Chicago Union Traction Co. v. City of Chicago (199 Ill. 579, 1902)

Mr. Chief Justice Magruder

delivered the opinion of the court:

As will appear by reference to the case of Chicago Union Traction Co. v. City of Chicago, (ante, p. 484,) the North Chicago City Railway Company was organized by special charter on February 14, 1859, and the Chicago West Division Railway Company was organized by special charter on February 21, 1861. The street railroads in the north and west divisions of the city were operated by these two railway companies until 1886 in the north division of the city, and until 1888 or 1889 in the west division of the city. About the year 1886, the North Chicago Street Railroad Company was organized under the general Incorporation law of this State, when, as is claimed by appellant, the North Chicago City Railway Company leased its property to the North Chicago Street Railroad Company. The latter company continued to operate its lines until about July 1, 1899, when, as is claimed by the appellant, the North Chicago Street Railroad Company leased its properties to the appellant. About the year 1888 or 1889, as is claimed by the appellant, the Chicago West Division Railway Company executed a lease of its properties to the West Chicago Street Railroad Company, and the latter company operated its lines until they were leased on July 1, 1899, to the appellant, as will appear by reference to the case of Chicago Union Traction Co. v. City of Chicago, (ante, p. 484).

While the North Chicago Street Railroad Company and the West Chicago Street Railroad Company were engaged in the operation of street railway lines, various companies were organized in the north and west and north-east and north-west portions of the city as feeders to, or extensions of, the North Chicago Street Railroad Company and the West Chicago Street Railroad Company. The companies so organized were seven or eight in number, and will be mentioned hereafter. On or about February 27, 1899, they passed into the hands of the Chicago Consolidated Traction Company, a corporation organized under the general Incorporation act of this State on January 28, 1899. The appellant contends that it was not obliged to furnish transfer tickets under and in obedience to section 1723 of the Revised Code of Chicago to passengers, passing from any one of the lines, which it admits itself to be the owner of, to any one of the lines, constituting the Chicago Consolidated Traction Company, or from any one of the latter lines to any one of the lines, which it admits itself to be the owner of.

So far as any of the questions, involved in the case of Chicago Union Traction Co. v. City of Chicago, (ante, p. 484,) apply to the facts of the eight cases now under consideration, they have been already sufficiently discussed in the opinion in the last named case, and such discussion will not be here repeated. There are only two questions, involved in the present cases, in addition to the questions already decided in the other case, which disposed of three actions, based upon the same sections of the Revised Code of the city. The first of these questions is, whether the Chicago Consolidated Traction Company bears such a relation to the appellant company, as to make the two companies come within the purview and meaning of section 1723, so far as transfer tickets are concerned. Under this branch of the case, appellant claims that it was justified in refusing "the transfer tickets, upon the ground that it does not own, lease or operate or run the cars from which, or to which, as the case may be in each action, transfers were demanded and refused, but that said cars are owned, operated and run by another company, distinct and separate from the appellant, to-wit, the Chicago Consolidated Traction Company. On the other hand, the.appellee claims that the organization known as the Chicago Consolidated Traction Cotnpany is a mere “dummy;” that, if it has any legal existence at all, it is only on sufferance by the appellant, the Chicago Union Traction Company; that it is suffered to continue to preserve its technical legal existence only to subserve private interests, and not to subserve any public interest, nor to perform the public duties imposed upon it by the State when the State created it; that its duties to the public have been usurped and are being performed by the Chicago Union Traction Company; that the latter has absolute control, defacto, of all the property of which said Consolidated company may have a dry, technical, legal title; in a word, that, defacto, the Chicago Union Traction Company owns, operates and runs the cars for the conveyance of passengers over all the lines of street railway in the city of Chicago, which, for purposes of its own, it chooses to operate under the masqne of the name of the said fictitious Chicago Consolidated Traction Company; that the facts in the record must be viewed and examined, not from the point of view of a creditor or stockholder, in privity with the fictitious entity known as the Chicago Consolidated Traction Company, but from the point of view of the public to whom appellant owes great and important duties, the faithful performance of which is, in contemplation of law at least, appellant’s guiding thought; that the city council has the power to deal with facts within the limits of its jurisdiction as it finds them, whatever may be the legal rights of the State, of stockholders, or creditors; that one corporation may be, defacto, running and operating a line of street railway in the city of Chicago, although the title to that property may be de jure in another corporation.

The second question involved in this case is, whether the effect of the ordinance known as sections 1723 and 1725, if enforced over both the lines of appellant and the lines of the so-called Chicago Consolidated Traction Company as one system of railway, will be to so cut into the earnings of appellant as to constitute a taking of its property. Under this branch of the case the appellant contends that the ordinance if enforced, as has been done in these eig'ht cases, will deprive it of its property without due process of law, upon the alleged ground that the maximum rate of fare, fixed in the ordinance at five cents for a continuous trip, is unreasonable; that is to say, that its practical operation and effect will be to so cut into the earnings of the company, that there will be not only no profit for the stockholders, but an actual loss.

