Commonwealth Ex Rel. Margiotti v. Union Traction Co.

194 A. 661, 327 Pa. 497, 1937 Pa. LEXIS 587

• Court: Supreme Court of Pennsylvania
• Decided: June 25, 1937
• Docket: Appeal, 1
• Status: Published

Opinions

Opinion by

Me. Justice Linn,

This appeal is from an order quashing a writ of quo warranto directed to forty-three respondent corporations and intended to procure forfeiture of their charters for alleged misuser and nonuser of secondary franchises to hold and operate street railways in Philadelphia. The writ was issued at the relation of and on a Suggestion filed by the attorney general. The charge is that by lease and stock ownership respondents unlawfully conspired to avoid performing corporate duties, with resulting damage to the public. The extent of the conspiracy, in point of time, and its character, as respects overt acts, may be understood by keeping in mind that many of the respondents were incorporated by special acts of assembly prior 1 to the adoption of the Constitution of 1873 and many of them under general acts passed since 2 ; that many leases, 3 contracts, enabling acts and city ordinances passed long ago are involved; that the last lease made by any respondent was made in 1902 by Union Traction Company to Philadelphia Rapid Transit Company (not a party to this suit). It also appears that since then the lessee has been operating street railways in Philadelphia under that lease, and under additional leases and contracts of the same character as some of those complained of.

Respondents moved to quash the writ, assigning many reasons which the learned court below reduced to twelve. 4 We need not consider whether all are valid; as the Suggestion for the writ shows on its face that the Commonwealth is estopped from claiming the forfeiture on the case presented, the Suggestion is defective in substance. It is therefore unnecessary to state in detail the grounds for the proceeding set forth in the Suggestion. Assuming that some defects might be cured by amendment, there is no escape from the conclusion that the record shows the Commonwealth is estopped from forfeiting the charters.

1. The attorney general insists that if the Commonwealth, at his relation, files a suggestion for a writ of quo warranto the writ must be granted; that the Commonwealth’s right to the writ and to a trial is absolute as the exercise of the sovereign’s prerogative; that the court has no discretion about it, even though discretion may be exercised to the extent of refusing or quashing a writ sought in the name of the Commonwealth at the instance of a private relator; that a motion to quash will not lie; that respondents have no alternative but to demur, answer or plead.

The contention must be rejected. Against it are the express terms of the Act of June 14, 1836, P. L. 621, 12 PS section 2021 et seq., as well as prior and subsequent decisions dealing with this subject. The jurisdiction in quo warranto, for the first time vested in the common pleas by the Act of 1836, is an adaptation of provisions of the statute of 9th Anne (1710) reprinted in Roberts’ Digest, page 384, which, as a result of the construction put upon our Act of 1722, may be said, in a general way, to have determined the nature of the jurisdiction in quo warranto exercised by this court, 5 as well as the procedure.

Prior to the Act of 1836 vesting concurrent jurisdiction in the common pleas in certain cases in quo warranto, this court had exclusive jurisdiction. Section 1, vesting jurisdiction in the Supreme Court, was declara tory of the existing law: Murphy v. Farmers’ Bank of Schuylkill County, 20 Pa. 415. Section 2 • provides: “Writs of quo warranto in the form and manner hereinafter provided, may also be issued by the several courts of Common Pleas, concurrently with the Supreme court in the following cases, to wit: . . . IV. In case any association, or number of persons, shall act as a corporation, or shall exercise any of the franchises or privileges of a corporation, within the respective county, without lawful authority. V. In case any corporation as aforesaid, shall forfeit by misuser, or nonuser, its corporate rights, privileges or franchises, or shall do, suffer, or omit to do, any act, matter or thing, whereby a forfeiture thereof shall by law be created, or shall exercise any power, privilege or franchise not granted or appertaining to such corporation. And in any such case, the writ aforesaid may be issued upon the suggestion of the Attorney General, or his deputy, in the respective county, or of any person or persons desiring to prosecute the same.”

■ Section 3 provides, “Whenever the Attorney General shall have reason to believe that any association as aforesaid, have acted as a corporation, or exercised any of the franchises or privileges thereof, without lawful authority, or that any corporation has forfeited its corporate rights, privileges, or franchises, as aforesaid, or exercised any power, privilege, or franchise, not granted or appertaining to such corporation, it shall be his duty to file, or cause to be filed, a suggestion as aforesaid, and to proceed thereon for the determination of the matter.”

The words of the Act are that the writ “may also be issued” by the common pleas. The cases hold that “may” is used in its permissive and not in its mandatory sense, and that whether the writ shall issue, or, having issued, shall be tried, rests in the discretion of the court. To accept the attorney general’s argument that a motion to quash will not be entertained and that respondents must demur, answer or plead, even though the Sugges tion shows that the Commonwealth is not entitled to assert the forfeiture, would require a reversal of the procedure long established and followed and would place a power in the attorney general hitherto withheld from that officer. To show that he is in error in contending that the cases support his view, and that, on the contrary, they support respondents’ position, we shall refer to a number of them at the risk of unduly extending this opinion.

