Case ID: ohio-st_105/html/0311-01.html
Source: Caselaw Access Project
Author: {"author": "Jones, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Cincinnati Union Depot & Terminal, Co. v. The City of Cincinnati et al.
    
      Municipal corporations — Franchises—Deposit to secure performance — Return to company after franchise revolted — Rights under franchise and revolting ordinance.
    
    1. A municipality conferred a franchise upon a depot and terminal company, authorizing it to occupy the city’s streets and property for the construction of a union depot and terminals, the construction to begin within one year from a fixed time. The franchise provided for a deposit by the company, which should become the property of the city if at any time the franchise was forfeited. Differences arising between the parties, relating to the existence of the city’s right .to forfeit for noncompliance with the terms of the grant, the city council later revoked the franchise, and in the revoking-ordinance authorized the return of the deposit to the company.
    
      Held: Under these facts the return of the deposit was not a gift by the city, and its repayment was within the power of the city council.
    2. While the company may not at the same time seek relief under its original franchise and demand the return of the deposit, where the city attempts to enjoin the payment of the deposit the company may disclaim its rights to relief under the claimed franchise and accept the provisions of the revoking-ordinance returning such deposit; which may be done either by an express acceptance or by such disclaimer made upon the trial.
    (No. 17271
    Decided June 20, 1922.)
    Error to the Court of Appeals of Hamilton county.
    On August 16, 1910, and December 28, 1911, the city of Cincinnati passed certain ordinances grant ing the use and occupancy of certain streets in the city to the plaintiff in error for the purpose of the construction of a union depot and terminals. These ordinances were accepted by the grantee. The first grant provided that ‘ ‘ counting from the date of approval of plans and drawings by council as provided herein the said company shall within one year commence the construction of its depot and terminals under this ordinance.” It also contained the following provision: ‘ ‘ Furthermore, at the time of said acceptance the said company shall also deposit in the treasury of the said city the sum of ten thousand ($10,000) dollars, which sum shall become the property of the city of Cincinnati if at any time this franchise is forfeited.” The ordinance also provided-that the $10,000 should be deposited in a bank or trust company of the city, the interest thereon to be paid to the depot company until the $10,000 was either returned or forfeited, and that if the company should complete its construction within the time provided such deposit of $10,000 should also be returned to the depot company. Following the passage and acceptance of these ordinances the plaintiff in error expended large sums of money in the preliminary work necessary for the actual construction.
    On December 30, 1913, the city council passed an ordinance revoking and canceling all the rights, privileges and franchises granted by the ordinances of 1910 and 1911, for the reason that the depot company had failed “to commence within one year the construction of its depot and terminals under said ordinance,” and had further failed in complying with the terms of the former grants.
    
