In re the Amsterdam, Johnstown & Gloversville Railroad — 67 N.Y. St. Rep. 878

Majority

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In the Matter of the Application of the Amsterdam, Johnstown and Gloversville Railroad Company for a Certificate, etc.

(Supreme Court, General Term, Third Department,

Filed May 24, 1895.)

Headnote

1. Appeal — Railroad commissioners.

Unless the court can see that the decision of the board of railroad commissioners is founded upon erroneous legal principles, or that it proceeded' contrary to the clear weight of evidence in arriving at its conclusion upon any question of fact, or that it has abused the discretion vested in it and has arbitrarily refused to issue the necessary certificate, the court will not reverse its determination and compel it to issue a certificate.

2. Railroads — Commissioners—Certificate.

The fact that an existing railroad is making excessive charges for freight and passenger transportation, does not establish that public convenience and necessity require another railroad, within section 59, chapter 676 of . 1892.

Application for a certificate that petitioner has complied with the railroad law.

Hale, Bulkeley & Tennant (Matthew Hale and Andrew J. Nellis of counsel), for application ; Hamilton Harris (A. D. L. Baker, of counsel), opposed.

The Amsterdam, Johnstown & Gfloversville Bail-road Company was incorporated July 12, 1894, pursuant to chapter 565 of the laws of 1890, and the laws amendatory thereof, for the purpose of constructing a steam railway between Amsterdam, Montgomery county, and Johnstown and G-loversville, Fulton county, a distance of about fourteen miles. The company has paid to the state treasurer the taxes upon the capital stock, as required by statute. Section 59 of- chapter 676 of the Laws of 1892 provides that:

“No railroad corporation hereafter formed under the laws of this state, shall exercise the powers conferred by law upon such corporations, or begin the construction of its road until the directors shall cause a copy of the articles of association to be published in one or more of the newspapers in each county in which the road is proposed to be located, at least once a week for three successive weeks, and shall file satisfactory proof with the board of railroad commissioners; nor until the board of railroad commissioners shall certify that the foregoing conditions have been complied with, and also that public convenience and necessity require the construction of said railroad as proposed under said articles of association. * * * After the refusal to grant such certificate, the board shall certify a copy of all maps and papers on file in its office, and all the findings of the board when so requested by the directors aforesaid. Such directors may thereupon present the same to a general term of the supreme court, of the department within which such road is proposed, in whole or in part to be constructed, and said general term shall have power, in its discretion, to order said board, for reasons stated, to issue said certificate, and it shall be issued accordingly.”

The corporation so formed complied with the necessary prelimi»

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nary requirements of this statute, and made application to the board of railroad commissioners for a certificate “that public convenience- and necessity required the construction of the proposed railroad.” The said board of railroad commissioners, holding that it did not appear to the board that “public convenience and necessity” required the construction of said railroad, as proposed in said articles of association, “and as set forth on the maps and profiles filed,” denied the application for such certificate. Whereupon the directors of said railroad corporation procured certified copies of all maps, papers, and evidence presented in said application, and have presented the same to this court, and ask for an order to compel the board of railroad commissioners to issue the certificate applied for. In re New Hamburgh & P. C. R. Co., 76 Hun, 76 ; 59 St. Rep. 150 , where a similar application was made to the general term of the supreme court, after stating the manner in which the application was brought before it under the statute, the court said:

“ This mode of proceeding, while it grants the court power to-review the action of commissioners, plainly indicates that the court is to treat the application as in the nature of a review of the decision of a subordinate tribunal, and not as it would an original application made to it in the first instance. The burden rests upon the petitioner to show affirmatively that the commissioners erred in their determination, and the commissioners should be credited with some technical knowledge which this court is not presumed to possess.”

I concur with that view of the province of this court in these proceedings. Hnless the court can see that the decision of the board of railroad commissioners was founded upon erroneous legal principles, or that it proceeded contrary to the clear weight of evidence in arriving at its conclusion upon any question of fact, or that it has-abused the discretion vested in it, and has arbitrarily refused to issue the necessary certificate, I do not think that the court should reverse its determination and compel it to issue a certificate. The railroad commissioners are vested with the supervision of the railroads of the state. It is made their special and peculiar duty to investigate and inform themselves as to the condition of existing roads, and as to the needs of the various parts of the state for transportation facilities; and their opinion upon these matters, in" regard, to which a proper discharge of their official duty requires them to be specially informed, is entitled to respect and consideration, Upon the hearing before the railroad commission, oral testimony was-given by witnesses sworn both on behalf of and in opposition to the-application. Petitions, signed by hundreds of the residents of Amsterdam, Gfloversville, and Johnstown, were presented to and filed with such board of railroad commissioners. Some of the petitioners certify that public convenience and necessity require the-construction of the proposed road, and others certify that public-convenience and necessity do not require the construction of the proposed road. The board of railroad commissioners, in making its order denying the application, filed a memorandum, which, amongst other things, contains the following statement:

