Lynn v. Mount Savage Iron Co.

Alvey, J., delivered the opinion of the Court. The object of the bill in this case is to enforce specific execution of certain covenants entered into by the Mount Savage Iron Company of Allegany county, with some of the com ⁶²⁴ plainants and those who are represented by the others of them, dated the 8th of September, 1849, and to obtain an injunction to restrain said company and the Cumberland and Pennsylvania Railroad Company, from the further alleged violation of such covenants. The Mount Savage Iron Company and the Pennsylvania Railroad Company are the only defendants to the bill; and the latter company having answered, the injunction was refused, and it is from the order refusing the injunction that the present appeal is taken. The answer of the one defendant, under oath, having been put in before the application for the injunction wars acted on, it must appear either that merits are confessed, or that some substantial and material averments of the bill are left undenied, to entitle the complainants to the injunction as against the defendant answering. 3 Danl.

Ch. Prac., 1883; Magnay vs. Mines Royal Co., 3 Drew., 130. Where the injunction has been issued upon the sworn averments of the bill alone, it is the universal practice to dissolve it upon the coming in of the answer, if all the circumstances upon which the equity of the bill is founded be denied. And it is the equally well settled practice to refuse the injunction where the application is made after the coming in of the answer denying the equity of the bill.

Ad. Doct. Eq., 356, and authorities collected in note. A.s the case is disclosed upon bill and answer, we think there is sufficient ground for the refusal of the injunction, apart from all other questions, in the want of proper parties.

The Chesapeake and Ohio Canal Company, and Walsh and McKaig, the owners of the new, wharf on the canal basin, are shown to have such an interest in the subject-matter of the litigation, as to require that they should have been made parties defendants. No such relief as that prayed for by the bill could be given without affecting the interest of those parties, and the plainest principles of justice require that their interest should not be adversely affected in their absence, and without an opportunity to be heard. We shall not, however, dispose of the case as now presented upon this ground alone, but shall ⁶²⁵ examine and decide such of the more prominent questions involved as are supposed to be material to the relief prayed by the complainants. The Mount Savage Iron Company was originally incorporated, by the Act of 1846, ch. 297, as the Lulworth Iron Company, and by the subsequent Act of 1847, ch. 57, its name was changed to that of the Mount Savage Iron Company.

This corporation was invested with all the powers, privileges and rights, proper and necessary tor carrying on the manufacture of iron, and of articles of which iron is a component part, and for opening, working, transporting to market and vending the produce of its lands, mines and manufactories, and also for the purchasing and holding all such property, real, personal or mixed, as it might require for the purposes specified; and with full power and authority “ to make and enter into all manner of contracts in relation to the business and property aforesaid.” And by the 6th section of the act of incorporation, “for the purpose of enabling said corporation to transport the produce of its mines and manufactories to market and elsewhere, in the cheapest and most expeditious manner,” it was invested with all necessary powers and privileges for “locating, establishing and constructing a railroad or railroads, with the necessary appurtenances, beginning the same at or near the mines or manufactories of the said corporation, and running to a convenient point or points at or near the town of Cumberland, or to such other point or points as may best, suit the convenience and interest of said corporation.” And, by proviso to the same section, full right and privilege is reserved to the citizens of the State, or to any company incorporated by the State, to connect with such railroad or railroads, upon certain conditions; and the corporation is required to transport on its railroad all persons and property, at the same rates of toll and prices of transportation as the Baltimore and Ohio Railroad Company are allowed to charge and receive. Power is also reserved to the legislature to regulate, modify or change the ⁶²⁶ control, use and estate of the railroad authorized to be constructed, in such manner as it should deem equitable towards the corporation, and necessary to the accommodation of the public. This company, with these corporate powers and franchises, had, prior to September, 1849, acquired and held large bodies of coal and other mineral lands in the valley of Jennings’ run, in Allegany county, and had erected and in operation thereon large rolling-mills and other works for the manufacture of iron, and had constructed or purchased, and was operating a line of railroad, which extended from their works at Mount Savage to the depot of the Baltimore and Ohio Railroad Company at Cumberland, which was, at that time, the only terminus of such road at the Cumberland end thereof; and over this road the company was transporting the products of its own works and mines, and freight for other persons. Up to this time the Chesapeake and Ohio canal had not been finished to Cumberland, but was nearly approaching completion to that point.