First—So far as section 1723 of the Revised Code of Chicago, passed by the common council on April 8, 1897, fixes the maximum rate of fare to be charged by street railroad companies within the limits of the city at five cents for each passenger over twelve years of age, and half fare for each passenger over seven and under twelve years of age, for one continuous trip, its validity is not here involved, but has been passed upon in the other case. The second clause of section 1723 provides that “at any point where any line of any street railway owned, leased or operated by any person, firm or corporation does now or shall hereafter, within the limits of the city of Chicago, join, connect with, cross, intersect or come within a distance of two hundred feet of any other line of street railway owned, leased or operated by the same person, firm, company or corporation, any passenger who shall have paid his fare on any street car or other vehicles run or operated on such first mentioned line shall, on his request, be entitled to demand and receive from the person or persons in charge of such street car or other vehicle upon which he has so paid his fare a transfer ticket, which transfer ticket shall entitle such passenger, without further charge, to be carried on any other one line adjoining, connecting, crossing and intersecting, as aforesaid, and owned, leased or operated by such person, firm or corporation, for a continuous trip of any distance within the limits of the city of Chicago, if used within one hour after the same is issued at the point or place for which such transfer ticket was issued.” The contention of appellant here is, that it does not own, lease or operate the lines of the Chicago Consolidated Traction Company in any such sense, as to subject it to the requirements above set forth of section 1723.

In order to determine the question, whether or not the lines of the so-called Chicago Consolidated Traction Company are owned, leased or operated by appellant, the Chicago Union Traction Company, it will be necessary to review the history of the various companies leading up to the organizations, known as the Chicago Consolidated Traction Company and the Chicago Union Traction Company.

By the original charters of 1859 and 1861, as they appear in the other case, the North Chicago City Railway Company and the Chicago West Division Railway Company were authorized to extend their several railways to any point or points within the county of Cook. They were also authorized, with the assent of the supervisor of any township, to lay down and maintain their railways along any common highway in such township. Presumably, the power thus to extend their railways passed to their alleged lessees, the North Chicago Street Railroad Company and the West Chicago Street Railroad Company. The latter companies, however, did not pursue the policy of extending their roads in the manner contemplated by the original charters. That is to say, such extensions were not effected under the name of extensions, but were accomplished in another way in the manner hereinafter stated. Instead of extending their lines, these corporations were largely instrumental in the organization of other companies, which connected with their own lines at their respective northern and western termini, and acted as feeders to their business.

Under the original charters of 1859 and 1861, and the ordinances of 1858 and 1859, referred to in the other case, and relied upon by appellant as constituting its charter, the original companies, and their lessees, the North Chicago Street Railroad Company and the West Chicago Street Railroad Company, could only charge a maximum rate of fare, not exceeding five cents, for any distance to which their lines should be extended under the acts of 1859 and 1861. But by the organization of separate companies, whose car lines were not technically extensions of the original lines, though, by reason of their connections with the same, they were practically operated as such extensions, the public could be forced to pay a separate fare of five cents upon each of the separate lines, operated by the companies so organized. Whether, as is claimed by the appellee, such separate companies were organized for the express purpose of making the public pay several fares of five cents, instead of one fare of five cents, it is not necessary here to inquire. It is sufficient to say that such was the effect of the action taken, if it was not, as a matter of fact, the intended effect.

1. On February 15,1889, a corporation known as “The Cicero and Proviso Street Railway Company” was organized under the general Incorporation act of the State. The object of its formation is stated in the statement, accompanying its certificate of organization, to be the construction, purchase, maintenance and operation of street railways with one or more tracks and the necessary and convenient side-tracks, turn-outs and other structures and fixtures appurtenant thereto, in the territory embraced in the towns of Cicero, Proviso and Jefferson in Cook county, such railways to be operated by horse power, or by electrical device, or by any other proper or convenient system of cables, or by any other approved motive power, except steam locomotive, etc. The statement recites that the capital stock shall be §250,000.00; that the number of shares shall be 2500, and the amount of each share §100.00, and that the location of the principal office is in Chicago. Soon after the organization of the Cicero and Proviso Street Railway Company, to-wit, on August 5,1890, a contract was made between the West Chicago Street Railroad Company and the Cicero and Proviso Street Railway Company, wherein the West Chicago company granted to the Cicero company permission to run its cars over certain portions of the tracks of the West Chicago company, and the Cicero company agreed to encourage the transfer of passengers from its cars to the cars, belonging to the West Chicago company, and in every way to do such things, and act in such manner, as to encourage the business of the West Chicago company. This agreement recites that the Cicero company was about to build a street railway on certain streets, so that the agreement was entered into before the actual completion of its line of railway.

From the terms of an agreement, dated March 29,1899, and hereinafter referred to, it appears that the West Chicago Street Railroad Company held notes against the Cicero and Proviso Street Railway Company, and two other suburban companies hereinafter mentioned, to-wit, the Ogden Street Railway Company and the Chicago and Jefferson Urban Transit Company, for a large amount, certainly not less than §175,160.00. The proof shows that the lines of this Cicero and Proviso company were built simply as feeders to the West Chicago Street Railroad Company, and it is a fair inference from all the facts developed by the testimony, that money was advanced by the West Chicago Street Railroad Company for the construction of the lines of the Cicero and Proviso Street Railway Company. It is inconceivable for what other purpose these notes could have been held by the one company against the other, unless such notes represented money advanced for construction purposes. On May 21, 1896, the Cicero and Proviso Street Railway Company executed a lease to the West Chicago Street Railroad Company, by the terms of which the latter company, for a period of fifty years, was to take charge of, manage and operate all the cars of the said Cicero railway company. This lease or operating agreement was in force between the two companies up to February 24,1899. Under it the West Chicago Street Railroad Company was entitled to receive, and take charge of, all receipts derived from the management and operation of the Cicero railway; and the Cicero company was to issue its bonds, secured by mortgage, to pay the street railroad company for improvements and betterments to be made by the street railroad company for the Cicero railway company. Thereby, also, the street railroad company agreed to guarantee the payment of the principal and interest on all bonds, issued by the Cicero railway company. How many of these bonds of the Cicero company were actually guaranteed by the West Chicago Street Railroad Company does not clearly appear, but the evidence shows that there were consolidated mortgage bonds of the Cicero and Proviso Street Railway Company to the amount of $1,908,000.00, and first mortgage bonds of said company to the amount of $78,000.00.

