Collins v. Bellefonte Central R. R. , 171 Pa. 243 ( 1895 )

Opinion by

Mb. Justice Dean,

In 1885, two connecting short railroads, the Bellefonte and Buffalo Run, and Nittany Valley and Southwestern, wei’e consolidated under the name of the Buffalo Run, Bellefonte and Bald Eagle Railroad Company. Under the original grants, the new company had authority to construct and operate a railroad from Beech Creek to Bellefonte, and from thence, by way of Buffalo Run to State College in Centre county. After consolidation, the road was built from Bellefonte to State College, by a contract with Frank McLaughlin. To raise money for the construction, the new company executed a mortgage to the Fidelity Insurance, Trust and Safe Deposit Company, as trustee, to secure the payment of $600,000 in bonds to promote the work of construction. This mortgage was recorded in Centre county May 18,1886, and by its terms, pledged the railroad then under construction, and all the rolling stock and equipment to be acquired for operating the road. All the bonds were disposed of when the road was completed; some had been sold to purchasers, others had been delivered to McLaughlin in payment for construction. McLaughlin, to facilitate the completion of the work, first borrowed from the Pennsylvania Railroad Company some rolling stock, but afterwards replaced this by a new locomotive and some construction ears purchased in his own name, and used these in completing his contract. On October 10, 1888, McLaughlin and Philip Collins, the plaintiff, entered into a written agreement, wherein, for certain considerations, McLaughlin transferred, among other things, all his interest in the rolling stock to Collins, thus describing it:

“ Fourth: All the right, title and interest of said Frank McLaughlin, in and to the locomotives, passenger cars, freight cars and rolling stock of every description used in and upon the said Buffalo Run, Bellefonte & Bald Eagle Railroad, together with the right to receive payment and make settlement for any such rolling stock which may have already been transferred to said railroad company and still remains unsettled for.”

The rolling stock having thus passed to Collins, it remained in use by the railroad company. Collins was interested, as a stockholder in the company, and was one of the directors. While some of the rolling stock was marked with one or other names of the original companies, none of it had upon it the corporate name of the new company. On December 31, 1890, as appears from the minutes of the company, this resolution was adopted by the board of directors :

“Resolved: That the president be authorized to purchase the rolling stock owned by Philip Collins, and now in use on the railroad at its cost, less any payments made thereon, the said rolling stock to be held as security by Collins until fully paid for; and that the funds available from the earnings for the year be applied to the payments to Philip Collins, on account of the rolling stock owned by him and used in operating the railroad.”

Five days afterwards, on January 5, 1891, the company, by its president, and Collins, entered into a written agreement for a lease of the rolling stock to the company at an annual rental, with an option to purchase before the expiration of the lease. The paper starts out thus :

“Whereas, the said Philip Collins purchased at his own proper cost, amounting with interest and repairs, to §17,185.67, in the years 1886 and 1887, and let the same to the said party of the second part (the Railroad Company,) the following described rolling stock and equipments.” Then follows a detailed description of cars and locomotives corresponding to those in dispute, and then is this declaration:

“ And whereas, the party of the second part (the Railroad Company), has had the use and benefit of said described rolling stock and equipments, without any definite annual rental therefor having been fixed and agreed upon.” Then follows the stipulation that, for the consideration thereinafter named, Collins agrees to lease all of the rolling stock to the railroad company, its successors and assigns for eight years from January 1, 1887, to January 1, 1895; and then follows this stipulation on part of the company:

“ The said party of the second part (the Railroad Company), its successors and assigns, agree to pay the said party of the first part (Collins), his executors, administrators and assigns, an annual rental therefor of §2,500, payable quarterly at the end of each and every quarter from January 1, 1887.” It is then further stipulated that the company has the privilege of' purchasing the rolling stock at any time during the term at the price of §17,185.67, with interest; and should the purchase be made, credit is to be given for amount of rent paid, as purchase money. The company paid Collins rents at different dates between February 21,1891, and December 19,1891, amounting to $10,542.67, for which he gave receipts, stating in them the money received was “on account of lease for purchase of engine and cars dated January 5, 1891.” The lease was not acknowledged or recorded.

Default having been made on interest on the bonds, the mortgage was foreclosed by bill in equity against the railroad company, filed in the circuit court of the United States for the western district, and a decree of sale of the mortgaged property made, including engines, cars, and all equipment. The sale was advertised for December 1,1891, at Philadelphia. A committee of the bondholders, Henry Whelen, R. Dale Benson and Francis M. Milne, was formed to bid on the property; it was knocked down to them, and by order of the court the trustee in the mortgage conveyed to them, and they conveyed it to the Bellefonte Central Railroad Company, this defendant, which, about January 1, 1892, took possession of the railroad and all the equipment.

