People v. Ulster & Delaware Railroad — 34 N.Y. St. Rep. 983

Majority

p. 983

The People, App’lts, v. The Ulster & Delaware R. R. Co., Resp’t.

(Supreme Court, General Term, Third Department,

Filed December 12, 1890.)

Headnote

1. Railroads—Constitutional law—Laws 1889, chap. 236.

Chapter 430 of Laws of 1874 provides for the re-organization of railroads sold under mortgage and for the formation of new companies in such cases. Chapter 236 of Laws of 1889 (amendatory of the above act), declares that nothing contained in the act of 1874 shall be construed to compel a corporation organized under it to extend its road beyond the portion thereof constructed at the time the "corporation acquired title, provided the board of railroad commissioners certify that the public interests do not require such extension, and that if such certificate was made it should be a bar to any proceedings to compel the road to make such extension or to annul its existence for failure to do so. EM, that the amendatory act was neither unconstitutional nor void.

2. Same.

The amendatory act does not confer judicial power upon the board of railroad commissioners.

3. Same.

It is competent for the state to surrender any right of action which it may have, e. g., a forfeiture.

4. Same—Costs—Extra allowance.

Taxes paid under chapter 361 of Laws of 1881 by a corporation do not necessarily show the value of its franchise and perhaps may not show it correctly at all. And upon the question of an extra allowance, the state is not bound by such a method of arriving at the value; other evidence must be produced.

Appeal by plaintiff from a judgment dismissing the complaint with costs, entered upon a verdict directed by the court, and from order granting an extra allowance of $1,500 to defendant.

Action to annul the charter of defendant as a railroad corporation re-organized pursuant to chap. 430, Laws 1874.

The ground of action alleged is that the defendant has failed to construct or operate any portion of its road between Stamford and Oneonta, a distance of about twenty-six miles, under the provisions of its charter as required by law, and has, therefore, forfeited all its franchises.

Defenses: 1. A denial that defendant “ ever became bound or liable or had lawful right or authority or legal or pecuniary ability to construct any part of said projected railroad between Stamford and Oneonta.

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2. That the located line of said railroad beyond Stamfo'rd, through the town of Harpersfield “ runs on the side of a mountain through a sterile, barren country, almost uninhabited and there are not more than one or two houses on the line, and no roads leading thereto,” etc., and that another railroad has been projected from Stamford to Bloomville and thence to a point at or near Oneonta by a different route and two other corporations are to-build and operate the same. And which when completed can he operated in connection with that of defendant.

3. That the defendant has made annual reports of its property and earnings under the laws of the state upon the railroad as operated from Bondout to Stamford and has been assessed thereon as well as upon its franchise and business and has paid the taxes thus assessed, etc.

4. That the action is barred by the statute of limitation.

5. That after this action was commenced the legislature passed an act amending the reorganization act of 1874, by adding a new section relieving a corporation' thus organized from finishing a railroad not then completed, provided the board of railroad commissioners shall certify that the public interests do not require itr and that such certificate has since been made in relation to the completion of that portion of the road beyond Stamford.

The present road was built by the Bondout & Oswego B. B. Co., the name of which was changed to the New York, Kingston & Syracuse B. B. Co. Mortgages given thereon were foreclosed and the property bid in for the bondholders, who reorganized and formed the corporation defendant.

The town of Harpersfield, which was instrumental in having this action brought, had issued bonds for the sum of $100,000 and purchased stock in the Bondout & Oswego B. B. Co. on the condition, it is claimed, that the road should be constructed through that town. It is .also claimed that the company was then at woi’k in said town, but as soon as the bonds were sold and the money obtained it stopped work and nothing has since been done.

M Countryman, for app’lts George ZdbrisMe, for resp’t.

We have nothing to do in this case with the alleged bad faith or breach of contract in the dealings of the Bondout & Oswego Bailroad with the town of Harpersfield. That town is not the plaintiff.

The only question is, whether the people have a right to .annul the charter of the Ulster & Delaware Bailroad Company for the failure to' construct a certain part of the route originally laid out.

We do not consider it necessary to decide the question whether the defendant, taking title under the foreclosure "of a mortgage-made by the Bondout & Oswego Bailroad Company, or New York, Kingston & Syracuse Bailroad Company, and organizing under chapter 430 of the Laws of 1874, became bound to complete the road as originally laid out.

We have great doubt whether it came under any such liability. But, as we think there is a conclusive defense to this action, we deem it best to pass the question above mentioned.

p. 985

Chapter 236 of the Laws of 1889, adds a new section to chapter 430, Laws of 1874, being the reorganization act. This declares that nothing therein contained shall be construed to compel a corporation organized under that act to extend its road bey-" and the portion thereof constructed at the time the corporation acquired title, provided the board of railroad commissioners should certify that the public interests did not require such extension.

It provided that, if such certificate should be made, the corporation should not be deemed to have incurred any obligation to extend its road; and that such certificate should be a bar to any proceedings to compel it to make such extension or to annul its existence for failure so to do ;' and should be final and conclusive in all courts and proceedings whatever.

Under this statute the defendant petitioned the railroad commissioners. Notice of the prosecuting the-petition was published and was served on the town of Harpersfield, which had been the active party in instigating the present action.

On the 24th of June, 1890, the board made and filed its certificate in compliance with said act. This is set up by defendant in an amended answer.

