Mayor of New York v. Manhattan Railway Co.

Headnote

1. Railroad—-Elevated—Compensation for use of street.

Upon acceptance by the company named in the act of the franchise granted by chap. 489, Laws of 1867, the obligation imposed by said act of the payment of a percentage of the net income as compensation for the use of the streets became fixed without further legislation, and defendant, as its successor, took the franchise, rights and property subject to such obligation.

2. Same—Connections,

Said obligation extends to the income from connecting routes constructed under the provisions of the rapid transit act.

8. Same—Accounting.

In such case an action for an accounting to determine the account for an accounting.

Appeal from judgment of special term in favor of plaintiff in an action for an accounting.

The following is the opinion of the special term :

Ingraham, J.—By chapter 489, Laws 1867, the West Side, Yonkers & Manhattan Eailroad Company, a corporation organized under the general railroad act, was authorized and empowered to construct an elevated railroad in the counties of Hew York and Westchester upon a certain specified route. By § 9 of that act it was provided “ that the said company shall pay the sum of five per cent, of the net income of said railway from passenger traffic upon Manhattan island as aforesaid, into thé treasury of the city of Hew York, in such manner as the legislature may hereafter direct as a compensation to the corporation thereof

for the use of the streets thereof.” And this action is brought to enforce the obligation imposed upon such corporation by this section.

In deciding this question I shall assume that chapter 855 of the Laws of 1868 is unconstitutional The court of appeals in Be New York El. B. Co., 70 H. Y., 327, appears to have intimated an opinion that this act was in conflict with the provisions of the constitution. The defendants claim that the act is unconstitutional, and I think it my duty to follow this intimation of the court of appeals. The defendants strenuously insist that § 9 of the act of 1867, before referred to, did not impose any obligation upon the corporation therein named to pay the 5 per cent named into the treasury of the city of Hew York until the legislature should subsequently direct as to what manner the same should be paid; that further legislation was contemplated and necessary before any obligation would exist which required the corporation to pay to the city any sum of money whatever. I think, however, that such a construction would be contrary to the plain intent of the legislature and expressed in the act, and that, upon the acceptance of the franchise granted by the act, the corporation became bound to pay to the city of Hew York 5 per cent, of the net income of the railway from passenger traffic upon Manhattan island. It is apparent that no further direction from the legislature was necessary. The plaintiffs have by law an officer whose duty it is to receive and collect all sums of money due to the city of Hew York. The money to be paid to the corporation was to be paid to the city as compensation for the use of the streets, and under the provisions of the act 5 per cent of the net earnings became a part of the money of the city, which was entitled to receive as a compensation for the use of a portion of its property. Ho further direction was necessary as to the manner of its payment, and it i$ difficult to perceive what object there was for the insertion of the words “.in such manner as the legislature shall hereafter direct” in the act. It may be possible that it was deemed necessary to insert such words in order to give the legislature control, if it saw fit to exercise it, of the method of payment. The obligation to pay, however, was distinct, and by the acceptance of the privilege granted to the corporation it became a contract, whereby it became bound to pay to the city the sum mentioned, and it seems to me clear that, in the absence of further direction from the legislature, that obligation on the part of the railway should be enforced. In the case of Mayor, etc., of New York v. Twenty-third St. B. Co., 313 H. Y., 314; 22 St. Rep. 958 , asimilar provision was construed. A railroad corporation was there required to pay annually on the 1st day of October into the treasury of the city of Hew York one per cent, of the gross receipts of the company, and it was held that this was a charter obligation, and that it was bound to pay one per cent of its receipts to the city, not a sum equal to one per cent, hut so much of the gross receipts; that the railway corporation would receive one per cent, of all the fares paid to it to and for the use of the city under the obligation to pay it to the city. Applying this principle here, it would follow that when

the railroad corporation received the fare from a passenger it received five per cent, of that fare, after deducting the expenses of operating the road, for the use of the city, and that sum became at once the city’s money ; and, in the absence of any further direction from the legislature, I can see no reason why the city is not entitled to recover from the corporation this money which the corporation has received for the use of the city.

