118 F. 746 | U.S. Circuit Court for the District of Southern California | 1902
Complainant brings this suit against the city of Fos Angeles and other defendants to obtain a decree establishing complainant’s ownership of the street railway franchise described in the bill, to vacate and set aside certain orders or resolutions of the city council of Fos Angeles purporting to devest complainant of said franchise, and to enjoin any interference by defendants with the construction and operation of the railway authorized by said franchise. The matters alleged in the bill are these:
Complainant and the city of Fos Angeles, one of the defendants, are California corporations, the latter being a municipal corporation, under a freeholders’ charter. St. Cal. 1889, p. 456. The other defendants are also citizens of said state, except the Fos Angeles Traction Company, which is a corporation organized under the laws of the state of Illinois. The legislature of the state of California, at its session held in the year 1901, passed an act entitled “An act providing for the sale of street railroad and other franchises in municipalities, and providing conditions for the granting of such franchises by legislative or other governing bodies, and repealing conflicting acts,” which act became a law of said state on the nth day of March, 1901, and is in the words and figures following:
“Section 1. Every franchise or privilege to erect or lay telegraph or telephone wires, to construct or operate street railroads upon any public street or highway, to lay gas pipes for the purpose of carrying gas for heat and power, to erect poles or wires for transmitting electric heat and power along or upon any public street or highway, or to exercise any other privilege*748 whatever hereafter proposed to be granted by boards of supervisors, boards of trustees, or common councils, or other governing or legislative bodies of any city and county, city or town within this state, except steam railroads and except telegraph or telephone lines doing an interstate business,, and renewals of franchises for piers, chutes or wharves, shall be granted upon the conditions in this act provided, and not otherwise.
“Sec. 2. An applicant for any franchise or privilege above mentioned shall file with the governing- or legislative body of the municipality an application, and thereupon said governing body shall, in its discretion, and, when the-application is accompanied with a petition praying that the same be granted, signed by the owners of three-fourths of the frontage of the real property fronting along and upon the route of the franchise applied for, must advertise the fact of said application, together with a statement that it is proposed to grant the same, in one or more newspapers of the city and county, city or town wherein the said franchise or privilege is to be exercised. Said advertisement must state that bids will be received for such franchise, and that it will be awarded to the highest bidder, and the same must be published in such newspaper once a day for ten successive days, if it be a daily newspaper, and if there be no daily paper published in such city and county, city or town, then it shall be published in a weekly newspaper once a week for four successive weeks, and in either case the full publication must be completed not less than twenty (20) nor more than thirty (30) days before-any further action can be taken thereon. '
“Sec. 3. The publication must state the character of the franchise or privilege to be granted, the term for which it is granted, and, if it be a street railroad, the route to be traversed; that sealed bids therefor will be-received up to a certain hour and day named therein, and that the successful bidder and his assigns must, during the life of said franchise, pay to the municipality two per cent (2%) of the gross annual receipts of the person, partnership or corporation to whom the franchise is awarded, arising from its use, operation or possession. No percentage shall be paid for the first five (5) years succeeding the date of the franchise, but thereafter such percentage shall be payable annually; and in the event said payment is not made, said franchise shall be forfeited; provided further, that if the-franchise be a renewal of a right already in existence, the payment of said' percentage of gross receipts shall begin at once.
“Sec. 4. In case the franchise granted shall be an extension of an existing system of street railroad then the gross receipts shall be estimated' to be one half of the proportion of the total gross receipts of said system which the mileage of such extension bears to the total mileage of the whole system, and said estimate shall be conclusive as to the amount of the gross receipts of said extension.
“Sec, 5. Said advertisement shall also contain a statement that the said franchise will be granted to the person, firm or corporation who shall make the highest cash bid therefor; provided only, that at the time of the opening of said bids any responsible firm or corporation present, or represented, may bid for said franchise or privilege a sum not less than ten per cent above the highest sealed bid therefor, and said bid, so made, may be raised ten-per cent by any other responsible bidder present, and said franchise or-privilege shall finally be struck off, sold and granted by said governing body to the highest bidder therefor, in gold coin of the United States, and said successful bidder shall be required to deposit with said governing body, or-such person as it may direct, the full amount of his or its said bid, within-twenty-four hours thereafter; and in case he or it shall fail so to do, then the said franchise or privilege shall be granted to the next highest bidder therefor.
