(153 N.E.)

public interest, taking into consideration the fixed charges of such corporation, the amount and character of its contingent liabilities and other pertinent conditions; but that in no event shall the aggregate amount of all bonds, notes, or other evidences of indebted ness of which it is the maker or which it has assumed, exceed twice the amount of the capital stock. On July 27, 1917, by vote of directors of the Albany and with the approval of the department, $1,000,000 in bonds were issued, bringing the total now outstanding up to $26,000,000.

It is provided in the lease:

That "if the board of directors of the lessor, by a majority vote, shall consent to or approve of any or all of such permanent additions and improvements or the doing of such other things, including the acquisition of real estate as aforesaid, or if, after a hearing, the Board of Railroad Commissioners of Massachusetts approve an issue of bonds therefor, fixing the amount

and purposes for which said bonds may be issued, the lessor shall, at the request of said lessee and to the extent that it lawfully may, issue its bonds at such lawful rate of interest as may be determined by the lessee for such sums as may be necessary or specified by said Railroad Commissioners, to meet the cost and expense thereof, and shall take such lawful corporate action to that end as may be requested by said lessee"; and also that "the lessee, its successors and assigns, may, at its own expense and charge, use the name of the lessor in making and prosecuting petitions to the Board of Railroad Commissioners or other boards of governmental or judicial authority, to secure the determinations aforesaid, from time to time, and the lessor hereby appoints said lessee its agent and attorney during the duration of this lease for the purpose aforesaid, but the lessor reserves the right in all cases to be heard before said board or other authority in opposition to

granting in whole or in part the prayer of such petition."

It is further provided in the lease that if the Board of Railroad Commissioners should "be deprived of its present power in reference to the issue of bonds by railroad companies and the same or similar power shall not be conferred by law on some other governmental or judicial authority, then no such bonds for improvement shall be issued wit out the approval of the Governor of the commonwealth unless the board of directors of the lessor, by a majority vote, consents thereto."

the future, and indicates doubt instead of certainty. The meaning of this word in a contract depends upon the connection in which it is used. Greene v. Robinson, 41 Conn. 470. Payment in lawful money means in money lawful at the time of payment. O'Neil v. McKewn, 1 S. C. 147. It is probable that if the parties were intending to limit bond issues under the lease to the amount of outstanding capital stock of the Albany at the time of the lease, they would have stated the amount or made that meaning clear by some definite expression. There is nothing in the language used in other parts of the lease to show an intention to confine the future issues to the amount authorized when the lease was made. The parties in providing for an issue of bonds by the Albany for permanent additions or improvements not financed by the Central used the expression "required to be made, by force of any law now or hereafter existing, or by any court, tribunal, board of commissioners or public officers having lawful authority in the premises." The expression in this clause "by force of any law now or hereafter existing" throws little light on the construction of the clause under consideration. In both cases the parties are referring to the law as it may be in the future-in one case to what the law may thereafter authorize and in the other to what the law may thereafter require. The clause, "the lessor shall

* * * and to

the extent it lawfully may," applies to an issue based upon additions and improvements assented to by a majority of the directors as well as to an issue based upon an approval of the commissioners without such assent.

It would be a strained construction of the

lease to say that the parties intended that the directors of the Albany might vote to issue bonds for permanent additions and improvements made by the Central in accordance with changing provisions of law, but that the department could not on petition of the Central approve an issue in excess of the amount that was legally possible at the date of the lease.

When St. 1913, c. 784, was enacted, increas ing the possible bond issue to twice the amount of the outstanding capital stock, the outstanding bonds of the Albany had reached the limit authorized by the law as it existed when the lease was made.

