City of New York v. Fulton Street Railroad

Ingraham, J.: The defendant was incorporated tinder chapter 252 of the Laws of 1884. By section 8 of that act it is .provided that “ Every corporation incorporated under, or constructing or operating a railroad — 792 — constructed or extended under the provisions of this act * . * * shall * * * after the expiration of said five years make a like annual payment into the treasury of said respective cities, for the credit' of said sinking funds, of five per cent, instead of three per Cent of said gross receipts.” By section 1 of chapter 642 of • the Laws of '1886 it was provided that the right, franchise and privilege of using a street in an incorporated city should be sold at public, auction to the bidder who would agree to give the largest percentage per annum of the gross receipts of said company or corporation with adequate security. After that act took effect the N orth and East River Railroad Company applied to the common •council of the city of New York for permission to construct,'maintain, operate and use a street surface railroad from Fulton street at the East river through Fulton street with double tracks to Broadway, across Broadway and through Fulton street with double tracks-to West street; thence along West street to Cortlandt ferry, also-running along West street to Chambers street ferry. Acting on this application the common council passed a resolution which provided that the right and franchise so applied for should' be sold at public auction to the bidder who would agree to give the largest percentage per annum of its gross receipts. Pursuant to this resolution the franchise was on May 31, 1887, sold at public auction and was bought in by the North and East River Railroad Company, that company agreeing to pay to the plaintiff thirty-five per cent of the gross receipts in addition to the percentages payable under chapter 252 of the Laws of 1884, that percentage being three per cent for the first five years and five per cent for the subsequent years; and on June 2, 1887, an agreement under this resolution of the conn mon council and the sale in pursuance thereof was executed by the corporation and by the city, and thereupon a permit was issued by the city to open Fulton street between West and South streets for the purpose of building a double-track railroad. At the time this permit was granted there was in some portion of Fulton street a single track, and a double track in West street over the route granted to the North and East River Railroad Company operated by other railroad companies. After this franchise had been granted and between 1887 and 1890 the North and East River Railroad Company constructed a street surface railroad, in Fulton and West — 793 — streets. It constructed a single track in the portion of the street in which a single track had before existed and changed the tracks of the existing roads so as to allow room for a double track in the street, and lipón these two tracks since that time it and its successors have operated the railroad, using the tracks of the other roads in the street. On October 18, 1895, it transferred its railroad and franchise to the defendant. The learned trial court held that it was the intention of the statute that percentages should be paid only upon a track that the railroad obtaining the franchise built under the law, and where a franchise was in operation upon a track built by another road, there is no obligation to pay the percentage, and from that determination the city appeals. (59 Misc. Rep. 630.) " On May 1, 1891, the Revised Railroad Law (Laws of 1890, chap. 565) went into effect. It repeals chapter 252 of the Laws of 1884 and chapter 642 of the Laws of 1886, but it was provided that a repeal of a law shall not affect or impair any act done or right accruing, accrued or acquired, or liability, penalty, forfeiture or punishment incurred prior to May 1, 1891, under or by virtue of any law so repealed, but the same could be asserted, enforced, prosecuted or inflicted as fully and to the same extent as if such law had not been repealed. (See §§ 180, 181,183.) The North and East River Railroad Company in 1895 petitioned for a release and compromise of the agreement made on Julie 2,1887, providing for the payment of thirty-five per cent of its gross earnings in addition to the percentages required to be paid by chapter 252 of the Laws of 1884; and in accordance with that petition on June 25, 1895, an agreement was made between the sinking fund commissioners and the North and East River Railroad Company, whereby in consideration of the sum of $6,000 all arrears of taxes or percentages were released and discharged, and the obligation of the railroad company under the agreement of June 2, 1887, was compromised and released to the extent that the percentages therein provided to be paid should be fixed and adjusted for the future at the sum of one-eighth of one per cent per annum upon the gross receipts of the North and East River Railroad Company in addition to the five per cent required under chapter 252 of the Laws of 1884, the agreement providing that the said sum of one-eighth of. one per cent upon the gross — 794 — receipts of the said railroad company to be the sum which the railroad company should pay to the plaintiff for the right to .use the said franchise and operate the said railroad in the future, instead of the sum of thirty-five per cent as; provided in said agreement; and on the transfer of the railway to the defendant, a corporation organized under section 3 of the Stock Corporation Law,* the defendant became subject to all the provisions, duties and liabilities imposed by law on the corporation the North and East River Railroad Company. The court found that from 1903 to 1905, inclusive, the years for which this liability was sought to be enforced, the defendant operated a line of horse cars