Potter v. . Collis

50 N.E. 413, 156 N.Y. 16, 10 E.H. Smith 16, 1898 N.Y. LEXIS 676

• Court: New York Court of Appeals
• Decided: May 10, 1898
• Status: Published

Opinion

Gray, J.

Certain questions have been certified to this court by the Appellate Division of the Supreme Court, in the first department, which have arisen upon the application for an injunction during the pendency of this action. It was brought by a taxpayer, in the city of Hew York, to restrain the commissioner of public works of the city from issuing a permit to the defendant railroad companies to make excavations in the streets and to do what other necessary work is required, in order to change the motive power of the Eighth Avenue Railroad from that of horses to that of electricity. The application of the plaintiff was denied at the Special Term and its order to that effect has been affirmed by the Appellate Division.

. The questions, which have been certified to us, relate to the construction of the Eighth Avenue Railroad in the city, under certain resolutions of the Common Council of the city of Hew York, and to the organization of a corporation under that name under certain acts of the legislature of the state. A statement of the facts in the history of this company can be briefly made and is necessary, in order that the questions certified may be intelligibly discussed. In July 1851, .the Common Council of the city of Hew York adopted a resolution, whereby there was granted to John Pettigrew and his associates authority to construct a railroad in certain streets and avenues mentioned and which made up the greater part of the main line of the present Eighth Avenue Railroad Company. This resolution provided that, before it should have effect as authority to the parties, they should execute an agreement with the city, obligating themselves to perform its stipulations and provisions, and such as might be contained in other resolutions or ordinances relating to the road. Among the stipulations, mentioned in the resolution, was one requiring the parties “ to file with the Comptroller, a statement, under oath, of the cost of each mile of road completed and to agree to surrender, convey and transfer the said road to the Corporation of the city of Hew York, -whenever required so to do, on payment by the Corporation of the cost of said road, as appears by said statement, with ten per cent advance thereon.” Another stipulation was that, on being required, they should “ take up, at their ‘own expense, the rails, or such part thereof as should be required,” or, upon their failure to do so, that the street commissioner might do it at their expense. Another stipulation provided for license fees, to be paid annually upon the passenger cars on the road. The contract, called for by the resolution, was executed, in September 1851, between the municipal authorities and the parties named in the resolution. It recited the resolution and contained covenants on the part of Pettigrew and associates to perform all stipulations and conditions and, also, within ten days thereafter, to organize themselves into an association or company, to be called the Eighth Avenue Eailroad Company. After the execution of this agreement, other resolutions were adopted, which related to extensions of the road in and upon the streets; but none contained, or referred to, the condition in the first resolution, relating to the surrender and transfer of the road to the city, when required so to do. The construction of the railroad was undertaken in 1852 and was continued until in the year 1854, when the legislature of the state passed a general act, “ relative to the construction of railroads in cities.” (Chap. 140, Laws of 1854.) By section one, of the act, the Common Councils of the several cities of the state were prohibited from permitting the construction of street railroads within the city, without the consent thereto of a majority in interest of the owners of property upon the streets to be affected. By section two, of the act, upon such consent being obtained, the Common Council of a city was authorized to grant the right to construct such a railroad “ upon such terms, conditions and stipulations ” as it may see fit to prescribe. The grant, however, could not be made without a public advertisement for proposals. By section three, it was provided that the act should not operate to prevent the construction, extension, or use of any railroad in any of the cities, which had already been constructed in part; and in such case, the “ parties ” or “ companies ” were authorized to complete and use such road “ through the streets and avenues designated in the respective grants, licenses, resolutions or contracts, under which the same have been so, in part, constructed, and to that end the grants, licenses and resolutions, aforesaid,” were confirmed. In the following year, the Eighth Avenue Kailroad Company was organized under the General Kailroad Act of 1850 and under the above-mentioned act of 1854, for the term of one thousand years. Subsequently, and in 1874, the legislature passed an act, (Chap. 478 of the Laws of 1874), requiring the Eighth Avenue Kailroad Company to further extend its railroad to Macomb’s Dam bridge and providing, among other things, that “ when the extension required by this act shall be completed and put into operation, the company shall use, maintain and operate its railroad during the term for which the company was incorporated, ’ * * subject only to the provisions of the General Kailroad Act of this state with its amendments, which shall be applicable to the railroad and the extension hereby granted, except as herein jjrovided.”

