Oregon-Washington R. & N. Co. v. Spokane P. & S. Ry. Co.

Mr. Justice McCamant

delivered the opinion of the court.

We desire to express our obligations to counsel who have appeared in this case for the clarifying arguments and the able and exhaustive briefs with which we have been assisted in our investigation of the important questions suggested by this record.

It was formerly necessary to secure an act of Congress in order to authorize a railroad company to bridge a navigable stream. The policy of Congress in adopting legislation of this character was to require the builder of the bridge to permit the common user thereof by other railway companies: Union Pacific Co. v. Chicago, Rock Island & P. R. Co., 163 U. S. 583 (41 L. Ed. 265, 16 Sup. Ct. Rep. 1173); Union Pacific R. Co. v. Mason City etc. R. Co., 199 U. S. 160, 161 (50 L. Ed. 134, 26 Sup. Ct. Rep. 19). In 1899 Congress passed a general act on the subject (30 Stats, at Large, 1151, 4 U. S. Comp. Stats. 1913, § 9971, 6 Fed. Stats. Ann. 805), giving general authority to the Secretary of War and to the several states to act in all cases involving the bridging of navigable streams lying wholly within the boundaries of one state. Pursuant to this statute and the construction placed thereon by the Federal Supreme Court in Montgomery v. Portland, 190 U. S. 89 (47 L. Ed. 965, 23 Sup. Ct. Rep. 735), plaintiff secured authority to construct the bridge in question, subject to certain conditions, one of which was the common user clause above quoted.

1. Plaintiff contends that the defendant is not entitled to avail itself of the common user clause in the ordinance of the Port of Portland, because it is not authorized under its articles of incorporation to operate between its passenger terminals on the west side of the Willamette River in Portland and the in *536 dustrial district of East Portland. The articles of incorporation of the defendant have been received in evidence. They confer authority, among other things, for the construction, maintenance and operation of a line of railway from Spokane, Washington, to Portland, Oregon. It has been- frequently held that the line authorized by such a grant need not terminate at the boundaries of the terminal cities, but may extend to convenient points within them: 2 Elliott on Railroads, 927a; 33 Cyc. 122; Farmers’ Turnpike Road v. Coventry, 10 Johns. (N. Y.) 389; Mohawk Bridge Co. v. Utica & S. R. R. Co., 6 Paige Ch. (N. Y.) 554; Mason v. Brooklyn City etc. R. Co., 35 Barb. (N. Y.) 373, 377; Moses v. Pittsburgh etc. R. Co., 21 Ill. 516; McCartney v. Chicago etc. R. Co., 112 Ill. 611, 626; Tennessee & A. R. Co. v. Adams, 3 Head (Tenn.), 596, 597; Waycross Airline R. Co. v. Offerman & W. R. Co., 109 Ga. 827, 829 (35 S. E. 275); Rio Grande R. Co. v. Brownsville, 45 Tex. 88, 93. It has also been held that the definite location by a railroad company of its terminals does not deprive it of the power to extend its facilities into other parts of the city; Appeal of Western Pennsylvania R. Co., 99 Pa. St. 155, 161. Any other rule than that announced in these authorities would greatly hamper the development of cities, demanding as they do enlarged terminal facilities to keep pace with their industrial expansion. The charters of railroad companies should not be subjected to the narrow and technical construction which we must adopt in order to sustain plaintiff’s contention on this point.

2. It is next contended by plaintiff that the defendant is not a railroad company within the purview of the common user clause of the ordinance of the Port of Portland. This claim is based on the fact that the bridge and its approaches will not constitute a part of *537 the main line of the defendant and will not be used by its passenger trains or for the carriage of mail and express matter, which is a traffic appurtenant to the carriage of passengers, and that, on the contrary, the defendant desires the common user privilege solely for the purpose of switching cars between its established terminals on the west side of the Willamette in Portland and the trackage which it controls on the east side of the river in the same city.