And in view of such completion, the Mount Savage Iron Company, on the 8th of September, 1849, entered into the agreement with the complainants for the erection of wharves, and the right of way for railroad tracks thereto, on and over the lands of the latter, bordering on the river Potomac, and in near proximity to the canal, for the purpose of making convenient communication with canal transportation. A wharf was erected, the railroad track or tracks laid, and the other improvements, contemplated by the agreement, were placed upon the land of the complainants by the Mount Savage Iron Company, and that company entered upon the use and enjoyment thereof at once, and continued to use and enjoy the same, in the mode and manner as provided for in the agreement, until the year 1854, when it assigned all its interest and estate in the wharf, and other improvements, placed upon the land of the complainants, together with all right it possessed under the agreement of whatever kind or nature, to the Cumberland and Pennsylvania Railroad Company; and ⁶²⁷ since which time the latter company has been in the use and enjoyment of the wharf and other improvements, in the same manner as formerly used and enjoyed by the Mount Savage Iron Company. The agreement of the 8th of September, 1849, contains many clauses and stipulations, but there aim only two which are immediately involved in this case. By the first of these, it is expressly stipulated that certain other described jiroperty belonging to the complainants, and binding on the river Potomac, “ shall not be used by them, or by any other person or company, in a manner or for a purpose to compete with the Mount Savage Iron Company, in the transportation of coal from the regions of Braddock’s and Jennings’ run ; and in opposition to, or in competition with, or diminution of, the value of the wharfage and improvements herein contemplated, so far as the same depend on, or are connected with said transportation of coal from said regions.” The agreement then proceeds to declare that “ this stipulation is in no way to limit or affect the right of said parties, of the first part (the complainants) to use, sell or convey said other property for wharves, warehouses, coal yards, or other purposes connected with the coal trade, from the Westernport region, and other trade on said canal and river, and the Baltimore and Ohio Railroad, west of Cumberlaud, and not from Braddock’s or Jennings’ run region.

The object of the restriction above stated being merely to prevent rivalry and competition, and thereby diminished profits from the transportation and wharfage of the coal from'said Braddock’s and Jennings’ run region.” The next stipulation involved, and which is the last in the agreement, is that upon which the complainants mostly rely, and that is, that the Mount Savage Iron Company “further agrees and binds itself to make the terminus of its road on said piece or parcel of land, its only terminus on the Chesapeake and Ohio canal, or its basin, and not to extend the present terminus of its road at the present depot of the Baltimore and Ohio Railroad Company, any further than it is now.” ⁶²⁸ And the grievance now complained of, as stated in the bill, and which is the only ground for the relief prayed, is, that the Mount Savage Iron Company and the Cumberland and Pennsylvania Railroad Company, or one of them in concert .with the other, for some weeks prior to the filing of the bill in this case, “have been engaged in carrying coal over the line of the Mount Savage Iron Company, as it existed at the date of the agreement, to the wharf, on the line of a basin, constructed by McKaig and Walsh, and forming a basin of the Chesapeake and Ohio canal, and there delivering the same into canal boats for transportation over the canal; the said companies or company using, for the purpose of said carriage, a section of the track of the railroad of the Baltimore and Ohio Railroad Company, connecting with the terminus of the railroad of the Mount Savage Iron Company at the depot of the said Baltimore and Ohio Railroad Company, at Cumberland, as it existed at the date of said agreement, and with the railroad tracks on the wharf of the said McKaig and Walsh; by which means large quantities of coal which would otherwise be carried over the line of said road, and be delivered at the wharves constructed by the Mount Savage Iron Company, on the aforesaid parcel of land, owned as aforesaid by your orators, are diverted from the said line of railroad and wharves, and thus the profits which the said parties to the said agreement of the first part anticipated, and which were intended to be assured to them by the execution of the agreement, have been greatly lessened.” The bill further charges that the conduct of the companies, or such one of them as may be actually using and operating the railroad of the Mount Savage Iron Company, is in effect the making of another terminus of such road on the Chesapeake and Ohio canal, and its basin, and is an extension of that road beyond its terminus at the depot of the Baltimore and Ohio Railroad Company, as it existed at the date of the agreement, and is, therefore, a breach of the covenant made by the Mount Savage Iron Company- ⁶²⁹ The prayer of the bill is, among other things, that an injunction may issue, “to prevent the defendants, and each of them, from carrying and delivering coal which shall or may be carried over the railroad owned by the Mount Savage Iron Company, as it existed on the 8th of September, 1849, or any part thereof, to any point beyond the terminus of the said railroad in the depot of the Baltimore and Ohio Railroad Company, as it existed on the day aforesaid, or in any wise aiding or assisting by the use of their motive power or rolling stock, or otherwise, in the carrying and delivery of such coal beyond the said terminus.” Kow, treating the case as between the complainants and the Mount Savage Iron Company, upon the undisputed facts as disclosed by the bill and answer, have the former a right to the relief sought as against the latter, under the contract? And to determine this question we must first ascertain to what subject-matter the contraed relates, and what conduct on the part of the Mount Savage Iron Company was intended to be prohibited by it. At the date of the contract the railroad of the Mount Savage Iron Company extended no farther westward than the location of its main works at Mount Savage; nor had that pompany any power to construct a railroad beyond that point. By its charter the railroad was to begin at or near its mines or factories, and run to some convenient point or points at or near the town of Cumberland.

