App. Div.] shown to have any personal knowledge whatever of the facts in relation to the lease in question, or to the alleged modification thereof, nor is the absence of an affidavit from the proper parties explained in any way. No effort was made to supply any further affidavit in support of the motion, which, therefore, should have been denied. The order appealed from will be reversed, with ten dollars costs and disbursements, and the motion for a stay denied, with ten dollars costs. CLARKE, P. J., SMITH, PAGE and GREENBAUM, JJ., concur. Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs. WESTCHESTER FIRE INSURANCE COMPANY, Respondent, v. THE SYRACUSE, BINGHAMTON AND NEW YORK RAILROAD COMPANY and THE DELAWARE, LACKAWANNA AND WESTERN RAILROAD COMPANY, Appellants, Impleaded with HATTIE E. ALVORD and Others, Defendants, and HONOR B. DOUGLAS and GILLIAN W. B. BAILEY, as Executors and Trustees of the Estate of WILLIAM R. BARR, Deceased, and Others, Respondents. First Department, July 2, 1920. Railroads suit by minority stockholders to compel cancellation of lease in perpetuity of railroad properties lease construed agreement that lessor shall issue its obligations at request of lessee guaranty of payment of obligations of lessor by lessee when lease will not be set aside in equity. Suit by minority stockholders of the Syracuse, Binghamton and New York Railroad Company, a domestic corporation, brought to set aside a lease of the property and franchises of said company to the Delaware, Lackawanna and Western Railroad Company, upon the ground, among others, that said lease, approved by the majority of the stockholders, is unfair and oppressive to the minority to the extent that a court of equity should interfere for the protection of the latter. It appeared that the lessee company owned the majority of the stock of the lessor and for many years had practically operated the lessor's road as part of its own system, chiefly for the purpose of transporting coal, in which the lessee had formerly engaged in mining, in connection with its railroad business. As the opera First Department, July, 1920. [Vol. 192. tion of such mines by the lessee was held to be illegal by the Supreme Court of the United States so that it could no longer execute its contract with the lessor for the transportation of coal, the lease in issue was prepared and approved by the directors and majority stockholders of both companies and also received the approval of the Public Service Commission subject to certain conditions which were subsequently fulfilled by the parties thereto. The lease demised all the properties and franchises of the lessor for the full term of its corporate existence and thereby the lessee assumed all the debts and obligations of the lessor and agreed to pay to the holders of the capital stock of the lessor interest at the rate of twelve per cent per annum upon the par value of their stock. The lessor was to maintain its corporate existence and at the request of the lessee to issue bonds or other obligations as might be required by the lessee for the purchase of railroad equipment, etc. The lessee agreed to maintain the property in good condition at its own expense, and the lessor reserved the right to rescind the lease if the lessee neglected to fulfill its obligations. The consent of the Public Service Commission to the execution of the lease was upon the express condition that the lessee should guarantee the payment of bonds and obligations which might be issued by the lessor which the lessee agreed to do. On all the evidence, Held, that the lease, as approved by the majority of the stockholders of the lessor, was not oppressive and unfair to the minority stockholders because it required the lessor at the request of the lessee to execute bonds and other obligations to such amount as might be required by the lessee for the purchase of railroad equipment and the maintenance thereof and was not of such a nature that the lessee was not bound thereby; that the lease, construed most strictly against the lessee, impliedly bound it to guarantee the principal and interest of all obligations issued by the lessor at the request of the lessee, and that such was the real intent of the parties, and that, there being no suggestion or proof of bad faith or fraud on the part of either railroad company, the lease must be held to be fair and equitable and should not be set aside. APPEAL by the defendants, The Syracuse, Binghamton and New York Railroad Company and another, from a judgment of the Supreme Court in favor of the plaintiff and certain of the defendants, entered in the office of the clerk of the county of New York on the 15th day of May, 1917, upon the decision of the court rendered after a trial of the New York Special Term setting aside and canceling a certain lease made by the Syracuse, Binghamton and New York Railroad Company to the Delaware, Lackawanna and Western Railroad Company. The opinion of the Special Term is reported in Westchester F. I. Co. v. S., B. & N. Y. R. R. Co. (97 Misc. Rep. 471). App. Div.] Douglas Swift of counsel [Wilbur L. Ball with him on the brief], William S. Jenney, attorney, for the appellants. Benjamin G. Paskus of counsel [Jacob Scholer and John E. Tracy with him on the brief], Frank M. Tichenor, attorney, for the plaintiff, respondent. Oscar S. Blinn of counsel [Theodore L. Bailey, attorney], for the defendants, respondents, Honor B. Douglas and Gillian W. B. Bailey, as executors, etc. DOWLING, J.: The plaintiff, Westchester Fire Insurance Company, a domestic corporation (hereinafter referred to as the Westchester Company), is the owner of 500 shares of the capital stock of the Syracuse, Binghamton and New York Railroad Company, a domestic railroad corporation (hereinafter referred to as the Syracuse Company). The defendant Delaware, Lackawanna and Western Railroad