Now it is plain that this certificate is a bar to this action, unless the plaintiff can show some reason why the statute does not apply, or why it should be held unconstitutional or void. The plaintiff insists that the statute is void because it assumes judicial power. We do not think that the language that the reorganization act “ should not be construed to compel a corporation” to do-a certain thing is an assumption of judicial power. It is simply a mode of stating the meaning of the legislature in making the amendment. But the further language that the certificate, when made, should be a bar to proceedings like the present is certainly not open to the objection that it assumes judicial power in construing statutes.

Further, the plaintiff insists that this act is unconstitutional in giving judicial power to the board of railroad commissioners.

We do not see that judicial power is given to the board. Administrative duties often require an administrative officer to decide , on the proper course of action and for that purpose to ascertain what are the facts in the matter before him.

But he is not, therefore, exercising judicial functions. In the present case the people have the right to annul the charter if they show good cause. The legislature has the right, in behalf of the People, to refuse to annul the charter, even if there be good cause. And it has a right to say that the charter shall not be annulled anet that the corporation shall not be relieved from any obligation which it might have owed to the state to do a certain act.

Such being the right of the legislature, we see no reason why it may not authorize a board of its administrative officers to inquire what the public interests demand in that respect, and to decide whether the public interests do or do not require the corporation to do a certain act.

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The only parties are the People speaking through the legislature, on the one hand, and the corporation on the other. We have no occasion to say if there was a controversy between the corporation on one side and some individual on the other, whether the legislator could compel the submission of that controversy to this board. That does not arise here.

It is only the state itself which says, if our board of railroad commissioners certify that the public interests do not require the building of a certain piece of road, then it need not be built.

Yery possibly the legislature could not declare that a certificate of the railroad commissioners should be a bar to an action by one. private individual against another. But it is certainly competent for the state to surrender any right of action which it may have.

It could declare that no action on its behalf for the annulling of a charter should be further prosecuted. So here the legislature has declared that if the board of railroad commissioners give a certificate, then the state will not further prosecute its action.

The legislature is certainly competent to stop a litigation which is prosecuted on behalf of the state. There is no interference with the judicial power when a plaintiff declines further to prosecute his case. And this statute, by which the legislature says that a certain certificate of 'state officers shall put an end to a state prosecution, does not interfere with any judicial authority.

There is no need of a discussion about the power of the legislature to enact laws which shall take effect upon certain conditions, or upon its power to delegate legislative functions. For there is nothing in this statute but a waiver of a forfeiture, or, in other words, a refusal to annul a charter. The legislature authorizes certain boards to convey the property of the state, as, for instance, land under water. Cannot it authorize another board to give a certificate which shall practically waive a forfeiture, which no one but the state could enforce ?

The state has frequently by statute extended the time within which a corporation was to build a road. This was a waiver of the forfeiture for not building. * And a statute of that kind would be a bar to an action for forfeiture, if such an action should be commenced, or if such an action were pending. The state is not bound to enforce a forfeiture, and if it waives a forfeiture] no private individual or body can object.

It seems to us that the error on the part of the plaintiffs’ counsel is in the application of very sound and important doctrines. If this were a controversy between two private individuals it might well be doubted whether the legislature could enact that a certificate of railroad commissioners should be a bar. But the real meaning and plain effect of the statute is simply that the state will not continue a litigation when its own board of officers have said that the public interests do not. require it The attorney-general stands in the strange position Of insisting upon prosecuting an action for the state which the state has said shall be barred. Of course this is explained by the not unusual circumstance that the attorney-general allows some other party to úse his name of office. But that other party, the town of Harpers

p. 987

field, has no right to enforce a forfeiture which the state has waived, or to seek to annul a charter on grounds which the state has declared shall not be a cause for such annulling.

The plaintiff further insists that the reasons given by the board of railroad commissioners for its certificate are not satisfactory. It was not bound to give any reasons, though this was a very proper course. But it is not in our power to review the action of the board, even if we thought its reasons improper or insufficient, which we do not. It is enough that the statute makes the certificate, not the reasons, conclusive and a bar.

The judgment of the learned justice is correct and should be affirmed, with costs.

Another question is presented by the appeal from the order granting an extra allowance. There is no doubt that the case is one in which an extra allowance was proper. But the plaintiff urges that there was no proof of the value of the corporate franchise and that only upon that value could the allowance be based. Conaughty v. Saratoga County Bank, 92 N. Y., 401 .

The defendant, to show the value of this franchise, showed the taxes which it had paid for several years, under the statute, chap. 361, Laws 1881. The defendant claims that this statute imposes a tax on corporate franchises and not on corporate property. People v. Home Insurance Co., 92 N. Y., 328 . That hence the valuation on which the tax is assessed must be a measure for the franchise taxed. Now the statute may impose a tax on an amount which shall greatly exceed the real value of the franchise. The mode in which a corporation is assessed under this statute-merely determines the amount at which, for the purpose of tax ation,'its franchise shall be .estimated.

We think that this assessment does not bind the state as to the actual value of the franchise when such value had to be ascertained on the motion. Not only does' it not bind the state, but we do not see that it is evidence. The question before the learned j ustice was what was the value involved, that is, what was the value of the franchise. And upon that point these several transacations of the defendant do not seem to us to be evidence. We think, therefore, that the order should be reversed, only on the ground that the vajue of the franchise was not shown. Judgment affirmed, with ‘costs. Order of extra allowance reversed on the ground that the value of the franchise was not shown.

Landon and Máyham, JJ., concur.