Case ID: ad_9/html/0452-01.html
Source: Caselaw Access Project
Author: {"author": "Barrett, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Mayor, Aldermen and Commonalty of the City of New York, Respondent, v. Ashbel P. Fitch, Comptroller of the City of New York, and Others, Respondents; The People’s Traction Company, Appellant.
    
      Equity ■—a city cannot maintain an action in order to determine who is the highest Udder for a street railroad franchise.
    
    The jurisdiction of equity is primarily incident to express trusts created by some appropriate instrument, and, in order to justify the trustee in applying to the court for instructions, there must be some doubt or obscurity as to. what the law is and what his conduct should be under it. There must be some risk and' responsibility as such attached to the trustee in his relation to his cestui que trust.
    
    A court of equity will not entertain an action brought by a municipal corporation to have it adjudged, in respect to a city auction sale of a street railroad franchise, whether the bidding has passed beyond all reasonable and valid bids, and which is the highest legal and valid hid, and to have the city comptroller directed to award the franchise accordingly, or whether the biddings should he canceled and a new sale he ordered, and that the court protect the plaintiffs rights and instruct its comptroller as to his official duty in the premises. .
    Appeal-by the defendant, The People’s Traction Company, from an order of the Supreme Court, made at the Hew York Special Term and entered in the office of the clerk of the county of Hew York on the 20th day of July, 1896, continuing pendente lite an injunction restraining the defendant Fitch, as comptroller, from continuing the sale of the franchise of constructing, maintaining and operating a certain street surface railway in the city of Hew York, and from entertaining, receiving or accepting any further bids at such sale.
    The injunction order also restrained the three corporations defendant from making any further bids at such sale or from receiving or accepting an award' of such franchise upon any bid heretofore made by either of them. The sale was pursuant to a resolution of the common council and in accordance with the Railroad Law (Laws of 1890, chap. 565, § 93). It was adjourned to the 9th' day of October,- 1895. Upon such sale, after two very small bids, the Horth Hew York City Traction Conqpany bid thirty-nine and twelve-sixteenths per cent. Immediately thereafter the People’s Traction Company bid ninety-seven per cent for the first five years, and ninety-five per cent thereafter. All such bids were additional to the percentage required • by the railroad statute, namely, three percent for the first five years and five per cent thereafter. Therefore, tire aggregate bid of the People’s Traction Company was 100 percent of its gross receipts.
    The defendant the Horth Hew York City Traction Company immediately thereafter bid 101 per cent, and the People’s Traction Company at once protested against the reception of any further bid beyond its bid of 100 per- cent, claiming that no legal bid could be made to pay any percentage greater- than 100 per cent.
    The protest was overruled, and the bid of 101 per- cent received, and thereupon the People’s Traction Company bid 1000 per- cent. The bidding continued until the close of business hours, the last bid being 6975 per cent by the defendant the Horth Hew York City Traction Company; and thereupon, the auction sale was suspended and an announcement made that it would be continued on the next day, October tenth, at twelve o’clock noon, at the same place.
    The Southern Boulevard Company made no bid after three and a half per cent.
    On the 10th day of October, 1895, before -the hour fixed for resuming the sale, an action was commenced in the Supreme Court by the Southern Boulevard Company, as plaintiff, against the People’s Traction Company, the North New York City Traction Company and Ashbel P. Fitch, comptroller. In said action an order was granted by a justice of the Supreme Court enjoining further continuance of the sale until further order of the court. Subsequently the action was tried, and a judgment was entered, therein dismissing the complaint of the Southern Boulevard Company upon the ground that it had no grievance to be redressed, because its bid of three and one-half per cent had been largely exceeded by subsequent bids made in good faith by the. two competitive companies. This judgment was subsequently affirmed by this Appellate Division. (5 App. Div. 330.)
    On the thirteenth day of June this action was commenced, and the injunction Order under review was obtained and served upon the respective parties on the same day.
    The relief demanded in the present complaint is as follows:
    1. If the court finds that the bidding had passed beyond all reasonable and valid bids, that the court determine in such case which is the highest legal and valid bid, and direct the comptroller' to award the franchise accordingly; or,
    2: Direct that the biddings be canceled and the proceedings be adjudged to be null and void, and direct a resale under such terms and conditions as may be lawful, and,
    3. That the . court render such judgment as will protect the plaintiff’s interest in said franchise, and instruct the said defendant Ashbel P. Fitch, comptroller, aforesaid, as to his official duty in the premises, and that the court in the meantime restrain and enjoin said corporation defendant from purchasing said franchises, and said .Ashbel P. Fitch frormawarding said franchise to either of the bidders-at said anction sale until the hearing and determination of this action.
    
      Benjamin F. Tracy, for the appellant, The People’s Traction Company.
    
      
      Francis M. Scott, Corporation Counsel, in person,a and Theodore Connoly, for the plaintiff, respondent.
    
      William F. Sheehan, for the respondent, The North New York City Traction Company.
    
      John M. Tierney, for the respondent, The Southern Boulevard Railroad Company.
    