Before the sale to the committee, Collins read aloud a notice to bidders of his claim to the rolling stock transferred to him by McLaughlin, aud then leased by him to the railroad company. There was also some evidence, by correspondence and otherwise, of the recognition of his claim by Mr. Frazer, the president of the new company; but afterwards the company repudiated his claim, and asserted title to the property; thereupon, Collins issued a writ of replevin, and the company gave a claim property bond and retained possession. The plea of “ non cepit and property ” was afterwards put in, and on January 1.7, 1894, the case was called for trial. The facts proven were in substance as we have stated, except there was no evidence of pajunent of rental to Collins admitted; the offer of the defendant in that particular having been overruled. But two questions were submitted to the jury: 1. Was the contract between Collins and the company for leasing the property made in good faith ? 2. If so, what was the value of the property, as that was the measure of damages? There was a verdict for plaintiff for $12,890.41. Afterwards there was a motion for a new trial, which the court, in an opinion filed, overruled, and entered judgment on the verdict. Defendant appeals, preferring twenty-two assignments of error, four of them to rulings on admission or rejection of evidence, and the remainder to answers to points and charge of the court.

There was abundant proof in the case that Collins was the actual owner of the property claimed, by him on his writ; there really was nothing even tending to contradict this proof. We speak now of the facts; not of the legal conclusion sought to be drawn from the description in the mortgage, and the neglect, under the act of July 5, 1883, to record the lease. It is un contradicted that McLaughlin, the contractor, bought the whole of it and paid for it, for his own purposes, before the completion of his contract, and then transferred it to Collins. It never was property “acquired” by the railroad company, under the description in the mortgage, unless acquired by the lease from Collins; and the company, up until after the sale on the mortgage, never pretended to assert possession in hostility to Collins’ title. Nor, if notice to the purchaser at that sale was given by Collins, as is uncontradicted, would the act of 1883 operate to divest liis title. The resolution of the directors and the written lease, when read together, constituted a bailment, and such they were correctly interpreted to be by the learned judge of the court below. The alleged errors, in the first two and the fourth assignments, to the admissions of evidence on part of plaintiff, cannot he sustained. The evidence offered tended to prove full notice to bidders of Collins’ claim, and that his right, after this defendant company was formed, had been recognized by its president; and further that, in the sworn report by the company to the secretary of internal affairs, was an implied disclaimer of title to this property. Not one, except the third, of the many errors alleged, is well founded ; the rulings of the court are correct, and the reasons therefor sound, and there is nothing of merit in the assignments winch calls for further notice ; therefore, all except the third are overruled.

As to the third assignment, it will be noticed the plaintiff claimed damages for the taking and detention of the property in an amount equal to its value, $17,185.67, with interest. The defendant offered in evidence rental receipts attached to a duplicate copy of the lease of January 5, 1891, in its possession. These receipts amounted to $10,542.67. The form of these receipts was tbe same in substance; tbis is a copy of tbe first in date:

“Received February 21st, 1891, from the Buffalo Run, Bellefonte & Bald Eagle Railroad Company, the sum of Five Thousand, Five Hundred and Forty-five Dollars and nine cents on account of lease for purchase of engine and cars.

“ (Signed) Philip Collins.”

The offer of defendant was of the lease with receipts attached, signed by Philip Collins, being stated “ on account of lease for purchase of engine and cars.” Then follows the purpose of the offer in these words :

“ The purpose of the offer is to present upon the record to the court and jury what, the defendants conceive to be the principal data, upon which to estimate and determine the damages due from the defendant in this action to the plaintiff, in case the court is of the opinion that the plaintiff, as against this defendant, has any right to recover at all.”

To this offer plaintiff objected, for tbe reasons: 1. Because defendant denies plaintiff’s title under the lease. 2. Defendant never declared the option to purchase under the lease. 3. The plea of non cepit and property is a denial of any payments under the agreement. The court then put this question to defendant’s counsel: “Do you offer this paper as binding upon you?” To which counsel answered: “We offer it as showing what the contract was between the original parties to. it, so that when the court comes to consider the question of damages, in ease the court should differ with us as to the question, right here we have the evidence, from which the true measure of damages is to be determined from that issue.” The court, being of opinion that as defendant had disaffirmed the lease, and claimed under a title paramount to it,—the mortgage ; had not acknowledged it in any way, or offered to purchase under the option, the receipts were inadmissible, and the offer was overruled. Was this ruling correct?

The suit was replevin ; the property had been seized by the sheriff, and defendant had given a bond, and then pleaded property. So far as the property itself was concerned, the plaintiff could not recover it. Replevin is a mixed action, in rem and' personal. The defendant has his election to deliver the property on the writ, or to give security and keep it. If the property be delivered to plaintiff, the defendant is answerable in damages only for the taking and detention. If it be retained, he is answerable for the full value. As is said in Fisher v. Whoollery, 25 Pa. 197, “ In either case, the action thenceforth proceeds for damages alone. The property itself can in no event be recovered at law from the defendant; nor can he tender it afterwards in discharge of the action, or even in satisfaction pro tanto of the damages claimed. . . . Nothing but money can be recovered in an action on the defendant’s property bond.” So that the possession of the property itself was no longer an element in the case ; it belonged absolutely to defendant; how much money, if any, ought defendant to pay plaintiff? As the defendant had the property, and must keep it, that was the only question remaining. To answer this, involved the determination of three other questions; if the property passed to the defendant under the description in the mortgage, it ought to pay nothing; but, we have already held, with the court below, that this position is not sustainable; if the interest of the Buffalo Run, Bellefonte and Bald Eagle Railroad Company in the property leased passed by the mortgage sale to defendant, then, when the writ of replevin issued, the latter had a qualified interest in the property, and such interest as it did not have Collins had, and ought to be paid for; if no interest passed under the lease to defendant, it ought to pay damages measured by the value of the property.

