no reason for shutting them out of this branch of the public service. It does not require the purchase to be made by a corporation, or by more than one person. Neither in express terms, nor by fair implication, does it require the purchaser to be a citizen of New Hampshire or of the United States. In the attempt to rescue the highway from extinction, it is not to be assumed that the legislature must have meant to deprive the public of the pecuniary aid and personal services that might be offered by strangers and foreigners. For all necessary and proper purposes, the road and its purchasers and operators would be subject to New Hampshire law, and to the verdicts of New Hampshire juries in all courts, state and federal. There is in the act no intimation of a preference for the opinions of this court on questions of local law, or an intention to adopt an inability to remove a case to the federal court as a test of the right to be a purchaser.

Express consent is given to a purchase by "any railroad company." Taken without qualification, this clause includes foreign as well as domestic railroad corporations. The words "any railroad company" might be used in a connection and for a purpose that would show a restricted sense not including foreign companies. Here is no evidence of a purpose to exclude them; and the general scope of the act, and the impending danger for which it attempted to provide the best available remedy, furnish abundant reason to believe the rejection of foreign aid was not intended. So much of the road "as may be purchased by any railroad connecting therewith, either directly or through lines which it leases or operates, may thereupon be made a part of the railroad purchasing the same as aforesaid, the same as if it had been originally incorporated as a part of its railroad; and said railroad shall have all the rights, powers, and privileges necessary to carry this act into effect." How many connecting railroads are within this clause we need not inquire. It describes the Lowell as a company authorized to be a purchaser, so far as authority can be given by New Hampshire law. And without this clause, considering to what extent the Manchester Keene road must have been designed to be a means of communication between southern New Hampshire and Boston, and to what extent economy and public convenience would be consulted by its being run as a part of the Lowell, a legislative intent to exclude the Lowell and every other foreign company from the right of purchase could not be found without clear evidence of a discrimination so manifestly calculated to defeat the object of the act.

Words literally importing the singular number may extend to several persons or things when such is their apparent meaning. By this rule of construction, the act authorizes several railroad companies to be joint purchasers of the whole or any part of the road. And this meaning is in the provision of s. 4 (amended by c. 246, Laws 1883) giving a certain authority to "the railroad or railroads purchasing the said Manchester Keene Railroad, or any part thereof." "The railroad or railroads" making such purchase "are authorized to issue bonds, secured by mortgage on their own road, . . . or on the property purchased, or on both jointly." The legislature were content with giving all the needed authority they could give to invite bids from citizens and aliens, residents and non-residents, incorporated railway companies and unincorporated persons, and to induce them to save this road for public use, without undertaking to exclude any for want of foreign corporate power. The consent of another state was not made a condition of the consent of this state. The authority to make a mortgage and increase capital stock, which was given to those purchasers to whom New Hampshire could give it, included the assent of this state to a joint mortgage of this road and a foreign road of the purchasers. The Lowell company operated this road, with the consent of the state, under the act of 1881. If any stockholders of the Lowell were ever entitled to all injunction in this state, they apparently waived it by laches. The burden of proof has not been shifted from the plaintiffs to the defendants; and it does not appear that, at the date of the Montreal lease, the Lowell company could have been expelled by legal process from the Manchester Keene road. For all the purposes of this case, they were operating that road lawfully; and if an illegal operation would not be sufficient under s. 18 of the act of 1883, nothing more than a legal one is made necessary by that section.

If the lease was subject to the condition that the lessors or lessees should lease or unite with some other road for the purpose of forming a continuous line, the union of the Montreal and White Mountains roads was a compliance with the condition. That union is within the literal meaning of the requirement, and no ground has been suggested on which it can be held not to be within the legal meaning. The reason that induced the legislature to accept extension as compensation for loss of competition is not stated in the act, and none that can be fairly inferred is competent and sufficient evidence of any other condition than a union or lease for the purpose of forming a continuous line. The adequacy of the compensation is not submitted to the court, but is settled by the statute. The legislature have not stipulated that the region losing the benefit of competition shall receive the benefit of extension. In such public benefits there are no vested private rights that affect the construction of this act. If, upon an investigation of the facts, we should be of opinion that the compensation in this case is inadequate, or does not accrue to the territory losing the advantage of competition, or that in every possible lease there would be a compliance with the condition, such an opinion could not impose a qualification which the legislature have chosen to omit. There is probably no jurisdiction in which a legislative purpose is carried into effect by a more liberal mode of construction than that which prevails in this state. But the most liberal construction is nothing more than the ascertainment of that purpose from competent evidence. Here is no evidence of a condition at variance with, or in expansion of, the ordinary and natural meaning of a continuous line formed by a union or lease. This suit is an exercise of corporate power acquired by persons who bought a controlling amount of Montreal stock for the purpose of taking the road from the lessees and uniting it, by lease or otherwise, with the Concord. The evidence shows the Concord have been advised that the formation of a continuous line by the union of the Montreal and the Concord would legalize the union of the Concord and the Manchester Lawrence. This advice gave the legal construction of the proviso, which may have been designed for that or some other special case, without regard to its effect as a general clause applicable to other cases. If the design was to require something more than the formation of a continuous line by a lease or other union, the act does not show what other condition the legislature intended to impose.