2. On October 8,1890, another corporation was organized, called “The Chicago and Jefferson Urban’ Transit Company,” under the general Incorporation law of the State with a capital stock of $1,000,000.00,10,000 shares, each share of $100.00, formed for the express object of building and operating lines of street railway in the city of Chicago and neighboring towns, to be run by electric or other motive power. This corporation was organized as a feeder to the West Chicago Street Railroad Company. On November 27, 1895, it entered into an agreement with the latter company, by the terms of which the Jefferson company granted to the West Chicago company the use of all its tracks, then laid or thereafter to be laid, for the purpose of operating thereon the cars of the West Chicago Street Railroad Company, and the Jefferson company was granted the right to use, for the purpose of completing a route, any tracks of the West Chicago company upon certain terms. Under the agreement, the West Chicago company was to furnish electric power to the Jefferson company, and therein and thereby the West Chicago Street Railroad Company agree to guarantee all the bonds, which the Chicago and Jefferson Urban Transit Company might issue, provided that such issue should not exceed in amount the actual cost of constructing the road, and equipping the same and any extensions or additions thereto. Therein, the Jefferson company also agreed that, in case the West Chicago company should be obliged to pay anything on account of its guarantee of such bonds, the amounts so paid should be a lien upon the property of the Jefferson company, and the latter company agreed to confess judgment in double the amount of money, paid by the West Chicago company, on account of such default. The proof shows that there are bonds of the Chicago and Jefferson Urban Transit Company to the amount of §208,000.00, and, besides the guarantee of the bonds already mentioned, the West Chicago company held notes for large amounts against the Jefferson company, as already stated. The Chicago and Jefferson Urban Transit Company was organized and its tracks were built as feeders to the West Chicago Street Railroad Company. The Jefferson company’s lines started at one line of the West Chicago company, and crossed other lines of the West Chicago company. It should also be observed, that the Cicero and Proviso lines came near to points, where there were lines operated by the West Chicago Street Railroad Company. The agreement between the Jefferson company and the West Chicago Street Railroad Company also provides that, in case the Jefferson company should lay certain tracks in certain streets, “all construction for such extension shall be made under the direction and control of the party of the first part,” that is, of the West Chicago Street Railroad Company. The books in evidence show that large expenses were incurred by the West Chicago Street Railroad Company on behalf of the Jefferson Urban company, and also that the West Chicago company acted as agent in the disbursement of the money for the Jefferson company, just as a bank would act for its customers. The expert accountant says in his testimony: “You cannot tell from the books whether the West Chicago handed that money over to the Jefferson and Urban, or whether they paid it out directly to the people to whom it was owing.”

8. On October 1, 1891, another corporation was organized under the general Incorporation act of the State, by the name of “The Ogden Street Railway Company,” with a capital stock of §2,000,000.00, the number of shares being 20,000, and the amount of each share §100.00, formed, as set forth in the statement, for the construction, purchase, maintenance and operation of street railways, etc., in Cook, DuPage and Kane counties. The lines of the Ogden Street Railway Company were built as feeders to the West Chicago Street Railroad Company. As has already been stated, the West Chicago Street Railroad Company on March 29, 1899, held notes against this Ogden Street Railway Company. On May 21, 1896, the Ogden Street Railway Company executed a lease to the West Chicago Street Railroad Company, similar in terms to the lease executed by the Cicero and Proviso Street Railway Company to the West Chicago Street Railroad Company. By the terms of the lease, the West Chicago Street Railroad Company was, for a period of fifty years, to take charge of, manage and operate all the cars of the Ogden Railway Company and make all necessary repairs, and pay for improvements to be made, and use the tracks of the Ogden Street Railway Company, and pay all claims for injuries suffered by parties traveling on the Ogden company’s lines, and control the property of the Ogden Railway Company, and receive and take charge of all the receipts, derived from the management and operation of the Ogden railway. By the terms oh the lease or agreement, the Ogden Railway Company was to issue its bonds to pay the West Chicago Street Railroad Company the cost of improvements made by it; and the West Chicago Street Railroad Company also agreed to" guarantee the payment at maturity of the principal and interest on all the bonds, issued by the said Ogden Railway Company, such guaranty to be endorsed on said bonds. This agreement was in force up to February 24, 1899. The proof shows that the bonds of the Ogden Street Railway Company amount to $750,000.00. The West Chicago Street Railroad Company acted as collecting agent or banker for the Ogden Street Railway Company, and the receipts of the latter were actually received and disbursed by the West Chicago Street Railroad Company. The Ogden company turned over all its receipts to the West Chicago Street Railroad Company. On August 4, 1896, an agreement was entered into between the North Chicago Street Railroad Company and the West Chicago Street Railroad Company, the Chicago and Jefferson Urban Transit Company, the Cicero and Proviso Street Railway Company, the Ogden Street Railway Company and the North Side Electric Street Railway Company, hereafter mentioned, by the terms of which these companies agreed that, for the purpose of completing a route or making a terminal, each company might make use of the tracks of the other, or any of them, for the operation of its cars. It also appears that on August 4, 1896, one George A. Yuille was second vice-president of the West Chicago Street Railroad Company and at the same time president of the Cicero and Proviso Street Railway Company.