“Sec. 6. Work to erect or lay telegraph or telephone wires, to construct street railroads, to lay gas pipes for the purpose of carrying gas for heatr and power, to erect poles or wires for transmitting electric heat or power, along or upon any public street or highway, or to exercise any privilege-whatever, a franchise for which' shall have been granted in accordance with the terms of this act, shall be commenced in good faith within not more than four months from the granting of any such franchise, and if not so-*749 commenced within said time said franchise so granted shall be declared forfeited, and shall be completed within not more than three years thereafter, and if not so completed within said time said franchise so granted shall be forfeited; provided, that for good cause shown the governing or legislative body may by resolution extend the time for completion thereof, not exceeding three months.
“Sec. 7. The grantee of every franchise or privilege granted under this act shall file a bond running to said city and county, city or town, with at least two good and sufficient sureties to be approved by such governing body, in a penal sum by it to be prescribed and set forth in the advertisement for bids, conditioned that such bidder shall well and truly observe, fulfill, and perform each and every term and condition of such franchise, and that in case of any breach of condition of such bond, the whole amount of the penal sum therein named shall be taken and deemed to be liquidated damages, and shall be recoverable from the principal and sureties upon said bond. Said bond shall be filed with such governing body within five days after such franchise is awarded, and in case said bond shall not be so filed, the award of such franchise shall be set aside, and the same may be granted to the next lowest bidder, or again offered for sale, in the discretion of said governing body.
“Sec. 8. It shall be the duty of the attorney-general, upon the complaint of any municipality, or, in his discretion, upon the complaint of any taxpayer, to sue for the forfeiture of any franchise granted under the terms of this act, for the non-compliance with any condition thereof.
“Sec. 9. No clause or condition of any kind shall be inserted In any franchise or grant offered or sold under the terms of this act, which shall directly or indirectly restrict free and open competition in bidding therefor, and no clause or provision shall be inserted in any franchise offered for sale, which shall in anywise favor one person, firm or corporation, as against another, in bidding for the purchase thereof.
“Sec. 10. Any member of any common council or other governing or legislative body of any city and county, city or town of this state, who, by his vote, violates or attempts to violate the provisions of this act, or any of them, shall be guilty of a misdemeanor, and may be punished therefor, as provided by law, and may be deprived of his office by the decree of a court of competent jurisdiction, after trial and conviction.
“Sec. 11. All acts or parts of acts in conflict herewith are hereby repealed; provided, however, that nothing herein contained shall be construed as repealing or amending the following acts, to-wit: ‘An act relating to the ’granting by the counties and municipalities of franchises for the construction of paths and roads for the use of bicycles and other horseless vehicles,’ approved March twenty-seventh, eighteen hundred and ninety-seven; ‘An act to authorize cities and towns to grant franchises for the construction and maintenance of railroads beyond the limits of such cities or towns leading to publie parks owned thereby,’ being chapter forty of the laws of eighteen hundred and ninety-seven of the state of California.
“This act shall take effect immediately.” St. Cal. (Extra Sess. Thirty-third Legislature, 1900) p. 265.
