Crane, J.
The relator has been assessed for certain alleged special franchises. It claims to operate its railroad at the places designated under easements conveyed by the State and over its own property, and not by reason of any special privilege or franchise.
The matter was referred to ex-judge Nathaniel Foote as official referee, who reported in favor of the relator. The Appellate Division has reversed, and found in favor of the State.
The franchises have been considered under three differ
ent heads, and I will treat them the samé way, taking up first the
“
Lengthwise occupation of the former Genesee Valley canal lands,” so called in this proceeding. The State says the railroad runs over public lands under a permit; the railroad claims to own the right-of-way.
The Genesee Valley Canal Bailroad Company was organized under chapter 140 of .the Laws of 1850, and in November of 1912 was merged with and became the Western New York and Pennsylvania Bailway Company, the relator herein. ' It operates a railroad between the Erie canal in the city of Bochester, county of Monroe, and the village of Millgrove or the city of Olean, in the county of Cattaraugus, substantially along the lines of the old Genesee Valley canal. This canal was abandoned by the State and the property sold to the relator, pursuant to chapter 404 of the Laws of 1877 and chapter 326 of the Laws of 1880. This latter act authorized and required the Commissioners of the Land Office to sell and convey the title of the State in and to the banks and prism of the Genesee Valley canal, between the Erie canal in the city of Bochester, and the village of Millgrove or of Olean in the county of Cattaraugus, to the company which would give a bond in the penal sum of $700,000 to construct and operate within two years a standard gauge railroad between said points and over the land of said canal. The Genesee Valley Canal Bailroad Company was organized July 16, 1880, and purchased the canal lands under this act, executed the bond and received the deed from the State. The deed, dated November 6, 1880, grants to the Genesee Valley Canal Bailroad Company “ all the right, title and interest which the state of New York has in and to the banks and prism of the Genesee Valley Canal, between the Erie canal, in the city of Bochester, county of Monroe, and the village of Millgrove, in the county of Cattaraugus. Together with all and singular the rights, belonging or in any wise appertaining, etc. * * * Also excepting and reserving to ourselves the right to
retain that portion of said Canal from the point where Allen’s creek feeder enters the same to the Erie canal. Also excepting and reserving to ourselves, the right to retain any portion of the prism of said canal for the purpose of conducting the waters
from any
feeder and reservoir to the Erie canal.”
This conveyance gave to the railroad company the fee of the land sufficient at least to enable it to maintain and construct a railroad over it. This was the purpose of the act of 1880. Under it, upon giving the bond and receiving the deed, the company was compelled to construct its railroad within two years.
It cannot be that the' State retained the fee title to this portion of the canal land. The last clause, above quoted, says that the grant excepts the right to retain
any
portion of the prism for the purpose of conducting waters from any feeder. If this meant that the State excepted the fee of the land for such purpose, the whole grant was nullified. The railroad company by its purchase took the fee to the prism and banks of the canal, subject to the right of the State to conduct the water from the feeders to the Erie canal by some arrangement thereafter to be made, or plan adopted by its agents or engineers, not inconsistent with the grant. Two things were to be done. The railroad was to be constructed and operated over the canal lands purchased in fee by the railroad company, and the State was to get the water from the feeders into the Erie canal also over or through said land. The railroad company got the fee sufficient for its railroad purposes and the State got this right or easement.
The railroad company began the construction of its railroad when suit was brought by the Attorney-General at the instance of the Superintendent of Public Works to restrain its construction. The suit was discontinued upon an agreement executed by the railroad company to provide for the taking of the water in Allen’s creek feeder to the
Erie canal. The Genesee Valley Canal Railroad Company on September 28, 1881, presented to the Superintendent of Public Works an application for written permission to construct its railroad along the
banks
of the Genesee Valley canal, agreeing to lay at its own cost iron pipes to conduct the water from the feeder to the Erie canal or to the Genesee river feeder. A permit was granted upon these terms and an agreement made in accordance therewith on the eighth day of November, 1882. The company agreed in no wise to fill up the prism of the canal now used as a feeder or to interfere with the flow of the water from Allen’s creek to the point specified. As heretofore stated, the railroad company constructed its railroad upon the land or banks designated by this agreement. Likewise, the State obtained the water through the pipes from the feeders to the Genesee feeder and the Erie canal.
