Union Pacific Railway Company v. Goodridge

Statement by Mr. Justice BROWN:

This was an action at law by the firm of Goodridge & Marfell, coal merchants, carrying on the business of mining coal at Erie, Colo., and of selling same at Denver, against the Union Pacific Railway Company, to recover triple damages, under a statute of Colorado, for an alleged unjust discrimination in freights upon coal from Erie to Denver.

The statute which was the basis of this action, together with a corresponding clause of the state constitution of Colorado, so far as the same are material to this case, are set forth in the margin.

The amended complaint alleged the defendant to be a common carrier, chartered by an act of congress, and operating a line of railroad from Erie and Marshall, at both of which were located certain coal mines, about 35 miles, to Denver; that if there were any difference in distance it was in favor of Erie, by about 2 miles, and that the published schedule of freights for coal was the same, namely, $1 per ton from each place; that plaintiffs, while operating their coal mines from Erie, between October 31, 1885, and August 12, 1887, shipped to Denver 12,960 tons and 1,625 pounds of coal, for which they paid defendant $12,960 and a fraction, being at the rate of $1 a ton, believing that such was the regular schedule rate charged the general public and all parties similarly situated for such service, there being no difference or discrimination between such rates as between Erie and Marshall t Denver; that the Marshall Consolidated Coal-Mining Company at the same time operated coal mines at Marshall, and was engaged in shipping coal over defendant's road to Denver under the same circumstances as the plaintiffs, except as to rates, and was a competitor with the plaintiffs; that the amount of such shipments was about 145,833 tons, the defendant charging such company 60 cents per ton, and allowing a rebate of 40 cents from its schedule rates; that plaintiffs are informed such rebates amounted to upwards of $58,000, and that the defendant in this manner, without the approval of the railroad commissioner, demanded and received from the plaintiffs the sum of $5,184.30 more than it received from the Marshall Consolidated Coal Mining Company, (hereinafter called the Marshall Company,) for like services, upon like conditions and under similar circumstances, without the knowledge or consent of the plaintiffs; that the defendant in this manner, and to this extent, allowed the Marshall Company drawbacks or rebates for carrying its coal, which were not open to and allowed all companies and corporations alike, at the same rate per ton per mile; that these rebates were made secretly and clandestinely in favor of the Marshall Company, with the design to deceive and mislead the plaintiffs, and fraudulently conceal from them the facts relating to such rebates, and did so conceal them until about

The plaintiffs further alleged that defendant had granted other parties, similarly situated, the same rebates for the carrying of coal over its road from Marshall, and further charged that all the coal shipped by the plaintiffs and the Marshall Company was about the same quality, and cost the defendant the same amount to handle and ship over its lines, and that the charges made by the defendant were unreasonable, unjust, and extortionate; that plaintiffs had demanded of defendant reimbursement of the overcharges, which had been refused, by reason of which they asked judgment in the sum of $15,552.90, being three times the amount alleged to have been extorted, at the rate of 40 cents per ton on all coal shipped by them.