[2-4] In 1917 an additional bond issue of $1,000,000 was authorized by the directors of the Albany at the request of the Central with the approval of the Public Service Commis sion. The interpretation which the parties have placed upon doubtful or ambiguous words in a contract is of great weight in de

The question whether the department had authority to approve the issue of any bond requires us to determine what the parties reasonably intended by the words "to the extent that it lawfully may." It is to be noted that this expression is a part of a sentence. which relates to the future, and naturally re-termining their true meaning. New York fers to what may lawfully be done when the time for action arrives. The parties must have been considering bond issues which might be made at any time in 99 years. The word "may" itself naturally looks to

Central Railroad v. Stoneman, 233 Mass. 258, 123 N. E. 679. Considering the purpose of the lease, the reasons which would justify the issuance of bonds, and the possibility that the amount which might lawfully be issued

tions and improvements and are not proper subjects for capitalization. The department in referring to this schedule stated that:

"An examination of the accounts and an in

would vary from time to time, that issues legal when the lease was made might become illegal during the period of the lease, and that provisions as to the control of bond issues by public authority might change, we are of spection of the property of the railroad were opinion that the parties intended by the ex-made by the engineering and accounting divipression used to refer to the law relating to a sions of the department. Of the exbond issue in force at the time when the ques- penditures set forth in the schedule attached tion of its approval or authorization might to the petition we are satisfied that to the arise. See Joy v. St. Louis, 138 U. S. 1, amount of $2,990,000 they represent additions and improvements of a permanent character 38, 11 S. Ct. 243, 34 L. Ed. 843; People v. made upon the premises of the Boston & Albany Detroit United Railway, 162 Mich. 460, Railroad included in the lease, and are properly 465, 125 N. W. 700, 127 N. W. 748, 139 Am. St. capitalizable." Rep. 582; In Matter of Russell, 163 Cal. 668, 126 P. 875, Ann. Cas. 1914A, 152. As thus construed, no constitutional right is violated. The obligation of the contract is not affected because by its terms the parties obligated themselves to be bound by the law as it might be when bonds were to be issued. The issuance of bonds by the Central to cover the cost of permanent improvements and additions is an affair in which the superintending agency of the government has an interest. As a railroad is devoted to a public use, it is subject to public regulation and to the possible exercise by the Commonwealth of its police power. See Munn v. Illinois, 94 U. S. 113, 24 L. Ed. 77; Bulkeley v. New York, New Haven & Hartford Railroad, 216 Mass. 432, 103 N. E. 1033. "One whose rights, such as they are, are subject to state restriction, cannot remove them from the power of the state by making a contract about them. The contract will carry with it the infirmity of the subject-matter." Hudson County Water Co. v. McCarter, 209 U. S. 349, 357, 28 S. Ct. 529, 531 (52 L. Ed. 828, 14 Ann. Cas. 560); Union Dry Goods Co. v. Georgia Public Service Corp., 248 U. S. 372, 39 S. Ct. 117, 63 L. Ed. 309, 9 A. L. R. 1420; Postal Telegraph-Cable Co. v. Associated Press, 228 N. Y. 370, 375, 127 N. E. 256.

[5] The Albany and petitioning stockholders made a request concerning the word "permanent" in the following terms:

"The board has no jurisdiction to compel the Boston & Albany to issue bonds at the request of the New York Central unless the expenditures to be paid for by such bonds have been made for what are strictly 'permanent' additions and improvements to the property of the lessor."

In dealing with this request and that numbered 10, hereafter mentioned, the department stated:

"As we have considered, in arriving at our decision as to what of the items set forth in the petitioner's schedule were capitalizable, only such items as we deemed permanent additions and improvements within the meaning of the lease, in substance we have granted the ninth and tenth requests."

