New York Electric Lines Co. v. Empire City Subway Co.

delivered the opinion of the court.

This is a writ of error to review the denial by the state court of an application for a writ of peremptory mandamus directing the Empire City Subway. Company (Lim-' ited) to lease space in its conduits in the City of New York to the plaintiff in error.

In the year 1884, the legislature of the State of New York required that 'all telegraph, telephonic and electric light wires’ in certain cities — New York and Brooklyn— should be placed under the surface of the streets (Laws of 1884, chap. 534). Under the authority of a statute passed in the next year (Laws of 1885, chap. 499, amended by Laws of 1886, chap. 503), the Board of Commissioners of Electric Subways adopted a plan by which the City of New York should enter into a contract with a company to construct the necessary subways, etc., which other companies operating electrical wires should be compelled to use, paying therefor a reasonable rent. Under contracts, made accordingly and ratified by the legislature (Laws of 1887, chap. 716), subways, etc., were constructed by the Consolidated Telegraph & Electrical Subway Company. The board first-mentioned was succeeded by the Board of Eleqtrical Control (Laws of 1887, chap. 716); and, in 1890, the subways, conduits and ducts for low tension conductors, which had been thus provided, were transferred . to the Empire City Subway Company (Limited),- the de

• The plaintiff in error, The New York Electric Lines Company, claiming to be entitled to space in these subways, made application therefor on or about June .10,1910. The request was refused and the present proceeding for a peremptory mandamus was brought. The assertion of right rested upon a permission granted by the City of New York, through its Common Council, to the plaintiff in error, on April 10, 1883, to lay electrical conductors, in the City’s streets. This permission, the City by its Board of Estimate and Apportionment, which had succeeded to the powers of the former Common Council in the matter, had formally revoked by a resolution adopted on May 11, 1906, reciting .that whatever rights the company had secured under the permission in question had long since been forfeited by non-user. The Court of Appeals of the State, holding that the Board of Estimate anjl Apportionment had this power of revocation,- and' had duly exercised it, affirmed an order refusing the writ of mandamus. Matter of New York Electric Lines Co., 201 N. Y. 321 . The plaintiff in error insists that the resolution thus sustained was an unconstitutional impairment of the obligation of its contract with the City.

We think that it sufficiently appears that this question was raised in the state court, and as the state court gave effect to the repealing resolution the case is properly here. It is therefore the duty of this.court to.determine for itself whether a contract existed and whether its obligation has been impaired. Douglas v. Kentucky, 168 U. S. 488 , 502;

The plaintiff in error was incorporated in the year 1882, under a general law of the State of New York (Laws of 1848, chap. 265, as amended by Laws of 1853, chap. 471). Its certificate of incorporation stated, among other things, that it was incorporated for the purpose of ‘ owning, constructing, using, maintaining and leasing lines of telegraph wires or other electric conductors for telegraphic and telephonic communication and for electric illumination, to be placed under the pavements of the streets ... of the Cities.of New York and Brooklyn’ and ‘for the purpose of owning franchises for laying and operating the said lines of electric conductors.’ Chapter 483 of the Laws of 1881 had authorized any company so incorporated ‘to construct and lay lines of electrical conductors underground in any city,’ provided that it ‘first obtain from the common council’of such city the ‘permission to use the streets’ for the purposes set forth. The permission in question, which as already stated, was granted by the Common Council of the City of New York, on April 10, 1883, was (omitting parts not here material) as follows:

“Resolved, that permission be and hereby is granted to the New York Electric Lines Company, to lay wires or other conductors of electricity in and through the streets, avenues and highways of New York City and to make connections of such wires or conductors underground by means of the necessary vaults, test boxes and distributing conduits, and thence above ground with points of electric illuminations or of telegraphic or telephonic signals in accordance with the provisions of an ordinance . . . approved . . . December 14, 1878.”