It is a familiar principle, universally applied in the construction of acts of this kind, that where any ambiguity exists, or a dual interpretation may be indulged, such a construction shall be given as shall be most strongly against the corporation. Every reason is to be resolved adversely to it, and the public is to be entitled to the benefit of the doubt. See Mayor, etc., of New York v. Dry Dock, etc., R. Co., 47 Hun, 200 ; 13 St. Rep., 396 , affirmed by court of appeals, 112 M. Y., 141 ; 20 St. Rep., 236 . It appearing, therefore, that the corporation was bound to pay to the city of Mew York five per cent, of its net income from passenger traffic, this defendant, having succeeded to the franchise, rights, and property of the corporation named in that act, took with such property the obligation to pay the percentage named in the act. This is expressly decided by the court of appeals in the case of Mayor, etc., of New York v. Twenty-third St. R. Co., 113 M. Y., 319 ; 22 St. Rep., 958 , before cited.

The important and difficult question in the case, however, remains to be determined. The act of 1867, before referred to, authorizes the corporation therein named to construct a railroad through Greenwich street and Minth avenue in the city of Mew York. The Mew York • Elevated Railroad Company subsequently acquired by purchase the portion of the railroad built, and its franchise and right, and the legislature, by chapter 595 of the Laws of 1875, confirmed in the possession of the Mew York Elevated Railroad Company the rights, powers, privileges, and franchises granted to the corporation named in the act of 1867, and the Mew York Elevated Railroad Company thereupon proceeded to build certain portions of the railroad authorized by the act of 1867, aud not built by the West Side Elevated Railroad.. Subsequently the act known as the “ Rapid Transit Act” chapter 606 of tfie Laws of 1875 was passed. That act provided for the organization of corporations to construct elevated railroads, the appointment of commissioners to determine the route upon which such railroads should be built, and by § 36 of that act it was provided that whenever the route or routes determined upon by the commissioners coincided with the route or routes given by the charterxof the existing corporation formed for the purposes provided by the act, such corporation should have the like power to construct and operate such railroad or railroads upon the fulfillment of the requirements and directions by said commissioners as a corporation formed under the said act; and the said commissioners were authorized to fix and determine the route or routes by which any elevated steam railroad or railroads then in actual operation should connect with other steam railroads, or the depot thereof, or with steam ferries, upon fulfillment by such elevated

railway companies of such of the requirements and conditions as were imposed by said commissioners. The act then provided as follows : “And when any connecting route or routes shall be so designated, such elevated railway company may construct such connection with all the rights and with the like effect as if the same had been a part of the original route of such railway.” Under the provisions of this act commissioners were appointed. The Hew York Elevated Railway Company was at the time operating an elevated railway in the city of Hew York which had been constructed under the act of 1867, before mentioned, from a point on Hinth avenue and Thirty-fourth street through Hinth avenue and Greenwich street to the lower end of the street It came, therefore, within the provisions of this act, as an elevated steam railway in actual operation. The commissioners under the act determined a route by which the existing elevated railroad company, viz.: the Hew York Company, might connect with other steam railways, or the depots thereof, and with steam ferries beginning at the intersection of Greenwich street and Park place and extending through several streets to Third avenue to the Harlem river with several branches or turnouts.

The Hew York Elevated Railway, under the authority thus given to them, constructed a railroad upon the route so fixed, and the question to be determined is whether or not the obligation to pay five per cent, of the net earnings from passenger traffic extended to such traffic upon the railroad in Third avenue built under the permission thus granted. In determining this question, the principle before mentioned, that in the construction of all statutes of this character the construction must be adopted which is most favorable to the public where the statute is capable of more than one construction, must not be lost sight of. At the time the rapid transit act was passed, the Hew York Elevated Railway was operating so much of its road as had then been constructed, and in operating that road it was paying to the city of Hew York the percentage required by the act under which it had obtained authority to build the road. The corporation had not disputed its liability to pay such five per cent., but expressly recognized it by making the payments. By operation of the provisions of section 36 of the rapid transit act, it was authorized to extend its road so that the length of its road was more than doubled, and, when the railroad company constructed said connection, it had, as to such extension, all the rights, and maintained and operated it with like effect, as though the same had been a part of the original route of the railway. What would have been the effect if the extension had been built as part of the original route of the railway ? Clearly the company would have been bound to pay five per cent, of its net income from passenger traffic upon such extension to the city, and I think it follows that, by building the extensión under the authority granted by the provisions of the statute, the Hew York Elevated Railroad Company became liable to pay such percentage of its passenger traffic to the city. Such a construction is the only one that will give effect to

the words, “ with like effect as- though the same had been part of the original route of such railway.”