In the light of these historical facts these questions were certified up to us; namely,

First. Whether, independently of and without giving any effect to chapter 478 of the Laws of 1874, on the facts, stated in the affidavits, the Eighth Avenue Kailroad Company is under a legal obligation to surrender, convey and transfer to the corporation of the city of New York, whenever required so to do, the railroad built on the route described in the resolution of the common council approved by the mayor July 30th, 1851, on payment by the corporation of the city of the cost of said road with ten per cent advance thereon ?

Second. Whether, independently of and without giving any ■effect to chapter 478 of the Laws of 1874, the Eighth Avenue Kailroad Company is under obligation to surrender, convey and transfer to the corporation of the city of New York the railroads built on the routes described in the resolution of the Common Council adopted December 13th, 1852 ?

Third. Whether, independently of and without giving any effect to chapter 478 of the Laws of 1874, the city of New York has any legal right to require the surrender, conveyance or transfer to it of the said railroads, or either of them.

Fourth. Whether, if prior to the 19th of May, 1874, the Eighth Avenue Railroad Company was under obligation to surrender, convey and transfer the said railroads, or either of them, to the corporation of the city of Mew York, whenever required so to do, and the said corporation had the light to require such surrenders, conveyances and transfex-s, said obligation and right were terminated or suspended by force of chapter 478 of the Laws of 1874 and the Eighth Avenue Railroad Company’s compliance with the requirements of the said act ?

Fifth. If the Eighth Avenue Railroad Company is under obligation to make, and the city has a right to require, a surrender, conveyance and transfer of said railroads, or any of them, is the railroad company under obligation to surrender, convey and transfer, and has the city a light to acquire, the said railroad company’s franchise to construct, maintain and operate a railroad on said routes, or any of them ?

It was the claim of the plaintiff that the city would take over the franchise of the Eighth Avenue Company and could dispose of it to other parties upon very favorable terms, and that if these large expenditures are to be made in changing the motive power, the city will be obliged, in order hereafter to exercise its right to repurchase, to pay a much larger sum than now would be required.

The Appellate Division justices have rested their opinion, as to the relative rights of the city and the railroad company, upon a construction of the act of 1874. Mr. Justice Ingraham, speaking for that court, said “ that whatever rights the ■city had, under the original resolution and contract of 1851, which were inconsistent with the grant of the act of 1874, were at least suspended during the period for which this company was, in express terms, authorized and directed to use, maintain and operate its road.” They held that the effect of the act of 1874 was to suspend the right of the city to exei‘cise the privilege, or option, claimed; but they did not discuss the question if the city ever, really, acquired any such right; or any rights at all, under the contract of 1851, unless and as saved by the act of 1854. I think, while we may entirely agree with the Appellate Division in the view of the effect of the passage of the act of 1874, that the objection, or difficulty, is radical in the way of maintaining, on the part of the city, that the Eighth Avenue Railroad Company liad come under a contractual obligation to transfer to it its road, whenever required to do so, upon the payment of the cost thereof with ten per cent added. It arose long before the passage of the act of 1874 and never was removed.

