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CHAPTER XI

RAILROADS

Interest of Engineers. Civil engineers or mechanical engineers are nowadays so often selected for the management and operation of railroads that a special chapter on railroads seems appropriate; electrical engineers in the near future may be expected to have a similar and equal interest. The engineer's interest is not restricted to location and construction, but extends to operation and to management.

Route. The first duty in connection with a railroad project is the selection of the general route, in pursuance of the wishes of the projectors in the case of a new railroad, or of the proper officials in the case of extension of an existing railroad. In either case this is commonly a preliminary either to securing or to formally extending a charter. The general route stated should be sufficiently explicit to meet the requirements of law but not so closely defined as to limit such freedom of action and selection as is allowable under the law. In a venture of this magnitude, the services of a lawyer should be available and preferably in consultation with the engineer. In some cases exact location may be required previous to incorporation, in others not.

Incorporation. The details of incorporation differ from those necessary for business corporations, but those are the lawyer's, and not the engineer's duty. So far as the route is concerned, the approval of the engineer is properly necessary. The raising of funds belongs to the incorporators; nevertheless the engineer should read and come to understand the laws of the State dealing with the incorporation of railroads. It is worth his while to have a broad outlook over the entire railroad field.

Financing. In financing railroads, in earlier days all the money required was in some cases raised by stock subscription. Nearly all of the railroads now are financed in part from the sale of bonds. Stocks and bonds of railroad companies are of great variety. Among the classes of stock there are common and preferred; the latter may be 1st preferred or 2d preferred, cumulative or non-cumulative.

Bonds. Bonds are more commonly mortgage bonds, but often are not. One railroad has 1st, 2d, 3d, 4th, and 5th mortgage bonds. There

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are also income bonds which in some cases are little better than preferred stock. Some bonds are “convertible” into preferred stock, some into common stock. Equipment bonds are not uncommon. There are also occasionally prior lien bonds, and other bonds with various names and characteristics. Following the customs of their country, English owners often show a preference for “debentures" or debenture bonds, the terms of which are such that foreclosure is not possible for non-payment of interest when due.

Most of the special forms of bond and much of the preferred stock are the result of re-financing or re-organizing, in many cases after railroads have been placed in the hands of a receiver. With railroads whose credit is satisfactory, the common stock and mortgage bonds usually furnish sufficient variety to satisfy investors.

The railroads of the United States as a whole show a moderate excess of bonds over stock. Individual railroads show great differences in the proportion between the two, even among the important systems.

At the close of the year 1915, 38,861 miles of railroad with stock and funded debt amounting to $2,372,204,457, were in the hands of receivers, more commonly from inability to pay interest on their bonds but sometimes more directly from inability to meet other obligations. Receiver's certificates are another form of security issued to acquire funds necessary to tide over an emergency during the receivership. They are issued to protect the interests of the creditors, under the orders of the Court, and thus properly have priority over the bonds and all other forms of indebtedness.

Location. The definite location of the line of railroad is the next step in order. This must be followed, or accompanied, by the filing of plans, and perhaps profiles, of the located lines; these filings must comply with the laws of the State involved, and with United States laws in case the public domain is entered or crossed. The maps filed must be adequate to the purpose. The requirements involve the kind of maps and perhaps the scales, and also the forms of certificates to accompany them. Here again the lawyer is necessary, unless the engineer has had previous experience in exactly the same thing. Unless State laws or the charter confer the right to enter private lands for surveying purposes, or until by right of eminent domain a right is obtained, entry upon lands may be a trespass. The charter very frequently does authorize such entry subject ordinarily to the payment of damage actually caused, if any.

Approval Necessary. It should be understood that a location by an engineer, not reported to the company nor accepted by it, does not secure title to the company. Acceptance or approval by some adequate official authority is necessary. Priority over another company is not secured until

the location is thus formally adopted, and in some cases not until the proper filings are made. In some cases where filing is not a prior requirement, priority in instituting condemnation proceedings under the right of eminent domain will serve to secure title against another railroad. Sometimes failure to build within a limited time means abandonment of location and forfeiture of a right previously acquired; statutory provisions may often cover this.

Discretion as to Route. Railroad authorities have reasonable discretion in selecting the route. The railroad's rights in this matter must be reasonably exercised, but there is no necessity for proving the route the best or the only feasible one.

It is often possible to make minor changes in location; in some cases rights may have been acquired by landowners or perhaps by another railroad, and the change may involve expense or other difficulty for such reasons.

In some States no new line can be constructed until “ a certificate of exigency” is issued by the Railroad Commission. The object is to prevent the building of unnecessary lines which the public must eventually support.

Lands of Other Railroads. Unless the charter or some statute authorize it, a newer railroad has not the right to occupy and use lands previously appropriated to another railroad, but the State has the right to specifically grant such authority. The right to cross another railroad may often be implied. Crossing at grade is in disfavor, and in very many cases will not be allowed if any other feasible method is apparent.