The road of the lessees need not adjoin that of the lessors. On this point, and in relation to the foreign authority of a foreign company, the act is silent. An intention to require contiguity of roads, or to make foreign authority a condition of New Hampshire's assent, is not proved by competent evidence. The validity of the lease is not disputed by stockholders of the Lowell.

The lease of the Montreal to the Lowell complied with all the terms prescribed by law as conditions of the state's assent. Neither the state, nor any Montreal stockholder who voted for the lease, can maintain a suit to set it aside. If all the stockholders had voted for it or assented to it, this bill would be dismissed because neither they nor the corporation could complain of their own act If the lease had been contrary to public policy, that is, had been contrary to the will of the state as a party in interest, and abatable at the suit of the state, there would have been a question whether a bill seasonably brought by the lessors could be sustained. But the lease is not contrary to public policy in the sense in which those terms are commonly used in this connection. If it is illegal, its illegality does not extend beyond its violation of the partnership contract of the Montreal stockholders; and of that violation the objecting minority alone could complain. The lease being allowed and approved by the state, so far as legislative power can allow and approve it, nobody can object but a dissenting party in interest, or some one representing him and acting in his behalf, because nobody else is aggrieved. This is a private suit, in which no one has a right to be heard who is not interested in the decree. Central Railroad Co. v. Collins, 40 Ga. 582, 616. Neither the state, the corporation, the majority of the stockholders who voted for the lease, nor their assigns can contest the lease which they or their assignors made or authorized to be made. Whether the suit could be maintained if seasonably brought in the name of the corporation as a representative of the dissenting minority, we need not now inquire. The bill stands no better than it would if brought by that minority in their own names as sole plaintiffs, after a refusal of the corporation to act for them.

If the suit could be regarded as brought by or for the minority, it could not be maintained. The bill was filed April 22, 1887 It alleges that the lease was approved by a vote of the stockholders June 12, 1884, and that it was executed June 19, 1884. When the minority had knowledge of the vote or the lease, they would waive their claim for equitable relief by not prosecuting it with equitable expedition. The suit was brought nearly three years after the lease was made. During that time the lessees became extensively involved in obligations and liabilities incident to the business of running the leased road. The delay needs explanation, and none is given. It is said the minority supposed the question of the validity of a lease of another road would be settled in Dow v. Northern R. R. The supposition is irrelevant. It does not account for their inaction. They may have hoped, or even expected, that if Dow prevailed against the Northern lease, the Montreal lease would be surrendered without suit. But it was not a hope or expectation of the result in the Northern case that induced them to refrain from litigation. It was for a very different reason that they did not resort to the law. A suit prosecuted in their name, by and for the benefit of others having no legal cause of action, would have been unavailing; and there is no presumption that they would have allowed themselves to be mere nominal plaintiffs. A suit prosecuted by themselves, in their own name or in any other name, for their own benefit and at their own expense, is a step they have never intended to take. The agreement, in pursuance of which eighteen other persons bought stock of the majority for the purpose of controlling the corporation and contesting the lease, is dated May 20, 1886, nearly two years after the date of the lease. The defence of the partnership rights of the minority was not among the objects for which that purchase was made, and for which this suit was brought. Were it possible to treat the minority as plaintiffs in interest, it would remain impossible to find that the Northern case was the cause of this or any other suit not being brought by or for them at an early day. Assuming that the suit is theirs, they were bound to know that a delay of nearly three years would raise, in the equity jurisdiction, a question of laches that was not raised in the Northern case.