In view of what I have stated about the original deed or grant, it is apparent that the State intended to grant to the railroad company the land in fee, upon which its road was to be constructed. After the contract, the company built its railroad in accordance with the deed and the contract. Thus the land designated for the railroad in no way interfered with the water from the feeders and the right retained by the State did not obstruct the railroad. The land on which the road was built, therefore, was owned by the company under its deed from the State authorized by the act of 1880.
The State, several years before the assessments here in question, discontinued the use of Allen’s creek feeder to supply the Erie canal.
This assessment, known as the lengthwise occupation of former Genesee Valley canal lands, proceeds upon the theory that the State owns these lands in fee, and that the railroad company operates under the permit that the Public Works Commissioner issued in 1881. The Attorney-General asserts in his brief the following:
“
The
assessment in question relates to and covers the occupation of the land described in the permit granted by the Superintendent of Public Works on the 30th day of September, 1881, and is made upon the theory that such lands, being canal lands, are a public place within the meaning of the tax law,, and that the occupation thereof including the value of all franchises, rights or permission to construct, maintain or operate a railroad on or through such public place constitutes that species of real property called
‘
Special Franchise.’ ”
“
The use,” says he,
“
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Crane, J.
The relator has been assessed for certain alleged special franchises. It claims to operate its railroad at the places designated under easements conveyed by the State and over its own property, and not by reason of any special privilege or franchise.
The matter was referred to ex-judge Nathaniel Foote as official referee, who reported in favor of the relator. The Appellate Division has reversed, and found in favor of the State.
The franchises have been considered under three differ
ent heads, and I will treat them the samé way, taking up first the
“
Lengthwise occupation of the former Genesee Valley canal lands,” so called in this proceeding. The State says the railroad runs over public lands under a permit; the railroad claims to own the right-of-way.
The Genesee Valley Canal Bailroad Company was organized under chapter 140 of .the Laws of 1850, and in November of 1912 was merged with and became the Western New York and Pennsylvania Bailway Company, the relator herein. ' It operates a railroad between the Erie canal in the city of Bochester, county of Monroe, and the village of Millgrove or the city of Olean, in the county of Cattaraugus, substantially along the lines of the old Genesee Valley canal. This canal was abandoned by the State and the property sold to the relator, pursuant to chapter 404 of the Laws of 1877 and chapter 326 of the Laws of 1880. This latter act authorized and required the Commissioners of the Land Office to sell and convey the title of the State in and to the banks and prism of the Genesee Valley canal, between the Erie canal in the city of Bochester, and the village of Millgrove or of Olean in the county of Cattaraugus, to the company which would give a bond in the penal sum of $700,000 to construct and operate within two years a standard gauge railroad between said points and over the land of said canal. The Genesee Valley Canal Bailroad Company was organized July 16, 1880, and purchased the canal lands under this act, executed the bond and received the deed from the State. The deed, dated November 6, 1880, grants to the Genesee Valley Canal Bailroad Company “ all the right, title and interest which the state of New York has in and to the banks and prism of the Genesee Valley Canal, between the Erie canal, in the city of Bochester, county of Monroe, and the village of Millgrove, in the county of Cattaraugus. Together with all and singular the rights, belonging or in any wise appertaining, etc. * * * Also excepting and reserving to ourselves the right to
retain that portion of said Canal from the point where Allen’s creek feeder enters the same to the Erie canal. Also excepting and reserving to ourselves, the right to retain any portion of the prism of said canal for the purpose of conducting the waters
from any
feeder and reservoir to the Erie canal.”
This conveyance gave to the railroad company the fee of the land sufficient at least to enable it to maintain and construct a railroad over it. This was the purpose of the act of 1880. Under it, upon giving the bond and receiving the deed, the company was compelled to construct its railroad within two years.
