proceedings are unauthorized by any of the provisions of the act of assembly.

The order of the court below is therefore reversed and set aside, and the proceedings upon the petition for an appeal from the decision of the commissioners of registration are quashed.

MITCHELL, C. J., dissents.

(218 Pa. 24)

CHESTER CITY v. UNION RY. CO. OF CHESTER et al.

(Supreme Court of Pennsylvania. April 29, 1907.)

1. STREET RAILROADS-RIGHT TO USE STREET -CONDITION OF GRANT.

A city gave by ordinance a street railway company the right to use a particular street, reserving the right to grant to any other railway company rights in the same street. The mayor required the railway company in consideration of the ordinance, to agree to arbitrate any dispute with another company to which the right to the street might be granted. Held, the company could not allege that the agreement for arbitration, not being a part of the ordinance, was not binding on it. 2. SAME-FORFEITURE OF FRANCHISE.

Where an ordinance giving a street railway company the right to use a street contained no clause of forfeiture, an agreement of the company with the mayor, at the time of signing the ordinance, to arbitrate any difficulty with another street railway company seeking to use the street, did not give the city the right to forfeit the franchise because its arbitrator was unable to agree with the second arbitrator in the choice of a third.

3. SAME-USE OF STREET.

Where a city gave a railway company by ordinance permission to use a street in question, with a provision therein reserving the right to another company to use the same street, the city cannot maintain a bill in equity to compel the first company to permit the second company to use the street; the party aggrieved in such case being the second company.

Appeal from Court of Common Pleas, Delaware County.

Bill by the city of Chester against the Union Railway Company of Chester, Pa., and the Chester Traction Company. Decree for plaintiff, and defendants appeal. Reversed.

Argued before MITCHELL, C. J., and FELL, MESTREZAT, POTTER, and ELKIN, JJ.

W. B. Broomall, for appellants. A. A. Cochran, for appellee.

MITCHELL, C. J. The city of Chester, in 1893, by ordinance granted to the Union Railway Company, appellant, the right to construct and operate its railway on certain streets named. The ordinance contained conditions, none of which have any relevancy to this controversy, except the following: "The councils of the city of Chester reserve the right to grant permission to any other railroad company to run over the tracks of the said Union Railway Company on Edgmont avenue from Fifteenth street to the city line, upon the company to whom

this right shall be granted making an amicable arrangement with the Union Railway Company for the running of cars over its tracks between the points named." When this ordinance was presented to the mayor, he declined to approve and sign it until the appellant had agreed "that if at any time permission shall be granted by the said city of Chester to any other railway company, or if such permission shall be asked of the said city by any other railway company to run over the tracks of the party of the first part on * * * Edgmont avenue, from Fifteenth street to the city line, * and the said party of the first part and the said other railway company shall fail to agree upon the terms upon which the said other railway company shall be allowed to use the tracks of the party of the first part, then and in such case the terms and conditions of such use shall be determined in the following manner, to wit: The party of the first part shall appoint one person, and the other railway company asking the said permission shall appoint another person, and these two persons so appointed shall select a third person, and the majority of the said three persons so selected shall prescribe the terms and conditions upon which the said other railway company shall occupy and use the said tracks of the said party of the first part, and such terms shall be obligatory upon the said party of the first part; and in case either party refuse or neglect within a reasonable time to appoint, the other party shall have the right to appoint in its place." A formal agreement in these terms was exe cuted by the appellant company and the mayor and city clerk, and on the same day the ordinance was signed by the mayor and became effective. By various ordinances between 1894 and 1902, the city of Chester granted to the Media, Middletown, etc., Railway Company the right to lay tracks on certain streets, including finally Edgmont avenue, with the right to use appellant's tracks thereon. This was the origin of the present controversy.

The appellant claimed that the agreement for arbitration, not being part of the ordinance, was not binding on it, and that, even if it were, the agreement of submission was revocable. Neither claim can be sustained. Whether the mayor of the city had any authority to impose conditions of consent additional to those called for in the ordinance itself is a question that does not arise. The appellant agreed to them. The city was not under any obligation to grant the use of its streets at all, and did so only by virtue of the ordinance. The ordinance became valid by the mayor's approval, and his approval was in consideration of the agreement for arbitration. That agreement was, therefore. part of the consideration for the city's consent, and binding on the appellant.

