New Orleans v. Texas & Pacific Ry. Co., 171 U.S. 312 (1898)

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Author: Justice Fuller

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New Orleans v. Texas & Pacific Ry. Co., 171 U.S. 312 (1898)

MR. CHIEF JUSTICE FULLER, after stating the facts in the foregoing language, delivered the opinion of the Court.

The assignments of error relate to three subjects: first, the batture or space in front of the City Park, embraced in the lease made by the city to the railroad company in execution of the terms of the city ordinance; second, the construction of a track on Claiborne and Canal, and the building on Claiborne near Canal of a passenger depot; and, lastly, the wharfage rights claimed by the railroad company at the foot of Thalia Street, in virtue of section 4 of Ordinance No. 6938.

The argument as to the first and second assignments is that the right granted to the railroad company by Ordinances 6695, 6732, and 6938, to extend its track from the point designated as its terminus, in the rear of the city, along Claiborne to Canal, and there to build a passenger depot, as also the lease, which, to carry out the ordinance, empowered the railroad company to use the batture in front of the park, and to construct its railroad along the edge thereof through certain designated streets to the rear of the city, were all granted to the railroad company as accessory rights, depending for their existence upon the crossing at Westwego, and the location by the railroad company of its terminus in the rear of the city. In other words, that these rights were given to the railroad company, subject to conditions precedent, or, to use the language of the law of Louisiana, "subject to suspensive conditions." It is further contended: first, that in consequence of the failure of the railroad company to cross at Westwego and to locate its terminus as aforesaid and its election, on the contrary, to continue its road down the river to Gouldsboro, and there cross the river, it never acquired the right to enjoy the privileges above mentioned, and hence that the repealing ordinances are valid; second, that, even if the rights in favor of the company above mentioned were not granted to it on a suspensive condition, they were clearly subject to a resolutory or dissolving condition, arising from the obligation to cross at Westwego, and to locate the terminus in the rear of the city at the point designated in the original ordinance, the contention being that the failure to do so within the period named in the ordinance authorized the city to treat the contract as dissolved and pass the repealing ordinances in question. The railroad company meets these propositions by denying that crossing at Westwego and the location of the terminus in the rear of the city at the point named in the original ordinance was made a condition suspending the operation of the grant of the rights above stated, and argues that even if it be conceded that the location of the terminus at the point originally pointed out created a condition, it was not a suspensive, but a resolutory, one. Although it is admitted that the happening of a resolutory condition dissolves the contract, yet such consequences, it is asserted, do not arise from the mere happening of the condition, and cannot be availed of by one of the contracting parties of his own will, since before the resolutory condition can be invoked, it must be established by a suit brought that such condition has arisen and that the effect of its existence has been to dissolve the contract -- that is, the claim is that, under the law of Louisiana, a dissolving or resolutory condition does not operate upon the contract proprio vigore, but requires the judgment or decree of a court to give it effect, and that, before finding a contract dissolved in consequence of a resolutory condition, the court has the power to obviate the effect of the condition by giving further time to perform the act from which the condition is claimed to have arisen if, in its judgment, the equities of the case so require.

The question which first arises is was the right of the railroad company to the property in front of the park and to the track on Claiborne Street, including the construction of a passenger depot on Claiborne near Canal, subject to suspensive conditions? The Louisiana Civil Code provides as follows:

Art. 2021. Conditional obligations are such as are made to depend on an uncertain event. If the obligation is not to take effect until the event happen, it is a suspensive condition; if the obligation takes effect immediately, but is liable to be defeated when the event happens, it is then a resolutory condition.

Art. 2022. Conditions, whether suspensive or resolutory, are either casual, potestative or mixed.

Art. 2024. The potestative condition is that which makes the execution of the agreement depend on an event which it is in the power of the one or the other of the contracting parties to bring about or to hinder.

