Schisler v. Merchants Trust Co.

94 N.E.2d 665, 228 Ind. 594, 1950 Ind. LEXIS 174

• Court: Indiana Supreme Court
• Decided: October 31, 1950
• Docket: No. 28,677
• Status: Published

Opinions

Gilkison, J.

This action was brought in two paragraphs by appellant to collect damages alleged to have resulted to her from the execution of an alleged civil conspiracy by appellees. It is alleged that this conspiracy wrongfully deprived her of a right to operate jitney busses on Congerville Route or Routes one and two, in the city of Muncie, Indiana, these routes being particularly described in the complaint. This alleged right is based upon the averred facts that on April 16, 1941 she was and had been the holder and owner of a certificate of public convenience and necessity to operate busses on these routes, and that she then held, and for many years prior thereto she had held a license to operate such busses, and had operated the same under such certificate and license, and was so operating the same at that time. That the city of Mu'ncie by ordinance enacted in 1921 and an amendment thereto enacted in 1923; and by an ordinance enacted in 1925 among other things regulated the operation of jitney busses within the city, and the granting of certificates of public convenience and necessity after hearing by the Common Council, and provided that any jitney bus owner who had operated over a fixed route upon a regular schedule for ninety days prior to November 26, 1925, should be entitled to such certificate as a matter of right.

That appellant’s husband shortly after the enactment of the 1925 ordinance, duly obtained from the city council a certificate of public convenience and necessity and a license to operate jitney busses on said routes, and immediately entered upon the operation of the jitney bus routes in accordance with the terms thereof and of the laws of the state, and purchased busses and other equipment therefor. These facts, it is averred, constituted a franchise or contract between the city and appellant’s husband, John M. Schisler, now deceased, carrying with it. the duties and obligations pertaining thereto as set forth in the ordinances and as fixed by law; that this alleged franchise or contract constituted a property right of great value. That plaintiff does not have and cannot obtain the original or a copy of such franchise or contract, and cannot make the same a part of the complaint for that reason. That she believes the defendants have the original or copies thereof.

That John M. Schisler died August 26, 1934 testate, and bequeathed and devised to plaintiff, who is his widow, all his property. That on September 3, 1934 the Common Council of the city, by resolution, which is made Exhibit “B” in the complaint, transferred to the executor of the will the certificate of convenience and necessity granted to John M. Schisler with authority in the executor to transfer it to plaintiff agreeable with the will, subject to the approval of the Probate Court of Delaware County. That in due time the executor transferred the alleged franchise to plaintiff with the approval of said Probate Court; that she accepted the same and thereafter regularly paid all the license fees required and continued to operate the jitney busses on the routes, expending large sums of money for busses and equipment. That she performed all the duties, obligations and covenants incumbent upon her under her contract, the several city ordinances, and the laws of the state until prevented therefrom by the appellees late in 1941. The acts of such alleged prevention are fully alleged in the complaint.

General demurrers by Merchants Trust Company, Executor; George S. Koons, Executor and John R. Hines; John D. Lewis, H. Lester Janney and William H. Bales; Orville Sutton, Samuel L. Cunningham, Harold Stanley, Ora T. Shroyer, Ray Langdon, Kenneth Rutledge and Albert Stephens; and Wesson Company, were sustained by the court. Appellant refused to plead over and judgment was rendered against her that she take nothing and that appellees recover their cost. From this judgment the appeal is taken.

The first important question raised by the several demurrers is: Do the licenses alleged to have been granted appellant and her predecessors in manner and form as alleged in the complaint amount to a contract or franchise for any determinate or indeterminate period ?

This court has held that a franchise is a privilege or immunity which can exist only by special grant of the state government, and is incapable of existing without such grant. It is, therefore, essential that a franchise should be a grant from the sovereign authority. There cannot be a franchise which is not derived from the legislative power of the state. The State, ex rel. Walker, Prosecuting Attorney v. Green (1887), 112 Ind. 462, 472, 14 N. E. 352. See also 23 Am Jur., Franchises, § 10, p. 722; 37 C. J. S., Franchises, § 2, p. 147; § 14 (a), p. 156.

By statute every city and town in Indiana is given exclusive power over the streets, alleys, bridges and public grounds within such city or town, except when otherwise provided by law. Section 48-503, Burns’ 1950 Replacement; Acts 1905, Ch. 129, §267, pp. 219, 407; and §48-7302, Burns’ 1950 Replacement; Acts 1905, Ch. 129, §254, pp. 219, 396.

Wherever there is a statutory grant of authority or power to a city or town and no method is provided for the exercise of such authority or power, the common council of any city or the board of trustees of any town, may, by ordinance, provide such method. Section 48-501, Burns’ 1950 Replacement; Acts 1905, Ch. 129, § 270, pp. 219, 409.