The delay does not destroy the minority's cause of action, if they had one, but it affects the number of their remedies. If they have a grievance, they have a right of action at law against the Montreal company for violation of their partnership contract. In such an action against the lessors, they can recover all the damages to which they are entitled. Their right to the additional redress of an injunction that would enforce specific performance of the partnership contract is a question of justice. Eckstein v. Downing, 64 N.H. 248, 259. If they desired the cumulative remedy in equity, they should have done equity by applying for it promptly. The question is, not whether their delay comes within a technical rule of estoppel, but whether it was unreasonable. It was not equitable that they should leave the lessees exposed to the railway risks and controversies arising during two successive lawsuits. Reasonable diligence did not permit the Montreal minority to wait for the decision of the Northern case. They did not know that all the answers that would be made to this bill would be disposed of by that decision. More than one defence is set up here that was not presented in the Northern case; and the consequences of an unwarranted assumption that the defences would be the same in both cases cannot justly be put upon the lessees. As this action was not seasonably begun to contest the original validity of the lease, it is not necessary to examine the partnership contract of the Montreal stockholders to ascertain whether the lease is a violation of it.

Of the contract in regard to rent, the construction most unfavorable to the lessees is, that they are to pay a maximum sum, fixed in the contract, unless they show, in a prescribed manner, that a less sum is the result of a certain computation upon the gross receipts of the Northern and four other roads: but a minimum is also fixed below which the rent cannot be reduced. There has been no breach of the express covenant to pay rent, or the express agreement to render to the plaintiffs a statement of the gross receipts of the five roads, or the express covenant that books and accounts relating to the business of the five roads shall be open to the plaintiffs' inspection. But the lease of the Northern and its branches to the defendants has been judicially annulled; and the plaintiffs contend that upon the validity and continuing existence of that lease the Montreal lease was made dependent. If the parties had intended this lease should terminate in case the Lowell voluntarily or involuntarily ceased to operate or control the Northern, their accidental failure to put that important part of their contract in the lease could have been cured in a suit for the reformation of the defective instrument. In the lease there is no express stipulation of that kind, and no evidence on which it can be found that such a condition (which would naturally be expressed in direct and distinct terms) was intentionally left to be implied from the mode in which the lessees are to ascertain and show the amount of rent to be paid if they seek to avoid the payment of the largest sum named in the contract. It is not a necessary or a reasonable inference that the inability of the lessees to prove their right to hold the road on payment of a less sum would extinguish their right to hold it on payment of the maximum. If the writing is construed literally, the plaintiffs have no cause of complaint. They do not claim that they have received less rent than was due, or that the statement of the receipts of the five roads has not been rendered, or that "all books and accounts kept by it (the Lowell corporation) relating to the operation of the demised premises and the business of the other roads herein named, so far as may be necessary and proper in determining the gross receipts whereby the amount to be paid as rent is to be ascertained" have not been open to the plaintiffs' inspection. The letter of the written contract does not require that the defendants shall operate or control the Northern, or be able to render the statement without the consent of the operators of the Northern, or that any books or accounts not kept by the defendants shall be open to the plaintiffs' inspection. And upon the intention of the parties legally proved by the evidence contained in the lease, the plaintiffs have no stronger position than upon the letter of the document. There is no evidence and no reason to believe, that the statement of receipts and the opportunity to inspect books and accounts were to be given for any other purpose than to furnish means of information on the question of the amount of rent to be paid if the defendants should raise that question by not paying the maximum. Whether a strict interpretation is accepted without looking for the intention of the parties, or their words are weighed as evidence of what they meant, the result is the same. The lease of the Montreal was not made dependent upon the validity and continuing existence of the lease of the Northern.

Bill dismissed

All concurred.

The substance of the second bill (filed March 30, 1888) is stated in the opinion.

[ANSWER OF THE BOSTON MAINE RAILROAD, FILED JUNE 1, 1888.]

This defendant, reserving to itself the benefit and advantage of any exceptions to the plaintiff's bill, which can or might be taken by special or formal demurrer, or otherwise, for answer thereto saith as follows, to wit, —

