New York & Greenwood Lake Railway Co. v. Heirs of Stanley

The opinion of the court was delivered by Depue, J.

Whether the agreement between the respondents and the Montclair Railroad Company, of February 22d, 1870, was a valid agreement, is not raised by this appeal. The parties seem to have abandoned or repudiated the agreement. The chancellor held that the circumstances would not warrant a decree of specific performance, and, therefore, refused to make such a decree. From his judicial action in that respect no appeal has been taken.

Nor does the question arise whether the appellants might not have abandoned all rights in the premises which they succeeded to, as the representatives of the Montclair Railway Company, and have proceeded de novo to condemn the respondents’ lands, in their new corporate name. Under section 57 of the general railroad act (Rev. p. 917,) it is possible that in such condemnation proceedings — the respondents’ title being in that event divested by the proceedings to condemn — the measure of the land-owners’ compensation would be the value of the land at the date of the report of the commissioners, and interest from that time. Metler v. E. & A. R. R. Co., 8 Vr. 222 . No proceedings to condemn have been commenced.

Immediately after the agreement was made between the Montclair Railway Company and the Stanleys, the .company entered *287 into possession and constructed its railroad upon the premises. On'the 1st of September, 1870, the company executed and delivered a mortgage on its road and franchises. On November 17th, 1873, a bill of foreclosure was filed, in which proceeding a sale was effected on the 25th of September, 1875. The purchasers organized in the corporate name of the Montclair and Greenwood Lake Railway Company, by articles of association filed October 2d, 1875. The last-named company again mortgaged the railroad and franchises, and on foreclosure of such mortgage, its property and franchises were sold, in October, 1878, and the purchasers at that sale, on the 30th of October 1878, organized as si- corporation, under the present corporate name. These several corporations and their receivers, in the intermediate stages of insolvency, have been in the possession and use of the track laid over the respondents’ lands ever since the railroad was constructed on it. The respondents began their ejectment suit in 1879.

The bill sets out the agreement between the Montclair Railway Company and the Stanleys; possession taken of the premises under it; the construction of a railroad üpon it, and the continued use thereof, and the injury which would result to the appellants if they were ejected from the property. It contains an offer to perform the agreement of 1870, or to pay the value of the right of way over the respondents’ lands and for the use thereof since the appellants have been in possession, as might be deemed equitable, and prays an injunction staying the ejectment suit.

It is apparent that the appellants’ right to equitable relief arises out of equities which subsisted between the Montclair Railway Company and the respondents — possession taken by that company under an agreement which has not been carried out, and the expenditure of money on the faith of that agreement, in the construction of a railroad over the premises. On no other hypothesis would the appellants have a standing in court to stay the respondents in the pursuit of their legal remedy. This was the view entertained by the chancellor, upon which his decree was founded. He held that the appellants had *288 only a right to equitable protection against the respondents' legal title to the same extent and on the same terms as the Montclair Railway Company would have been entitled to such protection, and ordered a reference to ascertain the value of the land and damages as of the time when the land was taken possession of by the Montclair Railway Company, and the allowance of interest on such valuation from that time.

The chancellor’s decree conforms to the rule which would have been the correct rule for ascertaining the respondents’ compensation for their lands if a bill had been filed by the Montclair Railway Company for the same relief as is sought in this case. N. H. C. R. R. Co v. Booraem, 1 Stew. Eq. 450. And I think it was correctly applied as against the appellants. The foreclosure and sale of the company’s property and franchises under the mortgage did not divest the land-owners’ right to compensation for their land, and they are entitled to such compensation from the purchasers at the sale, though the purchasers are created a new corporation; and interest from the time the lands are occupied is part of the compensation which is recoverable in such a proceeding. Drury v. Midland R. R. Co., 127 Mass. 571 ; Western Pa. R. R. Co. v. Johnston, 59 Pa. St. 290 ; Gilman v. Sheboygan R. R. Co., 37 Wis. 317 ; Dayton X. & D. B. R. R. Co. v. Lewton, 20 Ohio St. 401 .