In defining the suspensive condition, the Louisiana Code says:

Art. 2043. The obligation contracted on a suspensive condition is that which depends either on a future and uncertain event or on an event which has actually taken place, without its being yet known to the parties.

These provisions of the Louisiana Code are like those of the Code Napoleon on the same subject. Articles 1168, 1170, 1181.

In Cornell v. Hope Insurance Company, 3 Martin 223, 226, the Supreme Court of Louisiana said, in respect of conditions precedent:

They are recognized and provided for by our system of jurisprudence, and by every other that has in view the ordinary transactions of men. The obligation is conditional, when it depends on a future or uncertain event, says our Code. The event, then, must be shown to make the obligation binding on the party against whom it is presented, for until it takes place, he is not bound to perform what he has promised. Civ.Code, p. 272, Art. 68. There is an exception to this rule in regard to the dissolving condition. But in relation to all others, it is true, and it is a matter of no moment whether we say the obligation is suspended until the condition is performed or that the performance of the condition must precede the execution of the obligation. Civ.Code, p. 274, Art. 81, and 3; Toullier, Droit Civ. Francaise, liv. 3, tit. 3, c. 4, No. 472; Pothier, Traite des Ob., No. 202.

The effect of a suspensive condition, as its name necessarily implies, is to suspend the obligation until the condition is accomplished or considered as accomplished. Till then, nothing is due. There is only an expectation that what is undertaken will be due; pendente conditione nondum debetur, sed spes est debitum iri.

(Pothier, Traite des Ob. 218.)

The suspensive condition, under the Louisiana Code, is the equivalent of the condition precedent at common law.

The general principles in respect of conditions precedent are set forth sufficiently for the purposes of this case by Chief Justice Shaw in Mill Dam Foundry v. Hovey, 21 Pick. 440, cited by appellant. Where the undertaking on one side is in terms a condition to the stipulation on the other -- that is, where the contract provides for the performance of some act or the happening of some event, and the obligations of the contract are made to depend on such performance or happening -- the conditions are conditions precedent. The reason and sense of the contemplated transaction, as it must have been understood by the parties and is to be collected from the whole contract, determine whether this is so or not; or it may be determined from the nature of the acts to be done, and the order in which they must necessarily precede and follow each other in the progress of performance. But when the act of one is not necessary to the act of the other, though it would be convenient, useful, or beneficial, yet as the want of it does not prevent performance, and the loss and inconvenience can be compensated in damages, performance of the one is not a condition precedent to performance by the other. The nonperformance on one side must go to the entire substance of the contract and to the whole consideration, so that it may safely be inferred as the intent and just construction of the contract that, if the act to be performed on the one side is not done, there is no consideration for the stipulations on the other side. See Cutter v. Powell, 2 Smith’s Leading Cases 17, and notes.

In examining the contract embodied in the ordinances, it is essential to have in mind the particular territory to which the ordinances relate, and we therefore insert an outline sketch extracted from a map of the City of New Orleans contained in the record.

Click for larger view

The original Ordinance 6695 contemplated that the proposed railroad would be built upon the west bank of the Mississippi River, New Orleans being upon the east bank, and that the road would cross that river to the east bank some hundred or more miles above New Orleans, coming to that city on the east bank, and entering in the rear of the city; that is, in that portion of the city lying a considerable distance back from the river. The purpose of the ordinance was clearly indicated by its title, which declared that it was intended to grant

to the New Orleans Pacific Railway Company or its assigns the right to establish its terminus within the city limits and to construct, maintain, and operate a railroad to and from such a terminus, with one extension for passenger purposes and another for freight purposes, into and through certain streets and places in the City of New Orleans.

The preamble to the ordinance recited the desire of the railroad to enter the city at about a certain point and to construct its terminus between the New Canal and Melpomene Street, providing the city would grant the right to extend its tracks

from such terminus into and through Claiborne Street to Canal Street for passenger purposes, and shall also grant the right to extend its tracks from such terminus north of Claiborne Canal by the most convenient and practicable route through the public streets to the riverfront for freight purposes.