I. It admits that the plaintiff, on the 19th day of June, 1884, as in possession, either as owner or lessee, of the railroads and branch railroad described in the plaintiff's bill; that prior to June 12, 1884, the directors of the plaintiff and of the Boston Lowell Railroad corporation made an agreement for a lease of the plaintiff's several railroads to said Boston Lowell Railroad corporation; that after said agreement, and pursuant thereto, the directors and stockholders of the plaintiff severally voted as stated in said bill, agreeing to and approving of a lease by the plaintiff to said Boston Lowell Railroad corporation of the tenor and terms of a copy of an indenture of lease made part of said plaintiff's bill; that said indenture of lease was duly executed on behalf of the plaintiff and said Boston Lowell Railroad corporation; that possession under said lease was given by said plaintiff, and assumed by said Boston Lowell Railroad corporation, June 19, 1884, and has continued as alleged in said bill until October 11, 1887, and as hereinafter alleged by this defendant, has ever since continued, and still continues; that said Boston Lowell Railroad corporation surrendered possession of the Northern, Concord Claremont, and Peterborough Hillsborough railroads, July 1, 1887, pursuant to a decree of court; that on the 22d day of June, 1887, this defendant made a contract of lease with said Boston Lowell Railroad corporation, a portion of the provisions of which the plaintiff undertakes to set out in its said bill, but all the provisions of which are contained in a true copy of said contract, marked "A," hereto annexed and made part of this answer; that on the 18th day of November, A. D. 1887, the plaintiff entered upon the premises described in its said lease to said Boston Lowell Railroad corporation, assuming and undertaking to do so for the purpose of determining the estate thereby granted for an alleged breach of certain conditions of said lease, as appears by the copy of a written instrument executed simultaneously with said entry, a copy of which is hereto annexed marked "B," and made part of this answer; that on the 29th day of November, A. D. 1887, the plaintiff brought a suit at law against this defendant, now pending in this court, but which suit is not for the recovery of the plaintiff's said railroad and railroad property as alleged in said bill, but only for a portion thereof — as fully appears of record; that in contracts of lease between said Boston Lowell Railroad corporation and said Stony Brook and Wilton railroads, respectively, the said Boston Lowell Railroad has covenanted with each of those corporations that it would not assign, underlet, or part with the possession of the leased premises without the written consent, in each case, of the lessor; and that the operating expenses and fixed charges of the plaintiff's railroad since said October 11, 1887, have exceeded the earnings thereof and that such excess has been paid by this defendant.

II. It denies, except as herein admitted, each and every allegation of the plaintiff's bill as fully and particularly as if the same were herein repeated and specifically denied.

III. It specially denies that it has ever intended or contrived to acquire possession of the plaintiff's railroads, except with the plaintiff's assent; that it has ever threatened to hold, or is now holding or operating, the plaintiff's railroad; that from April 1, 1887, to October 11, 1887, it managed and controlled the Boston Lowell Railroad corporation, or any part thereof, or any of its leased lines, including the plaintiff's railroads: that after October 11, 1887, it operated, or continued to operate, the roads of the plaintiff, except as hereinafter alleged and stated, or the Stony Brook and Wilton railroads; that said Boston Lowell Railroad corporation, on said 11th day of October, 1887, or at any time since, has ceased to exist as a manager, controller, or operator of any railroad property, or has voluntarily deprived itself of rolling-stock, equipment, and other property necessary for the operation of a railroad; that since said 11th day of October, 1887, said Boston Lowell Railroad corporation has received no money or income except its semiannual dividends and its organization expenses, as paid to it by this defendant; that since October 11, 1887, said Boston Lowell Railroad corporation has expended no money except for dividends and organization expenses; that said Boston Lowell Railroad corporation, under its contract of lease with this defendant, does not expect to receive, and cannot receive, any money or income except for its dividends and organization expenses, as aforesaid, to be paid by this defendant; that on said 11th day of October, 1887, said Boston Lowell Railroad corporation turned over to this defendant all its railroad, railroad property, and contracts with other railroads, including the plaintiff's lease of June 19, 1884, and at said time discharged and turned over to this defendant all its officials and employes (except its directors, president, and treasurer), and quitted the business of operating railroads; that the consent of the plaintiff, or of said Stony Brook and Wilton railroads, respectively, to an assignment to this defendant of the lease of each of said railroad corporations to said Boston Lowell Railroad corporation, has never been asked or granted; that on said 11th day of October, 1887, or at any time since, this defendant took, or has taken, possession of the road of the plaintiff, or has operated the same through officials duly appointed by it for that purpose, or on said 11th day of October, 1887, took possession of said Stony Brook and Wilton railroads, and has ever since possessed and operated the same, except as hereinafter alleged and stated; that said Boston Lowell Railroad corporation has no officers or employes for operating any railroad; that all the officials and employes now, and since October 11, 1887, engaged in operating said three roads, have been, and are, hired by said Boston Maine Railroad, and paid from its treasury; that all gross income received from each of said three roads since October 11, 1887, has been turned into the treasury of the defendant, and the operating and other expenses of said three roads been paid therefrom; and that under the lease between this defendant and said Boston Lowell Railroad corporation of June 22, 1887, all the future income of the plaintiff and said Stony Brook and Wilton railroads, for ninety-nine years from April 1, 1887, is to be taken by this defendant, and all operating and other expenses of said three roads to be paid by it during said term.