It cannot be that the' State retained the fee title to this portion of the canal land. The last clause, above quoted, says that the grant excepts the right to retain
any
portion of the prism for the purpose of conducting waters from any feeder. If this meant that the State excepted the fee of the land for such purpose, the whole grant was nullified. The railroad company by its purchase took the fee to the prism and banks of the canal, subject to the right of the State to conduct the water from the feeders to the Erie canal by some arrangement thereafter to be made, or plan adopted by its agents or engineers, not inconsistent with the grant. Two things were to be done. The railroad was to be constructed and operated over the canal lands purchased in fee by the railroad company, and the State was to get the water from the feeders into the Erie canal also over or through said land. The railroad company got the fee sufficient for its railroad purposes and the State got this right or easement.
The railroad company began the construction of its railroad when suit was brought by the Attorney-General at the instance of the Superintendent of Public Works to restrain its construction. The suit was discontinued upon an agreement executed by the railroad company to provide for the taking of the water in Allen’s creek feeder to the
Erie canal. The Genesee Valley Canal Railroad Company on September 28, 1881, presented to the Superintendent of Public Works an application for written permission to construct its railroad along the
banks
of the Genesee Valley canal, agreeing to lay at its own cost iron pipes to conduct the water from the feeder to the Erie canal or to the Genesee river feeder. A permit was granted upon these terms and an agreement made in accordance therewith on the eighth day of November, 1882. The company agreed in no wise to fill up the prism of the canal now used as a feeder or to interfere with the flow of the water from Allen’s creek to the point specified. As heretofore stated, the railroad company constructed its railroad upon the land or banks designated by this agreement. Likewise, the State obtained the water through the pipes from the feeders to the Genesee feeder and the Erie canal.
In view of what I have stated about the original deed or grant, it is apparent that the State intended to grant to the railroad company the land in fee, upon which its road was to be constructed. After the contract, the company built its railroad in accordance with the deed and the contract. Thus the land designated for the railroad in no way interfered with the water from the feeders and the right retained by the State did not obstruct the railroad. The land on which the road was built, therefore, was owned by the company under its deed from the State authorized by the act of 1880.
The State, several years before the assessments here in question, discontinued the use of Allen’s creek feeder to supply the Erie canal.
This assessment, known as the lengthwise occupation of former Genesee Valley canal lands, proceeds upon the theory that the State owns these lands in fee, and that the railroad company operates under the permit that the Public Works Commissioner issued in 1881. The Attorney-General asserts in his brief the following:
“
The
assessment in question relates to and covers the occupation of the land described in the permit granted by the Superintendent of Public Works on the 30th day of September, 1881, and is made upon the theory that such lands, being canal lands, are a public place within the meaning of the tax law,, and that the occupation thereof including the value of all franchises, rights or permission to construct, maintain or operate a railroad on or through such public place constitutes that species of real property called
‘
Special Franchise.’ ”
“
The use,” says he,
“
of such lands for canal purposes had been discontinued, but, notwithstanding this fact, the lands were still retained and owned by the State as canal lands, and were, therefore, a public place within the meaning of the Tax Law.”
For the reasons above stated, I do not agree with this claim of the Attorney-General. It seems to me as if the purpose and wording of the acts referred to gave to the railroad company under its deed of purchase the fee of the land upon which its road was to be constructed, as arranged by the subsequent permit and agreement. Of course we are now dealing only with that portion affected by this assessment.
As to the assessment termed for convenience “ The Gates-Rochester Barge Canal Crossing,” we have the following facts: The new Barge canal crosses the railroad, which now goes over it- on bridges which have been constructed. It is claimed that these crossings constitute special franchises which can be assessed and taxed. At these points the relator owned its right-of-way in fee by deed acquired in 1882, and since the time of the railroad construction maintained and operated its railroad over its own right-of-way up to the time that the Barge canal was constructed.
