lions.

Council Bluffs and South Omaha, to-wit, $45,000, is grossly inadequate. Contemporaneous with this, another contract of similar import was executed with the Chicago, Milwaukee & St. Paul Railway Company, by which it also was to pay a like rental; so that the rentals secured by these two contracts, for the use of the same property, amount to $90,000. A volume of testimony was taken to show the value of the Pacific's property for which this rental was to be paid. Four or five engineers of ability, and real estate men of experience, testified fully in respect to this matter. Their estimates were very divergent, varying from three to seven millions. I shall not attempt in this opinion to review this testimony, or seek to determine which of these estimates is most reliable. Obviously, the estimate of Mr. Smead, the chief engineer of the Pacific, is too high, in that it includes property not covered by the lease. Probably the real value lies somewhere between the respective figures, and nearer three than seven milIf the value be seven millions, $90,000 rental is only about 1 per cent.; and, if this were the rental for the full and exclusive possession, it would obviously be too low, but there is only a partial possession and a partial use. This rent is so much in excess of that which the Pacific realizes from its own use of the property. Not only that, by section 7 of article 3 of the contract, the Pacific reserves to itself the right to let other companies into the like possession and use of this property, without sharing with these lessees the rentals thus obtained. On the other hand, if the value of the property is only $3,000,000, the rental is 3 per cent., and that for only this partial use. But, beyond this Omaha property, the contract provides for the use by each party of portions of the other's tracks; and the benefits which flow to the Pacific, from its acquisition of parts of the Rock Island's tracks elsewhere in the system, are worthy of notice in determining the sufficiency of the consideration. There are other benefits, also, of a pecuniary nature, the amount of which may not perhaps be easily estimated, which will inure to the Pacific from the pouring of this volume of business of the Rock Island and St. Paul roads over its tracks, rather than over an independent and separate line.

But I place more reliance upon this further matter: As heretofore stated, the contract was sought by the Pacific. The then executive officers of that company, distinguished and competent railroad gentlemen, of long experience in connection with the property, in their consultations as to the price to be demanded, and before any conference with the officers of the Rock Island and the St. Paul, fixed $50,000 as the sum to be demanded, and $45,000 as that to be accepted.

Now, when gentlemen so competent to determine such a matter, so interested in securing the best possible terms for the Pacific, without suggestion from the other side, named $50,000 as the rental to be asked, I think it would be strange for a court to hold that a rental of $45,000 was grossly inadequate. This is not a case in which the defendant has been led into a contract, or its terms fixed by inexperienced or incompetent men; but it sought the contract, named its price, and received nine-tenths of the consideration which it proposed to take.

It is further objected that the Pacific does a large local business between Council Bluffs and South Omaha, from which it makes much profit; and that under this contract the Rock Island may itself put on local trains, and, by reducing the fares, practically cut off this source of revenue from the Pacific; whereas, if it built a separate bridge and a separate line, the amount of the cost would be so great that it would be compelled to keep up rates. My observation has taught me that the cutting of rates generally springs from quarrels between competing roads, and is little, if at all, affected by the cost of the property; and if the Rock Island and St. Paul were now forced to build a new bridge, and establish an independent line, there would be just as much likelihood of the cutting of rates. Aside from the existence of any quarrel, self interest will prompt the Rock Island and St. Paul to maintain any rate which is just and reasonable. More than that, the Pacific has no right to expect. But another safeguard is this: Every contract implies good faith in the contracting parties, no matter what may be the mere language of the instrument; and if, after having been let into possession, the Rock Island should in any way abuse the privileges given by this lease, the courts are open to furnish protection, even if, to secure it, it be necessary to cancel the lease.