IV. It specially denies each and every allegation of fraud, of unfair dealing or misrepresentation, of suppression of facts, and of the employment of fictitious business, machinery, and methods in the plaintiff's bill contained, as fully and explicitly as if each allegation were here repeated and specifically denied, and denies that at any hurriedly called conference of officers of the defendant, or at any other conference, it was agreed that any fictitious machinery and methods had been used by the defendant for keeping possession of and operating the plaintiff's railroad, or were dangerous and unsafe; that the defendant must provide other and more deceitful and delusive methods and machinery for operating and retaining the possession of the plaintiff's railroad; that thereupon, and for said purposes, the defendant invented and adopted new machinery and methods, and a separate organization of heads of departments and superior officers, to be deceitfully appealing to operate the plaintiff's railroad for and in behalf of said Boston Lowell Railroad corporation; and that thereupon either the circular of November 5, 1887, or any other circular, was fraudulently dated and issued by this defendant.

V. It specially denies that since the taking possession of the plaintiff's railroads (alleged by the plaintiff, but denied by the defendant) under said lease of June 19, 1884, it has permitted the plaintiff's property to depreciate; that the bridges on said line have become unsafe, or that the road-bed, or the ties and rails belonging thereto, have not been kept in proper repair; that engines, cars, and other equipment used on the plaintiff's railroads are unsafe or unsuitable for the proper operation of said road; that new locomotives and new steel rails are absolutely required; that all locomotives now in use on said road are unfit for use, and ought to be sent to the shop for repairs; that the station-houses and buildings on said road are ruinously out of repair; and that a large sum of money, to wit, two hundred and fifty thousand dollars ($250,000), ought to be expended upon said railroads in renewals and repairs, in order to make the same safe and convenient for the public travel upon them.

VI. It alleges that the lease of the roads of the plaintiff to said Boston Lowell Railroad corporation, by indenture dated June 19, 1884, was duly agreed to by the directors of said Boston Lowell Railroad corporation, and approved of by its stockholders conformably to, and as authorized by, the laws of the state of Massachusetts; that said Stony Brook and Wilton railroads are operated under contracts between the Nashua Lowell Railroad company and said Wilton and Stony Brook railroad companies, respectively, dated May 6, 1872, May 28, 1860, and October 26, 1868, and by this defendant as agent and attorney of said Nashua Lowell Railroad company; that neither itself nor said Boston Lowell Railroad corporation have done anything as respects the plaintiff or its property, except openly and bona fide, and pursuant to the provisions of the public contract of lease between them of June 22, 1887, hereinbefore referred to; and that the epithets profusely applied to the defendant and its conduct, throughout the plaintiff's bill, — such as "subterfuge," "equivocation," "secretly," "clandestinely," "fictitious," "deceitfully," "falsely," "delusively," "fraudulently," "cheating," — are impertinent and irregular as matter of pleading, and as matter of argument are wholly without justification in the facts, even as alleged by the plaintiff itself.

VII. It alleges that the said Boston Lowell Railroad corporation has never surrendered possession of the plaintiff's railroad or any part thereof; but, pursuant to the covenants of its lease to the defendant of June 22, 1887, has remained in possession thereof, and operated the same in all respects conformably to said contract, retaining for that purpose the necessary material, supplies, equipment, money, and other property, and receiving the gross income thereof.

VIII. It alleges that the plaintiff's railroads, the road-bed thereof, and the rolling-stock and equipment used thereon, are not only in no worse condition than the same usually are at the end of the winter season, but are in better condition than they customarily have been at the same season of the year; that the said Boston Lowell Railroad corporation is now making such substantial and thorough renewals and repairs upon the plaintiff's roads and the equipment used thereon, as are always made at the opening of the summer season, and as will enable them to be operated with safety and efficiency; and that since the plaintiff's railroads have come into its possession the said Boston Lowell Railroad corporation has expended in new bridges, steel rails, on station building, water-tanks, turn-tables, and other permanent betterments on the plaintiff's said railroads, more than two hundred and fifty thousand dollars ($250,000); so that the plaintiff's railroad property, instead of having depreciated while in the possession of said Boston Lowell Railroad corporation, has largely enhanced in value, as well as in its capacity and fitness for use in the business of railroad transportation.