If the act authorizing the construction of the original road had contained limitations as to the fare to be paid, regulations as to the carriage of passengers, or other regulations as to the method by which the business should be done, would it not be clear that such regulations would apply and bind the corporations as to the operation of the extended railroad? And I think it clear that this obligation to pay also applied to the extension. It seems to follow, therefore, that the Hew York Elevated Railroad was bound to pay to the city of Hew York five per cent, upon its receipts for passenger traffic, both upon its original and upon the extension that it was authorized to build by the commissioners appointed under the rapid transit act; and the Hew York Elevated Railroad so construed its obligation, as it had undertaken to pay to the city a sum which it assumed would discharge it from that obligation. Upon the lease by the Hew York Elevated Railroad Company to the defendant, upon the principle settled in the case of Mayor, etc., of New York v. Twenty-third SL B. Co., 113 H. Y., 319; 22 St. Rep., 958 , before cited, the defendant became liable to the plaintiff for the percentage to be paid by the company, and that amount did not depend upon the amount of rent that the defendant should pay to the Hew York Elevated Railroad Company. As before stated, when it received a fare it received for its own use ninety-five per cent, and for the city of Hew York five per cent. As was said in the Twenty-third St. B. case: “ When the defendant took the place of the lessor corporation, it became obligated to take and return one per cent, of the fares received by it to and for the use of the city, and to make payment thereof to the city;” and, so far as the city was concerned, it was entirely immaterial as to what sum the defendant paid to the Hew York Elevated Railroad Company for rental; whether it paid the interest on its bonded indebtedness or not, five per cent, of the net income of the railroad from passenger traffic was the money of the city, and when the defendant assumed possession of the road, and operated and used its property and franchise, it became liable to the city for such percentage.

The point is also taken by defendant that an action for an accounting cannot be maintained, but that the remedy is an action at law. It would seem, however, that, as the defendant has collected the money of the city for which it was bound to account to the city, and where an accounting is necessary to determine the amount due of the city’s money in possession of defendant, an action for an accounting is the proper remedy ; and in the case of Mayor, etc., of New York v. Twenty-Third St. B. Co., supra, which was an action under an obligation of the like character, an interlocutory judgment for an accounting was entered, which was affirmed, the court of appeals thus approving the form of the action.

All but one of the counterclaims are disposed of by the con- , elusion at which I have arrived as to the liability of the defendant under the act of 1867. The counterclaim remaining undisposed

of is the one under which a recovery is sought for the amount paid by the defendant, the New York Elevated Railroad Company, for property of abutting owners in the street that had been appropriated by the elevated railroad, but I do not think there is any basis for the recovery against the city for such cause of action. It was the property in the streets that belonged to the city that the statute authorizes the corporation to use, and it was as compensation for the use of the city’s property that the five per cent, was to be paid. Nothing in the act of 1868 can be construed into.a covenant on behalf of the city whereby the city agreed to acquire for the use of the corporation the property other than that owned by itself. It authorizes the corporation to use the city property, but, if the railway corporation wished to use the property of private individuals in the construction of its road, it is bound to acquire the title to such property by purchase or other proper proceedings. The railroad corporation was not bound to accept the franchise granted to it, but, having accepted it, it was bound to pay for its use, and upon no principle could it compel the city to give to it any more than the property that the city had in the streets which was necessary for its use. It follows, therefore, that the plaintiff is entitled to an interlocutory judgment for an accounting before a referee, the question of costs to be reserved until final judgment. Decision and judgment to-be settled on notice.