In Commonwealth v. Jones, 12 Pa. 365 (1850), in quashing a writ, Gibson, C. J., said: “The writ of quo warranto iunder the Act of 1836 is not more a matter of right than is the quo warranto information under the statute of Anne. The legislature has spoken guardedly on the subject. ‘Writs of quo warranto MAY be issued by the Supreme Court,’ and ‘writs of quo warranto MAY be issued by the Common Pleas,’ is language so circumspect as to, convince us that the intention was to give the same control over the writ which the Court had exercised over the information. The object was to combine in it all that was valuable in the ancient writ, with all that was convenient and proper in the quo warranto information. ...”

“Now it is well known that an information at the suggestion of a relator was always preceded, in this Court, by a rule to show cause, as it is in the Queen’s Bench at this day. The Court itself stood as an inquest, between the accuser and the accused. No man would submit to be the dispenser of corporate patronage, if nothing else were between him and vexatious prosecution, than the magnanimity and justice of the displaced officer or disappointed applicant. ...”

“The practice under our statute, however, has been wrong. The writ has inadvertently issued on the filing of the suggestion, and consequently improvidently; so that it would be impossible to resist a motion to quash for that reason alone. But the ground of the prosecution may, at the same time, he examined as if the case stood on a rule to show cause. [Italics supplied.] The eye of the Court had not been directed to the irregularity, but henceforth it shall be avoided.

“Now a Court will refuse its leave to issue a quo warranto writ, wherever it would have refused its leave to file a quo warranto information. Before the accession of Lord Mansfield to the chiefship of the King’s Bench, it was the practice to file almost of course; but in Rex v. Wardroper, 4 Burr. 1964, he put his hand on it, saying that The Stat. 9 Ann. c. 20, had a view to the speedy justice to be done against the usurpers of offices in corporations, as well as to quiet the possession of those who had right; and that act,’ he said, 'does not leave it to the discretion of the officer (the master of the crown office), as it was before, but puts it in the discretion of the Court; therefore the Court must exercise a discretion. It would be very grievous if the information should go of course, and it would be a breach of trust in the Court to grant it as of course.’ In Rex v. Dawes, Ib. 2022, the same Avas said in substance; and in Rex v. Sargent, 5 T. R. 457, Lord Kenyon approved of it. There are several cases in which leave to file was refused, though there was a clear defect in the incumbent’s title. Thus, in Rex v. Parry, 6 Ad. & Ell. 810, where no answer was given to an objection to it, the Court refused even a rule, because no fraud was imputed; because no mischief appeared to have been done, and because the object of the relators appeared to be a dissolution of the corporation. In Rex v. Bond, 2 T. R. 767, as well as in Rex v. Trevanen, 2 B. & A. 479, it was said that leave will not be given when the circumstances induce a suspicion of the relator’s motive: R ex v. Trelawney, 3 Burr, 615; Rex v. Midlecoat, 2 Barnard. 221; Reg. v. Archdall, 8 Ad. & Ell. 281, and some other cases, are to the same general eifect.”

In Murphy v. Farmers’ Bank of Schuylkill County, 20 Pa. 415 (1853) a writ issued by leave of court without a rule. The Suggestion averred misuser. The bank moved to quash on the ground that the writ was issued at the instance of a private relator instead of the attorney general; that the relator was not a stockholder or creditor of the hank and claimed no office or other private right in it. The court said that the question “depends on the construction of the Act of 14th June, 1836, for, independently of that Act, it is beyond dispute that the Commonwealth only could have quo warranto for the purposes of the present proceeding.” It was held that as the relator had “shown no right or title to maintain the information in the name of the Commonwealth” the writ must be quashed. The court pointed out that the Act of 1836 “grants no powers to, imposes no limitations on, and prescribes no rules for the Supreme Court whatever”; that “all the provisions that follow in this section [the second section] are limited to the Common Pleas, and have no reference to the Supreme Court. They are provisions to regulate the new jurisdiction bestowed on the Common Pleas, and do not touch the old jurisdiction of the Supreme Court. . . . The statute of Anne was enacted in 1710, and gave jurisdiction in Quo Warranto to the Queen’s Bench. In 1722 our Supreme Court was authorized to issue habeas corpus, certiorari, writs of error, and all remedial writs, and were clothed with the same jurisdictions and powers as the Justices of the Court of King’s Bench, Common Pleas, and Exchequer, at Westminster. This was a sufficient warrant for this Court to adopt in practice a rule prescribed in the statute of Anne, and justifies the remark of Judge Gibson in Burrell’s Case, [7 Pa. 34] that the substance of that statute had been adopted before our revolution as part of our common law.” At the close of the opinion, Woodward, J., said: “Another question is made here which deserves to be noticed, because it touches the practice in cases like the present. It is said the writ can be issued only after a rule to show cause: and for that, Jones’ case [12 Pa. 365] in 2d Jones is an undoubted authority. The statute of Anne has the words by the leave of the Court, and the fifth section of the Act of 1836, applicable alike to the Supreme Court and the Common Pleas, provides that the writ may issue with the leave of the Court in term time, or of a judge in vacation. This is sufficiently complied with by the motion which is made, and the allowance of the writ without a hearing. But all analogy and principle show that the party respondent must have a hearing before he is put to answer. This we allow him in a motion to quash the writ. [Italics supplied.] And notwithstanding what was said in the Jones' case, we are inclined to sustain this practice, and dispense with the preliminary rule. It is a matter of form and not of substance; so that the respondent is secure of his preliminary hearing, it matters little whether it be on a rule to show cause, or the less cumbrous motion to quash” (p. 420).

