N.Y. RRD Law § 173 — New York Code / Act RRD / Article 5 / Section 173
Condition upon which consent shall be given; sale of franchise at public auction
Status: in_force

§ 173. Condition upon which consent shall be given; sale of franchise\nat public auction.  The consent of the local authorities in any city\nhaving a population of three hundred thousand or more must contain the\ncondition that the right, franchise and privilege of using any street,\nroad, highway, avenue, park or public place shall be sold at public\nauction to the bidder who will agree to give the city the largest\npercentage per annum of the gross receipts of such corporation, with a\nbond or undertaking in such form and amount and with such conditions and\nsureties as may be required and approved by the comptroller or other\nchief fiscal officer of the city, for the fulfillment of such agreement\nand for the commencement and completion of its railroad within the time\ndesignated by law and for the performance of such additional conditions\nas the local authorities in their discretion may prescribe. Whenever\nsuch consent shall provide for the sale at public auction of the right\nto construct and operate a branch or extension of an existing railroad,\nsuch consent shall provide that but one fare shall be exacted for\npassage over such branch or extension and over the line of road which\nshall have applied therefor; and further, that if such right shall be\npurchased by any corporation other than the applicant, the gross\nreceipts from joint business shall be divided in the proportion that the\nlength of such extension or branch so sold shall bear to the entire\nlength of the road whether owned or leased which shall have applied\ntherefor and of such branch or extension, and that if such right shall\nbe purchased by the applicant, the percentage to be paid shall be\ncalculated on such portion of its gross receipts as shall bear the same\nproportion to the whole value thereof as the length of such extension or\nbranch shall bear to the entire length of its road, whether owned or\nleased. The bidder to which such right, franchise and privilege may be\nsold must be a duly incorporated railroad corporation of this state,\norganized to construct, maintain and operate a street railroad in the\ncity for which such consent may be given; but no such corporation shall\nbe entitled to bid at such sale unless at least five days prior to the\nday fixed for such sale, or five days prior to the day to which such\nsale shall have been duly adjourned, the corporation shall have filed\nwith the comptroller or other chief fiscal officer of the city, a bond\nin writing and under seal, with sufficient sureties, to be approved by\nsuch comptroller or officer, conditioned that if such right, franchise\nand privilege shall be sold to such corporation, to pay to the city\nwhere such railroad is situated the sum of fifty thousand dollars as\nliquidated damages and not by way of penalty in the event of the failure\nof such bidder to fulfill the terms of sale, comply with the provisions\nof this article pertinent thereto, and complete and operate its railroad\naccording to the plan or plans and upon the route or routes fixed for\nits construction within the time hereinafter designated for the\nconstruction and completion of its railroad, and also conditioned to pay\nto the corporation first applying for the consent, if it shall not be\nthe successful bidder, the necessary expenses incurred by such\ncorporation prior to the sale pursuant to the requirements and direction\nof the local authorities, within twenty days after such sale and upon\nthe certificate of the comptroller or other officer conducting the same\nas to the sum or amount to be paid. Notice of the time, place and terms\nof sale, and of the route or routes to be sold, and the conditions upon\nwhich the consent of the local authorities to the construction,\noperation and extension of such street railroad will be given, must be\npublished by such local authorities for a least three successive weeks,\nat least three times a week in two daily newspapers of the city to be\ndesignated by the mayor. The comptroller or other chief fiscal officer\nof the city shall attend and conduct such sale and may adjourn the same\nfrom time to time, but not more than four weeks in all, unless further\nadjournments should, in his discretion, be necessary by reason of the\npendency of legal proceedings, and shall cancel any bid if in excess of\nthe gross receipts, leaving in force the highest bid not in excess, or\nif the bidder shall not have furnished adequate security entitling such\nbidder to bid, or shall otherwise fail to comply with the terms and\nconditions of sale, and shall resell the consent and license in the same\nmanner as hereinbefore provided for the first sale. The bidder who may\nbuild and operate such railroad shall at all times keep accurate books\nof account of the business and earnings of such railroad, which books\nshall at all times be subject to the inspection of the local\nauthorities.  In the event of the failure or refusal of the corporation\noperating or using such railroad to pay the rental or percentages of\ngross earnings agreed upon, and after notice of not less than sixty days\nto pay the same, the local authorities interested therein may apply to\nany court having jurisdiction upon at least twenty days' notice to such\ncorporation, and after it shall have had an opportunity to be heard in\nits defense, for judgment declaring the consent and right to operate and\nuse such railroad forfeited and authorizing the sale again of the same\nin the manner hereinbefore prescribed, provided, however, that no such\nresale of any such consent and right heretofore granted shall be\nauthorized except upon the condition that the same shall be subject to\nall liens and incumbrances existing on said railroads at the time such\nforfeiture may have been declared. All consents hereafter given by the\nlocal authorities, unless it be otherwise provided in such consent or in\nsome renewal thereof, may be forfeited at the expiration of two years\nthereafter. The board of sinking fund commissioners of any city shall\nhave power to reduce, compromise or release