Eighth Avenue Coach Corp. v. City of New York

The single question presented for decision is whether the Police Commissioner of the city of New York, by means of a traffic regulation providing for one-way traffic on a portion of Eighth and Ninth avenues, may abrogate and cancel a substantial part of two out of the four omnibus routes granted under a ten-year franchise following competitive bidding upon payment of a cash consideration of $475,000 and three per cent of the gross receipts.

After a trial at Special Term, a decree was entered enjoining the Police Commissioner of the city of New York from enforcing one way traffic regulations permitting only southbound traffic, which includes the omnibus line operated by plaintiff on Eighth avenue from Fifty-seventh street to Bethune street, and only north-bound traffic on Ninth and Columbus avenues from Fourteenth street to Sixty-fourth street.

The franchise of plaintiff provides for a route on Eighth avenue starting with the Cortlandt Street Ferry and running along Hudson street, West Broadway, Eighth avenue, Central Park West, to the Polo Grounds. A second route, independent of the first and intersecting it at no point, runs along Ninth and Amsterdam avenues, starting at Gansevoort street and running along Ninth avenue, Columbus avenue, Broadway, Amsterdam avenue to LaSalle street near One Hundred Twenty-fifth street.

Following an announcement in the newspapers, the Police Commissioner sent to the Coach Corporation a letter to the effect that the existing two-way operation on each of these

Special Term placed its decision upon two grounds, first, that no express provisions nor anything in the franchise contract amounted to a consent in advance to the one-way traffic regulation now assailed by plaintiff, and second, that apart from consent, the traffic regulation, though an alleged reasonable exercise of the police power, could not abrogate and cancel without compensation a substantial portion of the valuable property rights owned by plaintiff under the franchise.

Plaintiff urged also that this regulation invaded the exclusive jurisdiction of the Board of Estimate and the Transit Commission. Special Term, however, expressly refrained, as do we, because it is unnecessary in view of our decision, from passing upon this issue.

The Appellate Division affirmed the decree of Special Term, without opinion. °

We take up first the contention of the city that we should consider certain clauses of the franchise contract as creating reservations which permit a mere police regulation to abrogate and cancel a large part of two of the four routes over a substantial portion of the franchise route contract.

In answer to this contention we need only cite the fundamental canon of construction, that the franchise contract must be read as a whole in order to determine its purpose and intent, and that single clauses cannot be construed by taking them out of their context and giving them an interpretation apart from the contract of which they are a part. (Atwater & Co. v. Panama R. R. Co., 246 N. Y. 519 ;

Keeping in mind the situation and circumstances existing at the time of the awarding of this franchise, that the two-way operation over these longitudinal thoroughfares was intended by both parties to the contract for the benefit of the public as well as for plaintiff, and that the value of the franchise was fixed and paid for on that basis, we examine the clauses upon which defendants rely as containing alleged express reservations so that a mere traffic regulation, issued by the Police Commissioner, not a party to the contract, may cancel a substantial part of two of the four routes. The first of these clauses appears in section 1, containing the grant of the franchise. Following the enumeration of the streets and avenues to be traversed, there appears the clause that plaintiff “ shall have the right to cross such other streets and avenues, named and unnamed, as may be encountered in traversing said routes, with the right to operate omnibuses in either direction over any street and avenue described in the foregoing routes, except that said operation shall at no time he in a direction contrary to police regulations.” Subdivision seventeenth of section 2 provides: “The Company shall be subject to all laws and ordinances affecting or which may be applicable to the operation of omnibuses and all traffic regulations applicable thereto now in force or which may be in force during the term of this contract. The Company shall also comply with and enforce the carrying out of any lawful orders or regulations designed for the protection and safety of persons or property or for the comfort, health and convenience of the public, which may be issued by the Board or official having jurisdiction over such matters, and the Company shall also comply with and enforce the carrying out of such specific orders or directions with respect to the operation of omnibuses

Another provision relied upon by defendant is contained in subdivision 32, in which the company contracts to abide by and perform all the terms of the contract and not to set up any claim that the provisions reserving to the city the right to terminate the franchise or any other provisions are unreasonable or void.