In Com. v. Cluley, 56 Pa. 270 (1868), on the suggestion of a private relator, a rule was granted to show by what warrant respondent exercised the office of sheriff. The court considered the suggestion insufficient in substance and refused the writ. Strong, J., said: “A writ of quo warranto is not a writ of right. Even our Act of Assembly of June 14th 1836, recognizes this. It enacts that such writ mwy be issued by the Supreme Court in all cases in which the writ of quo warranto at common law may have been issued, and in which the said court had, before the passage of the act, possessed the power of granting informations in the nature of such writ. . . . Under the British statute it was always held to be within the discretion of the court whether to grant or withhold an information in the nature of a quo warranto, and the court acknowledged themselves bound to exercise a sound discretion upon consideration of the particular circumstances of each case. This was said by Lord Mansfield . . . and there are cases in which courts have refused leave to file an information at the suggestion of a private relator, even when a valid objection to the defendant’s title has been shown: Rex v. Parry, 6 Ad. & E. 810; 2 N. & P. 414. Nor has this court since the Act of 1836, adopted any other rule. In Commonwealth v. Jones, 12 Penn. St. Rep. 365, the British practice was recognized as the rule with us, and though it has since been decided that it is not indispensable a rule to show cause should be obtained before the writ can issue, no decision has been made that this court is obliged to entertain such writ, if in their opinion it was improvidently issued. The issue of the writ does not end the discretion of the court.” [Italics supplied.] (271-272.)

Commonwealth ex rel. v. Graham, 64 Pa. 339 (1870), arose on a motion to quash a writ issued at the instance of private relators, members of the board of trustees of a church congregation. The motion to quash was overruled. In the course of the opinion Read, J., said: “This writ was allowed by. the Chief Justice, and the rule to show cause is entirely dispensed with: Murphy v. Farmers’ Bank of Schuylkill County, 8 Harris 415; Commonwealth v. Commercial Bank of Pennsylvania, 4 Casey 383. In these cases motions to quash were made, and in the first the writ was quashed, whilst in the second the motion to quash the writ was overruled. Since the case in 4 Casey, which was thirteen years ago, motions to quash seem to have fallen into disuse, and the course pointed out by the Act of the 14th June 1836, has been pursued, the defendants either answering, pleading, or demurring to the suggestion filed.

“Upon a motion to quash, it must be for some defect in the suggestion itself, and not for any matter outside of it. Mere defects in form that can be amended will not be regarded. All the affidavits and evidence that have been put before us by either side must be laid aside, and we must confine our attention to the suggestion alone. The suggestion seems regular in form, and if demurred to, it would seem might hold water: 4 Casey 387. It asserts the title of the relators, which upon demurrer would seem to be sufficient. We do not so decide now, but a reasonable doubt, or rather a reasonable belief, that such might be the case must oblige us to refuse the motion.” (342.)

Though the court, in that opinion, said that, in the thirteen years immediately preceding, “motions to quash seem to have fallen into disuse,” subsequent reports show that such motions again came into use.

In Com. ex rel. v. Dillon, 81* Pa. 41 (1870), after the proceeding was at issue, the attorney general proposed to discontinue, and certain persons, claiming an interest, asked leave to amend by suggesting their interest and substituting themselves as relators instead of the attorney general. Their rule was discharged. In the course of his opinion, Sharswood, J., said: “Upon the motion to quash the writ, which has been substituted for the old practice of a previous rule to show cause why it should issue, Murphy v. Farmers’ Bank of Schuylkill County, 8 Harris 415, the court will consider, not merely the legal questions which may be involved, but the broad questions of the justice and propriety of the proceeding: Commonwealth v. Jones, 2 Jones 365. It is too late to make such a motion after pleading to the suggestion.” (46.)

It will be noted that the motion to quash was deemed a substitute “for the old practice of a previous rule to show cause why it [the writ] should issue,” and that the court should consider the justice and propriety of the proceeding.

In Com. ex rel. Attorney General v. Walter, 83 Pa. 105 (1876), the right to a public office was challenged on the ground of bribery (Article VIII section 9 of the Constitution). An answer was filed to the suggestion. Notwithstanding the answer, the right to issue the writ was challenged by motion. Paxson, J., said: “All this took place upon a rule to show cause why the writ of quo warranto should not go out. The learned judge of the court below was of opinion that the case was not one in which the writ should issue, and discharged the rule, yet on the request of the counsel for the Commonwealth di rected the writ to be issued pro forma, and immediately quashed it.

“It is proper to remark as a matter of practice, that when the Commonwealth through her attorney-general applies for a writ of quo warranto, she is entitled to it without a previous rule to show cause. It is not to be presumed that the law officer of the Commonwealth would apply for this high prerogative writ for personal or private ends. He is supposed to be impartial, and to seek only the vindication of the rights of the state. It is not so in the case of a private relator, who is usually put to his rule to show cause. It might not be so where the attorney-general merely allows private counsel to use his name, as is sometimes done to procure the writ. But when the attorney-general or his recognized deputy assumes the responsibility the writ should issue in the first instance.” The point decided was that the writ would lie without a prior conviction on an indictment charging bribery and that the violation of the constitutional provision and the resulting disqualification to hold office could be tried in the quo warranto.

