195 N.Y. 471 | NY | 1909
For the purposes of this discussion it may be assumed that this action cannot be maintained if the franchise is void. The bond upon which the suit was brought was given to insure the proper completion of the road in accordance with the terms and conditions of the franchise. If the franchise was invalid, there was no consideration for the bond, and both failed to become effective. In seeking to determine the validity of the bond it may properly be considered as an integral part of the one transaction which must stand or fall in its entirety.
The question whether a municipality can grant to an individual a franchise for the construction and operation of a *474
street surface railroad is not free from doubt, but we are inclined to the view that the question must be answered in the affirmative. Primarily the power to grant franchises in the public streets resides in the state. Municipalities have only such power in this regard as has been delegated to them by the legislature. (Beekman v. Third Ave. R.R. Co.,
Article 6 of the Railroad Law relates specially to street *475 surface railroads, and in the provisions of its various sections there are indications of a legislative intent to confine the actual operation of such railroads to corporations duly organized for that purpose. Section 91 contains general provisions to that effect. Section 92 prescribes the procedure for obtaining the consent of the local authorities for the construction and operation of a street railroad. Such a consent is practically a franchise, but in the section authorizing the granting thereof there is nothing to suggest that it may not be given to an individual. Section 93 of the same article provides that in cities containing one million two hundred and fifty thousand or more inhabitants, the bidder to whom such a franchise is sold must be a duly incorporated corporation of this State. The plain implication from this prohibition is that in other cities and villages there is no such limitation. Sections 7 and 8 of the Rapid Transit Act (L. 1891, ch. 4) provide that franchises for the railroads to be constructed thereunder are to be granted before the corporations are organized and the purchasers are required to organize the corporate entities which are authorized to operate.
In considering the statutes which are now a part of the Railroad Law this court has said that "the transfer to an individual may not be expressly authorized by statute, but neither is it expressly prohibited." (Woodruff v. Erie Ry.Co.,
Similar views were expressed in Parker v. Elmira, C. N.R.R. Co. (
The context of the consent granted by the plaintiff to Manz, "his successors and assigns (hereinafter referred to as the company) to construct, maintain and operate a street surface railroad," *477 clearly indicates that Manz was regarded as a mere conduit through whom there was to be a proper transfer to a legally organized corporation. Under the statutes and decisions above cited we think that the transaction constituted the granting of a valid franchise which Manz could have assigned to a corporation thereafter to be formed for the purpose of exercising the franchise, and the conclusion follows that the bond, given to secure performance of the duty which was coupled with the right granted, must also be held valid.
The learned counsel for the defendants argues that this decision will lead to grave abuses, because it will enable individuals to obtain consents which they may use to thwart the efforts of duly organized corporations to build and operate street railroads. The answer is that municipalities can always guard themselves against such possibilities by insisting upon conditions which will insure the exercise of the franchise granted. We think, moreover, that the danger from these anticipated abuses is more imaginary than real. If municipalities in granting such consents will hedge them about with proper conditions, individuals will not rashly or carelessly ask for franchises which they cannot hope to use. In cities of the second class these franchises are now required to be sold to the highest bidder, and if the element of competition in such municipalities is to be eliminated or limited by prohibiting individuals from bidding, that should be done by legislative enactment and not by judicial construction.
The order of the Appellate Division should be reversed and the judgment of the trial court affirmed, with costs to the appellant in both courts.
EDWARD T. BARTLETT, HAIGHT, WILLARD BARTLETT and CHASE, JJ., concur; HISCOCK, J., not voting; CULLEN, Ch. J., absent.
Order reversed, etc. *478