The resolution of the Common Council, in 1851, was void; inasmuch as it purported to do something not within the powers of that body. It undertook to authorize the laying of railroad tracks in the city streets and avenues and thus to subject them to new uses. But the title of the municipal corporation to the public streets was held in trust for the public and the power to regulate those uses was vested solely in the legislature. It might delegate that power, as any other appropriate power, to the municipal corporation ; but, without such delegation, any such act by the corporation, for not being within the strict or implied terms of its chartered powers, would he invalid. What the Common Council, or the Corporation, had attempted to grant 'to Pettigrew and his associates was a right to an exclusive interest in the streets, and that was beyond the power of either. It could not he sustained under any theory; either of a franchise, or .of a license. The Common Council could not divest the municipal corporation of that control over the streets, which was held by it in trust for the public. (Davis v. Mayor, 14 N. Y. 506; Milhau v. Sharpe, 27 (ib.) 611; People v. Kerr, 27 (ib.) 209; Coleman v. Second Ave. R. R. Co., 38 (ib.) 201.) All that the municipal corporation could do, within the provisions of the General Railroad Act of 1850, was to assent to the construction of a railroad. At the time, however, it was not supposed that its provisions were sufficient to authorize a city street railroad. The situation of the city corporation, in the machinery of the state, was that of a mere agency; possessing no inherent and independent authority to create rights in others, which affected the public interests. It undertook to grant a right, which, if effective, operated to invest private parties with an exclusive interest in its streets. This the legislature, possessing a supreme authority over the public territory, within constitutional limitations, could, of course, do; but, to attribute snch a power to th'e, municipal corporation, would be foreign to the concept of such an administrative agency of government. Hence, the defense bf the municipal action, in those eases which came before the courts, was placed upon the ground that it constituted a license. But that attitude failed to command any support in the decisions and the absence of any such authority in municipal corporations may be said to have been recognized and asserted by the legislature in the passage of the Railroad Act of 1854. As well say that the creature could create, as to assert that such corporations, in the guise of a license, could endow an association of persons with rights and powers which would enable it to use the public streets for private gain, to the same extent and with like effect, as if possessing the franchise or privilege which the sovereign power alone could grant. Billing the capacity of a trustee towards that portion of the public, it is clear that the only power to modify the relation held by the city corporation, and to increase the corporate authority, resided in the state, as the creator of the corporation, acting through the legislative body.

The Common Council, then, being without power to confer any snch right under its resolution, the consideration for the contract subsequently executed failed, and it was of no force or effect; unless the act of 1854, in its intended operation upon the parties, with their partly constructed road, preserved it. That I think, clearly, was not its effect. The very passage of the act negatived the idea of any power in the cities of the state to do what had been attempted to be done by the resolution and contract of 1851. It not being supposed that the power to organize as a street railway within cities existed, within the provisions of the General Railroad Act of 1850, the enactment of the law of 1854 performed the function of prescribing a uniform system, under which the cities of the state might authorize the construction and operation of any such. It provided that, when the consent of a majority in interest of the property owners upon streets to be affected was obtained, the Common Council of the city, desirous of author izing the construction of a street railroad, might effect that purpose, upon such terms, conditions and stipulations as it saw fit to prescribe. But there remained still to be taken into-account cases where street railroads had been partly constructed under the permission, in one form or another, of municipal authorities and the act made provision for them. In its third section, it authorized such roads to be completed, extended and used in, and through, the streets “ designated in the grants, licenses, resolutions or contracts,” and “ to that end confirmed “ the grants, licenses and resolutions aforesaid; ” thus distinctly limiting the extent of the confirmatory action. It will be observed' that while, by the language of the act, the-legislature ivas willing to preserve the rights of parties, as attempted to be given in any way by the municipal corporation, and under which they may have partly constructed street railroads, it was careful to define what, to the end that they might be completed, was confirmed ; namely, all “ grants,, licenses and resolutions.” The absence of the word “ contracts,” in the confirmation -by the legislature of what had been done, is significant. Under the strict interpretation which must be given to legislative acts, conferring franchises and defining the duties and obligations which accompany their grant, and which are owing, only, to the state and the public, the-omission to confirm any previous contracts should be construed as a legislative intent that they should not be preserved. Nor was it at all necessary that they should be. All that had gone before was as naught; saving and excepting that, in so far as-the railroad had been partly constructed pursuant to the action, of the municipal authorities, the right to construct, whether in the shape of grants, licenses, or resolutions, was confirmed. The franchise, or right, to use the city streets by Pettigrew and his associates had its origin in this act; but, as an exceptional case which was being provided for, the legislature deemed it proper that any regulations imposed hy the municipal authorities upon the operation of a street railroad should he continued.' The “ end,” intended to be reached, in confirming the grants, licenses and resolutions, was, by the plain reading of the section, the construction, completion, extension and use of the road. They were confirmed to the end that the parties should be exempted from obtaining the consents of property owners and from compliance with other requirements of the act. That section was enacted in view of the invalidity of all that had been done, and the legislative intent must be construed in the light of the object in view. That was a beneficial purpose; granting the necessary right and validating the existing regulations. The only contract, therefore, under .which the Eighth Avenue Railroad Company and its pro-motors came, was one with the state; the consideration for which was the recognition' and grant of its right, and by reason of which they assumed just those liabilities and duties, which were to be read in, or implied, from it. When, in the following year, the Eighth Avenue Railroad Company became incorporated under the provisions of this act, as well as of the General Railroad Act, it held a charter from the state. It became the owner of the franchise therein conferred and was responsible only to the state for the fulfillment of the duty to operate its franchise during the continuance of the term, or period, specified. It is not to be reasonably supposed that the legislature conferred a franchise, which could, at some time, at the option of the municipal corporation, be surrendered to it.