But there are considerations on the other side which are worthy of mention, and which make specific performance right. While no estoppel runs against an ultra vires contract, yet it is fair always to consider the situation of the plaintiff if specific performance be denied. The Rock Island has constructed a line from Lincoln to Omaha, and had expended a million and a half of money in reliance upon this contract. It and the St. Paul abandoned their scheme of building a new bridge, and creating a new and independent line into and through Omaha. If now specific performance is refused, what becomes of that investment? Must it lie idle until a year or so have passed, in which a new bridge and a line into and through Omaha can be completed? and who can tell

whether, in the changed financial condition, these companies could secure the money with which to build the bridge and construct the line? Suppose the Rock Island was refused specific performance, and relegated to an action for damages, of what avail would such action be? Long would be the delay in prosecuting it to judgment. What would be the measure of damages? And, if a large sum were recovered, is there any certainty, in view of the heavily mortgaged condition of the Pacific, that the judgment could be collected? I think I need continue this discussion no further. I have given this case long and careful consideration. Summing the whole matter up: The defendant sought this contract. Its executive officers were gentlemen of long experience with the property, and distinguished ability as railroad officials. There was no concealment or deception, no fraud or unfairness, on the part of the officers of the plaintiff. There was no opportunity for any; the officers of the defendant company fully understood the situation. To this contract, not only the executive officers, but also the great body of the stockholders, of the Pacific gave their approval. The rental finally agreed upon was within a small fraction of that which the defendant had determined to ask. Relying on this contract, the plaintiff abandoned plans and negotiations for an independent line, and has expended over a million of dollars in building a road from Omaha to Lincoln. It will be grievqusly hurt if performance is not now decreed. Performance will not disable the Pacific from discharging all its duties and performing all its functions. If the time shall ever come in which performance shall tend to have that effect, the government, at least-the party having the right to complain-can interfere and put an end to the plaintiff's possession and use. The contract is for the interest of the government as second mortgagee, as coining surplus use of tracks into money. It is for the interest of the public in preventing the destruction of valuable property, and the cutting up of a large city by new tracks and right of way, and in avoiding an unnecessary investment of large sums of money in railroad building, and thus increasing the railroad burden. It is to the higher interest of all, corporations and public alike, that it be understood that there is a binding force in all contract obligations; that no change of interest or change of management can dis turb their sanctity or break their force; but that the law which gives to corporations their rights, their capacities for large accumulations, and all their faculties, is potent to hold them to all their obligations, and so make right and justice the measure of all corporate as well as individual action. The decree will go for the plaintiff as prayed for. The same

considerations require that a like decree be entered in the case of the Chicago, Milwaukee & St. Paul Railway Company against these defendants.

Contract for Use of Tracks-Assignment of Rights Under Contract.-A contract between the C., R. I. & P. R. Co. and defendant company, giving the former the right to use the latter's tracks, depots, etc., stipulated that the contract should be binding on the lessees, assigns, grantees, and successors of each company during the continuance of their franchises, and provided that the former company could assign its interest in the contract only by sale, lease, or consolidation of its own property. Held, that an assignment or conveyance by the C., R. I. & P. R. Co. of its interest in the contract by virtue of leases, sales, and consolidation of its property, carried with it all the rights of said company under the contract. Chicago, R. I. & P. R. Co. v. Denver & R. G. R. Co., 46 Fed. Rep. 145.

Construction of Contract for Use of Tracks and Terminals.-Complainant's assignor, being engaged in building a railroad from the east, with the intention of bringing it to Colorado Springs, or, possibly, direct to Denver, entered into a contract with defendant company for the use of its tracks, depots, etc., which provided that complainant's assignor should have the full, equal, joint, and perpetual possession and use of all defendant's tracks, buildings, stations, sidings, and switchings on and along its line of railway" between and including Denver " and South Pueblo, meaning and intending to include all its railway and appurtenant property "between and at the points aforesaid." Held, that the contract gives complainant the right to use the depot grounds and property of defendant in Denver for the handling of its freight and passenger business, without respect to the road over which it may haul its cars. Chicago, R. I. & P. R. Co. v. Denver & R. G. R. Co., 46 Fed. Rep. 145.

