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December 12, 1957


Author: Bell

BELL, Chief Justice.

The Texas and New Orleans Railroad Company, hereinafter called Texas, brought this suit against Houston Belt & Terminal Railway Company, hereinafter called Belt, the Missouri-Pacific Railroad Company, hereinafter called Missouri, the Chicago, Rock Island and Pacific Railroad Company, hereinafter called Chicago, the Gulf, Colorado and Santa Fe Railway Company, hereinafter called Santa Fe, and the Ft. Worth and Denver Railway Company, hereinafter called Ft. Worth, for the purpose of securing a judicial construction of an agreement entered into November 18, 1929, between Texas, I. & G.N. and San Antonio & Aransas Pass Railroad Company, hereinafter called San Antonio. Missouri is the successor company to I. & G.N. and it has admittedly succeeded to the rights of I. & G.N. under the contract. In 1934 Texas became successor to San Antonio. The suit was brought for a declaratory judgment under Article 2524-1, Vernon's Revised Civil Statutes of Texas.

On December 26, 1926, the Interstate Commerce Commission, hereinafter called I.C.C., authorized Texas to acquire "control of * * * by lease" certain named railroads, including San Antonio, which was then under lease to Galveston, Harrisburg and San Antonio Railway Company. This lease was assigned to Texas. Under the lease to Texas, effective March 1, 1927, the property of various railroads referred to in the December order of the I.C.C. was leased to Texas. Too, the lease by G.H. & S.A. of the property of San Antonio was transferred by G.H. & S.A. to Texas. G.H. & S.A. assigned "its leasehold interest in the lines of railway and other properties" of San Antonio, together with "its interest in all trackage rights, operating agreements, and other contracts of every description pertaining to the properties so leased from" San Antonio. From such time Texas became the sole operating line for properties of San Antonio and operated over tracks of San Antonio solely for its own account. Thereafter San Antonio never operated any equipment over any trackage. This lease continued until Texas actually became owner of San Antonio's property in 1934.

On August 12, 1929, San Antonio, the owner of certain trackage in the City of Houston, which was wholly operated by Texas, applied to the I.C.C. for a certificate of public convenience and necessity authorizing it to construct an eastern extension of its track south of and along Buffalo Bayou.

Thereafter, on September 4, 1929, I. & G.N. filed its application with I.C.C. seeking authority to extend its tracks through the area which would be served by the extension of San Antonio's track. I. & G.N. intervened in the proceeding by San Antonio and opposed the application of San Antonio.

I.C.C. referred both applications to the Railroad Commission of Texas for hearing, and on hearing San Antonio, Texas and I. & G.N. filed an amended application in which it was stated that the applicants had entered into an agreement under which through their joint undertaking, trackage would be constructed and operation carried on jointly as provided in the agreement. The applicants asked that such agreement, which is the agreement we are called upon to construe, be approved. The agreement was approved by the I.C.C.

The agreement which was approved by I.C.C. and which was the basis of the issuance of certificates of convenience and necessity to San Antonio, Texas and I. & G.N. makes the following provisions which are relevant to this appeal:

1. San Antonio agreed to construct an industrial lead track from the track of Trinity Portland Cement at or near the intersection of Foley and North Hutcheson Streets in an easterly direction along Foley Street to Milby Street, thence across private property to Lockwood Drive, a total distance of approximately 3700 feet. The right of way was to be obtained by San Antonio, and it was to pay the cost of constructing this industrial lead track. The rights with regard to this extension are the subject of dispute in this proceeding.

2. I. & G.N. was to renew its industrial lead track from a point near its intersection with Commerce Street and extend it to the west line of the Cement Company property.

3. The Cement Company had a track through its property and I. & G.N.'s track connected with it on the west and the proposed extension by San Antonio would connect with it on the east. The Cement Company had given I. & G.N., San Antonio and Texas the right to use this track.

4. The portion of the track to the east of the Cement Company property was to be maintained by San Antonio, but the cost of maintenance was to be shared by I. & G.N., such cost to be apportioned on the basis that the number of cars in any one month handled for I. & G.N. bore to the whole number of cars handled over the track. Too, I. & G.N. was to pay in monthly installments as rental 1/12th of 3% per annum on the appraised value of such track, and was to pay 1/2 of any taxes.

5. On the track to the west of the Cement Company trackage, which belonged to I. & G.N., all maintenance work was to be done by I. & G.N., but San Antonio (actually Texas) was to pay its portion calculated in the same manner as stated in paragraph 4. above. San Antonio (actually Texas) was to pay I. & G.N. the 3% per annum rental based on the valuation of this I. & G.N. trackage, payment to be made in monthly installments of 1/12th of such 3%, and was to pay 1/2 of any taxes.

6. San Antonio (actually Texas) and I. & G.N. were to alternate in actually operating for both Texas and I. & G.N. over the jointly operated trackage, I. & G.N. handling operations one year and San Antonio (actually Texas) the next year, and so on. In the year San Antonio (actually Texas) operated, I. & G.N. paid it $4.50 for each car handled for I. & G.N.; and if I. & G.N. operated, Texas would pay I. & G.N. $4.50 for each car handled for Texas.

7. Any industry tracks off of the eastward extension were to be built and paid for by San Antonio and any tracks off of the westward extension were to be built and paid for by I. & G.N. Such spurs would then come under the terms of the agreement the same as the original extensions provided for in the agreement. There were such spur tracks built from time to time.

8. Article I, Section 2, provides:

"San Antonio Company hereby grants to the International Company the right to operate its switching locomotives and cars upon the track to be constructed by the San Antonio Company as described in Section 1 of this Article I, for the purpose of serving such industries as may from time to time be located adjacent to said track or adjacent to the tracks connecting therewith; such right of use shall be in common with the San Antonio Company, its ...

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