4. On February 28, 1893, another corporation was organized under the general Incorporation act of the State, called “The North Side Electric Street Railway Company,” with a capital stock of $500,000.00, the number of shares being 5000, and the amount of each share being $100.00, and the object of its formation being the construction, equipment and maintenance of a system of railways in the city of Chicago. The duration of the corporation was to be ninety-nine years. This corporation was a party to the agreement above mentioned, dated August 4, 1896. On October 1, 1895, an agreement was made between this North Side Electric Street Railway Company as party of the first part, and the North Chicago Street Railroad Company as party of the second part, by the terms of which the first party agrees that the second party shall have the right to use any and all of the tracks of the first party, then built or thereafter to be built, for the purpose of operating thereon the trains and cars of the second party, and the second party agrees to furnish to the first party electricity necessary to propel and heat and light its cars, and the second party agrees to permit the first party to use the tracks of the second party to operate its cars on, for the purpose of making connections and for terminal facilities. The contract was to endure for fifty years. On December 10, 1895, another contract was made between the North Side Electric Street Railway Company, party of the first part, and the North Chicago Street Railroad Company, party of the second part, by the terms of which the party of the second part agreed to guarantee the bonds of the party of the first part, and the first party granted unto the second party the right to use any part of its tracks free of charge, and to purchase from the second party the electricity required to furnish motive power, light and heat for the operation of its cars, etc. The bonds of the North Side Electric Street Railway Company are §155,000.00. The lines of the North Side Electric Street Railway Company extended north and north-west, and at certain points connected with the lines of the North Chicago Street Railroad Company.

5. On May 9, 1893, another corporation was organized under the general Incorporation act of the State, known as “The Chicago Electric Transit Company” with a capital stock of §1,500,000.00, the amount of each share being §100.00 and the number of shares 15,000, and the object of its organization being stated to be to locate and from time to time, alter, change or re-locate, construct, reconstruct, purchase, lease or otherwise acquire, maintain and operate, and to lease to others to operate, with steam, or animal, or cable power, or electric, gas or compressed air motive power, street railroads with one or more tracks laid down upon streets, alleys, highways or such other lands as it may acquire by purchase, condemnation or otherwise in the city of Chicago and territory adjoining thereto within Cook county. On November 12,1894, the Chicago Electric Transit Company as first party, and the West Chicago Street Railroad Company as second party, made an agreement, in and by the terms ■of which the first party agreed to connect at its southeastern terminus with, and deliver its passengers to, the lines of second party, its successors and assigns, during the life of its ordinance rights on Elston avenue, and second party agreed that, during the life of its franchises on Milwaukee avenue, it would take up the passengers of first party so delivered to it at the points of connection of the lines of said parties thereto, and transport them southward over its lines, and in consideration thereof the West Chicago Street Railroad Company guaranteed the bonds of the Chicago Electric Transit Company. It was provided in said agreement that nothing should be taken to prevent each party thereto from charging a full fare for each passenger on the respective lines of each. The bonds of the Chicago Electric Transit Company are $1,097,000.00. On January 1, 1895, an agreement was made between the West Chicago Street Railroad Company as first party, and the Chicago Electric Transit Company as second party, by which second party agreed to furnish to first party the electric current with which to operate its cars. On the same day, to-wit, January 1, 1895, an agreement was made between the North Chicago Street Railroad Company as first party, and the Chicago Electric Transit Company, as second party, of a similar nature to the contract already referred to of the same date. Electric current was to be conveyed to the lines of one party by feeder wires, connecting with the power station of the other party. On July 16, 1895, another agreement was made between the Chicago Electric Transit Company as first party, and the North Chicago Street Railroad Company as second party, wherein second party guaranteed the principal and interest of $150,000.00 of the first mortgage bonds of the first party, issued for the construction and equipment of the Belmont avenue line of the first party, and first party agreed, during the life of its rights on certain streets and avenues, to connect with the north and south linesoof the second party at the points where said north and south lines intersect said Belmont avenue line, and, at the points of intersection,, to deliver passengers to said north and south lines of second party for transfer north and south, said first party agreeing to operate and carry on its Belmont avenue line in such manner, as to increase and develop the north and south traffic of said second party;. and said second party agreed to take up the first party’s passengers delivered to it at said points of intersection, and transport them northward and southward over the lines of said second party. Nothing in the contract was to be taken to prevent either party from charging a full fare on each of their respective lines. On January 17, 1896, another agreement was made between the West Chicago Street Railroad Company as first party, and the Chicago Electric Transit Company as second party, by the terms of which the first party agreed to permit the second party to operate its cars over the tracks, owned and operated by the first party on certain streets and avenues, and it was agreed that the cars of the first party should not be restricted to any particular lines of the second party, but might run over any part of the tracks of said second party. On December 12, 1896, another agreement was entered into between the Chicago Electric Transit Company as first party, and the North Chicago Street Railroad Company as second party, by the terms of which the second party agreed to guarantee the principal and interest on §68,000.00 of the first mortgage bonds of the first party, issued for the construction and equipment of the Irving Park Boulevard line of first party, and, in consideration thereof, the first party agreed to connect with the north and south lines of the street railroad of the second party at certain intersecting points, and to deliver passengers to the north and south lines of second party for transfer north and south, the announced intention being that the first party would, so far as it reasonably could, operate and carry on its said boulevard line in such manner, as to increase and develop the north and south traffic of said second party, and the second party agreed to take up the passengers of the first party, delivered to it at such points of intersection, and transport them northward and southward over the lines of second party, it being understood that nothing should forbid each party from charging a full fare for each passenger on their respective lines. On December 14, 1896, another agreement was made between the Chicago Electric Transit Company as first party, and the West Chicago Street Railroad Company as second party, by which the second party agreed to guarantee the principal and interest of §68,000.00 of the first mortgage bonds of the first party, issued for the construction and equipment of said Irving Park Boulevard line of the first party. The agreement contains similar provisions as to connections with the north and south lines of the second party, and the delivering of passengers, etc., and the charging of full fare for each passenger, and the increasing and developing of the north and south traffic of said second party, as are contained in the other agreement above mentioned dated December 12, 1896. On November 1,1897, another agreement was made between the Chicago Electric Transit Company as first party, and the West Chicago Street Railroad Company as second party, whereby the second party agreed to guarantee the principal and interest of §37,000.00 of the first mortgage bonds of the first party for the construction and equipment of the Fortieth street line of railroad of the first party, and the same agreements between the two parties in regard to the connection with the north and south lines, and the delivery of passengers, and the development of the business, and the charging of full fare, were made as are embodied in the other agreement above set forth, dated December 14, 1896. In the language of one of the witnesses, the lines of the Chicago Electric Transit Company “dovetailed onto the lines of the West Chicago Street Railroad Company.”

