Mayor v. Twenty-third Street Railway Co. — 16 N.Y. St. Rep. 137

Majority

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The Mayor, etc., of New York, Resp’ts, v. The Twenty-third Street Railway Co., App’lt.

(Supreme Court, General Term, First Department,

Filed May 18, 1888.)

Headnote

1. Street railways—Laws 1860, chap. 514—Laws 1873, chap. 199-Laws 1873, chap. 647—Laws 1875, chap. 389—Obligations imposed by.

By chapter 514, of the Laws of 1860, the right to construct and operate the Bleecker Street and Fulton Ferry Railroad Company was granted to twelve men therein named and their assigns, upon paying annually to the city of New York the same license fee for each car run thereon as was paid by the other railroads in that city. The Bleecker Street and Fulton Ferry Railway Company organized under the General Railroad act on December 12, 1864, and on that day the twelve persons above mentioned assigned their rights and franchises under the act of 1860 to the company.

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The company was by Laws 1873, chapter 199, allowed to extend its route through certain streets therein specified, and required to pay to the city a license fee of fifty dollars for every car used by it on said extension, with the privilege of leasing all or any portion of the road, or to consolidate, with any other roads. The Laws of 1873, chapter 647, substituted for the license fee of fifty dollars a car the payment of one per cent of the gross ' receipts of the company to begin October 1, 1875, unless the extension was sooner completed. On January 10, 1876, the company was under authority of Laws 1875, chapter 389, leased to the defendant. This action was brought to compel the defendant to account for its receipts accruing from the operation of the Bleecker Street and Fulton Ferry Railroad route, not for license fees for cars run by the defendant over the original route, described in the act of 1860. Held, that the sole object of the several acts was primarily to clothe the Bleecker Street and Fulton Ferry Railway Company with the franchise, and, secondly, to exact from it for the city of Sew York proper compensation, and that the language of the act was sufficient to impose that obligation upon any lessee of that company.

S. Same—Obligation imposed by law that companies organized for PUBLIC PURPOSES AND OPERATING PUBLIC FRANCHISE FOR PRIVATE GAIN SHALL CONFORM TO EXISTING LAWS.

Held, that the fact that the lessee did not by the lease assume that obligation was immaterial, that being organized under the law for public purposes, no further agreement was necessary on its part than that implied by law, that in operating a public franchise for private gain it should conform to existing laws.

3. Same—Rights of—Derived from people of the state.

Held, that the rights and privileges of the defendant were derived not from the twelve persons to whom the original grant was made, but from the people of the state, acting through their legislature, and that it was bound by the condition that a portion of its gains should be paid into the public treasury.

Appeal from an interlocutory judgment requiring the defendant to account for one per cent, of the gross earnings received by it in the operation of its cars over the Bleecker Street and Fulton Ferry Railroad, of wdiich the defendant is a lessee.

Chapter 514 of the Laws of 1860, granted the right to construct and operate the road in question, to twelve men therein named, and their assigns, upon paying to the city of New York the same license fee annually, for each car run thereon, as was paid by other railroads in the city.

The Bleecker Street and Fulton Ferry Railway Company was organized as a corporation on the 12th day of December, 1864, under the general railroad act. On the last named day, the twelve persons mentioned in the act of 1860, assigned their rights and franchises under that act to the Bleecker Street and Fulton Ferry Railroad Company.

Chapter 199 of the Laws of 1873, allowed that corporation to extend its route through specified streets and required it to pay to the city a license fee of fifty dollars, for each and every car used by the company on said extension, with the privilege of leasing all or any portion of the road, or to consolidate with any other roads. Chapter 647 of the Laws of 1873, passed about a month subsequently to the last

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named act, substituted for the lincense fee of fifty dollars a car, the payment of one per cent, of the gross receipts,of the company, to begin October 1, 1875, unless the extension authorized {supra) was sooner completed.

The Bleecker Street and Fulton Ferry Eailroad Company was, under chapter 389 of the Laws of 1875, leased to the defendant on the 10th day of January, 1876.

Morgan J. O'Brien and Thomas Allison, for resp’ts; Leslie W. Russell, for app’lt.

This action is brought to compel the defendant to account for the receipts by it accruing from the operation of the Bleecker Street and Fulton Ferry Eailroad route. It is not brought to recovery any license fees for cars run by the defendant over the original Bleecker street route described in the act of 1860.

It stands conceded because so alleged in the complaint, and not denied by the answer, that on the 29th day of September, 1876, the defendant, by virtue of a written agreement entered upon and took full; sole and exclusive possession of the demised premises described in the complaint, and has ever since retained the same, and has solely and exclusively exercised and enjoyed the franchises, privileges, licenses and immunities of these and other demised premises conferred upon the said Bleecker Street and Fulton Ferry Eailroad Company by the laws mentioned in the foregoing preliminary statement, and has solely and exclusively received to its own use all the receipts arising from the exercise and enjoyment of said privileges and franchise, for operating the horse railroad through such streets.