In Gilroy et al. v. Commonwealth ex rel., 105 Pa. 484 (1884), a writ was issued at the relation of a district attorney to try the right to the office of school directors. A motion to quash was made on the grounds (1) that it was granted on the information of the district attorney, (2) that it issued without a preliminary rule to show cause and (3) that it was made by a person without a special interest in the office. The motion was refused. It was held that by the Act of May 3, 1850, the district attorney had the powers formerly in a deputy attorney general and was authorized to malte the suggestion. On the second point, it was said that while Commonwealth v. Jones, 12 Pa. 365, held a rule to show cause necessary, later cases, Murphy v. Bank, 20 Pa. 415, and Com. v. Cluley, 56 Pa. 270, “have so modified this decision as to hold that the rule to show cause is not indispensable. In such case the practice is analogous to that prescribed by the British statute of 9 Anne, under which the writ was allowed by the court, and as the matter thus rests throughout in the sound discretion of the court, if it appears at any time during the trial that the writ issued improvidently, the court may refuse to entertain it. This removes the necessity of a strict insistence upon the rule to show cause, since the defendant does not thereby lose his opportunity of showing that the suggestion should not have been entertained.” (487.) As late as Commonwealth ex rel. Miller v. Sommer, 309 Pa. 447, 164 A. 515 (1932), we repeated that the writ lay in the discretion of the court.

In Com. ex rel. Attorney General v. West Chester R. R. Co., 3 Grant 200, a motion to quash the writ which had been issued at the relation of the attorney general, was granted. 6 The court examined the ■ Suggestion to see whether it set forth a cause of forfeiture and, adopting respondent’s (instead of the attorney general’s) construction of the incorporation act, held the Suggestion defective for want of such cause, quashed the writ. 7

The general effect of the cases is summarized as follows in 51 C. J., p. 332, sec. 34: “In a few jurisdictions the discretion of the court in a quo warranto proceeding is limited to the grant or refusal of leave to file an information, and is expended when leave to file is granted and an information is filed in pursuance thereof. In a majority of jurisdictions, however, the court may in its discretion withhold relief or decline to proceed to judgment, and it may exercise this discretion, and dismiss the proceeding or render judgment for defendant, upon the. ease made by the pleadings, or at the final hearing, where the facts disclosed are such that if they had been made known in the first instance leave to file the information would have been refused, as where there has been laches or long acquiescence on the part of the relators or the public, or where the rendition of a judgment of ouster would not be in the public interest or serve any good end or purpose.”

A respondent’s right to a determination that the suggestion is defective in substance can not depend, as suggested at the argument, on whether a writ issues at the instance of the attorney general without a rule to show cause, but will not issue at the instance of a private relator without such a rule, because it is clear, from what has been decided in cases quoted, that respondent, by motion to quash may show that the suggestion is defective in substance, after the writ is out. The right to such determination follows from the discretionary character of the power exercised before and since the Act of 1836 and by it vested in the common pleas in such proceedings. The ninth section of the Act of 1836 providing that the defendant shall answer, plead or demur to the suggestion, has not, as the cases quoted show, displaced the motion to quash as a method of calling attention to a fatal defect of substance in the suggestion.

2. We come then to respondents’ contention, inter alia, that it appears from the Suggestion and exhibits that the asserted right of forfeiture should not be allowed, and that this is a defect on the merits not curable by amendment. If that is the fact, this appeal may be disposed of on that ground without discussion of other objections made by respondents.

The Commonwealth’s position is stated as follows: “A suggestion for a writ of quo warranto is not lacking in merit when it avers a conspiracy consisting of specific agreements by all defendants and a general course of conduct by many, resulting in injury to the public and to individuals through nonuser and misuser of franchises.” No usurpation of power is charged. The complaint is of “nonuser and misuser of franchises” 8 ; the burden of showing that is on the Commonwealth. 9 A forfeiture of corporate franchises will not be declared except for substantial reasons: Com. v. Monongahela Bridge Co., 216 Pa. 108, 64 A. 909; Com. v. Amer. Baseball Club, 290 Pa. 136, 146, 138 A. 497; Com. ex rel. Margiotti v. Neptune Club, 321 Pa. 574, 184 A. 542.

For convenience the franchise of a respondent to be a corporation has been regarded as primary and the pow ers to be exercised by them in holding and operating street railways as the secondary franchises. If it appear by the Suggestion that what is charged to be misuser or nonuser of secondary franchises was in fact authorized by legislation, or that the right to ask a decree of forfeiture for the defaults alleged has been waived, that the Commonwealth is estopped by laches, the court must refuse a decree forfeiting the franchises. The leases 10 have been made part of the Suggestion and are before us.