through Fulton street from Binding slip), through South street info Fulton' street, and then through Fulton to West street into Barclay street and the Cortlandt street ferries over the lines constructed. I think it clear that under the agreement with the city of New York, under which this franchise was acquired, the defendant was obliged to pay five per cent of the gross receipts frtim the exercise of the franchise granted. In addition to the obligation under the act of 1884, it was required to pay the amount bid at the public sale as modified by the agreement with the city. The obligation to. pay is imposed by chapter 252 of the Laws- of 1884 and its agreement with the city under which it acquired its franchise. By the resolution granting the consent it is first provided that the provisions of chapter 252 of the Laws of 1884 pertinent thereto shall .be complied with, and the franchise was to be sold at public auction to a bidder which should be an incorporated railroad company which would agree to give the largest percentage per annum on its gross receipts. The 7th clause of this resolution provides that, “in computing any percentage upon gross receipts that may hereby become payable, the amount thereof shall be computed upon a fare of five cents as having been received as part of the gross receipts from every passenger who shall ride upon any part of the route hereinabove described, and irrespective of the fact whether such passenger enters or leaves the car at any point upon the said route.” And by section 8 of chapter 252 of the Laws of ,1884 it is provided that every corporation constructing or operating a railroad con — 795 — structed or extended under the provisions of the act shall pay into the treasury of the said respective cities in which its road is located to the credit of the sinking fund thereof five per cent of its gross receipts. It was under the provision of this act that the corporation received a franchise to run its cars in these streets. The right to build the road or construct the tracks was preliminary to the right to occupy the street for the purpose of a franchise; and the Legislature had provided that as a compensation for the use of the streets of the city the corporation should pay this percentage. It seems to me to be immaterial whether the defendant exercised its franchise on tracks which it built, or on tracks of existing roads in the streets, the right to use which it had acquired. The essential part of the grant was a franchise to use these streets, not to build the tracks, but to operate, conduct and maintain a railroad; and it exercised that franchise just as much by using the tracks of other railroads in the streets as by using tracks that it had constructed. It did not acquire from the other roads under the trackage agreement or other arrangement a franchise to use the street, but acquired that right directly from the People of the State, who had imposed upon it an obligation to pay to the city a certain percentage of its gross earnings as a condition of the use of the franchise granted. The court- below seems to have relied upon the case of Ingersoll v. Nassau Electric R. R. Co. (157 N. Y. 453); but it certainly was not decided in that case that a franchise granted and accepted by a railroad company to run its cars through a particular street upon paying compensation for the use of the street was not required to be paid for because of the fact that it had also acquired the right to use the tracks of another railroad in the street so as to avoid the necessity of laying additional tracks of its own. The real question discussed and decided in that case was whether a right to use the tracks of one corporation acquired by another had to be consented to by the abutting owners before such right could be effective, and it was • assumed in that case that the franchise to operate the road must first be obtained from the State before a corporation by a contract with another railroad obtained a right to use a particular street. It is said in the opinion: “ By the General Railroad Law, in order to acquire the right to construct, extend or operate a railroad upon a public street, there must be obtained, first, consent of the municipal — 796 — authorities; second, consent of a majority in' interest of the abutting owners, or, if that cannot be had, the consent of the. Appellate Division. When these consents have been obtained and the rail* road corporation obtaining them has in all other respects complied with the commands of the General Railroad Law, it acquires what is known as a franchise, and one of the important features of that franchise consists in the right to contract with another corporation for the use of- its tracks, which right becomes a part of the franchise.” It may be that under section 102 of the Railroad Raw (as amd. by Laws of 1892, chaps. 306, 676; Laws of 1893, chap. 434, and La’ws of 1894, chap, 693), after a franchise is granted, before it could be operated where there were tracks of another street surface railroad in a street which' was a part of its route, it would have to obtain the consent of the other corporationbut there is nothing in this provision to indicate that the consent of the other railroad itself granted a franchise. There is nothing in section 95' of the Railroad Law (as amd. by Laws of 1892, chap. 676), which cair be construed in relieving the defendant from this obligation. I think, therefore, that the judgment must be reversed and judgment entered for the plaintiff for the amount claimed, with costs in this court and in the court below. McLaughlin, Lau&hlin, Houghton and Scott, JJ., concurred. Judgment reversed and judgment ordered for plaintiff as stated in opinion, with costs in this court and in the court below. Settle order on notice.' Footnotes [*] See Laws of 1890, chap. 564, § 3, as amd. by Laws of 1892, chap. 688, Since amd.— [Rep,