It appears in the record that the above clauses were standard clauses used by the city in other franchise contracts and were stock provisions not drafted with any special reference to the two longitudinal routes in the case at bar, and their inclusion in this franchise agreement would seem to have no special significance or importance beyond that of their ordinary meaning arising from the context in which they are used.

The second clause, subdivision 17 of section 2, which requires that plaintiff obey all laws, ordinances and traffic regulations applicable to omnibus operation in force during the term of the franchise, to obey lawful orders for the comfort, health and safety of the public, and to comply with specific orders issued by the Police Department with respect to the operation of buses and designed to govern their movements in the street, obviously is the standard clause applicable to all such contracts, which provides in general terms that the operation shall not be illegal but shall con

Both the clauses thus far considered, when read in harmony with the contract, do not presuppose curtailment but continued operation and concern the right to regulate the movement of the buses while being operated pursuant to the franchise. In the third clause, namely, subdivision 20 of section 2, which refers to the curtailment of operation because of events beyond the will of either contracting party, provision is made for substitutional operation so that as a result, instead of providing for curtailment, this clause makes provision for continued operation. Moreover, the franchise contract itself provides in subdivision 5 of section 2 that plaintiff is obligated under penalty of forfeiture of all of its rights to place and keep in full operation all of the authorized routes, obviously for the benefit of the traveling public. This subdivision 20 contains no reference to one-way traffic regulation and hence may be discarded upon that ground alone. The clause primarily relates to fires, parades and other events outside of the control of the contracting parties. The city urges that the use of the words, “ closing any such streets or avenues temporarily or permanently to vehicular traffic ” means a permanent shifting of the franchise for all time. A reading

No contention is being made here by plaintiff that any terms of the contract, if properly construed, are either unreasonable or void.

Construing this franchise contract as a whole in the light of the conceded intention of the parties, providing for a two-way operation, the clauses relied upon by the city clearly were not intended to permit a mere police regulation providing for one-way operation to cancel and abrogate for a substantial distance two of the four routes.

As bearing upon what has been said above and what follows, we have already indicated that there is in the record substantial evidence in support of the finding by the trial

We turn now to the second issue involved herein, namely, whether apart from alleged reservations in the franchise contract, the police traffic regulation may be sustained as a reasonable exercise' of the police power. In that connection it has long been settled authoritatively in this State that a franchise constitutes property within the ordinary significance of the word. (People v. O’Brien, 111 N. Y. 1 , 40.) The grant of a bus franchise constitutes a grant of property. (Brooklyn Bus Corp. v. City of New York, 274 N. Y. 140 .) A franchise, like other forms of property, is protected both by the State and Federal Constitutions against a substantial curtailment or destruction by the government without payment of fair compensation, (City of Los Angeles v. Los Angeles Gas & Elec. Corp., 251 U. S. 32 , 39.) Where, as here, the damage is substantial, the city may, of course, exercise condemnation, but not without the payment of just compensation. (Langdon v. Mayor, 93 N. Y. 129 ; Delaware, L. & W. R. R. Co. v. Town of Morristown, 276 U. S. 182 ; Pennsylvania Coal Co. v. Mahon, 260 U. S. 393 .) Plaintiff is demanding only that proper recognition be given to the franchise which it purchased and paid for. There is always open to the city the power to negotiate with the plaintiff as to fair terms for curtailing the bus routes, and should plaintiff seek too much, the city has the right to condemn the franchise in whole or in part, with the right to have just compensation for the talcing fixed by the courts.

It follows that the judgment should be affirmed, with costs.

Loughran, Rippey, Lewis, Conway and Desmond, JJ., concur; Lehman, Ch. J., taking no part.

Judgment affirmed.