Estoppel by laches may be asserted against the Commonwealth. In Com. ex rel. Attorney General v. West Chester R. R. Co., 3 Grant 200 (supra), one of the grounds of forfeiture alleged was that some of the subscribers to stock, instead of paying their subscriptions in cash, as required, had given promissory notes. In holding the Commonwealth estopped from claiming forfeiture on this ground, the court said: “But if there was anything originally in this objection, it has been repeatedly waived by subsequent legislation [then referred to]. . . . After obtaining large subscriptions to its stock from the borough of West Chester, and from individuals — after borrowing money on the credit of its road and its appurtenances, on its preferred stock, and even on the mortgage of its corporate franchises, in pursuance of direct authority from the legislature, conferred since the happening of the irregularity now complained of, and after expending the money in the construction of the contemplated work, it would be the grossest injustice to permit the State to avoid the charter for the mistakes of her own agents in matters of minor importance. As against innocent stockholders and capitalists who advanced their money on the faith of the grants of the State, authenticated by the highest evidence known to the law, she is certainly bound by an estoppel founded upon the purest equity. As against such parties, she must be deemed cognizant of the acts of her agents, and must be held to have waived all irregularities in bringing the corporation into existence: 9 Wend. 351.” (p. 202.) To the same effect see Com. v. Bala & Bryn Mawr Turnpike Co., 153 Pa. 47, 11 25 A. 1105; City of Bradford v. N. Y. & Penna. T. & T. Co., 206 Pa. 582, 56 A. 41 12 ; Com. v. Hulings, 129 Pa. 317, 18 A. 138; Com. v. Philadelphia, H. & P. R. R. Co., 23 Pa. Superior Ct. 235, 250; a collection of cases on the subject will be found in State of Iowa v. Carr (C. C. A. 8th), 191 Fed. 257, 266.

We then inquire what are the facts supporting estoppel by laches. About sixty-five years have passed since the making of the first lease declared on and thirty-five years since the making of the last (Union Traction Co., respondent, to Philadelphia Rapid Transit Company, not a respondent); about forty-two years have passed since Philadelphia Traction Company leased to Union Traction Company. These transactions were public during all the intervening periods. Many of them were the subject of, or result of, enabling legislation passed with the facts in full view: see for example, the Act of April 15, 1907, P. L. 80, 67 PS section 1256, construed in Brode v. City of Philadelphia, 230 Pa. 434, 79 A. 659 (1911). Case after case in the appellate courts and (since it was established) before the Public Service Commission, brought the character of the corporate organization of these companies and their relation among themselves, which, as we understand the attorney general, constitutes the conspiracy complained of, to the attention of the Commonwealth and its agents. Among them, are Reeves et al. v. Phila. Traction Co. et al., 152 Pa. 153, 25 A. 516 (1893), holding that a municipal ordinance granting consent to the lessor to operate by overhead wires, etc., enures to the benefit of lessee though not named. Mitchell, J., said, (p. 165) “In the present case the thing to be done was the operation of the railways on the streets named by the overhead electric system, and the corporation by which in fact it was to be done was the Traction Company. Whether by virtue of its own powers or by those of its lessor, was of no moment to the public interests, for, as already said, all the powers of both were in the same hands. But the street railway companies, though they had parted with the present control of all their powers except the reserved franchise to be a corporation, were nevertheless the owners not only of all the franchises but of all the plant, or property necessary for the use of such franchises. To them by virtue of their reversionary interests, it would all finally come upon the termination of the lease, whether by its own limitations, or by surrender, for forfeiture or new contract.”

Brode v. Phila., 230 Pa. 434, 79 A. 659 (1911), involved the contract constituted by ordinance enacted pursuant to the Act of April 15, 1907, P. L. 80, authorizing contracts by cities and street railway or motor power companies “leasing and operating the franchises and property of such companies”; the ordinance is set forth in the report of the case, and, at p. 437, malíes the following recitals showing general public knowledge of the transactions now complained of as ground for forfeiture: “Whereas, Beginning about the year 1857 different companies to the number of upwards of fifty, incorporated by the Commonwealth of Pennsylvania, have been granted consent by the City to occupy various streets of the city for the purpose of transporting passengers from point to point along the same, which fran chises and consents have been granted subject to various conditions and restrictions;

“And Whereas, These companies were subsequently leased for long terms of years by traction or motor-power companies, which have installed the electrical system of propulsion of cars, all of which leases have now, by assignments and various conveyances, become vested in the Company, which thus controls and operates as one general system practically all of the street passenger railway companies in the City of Philadelphia; . . .

“And Whereas, The terms, conditions, restrictions and liabilities which have been imposed upon these various companies (all of which shall be taken as included in the words ‘subsidiary companies’ wherever the same are hereinafter used) differ widely, and there is dispute and uncertainty with respect to the effect of many of the provisions thereof, and it is believed that it is to the interest of the public as well as of the parties hereto to supersede the former regulations, and to define and regulate the relations between the parties hereto so as to make them fixed, fair and uniform;” the parties agreed in “confirming of the rights and franchises of itself [The Philadelphia Rapid Transit Company] and its underlying companies [present respondents] under the conditions herein contained.” (p. 439.)