The first section of the ordinance grants the railroad the right to enter the city to the point stated in the preamble, and to construct and maintain at the terminus necessary depots, shops, yards, warehouses, and other structures, convenient and useful for the transaction of its business. The point at which the right to construct this terminus was given by the ordinance is embraced within the triangular space in the rear of the city as marked on the sketch above given. The second section of the ordinance empowered the company to

locate, construct, and maintain an extension of its railroad with all necessary tracks, switches, turnouts, sidings, and structures of every kind, convenient and useful and appurtenant to said railroad, . . . into and through Claiborne Street to Canal Street, with the right to construct a passenger depot at or near the intersection of Claiborne Street with Canal Street.

A glance at the sketch will make clear the fact that Claiborne Street thus designated was in the rear of the city, quite near the point where the railroad had contracted to establish its terminus, depots, and structures, and that the route thus mapped out, in the very nature of things and in the language of the ordinance, was a mere right granted to the railroad to extend its tracks from the terminus, which the railroad was under the obligation to build, to and along the designated route to the point indicated on Claiborne and Canal. The third section of the ordinance obligated the city to designate a street from the point where the terminus was selected, and where the company was to establish itself, through which it could build an extension for the purposes of its freight business to the riverfront. On the face of this ordinance, it is apparent that the rights thus given the railroad to extend along Claiborne to Canal for passenger purposes, and along a street to be designated to the river for freight purposes, were mere accessories to the obligation imposed by the ordinance upon the railroad to build its depots, structures, warehouses, etc. at the point indicated, and that the incidental rights of extension from the terminus to the other points could have no existence if no terminus was established from which the extensions could be made. Reading the provisions of the ordinance with the preamble and the title, it cannot reasonably be controverted that the rights of extension were granted upon the suspensive condition that the railroad should terminate at the point indicated, and there build the shops and depots from which the right to extend its tracks was conceded. And this is, if possible, made more certain by considering the fourth section, which in express words provides that the privileges of extension granted were dependent upon the establishment of the terminus at the point indicated, and would cease to exist if, after the establishment of the terminus, the railroad company should abandon it. The language of the fourth section is as follows:

That the right of way, franchises and privileges herein granted to the New Orleans Pacific Railway Company are granted only on condition and in consideration that the said grantees shall permanently establish the terminus of said road within the city limits, and maintain said terminus during the existence of the charter of said company, for which period said right of way and privileges shall last, and should the said company at any time hereafter abandon its said road on the east side of the Mississippi River and its terminus within the city limits, then this grant shall cease and terminate, and be without force or effect from the date of such abandonment; . . . and it is still made a condition of this grant that said railway company shall complete its road from the crossing of the Mississippi River at or near Baton Rouge, to its terminus in this city within two years from the promulgation of this ordinance.

The words "the terminus of said road" and "said terminus," used in this fourth section, clearly refer to the terminus fixed by the ordinance, and where the railroad agreed to establish its shops, roundhouses, etc. It follows, then, that the ordinance granted a right to the railroad company to enter the city to reach a designated point, and imposed upon the company the obligation to erect its depots, shops, warehouses, etc. at that point; that in consideration of this obligation assumed by the company, to be performed within two years, a right was given to it to extend from the depot so designated a passenger track to a given point, and a freight track to another point; that the two rights of extension were the mere resultants of the principal obligation imposed upon the company, in consideration of which the rights to the extensions were conceded, and that the ordinance, in addition, in order to remove all question that the incidental rights of extension were dependent upon the principal obligation to establish a terminus at the point named, provided that, even after the fixed terminus was established, if it were abandoned, the company should cease to enjoy the right of extension along Claiborne to Canal which the original ordinance granted. Thus, there were plainly created first a suspensive, and, after the work was done, a resolutory, condition.