If it were necessary for us to consider the effect of the insertion, in the resolution of 1851, of the provision as to a transfer of the road to the city, we should say that there was great reason to doubt that it was intended, thereby, that the city might become the owner of the road, at its option. The con struction of street railroads was in the experimental stage and it is more reasonable to suppose that the insertion of that provision was intended as a measure of protection, in the event that the experiment should prove undesirable in the public-interest. The city had neither franchises to confer upon parties for the construction and operation of railroads; nor had it any power, under its charter, to maintain and operate such for itself. As a mere governmental agency, it had only such powers of administration, with respect to that portion of the. public within its limits, as were expressly conferred, or as might he implied from and be incidental to the powers possessed. That this provision in the resolution was intended in the nature of a protection, simply, seems very evident; whether we consider the legal limitations upon the municipal power, or whether we consider the context. Immediately following it is the provision that, to the extent required, the parties constructing the road should take up at their own expense the rails; or, upon their failure to comply, the street commissioner might do so at their expense. It is, too, not without consid-. erable significance that in subsequent resolutions, authorizing extensions upon other streets, there is no provision for any transfer to the city. An abandonment of the idea might well be inferred.

However that may be, I think the conclusion must be reached, upon a deliberate consideration of the question, that the Eighth Avenue Railroad Company never came under any legal obligation to surrender, or transfer, its railroad to the city of Hew York, whenever so required. Whatever grant of rights it acquired, it took through the act of 1854, and it acquired them freed from any condition, other than as imposed by that act, or by the General Railroad Act, or as might be contained in the regulations previously imposed and not inconsistent with its general grant of rights; the imposition of which was validated by the legislature, in order that there might be no exception, in its case, from the general rule applicable to all street railroads" which should thereafter be organized pursuant to its provisions.

It is argued that the question under consideration has been settled by the decision of this court, in the case of Mayor, etc., v. Eighth Ave. R. R. Co. (118 N. Y. 389). Such an argument is in total misapprehension of the effect of that decision. That was an action to recover license fees from the company; the payment of which had been refused, after the passage of chapter 478 of the Laws of 1874, upon the ground that, by the provisions of that act, the company liad been relieved of any such obligation. Judge IIaigiit, who delivered the opinion in that case, stated that the question presented, upon the contention of the defendant, was whether it might operate its road, subject only to the provisions of the General Railroad Act and relieved of all conditions, not appearing therein. He proceeded in his opinion, very correctly, to show that no such result was intended by the legislature. He construed the provisions of the second section of the act of 1874, and reached the conclusion that it did not affect the right of the city to enforce the obligation which it had imposed, pursuant to the provisions of the General Railroad Act and its amendments, relating to the regulation or the operation of the road. The payment of license fees was not inconsistent with the grant of a franchise under the act of 1854, and did not come within the exception attached to the applicability of the General Railroad Law. In the course of the opinion, it was observed that the act of 1854 was the act under which the defendant was incorporated and took title to its property and franchises. In speaking of its confirmation of the “ contract,” the opinion, obviously, had reference to the contract which was under consideration; namely, the contract to pay license fees. That, as a condition of a grant which was invalid at the time, for want of power to make it, was rehabilitated by the provisions of the act of 1854.

The first, second and third questions should, therefore, be answered in the negative.

The fourth and fifth questions, I do not deem- it necessary to discuss.

The order appealed from should he affirmed, with costs.

All concur, except Parker, Oh. J., not sitting.

Order affirmed.