It was also resolved that the Company should not

On April 24, 1883, the plaintiff in error presented to the Common Council, and the latter spread upon its minutes, a formal acceptance of the permission, which after the recitals states:

''Now, therefore, the said New York Electric Lines Company by these presents accepts the said franchise as contained in the ordinance and resolutions'adopted by the Honorable the Board of Aldermen, April 10, 1883, and agrees to, assumes and obligates itself in the observance of all the requirements, provisions, restrictions, conditions and limitations contained in the said last mentioned ordinance as adopted April 10, 1883, as well also as to the provisions, conditions and obligations of the said general ordinance approved by the Mayor December 14, 1878.”

The ordinance of 1878, referred to, -regulated the method of laying wires under the streets, and provided that within six months after the grant of permission, grantees should file with the County Clerk 'maps, diagrams and tabular statements indicating the amount and position of the spaces proposed to be occupied by them.’ In May, 1883, the plaintiff in error, in asserted compliance with the ordinance, filed a map, diagrams and statement. It is alleged in the affidavits presented on the application for mandamus that the plaintiff in error secured inventions and patent rights, that it had an office and factory, that it prosecuted experimental work in relation to its project, and expended in this way large sums of money. But, in the actual construction of conduits or laying of wires, nothing was done prior to the legislation of 1885 and 1886, which as we have seen provided for a comprehensive plan for the building of subways in which electrical conductors should be placed.

Section 3 of the act of 1885 expressly made it obligatory upon any company 'operating or intending to operate elec

This court affirmed the judgment (id., 145 U. S. 175 ), spying (pp. 187, 188):

“In no sense of the term do we think it can be safely averred that the acts of 1885 and 1886 are not applicable to the relator. . . . Neither can it be said that -the acts of 1885 and 1886 have a retroactive effect, at least so far as the relator is concerned, since whatever rights it obtained under the ordinance of 1883, which it accepted

And conceding for the purpose of the discussion, but ‘without deciding,’ that the plaintiff in error had a contract with the City ‘for the laying of its wires, and the construction of its underground electrical system,’ this court reached the conclusion that its rights had in no way been impaired by the legislation under review.

This decision was rendered in May, 1892. Meanwhile, pursuant to the statutes above mentioned, a plan of construction had been adopted by the board charged with that duty, subways had been built, and the defendant in error had entered into its contract to maintain and operate them for low tension conductors, as specified, including telegraph and telephone conductors. But for fifteen years after the final decision in the case cited no application was made by the plaintiff in error'for space in these subways. The first application for such space was made in June, 1907, and was not granted.

Nor, during this long period, was any attempt made by the plaintiff in error either to build conduits or to place wires under the City’s streets, save that in December, 1905, it applied to the Commissioner of Water Supply, Gas and Electricity for a permit to open the streets for that purpose and, on its being denied, a proceeding was begun to obtain a peremptory writ of mandamus. This was refused, and the order to that effect was affirmed by the Court of Appeals of the State. People, ex rel. New York Electric Lines Co. v. Ellison, 188 N. Y. 523 . The pertinent legislation and the subway contracts were reviewed and

It was about the time when the last-mentioned proceeding was instituted that the City’s permission was revoked (May 11, 1906); and the state court, in its opinion in the present case, said that the question ‘remaining to be determined’ was whether ‘the relator, under the resolution of the common council of April, 1883, has the right, as a matter of law, to have its wires inserted in the ducts of the Empire City Subway Company, notwithstanding the revocation of such resolution.’ Did a ‘bare acceptance’ of the permission operate to vest an irrevocable franchise? 201 N. Y. pp. 321, 329. This question was answered in the negative in the view that such a permission is ‘a license merely, revocable at the pleasure of the city, unless it has been accepted and some substantial part of the work performed,’ as contemplated by the permission, ‘sufficient to create a right of property and thus form a consideration for the contract.’