It has been held that a common user clause, such as that involved in the case at bar, is entitled to a liberal construction: Joy v. St. Louis, 138 U. S. 1, 38, 50 (34 L. Ed. 843, 11 Sup. Ct. Rep. 243). If we are to give a liberal construction to the common user clause we think we must hold that the defendant- is entitled to the benefit of its terms. The purpose in view in inserting a common user clause in a bridge franchise is twofold. It is important that navigation shall not be impeded by the construction of bridges over navigable streams except as such bridges are needed, and it is also important that public service corporations shall not be required to expend money unnecessarily in providing facilities for which the public must pay in the form of transportation charges. The use which the defendant desires to make of the bridge in question is a legitimate railroad use and would probably have justified the Secretary of War and the Port of Portland in granting the defendant a franchise for the construction of an additional bridge across the Willamette Eiver. It is much better from every point of view that the present bridge should be used by both of these parties. The equal rights and privileges relative to the passage of railway trains and cars over the bridge, provided for in the ordinance; and for which plaintiff is entitled to compensation, are the right to pass trains *538 and cars thereover without discrimination and with the same facility as that under which plaintiff operates on the bridge. In order to the enjoyment of these rights and privileges it is not necessary that defendant should transport thereover the same number or the same kind of trains and cars as plaintiff.

It is true, as contended, that the defendant’s right to use the bridge grows out of the franchise ordinance and is not dependent on a judgment of condemnation. It has been held that the parties are not entitled to a trial by jury for the purpose of fixing the compensation to be paid in such a case as this: Union Depot R. Co. v. Southern Ry. Co., 105 Mo. 562 (16 S. W. 920). The proceeding is nevertheless somewhat analogous to a condemnation proceeding. The payment to the senior company of adequate compensation is a condition to the exercise of the right demanded by the junior company: Grand Avenue Ry. Co. v. People’s Ry. Co., 132 Mo. 34, 38 (33 S. W. 472, 475). It is therefore pertinent that the courts have held that in a condemnation proceeding a limited easement may be condemned: St Louis etc. R. Co. v. Postal Tel. Co., 173 Ill. 508, 535 (51 N. E. 382). It is also well established that the condemnor may by proper proceedings had in the condemnation action limit the right demanded, with a view to the reduction of the damages to be assessed: 2 Lewis on Eminent Domain, 1247, and note; Oregon Ry. & Nav. Co. v. Owsley, 3 Wash. Ter. 38 (13 Pac. 186, 188); State ex rel. Kent Lumber Co. v. Superior Court, 46 Wash. 516, 520 (90 Pac. 663); Spokane Valley etc. Co. v. Arthur D. Jones & Co. 53 Wash. 37, 45-48 (101 Pac. 515); Tacoma Eastern R. Co. v. Smithgall, 58 Wash. 445, 451 (108 Pac. 1091).

We therefore reach the conclusion that the defendant is entitled to avail itself of the common user clause *539 contained in the bridge franchise of plaintiff for the transportation over the bridge of freight-cars only.

3. This brings ns to the question of the validity of the award made by the Eailroad Commissioners. The presumptions are in favor of such an award: Garrow v. Nicolai, 24 Or. 76, 84 (32 Pac. 1036). As shown by the above case and by the text-books which treat of the subject, there are well-established principles determining the circumstances under which an award can be set aside in equity. Has plaintiff brought itself within the operation of these principles?

At the inception of the trial in the court below, plaintiff called as its witness Mr. Clyde B. Aitchison, one of the members of the Eailroad Commission, who participated in the arbitration and the award. Plaintiff called this witness merely for the purpose of identifying the testimony which was before the arbitrators and on which they acted. The defendant thereupon proceeded further to examine him, over the objection of plaintiff, as follows:

“Q. As a matter of fact, the Commission in making this award of reasonable compensation allowed something for profits, did it not?

“A. I do not have the exact details in mind of the manner in which the award was made up. I do recall that after considering items of expense as best we could determine, an additional sum was estimated and included.

“Q. Included as profit, was it not, allowed to the owner of the bridge ?

“A. Well, it was included over and above every item of expense we could figure on, and it was going to the owner of the bridge.

“Q. Do you remember what percentage it was?

“A. I do not, without having access to the papers that were used at the time.”

On redirect examination plaintiff followed up this line of proof and the witness testified as follows:

*540 “A. All I can say to that is that to the best of our ability wé considered every fragment of evidence that was introduced by either party, and gave it such weight as we thought proper. But, as far as being able at this time to recall the state of that voluminous record, I cannot, except in a very general way.

“Q. Well, you said you made an allowance of profit?

“A. I recall that. I did not say that it was profit. I say that after we had figured out every item of expense that we could, then, in order to be certain that we were dealing fairly, as we considered it, with the parties, and had not overlooked anything, and to make sure there was a return, I remembered we figured a return on the investment, and when we came to deliberate, we added still an additional amount, so you can call it profit or what you please.