The contention under these requests is that many items, in the schedule annexed to the petition, do not represent permanent addi

The department rejected certain items in the schedule, and upon the record it is not possible for us to say what those items were, or that any were included in the findings which we could say as matter of law did not represent permanent additions and improvements. The word "permanent" as used in the lease, is not the equivalent of "perpetual." See Lowell v. French, 6 Cush. 223, 224; Trippeer v. Couch, 110 Or. 446, 220 P. 1012; Knickerbocker Co. v. Seattle, 69 Wash. 336, 124 P. 920. In Texas & Pacific Railway v. Marshall, 136 U. S. 393, 10 S. Ct. 846, 34 L. Ed. 385, which dealt with an agreement permanently to establish a terminus at a certain place, it was decided that the word permanent is "to be construed with reference to the subject-matter" and the agreement was complied with" by the establishment of the terminus with no intention at the time of removing or abandoning [it]." See Mead v. Ballard, 7 Wall. 290, 19 L. Ed. 190. In deciding whether additions and improvements were permanent the department had the right to take into consideration, not only the time they would last, but to some extent the purpose in making them. The determination of this matter called for the exercise of sound judgment, and it cannot be said that the department erred as matter of law. No sufficient reason appears for sending the case back for further hearing upon this question. The request of the Albany numbered 10is based upon methods of accounting by the Interstate Commerce Commission in the matter of making charges to investment as distinguished from operating expenses. There are no facts stated in the record which make this request relevant and we find nothing unlawful in the manner in which the department dealt with it.

[6] The remaining requests for rulings. made to the department, upon which the Albany and petitioning stockholders now rely, are three in number. These are to the effect that the issue of bonds in 1917 does not estop the Albany from asserting lack of power in the Central or in the department to compel a further issue of bonds by the Albany and that it does not estop the department from considering on its merits or from rejecting the present application; they were in substance given. No one is now objecting to

(153 N.E.)

these rulings and in this opinion it is as- General, supra; Lapham v. Tax Commissionsumed that they were right, interpreting the [er, 244 Mass. 40, 138 N. E. 708; Knoxville v. word "compel" to mean "approve" as applied Knoxville Water Co., 212 U. S. 1, 29 S. Ct. to the department. 148, 53 L. Ed. 371. The determination of the

[7] The Central contends that the depart-public interest under G. L. c. 160, § 47, rement had no right to consider depreciation in determining the amount for which the bond issue should be approved; that it was limited to the provisions of paragraph 8 of the lease and to an inquiry as to the amount of permanent additions and improvements; and it further contends that, if the department had a right to consider depreciation, it adopt-erty demised in good order and condition dured wrong principles in determining its

"Manifestly it was rational to make adequate provision in the management of property of this nature for charges for depreciation, obsolescence, repair and maintenance." Boston v. Treasurer and Receiver General, 237 Mass. 403, 416, 130 N. E. 390, 393. "In valuing the plant of a carrier for purpose of fixing rates there should be proper deductions for depreciation." Simpson v. Shepard, 230 U. S. 352, 355, 33 S.terest. The interpretation of the lease by the Ct. 729, 57 L. Ed. 1511, 48 L. R. A. (N. S.) 1151, Ann. Cas. 1916A, 18.

tion such expenditures of the New York Central Railroad as we think properly may be used in offsetting accrued depreciation and the premiums realized on the issue of bonds since, the execution of the lease, we are of the opinion and so find that the net accrued depreciation of the property of the Boston & Albany Railroad accruing since the execution of the lease to November 30, 1922, to be $1,490,000. Thus,

[8] If it be assumed that the question whether, as matter of law, the department erred in its method of determining depreciation is open, the report of the department

only the language of the lease, but all attendant circumstances, including the purpose to be accomplished by it, the term for which it is to run, the fact that the parties are public service corporations and in a measure subject to public control, that the matter is not wholly between the two corporations, but that the commonwealth by the act approving the lease has rights to be considered and the pub-in our judgment, bonds to the face value of lic has interests to be protected, together $1,500,000 may properly be issued to reimburse with the fact that the department was called the New York Central Railroad for expendiupon to act in the matter not only because of tures made by it on permanent additions and improvement." the requirements of the statutes, but by the terms of the lease itself. The contention that the question of depreciation cannot be considered by the department until the end of the term, is not well founded. The terms of the lease do not require that construction. The fact that there is no covenant requiring a re-discloses no basis upon which we can say serve for depreciation does not make the order of the department unlawful. In addition to the clause in express terms referring to depreciation, there were the other provisions, hereinbefore quoted, taken from the lease and the act approving it, under which the department had a right to consider the question of depreciation as a pertinent fact in deciding what bond issue to approve as consistent with the public interest. We in-reservation. This evidence was objected to terpret the order approving the amount named as consistent with the public interest to mean that because of the terms of the lease and the approving act a larger issue would not be consistent with that interest. It was not contended that there was depreciation in the roadbed, and the question of depreciation of equipment was not presented because all equipment was owned by the Central. The department, however, could consider depreciation in stations, bridges, yards. and the rest of the physical plant. It ap pears from the findings that:

vestment.

that its method of reaching the conclusion on that subject was unlawful. But the Central sought to establish the unlawfulness of the method adopted for determining depreciation by its offer of stenographic notes of oral testimony and arguments at the hearings and conference before the department, and of certain reports made to the department, and certain votes, letters and schedules referred to in the

by the Albany, the intervening stockholders and the department. The reservation states that this evidence may be considered by the full court if it should have been admitted, and that any party might, at his own expense, print any or all of it in his brief for the use of the full court. It does not appear from the stipulation filed that the evidence offered before the single justice was all the evidence considered by the department. The decision stated in substance that the order was made after "notice and a hearing and further investigation." The report shows that the engineers and accountants of the department examined accounts and inspected the property of the railroad, and that their testimony as to the alleged expenditures for improvements and their estimate of accrued depreciation were based upon the inspection as well as the accounts examined. It is apparent that if the evidence offered before the single justice were admitted the court would not have all the evidence in the case, and it would not be possible to say what weight the department gave to the evidence offered or on what evidence the question of the amount of depreciation was decided.

"The determination of what depreciation has accrued in the depreciable property of the Boston & Albany Railroad since the lease to the time of the finding of the petition is one which largely must be determined by the exercise of sound judgment by this department. The New York Central Railroad contends that it has adequately provided for the accrued depreciation. It presented a schedule of expenditures amounting to $1,521,044.94, that it claims were charged to operating expenses between July 1, 1900, and December 31, 1907, as to which $926,754.03 might properly have been charged to inIt also asserts that since the time when it took over the property of the Boston & Albany Railroad under the lease many credits [9] The statute (G. L. c. 25, § 5) gives the have been given to the capital account of the Boston & Albany Railroad for property retired Supreme Judicial Court jurisdiction in equiwhich was not originally capitalized. Instances ty to review, modify, amend or annul any of such retirements were shown at the hearings. ruling or order of the commission but only Moreover, during the years 1912 and 1913 three to the extent of the unlawfulness of such rulissues of bonds were sold which netted premi-ing or order. It requires the commission to ums aggregating $52,749.58, which amount was rule upon any question of substantive law invested in the property. We are of opinion and so find that the gross accrued de- properly arising when requested so to rule. preciation of the depreciable property of the It provides for objection to the ruling made Boston & Albany Railroad since the execution by any party aggrieved. In order further of the lease to November 30, 1922, to be apto secure the rights of parties and establish proximately $2,450,000. Taking into considera- the practice, it is provided that a failure to

(153 N.E.)

rule upon a request is to be taken and record- "These allegations are immaterial and ired as a ruling adverse to the party requesting relevant, as they present questions of fact. the ruling; and the department is required The jurisdiction of the court is limited to deto file a written decision assigning its rea- termining whether the decision of the departsons therefor. The method of obtaining a re-arriving at the conclusion reached by a majorment contains any erroneous rulings of law. In view is then stated to be in equity in the Su-ity of the members of the department, it does preme Judicial Court. The burden of proof is not appear that any issue of law was involved, on the party adverse to the commission to or that any ruling was made." show that its order is invalid. The purpose "[The] court does not sit as a board of reof the statute is to provide for a review of view to substitute its judgment for that of the questions of law raised before the depart- Legislature or of the commission lawfully conment. It appears that the department has stituted by it, as to matters within the provundertaken in its report to state in substanceince of either." Simpson v. Shepard, supra. every ultimate finding of fact upon which its decision rests, and certain agreed facts were found by the single justice.