The answer set up a general denial of each and every material allegation in the complaint, and special denials that defendant had allowed the Marshall Company a rebate of 40 cents per ton, or that it had charged plaintiffs more than it had charged the Marshall Company for like services. For a second defense the defendant alleged that in January, 1880, the Denver, Western & Pacific Railway Company, a Colorado corporation, was engaged in building a railroad from Denver to Boulder, and in so doing passed over certain coal lands belonging to one Langford and others, known as the 'Marshall Coal Mine;' that in constructing its line it negligently broke into the mine, in consequence of which it was claimed the mine took fire, and destroyed large amounts of coal, and continued to burn for several months, to recover which damages suits were instituted by the owners of the mine against the railroad company, which were litigated for several years; that in addition to such damages the company had failed to obtain a right of way across the mining lands; that in January, 1882, a judgment was also obtained against the company, in the sum of $64,000, upon a mechanic's lien, of which judgment the Union Pacific subsequently became the owner, as well as of a large number of the bonds of the said company; that the road was subsequently sold, and came into the hands of the Union Pacific, and in 1885 a corporation was formed under the name of Denver, Marshall & Boulder Railway Company, which was owned and controlled by the Union Pacific, and which proceeded to construct its road from Denver to Boulder, and that the claim against the Denver, Western & Pacific had become, and still remained, a lien upon the property in the hands of the Denver, Marshall & Boulder Company; that in 1885 the said Langford and others sold the Marshall coal mine to the Marshall Company, which thus became the owner of the mine, and also, by assignment, the owner of the claim for damages done to it by the Denver, Western & Pacific Railway Company; that in 1885 the Union Pacific was the owner of a certain coal mine at or near Louisville, Boulder county; that in addition to the liens above stated there was also a bonded indebtedness of about $1,000,000 upon the Denver, Western & Pacific, secured by a mortgage, which was foreclosed in 1883, and upon such foreclosure the owners of the Marshall coal mine answered, setting up their claim for damages to the extent of $81,000; that the property was subsequently put up, and sold at master's sale, under decree of foreclosure, the rights of Langford and others not being adjudicated at that time, and that upon such sale the title was acquired by parties acting in behalf of the Union Pacific, which had become the owner of a large number of the mortgage bonds; that for some time prior to October 13, 1885, defendant was receiving coal for its locomotives from the Union Coal-Mining Company, which was the owner or lessee of certain coal mines at Erie and at Louisville, and had been engaged in working the mines, and furnishing the defendant with coal; that about the same time the Marshall Company had become the owner of the coal lands formerly owned by Langford and others, and that on account of complaints that had been made by the owners of other mines the defendant concluded that it was for its best interest to discontinue its connection with the Union Coal Company, and for that purpose it entered into negotiations with the Marshall Company for the purpose of inducing this company to take off its hands the mines of the Union Coal Company; that it was further induced to enter into this contract by the fact that the Marshall Company had succeeded to the rights of the former owners of the Marshall coal mines, and to their claim for damages against the Denver, Western & Pacific, and for the purpose of getting rid of the operation of the Union coal mines, and of settling this claim for damages, it entered into a contract with the Marshall Company on the 13th day of October, 1885, in which it was recited that, it being for the interest of the Union Pacific to discontinue the working of the Union coal mine, and to contract with the Marshall Company for all the coal needed for its own consumption on its road and branches, not to exceed 50,000 tons for the first year, and 100,000 tons for every year thereafter, therefore, in consideration of the Union Coal Company going out of the coal business, and the purchase from the Marshall Company by the defendant of the coal used for its own consumption at the rate mentioned therein, and in consideration of the rates for the transportation of coal therein agreed upon, the coal company agreed to furnish from the Marshall mine all coal ordered by the railway company for its own use and consumption, and the use of its branches, not exceeding 50,000 tons the first year and 100,000 tons per annum thereafter, and to deliver all coal on board of the cars of the Union Pacific at the mouth of the mine, at a price not to exceed $1.25 per ton, delivered and loaded on the cars, and, if such cost was less than $1.25 per ton, then at actual cost.

It was further agreed that the defendant should give to the Marshall Company for the transportation of its coal the regular tariff rate, not exceeding $1 per ton, unless 200,000 tons should be mined and furnished for transportation yearly, in which case a rate of 60 cents per ton should be paid for all coal transported over defendant's line to Denver, and, if the rate were reduced below $1, then the 60-cent rate should be reduced in the same proportion. It was also provided that, if the railway company should order coal in excess of the amounts of 50,000 and 100,000 tons per annum, then the railroad company should pay the cost of mining and putting such coal on the cars, plus 50 cents per ton, except that in no case should the price for mining and loading such coal exceed $1.40 per ton; and it was further agreed that, as part consideration of the contract, the majority of the capital stock of such coal company should for two years be held, in case the company desired to sell it, and should first be offered to the Union Pacific in preference to any other purchaser. This contract was to remain in force for five years.

It was further alleged that from the fact that Mr. Adams, the president of the defendant company, was not intimately acquainted with the claim for damages made by the former owners of the Marshall mines, the contract failed to mention anything about the settlement of said claim, but that the contract was sent to the general attorney of the defendant, with instructions to look it over, and if anything further was needed to settle the controversy that might grow out of anything theretofore existing it should be provided for in a separate instrument, and thereupon the attorney prepared a bond of indemnity for execution by the coal company, reciting the claim for damages against the Denver, Western & Pacific, and agreeing to indemnify the railway company against any damages which might accrue to it by reason of such claim, and upon the execution of such bond, and as part of the transaction, the contract was delivered to the Marshall Company, and afterwards the former owners of said Marshll mines executed and delivered a receipt in full, discharging the defendant from all suits and causes of action existing by reason of any matter or thing pertaining to the construction of the Denver, Western & Pacific Railway Company. The answer further alleged that the defendant was informed and believed that it cost the Marshall Company, and would have cost the defendant if it had continued to operate through the Union Coal Company, at least $1.60 per ton to mine their coal, and that on account of the settlement of the aforesaid claims, and of the coal necessarily used by it, the Marshall Company has paid the defendant a higher rate, as a matter of fact, than $1 per ton, although it was not intended that the rate should exceed the schedule price.

To this second defense, which was elaborately set forth in the answer, a demurrer was interposed by the plaintiffs, and sustained by the court, (37 Fed. Rep. 182,) to which the defendant duly excepted. Defendant thereupon, for a third defense, pleaded the statute of limitations, plaintiffs replied, and the case went to trial before a jury, which returned a verdict for the plaintiffs in the sum of $5,184.30, for which amount judgment was entered, and defendant sued out this writ of error.

John F. Dillon, Harry Hubbard, Willard Teller, and H. M. Orahood, for plaintiff in error.

A. J. Sampson, for defendants in error.

Mr. Justice BROWN, after stating the facts in the foregoing language, delivered the opinion of the court.