Nor can the appellant's claim of the right to revoke the agreement of arbitration be

sustained. While such agreements are in general unfortunately under the ancient precedents held revocable, yet, where they are part of the condition of the municipal consent, the corporation takes the consent cum onere, and cannot thereafter revoke or repudiate any part of the condition. Plymouth Township v. Chestnut Hill, etc., Ry. Co., 168 Pa. 181, 32 Atl. 19. But, on the other hand, the ordinance of March, 1904, was far beyond the city's authority. There was no clause of forfeiture in the original ordinance of consent, and even if the agreement of arbitration could possibly be considered as containing such implied power, there was no breach by the appellant. Even express powers of forfeiture must be strictly followed. What the agreement stipulated for was the appointment of an arbitrator by each party, and on refusal by either the right of the other to appoint for both. The appellant did not refuse. On the contrary, it appointed an arbitrator who met the arbitrator appointed by the Media & Middletown Company, but failed to come to an agreement with him as to the third, and thereupon the Media & Middletown arbitrator assumed to appoint another, and an award was made by the tribunal as thus constituted. This action was entirely unauthorized, and the award a nullity. The appellant appointed an arbitrator, and thus prima facie complied with its agreement. If appellant or its arbitrator was acting in bad faith, and his failure to agree on a third arbitrator was a mere device to escape substantial compliance with the agreement, that fact should have been judicially established by a bill or other proceeding. It could not be assumed by the adverse party and action taken on that assumption. The award was a nullity, and the ordinance of March 22, 1904, based on it, was void for want of authority to declare a forfeiture.

But another fatal objection to the present proceeding is that the city of Chester on its own showing is not a party aggrieved. In consenting to the occupation of its streets by the appellant, it reserved the right "to grant permission to any other railroad company to run over the tracks of the said Union Railroad Company on Edgmont Avenue," etc. Under that reservation it has given permission to the Media & Middletown Railway, and, if such permission has been regularly and properly granted, the franchise to that company is complete and valid and enforceable, without reference to appellant's consent or action. The right of the city to grant permission to the second company was not in any way dependent on the "amicable arrangement" between the two companies. Such a construction would make the validity of the city's permission to the second company dependent on the appellant's willingness to come to such amicable arrangement, and thus put it in appellant's power to defeat the city's reserved right. The agree

ment for arbitration by the two companies, therefore, was no part of the franchise which the city reserved the right to grant. It was only a mode provided for adjusting conflicting rights in the future, a mode to be pursued in the first instance because it was so agreed, but not exclusive of a mode to be ascertained and enforced by a court of equity, if, as heretofore said, the action of appellant or its arbitrator was in bad faith for the real purpose of defeating an apparent compliance. But the party aggrieved in such case, and therefore the party to ask for remedy, is the grantee of the second franchise which is thus interfered with. The city has exercised its reserved right and has no further legal interest in the matter.

The Media & Middletown railway is not a party to this action, and its rights cannot be adjudicated in it.

The decree is reversed, and the bill dismissed; each party to pay half the costs.

(217 Pa. 599)

KAUFMAN v. PITTSBURG & C. S. R. CO. et al. (Supreme Court of Pennsylvania. April 22, 1907.)

1. RAILROADS-POWER TO LEASE.

Where a railroad company is incorporated under the general railroad act of April 4, 1868 (P. L. 62), and acquires additional powers under the special act of February 21, 1872 (P. L. 142), enabling it to own and operate coal mines, and by special act of April 5, 1873 (P. L. 546), to construct and operate inclined planes, it may lease its railroad to a railway company or ganized under special act of May 25, 1871 (P. L. 1170), with general powers.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 41, Railroads, § 404.] 2. SAME.

Where a railroad company has under its charter power to construct a railroad for another company to operate, and also to operate a railroad for its own use, it can lease the railroad which it operates for its own use for a term of years.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 41, Railroads, § 404.] 3. SAME-CONDITIONS.

The general railroad acts April 23, 1861 (P. L. 410), and February 17, 1870 (P. L. 31), requiring the railroads of a lessor and lessee to be connected, do not apply to act May 25, 1871 (P. L. 1170), conferring on certain corporations chartered by the Legislature express power to merge, consolidate, or unite with any other company.

Bill by Sibilla Kaufman against the Pittsburg & Castle Shannon Railroad Company and others. From a decree dismissing the bill, plaintiff appeals. Affirmed.