Nor is there anything in Ordinance 6732, adopted on December 3, 1880, which changed the rights of the parties. That ordinance reiterated and reasserted the nature of the privilege covered by the concession made by the previous ordinance, and designated Thalia Street, which is marked on the sketch, as the one through which the railroad company should build the track for freight purposes in compliance with the obligations assumed by it under the first ordinance.

This brings us to the consideration of the Ordinance numbered 6938, passed in March, 1881. The purpose of that ordinance, and the change in condition which rendered its adoption necessary, is stated with great clearness in the preamble thereof:

Whereas, the New Orleans Texas Pacific Railway Company has purchased the road heretofore constructed under the charter of the New Orleans, Mobile and Texas Railway Company on the west bank of the Mississippi River, beyond Bayou Goula and Westwego, and with a view to maintaining and operating the said road in connection with and as a part of its through line to and from its terminus in New Orleans, designated in section 1 of Ordinance No. 6695, Administration Series, passed on the 9th day of November, 1880, such line to cross the Mississippi River from a point at or near Westwego to a point on the east bank of the river in front of the Upper City Park, late Fouche property; thence to extend by the best and most practicable route to the designated terminus between the New Canal, Claiborne Canal and Carrollton Avenue;

Now therefore, for the purpose of securing to the City of New Orleans the advantages that will result from locating and permanently maintaining the terminus of the New Orleans Pacific Railway within the limits of the City of New Orleans, as herein above recited.

The ordinance then proceeds in section 1 to authorize the railroad to maintain wharves, inclines, etc., on the riverfront at the Upper City Park from such point on the riverfront "as its crossings" from Westwego shall be located at, and from this point to build a track along the western border of said City Park, and from thence, by the best and most practicable route, to "its designated terminus east of Carrollton Avenue." The second section grants to the railroad land in front of the City Park belonging to the city, on the borders of the river, for the purpose of establishing the crossing of the road as recited in the first section. The third section gives the company the right to lay certain tracks down the riverfront -- in other words, to connect the newly authorized tracks with those existing at or near Thalia Street. The fourth section granted the company the right to make certain structures at the foot of Thalia Street, the point to which the extended freight track referred to in the previous ordinances was to terminate and at which, as we shall hereafter see, the company actually made its crossing from the west bank, and where it now maintains its terminal facilities. The rights covered by this section are those to which the third assignment of error relates, and are not involved in the inquiry now being pursued. The fifth section authorized the mayor of the city to enter into a contract of lease with the railroad for the piece of ground in front of the City Park referred to in the ordinance, and the sixth section declared that the grant referred to was made upon the condition of the establishment of "its terminus within the city limits."

Referring to the sketch, and considering the record and the terms of this ordinance, the situation was this: the railroad company having obtained a concession from the City of a right to enter the city on the east bank in a particular direction and to build its terminus at a point designated, and having received authority, if it did the foregoing things, to make certain extensions, found it necessary, in consequence of its change of route, to obtain a further consent from the city. The change of line was this: instead of building its road on the west bank to a point one hundred or more miles above New Orleans, and there crossing the river and coming thence into the city in the rear thereof, as designated in the original ordinance, the company having bought a road on the west bank, the terminus of which was Westwego, about opposite the City Park, asked and was allowed that it be exempted from reaching its designated terminus by entering the city in the rear thereof, and that it be granted the right to establish a crossing from Westwego to the land in front of the City Park, so that from the land thus conceded the railroad might reach the point where it had contracted that it would make its permanent establishment. The argument that this ordinance gave the railroad the power to establish a new or different terminus from that referred to in the original ordinance, because the place where the terminus was to be is referred to indefinitely in the ordinance as between the New Canal, Claiborne Canal, and Carrollton Avenue, is untenable. Indeed, the ordinance contains not a word relieving the railroad from the obligation to establish and maintain the terminus indicated in the previous ordinances. On the contrary, the preamble declares that the new route was granted to the railroad to enable it to reach "the designated terminus between the Claiborne Canal and Carrollton Avenue," which is the situation originally described. It further recites that it is passed for the purpose of enabling the railroad to locate and permanently maintain "the terminus . . . within the limits of the City of New Orleans, as hereinabove recited."

