On the 9th of the month (July 1878) last named, the struggle was renewed, Judge Dillon presiding. Lengthy arguments were heard on the demurrer of the Santa Fe to the complaint filed by its opponent. A perpetual injunction was asked for, restraining the former from constructing its road through the canon. The whole ground was gone over again for the purpose of advisiong Judge Dillon of all the material points in controversy. Hon. J. P. Usher, appeared for the first fiem as chief counsel for the Rio Grande, and made an elaborate argument. He was folloed by Mr. Macon, who raised the point that the Achison Company and not the Canon CIty and San Juan was the real aggressor, that the latter, if it possessed any rights at all under the general act of 1875 had forfeited them by not only acquiesing in the action of the Santa Fe in taking forcible possession of the line, but in practically aiding it to carry out its illegal purposes; that the Santa Fe having no corporate existence in this State could have no rights, and therfore both these companies should be restrained and the injunction against his client removed, because they had the only and exclusive right-of-way through the canon by virtue of the special act of Congress ot 1872. THe gist of Macon's plea was that the D.& R. G. really had no contestant in the case; that the San Juan Company was never organized for the purpose of building a road through the canon; that its capital stock originally was but $100,000. and that even if all paid up it could not build three miles of road; that it was organized for the sole purpose of a cloak for the Santa Fe, which had no rights under the law.
The attorneys for the latter made no reply, but agree to submit the case on its merits. On the 22nd the matter came up again, when a great deal of testimoney was taken. J. A. McMurtrie, chief engineer for the narrow gauge, testified that he made the first survey through the canon in January and February, 1871, from Canon City to Twelve Mile Park. In 1872 he continued the survey four miles beyond, staking the canon all the way. In April 1878, he ran his line three miles further, when he was stopped by the Santa Fe. Col. W. H. Greenwood testified that he had been General Manager of the Rio Grande road until July 1874, that the survey through the canon was made by his direction and for the purpose of holding that thoroughfare.
After two of three days spent in the examination of witnesses, the cause was continued to the first week in August. On the 23rd of that month, Judge Hallett rendered a decision, which granted the Canon City and San Juan Company the right to go forward and construct its line as surveyed, located and platted. The Denver & Rio Grande Company were therfore restrained from any interference, and from constructing a line for themselves but might proceed, if they could without interference, to construct another line and if it became necessary, might on application to the court, be allowed to use the track of the other company. But the Canon CIty and San Juan was cautined not to construct its line in such a manner as to make it more difficult or expensive for the RIo Grande to construct, and either party in case it considered itself aggrieved or wronged by the other, might apply to the court for protection.
This was a decided repulse to the Palmer forces, but they resolved not to stop there. They appealed to the Supreme Court of the United States and pending decision there, decided to construct their undisputed line above the twenty miles covered by the Canon City and San Juan.
On the 12th of September, the Atchison Company consolidated with the Pueblo and Arkansas Valley and the Canon City and San Juan. Its lines were in operation from the east line of the State to Pueblo and from La Junta to Trinidad. Its consolidated capital stock was $6,000,000. It proposed to build under the arrangement from Pueblo to Canon CIty, thence through the Grand Canon to Leadville, through Gunnision Pass, and the Park and Summit counties, with a number of branches covering all the Rio Grande territory, including Colorado Springs and Denver.
About May 1st, 1872, Col. D. C. Dodge was made general freight and passenger agent of the Rio Grande lines. He was thoroughly familiar with every detail of the business through long connection with the Chicago and Northwestern Railroad and the Kansas Pacific. In the wars of the narrow gauge with its persisitent rival, he took a prominent part and proved an admirable manager.
On the 8th of October, 1878, rumors of a lease of all the narrow gauge lines to the Santa Fe Company began to appear. On the 11th they were confirmed. On the 15th there came a dispatch from Canon City saying the matters in controversy had been adjusted, that both companies would continue their extensions southward, the Santa Fe abandoning the Arkansas Canon to Palmer. The papers were executed in New York, October 19th, 1878, and provided for the transfer December 2nd. By the terms of the lease the Santa Fe agreed not to build, operate or encourage any road, directly or indirectly not already constructed, that is parallel to, or competing with, the Denver and RIo Grande's then constructed lines; further, that the Santa Fe Company should not change the gauge nor lay a third rail without widening the gauge or laying an additional rail over all the lines, except those between Pueblo and the coal mines of Canon CIty; and any lines that might be built from any terminus of the Denver and Rio Grande road or in extension thereof, should be of three-foot gauge. The Santa Fe bound itself not to discriminate in freight or other charges in any manner to the injury of the Denver and Rio Grande, and when traffic could be carried at the election of the leasee, it should transported by the shorter line. The rental was to be paid monthly, and when the Santa Fe took possession it was to pay for fuel, material and other railway supplies on hand, a sum to be agreed upon by two persons to be appointed by the president of each road; the sum so paid to be applied by the Denver Company to the payment of its debts, exclusive of stock in excess of $22,644 per mile. No provision of the lease was to be abrogated or modified without formal written consent of the trustess of the existing mortgages of the Denver and Rio Grande. All litigation between the two companies was to be abandoned, the narrow gauge road to be extended to the San Juan mines and through the Grand Canon of the Arkansas. The usual condition of such instruments as to keeping the leased road in good repair, etc., were included.
At the annual meeting of the Rio Grande stockholders, held at Colorado Springs, November 29th, Gen Palmer presided and most of the stock was represented. The proposition of the Santa Fe to lease the road was fully discussed, after which Dr. W. A. Bell introduced a resolution to the effect, that the proposed lease of the present constructed lines "be and the same ratified and confirmed; provided, however, that inasmuch as certain acts are first required to be done, and the lessee company is first required by said lease to deposit a certain sum for supplies and property, to be ascertained as therin stipulated, possession shall not be given until the President shall so direct". The resolution was adopted. The lease was to run thirty years; rental for the first year, froty-three percent, of the gross earnings, with a reduction of one per cent, for each succeeding year to the seventh, after which to the fourteenth inclusive, it was to be thirty-seven percent, and for the remainder, thirty-six per cent.
The stockholders re-elected the old board of directors - Palmer, Bell, Risley, Wagner and Hunt. The officers chosen by the Board were; Palmer, President. Dr. Bell, Vice-President. Wm. Wagner, Secretary R.F. Weibrec, Treasurer. H. A. Risley, Solicitor and D. C. Dodge, General Manager. Although the lease had been virtually ratified, ill feeling cropped out from time to time, and it was clearly apparent that the arrangement was far from being amicable. But the RIo Grande was in hard times just then. Had Palmr been able to move his financial affairs successfully, no such compromise could have been effected.
The Santa Fe in its progress southward, crossed the southern boundry of Colorado into New Mexico, November 30th, 1878, by a temporary switchback over the Raton Range, to give passage to its trains while the mountain was being tunneled. The grading had been completed nearly to Las Vegas - 113 miles in advance.
The formal transfer of the narrow gauge road took place at midnight of December 13th, 1878, all disagreements having been reconciled. D. C. Dodge continued for a short time as General Manager and W.W. Borst permanently as superintendent.
A portion of page 109 and 110
This portion of the Meade's Manual transcribed in altered form by Russell L. Crump