[10] The position of the Central in asking for a review of the order is, in some respects, like that of a party appealing from a final decree in equity without having saved any rights in the trial court. It is assumed for the purposes of this decision that the Central is entitled to present the question whether upon the facts found the order was unlawful. See Lannin v. Buckley (1926, Mass.) 152 N. E. 71. Power to review decisions of any state department is given in general terms by G. L. c. 160, § 252; but the provisions of G. L. c. 25, 5, being more specific, are controlling in these proceedings. The provisions for review as they have been interpreted sufficiently protect the constitutional rights of the parties. See Opinion of Justices, 251 Mass. 569, 611, 147 N. E. 681. "The proceedings before the public service commissioners are in part investigations into facts. When the public service commission has concluded its investigation, it makes an order and the statute imposes upon the commission the duty to enforce that order or to defend that order if attack is made upon it. 1913, c. 784, § 28."

The Statute of 1921, c. 499, relating to the control of the sale of securities by the commission supervising the department of public utilities provides in section 7 for a review by the courts of rulings of law, findings of fact and orders, but in section 3 (d) securities of a corporation owning or operating a railroad are exempted from the provisions of the act.

So far as the record discloses the Central made no objection to testimony or its relevancy or to the right of the department to make its own independent investigation. The stenographic notes and other evidence objected to were not admissible. In the case of Haven v. County Commissioners of Essex, 155 Mass. 467, 29 N. E. 1083, a petition for a writ of certiorari, the evidence heard by the county commissioners was held to be properly before the court, but an examination of the record in the case discloses the fact (which does not appear in the printed report) that requests for rulings based on the whole evidence were presented to the county commissioners. Furthermore, in that case it did not appear that there was any objection made to the introduction of the evidence heard by the railroad commissioners. That case limited the review under the statute then applicable to rulings of law made by The power of this court under section 27 of the railroad commissioners. See Westport v. that act "is confined to dealing with 'rulings County Commissioners of Bristol, 246 Mass. or orders of the commission which are un-556, 141 N. E. 591; Clough v. Cromwell, 250 lawful to the extent only of such unlawful- Mass. 324, 145 N. E. 473.

*

St.

ing depreciation. It did not request that one standard rather than another be used and the reasons assigned by the department for its decision do not indicate the standard adopted.

No argument has been addressed to us concerning the provisions of section 20 (a) of the Interstate Commerce Act as added by Act Feb. 28, 1920, c. 91, § 439, 41 Stat. 494 (U. S. Comp. St. Ann. Supp. 1923, § 8592a), which relates to the approval by the Interstate Commerce Commission of the issuance of securities by interstate carriers and we have not undertaken to pass upon any question which might arise under that act.

ness.' Manifestly no power to rehear facts [11] The Central cannot question the standis conferred by these words. Paine v. New-ard adopted by the Department in determinton Street Railway, 192 Mass. 90 [77 N. E. 1026]. The findings of fact of the commission are not to be reviewed or revised by the hearing of evidence in a case like the present." | Donham v. Public Service Commissioners, 232 Mass. 309, 327, 328, 122 N. E. 397, 406. Under a statute giving the superior court and the Supreme Judicial Court jurisdiction in equity "to review annul, modify or amend the rulings of any state department or commission relative to street railways as law and justice may require" it was held that a finding made in good faith was not open to review. City Council of Salem v. Eastern Massachusetts Street Railway (1925, Mass.) 149 N. E. 671. The petitioner in the case last cited alleged in its bill that the location of a street railway had been originally granted upon certain representations by the street railway company. The court said:

Upon a consideration of all questions open to the parties which have been argued we see no sufficient reason for annulling, modifying or amending the order. In each case a decree dismissing the petition is to be entered. Ordered accordingly.