[ANSWER OF THE BOSTON LOWELL RAILROAD, FILED JUNE 1, 1888.]

This defendant, by leave of court and agreement of parties, appears in the several suits in which the Boston, Concord Montreal Railroad is plaintiff, now pending in the supreme court in the state of New Hampshire, and mentioned in the agreement of May 7, 1888, between the Boston, Concord Montreal Railroad, the Boston Maine Railroad, and the Boston Lowell Railroad corporation, and makes the following additional answer to said several suits in which either it or the Boston Maine Railroad is the defendant:

The said defendant, insisting that the plaintiff is not entitled to the relief prayed for, and reserving all rights, privileges, or advantages to which it would be entitled under a special or formal demurrer to plaintiff's bill of complaint, reaffirms the allegations contained in its original and amended answers to the plaintiff's bill of complaint formerly filed in the supreme court of said state of New Hampshire, in the eastern judicial district for the county of Grafton, on the 22d day of April, A. D. 1887, and referring to the same as part of this answer, reiterates the denials and allegation therein contained; and in further answer to the bill of complaint of said plaintiff, against the Boston Maine Railroad, filed in the said supreme court within and for the county of Merrimack in said state, March 30, 1888, to which it has become a party defendant by leave of court and by said agreement, it says, —

1. That on the 19th day of June, 1884, the plaintiff was the owner of or in possession of the railroad described in its said bill of complaint, and that on said 19th day of June, 1884, the plaintiff corporation executed to this defendant, in pursuance of the agreement and votes alleged in the plaintiff's bill, a valid lease of all its said railroad property, a copy of which lease and the votes relating thereto are hereunto annexed and made a part hereof (Exhibit A); and this defendant avers that the parties to said lease were duly empowered and authorized by law and by the votes of said corporation to make and execute the same, and this defendant was specially empowered to take said lease, and that said lease contained the covenants and agreements appearing in said Exhibit A, a part of which are set out in the plaintiff's bill of complaint; but this defendant denies that the stockholders of said plaintiff corporation ever protested against or objected to said lease, except that at the special meeting holden at Plymouth, June 12, 1884, persons owning 410 shares of stock voted against the approval of said lease, but that since June 12, 1884, the stockholders of said corporation, by receiving rent and accepting the benefits arising under said lease, have acquiesced in and ratified the same; and that until commencement of these said proceedings no objections other than above have ever been made to said lease; and this defendant says it has been permitted to make large expenditures upon the rolling-stock and railroad and other property leased to it by said plaintiff without objection from said plaintiff, but with its consent and at its request; and that the plaintiff is, and in equity should be, estopped from setting up any want of formality or legality in the execution of said lease.

2. That in accordance with the provisions of said lease, this defendant took full possession and control of said leased railroad and property, including the Pemigewasset Valley Railroad, and held, operated, and controlled the same in accordance with the agreements and covenants of said lease, not only from said 19th day of June, A. D. 1884, until October 11, 1887, as alleged in the plaintiff's bill, but has possessed, operated, and controlled the same from said October 11, 1887, to the present time, and still continues to possess, operate, and control said leased property in accordance with the terms of said lease, and has ever continued to faithfully keep and perform every covenant, agreement, and undertaking contained in said lease to be by it kept and performed, and has in no manner violated said lease nor any of the covenants and agreements therein contained. This defendant further alleges, that it has greatly improved said property and added to the business done over said railroad, and by its expenditure of money has permanently improved said railroad and leased property, and that by its effort said property has become of much greater value and efficiency for the transportation of passengers and freight than it was before and at the time said lease was made.

3. This defendant further says, that it is true that on the 22d day of June, 1887, it executed to the Boston Maine Railroad a lease of its railroad and property, a copy whereof is hereunto annexed, marked Exhibit B, and made a part of this answer; and it alleges that said lease was authorized by law and by the votes of the stockholders and directors of the parties thereto, and that in pursuance of said lease, on the 11th day of October, 1887, it transferred to the Boston Maine Railroad the possession of the railroad and property of which it was the absolute owner, and of which it had the legal right to transfer the possession, and of which the said Boston Maine Railroad had the legal right to take the possession. This defendant further alleges, that it did not and never has assigned or underlet or parted with the possession of the premises demised to it by the plaintiff by its lease of June 19, 1884, marked Exhibit A, either to the Boston Maine Railroad, or to any other corporation or person, and has not parted with the control thereof, but still possesses, operates, and controls the same in accordance with the provisions of said lease. It also alleges that at the time of said lease to the Boston Maine Railroad, and ever since, it reserved and still reserves and possesses sufficient rolling-stock, equipment, and other means with which to operate said railroad and property leased of the plaintiff as aforesaid, and it has retained under its direction a sufficient number of officers and employes to control and operate said demised railroad and property, in strict conformance with said lease of June 19, 1884.