' The Common Council of every city has power to enact ordinances to regulate, tax and license coaches, hacks, drays, automobiles and all other vehicles. Clause 32nd, Section 48-1407, Burns’ 1933; also to license, tax and regulate public hackmen, draymen, omnibus drivers, carters, cabmen, porters, expressmen, bill-posters and all other persons pursuing like occupations for pay or hire, and to prescribe their compensation, and to .revoke any license for violation of such ordinance. Clause 38th, Section 48-1407, supra; Acts 1905, ch. 129, § 53, pp. 219, 246, 252. See also Frick v. City of Gary (1922), 192 Ind. 76, 83, 84, 135 N. E. 346.

Cities are authorized, by statute to grant franchises for private gain by proceedings in which taxpayers have an opportunity to be heard thus:

“Whenever . . . the board of public works of any city,” or “the common council of any city not having a board of public works, . . . desires to enter into a franchise, grant or contract granting the use oyer, under or along any public highway, street or alley, to any person, persons, firm or corporation, for personal or private gain, . . . such ... board of public works,” or “common council. . . shall determine the exact form in which such franchise, grant or contract is to be finally adopted, and thereupon, such . . . board of public works,” or “common council . . .■ shall fix the time at which said franchise, grant or contract will be finally considered,. which day shall be not less than fifteen (15) days thereafter. At said time and place, a public hearing shall be had, at which any taxpayer ... of such city . . . may appear and file protest against any or all of the provisions of said franchise; grant or contract.” Publication of the purpose of, and the time and place of, the hearing with a full text of the proposed franchise, grant or contract is provided for. § 48-7303, Burns’ 1950 Replacement; Acts 1913, ch. 108, § 1, p. 286. See also § 48-7302, Burns’ 1950 Replacement; Acts 1905, ch. 129, §254, pp. 219, 396; and §54-601, Burns? 1950 Replacement; Acts. 1913, ch. 76, § 97, pp. 167, 200.; Acts 1933, ch. 190, § 9, pp. 928, 942.

Exhibit A of the complaint is an- ordinance of the bity of Muncie in effect on December 10, 1925, regulating the operation of jitney busses on the streets, avenues or highways in the city. It provided for the filing of an application for a license, the contents thereof, the payment of a yearly license fee and the amounts thereof. It provided that the applicant file a bond, indemnity undertaking, or policy of insurance for the year of the license to be issued, as provided by the ordinance. It provided penalties for violation of the provisions of the ordinance and repealed all conflicting ordinances. Exhibit F is an ordinance of 1935 amending this ordinance of 1925 or Exhibit A, but in all things, retaining its license features and not providing for the granting of any franchise or other contract, Exhibit C of the complaint is an ordinance passed on August 4, 1941 and signed by the mayor on August 5, 1941. Among other things it provides that thereafter no one should operate a bus upon the highways of the city, except pursuant to a franchise contract entered into with the Board of Public Works and Safety, ratified by the Common Council; that persons then operating busses might continue for the current year, if they made written application to do so within five days after the ordinance became effective; and provided for a refund of the unaccrued license fee paid. It also provided for penalties for violation of the ordinance, and for the repeal of all ordinances, resolutions, and action of the Common Council relating to the regulation and licensing of, and issuance of certificate of convenience and necessity for busses theretofore enacted. This ordinance was doubtless enacted to bring the relation between the city and bus operators within §§ 48-7303 to 48-7306 inclusive, Burns’ 1933, 1950 Replacement aforenoted; Acts 1913, ch. 108, p. 286. It was also intended to make that relationship agreeable with the Motor Vehicle Act of the state. Burns’ 1940 Replacement, §§ 47-1211 to 47-1250 inclusive, and particularly with §§ 47-1216 and 47-1217 thereof. Acts 1935, ch'. 287, p. 1412, §§ 1 to 42 and amendments thereto.

Exhibits A and F of the complaint, were lawful ordinances of the city of Muncie, and under the averments of the complaint, they granted to appellant’s testator and later to appellant a license to operate jitney bus service over the routes described in the application and the certificate of convenience and necessity for a period of one year from the date of the payment of the license fees. They also gave her a right to a renewal of the license each year thereafter agreeable with the terms of the ordinances.

However, these ordinances were repealed by the ordinance of August 5, 1941, aforenoted which is made Exhibit “C” of the complaint.

In considering the averments of the complaint with reference to the existence of a franchise in favor of appellant we are governed by certain definite rules one of which may be stated thus:

“It is a general rule that specific averments in a pleading must be given precedence over general averments regarding the same matter. They are deemed to explain, limit, and control the general allegations.” 41 Am. Jur., Pleading, § 33, p. 312.

