Brush Electric Illuminating Co. v. Consolidated Telegraph & Electrical Subway Co.

—The plaintiff in this action, together with the plaintiffs in the other actions argued herewith, were duly incorporated for the purpose of the manufacture, use and transmission of electricity for the production of heat, light and power in the city of New York, and for a long period of time maintained poles and wires and other conductors in the streets of the city by which their currents were transmitted and distributed. Prior to-the year 1887 overhead wires were exclusively used by these corporations.

In 1884 the legislature passed an act which provided that all telegraphic, telephonic and electric light wires and cables used in any incorporated city of this state having a population of 500,000’ or over, should thereafter be placed under the surface of the streets, lanes and avenues of the city.

In 1885 an act was passed by which in cities having a population exceeding a million, the mayor, comptroller and commissioner of public works of such city were authorized and directed to appoint three disinterested persons who were to be a board of commissioners of electrical subways, which board was charged with the responsibility of enforcing the provisions of the act of 1884 hereinbefore mentioned, and of causing to be removed from-the surface and to be maintained and operated under ground wherever practicable all' electric wires and cables used or to be used in the business in any such city. Under this act it was contemplated that the electric light companies should build the subways according to plans to be submitted to the said board of commissioners; and in case of the failure of said companies to-

The fifth paragraph of said contract reads as follows: “ The party of the second part (the respondent) may fix a fair scale of rent to be charged according to the kind of conductors and the amount of space required therefor, which shall be at the same rate to all companies making a like use of said subways; but the scale of rentals or any charge fixed or made by the party of the second part (the respondent) shall at all times be subject to the control, modification and revision of the parties of the first part (the commissioners of subways) or their successors, and no contract shall be made between the party of the second part and any company or corporation on any terms which shall not require the payment by such other company or corporation of rents at the ' rate so fixed.”

The tenth paragraph of said contract reads as follows: “In case any dispute shall .arise between the party of the second part (the respondent) and any company occupying or desiring to occupy said subways, the same shall be referred to the party of the first part, or their successors, for settlement, whose decision shall be final.”

In June, 1887, the legislature passed an act by which the agreement made between the commissioners of subways for the city of -New York and the Consolidated Telegraph & Electric Subway Company under date of July 26, 1886, as amended and modified by second and further contract or agreement between said parties dated the 7th of April, 1887, was ratified and confirmed; subject, however, to the provisions of that act.

Section 7 of the act reads as follows:

“ § 7. In case, and whenever it shall be made to appear to the satisfaction of any of the justices of the supreme court, or any judge of the court of common pleas in and for the city and county of Hew York, or any judge of the superior court of the city of Hew York, or to the satisfaction of either of said courts, that the said board constituted by this act, or its successors, or any officer or agent of ■ said board or its successors, or the said The Consolidated Telegraph & Electric Subway Company or any corporation or persons claiming under the said board or its successors, or under the said company, shall have violated or shall have failed to

observe and fully perform or to carry into full effect all or any of the provisions of this act or of either of the acts hereinbefore mentioned, or of the said agreement, .or shall have failed to furnish just and equal facilities under this act or the said agreement to any and all corporations lawfully competent to manufacture, use or supply electricity, or to operate electrical conductors in any street, avenue or highway in the city of New York, applying for such facilities upon terms that to the court shall appear just and reasonable, then and in every such case said judge or justice or court may, by proper proceedings in the nature of a writ of mandamus or by mandamus, enforce the provisions of this act or of the acts before mentioned, or óf the said agreements or of any agreements made under the said acts, or compel the granting of such facilities, or may grant such relief as may be proper in the premises. And the said board or its successors, or the mayor, aldermen and commonalty of the city of New York, or any person, company or corporation aggrieved by any such violation or failure as aforesaid, shall be entitled to institute and maintain such proceedings as are by this section authorized.”

The defendant having completed a large number of miles of subways in 1888, announced a tariff which would be charged the electric light companies for the use of the subways, and in 1889 applications were made by various of the electric light companies for space in the subways for the period of one year, some of which applications contained the rental inserted therein, and in others the rental was left blank; but all the electric light companies making this application knew the scale of rent which the defendant had adopted for the use of the subways constructed by them. These applications having been granted by the defendant, and space assigned in the subways to these various electric light companies, they proceeded to put their wires therein and use the same for the purposes of their business. It further appears that these companies protested against the rates which were charged by the defendant for the use of its subways upon the ground that they were unjust, unreasonable and not fair; and negotiations were had between the defendant and some of these electric light companies for a reduction of these rentals, such negotiations, however, being predicated upon an occupation of the subways by the electric companies for a series of years. Some slight portion of the rental thus claimed by the defendant has been paid, but for a long period of time prior to the commencement of these actions there had been a refusal upon the part of the electric light companies to pay any rent to the defendant upon ■ the ground that the rent demanded was unfair. In October, 1890, the defendant notified the electric light companies that they were required to pay the rentals due, or else to take out and remove their cables and electrical conductors from the subways; and in case of failure to Comply with the requirements of the notice upon a certain date, measures would be taken by the defendant for the removal or cutting out of both the cables and conductors belonging to the electric light companies from the subways owned by the defendant Thereupon these actions were commenced and injunctions