The following is the opinion of Macfarlane, J., in the court below:

"(1) The Pittsburg & Castle Shannon Railroad Company, hereinafter called the 'railroad company,' is a corporation organized under the general railroad act of April 4, 1868 (P. L. 62), and having by the special act of February 21, 1872 (P. L. 142), the right to own real estate and mine coal therefrom,

1

and by the special act of April 5, 1873 (P. L. 546), the right to construct an incline plane. The plaintiff was in August, 1905, and still is the owner of 50 shares of stock of the said company.

"(2) The Pittsburg Railways Company, hereinafter referred to as the 'railways company,' was incorporated by a special act of assembly May 25, 1871 (P. L. 1170), under the name of the 'Surety Contract Company,' subsequently changed to the present name, and its principal business is that of operating traction lines and passenger railways in the county of Allegheny.

"(3) The Pittsburg Coal Company, herein ́after referred to as the 'coal company,' is a corporation under the laws of the state of New Jersey, having its principal office in 'the city of Pittsburg, Allegheny county, and is engaged extensively in the mining and selling of coal in the said and adjacent counties; and it is the owner of 7,756 shares of the stock of the Pittsburg & Castle Shannon Railroad Company, out of a total of 9,628 shares.

"(4) The board of directors of the railroad company, 10 in number, is with one exception composed of officers and directors of the coal company, and the railroad company has been for several years controlled and managed by the coal company.

"(5) The executive officers of the railroad company, its superintendent, engineer, and accounting officers, were officers in a similar capacity of the coal company, which charged the railroad company for their services a reasonable amount, and the operating expenses of the railroad company were, in this respect, much less than they would have been if independently officered.

"(6) The railroad operated by the railroad company extends from Arlington Station, Scott township, Allegheny county, to a point | on Bailey avenue in the Thirty-Second Ward in the city of Pittsburg, and then by an incline plane with the road running from Bailey avenue to Carson street in the city of Pittsburg. It also owns and operates coal mines in Scott township. Prior to January 1, 1893, the railroad ran by a horseshoe curve track north of Washington avenue, in the Thirty-Second Ward, in the city of Pittsburg, via a coal tunnel and coal incline to Carson street in the Thirtieth Ward, Pittsburg, where there was and is now located a coalyard of the railroad company. About the last-mentioned date the company constructed a shorter and more direct line diverging from the former route at a point near Washington avenue, in Montooth borough, and by incline planes reaching Carson street at a point adjoining the coalyard. Upon the completion of the new short line the horseshoe curve track, coal tunnel, etc., were used solely for the transportation of coal from the mines of the company to the yard, and were not used for the transportation of freight and passengers, except on several

occasions prior to the year 1900 passengers were so transported on account of accidents to the incline planes on the shorter route, which from January, 1893, was used exclusively for passengers and freight and became the main line of the railroad. The horseshoe curve portions of the track were used in connection with the coalyard as a part of the terminal facilities of the railroad company in its mining and shipping of coal.

"(7) On July 13, 1904, the railroad company leased to the coal company, at $30 a month, for the term of three years from July 1, 1904, a lot which had been used as a dump for refuse, and the coal company erected thereon a laboratory for its use and the use of the railroad company.

"(8) For some time prior to any negotiations for the lease in this case the coal company had erected telephone wires, at its expense, along the right of way of the railroad, and this line was used by the coal company and the railroad company without charge to the latter.

"(9) The coal company has, and has had, no agreement or understanding with the railroad company for the use of the horseshoe curve portion of the tracks, and has not, at any time, used these tracks or any part thereof, and it does not own, control, or operate in any way any mines or other property on or near the line of the railroad company.

"(10) The railroad company was in August, 1905, and had been for several years previous, insolvent. Its coal property was valuable, and was capable of being operated with profit, but the railroad had for a long time been operated at a loss of more than $3,000, a month, which was almost an offset to the earnings of the coal business of the company.

"(11) During the months of July and August, 1905, the railroad company began negotiations with one Baxmyer for the lease of the railroad, and a meeting of the stockholders of the railroad company was called on August 16, 1905, for the purpose of considering a proposition for the leasing or selling of certain of its property, and there was then presented to the stockholders a resolution authorizing the execution of a lease, and it was then stated that the proposed lessee was the railways company, and that the proposed lease was in pursuance of a resolution of the board of directors, made on July 21, 1905. Objections were made by some of the stockholders, including the plaintiff, and a verbal offer was made to take a lease at the rent of $20,000 per annum. The meeting adjourned to August 17th, at which time William Kaufman, acting on behalf of a principal whose name he refused to disclose, but with whom the plaintiff had no privity, but who was, some time after the execution of the lease, disclosed to be Robert C. Hall, a broker and promoter, of the city of Pittsburg, offered in writing that he, Kaufman, would, on or before August 24th, bid at