Company, a foreign railroad corporation (hereinafter referred to as the Lackawanna Company), was the owner of 20,808 shares of the capital stock of the Syracuse Company at the time of the execution of the lease complained of, the remaining shares being owned by sixty-seven stockholders and at the time of the trial of this action it owned 21,557 shares. The Syracuse Company was originally organized on July 2, 1851, under the General Railroad Law (Laws of 1850, chap. 140), as the Syracuse and Binghamton Railroad Company, and was reorganized in 1856 as the Syracuse and Southern Railroad Company, and the said name was thereafter changed by a special act of the Legislature of this State in 1857 (Laws of 1857, chap. 214) to the Syracuse, Binghamton and New York Railroad Company, its present name. The total authorized capital stock of the Syracuse Company is $2,500,000, consisting of 25,000 shares of the par value of $100 each, all of which stock is issued and outstanding. This was the original amount of its authorized capital stock and the same has never been increased or decreased. The railroad of the Syracuse Company is approximately eighty-one miles in length with about fifty-one miles of sidings, extending from Binghamton to Syracuse, N. Y. At APP. DIV.-VOL. CXCII. 30 First Department, July, 1920. [Vol. 192. both termini it connects with leased lines of the Lackawanna Company. At the former it connects with a line from Pennsylvania; at the latter with a line from Oswego, N. Y. The Lackawanna Company is a Pennsylvania corporation, duly authorized to do business in the State of New York, and has a perpetual charter. It owns and operates lines of railroad in Pennsylvania, and leases and operates lines of railroad in New York and New Jersey. Its system includes a doubletrack main line extending from Hoboken, N. J., to Buffalo, N. Y. On January 8, 1858, the Lackawanna Company entered into a trackage contract with the Syracuse Company, and this marked the beginning of the relationship between the two roads. The Lackawanna Company at that time was a large owner of anthracite coal lands in Pennsylvania, and was engaged in mining its coal and transporting it in interstate commerce to markets in various States. A large part of its coal was marketed in Canada and points in northern and western New York, and in order to reach such markets it sought and by this contract obtained trackage rights over the Syracuse Company's road from Binghamton to Syracuse. In this contract the Syracuse Company agreed to allow the use of its tracks to the Lackawanna Company for the purpose of transporting coal thereon, and to keep said tracks in good running order. The Lackawanna Company agreed to bear the entire expense of the operation of its trains over said road, including that of loading and unloading coal and other freight; to pay the Syracuse Company one cent per ton per mile for all coal transported by it over said road, or any portion thereof; to make said road "its principal avenue for the transportation of coal destined for the Lakes, Canada and points in northern and western New York;" and to transport at least 100,000 tons of coal over said road each year. No charge was to be made for returning empty coal cars over the road, but the Lackawanna Company was given the right to transport other freight in such returning coal cars, and it agreed to pay for freight so transported one cent per ton per mile. The contract provided for a revision of the rate of compensation at the end of each five-year period at the instance of either party. It was agreed that the contract should remain in App. Div.] force during the existence of the charters of the respective companies and the renewals of such charters. In November, 1877, the contract was amended by reducing the trackage rate from one cent per ton per mile to one-half cent per ton per mile; and the latter rate continued in effect until upon the decision of the United States Supreme Court in the so-called Commodities Case the performance of the contract by the Lackawanna Company became unlawful and it was discontinued, as will be more fully explained hereinafter. Upon the execution of this contract in 1858 a heavy movement of the Lackawanna Company's coal over the Syracuse Company's road began. The importance of this traffic to the Syracuse Company during the period from 1902 to 1912 may be judged from the fact that the earnings therefrom varied from $335,422.69 in the former year, to the minimum amount of $299,061.45 in the latter, reaching the maximum of $481,999.71 in the year 1907. On December 22, 1873, the Lackawanna Company purchased 13,268 shares of the capital stock of the Syracuse Company, carrying with it the control of the road. From time to time thereafter it purchased additional stock until on July 31, 1907, it owned 19,389 shares. On that date, pursuant to the requirements of the Public Service Commissions Law (Laws of 1907, chap. 429, § 54) then in force, it applied to the Public Service Commission, Second District, and received permission to purchase any or all of the remaining stock of the Syracuse Company. Thereafter it purchased from time to time additional stock until on December 6, 1911, the date of the stockholders' meeting of the Syracuse Company at which the lease in question was approved, it owned 20,808 shares; on December 30, 1912, the date on which this action was started, it owned 21,041 shares; and on October 28, 1915, the date of the trial of this action, it owned 21,557 shares, including the qualifying shares of the directors of the Syracuse Company. By virtue of its stock control and the said contract of 1858, the Lackawanna Company since 1873 has practically operated the Syracuse Company's road as a part of the Lackawanna system. While the Syracuse Company had some equipment, a few locomotives and cars, most of the equipment for the |