109 N.Y.S. 779 | N.Y. App. Div. | 1908
Lead Opinion
The plaintiff alleged that by an ordinance the defendant city provided for the sale at public auction, to the highest bidder, of the franchise to construct, maintain and operate an electric street surface railroad on certain streets in said city; the advertisement of said franchise for sale, and that one Joseph A. Rowers, a resident of the city, attended said sale and bid for such franchise, and was the highest bidder therefor; that the United Traction Company, the other bidder, protested against the bid of said Powers, claiming that he was not capable of constructing, maintaining and operating said railroad, and, therefore, that his bid was void, and that it was, therefore, the highest bidder; and that while the matter was under consideration by the city authorities the plaintiff was organized as a street surface railroad and the bid of said Powers was assigned to it, notice of which was given to the city authorities, and thereafter the bid of said Powers was rejected and the franchise was stnuck off.to the United Traction Company. Plaintiff sought to enjoin the city authorities from granting the franchise to the traction company, and obtained a. preliminary injunction for that purpose.
We may assume, without deciding, that a private individual cannot maintain and operate a street railway for public use in a city. Several tilings are necessary in order that such a railway may be constructed and maintained: (1) A railway corporation with power to build and maintain a road in the city; (2) if the charter of the company does not cover the proposed streets, there must be filed in the offices where the certificate of incorporation is filed a statement of the names and descriptions of the streets, avenues, etc., upon which it is proposed to construct and maintain the road; (3) the consent of the local authorities; (4) the consent of the property owners. Neither bidder at the sale possessed all of these qualifications, and, therefore, neither of them was qualified to build and maintain the railroad. Either of them, if successful, must subsequently become qualified to build and operate the road, or assign the bid. The personnel of the bidder is immaterial. If a railroad company is the successful bidder under a notice like the one here, it may be insolvent and utterly incapable of building and maintaining a road and may be in the hands of unworthy and unfit men. Nevertheless if it complies with the terms and conditions of the
It was held in Geneva & Waterloo R. Co. v. N. Y. C. & N. R. R. R. Co. (163 N. Y. 228, 234) that the consent of property owners may properly be given to an individual and by him assigned to a corporation, and that the corporation thereby has valid consents, and in the city of Rew York where the sale can only be made to a duly incorporated railroad corporation organized to construct, maintain and operate a street railroad in the city, a company may be the successful bidder, although the Railroad Commission has denied it the certifícate of necessity and convenience and it thereby is not capable of building and maintaining the railroad. (People ex rel. Depew R. Co. v. Comrs., 4 App. Div. 259.)
It was held in Parker v. Elmira, C. & N. R. R. Co. (165 N. Y. 274) that an individual may urdíase a railroad franchise and property and transmit the same unimpaired to another railroad company, the court saying (at p. 281): “ While it is doubtless true that natural persons cannot exercise the franchises which the State has conferred upon railroad corporations, there is no reason why they cannot be the conduit for transmitting them to another corporation in the manner provided bylaw.” If a natural person can purchase such franchise of a road completed and in operation and transmit it unimpaired to a company which is capable of exercising it, it is difficult to see why a natural person cannot purchase the consent of the city, or the franchise as it is called, for a road to be constructed and transfer it unimpaired to a company which is capable of exercising the franchise.
It is suggested that an individual who is a successful bidder may hold the franchise until it is forfeited by the lapse of time and thus tie up the enterprise and prevent the city from having a railroad. A bid by a corporation is subject to the same criticism. Reither can do it if the ordinance authorizing the sale properly provides for the protection of the city. But it is said the successful bidder becomes obligated to build the railroad within the time limited. If
In Village of Phoenix v. Gannon (123 App. Div. 93) it was held that under section 92 of the Bailroad Law (as amd. by Lavra of 1893, chap. 434) a natural person could not acquire a franchise to construct a street surface railroad in a village, but we have seen that the rights of the parties in this case depend upon the proper construction of section 19 of the White charter, so called. That case is not, therefore, an authority against the position here maintained.