“Q. Do you mean to say $500 would make any return on the value of this bridge — $6,000 a year?

“A. I don’t undertake to say anything about that now. I am simply telling you that we passed on this to the best of our ability from the records that were here, and we intended to give a profit and thought we were doing it.

“Q. You intended to make a fair return on the investment to the owner, and something in the way of profit?

“A. Yes, on the theory on which we made the award.”

4. The Massachusetts authorities hold that the testimony of an arbitrator is admissible for the purpose of showing the matters considered by the arbitrators and the conclusions reached by them thereon: Barrows v. Sweet, 143 Mass. 316 (9 N. E. 665). There is a line of authority to the contrary, but we do not find it necessary to determine the question suggested by these conflicting cases. The defendant saw fit to go into this subject in the court below and must be held to have given its consent to the consideration by the court of the testimony adduced: Wm. H. Low Estate Co. v. *541 Lederer Realty Corp., 35 R. I. 352 (86 Atl. 881, 882, Ann. Cas. 1916A, 341). It will be noted that Mr. Aitcbison spoke for tbe Commission and testified not merely as to matters which he himself considered and the conclusions which he himself réached,. but rather as to the matters considered and determined by the entire board of arbitration. The effect of his testimony is that the board intended to allow plaintiff a proper share of the expenses involved in maintaining and operating the bridge, a return on the capital invested by plaintiff in the bridge and its appurtenances, and a further and additional sum which the witness declined to designate as profit. In the case of Wm. H. Low Estate Co. v. Lederer Realty Corp., 35 R. I. 352 (86 Atl. 881, 882, Ann. Cas. 1916A, 341), the court in commenting on similar testimony given by arbitrators said:

“If it appears from this testimony that the appraisers misconceived their duty under the submission, and that this misconception led them to an entirely erroneous conclusion, we cannot disregard that testimony, although it should result in an impeachment of the award. ’ ’

5. It is well established by the authorities that an award should be set aside whenever it appears on the face of the award, or otherwise by testimony properly received, that the award is not the result intended by the arbitrators and does not express their real judgment: Buys v. Eberhardt, 3 Mich. 524; Eisenmeyer v. Sauter, 77 Ill. 515, 517; Boston Water Power Co. v. Gray, 6 Met. (Mass.) 131, 168, 169; Barrows v. Sweet, 143 Mass. 316 (9 N. E. 665); Consolidated Water Power Co. v. Nash, 109 Wis. 490 (85 N. W. 485, 490); Adams v. New York etc. Ins. Co., 85 Iowa, 6, 12 (51 N. W. 1149); Conger v. James, 2 Swan (Tenn.), 213, *542 214; Humphreys v. Victoria, 5 Dominion L. R. 294; 5 C. J. 181; 2 R. C. L. 392, 393.

There was no dispute in the court below as to the testimony which was before the arbitrators and on which they acted. This testimony was transcribed and extended and on proper identification was received in evidence in this case. Except as to the value of the real estate occupied by the abutments and approaches of the bridge there was but little conflict in the testimony taken before the arbitrators. There are two decks to the bridge, the upper deck being adapted to foot and vehicle travel, and the lower deck devoted exclusively to railway service. The testimony of the defendant showed that the cost of the railway portion of the bridge was $882,980.47; that the approach tracks which the defendant would of necessity use cost $43,960.25. The testimony also showed that the safe and convenient operation of trains over the bridge demanded the construction of an interlocking plant, at a cost of about $40,000, and that $26,750.80 of this sum was properly chargeable to the tracks which the defendant would use. The testimony as to the value of the real estate occupied by the abutments of the bridge and by the tracks leading thereto was very conflicting and is in unsatisfactory shape. We have examined it with care and given the defendant the benefit of every disputed piece of testimony and every inference legitimately to be drawn therefrom. We do not see how this real estate could be appraised at less than $150,000. The arbitrators may have charged a part of this value to the upper deck of the bridge, but they could not have failed to charge at least half of it to the portion of the bridge used exclusively for railway traffic. The total of these investments of capital chargeable to the railway portion of the bridge is $1,028,691.52. The *543 legal rate of interest is six per cent and the interest at that rate on the capital invested in the bridge amounts to $61,721.49 per annum. There were circumstances presented to the board which might have led them to charge the defendant with interest at the rate of five per cent. On this basis the annual interest charge would be $51,434.58. The testimony further showed that the life of the bridge would be twenty years and that it was to be expected that it would have to be renewed or replaced at the end of that time. It further appeared from the testimony that there would be an annual cost for maintenance of the railway portion of the bridge, of $5,256.06; the annual cost of operation thereof amounted to $7,980; and that the operation of the interlocking plant would involve an additional continuing annual expenditure of $3,720; and that the maintenance of the interlocking plant would involve a continuing annual expense of $960. The sum total of these expenses is $17,916.06. The testimony does not show the taxes annually charged against the bridge, but it does appear that the bridge was assessed at $457,500. The property is subject to taxation for the support of the state, the county, the city, the school district and the Port of Portland. The tax rate must therefore be higher than that levied in a part of the state without the boundaries of a city and port district. The tendency is for the tax rate to increase.