In stating the purpose of the grant of the new right of way from the point of landing at the City Park opposite Westwego along the line of the park over the route indicated, the first section in the ordinance declares it to be given to afford the railroad the "most practicable route to its designated terminus east of Carrollton Avenue." True it is that, in section 6, in referring to the previous obligations of the company to establish its terminus, the words used are that the grantee shall permanently establish "its terminus within the city limits." But manifestly the words "its terminus," as used there, refer to its terminus as defined not only in the ordinance in question, but in the prior ordinances by which the grant was made.

It being shown by the record that the terminus from which the extension along Claiborne Street to Canal was to be made was never constructed, and that the crossing from Westwego to the land in front of the park was also never established, but, on the contrary, that the company extended its road down the river to Gouldsboro, where it made its main crossing, it needs no reasoning to demonstrate that the right to the extension down Claiborne Street and the right to the use of the batture in front of the City Park no longer obtains. The claim of the corporation really amounts to this: that, having had certain accessory rights conferred upon it in the event it discharged particular obligations, it can disregard the obligations, escape the burdens resulting therefrom, and yet hold onto all the rights which depended for their existence upon the performance of the obligations which the company has disregarded. The ordinances cannot be properly construed as authorizing an extended track to be built when the point from which the extension was to be made has never come into existence. They cannot be read as dedicating to the use of the railroad, under the terms of the ordinances, the land in front of the City Park when such use was accorded to the railroad solely to enable it to accomplish a purpose which it has declined to effectuate by carrying its main crossing to another and a far distant point. In reaching these conclusions, we are not unmindful of the argument predicated on the supposed effect of Ordinance numbered 7946, Administration Series. The title of this ordinance indicates its purpose. It is as follows:

An ordinance supplementary to Ordinances 6695, 6732 and 6938, Administration Series, granting certain rights to the New Orleans Pacific Railway Company and its assigns and providing for the selection of a site for the Claiborne Market.

The preamble of this ordinance recites the two ordinances conferring the right to build the extension on Claiborne Street, and states this right to be one of maintaining "an extension of its railroad through Claiborne Street," and, after reciting the fact that the railroad had crossed at Thalia Street, and established its terminus there, declares that the railroad is preparing also to cross from Westwego to the City Park, and thence to Claiborne Street. The ordinance then proceeds to provide for arrangements for removing the market from Claiborne Street in order to allow the extension on that street to be built. The argument which is based upon this ordinance is this: as at the time this ordinance was passed, the railroad had crossed from Gouldsboro to Thalia Street, and established its terminus there, as is recited in the ordinance, hence it is asserted the ordinance recognizes the fact that the railroad was entitled to the extension on Claiborne Street despite the fact that it had not established its terminus as required by the ordinances from which the right to the extension on Claiborne Street arose. But this overlooks the fact that, in the very sentence upon which reliance is placed, reference is made to the ordinance giving the corporation the right to build from the City Park to the "designated" terminus. One portion of the sentence cannot be separated from the other. The most that can be said of the argument advanced, from the text of this ordinance is that it seeks, by implication and remote deduction, to absolve the company from the obligation imposed upon it when the accessory right of extension down Claiborne Street was granted, and thus to enable the company to retain the incidental right when it had relieved itself of the obligation upon which the right rested. It is not to be doubted that the rule is that contracts are not to be so violently construed as to destroy rights in consequence of suspensive conditions, but it is also equally obvious that they are not to be so interpreted as to relieve one of the parties to a contract from the obligations resulting therefrom, and thereby destroy the suspensive condition plainly written therein. Corporations do not take public grants and privileges by implication, and, where express and positive obligations are imposed in making a grant, these obligations cannot, without violating an elementary canon of interpretation, be frittered away in consequence of loose implications made by way of reference in subsequent municipal ordinances. The formal contract of lease executed by the City of the batture in front of the City Park took its origin from, and was sanctioned by, the ordinance granting the right to cross the river from Westwego to the land covered by the lease in order to enable the corporation to carry its tracks from thence to the terminus which it contracted to establish under the original ordinance. It follows, therefore, that the suspensive condition by which the rights of the company under the original ordinance were held in abeyance operates also upon the lease in question.