It was not authorized to extend the road into the George’s creek valley, and its operation was confined to the transportation of the coal and other mineral products of the Braddock’s and Jennings’ run regions. It is to those regions that the contract refers, as the locations from which the coal was to be transported to the wharves erected on the land of the complainants. And understanding such to be the field of the road’s operation, Avhile providing against competition in the trade from those regions, the parties expressly declare that no stipulation contained in the contract should in any way limit or affect the right of the ⁶³⁰ complainants to use, sell or convey their adjoining property, fronting on the river, for wharfs, warehouses, coal yards, or other purposes connected with the coal trade from the Westernport region, and not from the Brad dock’s or Jennings’ run region. Thus plainly showing that it was only the trade from this latter region that was in the contemplation of the parties at the time, and so far as the trade from other regions or sections was concerned, and particularly the Western port region, the parties were left entirely unrestrained by the contract: That being so, if it be true, as stated in the answer, that all the coal that has been transported over the road that formerly belonged to the Mount Savage Iron Company at the date of the contract, and taken to the wharf of Walsh and MeKaig, on the canal basin, has been brought from the George’s creek valley, or the Westcrnport region, it is difficult to perceive upon what principle the complainants can suppose themselves aggrieved.

The principle of construction is well settled, that to fairly understand the meaning and intent of the contracting parties, reference must be had to the condition of things existing at the date of the contract. Courts should read the contract as the parties understood it, and, in order to do that, they should avail themselves of the light of all the surrounding circumstances. And applying this rule of interpretation to the contract before us, even if its terms and obvious intent were less plain than they are, we could not fail to perceive that the contract was never intended to apply to the coal trade that might thereafter be opened from the Westernport or George’s creek region. And although it is not pretended that the contract contains any express affirmative stipulation on the part of the Mount Savage Iron Company, that all the coal that might be transported by it, should be taken to the wharves on the complainants’ land, it is, nevertheless, insisted that the covenant by the corporation, to make the terminus of its road on the land of the complainants its only terminus on the Chesapeake and Ohio canal, and not to extend its then terminus at the depot of the Baltimore and ⁶³¹ Ohio Railroad Company, towards the canal, plainly implies a covenant to take to the complainants’ wharf all the coal transported by the railroad of the Mount Savage Iron Company for transshipment on the canal; and that too without reference to the location or region from which it may be transported.

In this general proposition, however, to the extent contended for, we do not agree. This latter covenant must be construed with reference to the subject-matter in the contemplation of the parties at the time, and must not be given a scope and operation which was never designed it should have. As we have said, the contract only contemplated and was intended to apply to the trade from the regions in which the road was operating at the time. The largest application, therefore, that could be given to this restrictive covenant, is to prohibit the establishment of any depot or terminus of the road other than those mentioned, to which the coal and other freight from the regions of Braddock’s and