The contract between the Chicago, Rock Island & Colorado Railway Company and the Denver & Rio Grande Railroad Company for the joint use of the railway of the latter company between and including Denver and Pueblo construed, and held-First, that the Chicago company has not the right to use the Denver terminals for the cars it operates and the business it does over the Union Pacific Railway; second, that the Chicago company has the right to do its own switching and handle its own freights in the joint yards, but its switching engines and laborers must work under the orders, superintendence, and direction of a superintendent or other officer appointed by the Denver & Rio Grande Railroad Company, and invested with the sole and absolute superintendence and control of the work in the joint yards; third, that, under the clause of the contract excluding from its operation the " shops at Burnham," the shop grounds appurtenant to the shops are excluded. Chicago, R. 1. & P. R. Co. v. Denver & R. G. R. Co., 45 Fed. Rep. 304.

Specific Performance of Contracts with Railroad Companies.-See Conger 7. N. Y. West Shore & B. R. Co. (N. Y.), 43 Am. & Eng. R. Cas. 643. note 645; Rector, etc., v. Paterson E. R. Co. (N. J.), 43 Id. 654: Appeal of Ballou (Pa.), 43 Id. 709; Joy v. St. Louis (U. S.), 45 Id. 655; Chicago, M. & St. P. R. Co. 7. Durant (Minn.), 46 Id. 488.

Authority of Officers of Railroad Company to Execute Lease of Line.-See Beveridge v. N. Y. El. R. Co. (N. Y.), 39 Am. & Eng. R. Cas. 199; Metropolitan El. R. Co. v. Manhattan R. Co. (N. Y.), 15 Id. 1.

MANCHESTER & LAWRENCE R. Co.

V.

CONCORD R. Co.

(New Hampshire Supreme Court, March 14, 1890.)

Lease -Ultra Vires Contract-Who May Allege Invalidity.-Under the equitable rule that neither party to a transaction ultra vires simply, will be heard to allege its invalidity while retaining its fruits, it is held that the defendant railroad company which has, under a contract, used the road bed, rolling stock, and equipments of the plaintiff company, cannot set up as a defense to the plaintiff's bill for an accounting, and a return of the property, that the contract was ultra vires.

When such

Contract Between Competing Railroads-Public Policy.-All contracts between rival railroad corporations, which prevent competition, are not necessarily contrary to public policy, and therefore illegal in themselves. In such cases the illegality depends upon the circumstances. contracts prevent a healthy competition, and furnish the public with adequate facilities at fixed and reasonable rates, they are beneficial and in accordance with sound principles of public policy.

Same-Statute Forbidding the Consolidation of Competing Lines.-A contract whereby the roadbed, rolling stock, and equipments of one competing line of railroad is to be operated and controlled by another competing line, is made illegal by Act N. H., July 5, 1867, which forbids the consoli

dation of competing railroads.

Same-Executed Contract-Illegality as a Defense to Bill for Accounting. -Where an illegal contract of consolidation between railroad companies having competing lines, has been executed, and defendant has derived all the benefits arising from the contract, its illegality is no defense to a bil in equity for an accounting, and a return of the consideration to the plaintiff company, whose property and equipments pass to the defendant under such contract.

Bill for Discovery-Exposure to Penalty.-Where a prosecution for a penalty is barred by the statute of limitations, a party cannot refuse to disCover matters connected with the transaction, on the ground that such evidence will induce an exposure to the penalty.

DEMURRER to bill in equity.

C. H. Burns, J. F. Briggs, O. E. Branch, W. S. Ladd, and Fletcher Ladd, for plaintiff.

J. W. Fellows, J. H. Benton, Fr., and Chase & Streeter, for defendant.

BLODGETT, J.-This proceeding is a bill in equity for a discovery and an accounting of the defendant's dealings with the plaintiff's railroad properties from December

1, 1856, to July 1, 1887, under various contracts Case stated. and leases; for the delivery of certain books, records, and papers alleged to belong to the plaintiff; for the return to