The interlocutory judgment and the order should, therefore, be reversed, with costs to the appellant, and judgment ordered for the plaintiff as above, with costs, with the right to the defendants within twenty days to withdraw the demurrers and answer upon payment of such costs.
All concurred, except Chester, J., dissenting in an opinion, in which Sewell, J., concurred.
See Kuhn v. Knight (190 N. Y. 339).— [Rep.
See Const, art. 12, § 2; Laws of 1898, chap. 182, § 2, as amd. by Laws of 1905, chap. 501; Legis. Manual, 1908, pp. 202, 203; Id. p 198; Session Laws, 1907, vol. 2, p. 2503; Laws of 1906, chap. 473, §§ 4, 37, 230, 231.—[Rep.
Dissenting Opinion
The only question brought up for our consideration is whether an individual can lawfully bid in a franchise to operate a surface railway in the streets of the city. At the time of making his bid in this case .Powers stated that it was made by him as an individual, and he did not claim to represent any corporation authorized by law to construct and operate street surface railways.
The statute under which the franchise was put up for sale is section 19 of chapter 182 of the Laws of 1898 (as aind. by Laws of 1906, chap. 52), known as the Act for the Government of Cities of the Second Class, which provides that an ordinance authorizing the sale of a franchise must provide for its disposition at public auction, after public notice of at least three weeks, to the “ highest bidder,” and that such sale shall not be valid or take effect unless subsequently approved by resolution of the board of estimate and apportionment.
Both parties agree that under the statutes the operation of street surface railways is confined to corporations, and even before a corporation may construct such a railroad it must have, first, the consent of the Public Service Commission (formerly the Board of . Railroad Commissioners) under section 59 of the Railroad Law (Laws of 1890, chap. 565, added by Laws of 1892, chap. 676, and amd. by Laws of 1895, chap. 545)
It seems to me clear that when a public franchise is authorized to be sold to the “ highest bidder ” it means to the highest qualified bidder; that is, to a bidder qualified by law to exercise the franchise offered for sale, otherwise the public interests and the railway corporation involved must inevitably suffer whenever an individual sees that by becoming a bidder on such a sale a personal advantage can be gained for himself.
It was said in Kent v. Common Council (94 App. Div. 529) by Chase, J.: “ Where a franchise is granted to build a railroad, it imposes upon the company to which it is granted an obligation to build the road.” It would be useless to grant a franchise to an -individual for the simple reason that under the law he could not fulfill the obligation to build. This would seem to indicate that only a corporation authorized to build could properly bid upon a franchise.
It is said that in each of the cities of the second class there is but a single trolley company, so that if an individual cannot bid there would be practically no competition in the case of the sales of public franchises. This, however, is not of much moment, in view of the fact that the municipal authorities under the law have the right to make such proper regulations for the protection of the city as the common council may impose, and no bid is effective unless subsequently approved by a resolution of the board of estimate and apportionment. (Charter Second Class Cities, § 19, supra.) This provision, I think, was inserted for a purpose, and enables the municipality to protect itself from the monopoly or greed of any corporation as it apparently did in the case in question where there was a provision inserted in the terms of sale that no bid less than $7,500, besides the cost of advertising, would be received.
I can conceive of no benefit to accrue to the public from the construction given to the statute in the prevailing opinion. Whatever
The views here expressed find support in Village of Phoenix v. Gannon (123 App. Div. 93), where it was held that a grant of a franchise by a village to an individual to operate a street surface railroad upon its streets was void.
I think the judgment and order should be affirmed, with costs.
Sewell, J., concurred.
Interlocutory judgment and order reversed, with costs to appellant, and judgment ordered for the plaintiff as per opinion, with costs, with leave to defendants within twenty days to withdraw demurrer and answer on payment of such costs.
See Public Service Commissions Law (Laws of 1907, chap 429), §§ 2, 53, 54, 80, 86, 89.— [Ebb.