This rule is applicable to inconsistent allegations of a conclusion and the special facts from which it is drawn. 49 C. J., Pleading, §§ 111, 112, p. 119. If the pleader goes beyond the general allegations and sets forth the specific facts that he claims constitute the situation which entitles him to recover, the specific averments may overbear the general and render the pleading vulnerable to demurrer. Cleveland, etc. R. Co. v. Berry (1899), 152 Ind. 607, 610, 53 N. E. 415, 46 L. R. A. 33; DeRuiter v. DeRuiter (1901), 28 Ind. App. 9, 12, 13, 62 N. E. 100; Houck v. Graham (1886), 106 Ind. 195, 202, 6 N. E. 594; Ohio and Mississippi Railway Company v. Walker (1888), 113 Ind. 196, 198, 15 N. E. 234; Pittsburg, etc. R. Co. v. Collins (1904), 163 Ind. 569, 572, 71 N. E. 661; American Car, etc. Co. v. Vance (1912), 177 Ind. 78, 82, 97 N. E. 327; Reynolds et al. v. Copeland (1880), 71 Ind. 422, 424; The State v. Wenzel (1881), 77 Ind. 428, 430; Boesker et al. v. Pickett et al. (1882), 81 Ind. 554, 555.

Another may be stated thus:

In all grants by the government to individuals or corporations, of rights, privileges, and franchises, the words are to be taken most strongly against the grantee. One who claims a franchise or privilege in derogation of the common rights of the public must prove his title thereto by a grant clearly and definitely expressed, and cannot enlarge it by equivocal or doubtful provisions or probable inferences. 12 R. C. L., Franchises, §§15 and 21, pp. 189 and 194; 23 Am. Jur., Franchises, § 16, pp. 725, 726; 37 C. J. S., Franchises, §10 (a), pp. 154, 155; Holyoke Water Power Co. v. Lyman, 15 Wall. 500, 21 L. Ed. 133; The Indianapolis Cable Street R. R. Co. v. The Citizens Street R. R. Co. (1890), 127 Ind. 369, 390, 24 N. E. 1054, 26 N. E. 893, 8 L. R. A. 539; Kinsey v. Union Traction Co. (1907), 169 Ind. 563, 632, 81 N. E. 922; Muncie Nat. Gas Co. v. City of Muncie (1903), 160 Ind. 97, 112, 66 N. E. 436; Valparaiso City Water Co. v. City of Valparaiso (1904), 33 Ind. App. 193, 197, 198, 69 N. E. 1018.

Applying these rules it is apparent from the ordinances of December 10, 1925, and April, 1935 pleaded as Exhibits A and F and which must govern all the conclusions contained in the complaint on the subject of a franchise, that appellant never at any time had or could have had a franchise to operate jitney busses on the Congerville Route in Muncie. The most she had or could have had was a yearly license to operate such busses, agreeable with the terms of the ordinances under which she claims. While it is not always clear, there is a distinction between a franchise or contract, and a license. 37 C. J. S., Franchises, § 7, p. 149; 23 Am. Jur., Franchises, § 3, p. 716; McPhee & McGinnity Co. v. Union Pac. R. Co. (1907), 158 Fed. 5, 10. To the extent Denny et al. v. Brady, Receiver (1928), 201 Ind. 59, 163 N. E. 489 conflicts with this opinion, it is hereby disapproved. So far as shown by the complaint, the city of Muncie at no time exercised or claimed the rights given it by the statute to issue franchises to persons to operate jitney busses until the ordinance of August, 1941 aforenoted. That ordinance protected all of appellant’s legal rights as a licensee to operate jitney busses in the city.

There is no contention that appellant obtained or made any effort to obtain a franchise to operate jitney busses in the city of Muncie under the ordinance of August, 1941.

Cities and towns in Indiana are incorporated entities, possessing only such powers as are granted by the legislature in express words, and those necessarily implied or incidental to those expressly granted, and those indispensable to the declared objects and purposes of the corporation and to its continued existence. When the manner in which granted powers may be exercised are by statute restricted to a definite course of procedure such procedure must be followed. State, ex rel. v. McCormack (1916), 185 Ind. 302, 305, 113 N. E. 1001; State, ex rel. Van-Hoy Treas. etc. v. Able, Treas. (1931), 203 Ind. 44, 50, 178 N. E. 683. See also Drinkwatter v. Eikenberry (1946), 224 Ind. 84, 64 N. E. 2d 399, and authorities there cited.

Since the Act of 1913, heretofore noted, Section 48-7303, Burns’ 1950 Replacement, the method by which a city may grant a franchise or contract of the kind pleaded in the complaint, is provided by that Act in express terms. If such franchise or contract were ever granted it must appear by the records of the city made agreeable with the terms of that Act. There is no averment in the complaint that any action was ever taken by appellant, or those under whom she claims, or by the city, agreeable with that act, so that a contract or franchise could have issued to appellant. Such a franchise or contract cannot be in parol, nor can it be implied.

Since appellant’s complaint shows affirmatively that she could not have had the franchise or contract for the loss of which she seeks to collect damages the demurrers to the complaint were properly sustained.

In this view of the case it is not necessary to decide other questions presented in the appeal.

The judgment of the lower court is affirmed.

Starr, J., concurs with opinion in which Young, J., concurs.