In Citizens Passenger Ry. Co. v. Public Service Com., 271 Pa. 39, 114 A. 642 (1921), the opinion states: “Originally there were a number of street passenger railway companies in the City of Philadelphia, operating under separate charters, and each limited to a specific route of travel. Believing that combination would be more profitable, favorable legislation was obtained, one road would lease others, and those owned and leased would be run as a single system. Ultimately many of them were leased by the Philadelphia Traction Company, which, with its leased lines and those still operating under their original charters, were later leased by the Union Traction Company; and it, in turn, with all its leased lines, was leased by the Philadelphia Rapid Transit Company, which is now the sole operating company in the city. This latter lease is the only one to which the last-named company is a party; bnt thereby, as by all the other leases, it was provided that the lessee company should carry out the terms and conditions of the preceding leases, for which its lessors were responsible. Those contracts provided for specified rentals, to be paid by the lessee to the lessor, sufficient to cover the fixed charges of the latter and a stated dividend to its stockhholders; and, since the leases included the franchises of the original companies, the latter were denuded of everything except their mere corporate existence. All this occurred long before the Public Service Company Law of July 26, 1913, P. L. 1374, went into effect; and those contracts, of course, are of binding force, according to their terms, unless the State constitutionally can interfere and actually has interfered therewith on behalf of the public.” (pp. 43-44). On the same subject see statement of Stewart, J., in Phila. v. Philadelphia Rapid Transit Co., 224 Pa. 544, at p. 550, 73 A. 923.

In 1920 many of these respondents were made parties to a proceeding then pending against the Philadelphia Rapid Transit Company before the Public Service Commission. The complaint set forth (p. 240 of 75 Pa. Superior Ct.) that “The rental received by the companies leased by the Philadelphia Rapid Transit Company was unjust and unreasonable and prayed the Public Service Commission to reduce the rentals, dividends and profits received by the respondents from each other and from the Philadelphia Rapid Transit Company or any other holding or operating company, so that each of the respondents should receive annually a fair return and not more upon the property and facilities contributed to the public service.” The case reached this court and is reported in 271 Pa. 39, 114 A. 642.

In 1923, the Public Service Commission considered a complaint, to which the City of Philadelphia was a party, against the Philadelphia Rapid Transit Company’s schedule of rates: 83 Pa. Super. Ct. 8. A similar proceeding is reported in 84 Pa. Super. Ct. 135.

In Passyunk Avenue Business Men’s Association v. The Public Service Commission, involving the Frank-ford and Southwark Philadelphia City Passenger R. R. Co., one of respondents, the right to discontinue service on certain streets and to reroute its cars were before the Commission and the court: 73 Pa. Super. Ct. 242.

The Public Service Commission was an agency of the state with jurisdiction over respondents as conferred by the Public Service Company Law, 1913, P. L. 1374, 66 PS section 1, et seq. Section 6 of Article IV of the Act (1913, P. L. 1398), provided, “The Attorney General shall ex officio be the general counsel of the commission. He shall appoint two attorneys, who shall be learned in the law, as counsel and assistant counsel, respectively, for the commission. . . . Said counsel and assistant counsel shall also assist the Attorney General in conducting all mandamus, injunction, and quo warranto proceedings, at law or in equity, instituted by him for the enforcement of the determinations, rulings, and orders of the commission, and shall perform such other professional duties as may be required of them, or either of them, by the commission.” In view of a contention made by the attorney general that certain of respondents leased their secondary franchises before constructing any railway, it is not without interest to note that this method of enlarging the street railway system of Philadelphia, though complained of by the attorney general in this case, was continued with the approval of the Public Service Commission after the lease by which the Philadelphia Rapid Transit Company in 1902 became the operating company. An example appears in Vol. 6, Penna. Pub. Ser. Com. Reports, p. 527, Application of Philadelphia Rapid Transit Co. The Commission in making orders approving five similar applications, said: “The Philadelphia Rapid Transit Company is a motor power company incorporated under the Act of March 22, 1887, (P. L. 8), without corporate power to construct or own street railway facilities. Therefore, it operates its system in Philadelphia under leases. Since the unification of the electric railway system in Philadelphia, all necessary changes in routing and operation that have involved new construction have been effected through the medium of incorporating new companies whose stock is owned entirely by the Rapid Transit Company, and then leasing the newly incorporated companies to the Rapid Transit Company. ... 13 The practical application of the situation is that the Rapid Transit Company, in the present instance, expends through an incorporated subsidiary $28,500 for the improvement of facilities made necessary in the public interest, upon which capital expenditure there will be an annual interest charge of 6 per cent. The property created by this expenditure as well as all the other rights upon which it is based will pass into the ownership of the city when the latter elects to exercise its option. Undoubtedly, the public service is benefited by the improvement, the capital expenditure is a justifiable one, and the rights of the city under its contract are fully asserted and preserved.”

For reports of rate cases, heard by the Commission, involving Philadelphia Rapid Transit Company’s rates and referring to these leases, see 12 Pa. Corp. Rep. 151; 14 Pa. Corp. Rep. 308. In 17 Pa. Corp. Rep. 269, is a report of the Commission made on the application of the City of Philadelphia pursuant to the Act of May 3, 1927, P. L. 508, 53 PS section 3712, authorizing the condemnation by the City of Philadelphia of the entire street railway system.

State tax reports filed by some of the respondents led to proceedings in the courts in which the corporate organization complained of was presented for consideration: see Com. v. Union Traction Co., 1 Dauphin Co. Rep. 169 (1898); Com. v. People’s Traction Co., 183 Pa. 405, 39 A. 42 (1898).

