Geneva-Seneca Electric Co. v. Economic Power & Construction Co.

McLennan, P. J.: The allegations of the complaint, construed most broadly, are to the effect that the plaintiff is a corporation, created and existing under and pursuant to the laws of the State of New York, for.the purpose,.among others, of supplying to the defendant city and its inhabitants electricity for lighting and power purposes; that purr suabt to the provisions of its charter it or its predecessor corporation erected a large plant in said city, expending therefor a large amount of money to enable it to carry out the ^purposes of its incorporation ; that it obtained permission from the city of Geneva to occupy its streets with its poles and wires and to occupy with its wires conduits in certain of said streets which are owned by the city, and that under such permission or franchise from the city it for -a long number of years has been supplying such city; and its inhabitants with electric light and power. It is not alleged or claimed that the plaintiff lias an exclusive franchise to so furnish electric lighting xand power to such city or its inhabitants. It is further alleged, in substance, that the defendant power company is not in fact a legal or valid corporation ; that the act which authorized its incorporation is violative of section 16 of article 3 of the Constitution and which was so .held to be by the Court of Appeals in the case of Economic Power & Construction Co. v. City of Buffalo (195 N. Y. 286). It was in that case held that the act (Laws of 1893, chap. 459) which created the defendant power company was -a private bill within the meaning of article 3, section 16, [221] of the State Constitution, and that the grants of special franchises in section 5 and all of section 6 of the act were not within the subject expressed, in its title and were void. It is also urged that such act is invalid because violative of section 18 of article 3 of the Constitution and that such invalidity, taken in connection with the provisions which have been expressly declared invalid by the Court of Appeals, renders the whole act void and so as to make any corporation purporting to exist thereunder a nullity. It is claimed that by reason of the matters alleged, and to which attention has been called, the defendant Economic Power and Construction Company has no legal corporate existence, and it is alleged that, notwithstanding, it is seeking to engage in the business of supplying the city of Geneva and its inhabitants with electric light and power, and that the city- of Geneva is aiding and abetting such power company in so doing in that it is permitting such alleged corporation to use its streets, avenues, conduits, etc., for the purpose of carrying on its business. It is also alleged that the defendant power company is not authorized to conduct and'carry on such business because it has failed to obtain a franchise so to do from the municipality or the. consent of the Public Service Commission, neither of which,, it is alleged, the power company intends to obtain. ■ It is further alleged that the purposes and plans of the power company, if carried out, will cause irreparable injury to the property and rights of the plaintiff in that it will secure many of the customers of the plaintiff, reduce its income and impair its earning capacity. It is not alleged or claimed that the action of the power company or of the city in the premises in any way interferes with the physical property of the plaintiff or of its use, the plaintiff standing upon the broad proposition that the Economic Power and Construction Company is to install a plant which will be a competitor of the plaintiff and that such competing corporation has no legal corporate existence and is, therefore, not entitled to so compete. The court below sustained the demurrer on the ground. that all the allegations df the complaint, construed most favorably to the plaintiff, did not establish a cause of action in this case. ■ It may be idle to discuss the proposition that if the plaintiff’s rights were invaded there are several means which it might adopt to [222] prevent such invasion, providing the allegations of the complaint are true. It could have applied to the Attorney-General to bring an action to prevent the exercise of the alleged corporate powers of the defendant company which had no right under the law to exercise such powers. Undoubtedly the plaintiff or any one else as a taxpayer could have brought an action which would have terminated in a judgment restraining the defendant company from continuing its work if the allegations' of the complaint were supported by proper evidence. So if we assume, as contended by appellant, that the consent of the Public Service Commission is necessary in order to enable the defendant power company to do business, it has nowhere been alleged that the action of such commission in the premises has been asked for by the plaintiff. In this case, so far as I ain able to understand the facts, the proposition is this : A corporation legally constituted is serving a city and its inhabitants with electric lighting arid power, having no exclusive franchise. • It is conducting a profitable business, Another alleged corporation, which we assume lias no corporate rights, assumes with the consent of the city to engage in the same business. Can such first corporation complain because the acts of the other, although in violation of law, may tend to decrease its revenue or earning capacity ? We are constrained to believe that such is the law in this State. In other words, that a legally authorized corporation, which is performing its functions properly and in accordance with law, may be displaced by an alleged corporation which has no sanction in law and yet which assumes to exercise the rights and responsibilities of a real corporation. In this case I am constrained to hold that the plaintiff has no cause of complaint notwithstanding the action of the defendant company and its alleged illegal incorporation. " The-primary question in this controversy is : Has the plaintiff the right to attack the validity of the defendant power company ?. The plaintiff is a private individual, so far as the allegations of the complaint are concerned, and, therefore, is not in a position to maintain an action against the defendants to abate a public nuisance, plaintiff not having shown by the allegations in the complaint that it was specially injured thereby. (Adler v. M. E. R. Co., 138 N. Y. 174.) In this case there is no question of public nuisance, but [223] rather it resolves itself into the proposition as to whether the plaintiff may attack the validity of the incorporation of ail alleged competing company, which competition will injure or impair the business of the plaintiff. We think, that upon authority the plaintiff’s contention is not tenable. (Old Forge Co. v. Webb, 31 Misc. Rep. 316; affd., 57 App. Div. 636; Empire City Subway Co. v. Broadway & Seventh Avenue R. R. Co., 87 Hun, 279; affd., 159 N. Y. 555.) But independent of the authorities, the proposition is presented as to whether a corporation authorized by its charter to supply a municipality with electric lighting and power and not having an exclusive franchise, may question the attempted exercise of such power by another corporation or individual, whether or not such corporation is legally constituted and whether or not such individual is authorized by law to conduct such business. We conclude that the whole trend of authority is to the effect that such plaintiff cannot in an action brought to obtain an injunction question the authority of the competing corporation or the right of the individual in the premises. If such were not the law, then every corporation could raise the question as to the legality of its competing neighbor. A street railroad company, having a franchise which covered the principal streets in a city could insist that a corporation which proposed to establish a street surface railroad in certain streets not occupied by the former corporation could be enjoined from such construction upon the ground alleged by the former corporation that it (the latter) was not organized under and in pursuance of the provisions of law.' It seems to me" clear that such question should not be left to warring competitors, but that if an alleged corporation is seeking to exercise corporate rights in violation of law, in the first instance the Attorney-General of the State should be "asked to take proceedings to prevent the exercise of such alleged power. If the contention of the plaintiff should prevail, it would be competent for every corporation to bring suit against every other alleged corporation competing with it, because of the fact, as alleged, that it had not fully complied with the provisions of law respecting its incorporation. It seems to me that it is the most sensible rule to hold that such action cannot be maintained because of the fact that an alleged [224] competitor m.ay not have been organized in accordance, with the provisions of law. In this case the question is presented squarely ; Assuming all the allegations of the complaint to be true and giving, the plaintiff the benefit of the most favorable inferences, to be drawn.therefrom, is it entitled to relief by injunction restraining the defendant, conceding. that sti.ch defendant company' lias no corporate existence, • from f urnishing to-the. city of Geneva electric lighting and power My notion is that; no cause .'of action is stated and that under the authorities thé judgment sustaining the demurrer was right. Having reached the conclusion that the plaintiff is not, entitled to maintain this action, it. is unnecessary- to determine: the other questions, involved Upon this appeal. The; interlocutory judgment should be affirmed, with costs. ■All concurred, Spring and Kruse, JJ., in result only. Interlocutory judgment affirmed, with costs, with leave to the plaintiff to plead over within twenty days upon payment of the costs, of the demurrer and of this appeal.