Complainant, under and pursuant to said act, on the 25th day of November, 1901, presented to the governing body, to wit, the council of the city of Los Ángeles, its application for an electric street railway franchise upon certain streets of said city. Said council, on January 6, 1902, adopted and caused to be published, as provided in said act, a “notice of sale of a street railroad franchise,” which notice defines the route of said proposed road, the terms and conditions upon which the franchise will be offered for sale and granted, and concludes as follows :
“Notice is also hereby given that sealed bids in writing will be received for the said franchise up to 11 o’clock in the forenoon of the 10th day of February, 1902; that the bids received will be opened at that time; that*750 all bids must be for the payment of a stated sum in gold coin of the United States; and that said franchise will be granted to the person, firm, or corporation who shall make the highest cash bid therefor; provided, only, that at the time of opening said bids any responsible firm or corporation, present or represented, may bid for said franchise a sum not less than 10 per cent, above the highest sealed bid therefor, and said bid so made may be raised 10 per cent, by any responsible bidder present, and said franchise will finally be struck off, sold, and granted by said city council to the highest bidder therefor in gold coin of the United States, and said successful bidder will be required to deposit with said city council, or such person as it may. direct, the full amount of his or its said bid within 24 hours thereafter, and, in case he or it shall fail to do so, then the said franchise shall be granted to the next highest bidder therefor, and that the city council reserves the right to reject any or all bids; provided, that no bid, whether sealed or otherwise, shall be received or considered unless the same be in writing and subscribed by a responsible bidder, or by his or its duly authorized agent.”
On the day named in the notice, at 11 o’clock a. m., the sealed bids were opened and found to be as follows: One by complainant of $25,000, one by the defendant William S. Hook of $37,500, one by the defendant E. A. Davis of $139,000, and one by E. Murray of $415,000. There being no bid of 10 per cent, upon the amount bid by said Murray, said council on the same day accepted the bid of said Murray, and ordered that the said franchise be struck off, sold, and granted to him, and that the city treasurer be authorized and directed to receive the money to be paid for such franchise by said Murray, and ordered and declared that the period of 24 hours within which the said Murray is allowed to pay for the said franchise should expire at 3:15 o’clock p. m. of February ix, 1902. The three bids other than complainant’s were made in the interest of the defendant corporation1 the Eos Angeles Traction Company, and with the fraudulent intent to prevent competition in the bidding before the council; and the bid of $415,000 was made at the suggestion and for the benefit of said Eos Angeles Traction Company, and with -the fraudulent intent to prevent any further bidding when the sealed bids were opened. The said Murray is not a person of any financial standing, and was not, at the time said bid was made, nor has he been at any time since, worth $1,000, and could not, either from funds or credit of his own, have paid, nor did he ever intend to pay, the said sum of $415,000, or any part thereof, and all of these matters were known by the said Los Angeles Traction Company, said E. A. Davis, and said William S. Hook. Said Murray did not pay the $415,000 within 24 hours, and never offered to pay said, or any, sum at any time, and never appeared before said council on the 11th day of February, 1902, or at any other time. The said Davis and the said Hook, agents of said Traction Company, appeared before said council on said nth day of February, 1902, and when said 24 hours expired, and, in pursuance of the fraudulent scheme to prevent competition in bidding, claimed that said council had no power, under said act, to do anything or take any proceedings looking to the saie of said franchise, other than to accept the bid next highest to that of said Murray, namely, the bid of said Davis for the sum of $139,000, and to sell and grant to said Davis said franchise, and demanded that said franchise be awarded to said Davis, under said bid, and for the benefit of said Eos Angeles Traction Company, and tendered to said council the amount of the bid of said Davis, to wit, $139,000, gold coin,
Said council threatens to, and will, unless restrained by this court, offer said franchise, rights, and privileges for sale, and will, if any bids are made therefor, sell or attempt to sell the same, and grant or attempt to grant the same rights, privileges, and franchise to any person making the highest bid therefor at said sale. Said council and other public authorities threaten and intend to- prevent complainant from constructing said street railway on any street in said city, and will, unless restrained by this court, forcibly prevent complainant from so doing; and on the 26th day of February, 1902, said council passed an order instructing the mayor, street superintendent, or the chief of police to stop and prevent any attempt complainant might make to construct any street railway on -any of said streets, with all the force at their command.
The matter in dispute exceeds, exclusive of interest and costs, the value of $2,000, and is of a value not less than $152,900. Several affidavits have been filed by the parties, respectively, but they do not set up any additional facts which materially affect the legal aspects of the case. Two demurrers have been interposed, one jointly by all the defendants, except the Eos Angeles Traction Company, William S. Hook, and E. A. Davis, and the other by the last three defendants. For causes, both demurrers allege want of jurisdiction and equity, and one of them' also alleges uncertainty in the bill.