6. On June 19, 1893, another corporation was organized under the general Incorporation act of the State under the name of “The North Chicago Electric Railway Company” with a capital stock of §2,000,000.00, the number of shares being 20,000, and the amount of each share being §100.00, the object of the formation of which is stated to be to construct, lease, purchase or otherwise acquire horse, dummy and street railroads in Chicago and adjoining territory in Cook county, and to maintain and operate the same. On March 22, 1894, an agreement was made between the North Chicago Electric Railway Company, as first party, and the Chicago West Division Railway Company and the West Chicago Street Railroad Company, as second parties, wherein the parties granted to each other the right and privilege of using their respective tracks where the same connected with each other, and to use and operate their cars along and upon the tracks of each other between certain points. Therein the first party agreed to propel the cars of the second parties from its connection with the cable road at certain points, and to carry the passengers on such cars free of expense to said second parties for a maximum fare of five cents from the lines of one to the lines of the other. It was therein agreed that the electric railway therein named should be completed and in operation by the first party within one year from that date. On the same date, to-wit, March 22, 1894, another agreement was made between the North Chicago Electric Railway Company, as first party, and the North Chicago City Railway Company and the North Chicago Street Railroad Company, as second parties, reciting that the first party had been granted the right to lay and construct an electric railway on certain avenues and streets, and that the second parties were already owners of street railway tracks on certain streets, and agreements were therein made for the use of the tracks of the respective parties by each other, and for the connection of the tracks of one with the other, and for the right of each to use, operate and run its cars along and upon the tracks of the other between certain points. The first party agreed to propel the cars of the second parties from the connection with their cable road at a certain point, and to carry passengers on certain cars for a maximum rate of five cents for a ride; and it was also agreed that the electric railway therein mentioned should be completed and in operation by the first party within one year from date. On October 19, 1894, another agreement was executed between the North Chicago Electric Railway Company as first party, and the North Chicago Street Railroad Company as second party, in regard to the furnishing of electric power by the railway company to the railroad company on certain streets and avenues, the contract to last for the term of twenty-five years. On November 12, 1894, another agreement was made between the North Chicago Electric Railway Company, as first party, and the West Chicago Street Railroad Company, as second party, whereby the second party agreed to guarantee the bonds of the first party, that day arranged for and agreed on, and the first party agreed to connect, during the life of its ordinance rights on Milwaukee avenue, at its south-eastern terminus with, and deliver its passengers to, the lines of the second party, its successors and assigns, and not to any other railway or lines. ■ Second party therein agreed to take up the first party’s passengers so delivered to it at the point of connection of the lines on said avenue of the parties thereto, and transport them southward over its lines. Nothing therein was to be taken to forbid or prevent each party from charging a full fare for each passenger on the respective lines of each. On November 12,, 1894, another agreement of a similar nature was made between the North Chicago Electric Railway Company, as first party, and the North Chicago Street Railroad Company, as second party, by the terms of which the second party agreed to guarantee certain bonds of the first party that day arranged for and agreed on, and the first party agreed to connect with certain lines of the second party, its successors and assigns, and deliver its passengers thereto, and the second party agreed to take up the passengers so delivered to it at the point of connection and transport them southward, each party being therein allowed to charge a full fare for each passenger. The bonds of the North Chicago Electric Railway Company are §868,000.00. On October 26, 1897, another agreement was made between the North Chicago Electric Railway Company as first party, and the North Chicago Street Railroad Company as second party, by the terms of which, in consideration of the guaranty by the second party of the principal and interest of §363,000.00 of the first mortgage bonds of the first party, issued for the construction and equipment of certain street lines of railroad of the first party, and that day arranged for and agreed upon, it was therein agreed that the first party would connect with the north and south lines of' the street railroad of the second party at certain points of intersection, and would deliver passengers to said north and south lines of second party for transfer north and south, the intention being, as therein expressed, to develop and increase so far as possible the north and south traffic of the party of the second part, and the party of the second part agreed to take up such passengers delivered to it at the points of intersection and connection, and transport them northward and southward over its lines, nothing therein being taken to prevent each party from charging a full fare for each passenger on the respective lines of the parties. On June 21, 1898, another agreement was made between the North Chicago Electric Railway Company as first party, and the North Chicago Street Railroad Company as second party, by the terms of which, in consideration of the guaranty by the second party of the principal and.interest of §47,000.00 of the first mortgage bonds of the first party, issued for the purpose of making payment for the completion of the construction and equipment of street lines of railroad of the first party on certain streets, on that day arranged for and agreed on, it was agreed that the first party would make connections with the north and south lines of the railroad of the second party at certain points and deliver passengers to the north and south lines of the second party for transfer north and south, the expressed intent being to increase and develop the north and south traffic of said second party; and the second party also therein agreed to take up such passengers, so delivered to it at the points of intersection and connection, and transport them northward and southward over the lines of said second party, nothing therein being taken to prevent each party from charging a full fare for each passenger over their respective lines, etc.