The position of the learned counsel for the defendant is upon this argument, that whatever the status of the Bleecker Street and Fulton Ferry Railway Company may be, no obligation is imposed upon this defendant to pay the percentages; and, secondly, that no such obligation was lawfully imposed upon the Bleecker Street and Fulton Ferry Eailway Company. It is contended, that the amendment mentioned above, as contained in chapter 647 of the Laws of 1873, imposing the payment of percentages of gross receipts is personal to Bleecker Street and Fulton Ferry Eailway, and does not purport to bind the lessee of that company. That-act declares that in lieu of the payment to the city of Few York of the license fee of fifty dollars for each and every car used by the company, there shall be paid by it annually, on the first day of October, one per cent of the gross receipts of that company. It is manifest that the sole object of the several acts was primarily to clothe the Bleecker Street and Fulton Berry Company with this valuable franchise; and secondly, as compensation therefor, the company should pay into the treasury of the city of Few York, a proper compensation therefor. As the act did not in terms contem

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plate the operation of the horse cars in those streets by any other company than this one, so there was no requirement resting upon the legislature to be more specific, and to declare in words that such payments should be made by any person or corporation to whom the Bleecker and Fulton Ferry Company might lease its railway.

This was a sufficient and effective mode of enacting that this percentage of the gross receipts arising from the operation of this railway should be turned into the city treasury, and it was not necessary to be more perspicuous in the use of language. It appears that the rent to be paid by the defendant for the use of this railway for its ninety-nine years’ lease goes into the treasury of the Bleecker Street and Fulton Ferry Company, but is paid directly to the stockholders of that company. So that if the obligation to pay a percentage is personal to that company, and does not follow the company or person who operates the road, and has the benefit of the franchise, then a most clever device has been hit upon for depriving the city of New York of the compensation which the legislature said it should receive in part payment of the valuable franchise so granted.

It is further contended that the defendant nowhere in the lease assumes any obligation to pay the percentage. The answer to that is briefly, that being a creature of the legislature organized for public purposes, it required no further agreement on its face than the agreement which is necessarily implied by law, that in so operating a public franchise for private gain the party shall conform to all existing laws.

It is further urged that the Bleecker Street Company was not liable to pay the percentages provided for by chapter 647 of the Laws of 1873. The argument is that the grant to Stephen R. Roe, and his eleven associates under the act of 1860, was not to a corporation, butto individuals, and hence there is not reserved to the legislature any power to alter, amend or repeal the same. This may be conceded. But Stephen R. Roe and his associates did not bestow upon the Bleecker Street and Fulton Ferry Railroad Company the tight to operate any other part of the route than that, portion which is specified in chapter 514 of the Laws of 1860. It is true, as is found by the learned trial judge, that the route of that railroad to construct, maintain and operate which, said company was formed as set forth in its articles of association, is the same as that over which Stephen R. Roe and other persons named in said act were authorized and empowered to operate. But by chapter 199-of the Laws of 1873 that company was authorized and empowered to extend its railway and to use the former

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road in connection with the roads of other railroad companies in said city upon such terms as might be agreed upon between the companies.

Moreover, as it seems to us, it is an erroneous proposition that the Bleecker Street and Fulton Ferry Company owes its franchise in any respect to the assignment made to it by Stephen R. Roe and others. The thing which is thus assessed a percentage for the benefit of the city of New York is not the railroad and other visible property assigned by Stephen R. Roe and his co-partners to the Bleecker Street and Fulton Ferry Railroad Company; nor is it that property in combination with the privilege of operating horse cars on that route The legislature by the general act of 1850, permitted the corporation to be created for a particular purpose, and by subsequent legislation placed it under certain obligations and conditions to pay a small part of its gains to the plaintiff. It said to the corporation by its public acts in substance, you may exist and operate horse cars on the route secured to Roe and others, by obtaining their consent, on condition that you turn into the treasury of the city, one per cent, of your gross earnings. It is no answer to this proposition to say that the individuals who formerly operated the road could not thus be made to pay any sum otherwise than had been agreed to in the original charter to them. Had Stephen R. Roe and his associates been able .to and had in fact created that corporation, and had so clothed it by deed with all the property and privileges conferred upon them by the act of 1860, there would be some reason for the attitude taken by counsel for the defendant.' But that company is not indebted to those persons for its existence and its high privilege of conducting a lucrative business as _ a common carrier, with all those advantages and immunities to its shareholders which incorporated capital tends to produce. It is indebted solely to the people of the state, acting through their legislature for such privileges, and it is bound by the reasonable condition that a portion of its emoluments should be turned into the public treasury.

It follows that the judgment appealed from should be affirmed.

Bartlett, J., concurs Van Brunt, P. J., not sitting.