On the question of jurisdiction, complainant contends that the proceedings set forth touching the street-railway franchise in question, up to and including the acceptance, approval, and filing of the bond required by the statute, constituted a complete and valid contract between said city and complainant, and vested in the latter said franchise, and that the resolutions or orders of said council, and the other proceedings taken and threatened for the purpose of vacating and setting. aside said contract, are within the prohibitions of section 10 of article
Coming now to the other cause of demurrer, want of equity in the bill, the next question to be considered is whether or not there was a valid grant to complainant of the street-railway franchise in question. On this branch of the case, “complainant, at pages 156 and 183 of its brief, filed June 10, 1902, states its contention thus:
“The power to grant this franchise comes from the act of 1901. * * * We next contend that the question whether the plaintiff has the rights which it here claims is dependent upon the statute of 1901, and not any other authority whatever, and that, under that act, there was a complete grant.”
•Defendants’ objections to the validity of said alleged grant may be generalized under two heads: First, that in the proceedings bad by the city council of Dos Angeles for the sale of said franchise certain requirements of said act of 1901 were not complied with, and, therefore, there was no valid grant; second, that said act of 1901 is void, because it undertakes to delegate municipal functions to a special commission, in violation of article 11 of section 13 of the constitution of California, and, furthermore, said act, if constitutional, does not apply to thfe city of Dos Angeles, because it concerns only municipal affairs, and, as to such affairs, said city, by article 11 of section 6 of the constitution of California, as amended in 1896, is exempt from the operation of general laws, and subject only to its charter, whose provisions require, for granting a franchise, the conjoint action, by an ordinance, of council and mayor. Either of these objections, if good, is fatal to the alleged grant, and I proceed at once to the consideration of the first.
In determining whether or not the council, in its proceedings for the disposition of said franchise, lawfully complied with the requirements of said act of 1901, the rule that mode is the measure of power, and aside from the designated mode there is no power, should be carefully observed. City of Ft. Scott v. W. G. Eads Brokerage Co. (C. C. A.) 117 Fed. 51; Board v. Templeton, 51 Ind. 266; Woodruff v. Berry, 40 Ark. 253; Sadler v. Board, 15 Nev. 39; State v. Cornell, 52 Neb. 25, 71 N. W. 961; Webster v. French, 12 Ill. 302; Zottman v. City and County of San Francisco, 20 Cal. 97, 81 Am. Dec. 96; McCracken v. City of San Francisco, 16 Cal. 620; Heidelberg v. St. Francois Co., 100 Mo. 69, 12 S. W. 914. It should also be borne in mind that negative words in a statute show an intent to make its provisions imperative, and require strict performance, both as to time and manner, since section 1 of said act provides that “Every franchise * * * to construct or operate street railroads * * * shall be granted upon the conditions in this abt provided, and not otherwise.” 23 Am. & Eng. Enc. Daw (1st Ed.) 455; Koch v. Bridges, 45 Miss. 247; Hurford v. City of Omaha, 4 Neb. 336; Cooley, Const. Dim.
“Any member of any common council or other governing or legislative body of any city and county, city or town of this state, who, by his vote, violates or attempts to violate the provisions of this act, or any of them, shall be guilty of a misdemeanor, and may be punished' therefor, as provided by law, and may be deprived of his office by the decree of a court of competent jurisdiction, after trial and conviction.”
I come now directly to the inquiry whether or not the proceedings of the council conformed, in all essentials, to the requirements of said act of 1901. Defendants, among other alleged illegalities, contend that the award of the franchise to complainant, on its bid of $152,900, after Murray’s default, was a fatal departure from that part of section 5 of said act of 1901, which provides—
“That at the time of the opening of said bids any responsible firm or corporation present or represented may bid for said franchise or privilege a sum not less than ten per cent above the highest sealed bid therefor, and said bid so made may be raised ten per cent by any other responsible bidder present, and said franchise or privilege shall finally be struck off, sold and granted by said governing body to the highest bidder therefor, in gold coin of the United States, and said successful bidder shall be required to deposit with said governing body, or such person as it may direct, the full amount of his or its said bid, within twenty-four hours thereafter; and in case he or it shall fail so to do, then the said franchise or privilege shall be granted to the next highest bidder therefor.”