“ In the pending application, the route of the proposed road

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from Akin, a small settlement about three miles west of the Amsterdam station on the New York Central, westerly for about three miles to Tribes’ Hill, on a line substantially parallel with the line of the Central, and lying a few hundred feet north of it. There are stations on the New York Central at both Akin and Tribes’ Hill. From Tribes’ Hill the proposed line runs northwesterly on a course gradually diverging from the line of the Central, passing at the most distant point within from two to two and one-half miles of the Fonda station of the Central, which station is some five miles west of the Tribes’ Hill station on the Central. The proposed line then turns northerly, and runs to Johnstown, on a course in the immediate neighborhood of and naralel to the lines of the Cayadutta Electric Railroad and the Fonda, Johnstown and Grloversville Railroad, and in fact crossing these roads in several places. From Johnstown to Grloversville it follows practically a route already occupied by three existing railroads, viz. the two just mentioned and the Johnstown, Grloversville and Kingsboro Horse Railroad. Considered as a whole, it offers a route from Akin to Grloversville of fourteen- miles in length, as against an existing route of about sixteen miles by the New York Central to Fonda, and from thence to Grloversville by the Cayadutta Electric Road, and a second routs of about twenty-one miles by the Central to Fonda, and the Fonda, Johnstown & Grloversville. Conceding that the new road may make a saving of a few miles, this saving is of no consequence except for passenger traffic. The only manner in which the proposed road would reach the city of Amsterdam would be by a connection with an existing electric street railroad now running to Akin, which from Akin to Amsterdam paralells and is adjacent to the New York Central. The proposed road does not touch any community or inhabited region not now amply supplied with railroad facilities. The evidence is undisputed that the existing roads are abundantly able to transact all business now offered, or that is likely to be offered for many years to come. If the charges made for transacting such business are exorbitant, there is a better method for curing this evil than by inviting superfluous competition. Furthermore, if the- existing roads between Fonda and Grloversville are making exorbitant charges, this fact may indicate that there is hardly business enough to support them upon reasonable charges, in which case there is obviously no occasion to build another road in a neighborhood already oversupplied. The board is of the opinion and finds that public convenience and necessity do not require the construction of said railroad.”

The testimony offered and produced, not only oral, but that contained in the petitions filed, seems to have been confined almost entirely to expressions of opinion that “ public convenience and necessity ” require the construction of the road in question, without giving any facts upon which such opinion is based, excepting the alleged fact that one of the present railroads, and the principal one, which the board of railroad commissioners finds the proposed road will practically parallel, is making excessive ■charges for freight and passenger transportation. Petitions pre

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senting no facts, nor the evidence thereof, but simply expressing the opinions and desires of the petitioners, are not evidence, and cannot take the place of evidence. Local sentiment, aroused by the alleged misuse or abuse of an existing franchise, affords no sufficient reason for granting another franchise upon the ground that public convenience and necessity require the construction of another road. No evidence was given to show that the amount of passenger traffic or freight traffic is so great as to require an additional road for its accommodation, and I think the evidence before the commissioners abundantly justifies their statement that u the evidence is undisputed that the existing roads are abundantly able to transact all the business offered, or that is likely to be offered for many years to come.” The privilege of constructing and operating a railroad is not one that exists in the incorporators as a common right; it is a privilege or franchise that is granted by the state, and can only be obtained by complying with the laws adopted by the state regulating the granting of such franchises. Prior to the enactment of section 59 of chapter 676 of the Laws of 1892, it was within the power of fifteen or more citizens to form a railroad corporation, and to lay its tracks through any section, upon securing from the property owners the necessary right of way. This section affected a change. It was evidently intended to resist the building of roads not actually needed, in order to protect, not only existing railroads, but also citizens from investing in alluring but profitless enterprises. The propriety and necessity of constructing a road was not left to be determined by enterprising but perhaps ill-informed or ill-advised citizens, or by those seeking by threats of destructive competition to levy tribute upon existing roads, but was placed in the hands of accredited officers of the state, who should act for and in its behalf in determining whether the interests of the state and of the community immediately affected would be promoted by the building of a road. Provisions had theretofore been made to be thereafter referred to, for the correction of abuses in the management of roads already constructed, so that it was no longer necessary to correct evils in the management of existing roads by constructing competent ones. And, before a new corporation can construct a road, the corporation must secure from the railroad commissioners their certificate “ that public convenience and necessity require the construction of such railroad.” The corporation applying for such a certificate necessarily holds the affirmative upon that question. It devolves upon it to show that its construction is required by public convenience and necessity. The certificate does not issue to it simply upon its filing its application, as a matter of right, unless evidence is produced before the board to show that public convenience and necessity require its construction. It is not entitled to it as a matter of right in the event of no one appearing to oppose its application ; nor, if any one does appear in opposition, is he obliged to prove a negative, and convince the board that public convenience and necessity do not require the construction of the road. The burden of

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proof is upon it to establish the performance by it of the requirements of the law, and to establish the existence of that condition of affairs which will authorize the state authorities to grant a franchise authorizing it to operate its road in the locality proposed. It is applying for something from the state, and it must prove its claim to it under the laws, the same as any person who attempts to establish any other claim or right.