The plaintiff in error challenges this view, insisting that by virtue of the City’s permission it is the grantee of an irrevocable franchise in the City’s streets; that this franchise was derived from the State; that when the consent of the City was given, as provided in the statute, the grant became immediately operative and could not thereafter be revoked or impaired by municipal resolution, or ordinance; that the granted right, however named, is- property, — and, as such, is inviolable; and that this position is

Butj while the grant becomes effective when made and accepted in accordance with the statute and the grantee is thus protected in starting the enterprise, it has always been recognized that, as the franchise is given in order that it may be exercised for the' public benefit, the failure to exercise it as contemplated is ground for revocation or withdrawal. In the cases where the right of revocation in the absence of express condition has been denied, it will be found that there has been performance at least to some substantial extent or that the grantee is duly proceeding to perform. And when it is said that there is vested an inde- ' feasible interest, easement, or contract right, it is plainly meant to refer to a franchise not only granted but exercised in conformity with the grant. (See cases cited supra.) It is a tacit condition annexed to grants of franchises that they may be lost by mis-user or non-user. Terrett v. Taylor, 9 Cranch, 43 , 51; Chicago Life Insurance Co. v. Needles, 113 U. S. 574 , 580; Given v. Wright, 117 U. S. 648 , 656. The condition thus implied is, of course, a condition subsequent. The same principle is applicable when a municipality under legislative authority gives the permission, which brings the franchise into being; there is necessarily implied the condition of user. The conception of the permission as giving rise to a right of property in no way involves the notion that the exercise of the franchise may be held in abeyance for an indefinite time, and that the right may thus be treated as a permanent lien upon the public streets, to be enforced for the advantage of the owner at any time, however distant. Although the franchise is property, ‘it is subject to defeasance or forfeiture -, by failure to exercise it (People v. Broadway R. R. Co. of Brooklyn, 126 N. Y. 29 ), or by subsequent abandonment after it has been exercised (People v. Albany & Vermont R. R. Co., 24 N. Y. 261 ).’ If ‘no time is prescribed, the

It follow? that where the franchise has not been exercised within a. reasonable time in accordance with the. condition which inheres in the nature of the grant, its revocation upon this ground cannot be regarded as an impairment of contractual obligation. The privileges conferred may be withdrawn by such methods of procedure as are consistent with established legal principles. This rule, frequently recognized in cases where franchises have been abused or misemployed (see Chicago Life Insurance Co. v. Needles, supra; Farmers Loan & Trust Co. v. Galesburg, 133 U. S. 156 , 179; New Orleans Water Works Co. v. Louisiana, 185 U. S. 336 , 347; Columbus v. Mercantile Trust &c. Co. of Baltimore, 218 U. S. 645 , 663; Dillon, Munic. Corp., 5th ed., § 1311), must also be applicable where they have been neglected, that is, have not been used in due time. Whether in such cases, where there has been a municipal permission for use of streets, the State shall proceed directly by quo warranto, or whether it shall authorize the municipality • to pass a resolution or ordinance of repeal or revocation leaving the propriety of its course to be determined in an appropriate legal proceeding in which the default of the grantee may be adjudicated, is a question of state law with which we are not concerned. The resolution in such case serves to define the attitude of the public authorities, and to revoke the permission where ?ufficient ground exists for such revocation. Whether there has been such a mis-use or non-exercise of the franchise as to warrant its withdrawal is a matter for judicial consideration.

In the present case, the plaintiff in error, insisting upon its continuing right, despite the resolution of revocation, applied for a peremptory writ of mandamus to compel the Subway Company — a quasi-public instrumentality— to furnish the desired space in its conduits. It had been

For a long period of years after the final determination of the validity of the statutes authorizing a comprehensive scheme of subway construction, and after the contract with the Subway Company had been made, the plaintiff in error made no attempt to secure space and to exercise the franchise now claimed. It treated that right as susceptible of practically indefinite retention unused. In the •circumstances disclosed, its excuses are unavailing. The right conferred, assuming it to be a contract right, was to be used within a reasonable time or lost. In view of the state of the case as to non-exercise, it" cannot be said that its constitutional right has been infringed.

Judgment affirmed.