These facts are not in dispute. The public character of the leases and the periods during which they have existed is conceded; that the legislature passed the Acts referred to dealing with these respondents is admitted; that its agent, the Public Service Commission, recognized the resulting street railway system as an operating unit is not denied; it is agreed that the City of Philadelphia had knowledge of the leases, and resulting changes in the operation of the street railways appear from city ordinances, only a few of which have been referred to; that innocent investors purchased respondents’ stocks and bonds on the faith of the apparent validity evidenced by such state and municipal recognition will not only be noticed judicially but is part of the history of the times as the records of the courts have frequently shown.

These considerations the attorney general meets by saying that it does not appear that there was “(1) An unreasonable lapse of time. (2) Knowledge by the Commonwealth of existing conditions during that period of time. (3) Prejudice to the defendants by virtue of the Commonwealth’s inaction.”

To support the first, that the delay is not unreasonable, his brief says “. . . what is 40 years over a period of 999 [the term of the lease] ?” Estoppel does not depend on time alone but on action and failure to act after knowledge. “But it is unnecessary to multiply cases. They all proceed upon the theory that laches is not like limitation, a mere matter of time; but principally a question of the inequity of permitting the claim to be enforced — an inequity founded upon some change in the condition or relations of the property or the parties”: Galliher v. Cadwell, 145 U. S. 368, 373. We do not understand the basis of the assertion of the attorney general that knowledge on the part of the Commonwealth is wanting. The Suggestion must be considered in the light of the legislation dealing with these corporations; that legislation is part of our public records; the actions of the Public Service Commission concerning the Philadelphia street railway system are also public records that may not be ignored in this inquiry. In Com. ex rel. v. West Chester Railroad Company, 3 Grant 200, supra, much less was held sufficient knowledge to estop the Commonwealth from asserting a forfeiture; the same case supplies all that need be said in rejecting the third point that no prejudice will result; certainly innocent stock and bondholders will be injured if the forfeitures are declared.

After the validity, or apparent validity, of corporate transactions so conducted in public view has gone unchallenged and has not only been recognized but participated in over the specified period by the General Assembly, by the courts of the Commonwealth and by the Public Service Commission, since its creation, in dealing with these transactions, we think that established principles 14 of law and equity as hitherto administered require that we hold that persons who have invested in the stocks, bonds or other securities issued on the faith of such conduct by the public authorities, did not assume the risk of a detrimental change in the Commonwealth’s attitude that would impair the resulting investments. As was said in quashing the writ in Com. ex rel. Attorney General v. West Chester Railroad Company, 3 Grant 200, after persons have acted “on the faith of the grants of the State, authenticated by the highest evidence known to the law, she is certainly bound by an estoppel founded upon the purest equity. As against such parties, she must be deemed cognizant of the acts of her agents.”

The order appealed from is affirmed, costs to be paid by appellant.

1 The first one was incorporated in 1854.

2 The last, the Union Traction Company, was incorporated in 1895.

3 The first lease involved was made in 1870.

4 “1. That no good cause of action is alleged,

2. That there is a misjoinder of parties defendant,

3. That there is a misjoinder of causes of action,

4. That no benefit to the public will result from the proceeding,

5. That joint trial of all the defendants would deprive them of due process of law,

6. That joint trial of all the defendants would be a denial of justice and of the right of trial by jury,

7. That Philadelphia Rapid Transit Company, a necessary party, is not joined,

8. That forfeiture of the defendants’ franchises would impair the obligation of defendants’ contracts,

9. That the Suggestion is vague, indefinite and uncertain,

10. That the claims of the Commonwealth are barred by its laches and acquiescence, and

11. That the Commonwealth has not properly pleaded the leases which form the basis of certain of the alleged causes of action.

The foregoing reasons are assigned in all of the motions filed by the thirteen defendants. That of the Union Traction Company of Philadelphia, contains an additional reason, viz:

12. That this defendant is party to the proceeding pending in the United States District Court at Philadelphia, for the reorganization of Philadelphia Rapid Transit Company, wherefore this court is without jurisdiction to entertain this proceeding; or, if it have jurisdiction, it should not exercise it during the pendency of that proceeding.”

5 See report of the Commissioners on Civil Code 1831-1836, page 782 of the volume in the Philadelphia Bar Association library.

6 While the report- merely shows that the,attorney general appeared in this court on behalf of the writ, an examination of our Docket in the prothonotary’s office shows that this court issued the writ at the relation of the attorney general.

7 These cases merely apply the general principle applied in other proceedings. The moving party must show a prima facie case; the writ obtained by him may be sustained only if legally supported; a writ having issued as of course, the respondent is given opportunity, by motion to quash, to show that the writ is not supported by the papers pursuant to which it issued; this he may do by showing that the suggestion or affidavit which obtained the writ, is defective in substance in a respect not curable by amendment. For such reason writs are constantly quashed: in attachment execution, see Provident Trust Co. v. Rothman, 321 Pa. 177, 187, 183 A. 793; Williamson v. McCormick, 126 Pa. 274, 17 A. 591; in foreign attachment, Pasquinelli v. Southern Macaroni Mfg. Co., 272 Pa. 468, 473 et seq., 116 A. 372; Christian v. Bennett, 317 Pa. 23, 175 A. 494; in capias ad respondendum, Whalen v. Gabell, 120 Pa. 284, 13 A. 941; Vocht v. Kuklence, 119 Pa. 365, 13 A. 199; in replevin, York v. Marshall, 257 Pa. 503, 101 A. 820; in proceedings under the sci. fa. Act of 1929, see Bowers v. Gladstein, 317 Pa. 520, 178 A. 44; though motions to strike off have also been sustained: Jones v. Wohlgemuth, 313 Pa. 388, 169 A. 758; Phi Chi Fraternity v. Phila., 317 Pa. 284, 176 A. 737; Aultman v. Pittsburgh, 326 Pa. 213, 192 A. 112.

