Northern Indiana Railroad Company v. Michigan Central Railroad Company/Opinion of the Court

This is an appeal in chancery, from the Circuit Court of the District of Michigan.

The Northern Indiana Railroad Company, and the Board of Commissioners for the Western Division of the Buffalo and Mississippi Railroad, corporations created by, and doing business in, the State of Indiana, filed their bill in the Circuit Court, stating that an act of the legislature of Indiana, dated February 6th, 1835, incorporated the Buffalo and Mississipi Railroad Company. That by a subsequent act of the legislature, of February 6th, 1837, the name of the corporation was changed to that of the 'Northern Indiana Railroad Company;' that by an act of the 8th of February, 1848, the 'Board of Commissioners for the Western Division of the Buffalo and Mississippi Railroad,' were incorporated. That several acts of the legislature of Indiana were passed, confirming, amending, and enlarging the charters and franchises of the same corporations; that by virtue of said laws the complainants are severally entitled to do and perform business in the State of India, as authorized by their said charters.

That the Northern Indiana Railroad Company, after being duly organized, examined, surveyed, marked, and located the route of their railroad, and by the means specified in the aforesaid acts, procured the right of way for said railroad, as the same has been constructed, and become seised in fee of the right to the lands acquired for that purpose, with all the privileges and franchises in relation thereto, confirmed and declared by the said acts; and that the route of that part of the western division of said railroad, lying between Michigan City, in the county of Laporte, and the western line of the State of Indiana, was duly surveyed and located, and the right of way duly acquired. That a part included in said location consists of a strip of ground eighty feet in width, extending from Michigan City to the west line of the State of Indiana, and that the railroad has been constructed and is in operation, from Elkhart to Laporte, and from Michigan City to the west line of the State of Indiana.

And the complainants say that they have purchased, and now own in fee-simple, certain other lands situated on or near the line of said railroad, which is deemed necessary for the business and purposes of said railroad. And they aver that they commenced their road within the time required, and have prosecuted the same, as by the several acts above referred to, they were required to do. That among the rights and privileges under their charters, is the sole and exclusive right and privilege of building, maintaining, and using a railroad along the general route of the road. And they insist that no charter can be lawfully granted to any other company to construct any other road or roads, in the vicinity of said railroad, which would materially interfere, injuriously, with the profits of said road, without the consent of the complainants, which has not been given. That the legislature of Indiana has no power to establish such a road, there being no such power reserved in the original charter.

And the complainants allege the Michigan Central Railroad, a corporation created by, and doing business in, the State of Michigan, were incorporated for the purpose of constructing and using a railroad from Detroit, in the State of Michigan, to some point in the same State upon Lake Michigan, accessible to steamboats navigating said lake; and with authority to extend their road to the southern boundary of the State of Michigan; that said company have constructed and now keep in use, a railroad from Detroit to New Buffalo, and thence to the southern line of the State of Michigan in the direction towards Michigan City, in the State of Indiana; and that by an arrangement with the Commissioners of the Western Division of the Buffalo and Mississippi Railroad Company, the road has been extended and is now in use to Michigan City.

And the complainants further allege, that the New Albany and Salem Railroad Company is a corporation created by and under certain acts of the legislature of the State of Indiana, and, doing business therein, has no power or franchise to construct, or to authorize the construction, of any railroad whatsoever, except what is contained in certain statutes referred to in the bill. That said company, and the defendants, the Michigan Central Railroad Company, on or about the 24th of April, 1851, entered into a contract with each other, which contract is in the possession of the defendants, and a discovery of the same is prayed, and that it may be produced. That by color of said contract the defendants claim the right to construct and use a railroad from Michigan City to the western line of the State of Indiana, by a route nearly parallel with the complainants' railroad, and in its immediate vicinity, and several times crossing the same; and also the right and power to locate, construct, and use such railroad, over and across the complainants' road, with the exclusive franchises and privileges aforesaid, as they, the defendants, shall see fit.

That the defendants have so laid out the route of their road from Michigan City to the western line of the State of Indiana, as to cross the complainants' railroad upon lands, the title of which was acquired by, and is now held by the complainants, and upon which their railroad has been constructed, with the purpose and intent of obstructing and unlawfully interfering with the possession, occupancy, and use of the complainants' lands, and with the intent to hinder and molest them, in the enjoyment and use of the rights and franchises granted to them by the legislative acts stated, and to defeat the exclusive right to have and use a railroad within that vicinity.

And after stating many other facts having a bearing upon the New Albany and Salem Railroad Company; and, as they allege, conducing to show a want of right in that company to extend their road to Michigan City, and from thence to the western line of the State of Indiana, near to and parallel with the complainants' road, as above stated, they pray that the defendants may be enjoined from the construction of their road, &c.

The defendants filed a general demurrer to the bill, and a decree was entered in the Circuit Court, sustaining the demurrer and dismissing the bill.

At the threshold of this case, the question of jurisdiction arises. It is not controverted, that the road of the defendants, against which the injunction is prayed, has been constructed, not only from Michigan City to the Western line of the State of Indiana, but to Chicago, in the State of Illinois. The demurrer admits the facts charged in the bill, and they are also established in part by surveys of both roads.