7. On October 17, 1895, another corporation was organized under the general Incorporation act of the State under the name of “The Evanston Electric Railway Company,” with a capital stock of $200,000.00, the number of shares being 2000, and the amount of each share $100.00, with the stated object of constructing, leasing, purchasing or otherwise acquiring horse, dummy and electric street railroads in Evanston and adjoining territory in Cook county, and maintaining and operating the same. On December 2, 1896, an agreement was made between the Evanston Electric Railway Company, first party, and the North Chicago Street Railroad Company as second party, by the terms of which, in consideration of the guaranty by the second party of the principal and interest of $100,000.00 of the first mortgage bonds of the first party, issued for the construction and equipment of its street railroad lines in Evanston, and that day arranged for and agreed upon, it was agreed that the first party would connect with the north and south lines of the second party at certain points, and deliver passengers to said lines for transfer. north and south, so as, as much as possible, to increase and develop the north and south traffic of said second party, and the second party agreed to take up such passengers at the points of intersection and transport them northward and southward over the lines of said second party, nothing therein contained being taken to prevent each party from charging a full fare for each passenger on their respective lines, etc. The bonds of the Evanston Electric Railway Company are $130,000.00.

8. Another railroad company had been organized, known as “The Chicago North Shore Railway Company,” which connected with the street railway line of the North Chicago Street Railroad Company at a certain point, but the record does not contain the certificate of organization of this company. It does show, however, that, on May 10,1894, an agreement was made between the North Shore Street Railway Company, as first party, and the North Chicago Street Railroad Company and the North Chicago City Railway Company, as second parties, by the terms of which the second parties granted permission to the first party to use, in conjunction with second parties, the tracks of the second parties located on certain streets and avenues, and to operate and run in conjunction with said second parties’ the first party’s cars along and upon said tracks between certain points, with electricity, and in consideration thereof the first party agreed to lay and construct a double track along certain streets. By the terms thereof the first party agreed to haul, without cost or charge to the second party, a trailer car to be furnished by said second parties, and to be in charge of a conductor to be employed by second parties, no fare to be collected from passengers riding in said trailer car, etc.

9. The West Chicago Street Railroad Company and the North Chicago Street Railroad Company, successors to the Chicago West Division Railway Company and the North Chicago City Railway Company, built and extended their lines from the center of the city westward and northward. It is apparent, that the street railway lines of the seven or eight companies heretofore mentioned, sometimes called in the record the “suburban lines,” and sometimes the “lines of the underlying companies,” were built as feeders to, and practically as extensions of, the West Chicago Street Railroad Company and the North Chicago Street Railroad Company. They all constituted one system; and the suburban or extension railway companies, although technically separate organizations, were, as matter of fact, built under the direction of the original companies, and with the money of the latter, or with money obtained by the guaranties of the latter. The agreements, made between the original companies and the outlying companies, as soon as the latter were organized, or shortly thereafter, provide for the use of the tracks of the original companies by the outlying companies, and for the use of the tracks of the outlying companies by the original companies. They provide also for the connection of the lines of the outside companies with the lines of the original companies, and that the respective companies shall deliver and carry passengers for each other. Some of the agreements provide that each company shall charge a full fare for each passenger over their respective lines, and these amounted to a violation of the charters of the original companies, providing for a chárge of only five cents over their lines, when built or extended anywhere within the county of Cook. These agreements also show that the bonds, issued by the outlying companies for the purpose of raising money for the construction of their lines, were guaranteed by the West Chicago Street Railroad Company and the North Chicago Street Railroad Company. Although the organizations of these outlying companies were sought to be maintained to a certain extent as separate corporate entities, yet, as matter of fact, they were all constructed in the interest and under the direction of the original companies. If this was not so, what right had these original companies to guarantee the bonds of the outlying companies? The right of one corporation to guarantee the contracts of another has been challenged by high authority. (Pennsylvania Co. v. St. Louis, Alton, etc. Railroad Co. 118 U. S. 315). The fact, that the bonds of these outlying companies were guaranteed by the original companies shows, that the former companies were but parts of the latter companies.

Now, what was the Chicago Union Traction Company, and what was the Chicago Consolidated Traction Company? The Chicago Union Traction Company consisted of the original companies, to-wit, the West Chicago Street Railroad Company and the North Chicago Street Railroad Company. The West Chicago Street Railroad Company executed a lease to the Union Traction Company, which is in the record, and by the terms of which it surrendered to the Union Traction Company all its property, and all its rights, to be used and operated by the Chicago Union Traction Company, retaining only its corporate existence. While there is no lease in the record from the North Chicago Street Railroad Company to the Chicago Union Traction Company, yet it is claimed by the appellant that such lease was executed, and the recitals in several of the agreements and leases refer to such a lease as having been executed. The Chicago Union Traction Company was organized under the general law of the State on May 24, 1899. It was nothing more than a consolidation and union of the old companies, to-wit, the West Chicago Street Railroad Company and the North Chicago Street Railroad Company.

The Chicago Consolidated Traction Company was organized under the general Incorporation act of the State on January 28, 1899. It was nothing more than a union or consolidation of the seven or eight suburban or outlying companies above mentioned, to-wit, the Cicero and Proviso Street Railway Company, the Chicago and Jefferson Urban Transit Company, the Ogden Street Railway Company, the North Side Electric Street Railway Company, the Chicago Electric Transit Company, the North Chicago Electric Railway Company, and the Evanston Electric Railway Company, and perhaps one or two other companies. The Chicago Consolidated Traction Company claims to have purchased all the property and rights of these suburban companies, though exactly how the purchase was effected does not appear.