8 In an earlier stage of this proceeding, apparently the foundation for the Suggestion, the attorney general said: “The ultimate question involved herein is whether these underlier corporations have failed to exercise or have abused the franchises conferred upon them by the legislature, and whether they have therefore forfeited these franchises”: In re Application of Matthew H. McCloskey, Jr., Philadelphia Rapid Transit Underliers, 27 D. & C. Rep. 184.

9 See Voorheis v. Walker, 227 Mich. 291, 198 N. W. 994; State ex rel. v. Talbot, 123 Mo. 69, 27 S. W. 366; State ex rel. v. St. Louis College of Physicians, 317 Mo. 49, 295 S. W. 537; State v. Haskell, 14 Nev. 209; North & Co. v. People, 147 Ill. 234, 35 N. E. 608; 22 R. C. L. 719, sec. 41. Contr a—Lockhard v. People, 65 Colo. 558, 178 Pac. 565, and cases cited.

10 The leases and contracts involved appear to have been made pursuant to statutes: the Act of April 23, 1861, P. L. 410, 67 PS section 582; the Act of February 17, 1870, P. L. 31, 67 PS section 586; the Act of March 22, 1887, P L. 8, 15 PS section 1892; the Act of May 15, 1895, P. L. 63, 67 PS sections 1279, 1252; the Acts of May 15, 1895, P. L. 64, 65, 15 PS sections 1894, 1895, 1897. Among the cases in which these statutes were considered are the following: Gratz v. Penna. R. R. Co., 41 Pa. 447; Phila. & Erie R. R. Co. v. Catawissa R. R. Co., 53 Pa. 20; Penna. R. R. Co. v. Sly, 65 Pa. 205; Kaufman v. P. & C. S. R. R. Co., 217 Pa. 599, 66 A. 1108; it becomes unnecessary, in view of the Commonwealth’s laches, to discuss this phase of the appeal. For a general review of statutes and decisions relating to street railway and traction companies, see Eastman, Private Corporations in Pennsylvania, (Vol. 2), chapters 70 and 71.

11 In Com. ex rel. Attorney General v. Bala & Bryn-Mawr Turnpike Co., 153 Pa. 47, 25 A. 1105 (1893), Paxson, C. J., said, at p. 54, “There is nothing to show that this proceeding was directed by command of the commonwealth. On the contrary, it is at least alleged to be the act of private parties who have induced the attorney general to allow his name to be used as representing the commonwealth. In the case referred to the injunction was refused on the ground that the defendant company’s plans and acts were notorious, and that the delay of the attorney general, while the defendants were expending money in the construction of their works, disentitled even the public to relief.”

12 In City of Bradford v. N. Y. & Penna. T. & T. Co., 206 Pa. 582, 56 A. 41, Brown, J., said, at pp. 586-587, “In Penna. R. B. Co. v. Montgomery Co. Pass. Ry. Co., 167 Pa. 62, we said: ‘But we know as matter of current history that street railways have been projected, and actually constructed, and are now in operation, over country roads where no legal consent has been obtained, and where no attention has been paid to the rights of property holders. Such railways cannot now be torn up or enjoined either by the township officers or at the instance of landowners along their routes. "Where such enterprises have been allowed to proceed and the expenditure of large sums of money has been permitted, it would be inequitable to correct at this time what was a mutual mistake under the influence of which these enterprises have been pushed to completion.’ What was said in Attorney General v. Delaware and Bound Brook Railroad Co., 27 N. J. Eq. 1, in denying an injunction asked for by the state, may well be regarded as applicable to the facts in the present ease: ‘The work has been, from its commencement, a matter of public notoriety, and yet no action has been taken on the part of the state authorities, nor even any warning uttered by them against the work. The defendants have been permitted to make their immense expenditure upon their enterprise, in the confidence of their convictions that they possessed all requisite legislative authority, without even a word of protest or remonstrance. Under such circumstances, equity will refuse its aid, even to the state.’ A stronger ease of delay or acquiescence is necessary to prevent equitable relief when sought for by the state than when a mere private right is involved; but the doctrine is applied against the public in a proceeding by the attorney general.”

13 By Act, approved July 2, 1937, P. L. 2824, a street railway or motor power company owning all of the capital stock of a company empowered to transport persons by trackless trolley car was authorized to acquire the corporate power, franchises, property, rights and credits of such company,

14 Com. ex rel. Attorney General v. Hulings, 129 Pa. 317, 18 A. 138; Kinter v. Com. Trust Co., 274 Pa. 436, 440, 118 A. 392; Patton v. Com. Trust Co., 276 Pa. 95, 100, 119 A. 834; Aldine Realty Co. v. Manor Real Estate, etc., Co., 297 Pa. 583, 590, 148 A. 56; Riley v. Boynton Coal Co., 305 Pa. 364, 368, 157 A. 794; Hammond v. Hopkins, 143 U. S. 224, 273.