least $17,500 for the lease in the same form as that submitted, and as evidence of his good faith he deposited three bonds of $1,000 each. The meeting was adjourned to August 24th, at which time Kaufman did bid $17,500 per annum for the lease for a term of 99 years, and for a further term of 99 years at $20,000 per annum. This bid was in writing. The said bid was not submitted for the consideration of the stockholders, for the reason that the identity of the principal was not disclosed, although demanded, and it appeared on the bid that there was no corporation competent to take the lease; and it was known by the directors and by the plaintiff and most of the stockholders present that the railways company was ready and willing to execute the lease, and that it was a strong corporation, of a good credit, and capable of carrying out the terms of the lease.

"(12) The action of the coal company as a majority stockholder, and of the officers of the railroad company, in voting for the lease and in subsequently executing it, was prudent and in good judgment and was advantageous to all of the stockholders, and the refusal of the Kaufman bid was in good faith and in the exercise of good judgment. It developed upon the trial of this case that Mr. Hall had no connection with or control over any corporation capable of taking a lease, and his purpose in desiring to acquire the lease was simply as a speculation.

"(13) At the last-mentioned meeting ar election was had upon the proposed lease. The coal company cast its stock in favor of the resolution, and out of a total of 9,628 shares 8,153 shares were cast in favor to 66 against the resolution, the affirmative vote being composed of the stock of the coal company and its officers, directors, and employés, with the exception of 350 shares, and of the 66 shares, 50 were owned by the plaintiff and 16 by E. F. Hays.

"(14) Neither the coal company nor any of its officers nor any of its subsidiary companies or their officers have received or will receive any pecuniary or other benefit or advantage in consideration of voting its stock in favor of the lease, except such benefits and advantages as accrue equally to all of the stockholders of the railroad company.

"(15) The lease dated August 25, 1905, was executed for the railroad company by its president on the morning of August 25th, and by its secretary in the evening of that day, and was executed by the railways company on August 26th; and as early as 12:25 p. m. August 25th, notice was served upon the railways company by plaintiff, requiring the defendant not to execute the lease or to pay out any money on account thereof. This bill was filed on August 30th and served the same day. The railways company entered into possession, and since that time has been operating the portion of the railroad leased to it.

"(16) On or before September 1, 1905, the railroad of the defendant railroad company

did not connect with nor intersect any other railroad nor physically with the road or railway of any street railway company, and the railways company did not own, control, lease, or operate a railroad physically connected with that of the railroad company. The railways company's tracks are situated, with reference to the railroad company's tracks, at a number of points, as follows: At Carson street within 60 feet, at which point passengers have been for several years transferred between the respective companies under the terms in an agreement; on Bailey avenue, within 4 or 5 feet; near Arlington avenue the railways' tracks cross the railroad above grade; the Washington avenue line parallels the railroad for more than a quarter of a mile, at a distance from 20 to 60 feet; at another point the lines are 150 feet apart, and the intervening land is leased by the railways company; from Arlington to Castle Shannon the lines parallel for about half a mile, at a distance from 25 to 200 feet; and in Castle Shannon a spur of the railroad extends to within 10 feet of the railways' tracks. At all but one of these points the transshipment of passengers from one road to the other is easy and convenient.

"Conclusions of Law.

"(1) There being no fraud or undue advantage, the lease is not void on that ground. "(2) The lessor has not violated any duty to the commonweath.

"(3) The lessee has the right to take the lease.

(4) The lessor has the right to make the lease.

"(5) It is not necessary under the charter of the lessee that the lines be mechanically connected, and it is sufficient that they are in proximity so as to afford convenient transfer of passengers.

"(6) The bill should be dismissed, at the costs of the plaintiff."

Argued before MITCHELL, C. J., and BROWN, ELKIN, and STEWART, JJ.

Wm. Kaufman and E. F. Hays, for appellant. David A. Reed and Charles M. Johnston, for appellees.

ELKIN, J. The answer to the third proposition contained in appellant's statement of the question involved will control all the material questions raised by this appeal. Does the charter of the defendant railway company authorize it to take the lease, the execution of which is sought to be enjoined by appellant, and, if so, will the lease be held valid for that reason, even though the charter of the railroad company did not in express terms confer the power to enter into such a contract?

The defendant railroad company is a corporation organized under the general railroad act of April 4, 1868 (P. L. 62); and by the special act of February 21, 1872 (P.