      Section 4 of the revoking ordinance of December 30, 1913, provides as follows: “That it be and is hereby determined, despite the above revocation, cancellation and forfeiture, to return to said company the $10,000 deposited with the city treasurer, in accordance with the provisions of Section 4 of said Ordinance No. 2055, and the auditor of the city of Cincinnati is hereby authorized to pay said sum. of $10,000 to the company, together with accrued and unpaid interest received by the city treasurer upon said deposit. Nothing herein contained, however, shall be considered as in any way modifying or affecting the revocation, cancellation and forfeiture as provided in the preceding section of this ordinance.”
    On December 30, 1913, plaintiff in error, The Cincinnati Union Depot & Terminal Company, filed its petition in the common pleas court of Hamilton county, wherein it claimed substantial performance under the ordinances of 1910 and 1911, and asked for an injunction restraining the city from forfeiting or attempting to forfeit its claimed franchise, and from interfering with it in carrying out its project of construction. To this the city filed its answer and cross-petition. In its answer the city took issue upon the questions of fact involving the right of forfeiture. By its cross-petition filed against the depot company and the auditor and treasurer of the city, the city of Cincinnati, alleging noncompliance with the conditions of the grants of 1910 and 1911, especially in the prosecution and construction as therein provided, asserted that Section 4 of the revokingcrdinance, above quoted, passed December 30, 1913, was null and void as it “attempted to give to the plaintiff [the depot and terminal company] herein without consideration and for no purpose the said sum of $10,000 deposited with the city treasurer of said city as liquidated damages for the failure of the said plaintiff to comply with and perform the terms, conditions and stipulations of the said ordinance.” The answer and cross-petition asked that the franchise grants of 1910 and 1911 be revoked; that Section 4 of the revoking-ordinance of December 30,1913, forfeiting the $10,000 of the depot company, be declared void, and that the city auditor and treasurer, respectively, be enjoined from issuing and paying to the depot company the deposit of $10,000. In its reply the depot company traversed the issuable facts contained in the answer; and for answer to the city’s cross-petition the depot company alleged that “the part of said ordinance attempting to refund the deposit of ten thousand dollars is as valid and binding as any other part of said ordinance.”
    Trial was had in the court of common pleas, and the case later appealed to the court of appeals, which found in favor of the city, declared the franchises granted in 1910 and 1911 null and void, and dismissed the petition and supplemental petition of the depot company. The court of appeals also found in favor of the city upon its cross-petition, and enjoined the city auditor and treasurer, respectively, from issuing and paying to The Cincinnati Union Depot & Terminal Company the $10,000 deposited with the city. Whereupon plaintiff in error instituted error proceedings in this court to reverse the judgment of the court of appeals.
    
      Messrs. Dinsmore, Shohl & Sawyer; Messrs. Scanlon & Carney and Mr. Harry T. Klein, for plaintiff in error.
    
      
      Mr. Saul Zielonka, city solicitor, and Mr. F. K. Bowman, assistant city solicitor, for defendant in error.
   Jones, J.

Counsel for plaintiff in error urge several reasons why the judgment of the court of appeals should he reversed. However, we are contení to place our judgment on but one of them. Had the city council, under the circumstances, the power to waive its right to the deposit of $10,000 and to refund that sum to the depot company on revocation of the franchise granted by the previous ordinance? The court of appeals held that upon forfeiture of the franchise this sum eo instanti became the property of the city, and that the city’s effort to yield its possession to the depot company was therefore a gift to the latter by the city, although this refunder was coupled with the declaration of forfeiture. Had this sum become the property of the city, or had the city attempted to make a donation thereof, without consideration, the decision of the court of appeals undoubtedly would have been correct. The legal conclusion arrived at by that court, however, is based upon a false premise. At the time of the revocation the sum of $10,000, whether considered as liquidated damages or penalty, had not become the property of the city. Nor did the city attempt to make it such, but, on the other hand, it distinctly provided that it should be delivered to the depot company. Moreover, had the city in fact attempted to claim the deposit as a forfeiture, it would have been under a forfeiture created by its own act. The terms of the ordinance do not provide for forfeiture by the city; the ordinance reads that the ‘ ‘ sum shall become the property of the city of Cincinnati if at any time this franchise is forfeited.” Since the right to forfeiture was not reserved to the city under this ordinance, it is evident that such forfeiture could not be accomplished except by mutual assent or by legal adjudication. Two of the judges of the court of appeals concurring in the judgment were of opinion that subdivision 4 of the ordinance, authorizing the auditor to pay the deposit to the depot company, “would be a valid legislative enactment if passed for the purpose of adjusting the difference between the company and the city over their respective rights under the provisions of the franchise.” In this principle we concur, and there is ample legal authority supporting it.