WTien Mr. Aitchison testified that the board intended to allow to plaintiff a legitimate and proper share of the above expenses, and also a fair return on the capital invested he must of necessity have referred to that portion of the award which charges the defendant with-a minimum payment of $500 a month. The fact that the arbitrators attached to this award a provision assuring plaintiff that its compensation should not fall *544 below a stated sum is proof that they doubted whether the car toll fixed by them would yield this minimum compensation. There was no testimony before the arbitrators bearing on the number of locomotives and cars of the defendant which would use the bridge, and there could therefore have been no intelligent estimate of the returns of plaintiff from defendant’s user of the bridge except as based on the minimum charge of $6,000 per year. If there be deducted from this sum any substantial amount to meet the indefinite sum referred to as a profit which was allowed by the Commission, it is evident that the remainder would be but little, if any, in excess of the defendant’s proper share of the expenses of maintaining and operating the bridge and paying taxes thereon. In the light of the uncontradicted testimony before the arbitrators, giving the defendant the benefit of every question arising thereon as to which there could be a dispute, it is apparent that the arbitrators have allowed plaintiff nothing, or practically nothing, in the way of interest on its investment. On the most favorable view of the record to be taken from the standpoint of the defendant there is a continuing annual charge growing out of the operation and depreciation of the bridge, and interest on the capital invested therein, amounting to at least $90,000, and the award of the arbitrators assures to plaintiff only the sum of $6,000 as the price of the common user of the bridge which was awarded the defendant.

Testimony was offered in the court below to the effect that in twenty months’ operation under the award the defendant had paid the plaintiff the sum of $12,-876.15. This return is equivalent to $7,725.60 per annum, but little in excess of the minimum provided for by the board. The lower court founds

*545 “That the car tolls which the defendant is required to pay under the award applied to the number of cars which the defendant will pass or switch over said bridge, produces an annual sum which is so disproportionate to a reasonable annual interest charge upon the value of the bridge, and necessary operation and maintenance charges, as to deprive the plaintiff of any compensation for the use of the bridge, and that said award so entirely disregards, mistakes and misapplies the evidence introduced at the hearing as to deprive the plaintiff of its rights in said bridge and of the rights in said ordinance and resolution and order of the Secretary of War.”

6. We are convinced that the above finding is substantially accurate. The testimony of Mr. Aitchison relieves us of the unpleasant necessity of holding that this indefensible award represents the deliberate judgment of the arbitrators. If we accept the testimony of Mr. Aitchison, as we are bound to do on this record, the conclusion is inevitable that by some mistake in computation or otherwise the award fails to express the conclusion reached by the arbitrators on the subject of compensation and it follows that the lower court did not err in setting it aside. There is a line of authority to the effect that an award will be set aside for mistake of fact so gross as to evidence partiality on the part of the arbitrators: 5 C. J. 182; 2 R. C. L. 393; Rand v. Redington, 13 N. H. 72 (38 Am. Dec. 475, 476); Williams v. Chicago etc. Ry. Co., 112 Mo. 463 (20 S. W. 631, 34 Am. St. Rep. 403, 419, 423). It should be remembered in connection with this award that it involved compensation for a continuing right. A mistake which would ordinarily not be relieved against might well become a gross mistake when multiplied by twenty. It is unnecessary for us to discuss the application of this principle to the award, because it is clear *546 that the award must be set aside on the grounds above stated.