The jurisdiction of the Circuit Court of the United States, is limited to controversies between citizens of different States, except in certain cases, and to the district in which it sits. In this case we shall consider the question of jurisdiction in regard to the district only. In all cases of contract, suit may be brought in the Circuit Court where the defendant may be found. If sued out of the district in which he lives, under the decisions he may object, but this is a privilege which he may waive. Wherever the jurisdiction of the person will enable the Circuit Court to give effect to its judgment or decree, jurisdiction may be exercised. But wherever the subject-matter in controversy is local, and lies beyond the limit of the district, no jurisdiction attaches to the Circuit Court, sitting within it. An action of ejectment cannot be maintained in the district of Michigan, for land in any other district. Nor can an action of trespass quare clausum fregit be prosecuted, where the act complained of was not done in the district.

Both of these actions are local in their character, and must be prosecuted, where the process of the court can reach the locus in quo.

The complainants allege that the defendants have built a railroad, crossing their road several times; have entered upon their grounds, and, by building a parallel road so near as to carry the same line of passengers and freight, their franchise has been impaired. That they have an exclusive right to run a railroad on the route stated, and that they have been seriously injured by the defendants' road.

This remedy by injunction is given to prevent a wrong, for which an action at law can give no adequate redress. In its nature it is preventive justice. Where the wrong has been inflicted before an injunction was applied for, it may be a matter of doubt, in most cases, whether an action at law would not be, at first, the appropriate remedy. But whether the relief sought be at law or in chancery, the question of jurisdiction equally applies.

In his conflict of laws, Mr. Justice Story says, (sec. 463,) not only real but mixed actions, such as trespass upon real property, are properly referable to the forum rel sitae. Skinner v. East India Company, Law Rep. 168; Doulson v. Matthews, 4 Term R. 503; Watts v. Kinney, 6 Hill, N. Y. Rep. 82. But he says a court of chancery, having authority to act in personam will act indirectly, and under qualifications, upon real estate situate in a foreign country by reason of this authority over the person, and it will compel him to give effect to its decree, by a conveyance, release, or otherwise, respecting such property.' Foster v. Vassall, 3 Atk. 589; 1 Equity Cases, Abr. 133; Penn v. Lord Baltimore, 1 Ves. 444; Lord Cranstown v. Johnson, 3 Ves. 182, 183; White v. Hall, 12 Ves. 323; Lord Portarlington v. Soulby, 3 Mylne & Keen, 104; Massie v. Watts, 6 Cranch, 148, 160. In this last case the Chief Justice says, 'Upon the authority of these cases, (cited,) and of others which are to be found in the books, as well as upon general principles, this court is of opinion that, in a case of fraud of trust, or of contract, the jurisdiction of a court of chancery is sustainable wherever the person be found, although lands not within the jurisdiction of that court may be affected by the decree.' In another part of the opinion he says, 'Was this, therefore, to be considered as involving a naked question of title; was it, for example, a contest between Watts and Powell, the jurisdiction of the Circuit Court of Kentucky would not be sustained.'

If the court had acquired jurisdiction of the person by his being within the State, they will compel him, by attachment, to do his duty under his contract or trust, and enforce the decree in rem, by his executing and conveying or otherwise, as justice may require, in respect to lands abroad. White v. White, 7 Gill & Johnson, 208; Vaughan v. Barclay, 6 Wharton, 392; Watkins v. Holman, 16 Peters, 25.

The controversy before us does not arise out of a contract, nor is it connected with a trust expressed or implied. An exclusive right is claimed by the complainants, under their charters, and the legislative acts of Indiana connected therewith, to construct and use a railroad, as they have done, from the city of Michigan, to the western line of the State. And they complain that the defendants have unlawfully entered upon their grounds, constructed a road crossing the complainants' road several times, and materially injuring it, by constructing a road parallel to it. Relief is prayed for an injury threatened or done to their real estate in Indiana, and to their franchise, which is inseparably connected with the realty in that State.

In the investigation of this case, rights to real estate must be examined, which have been acquired by purchase, or by a summary proceeding under the laws of Indiana. This applies, especially, to the ground on which the complainants' road is constructed, and to other lands which have been obtained, for the erection of facilities connected with their road. And, in addition to this, the chartered rights claimed by the defendants, and the right asserted by them to construct their road as they have done, crossing the complainants' road and running parallel to it, must also be investigated. Locality is connected with every claim set up by the complainants, and with every wrong charged against the defendants. In the course of such an investigation, it may be necessary to direct an issue to try the title of the parties, or to assess the damages complained of in the bill.

It will readily be admitted, that no action at law could be sustained in the district of Michigan, on such ground, for injuries done in Indiana. No action of ejectment, or for trespass on real property, could have a more decidely local character than the appropriate remedy for the injuries complained of. And is this character changed by a bill in chancery? By such a procedure, we acquire jurisdiction of the defendants, but the subject-matter being local, it cannot be reached by a chancery jurisdiction, exercised in the State of Michigan. A State court of Michigan, having chancery powers, may take the same jurisdiction, in relation to this matter, which belongs to the Circuit Court of the United States, sitting in the district of Michigan. And it is supposed that no court in that state, could assume such a jurisdiction.