There is no substantial dispute in the facts disclosed. At the time of the passage of the ordinance of revocation the city was contending that the conditions imposed in the franchise-grant had not been complied with, while the depot company was insisting upon substantial compliance. It appears that the revoking-ordinance was referred by the council to its committee on ways and means. The report of this committee was made upon the same day the ordinance was passed, but prior to its passage, and the report conclusively shows that these differences, “both as to existence of the causes of forfeiture and revocation set forth in ordinance,” were presented by representatives of the company and of the city. This committee recommended the passage of the ordinance, which was done over the protest of the officials of the depot company; and ita passage, with the remission of the deposit, cannot be otherwise considered than as an attempt to adjust their differenees and secure the acquiescence of the company. On the same day, but prior to the passage of the revoking-ordinance, the depot company filed its petition asking that the city be restrained from forfeiting its franchise. Therefore, in view of the circumstances, the city council had plenary power to disclaim possession of the deposit, and had the depot company accepted. the same unequivocally at that time there could be no question as to the validity of the action of the city authorities.

Counsel for the depot company insist that the deposit made was a penalty to be paid upon forfeiture, while the city solicitor insists that this sum was liquidated damages. If there were doubt as to the character of this deposit at the time of the passage of the ordinance, which would become the subject of future litigation, that would be a sufficient consideration in itself for the settlement of differences between these parties. Having the power to enact the franchise-ordinance the city could have waived the condition that required the prosecution of work within one year from the date of approval of the plans, and we have no doubt council could have waived the forfeiture, or have declared it, coupling therewith a refund of the deposit.

In the chapter relating to waivers of forfeiture by municipal authorities we find the following text: “Municipal authorities may waive the performance of conditions imposed by them and the right to enforce a forfeiture for failure to comply with such conditions.” 4 McQuillin on Municipal Corporations, Section 1667.

It is argued by the city that the provisions of the revoking-ordinance “were not accepted by the comyany, bnt were expressly repudiated by the institution of this action.” This view was expressed in the opinion of the two concurring judges of the court of appeals. It is true that the plaintiff in error cannot stand upon its original franchise and claim the deposit at the same time. Its original action in the court of common pleas was one based upon the validity of its original franchise. But the record discloses that in the course of the trial below the plaintiff in' error yielded its right to affirmative relief and confined its effort to the reclamation of the $10,000 deposit. It is true that the record contains a large amount of evidence tending to show substantial compliance with the terms of its franchise, but this was likewise competent upon the issue made by the cross-petition, as tending to show the differences existing between the parties and as sustaining a consideration for the action of the city council. . It is manifest from the record that the depot company no longer pressed its action for injunctive relief, but relied upon its right to accept the deposit in the city’s hands under the terms of the ordinance. It is true the record does not disclose an express acceptance of this ordinance by the company, but the course of the trial shows an acceptance in legal effect. As stated in the opinion of the court of appeals, the original suit for the protection of its franchise was brought immediately prior to the passage of the ordinance. In the spring of 1913 the president of the depot company wrote a letter to the mayor of the city of Cincinnati, in which he suggested that in view of the uncertainty in regard to the project they “be permitted to take down the $10,000 cash forfeit posted with the city when this franchise was granted,” and that the franchise be amended in an effort to induce the authorities to erect a modem station in such location and of such construction as would be agreeable. This letter was excluded by the court, but was pertinent evidence tending to show that the depot company was at that time willing to take the deposit. The opinion of the court of appeals discloses that it had under consideration not the affirmative relief asked for by the plaintiff, but the question who was entitled to the deposit under the provisions of Section 4 of the ordinance. Moreover counsel for the city concedes that such was the case, for in their brief they say: “Its [plaintiff in error’s] counsel specifically disavowed the existence of any franchise, and expressed its intention to disclaim one should any be found to exist.” Plaintiff in error in the court below could have dismissed its original petition and elected to stand upon its legal acceptance of the provisions of the revoking-ordinance in its favor. This was in fact done in the trial court.

For the reasons stated, the judgments of the lower courts will be reversed and judgment here rendered upon the cross-petition in favor of the plaintiff in error.

Judgment reversed.

Marshall, C. J., Johnson, Hough, Wanamaker, Robinson and Matthias, JJ., concur.