The Barge Canal Act (Laws of 1903, chap. 147, as amd. by Laws of 1915, chap. 511) authorized the State to appropriate in the manner therein designated, lands for the
Barge canal. The State could take any and all rights and property necessary for this purpose. Section 5 of chapter 511 of the Laws of 1915 provides that in the event that any land or structures, in whole or in part, heretofore taken, shall be found not to be necessary for canal purposes, the State Engineer shall so report to the Canal Board, and the Superintendent of Public Works shall have authority to execute and deliver to the owner from whom the property was taken a quitclaim deed covering such lands, structures, waters, et cetera. Acting under this authority, an agreement was made between the State agents and the relator on the fourth day of March, 1916, followed by a deed the third day of April, 1917, accomplishing the following. The deed recites that the State had formerly appropriated from the Western New York and Pennsylvania Railway Company a parcel of land for Barge canal purposes, and that an agreement of March 4, 1916, had been executed to adjust the damages wherein the State agreed to execute and deliver to the Western New York and Pennsylvania Railway Company a quitclaim deed of an easement to use and occupy forever for railroad purposes the premises described, and further
recites
that the easement for railroad purposes was
no longer considered necessary
for the Barge canal, and concludes with the following grant: “ Now, therefore, pursuant to and in accordance with the foregoing resolution of the Canal Board of the State of New York and the statutes in such cases made and provided, the party of the first part * * * has sold and by these presents does grant, release and quitclaim unto the said party of the second part * * * an easement to use and occupy forever for railroad purposes
”
the lands in question, describing them.
We have held in
People ex rel. New York Central & Hudson River Railroad Co.
v.
Walsh
(211 N. Y. 91, 96, 97) that such grant of an easement was legal and violated no constitutional provision. The court said of article 7,
section 8, of the State Constitution: “ It does not interdict the legislature from authorizing the appropriation of an estate less than the fee in the lands required for the canals. * * * The constitutional provision did not prohibit the state from agreeing to convey to the relator the permanent easement in the appropriated lands.”
Here we have a railroad running over its own right-of-way. It is obliged to run. The Barge canal passes under it, and the road has to cross it on a bridge. The Barge Canal acts, above referred to, provide for such crossings. The State does not need the railroad for the canal; it needs certain lands which it has taken, and, therefore, agrees with the railroad company that it may continue to operate its railroad over the Barge canal on a bridge in place of its former fee land. To accomplish this purpose, and to quiet all question, the State deeds an easement to the railroad for this purpose. The railroad has the bridge as an easement instead of the land which it formerly owned in fee. The result is not unlike the arrangement or exchange of properties made in
People ex rel. Long Island R. R. Co.
v.
State Board of Tax Commissioners
(148 App. Div. 751; 207 N. Y. 683).
We do not think that these arrangements constituted a franchise. The railroad company operated under a grant of property rights from the State.
People ex rel. Rochester, Syracuse & Eastern R. R. Co.
v.
Moroney
(224 N. Y. 114) is not in point, as the State merely granted to the railroad company after obtaining the fee, a revokable license to operate. This was held to be a franchise, mere permission to cross public property.
As to the Chili-Rochester Barge canal crossing, the facts with some exceptions are similar to those just stated in the Gates-Rochester Barge canal crossing assessment. There was an appropriation, a contract and a deed dated February 15, 1917. This deed recites a settlement made for damages caused by the appropriation, and conveys to
the railroad company an easement in the lands lying in the town of Chili, similar to that contained in the so-called Gates deed, above referred to. I understand that if our ruling in the Gates crossing assessment be correct, it follows that the same reasoning applies to the facts in this Chili Barge crossing assessment.
For the reasons here stated, the assessments were illegal; the order of the Appellate Division should be reversed, and the judgment entered upon the report of the referee in this proceeding affirmed, with costs in this court and in the Appellate Division.
His cock, Ch. J., Pound, McLaughlin, Andrews and Lehman, JJ., concur; Cardozo, J., not voting.
Order reversed, etc.