Highway Crossings. Unless some statute prevents it, crossing a highway at grade is allowable, but many States have passed laws not only forbidding or restricting this, but even providing for separating the grades of railroads and highways at existing crossings, and providing for the distribution of the expense of the change. In Massachusetts the railroad pays 65 per cent, the State 25 per cent, and the city or town 10 per cent of such cost. There is no uniformity in the provisions of those States which have made any similar provisions.

In some cases crossings must be maintained for the benefit of private owners of farms which have been cut in two, and a lawyer should be consulted as to the rights of such owners.

Operation at Crossing. In the operation of railroads at crossings of other railroads, or of highways at grade, the precautions necessary either at Common Law, or required by Statute Law, should be well understood. For regulating crossings with railroads, there is often a statute requiring a full stop before crossing or else the installation of an adequate interlocking plant.

Right of Way. Next comes the securing of lands for right of way, station grounds, or other railroad purposes. While this is not engineering, nevertheless the engineer is often found to be the man most available to attend to such matters. If he engages in this work, he will probably be expected to fill out the blanks in deeds for real estate, to see that the deeds are properly signed and acknowledged, and either filed or delivered to headquarters for filing; he may or may not be called upon to look up titles. Where State, county, city, or town lands, whether streets or otherwise, are to be crossed or occupied, proper legal steps must be taken to secure such occupancy or acquirement as may be necessary. Where navigable streams or bodies of water are to be crossed, the approval of the United States authorities must be secured.

Engineer's Qualifications. The engineer should prepare himself by consultation with a lawyer to do properly the things indicated above; unless unusually experienced he should not attempt the duties without such consultation. The engineer in settling for right of way, if not a natural trader, should make a point of acquiring skill in that line; with some experience he ought to become at least the equal of most of the landowners with whom he deals. Square dealing on his part, rather than sharp practices, will prove of advantage to the railroad. Lands will seldom be bought at their ordinary value and perhaps ought not to be; experience indicates that lands for right of way cost about three times the reasonable value of such lands if bought under ordinary conditions and in whole pieces.

Eminent Domain. The engineer should understand that where no agreement can be reached, the required lands, and under the laws of some States, material for construction also, may be secured under the "right of eminent domain." The right of the public to the service of common carriers is such that the courts have held a railroad to be a “public use in the sense necessary for the exercise of this right.

After a railroad has been located and constructed, it is the usual rule that the right of eminent domain cannot be revived for the purpose of taking lands to straighten the lines, to double-track the road, or for other improvement, unless a new grant of authority for that purpose be delegated by the State.

Private Tracks. Tracks to factories or mines, or what are called industry tracks, are not available to the general public; the general public has no rights in them. The use is therefore a private use, and the right of eminent domain cannot be invoked to acquire any necessary lands. The same may be true of lumber lines which are sometimes rather extensive.

Methods of Securing Lands. In securing lands, especially for station grounds, localities and individuals are often willing either to contribute outright, to sell at low prices, or to aid in some way. Such action on their

part must, in general, be secured previous to the determination of the route, or of the definite location. Bonds or agreements as to price are often secured in advance of filing the location. In furtherance of such action, locating engineers sometimes run alternate locations, and the alternate line does not always have merit. This savors somewhat of sharp practice. Forms used for bonds or agreements should have the approval of some lawyer.

It is further true that under some circumstances an agreement to locate on a stated line or to locate a station in a special place has been found to be illegal as against public policy; this illegality, however, is not easy to establish. A company may legally re-locate stations for good reasons if it properly consults public convenience in doing so. The United States laws allow the right of way and station grounds upon the public domain to be acquired simply by proper filing.

Right of Way Title. What title the railroad acquires in its right of way is a matter of interest. When the right of way is acquired through the exercise of the right of eminent domain, only an easement for railroad purposes is secured, and when a court of equity enforces specific performance of contract, the same rule will no doubt hold; but where a deed in fee simple is taken, the railroad secures, in most States, a clear title and may reconvey for any use. In some States, however, it is held that the railroad has no power to acquire lands for other than purely railroad purposes, and in case of abandonment or disuse, the title reverts to the previous owner.

The railroad may acquire, by grant, lands for purposes not directly connected with railroad construction or operation, where the lands could not be taken by right of eminent domain.

Construction. After the lands have been secured, the work of construction follows, and Part II of this treatise deals with the details of contract letting, while the whole field of law as outlined in Part I may be involved in some way or come into play during the performance of the contract.

Examples. In the excavation of cuts, damage may occur by violating the right to lateral support. Bridges and culverts tend to obstruct the flow of streams. A change of channel may interfere in various ways with the flow of water in the streams or over the surface. An embankment or an undrained excavation may cause stagnant waters and create a nuisance. Surface waters may be gathered and cast in great volume on lower lands. Trespass upon lands or some form of negligence during construction is also liable to occur.

Fencing and Cattle. The railroad right of way is commonly fenced, and domestic animals, particularly cattle, cannot then get into these

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