The precise question here presented is this: When must the competition subsequent to sealed bids, for which- said section provides, take place ? To this question, the first clause of the foregoing extract from the section makes answer as follows:
“At the time of the opening of said bids any responsible firm or corporation present, or represented, may bid for said franchise or privilege a sum not less than ten per cent above the highest sealed bid therefor, and said bid, so made, may be raised ten per cent by any other responsible bidder present, and said franchise or privilege shall finally be struck off, sold and granted by said governing body to the highest bidder therefor, in gold coin of the United States.”
This clause does not confine the subsequent competition to the precise moment of opening the sealed bids, but it does make it the next step in the series of steps prescribed by said section, and thus requires it to take place before the franchise has been struck off to the highest bidder. Said clause certainly does not contemplate that bidding shall continue after the franchise has been struck off. With that construction the clause would be meaningless. Again, the last clause of said section, which, referring to default of the successful bidder in the matter of the deposit required of him, is as follows: “And in case he or it shall fail so to do, then the said franchise or privilege shall be granted to the next highest bidder therefor,”—forbids, by unavoidable implication, the idea that there can be any competition after such default. It will be observed that the words “struck off, sold and,” used in a previous clause of the section, ai'e omitted from the last clause. These words; “struck off” and “sold,” which are ordinarily employed, and particularly appropriate, to designate the closing of a public sale to the
In the case at bar, therefore, when the sealed bids were opened, and no bid of 10 per cent, above the amount bid by Murray was then made, the action of the council in striking the franchise off to him, and fixing the time at which the 24 hours allowed by law for depositing the amount of his bid would expire, namely, 3:15 o’clock p. m. of February 11, 1902, was regular. When the time thus fixed had expired, and Murray had failed to make the required deposit, the action that should have been next taken is prescribed in the last clause of said section already partially considered, which provides that, if the successful bidder fails to make the deposit required of him, “the franchise shall be granted to the next highest bidder therefor.” When, speaking concretely, the contingency referred to in said clause, namely, Murray’s failure to deposit the amount of his bid, occurred, in the afternoon of
Complainant’s argument that this construction .of said act impairs its efficiency by enabling designing and unscrupulous persons to defeat the disposition of any franchise offered for sale under said act, if not without force, can but be deemed inconclusive, for the rule is well settled that the language of a statute, when plain and unequivocal, determines its meaning, regardless of consequences. Bartlett v. Morris, 9 Port. 268; 4 Bac. Abr. 652; Coffin v. Rich, 71 Am. Dec. 563. The truth is, said act of 1901 never contemplated the scandalous frauds here charged, without denial, against some of the defendants, and hence, it may be, no' adequate safeguards against them were erected. This defect in the law, however, if it exists, is an omission to be supplied by the legislature, not by the courts.
The declaration of the council, made after Murray’s default, that he was a fraudulent and irresponsible bidder, and that his bid was null and void, is an immaterial circumstance. If such an inquiry was authorized, it must have preceded the order striking off the franchise to Murray, since said order necessarily determined the lawfulness of his bid, and there was no power in the council to review said order. Belser v. Hoffschneider, 104 Cal. 455, 38 Pac. 312. After the franchise had been struck off, all the council could lawfully do, under the pending advertisement, was to allow Murray 24 hours to make the deposit, and, if he failed to do so, grant, or, on sufficient grounds, refuse to’ grant, the franchise to the next highest bidder.
For the reasons above given, I am of opinion that the complainant has not acquired the franchise it here claims, nor has it any valid contract with the city in relation thereto. This conclusion renders it unnecessary for me to pass upon the other questions which have been argued by counsel, and are outlined in an earlier part of this opinion.
The motion for injunction will be denied.