The decree of the lower court setting aside the award is right and is affirmed. The findings, of the lower court, adjudging that the defendant is not entitled to use the bridge for the transportation of freight-cars thereover, are set aside.

7, 8. In the absence of an agreement by the parties the court is not authorized to resubmit a question to a board of arbitrators: 5 C. J. 207; Smith v. Smith, 28 Ill. 56, 59; Fitzgerald v. Fitzgerald, Hardin (3 Ky.), 227, 235, 237; In re Cuerton, 7 D. & R. 774; 16 E. C. L. 321; In re Graves, 21 Man. 417, 425. On the other hand, the defendant’s right to use plaintiff’s bridge on payment of reasonable compensation should not be permitted to fail because the arbitration has not resulted in a valid award, or because the parties are unable to agree: Central Trust Co. v. Wabash etc. Ry. Co., 29 Fed. 546, 557. The answer of the defendant asks for general equitable relief. We think, therefore, that the court should proceed to determine in this suit the reasonable compensation to be awarded plaintiff: Grosvenor v. Flint, 20 R. I. 21, 24 (37 Atl. 304); Cooke v. Miller, 25 R. I. 92 (54 Atl. 927, 1 Ann. Cas. 30); Wm. H. Low Estate Co. v. Lederer Realty Corp., 35 R. I. 352 (86 Atl. 881, 884, 885, Ann. Cas. 1916A, 341); Coles v. Peck, 96 Ind. 333 (49 Am. Rep. 161); Biddle v. Ramsey, 52 Mo. 153; Hug v. Van Burkleo, 58 Mo. 202; Pretzfelder v. Merchants’ Ins. Co., 116 N. C. 491 (21 S. E. 302).

9. The bridge is used by three railroad companies, the parties to this suit and the Southern Pacific Company. In view of the fact that defendant desires the use of the bridge for freight traffic only, it should not be charged with one third of the interest on the in *547 vestment and one third of the depreciation charge, but for the reasons outlined by Judge Brewer in Central Trust Co. v. Wabash etc. Ry. Co., 29 Fed. 546, 559, we think the defendant should pay a substantial part of these charges. The evidence shows that the operation of defendant’s trains over the bridge will somewhat interfere with main line traffic on plaintiff’s road and on the Southern Pacific. After much consideration we have concluded that defendant’s user of the bridge for freight traffic only should be conditioned on the payment to plaintiff of twenty per cent of the interest on plaintiff’s investment in the bridge and its approaches, eliminating therefrom so much of the investment as is chargeable to the upper deck of the bridge. The defendant should also pay such proportion of the expenses of plaintiff for maintenance and operation of the railway portion of the bridge and taxes thereon as its traffic bears to the entire traffic on the bridge. Defendant should pay a like proportion of an annual depreciation charge to be fixed in view of the probable life of the bridge. Interest should be figured at the legal rate.

10,11. The parties agreed before the arbitrators on certain stipulations modifying the common-law rules of liability in the operation of the bridge and these stipulations which were incorporated in the award should be made a'part of the decree. In case the Southern Pacific Company shall cease to operate over the bridge plaintiff should have leave to apply for a modification of the compensation and in case one or more additional railroads should secure the right to operate thereover the defendant should have a similar right to apply for such modification. Plaintiff’s rules for the operation of the bridge should accord the defendant the right to transport freight-cars thereover with the same facility *548 as that accorded the Southern Pacific Company and to plaintiff’s own traffic.

12. There are reasons why this compensation should not be definitely determined by this court at this time. Plaintiff, on the hearing in the circuit court, offered some evidence additional to that which had been offered before the arbitrators, bearing on the reasonableness of the compensation. The defendant did not elect to offer any additional evidence on this line, preferring to stand on its claim that the arbitration judgment was valid and binding. The record before us is not by any means satisfactory as to the value of the real estate covered by the abutments and approaches to the bridge. Some of the witnesses base their estimates on square, feet, others of them on river frontage, and others estimate the value of the property by the lot or quarter block. It is extremely difficult in the present condition of the record to compare the testimony of these witnesses, and to appraise fairly the value of this real estate. For these reasons we think that the cause should be remanded to the lower court for a hearing on this subject, both parties to be privileged to introduce further testimony if they so elect.

The cause will be remanded to the lower court for further proceedings in accordance with this opinion.

Modified and Remanded.

Further Modified on Petition foe Rehearing and Rehearing Denied.