The mere payment of rent did not change the nature of the suspensive condition or work an estoppel. The right to use the property was limited to the destination stated in the contract. (La.Civil Code 2711.) But this right to use was covered by the suspensive condition, and the contract of lease only evidenced the agreement to use the property for the purposes stated, when the suspensive condition ceased to operate by the discharge of the obligations on which it rested -- that is, the establishment of the terminus at Westwego, the crossing therefrom, and the location of the shops, etc. at the place fixed in the original ordinance. The case is aptly illustrated by Roy De L’Ecluse et Autres, Cassation, Jan. 4, 1858; Journal du Palais, 1858, 452. There, a promise to sell on a suspensive condition was entered into, but the prospective buyer was allowed to take possession pending the condition. The claim was that this fact destroyed the suspensive nature of the condition. But the court held to the contrary, considering that the fact of possession was subject to the suspensive condition, as it was upon such condition that the contract had been entered into. Laurent, vol. 17, No. 33, p. 53.

Concluding that the rights on Claiborne Street and to the batture in front of the park were subject to suspensive conditions, it is manifest from the facts which we have stated that the railroad company was not entitled to possess or enjoy the same. This renders it unnecessary to consider the resolutory condition, and leaves only for consideration the subject matter of the third assignment of errors. This asserts that the rights conveyed by the fourth section of Ordinance No. 6938, to wharfage, etc. at Thalia Street, are not validly held by the corporation. This is based not on the claim of a condition either suspensive or resolutory, but because it is asserted that the grant was ultra vires. The repealing ordinances, however, do not embrace this grant, and, except for the argument at bar, it does not appear that the city has repudiated the grant. Since this case was argued, a suggestion has been made that this grant has been, in effect, ratified by a provision of a new Constitution said to have been recently adopted by the State of Louisiana. As we must reverse the decree rendered for the reasons above stated, we deem that the ends of justice will best be subserved by not passing on this assignment, thus leaving the rights of both parties in relation thereto open for further consideration in the court below.

Decree reversed, and cause remanded for further proceedings consistent with this opinion.

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Chicago: Fuller, "Fuller, J., Lead Opinion," New Orleans v. Texas & Pacific Ry. Co., 171 U.S. 312 (1898) in 171 U.S. 312 171 U.S. 332–171 U.S. 344. Original Sources, accessed April 26, 2018, http://www.originalsources.com/Document.aspx?DocID=CNZXJIXTZXXT9QS.

MLA: Fuller. "Fuller, J., Lead Opinion." New Orleans v. Texas & Pacific Ry. Co., 171 U.S. 312 (1898), in 171 U.S. 312, pp. 171 U.S. 332–171 U.S. 344. Original Sources. 26 Apr. 2018. www.originalsources.com/Document.aspx?DocID=CNZXJIXTZXXT9QS.

Harvard: Fuller, 'Fuller, J., Lead Opinion' in New Orleans v. Texas & Pacific Ry. Co., 171 U.S. 312 (1898). cited in 1898, 171 U.S. 312, pp.171 U.S. 332–171 U.S. 344. Original Sources, retrieved 26 April 2018, from http://www.originalsources.com/Document.aspx?DocID=CNZXJIXTZXXT9QS.