      George F. Mott, for the respondent, Ashbel P. Fitch, Comptroller.
   Barrett, J.:

The learned judge at Special Term aptly said that “ this action is brought by the plaintiff, as trustee of the streets, to ascertain which of the said defendants is the highest bidder ” for the franchise in dispute. The. question is, can such an action be maintained ? If it can, it is entirely proper to preserve the existing status by injunction until the plaintiff’s supposed doubts are resolved upon the trial. If it cannot, then the injunction pendente lite should, of course, be dissolved.-

The equity of the complaint rests avowedly upon the plaintiff’s trust relation to the streets of the city. But for this trust relation, it is not contended that such an action as the present would lie. In fact, it is not the province of a court of equity to act as a general adviser, nor to settle people’s disputes by resolving their own or other people’s doubts with regard thereto. A man who owns property, and puts it up at auction, may be greatly interested to know whether the sale was legally conducted and who -made the highest valid bid. But, even if there were no Statute of - Frauds, he could not well come into a court of equity to have -this ascertained for him, and, upon its being ascertained, to obtain such judg-. ment as against all the bidders, defendants, as might be appropriate. Except in interpleader or some similar and well-recognized head of equity, a party must decide for himself as to his rights. ; Having thus decided, he may assert those rights and submit the issues arising from their denial by his adversary to the arbitrament of .a court regularly constituted to hear and determine disputed questions of fact and law.

The question then is : Does the plaintiff come within . the rule which permits a trustee to ask the opinion of the court Upon a doubtful question % To answer this satisfactorily, we must have a clear understanding of the precise nature of the advisory jurisdiction and of the reason why trustees are permitted, under given cir-stances, to Seek instruction and direction from the court.

Primarily, the jurisdiction is incidental, to that over trusts. (Bailey v. Briggs, 56 N. Y. 407.) That is, over express trusts created by some appropriate instrument. The trustee thereby appointed cannot be expected to incur risk in the distribution of the trust fund, or responsibility resulting from an erroneous construction of the trust. This risk and responsibility are such as attach to the trustee in his relation to the eestuis gue trust. But even then there must be some doubt or obscurity as to what the law is and what his conduct ought to be under it, to entitle the trustee to the advice and instruction of the court. (In re Brewer, 43 Hun, 600.) This advisory jurisdiction will not be exercised where the power has been wholly and plainly confided to the trustee (Id.), nor even 'in construing a will, where the estate devised is a legal one, and the questions raised are also purely legal. (Perry on Trusts, 476a; Chipman v. Montgomery, 63 N. Y. 221.) The circumstances which will justify the trustee’s application for advice are those which relate to the terms of the trust itself and to the rights of the beneficiary thereunder. They are not such as relate to the conduct of the trustee in his dealings with third parties. There may, for instance, be a close question, upon the face of the trust instrument, whether the trustee should utilize trust funds in improving vacant lots. He may well be justified in asking instructions upon that head. But he would have no right to ask a court of equity to advise him as to what architect or builder he should employ, or what course he should adopt with regard to a dispute between rival claimants to the building contract, still less with regard to a dispute between himself and those with whom he had contracted. All such doubts and difficulties would be foreign to the trust proper. They would not come within the purview of the court’s advisory jurisdiction. As to these matters the trustee would have to decide for himself what, his proper course should be. He would have to come into court, whether in equity or at law, in the same way as any other suitor, in no other way. He would, in fact, be subject to the ordinary rule that, to put a court of equity in motion, there must be an actual litigation in respect to matters which are the proper, subjects of. the jurisdiction, of that court. (Chipman v. Montgomery, supra, p. 230.)

In the present case there is no such trust as the rule invoked by the plaintiff contemplates; The city of Yew. York isa trustee in but a general sense, that is, a trustee not for its citizens alone, but for the public at large. This is nothing more than saying that the fee of the streets is in the corporation subject to public use. It is quite clear that such a nominal trust furnishes no ground for the exercise of advisory jurisdiction. There is no trust instrument to be construed, and there are no cestuis gue trust to be considered. The defendants certainly are not the beneficiaries under the public use trust. They are simply rival claimants to a franchise which the city is authorized to grant Upon certain statutory terms and conditions. The city, as technical trustee for the public use, incurs no risk as trustee, no matter how the franchise may be disposed of. As between itself and the public, it is a matter of. no direct pecuniary consequence how it or its comptroller reads the statute or acts upon the circumstances which attended the bidding. Whatever loss the city may here incur by a false move will be its own direct loss. Indeed, it is so averred in the complaint. It will not be its loss as trustee resulting from its error in a trust capacity. Yor will it be charged with any such loss by a wronged cestui gue trust. It is quite plain that the circumstances under consideration have nothing whatever to do with even the city’s nominal trust. They are foreign thereto both inherently and in their application to the defendants.

There are other objections to the complaint, notably the failure to aver doubt and the contrary averment with respect to bids above 100 per cent of the gross receipts. We prefer, however, to place our judgment upon the distinct ground that the city cannot come into a court of equity for instruction and direction as to the course which it would pursue under the circumstances disclosed. The complaint is demurrable, and the court upon the trial will be required to dismiss it.

It follows that the order appealed from should be reversed, with ten dollars costs and disbursements, and the motion to continue the injunction denied, with ten dollars costs, and the temporary injunction dissolved.

Van Brunt, P. J., Rumsey, Williams and Patterson, JJ.> concurred.

Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs, and temporary injunction dissolved.