The Chicago Union Traction Company maintained the same relation after its organization towards these suburban or extension companies, which the West Chicago Street Railroad Company and the North Chicago Street Railroad Company had sustained before the organization of the Chicago Union Traction Company. The merging of the outlying companies into the Consolidated Traction Company did not change the relation of these companies to the Chicago Union Traction Company. In other words, after its organization, the Chicago Consolidated Traction Company bore to the Chicago Union Traction Company the same relation, which the seven or eight outlying companies bore to the West Chicago Street Railroad Company and the North Chicago Street Railroad Company. As the original companies substantially and in effect owned and operated the outlying companies before the merger of the original companies into the Chicago Union Traction Company, and before the merger of the outlying companies into the Chicago Consolidated Traction Company, so, after such mergers, the same relation of subordination and control existed on the part of the Chicago Union Traction Company over the Chicago Consolidated Traction Company.

In some of the agreements it is recited that the Chicago Consolidated Traction Company purchased all the suburban companies, and assumed all the liabilities of such companies, but there is nothing to show that it assumed or guaranteed the liabilities of the suburban companies, which it claims to have purchased, beyond amere recital to that effect in one or more of the agreements herein. • On the contrary, after the Chicago Consolidated Traction Company was organized, and, according to its claim, had absorbed or purchased the suburban companies, the Union Traction Company guaranteed the bonds of these suburban companies. Mr. John M. Roach, the president of the Chicago Union Traction Company and also the president of the Chicago Consolidated Traction Company, says: “I believe the Union Traction Company have guaranteed every bond that has been issued by the underlying companies.” Mr. P. E. Smith, auditor both of the Chicago Union Traction Company and of the Chicago Consolidated Traction Company, says: “The full amount of the bonds of the underlying companies guaranteed by the Union Traction Company is §5,194,000.00.” The latter sum is the sum total of the bonds of the Cicero and Proviso Street Railway Company, the Ogden Street Railway Company, the Chicago and Jefferson Urban Transit Company, the North Chicago Electric Railway Company, the Chicago Electric Transit Company, the North Side Electric Street Railway Company, and the Evans-ton Electric Railway Company. As these bonds for the construction of the lines of the outlying companies were originally guaranteed by the West Chicago Street Railroad Company and by the North Chicago Street Railroad Company, so they were subsequently guaranteed by the Chicago Union Traction Company even after the organization of the Chicago Consolidated Traction Company, and the merger of the outlying companies into the latter company. The dominion of the original companies over the suburban companies in the manner shown by the agreements set forth, was exercised afterwards by the Chicago Union Traction Company, successor of the original companies, over the Chicago Consolidated Traction Company, successor of the outlying companies.

The history of the development of the railway system here involved shows, that the lines of the Chicago Consolidated Traction Company were built by the lessors of the Chicago Union Traction Company, the North Chicago Street Railroad Company and the West Chicago Street Railroad Company, and, if not built directly by such lessor companies, they were built under the superintendence of the latter, and with money raised upon bonds guaranteed by the latter, and as extensions of and feeders to the lines of the latter. All the lines of the Chicag'o Consolidated Traction Company are operated for that purpose to-day. The leases and agreements show that for three years the lines of the west side, including the lines of the Cicero and Proviso Street Railway Company, the Chicago and Jefferson Urban Transit Company, and the Ogden Street Railway Company, were operated, as matter of fact, by the lessor companies, although they were apparently operated by the subordinate companies. The ordinance, known as sections 1723 and 1725, was originally passed by the common council of the city of Chicago on June 26, 1890, before the organization of most of these subordinate companies. Whether the lessor companies built and operated the extensions under the names of these various subordinate companies for the purpose of avoiding compliance with the terms of the ordinance, is a matter that is not established by the evidence. But the evidence shows that the existence of such separatee organizations made possible the collection of double fares over the lines as extended.

Second—The second step in the formation of this system of railways begins with the organization, under the general Incorporation act, of the Chicago Consolidated Traction Company on January 28,1899. In the statement, accompanying its certificate of organization, the object, for which the Chicago Consolidated Traction Company was formed, is stated to be “for the purpose of constructing, maintaining and operating horse, dummy or street railways within the city of Chicago and the county of Cook,” etc. Its capital stock is fixed at $15,000,000.00, the number of shares being 150,000, and the amount of each share $100.00, the location of the principal office being in the city of Chicago. The sum total of the capital stocks of the seven suburban companies above mentioned is $7,450,000.00. The capital stock of the Chicago Consolidated Traction Company, to-wit,' $15,000,000.00, is a little more than double the capital stock of the seven subordinate companies, which were merged into the Chicago Consolidated Traction Company. Four persons subscribed, each for one share of the capital stock of the Chicago Consolidated Traction Company. One Eugene Stewart subscribed for the remaining 149,996 shares, being $14,999,600.00. The proof shows that “Eugene Stewart did not take up his subscriptions; those 149,996 shares were issued to the stockholders of the suburban companies of the Consolidated Traction Company.” The proof also shows that one Mr. Yerkes, who was at one time president of the West Chicago Street Railroad Company, and subsequently also president of the Chicago Consolidated Traction Company, was a large stockholder in the West Chicago Street Railroad Company and the North Chicago Street Railroad Company, and also held about two-thirds of the stock of the Consolidated Traction Company. The latter company claims to have purchased or bought out the seven suburban companies, but exactly how the purchase was made is not shown. It does appear, however, that the Chicago Consolidated Traction Company has never built any line of its own, nor obtained any ordinance in Cook county from the common council of the city of Chicago. As is said by Mr. Roach: “It got all its property of other companies.” It seems to be a fair conclusion from the evidence in this record, that the 149,996 shares of stock of the Chicago Consolidated Traction Company were turned over to the stockholders of the seven suburban companies in exchange for their stock. No other explanation is given of the way, in which the Chicago Consolidated Traction Company came to be the owner of all the property and rights of the subordinate companies. We pass no opinion upon the legality of this transaction, if it took place, nor upon the validity of any of the other transactions or organizations herein recited and mentioned, but merely state what the record shows, and what are fair inferences from the facts in the record.