The plaintiffs, claiming that the rental charged by the defendant is unjust and unreasonable, have brought this action to have a fair scale of rentals determined by the court, all action upon the part of the defendant towards the collection of any rent whatever to be enjoined pending the investigation of this question.

The plaintiffs invoke the jurisdiction of the court upon the ground that the contracts hereinbefore mentioned provide that the defendant may fix a fair scale of rents; and upon the claim that § 7 of the act of 1887, above cited, provides that the electric light companies may occupy ducts in these subways upon terms that to the court may appear just and reasonable.

It seems to be clear under the elementary principles which determine whether contractual relations have been entered into between parties that the application of these electric light companies for space in the subways, with knowledge of the rental which was claimed to be charged, the granting of these applications and the occupation of the subways constituted a contract between the companies and the defendant to pay such rentals, unless there is something which is peculiar in the situation of the parties which takes their action out of the ordinary rules governing the conduct of parties to contracts. It is not necessary to cite authorities for the proposition that if A. desires B. to let him the use of anything which belongs to B. and he knows B.’s price for such occupation, and his application being granted he enters into such occupation, it makes a contract to pay the price.

But it is said that the electric light companies, the plaintiffs in these actions, are not governed by this rule, because they were compelled to get out of the streets and go into the subways. This is undoubtedly true. This court knows from the previous struggles of these electric light companies which have come before it to keep out of the subways and to conduct their business (notwithstanding that it had become a public nuisance) by the use of overhead wires, that it was not until they were threatened with the destruction of their business if they continued to maintain a. nuisance in the streets that they consented to occupy any portion of the subways which have been prepared for them. And it is also true that a very large part of that reluctance arose from the fact that it would necessarily be more expensive to use an artificial envelope for their conductors than to allow them to be surrounded by the open air. Having resisted the law to the very last moment, it may be that they were compelled to enter these subways rather precipitously. But for this the defendant was not responsible, and if any harsh or unfair contract was insisted upon, under the circumstances, by the defendant, the plaintiffs had their appeal, because the scale of rents or any charge fixed or made by the defendant was at all times subject to the control, modification and revision of the board of electrical control, or their successors, and if the terms of the contract which had been entered into be

But these parties without paying, or offering to pay, any rental whatever have come into a court of equity to have this rental fixed, upon the ground that it is unreasonable, without any resort whatever t"o the tribunal which had the power to modify the terms of the contract entered into between them and the defendant.

It is a familiar principle that at least until all measures which the law gives to a party have been exhausted to restrain a wrong, equity cannot be called upon to interfere. And it may well be doubted in a case of this description where the provisions of the law (because these contracts have become law by being adopted and approved by the legislature) state that the decision of the board shall be final, whether equity can interfere unless upon proof of fraud upon the part of the board.

But it is urged that under § 7 of the act of 1887, to which reference has already been had, notwithstanding this provision of the contract, jurisdiction has been conferred upon the courts to determine and fix what is a fair and reasonable rental or to grant such relief as may be proper in case such .jurisdiction is invoked.

An examination of the section, however, will show that the court as a court of equity has no jurisdiction conferred upon it. The whole jurisdiction conferred by that section is conferred upon a justice of the supreme court or a judge of the court of common pleas or superior court or upon either of those courts to enforce in a particular way the provisions of the various acts and the various agreements under said acts and to compel the granting of such facilities, and the granting of such relief as might be proper in the premises; and this way pointed out is by proper proceedings in the nature of a writ of mandamus or by mandamus; and no other jurisdiction whatever is conferred.