It is very clear to our minds that whatever right its predecessor had, by virtue of the lease, passed to this defendant. Assume that it wholly repudiates the claim of Collins, as one branch of its defense, why should that estop it from setting up the other ? If a landlord distrain for rent in arrears, and the tenant replevy the goods, the latter may not, at the trial, allege title paramount, and also set up payment of the rent; from motives of public policy, the law will not tolerate such repugnant defenses; if the entry was under plaintiff’s title, whether good or bad, that created the relation of landlord and tenant, and the tenant must pay; if not under that title, he owes nothing, for he is not tenant to the holder of it. But, in both ejectment and proceedings for the collection of rent, it has always been held that, while the tenant may not defend under an outstanding or paramount title, he may show that during the term his landlord’s title had ended by assignment or judicial sale; such defense is not repugnant to the original contract relation of landlord and tenant. So here, the plaintiff alleged a bailment with an option to purchase; there was no serious denial of it by defendant; but, it averred, by the mortgage of after acquired equipment, and the failure to record the bailment contract under the act of 1888, the mortgage clasped the bailed property, and it passed. by .judicial sale to the purchaser, absolutely; but defendant alleged further, even if it did not so pass absolutely, the special or qualified interest of the bailee, an interest measured by the amount of rental paid, at least passed, and the damages of plaintiff should be measured by the amount yet unpaid. This was, substantially, the position defendant took when it offered the receipts. In assuming these two theories of defense, there was nothing inconsistent with good morals or public policy, nor was there anything inconsistent with the issue framed. The judicial utterances, that a suitor will not be permitted to “ stultify himself; ” will not be permitted to “blow hot and cold in the same breath,” and the like, have no application to the facts here.

There was a repugnant defense which the court below thought defendant might take if the receipts were admitted, and which would operate with hardship on plaintiff, and defeat a trial on the merits. In amount the payments made were all that were due under the contract up to date of suit, and therefore, if the suit had been instituted on the contract, it was prematurely brought;'but, in replevin for wrongful detention, such claim on part of defendant would not have been tolerated at that stage of the proceedings. When Collins demanded his rights under the contract, defendant asserted absolute ownership of the property under the judicial sale. In view of this claim before suit brought, there would have been, at trial, such repugnancy between it and a plea of premature suit that the latter would not have been entertained. Defendant had positively and peremptorily denied any title in Collins to the property; he was thereby lured into an action to test his right. Equity would, in view of defendant’s attitude, before suit brought, estop it from alleging at trial that suit was brought prematurely ; it could not wholly repudiate his title before suit, and then at trial, defeat his ac tion by a qualified acknowledgment of it. Defendant did not take such position at the trial, and our remarks are prompted solely because the court below indicates this view as partly the ground of its rulings.

Take any one of these receipts on its face and what does it show? If the court had admitted them to be read to the jury as was the offer, it would have been hound, then, to say to the jury, this written receipt declares that the money paid is “ on account of lease for purchase of engine and cars, dated January 5th, 1891; ” this contract, with all these receipts attached, being produced by defendant, and by it offered in evidence, must be taken as true; being so, it is a distinct, unequivocal recognition of tlie contract; and before suit brought, having given distinct notice to plaintiff that it repudiated liability under the contract, would neither pay rental nor the purchase money, he, the plaintiff, was not bound to wait until the period for declaring the option had expired, but could bring his suit at once. The measure of plaintiff’s damages is the value of the property, as stipulated in the bailment contract mitigated by the amount already paid him by defendant’s predecessors, as shown by these receipts.

This, it seems clear to us, was the ruling that should have been made on the offer of the receipts, and the interpretation that should have been put upon them by the court.

It was not important what significance was attached to them by counsel when the offer was made ; the purpose, clearly stated, was to mitigate damages ; that rendered them admissible ; once in evidence, if they were to affect the amount of damages, their purport was for the court. Assume, that the offer of the receipts and their admission as- a ground of defense would necessarily have been the destruction of the first ground, neither was inconsistent with the issue, for both tended to show property in defendant; the first, by a title absolute, under a sale which it was argued wholly divested plaintiff’s title; the second, by a special or qualified title in subservience to that of plaintiff.

The judgment is reversed, and a v. f. d. n. awarded.