There is testimony to the effect that 149,6733- shares of the stock of the Chicago Consolidated Traction Company were issued. On March 29, 1899, an agreement was made between the Chicago Consolidated Traction Company, as first party, and the West Chicago Street Railroad Company, as second party. This agreement refers to and recites an ordinance, passed by the board of trustees of the town of Cicero on December' 19, 1898, by the terms of which ordinance the Ogden Street Railway Company agrees for a period of twenty years to sell twenty tickets for one dollar, entitling the legal holder to one continuous ride either way in one direction to or from any lawful stopping place on the lines of railway of the Ogden Street Railway Company, at or east of Austin avenue, from or to any lawful stopping place on the Ogden avenue line or the Madison street line east of Ogden avenue, or Randolph street line, or Twelfth street line east of Ogden line in the city of Chicago, of the West Chicago Street Railroad Company, without the payment of additional fare. The ordinance also provides for a system of transfers to or from the respective railroads at the points of connection, so that the legal holder of each of such tickets shall be entitled to a continuous ride either way without the payment of additional fare and without change of cars, except at the point of transfer from the cars of the West Chicago Street Railroad Company to those of the Ogden Street Railway Company, etc. This agreement recites that the Ogden Street Railway Company was indebted to the West Chicago company in a large sum of money; that the Consolidated company had made itself liable for the debts of the Ogden company, and it was therein agreed that the Consolidated company should issue, or cause to be issued, 4379 shares of its capital stock fully paid and non-assessable to the said West Chicago company, and the said West Chicago company was to turn over and to deliver to the Consolidated company “the notes now held by the West Chicago company against the Ogden Street Railway Company, the Cicero and Proviso Street Railway Company and the Chicago and Jefferson Urban Transit Company, and all liability for the sum of $175,160.00 now found to be due and owing from said three companies last above named to the said West Chicago company on an accounting heretofore had.” Therein also, the West Chicago company agreed to collect through. its collectors all cash receipts or tickets collected by the conductors or employees of the Consolidated company, operating over snch railroads in the town •of Cicero, and connecting with the West Chicago company’s lines, as may be requested of said West Chicago company by the Consolidated company from time to time. Therein also, the West Chicago company agreed to carry out and fulfill on its part the provisions of said ordinance, and to give all transfers therein spoken of.

These 4379 shares of Consolidated stock were handed over to the West Chicago Street Railroad Company. Afterwards all the property of the West Chicago Street Railroad Company was turned over to the Chicago Union Traction Company, the appellant herein. This being so, the 4379 shares of the stock of the Chicago Consolidated Traction Company also passed to the Chicago Union Traction Company, and the latter became the owner—if it could legally become such owner—of this amount of the stock of the Chicago Consolidated Traction Company. The notes, held by the West Chicago Street Railroad Company against the Cicero and Proviso Street Railway Company, the Chicago and Jefferson Urban Transit Company and the Ogden Street Railway Company, were given up and surrendered to the Chicago Consolidated Traction Company in return for, and as the consideration for, these 4379 shares of stock. These shares were transferred to the West Chicago Street Railroad Company, and the certificate, representing the shares, was delivered to the president of the West Chicago Street Railroad Company. An attempt is made to show that these shares were disposed of by the West Chicago Street Railroad Company, and did not pass to the Chicago Union Traction Company. The certificate appears to have been canceled and taken up, and a warrant issued in favor of one P. K. Waller. P. K. Waller, however, was merely the assistant secretary and treasurer of the Chicag-o Consolidated Traction Company and transfer agent for that company for its stock in New York. The warrant, issued in his favor, was delivered to the president of the West Chicago Street Railroad Company. The proof does not show to whom Waller transferred it. The amount, shown to have been paid by the West Chicago Street Railroad Company for these shares of stock, was the exact amount of the notes held by that company against the three subordinate companies above named; and it is difficult to understand, if the Chicago Consolidated Traction Company bought back these shares of stock from the West Chicago Street Railroad Company with money, why it did not in the first place pay these notes with money, and keep the shares of stock. Instead of doing that, however, it turned over the 4379 shares of stock in return for the notes. The record does not satisfactorily show that these shares were ever disposed of by the West Chicago Street Railroad Company. They appear to have passed with the other property to the Chicago Union Traction Company. It is not shown, and the witnesses cannot say—if there was any purchase of these shares from the West Chicago company—who purchased them.

On May 10, 1899, a long agreement was entered into between the Chicago Consolidated Traction Company, first party, the Chicago West Division Street Railway Company, second party, the West Chicago Street Railroad Company, third party, the North Chicago City Railway Company, fourth party, and the North Chicago Street Railroad Company, fifth party, wherein it is recited, that the Traction company is the successor and owner of all the railway tracks and rights of the seven subordinate companies above named, and that, prior thereto, said companies had made certain contracts or operating agreements with the said west and north side companies for the operation of cars, etc., and said West and North Chicago companies had made certain contracts or operating agreements with said seven companies above named for the operation of cars over their lines, and wherein it was recited that the seven companies, prior to the transfer to the traction company, and the traction company since said transfer, have been, and are, operating cars over parts of the lines of railroad of the West Chicago company and the North Chicago compa