It is apparent that no general equity jurisdiction was intended to be conferred, because the jurisdiction conferred by this act may be exercised by a justice or a judge and need not be by the court at all. It is true that the court may act; but the court has no power to do anything more than a judge would have the right to -•do out of court under the provisions of this act And that this is the true interpretation placed upon this act is apparent from the last clause thereof, .which is as follows: “And the said board or its successors, or the mayor, aldermen and commonalty of the city of New York, or any person, company or corporation aggrieved by any such violation or failure as aforesaid, shall be entitled to institute and maintain such proceedings as are hy this section author ized.” As has been before seen, the only proceedings authorized by this section are proceedings in the nature of a writ of mandamus. Even though, therefore, a judge or a court might, where proceedings in the nature of a mandamus had been instituted, grant such relief as the' circumstances required, the very wording

Again, even if a court of equity had jurisdiction, yet it could not intervene in an action of this character because of the position of the plaintiffs. They allege that the rental is unfair, but they have entered into a contract to pay this rental, and it is clear that no matter what the jurisdiction of the court may be as to rentals, accruing subsequent to the filing of a bill, they would have no power to relieve the companies from a debt which they have incurred prior to the initiation of these proceedings. They were bound to pay what was due before they could come into a court of equity and ask to be relieved from subsequent payment, even if the court had jurisdiction to entertain such an application, which we do not think it has. But in the case at bar they offer to pay nothing, they bring no money into court, and are seeking to be relieved from a debt which they owe to these defendants, by the intervention of this court upon the theory that they made a contract which it was improvident for them to make ; and that being compelled by the force of circumstances and the fear that their business might be destroyed, to make this contract, they ought not to be held to it.

We know of no rule of equity jurisprudence which justifies a court in intervening under such circumstances.

But it is claimed that even if there had been a valid agreement upon the part of the plaintiffs to pay rentals at the rate charged, their failure to pay would not justify the defendant in its threatened conduct.

It is conceded that the letting of these subways is not leasing an interest in real estate, and therefore under no circumstances could a possessory action to recover possession of the space occupied by these electric light companies as real estate be maintained. And it is clear that a possessory action for the recovery of personal property will not lie, as replevin could not be had to recover a hole in the ground.

The nature of the rights conferred upon these plaintiffs by the contract which they entered into with the defendant is peculiar because of the situation of the parties and the thing leased and the purpose for which it is rented. The fact however that the thing rented can neither be considered real estate nor personal estate cannot deprive the defendant of the protection of the law in the use of its property as against one who has entered upon its enjoyment under a contract which he has wilfully violated.

As has already been stated, under these circumstances equity will not intervene because the proposed action of the defendants would at most be a trespass, the damages for which might be easily ascertained. As far as the interruption of the business of the plaintiffs is concerned, that could not be considered, because they have no right in equity to continue their business at the expense of the defendants.

The position taken by the counsel for the appellants upon the argument of this appeal was that the only remedy of the defendants was to sue for the amount of these rents; and in case the

It might well be claimed that the rights of these defendants in reference to the occupation of their subways by the plaintiffs is similar to the right of a passenger to occupy a place in the train of a common carrier. It is well established both at common law and by statute that a common carrier has the right to eject a passenger who refuses to pay his fare. And for the same reason it would seem that when the plaintiffs refuse to pay the compensation which they agreed to pay for the occupation of these subways, the defendants would have a right to eject them from the vehicles in which they had been allowed to place their wires for the purpose of the conduct of their business. The position of the plaintiffs in the conduct of their business by means of these subways, by and with the consent of the defendant, seems to be like that of a licensee. They are permitted to conduct their business through this space over which the defendant -has control upon a promise to pay a certain remuneration. Failing to comply with their contract upon which the permit depended, the right to continue to conduct their business by means of these subways necessarily ended, and the defendants had a right to prevent its continuance.

We are of opinion, therefore, that a court of equity could not intervene certainly until these plaintiffs had paid what was due before the commencement of these proceedings, and that probably the sole jurisdiction of the court is controlled by § 7 of the act of 1887 and can be invoked only in the form of the proceedings therein prescribed in a proper case.

The order should be affirmed, with costs.

—While unreservedly concurring in the result arrived at by the presiding justice in this case, and in the other cases presented at the same time, I prefer to state briefly the conclusions at which I have arrived. These actions proceed upon the theory that the plaintiffs obtained access to certain allotted ducts in the defendant’s subway without having made any valid or binding contract as to rent, and they ask the court to determine what would be a just and reasonable rent. In the meantime they ask us to enjoin the defendant from disturbing them, and in the end to enjoin the defendant from collecting any greater sum as rental than the sum finally adjudged in these actions to be just and reasonable. Thus, without alleging what would be a just and reasonable rent, without furnishing a particle of proof upon that head, without giving any reason for the absence of either such allegation or proof, and without tendering or even offering