Trenton Water Power Co. v. Chambers, reported in 1 Stock, 471, and again in 2 Beas. 199, is a precedent in point. An examination of the original papers and records discloses the legal similarity of that precedent with the case now in hand. The Trenton Delaware Falls Company was incorporated in 1831, with the usual powers of condemnation. It constructed its raceway over lands of Chambers, by his consent. Afterwards, in 1843, the company became insolvent, and receivers were appointed to take charge of the company’s property as an insolvent corporation. On the 15th of February, 1844, an act was passed authorizing the receiver to sell the real estate, franchises and works of the company, clear of all encumbrances, and further providing that the purchasers thereof should hold said works, franchises and real estate as a joint stock company under *289 the corporate name of the Trenton Water Power Company, in the same manner as the original stockholders held the same. P. L. of 1844 p- 85. The property was sold on the 20th of February, 1844, and a new company was organized on the 2d of June, 1844. Chambers, not having been paid for his lands, in 1849 brought an action of trespass against the new corporation. The company filed a bill in equity to restrain the suit at law. In the bill it was averred that Chambers was not entitled to receive compensation for his lands from the new company; that he should seek his redress against the original company. This claim on the part of the company was overruled by the chancellor, and it was ordered and decreed that the complainants should pay the value of the land at the time it was taken, and all damages sustained by reason of the taking thereof, “ together with interest on the said value of the said land, and on said damages, from the time of taking of said land.” Under the order of reference, the master estimated the value of the lands as of February, 1832, when the survey of the canal over the premises was made, and added interest thereon from that date to the time of the making of his report, being twenty-eight years and three months. The master’s report was set aside, as appears by the report of the case in J Beas., on the ground that the estimation of the master of the value of the land and damages was greater than was warranted by the evidence, but the chancellor’s directions as to the mode in which the valuation should be made and interest should be computed, were not set aside or disputed.

The rule adopted in Chambers v. Trenton Water Power Co., with respect to the time as of which the value of the land is to be determined, and from which interest is to be calculated, was adopted as the general rule by this court in North Hudson R. R. Co. v. Boorœm, and is in conformity with the decisions in other courts in cases where the original company’s property and franchises had been transferred by a judicial sale to purchasers who, by the legislative act, became a new corporation. Drury v. Midland Co.; Western Pa. R. R. Co. v. Johnston, supra. It is, furthermore, a rule which is the necessary result of the doctrine *290 that a land-owner consenting to the occupation of his lands for a railroad before his compensation is ascertained, shall be allowed compensation on the basis of the value of his lands at the time' when the entry was made, excluding the value of the structure subsequently put upon them by the company. If the appellants are entitled to take the lands now, on a valuation which shall be referable to the time when the appellants took possession, either as to value or the interest thereon, the entry of the appellants must be considered a new taking; and for such a taking, the value of the lands, with the road-bed and structure, would represent the respondents’ damages for property of which they had, by such entry, been divested. The appellants cannot succeed to the advantage of having the road-bed and structure excluded from the valuation of the property taken, unless they assume the place of the Montclair Railway Company with respect to the circumstances under which that company entered into possession. Succeeding to an equity of the Montclair Railway Company, arising out of its entry of the premises, the appellants take the rights of their predecessors oum onere, subject to the obligation to render to the respondents the same equity which the Montclair Railway Company would have been required to render, if that company were making an effort to maintain possession. Paying interest on the value of the land, and damages from the date of the original entry, is not paying the debt of the defunct corporation; it is making the recompense which the respondents are equitably entitled to on the enforcement of an equity against them.

The chancellor directed the master to allow the cost of a fence erected by the respondents, with interest from the time it was erected. The expense of making and maintaining additional fences made necessary by the construction of the railroad, should be included in the damages to be awarded for the lands, where the expense thereof falls, as in the present instance, upon the land-owner. Pierce on Railroads 214; Mills on Em. Domain § 212; Readington v. Dilley, 4 Zab. 209. Any obscurity in the decree with respect to the mode in which the expense of fencing *291 should be estimated, can be corrected by application to the chancellor.

Decree unanimously affirmed.