So, also, in applying to this court, the- burden is upon the applicants to show to us affirmatively that the railroad commissioner» have erred in their refusal to grant the necessary certificate. Their determination as to whether they will grant a certificate of public-convenience and necessity is necessarily and properly largely a matter of discretion; not an arbitrary discretion, but a discretion-enlightened and guided by their experience in the affairs of railroads, the'problems of transportation, the needs of the people, together with the special facts brought before them in each particular case. To guide them, where it is claimed existing roads donor. afford the necessary facilities, the commissioners may properly take into consideration the means that the law affords to regulate-the management of railroad corporations, and correct mismanagement and enforce the providing of proper service. From an examination of the records in this case, it seems to me that the railroad commissioners were abundantly justified in finding that it did not appear that “public convenience and necessity” require the “construction of the said railroad as proposed in said articles of association, and as set forth on the maps and profiles filed,” and that they have not abused their discretion, nor can I sáy that they erred in its exercise.

As I have before stated, the opinions of the witnesses sworn in behalf of the application, and the certificates of the petitioners, residents in Amsterdam, Gloversville, and Johnstown, certifying that public convenience and necessity required the construction of the road, are almost entirely based upon the alleged exorbitant charges of the existing railroads, and their belief that rates of passenger and freight traffic will be lessened by the construction of the applicant’s road. In the memorandum of the railroad commissioners, before referred to, it is stated that, if the existing roads are exorbitant in their charges, “this fact may indicate that diereis hard by business enough to support them at reasonable rates in which case there is obviously no occasion to build another road in a neighborhood already supplied.” But it is claimed that the principal company already in existence has recently declared a dividend of eight per cent., and has in addition a surplus in its treasury, and that those facts show that there is no necessity for charging the present rates._ Without inquiring into the truth of such claims, nor for how long a time the existing company has been running and declaring dividends upon its stock, or whether the original investors have from the time of the commencement of their road down to the present time received reasonable returns for their investments, but, for the purposes of this case, assuming that their charges are, under all the circumstances, unreasonable, I think that the railroad commissioners did -not err in holding that

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that was not a sufficient reason for certifying that public convenience and necessity required the construction of the road. Where there is no railroad in existence in a locality, or when the traffic is so great as not to be properly cared for by one road, or even where there is traffic sufficient to adequately support more than one road, we may say that public convenience and necessity require the construction of another. But where, as in this case, it appears that “existing roads are abundantly able to transact all the business offered, or that is likely to be offered for many years to come,” I do not see how it can be said that public convenience and necessity require the construction of another. The charging of exorbitant rates does not, in the present state of the law, make a case for the building of another road. Such charges may indicate either that there is insufficient business to support the roads with lesser charges, or it may indicate bad management and a grasping disposition on the part of their operators. There is no pretense that there is too much business for the capacity of the existing railroads, and the remedy for the present high charges, if they are unnecessarily high, is not by building an opposition road, which may cripple those already in existence and destroy the value of the investments in them, or lead to the purchasing of the new road by the old companies, but, as indicated in the memorandum of the railroad commission, the remedy is to apply for a reduction of the rates. It is provided by section 161 of chapter 565 of the Laws of 1890 that if in the judgment of the board of railroad commissioners, after a careful personal examination of the same, it shall appear—

“That any change of the rates of fare, for transporting freight or passengers, * * * is reasonable and expedient, in order to promote the convenience and accommodation of the public; that the board shall give notice to the corporation of the change which they deem proper, and if after a fair hearing, the corporation refuses within a reasonable time to make the changes required by the board, the board shall present the facts in the case, to the attorney general, for his consideration and action, and also report them to the legislature.”

Section 162, as amended by chapter 676 of the Laws of 1892, provides that a special term of the supreme court shall have power—

“In its discretion in all cases of decisions and recommendations by the board, which are just and reasonable, to compel compliance therewith, by mandamus, subject to appeal to the general term, and the court of appeals, and upon such appeal the general term and the court of appeals may review and reverse upon the facts as the law.”

These provisions of the statute, together with others which I have not quoted, seem to me to afford a remedy for the alleged grievances against the existing roads. If an application had been made to the railroad commissioners to compel a reduction of the rates, and it had been made clearly to appear that they were exorbitant, and, notwithstanding that fact, the commissioners had refused to recommend the needed relief, so that the only relief at-

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tamable was by building another road, the case would appear before us in a different aspect. The court must assume, however, that the railroad commission will do its duty in the premises, and, upon its being made to appear to it that the existing railroads are charging unnecessarily high rates for transportation, that it will recommend their reduction. And it must also be assumed that the attorney general will do his duty, and present their recommendation to the court in the event of the railroads refusing to comply with the recommendation of the railroad commission ; and, upon its being so presented, the court will endeavor to dó its duty in the premises.

The only substantial reason given for the opinion that public convenience and necessity require the construction of the applicant’s road being the alleged excessive charges of the existing railroads for freight and passenger transportation, and there being a remedy provided for that by existing laws, it seems to me that the railroad commissioners were correct in declining to issue the certificate in question, and that there is no reason, either upon the facts or from their construction of the law, for reversing their determination, and compelling them to issue the certificate. The application should, therefore, be denied, with the costs and disbursements in this court.

Putnam, J., concurs; Stover, not acting.