But there remains another ground of objection to the jurisdiction in this case. The New Albany and Salem Railroad Company is not made a party to this suit. As an excuse for this omission, it is alleged, in the bill, that this company being a corporation by the laws of the State of Indiana, of the same State as the complainants, it cannot be made a party without ousting the jurisdiction of the court. This is true; and if the relief prayed for by the complainants can be given without impairing the rights of this company, under the act of 1839, the jurisdiction may be exercised.

The complainants contend that this company is not a necessary party, and that no decree is asked against it.

The right claimed by defendants to construct their road as stated in the bill, was derived solely from the New Albany and Salem Company. The contract under which this claim is made, is referred to in the bill, and is, consequently, a part of it. It is stated in the contract that this company, 'both for the public good and their own interest, deemed it important to extend its road to Michigan City, and thence westward by the State line of Illinois, &c. And it is also stated that the Michigan Central Railroad Company were willing to subscribe for five hundred thousand dollars of the stock of the New Albany and Salem Railroad Company upon certain conditions, as well as to build the entire line of railroad from Michigan City to the Illinois State line, provided they can have the use and control of the same, until the costs of the same shall be reimbursed to it, &c. The payment of the stock to the New Albany road, as one of the conditions, was to be made by instalments stipulated, a large part of which are yet unpaid. And to reimburse the Michigan Company a million of dollars were assumed as the cost of the road, from Michigan City to the western line of the State, which sum, if paid in forty years, with interest at five per cent. per annum, the railroad to be constructed by the Michigan Company, with all its equipments, shall become the property of the New Salem Company, and the mortgage or pledge of the contract shall cease.

In the argument it was contended by the complainants, that under no act or acts of the Indiana legislature have the New Albany and Salem Company, a right to construct a railroad further north than Crawfordsville. That certain words used in the act of February 11th, 1848, giving the company power to 'extend their road to any other point or points than those indicated by the location heretofore made by the authority of the State,' were necessarily limited to the points named in previous acts, New Albany, Salem, and Crawfordsville. And that in extending the road from Crawfordsville north to Michigan City, and thence west parallel with the complainants' road to the western line of the State of Indiana, it was located without any legal authority.

From the above it appears that the validity of the New Albany and Salem charter is involved in this case, for between two and three hundred miles, from Crawfordsville to Michigan City, and thence to the western line of the State of Indiana. The construction of that road has been nearly, if not entirely completed, at an expenditure of between two and three millions of dollars. And in addition to this, it appears from the contract made between this company and the Michigan company that, as one of the conditions of the contract, the latter company subscribed in stock to the New Albany and Salem road, half a million of dollars, a part of which sum only has been paid.

Now, if this court, in giving the relief prayed for by the complainants, should find it necessary to declare that the above charter gave no authority to the New Albany Company to locate and construct their road north of Crawfordsville, it would be ruinous to that company. And it is clear, that any decision which shall declare the road from Michigan City to the western line of the State of Indiana, without the protection of law; must equally apply to the road from Michigan City to Crawfordsville, as they were located and built under the same authority. This question is, therefore, vitally interesting to the New Albany Company; and by the bill we are called to decide that question, although that company is not made a party to the suit. It is impossible to grant the relief prayed, without deeply affecting the New Albany Company. If their charter should be held good, as claimed by that company, an injunction against the defendants would materially injure the New Albany Company, as it would not only impair the contract made with the defendants, in regard to the road from Michigan City westward to the State line, but it would, probably, release the defendants from a subscription of half a million to the stock of the Crawfordsville road, or at least from the payment of the part of that subscription which has not been paid.

The act of 1839 provides, that 'where, in any suit at law or in equity commenced in any court of the United States, there shall be several defendants, any one or more of whom shall not be inhabitants of, or found within the district, jurisdiction may be entertained, but the judgment or decree shall not conclude or preclude other parties. And the non-joinder of parties who are not inhabitants, or found within the district, shall constitute no matter of abatement, or other objection to said suit.'

The provision of this act is positive, and in ordinary cases no difficulty could arise in giving effect to it; but in a case like the present, where a court cannot but see that the interest of the New Albany Company must be vitally affected, if the relief prayed by the complainants be given, the court must refuse to exercise jurisdiction in the case, or become the instrument of injustice. In such an alternative we are bound to say, that this case is not within the statute. On both the grounds above stated we think that the Circuit Court has no jurisdiction. The judgment of that court, in dismissing the bill, is therefore affirmed.

Mr. Justice CATRON and Mr. Justice CAMPBELL delivered separate opinions. Mr. Justice DANIEL dissented.

This cause came on to be heard on the transcript of the record from the Circuit Court of the United States for the District of Michigan, and was argued by counsel. On consideration whereof, it is the opinion of this court, that the Circuit Court had no jurisdiction of the case, and on that ground the bill was properly dismissed; there was, therefore, no error in the decree of said court. Whereupon it is now here ordered, adjudged, and decreed, by this court, that the decree of the said Circuit Court in this cause be, and the same is hereby, affirmed, with costs.