Upon the plaintiff’s own complaint, therefore, there was not a particle of equity in the application which was denied. If there was no contract, the plaintiffs were in possession as bare licensees, and upon their refusal after due- notice to remove, they became trespassers. This view of the true relation of the parties is not affected in the least by the fact that, under the legislation confirming the contract between the commissioners of electrical subways and the defendant, the plaintiffs had an undoubted right to the due allotment of necessary space in the subways. But the further claim made by the plaintiffs that such right was absolute and could not be preliminarily conditioned upon reasonable terms and regulations, is, in my judgment, preposterous. The time to ■settle the question of rent and all other terms was when the plaintiffs applied for space. The defendant had a perfect right, and indeed it was its duty, to refuse to permit any company to occupy the' subways until the contract therefor was complete. The law is sufficiently explicit in this regard. The defendant could fix what it deemed a fair scale of rentals, and if the companies agreed to that scale, well and good. That settled the question. If, however, the companies deemed such scale to be unfair or unreasonable, an arbiter between them and the defendant was provided, namely, the board of electrical control. That board had full revisory power with regard to such rentals, and in the absence of fraud or bad faith its decision was final and binding upon both parties. It is entirely clear that the plaintiffs were bound in the first instance to appeal to this board in case(the rates fixed by the defendant were deemed unreasonable. It is equally clear that the court could not revise or reverse the honest judgment of that board, and that the.companies could not appeal to the court, even after an unsuccessful appeal to the board, without averring fraud or bad faith. In case, however, the board should refuse or neglect to act promptly upon the companies’ appeal, a summary remedy was provided by § 7 of the act of 1887.

The object of the provisions of this latter section was to secure the granting of just and equal facilities, upon fair and reasonable terms, to all applicants alike. The plaintiffs, however, neither appealed to the board to revise the rentals fixed by the defendant,

With regard to the question as to whether the defendant can under any circumstances resort to the remedy of eviction, I think the plaintiffs must be held to the position assumed in their complaints. They do not admit the tenantcy under a completed lease, but. simply claim that they are in possession under an implied agreement to give them a lease upon fair and reasonable terms to be judicially ascertained. Thus their attitude in the interim, as we have already seen, is necessarily that of licensees.. They are in possession, they say, without a contract, under the right, however, which the law gives them and the duty which the law imposes upon them, to place their conductors in the subway. Still, they are there as mere licensees until a contract such as the law authorizes and even compels the defendant to impose is entered into. Upon the case made by the plaintiffs, therefore, there can be no doubt of the defendant’s right to remove an apparatus wbibh simply trespasses upon the subways. But I agree with the presiding justice, that even upon the defendant’s case of a completed contract, the-right exists to remove the plaintiff’s apparatus for non-payment of the agreed rentals. When the nature and object of the subways are considered, it becomes apparent that the ordinary rules which govern as between landlord and tenant can have no application. The-subway is a great public work authorized for a specific purpose and constructed with a view to a special service. It stands to reason-that, when the conditions upon which the service is granted have been broken, such service may be discontinued and the facilities afforded by the structure withdrawn. To limit the defendant to the ordinary action to recover money, would be subversive of the-entire svstem thus inaugurated. Supposed .analogies with regard

I think, therefore, that payment of the agreed or fixed rentals is an essential and reasonable condition to the use of the allotted space, and that the defendant should not be interfered with in resuming possession of such space and again offering it for electrical purposes except in a case of real oppression and injustice. No such case has here been made out. On the. contrary, an injunction under the circumstances disclosed would plainly be both unjust and oppressive.

I concur, therefore, for these reasons, in the affirmance of the orders appealed from.

—I have out little to add to the opinion of the presiding justice which covers the material points discussed on the argument of this appeal. The several plaintiffs entered into the occupation of space in the conduits of the defendant under an absolute obligation to pay for their use. That they were compelled to do so by law cannot affect that obligation, for such compulsion resulted from a necessity connected with the public safety; their business as theretofore conducted being dangerous to the community. At the time they entered into the occupation of the space referred to, they knew not only they were required to pay, but also the rates established. Under such circumstances an implied contract arose to pay that rent unless a different one were fixed by the tribunal created by the law to regulate rentals, which, as I read the statute and the contracts, is in the first instance the board of electrical control. Even assuming

I agree with the presiding justice that whatever power the court may have over the subject is limited by the statute, but if general equity rules are applicable, the plaintiffs must put themselves in a position to show they are entitled to the consideration of a court of equity. That can be done only by securing to the defendant,, either by a deposit of money or by a sufficient bond, the amount, of rent which they knew was charged at the time they entered into occupation, which was neither $1,000 a mile as fixed by the-defendant or $900 a mile, which seems to have been considered by the board of electrical control a proper sum. Nothing whatever has been done by either of the plaintiffs in that direction,, and the court will not now make any order concerning it, for the case must be determined on the facts as they are presented in the record, and were submitted to the judge in the court below.

We are not called upon to interfere with the action of the defendant, nor to point out to either party what is the remedy for the non-payment of this rent. It is sufficient that no case has been made for the interference of the court by injunction, and if the defendant transcends its legal right in preventing the use of the subways by the plaintiffs, the latter have their adequate remedy at law.

Order affirmed, with costs.