4. This defendant denies the allegations in said bill of complaint relating to the motives and purposes of said lease to the Boston Maine Railroad; it denies that said lease, or any clause or covenant thereof, was made for the purpose of allowing the Boston Maine Railroad to acquire, against plaintiff's consent, the railroad mentioned in said plaintiff's lease marked Exhibit A, or to acquire any of plaintiff's property by "subterfuge, equivocation, and quibble," as alleged in plaintiff's bill. It denies that said Boston Maine Railroad either threatens to hold, or is in fact holding, operating, or controlling, the railroads mentioned in plaintiff's lease marked Exhibit A, and in violation of said lease, and that this defendant has no interest in or to said leased property, or possession thereof, as alleged in said plaintiff's bill.

5. This defendant admits that it surrendered possession of the Northern, Concord Claremont, and Peterborough Hillsborough railroads, July 1, 1887, pursuant to a decree of the supreme court of the state of New Hampshire, but this defendant alleges that it has ascertained and paid to the plaintiff the full amount of rental provided for by said lease marked Exhibit A, and it alleges that the fixed charges of the plaintiff's railroad, named in said lease, Exhibit A, have, since the eleventh day of October, 1887, exceeded the earnings thereof, and that such excess has been paid for the plaintiff. It alleges that said Stony Brook and Wilton railroads are operated under contract between the Nashua Lowell Railroad corporation and said Wilton and Stony Brook companies respectively, dated May 6, 1872, May 28, 1860, and October 26, 1868, and that if the Boston Maine operates said railroad or either of them, it does so as the attorney of said Nashua Lowell Railroad, and that such operation does not affect the rights of the plaintiff in any manner whatsoever, and it denies the allegations in relation thereto as set out in the plaintiff's bill.

6. This defendant denies, except as herein otherwise stated, each and every allegation in the plaintiff's bill as fully and particularly as if the same were herein set out and specifically denied, and especially it denies that there was any pretence, or suggestion, or fraud, or concealment in relation to the management of the several properties and railroads mentioned in the plaintiff's bill, or that the same were privately or clandestinely managed or controlled by the Boston Maine Railroad under the cover and in the name of the Boston Lowell Railroad as therein alleged, or for the purpose therein set forth; it denies that at any time since October 11, 1887, or before that time during its existence, this defendant has ceased to exist as a manager of all railroad property, or that it has deprived itself of rolling-stock, equipment, and supplies necessary for the operation of a railroad; it denies that since the 11th day of October, 1887, it has received no money or income from any source for its own use, excepting its dividends and organization expenses, and that it has expended no money since said date for any purpose except that received from dividends and organization expenses, and that it cannot receive from any source money, cash, or income except from the treasury of the Boston Maine Railroad for the term of ninety-nine years, as alleged in said bill; it denies that it has turned over to the Boston Maine Railroad its railroad and property of every kind and description, including the premises leased of the plaintiff, and has discharged and turned over to the Boston Maine Railroad, its officials and employes, excepting its president, directors, and treasurer, and has quit the business of operating railroads, as alleged in said plaintiff's bill; it denies the allegations contained in the plaintiff's bill that there was any pretence in the operation of any of the railroads therein named, or that there was any purpose to deprive the plaintiff of its property and its rights, or to cheat the plaintiff, the public, and the court, as alleged in said bill; it denies that this defendant has ceased to be a corporation, that it is the pretended agent and servant of the Boston Maine Railroad, that it is a corporation without officers, employes, cash, or resources, that it is helpless to use its own name in this proceeding, except at the bidding of the Boston Maine Railroad, as is impertinently, arrogantly, and scandalously alleged in the plaintiff's bill, and alleges that such allegations are neither pertinent nor proper in a proceeding of this character; it denies that there are any fictitious business machinery and methods adopted by it or the Boston Maine Railroad for the purpose of concealing the real possession of the railroad leased of the plaintiff, or that by false and deceitful methods of machinery the Boston Maine Railroad operated and possessed the plaintiff's railroad for one month or for any other time; and it denies that it ever consented or authorized any warning to be given to the Boston Maine Railroad, as alleged in plaintiff's bill; it denies that its chief officials ever did give such warning; it denies that there were any deceitful and delusive methods of machinery ever invented or used for the operation and possession of the railroad leased of the plaintiff, as alleged in the plaintiff's bill; it denies the allegations relating to the invention and construction of new machinery and methods relating to the operation of said railroads leased of the plaintiff as alleged in plaintiff's bill, or that any officers were fictitiously appointed therefor, and alleges that due and proper measures have been taken to control and operate the roads leased of the plaintiff in accordance with the provisions of said lease, and that this defendant has taken special care not to part with the possession and operation of said road, or permit any violation of the clause of said lease in relation thereto. And this defendant is not advised, and therefore denies the claimed admissions of the Boston Maine Railroad, as alleged in said bill; and alleges that if such admissions have been made, this defendant is in no way bound thereby.

This defendant admits that on the 18th day of November, 1887, the plaintiff entered upon the railroad described in the lease of June 19, 1884, claiming a breach of the covenant of said lease, that this defendant "will not assign or underlet the premises hereby demised, or part with the possession thereof, except with the written consent of the first party (the plaintiff)," for the purpose of determining the estate created by said lease, but it denies that by such entry the estate or rights of this defendant under said lease were determined and divested, and that notwithstanding such entry, the Boston Maine Railroad, in violation of the covenants of said lease, unlawfully, and without right, retained possession of the railroads and railroad property named in said lease, and now unlawfully, and without right, holds the same as alleged in said bill.

This defendant admits that on the 29th day of November, 1887, the plaintiff brought its suit at law against the Boston Maine Railroad for the recovery of a part of the railroad and property of the plaintiff named in said lease, to wit, that part situated in the county of Merrimack in the state of New Hampshire.

7. This defendant specially denies that since taking possession of the plaintiff's road, named in the lease of June 19, 1884, it voluntarily deprived itself of the power to perform any of its covenants; that it has permitted said railroad property to depreciate in its general condition so as to be unsafe or hazardous for the public to travel upon; that the bridges on said railroads have been improperly neglected, and permitted to become unsafe and unsuitable for the engines and cars doing the business over said railroad; that the ties and rails of said railroad have not been renewed and kept in repair according to the covenants of said lease and the demands of public travel and the business thereon; that the rolling-stock, equipment, engines, and cars used upon said railroad are insufficient for the business of said road, and are unsafe, and are in an unsuitable condition of repair; that every locomotive now in use on said road ought, in the proper management of said railroad, to be sent to the shop for repairs; that new locomotives and rails, other than those from time to time furnished, are an absolute necessity for said railroad; that the station-houses and buildings on said railroad are ruinously out of repair, and that two hundred and fifty thousand dollars, or any sum of money over and above what this defendant is to furnish or cause to be furnished, is necessary to be expended on said railroads in renewals and repairs, in order to make the same suitable for doing the business thereof, and that the public safety and convenience, and the preservation of said railroad and property, demand any such expenditure as alleged in said bill.

And this defendant alleges that said railroad and property is in no worse condition than what would be reasonably expected, regard being had to the condition of the road when leased and the rigorous nature of the winter just ended, and that this corporation is now making such repairs as are necessary for the reasonable improvement of said road and as are sufficient to make it safe and convenient for the accommodation of summer travel and business to be done over the same; and it further alleges, that since its lease of said railroad it has greatly improved the same; that at the time of said lease said railroad was so out of repair as to be unsafe; that in many instances it has renewed bridges and relaid rails, put on new equipment and rolling-stock, and increased the efficiency of said road and the business thereon; it has repaired, painted, and improved the stations along the line of said road, and greatly added to the convenience of the public having occasion to use the same; and in these improvements it has expended a sum upward of two hundred and fifty thousand dollars, all of which has been received by the plaintiff corporation and its directors without objection or sign of dissent.

It denies that the Boston Maine Railroad has obtained possession of said railroad and property, named in the lease of the plaintiff, by trickery, fraud, or in any other manner, and that said road is permitted to waste and deteriorate from any cause, and that great and irreparable loss of property and business must result unless the relief prayed for is granted, as alleged in said bill. And this defendant denies all allegations of trickery, fraud, secret combinations, unlawful action, cheating, and like charges contained in said bill, and alleges that said allegations are without justification, and that said plaintiff is not entitled to the relief prayed for in said bill.