any obligation or liability\nto the mayor, aldermen and commonalty of such city under the provisions\nof chapter six hundred and forty-two of the laws of eighteen hundred and\neighty-six, or of this chapter, whenever, in the opinion of such board,\nsuch release or compromise shall be just or equitable, or for the public\ninterest, the reason for any such release or compromise to be stated in\nthe recorded proceedings of such board. No lease by any company\norganized under section five of this chapter and owning a right,\nprivilege or franchise of using any street, avenue, highway or public\nplace for railroad purposes, which was sold prior to May nineteenth,\nnineteen hundred and eight, under the provisions of this section, made\nafter said date to any street surface railroad company which is not\nsubject to the payment of any percentage pursuant to this section, and\nwhich is not organized for the purpose of operating a railroad in a city\nhaving a population of three hundred thousand or more, shall be valid\nuntil the lessee company shall have filed in the office of the\ndepartment of state and in the office of the clerk of the county where\nits certificate of incorporation is filed, its acceptance in writing and\nunder its corporate seal of the provisions of this section as now\namended; and upon such acceptance being filed, the total percentage\namount thereafter to be paid annually under this section and under\nsection one hundred and seventy-five of this chapter, shall be at the\nrate of five per centum of the gross receipts derived from the operation\nof the roads of the lessor and lessee companies considered as one\nsystem. The lessee company, at the time of filing its acceptance\naforesaid, shall also file in the same offices a bond to the people of\nthe state, executed in duplicate by it and a surety company authorized\nby law to act as surety on bonds and undertakings, in the penal sum of\nfifty thousand dollars, and conditioned for the faithful payment\nannually of the total percentage aforesaid, and such bond shall be\ndeemed to be a full compliance with the condition for a bond or\nundertaking required by this section to be provided for in the\nconditions of the consent of the local authorities and shall supersede\nany such bond or undertaking theretofore given. Whenever it shall be\ndesired to unite two street surface railroad routes at some point not\nover one-half mile from such respective lines or routes, and establish\nby the construction of such connection a new route for public travel,\nand the corporation or corporations owning or using such railroads shall\nconsent to operate such connection as a part of a continuous route for\none fare, and it shall appear to the local authorities that such\nconnection cannot be operated as an independent railroad without\ninconvenience to the public, but that it is to the public advantage that\nthe same should be operated as a continuous line or route, with existing\nrailroads, or whenever for the purpose of connecting with any ferry or\nrailroad depot, it shall be desired to construct an extension or branch\nnot more than one-half mile in length, of any street surface railroad\ncorporation, no sale of such franchise shall be made as provided in this\nsection, but any consent of the local authorities for the construction\nand operation of such connection, extension or branch shall provide that\nthe corporation or corporations operating such connection, extension or\nbranch shall pay into the treasury of said city annually the percentage\nprovided for extensions or branches in section one hundred and\nseventy-five of this chapter, for the purposes, at the times, in the\nmanner and upon the conditions set forth in such section. Nothing herein\ncontained shall be construed as superseding, repealing or modifying any\nprovision of the charter of any city, village or town, nor as modifying\nor affecting the terms of a certain contract bearing date January first,\neighteen hundred and ninety-two, entered into by and between the city of\nBuffalo and the various street surface railroad corporations therein\nnamed in said contract, nor as modifying or affecting the terms of a\ncertain contract bearing date the twenty-fifth day of February, eighteen\nhundred and ninety, entered into by and between the city of Rochester\nand the street surface railroad corporation therein named, nor as\nmodifying or affecting any contract heretofore entered into between a\nstreet surface railroad corporation and any city having a population of\nless than fifty thousand, town or village regulating the payment of\npercentages or paving of streets, and any such city, town or village, is\nhereby authorized to enter into any such form of contract with any\nstreet surface railroad corporation, and any such contract entered into\nbefore said date is hereby ratified and confirmed. The local authorities\nmay, in their discretion, make their consent to depend upon any further\nconditions respecting other or further security, or deposit, suitable to\nsecure the construction, completion and operation of the railroad within\nany time not exceeding the period prescribed in this article and\nrespecting the character, quality or motive power of the road to be\ncompleted and respecting the grouping of streets, avenues and highways\ninto one route, or into several routes, for the purpose of a single sale\nof the franchise, right or privilege for all the routes collectively, or\nof the separate sale for each route or street, as said local authorities\nmay think expedient, and respecting the payment of the percentage agreed\nto be paid at the sale upon all the lines operated by the successful\nbidder within the city and respecting any matter involved in or\naffecting the computation of percentage payments and respecting the use\nof the railroads to be constructed under the consent by any other\ncompany and respecting the interchange of traffic and division of fares\nbetween the company operating such railroads and any other company, and\nrespecting the application of any provision herein contained as to\ncarriage of passengers for single fare and the division of gross\nreceipts and the payment of percentages to the line leased or operated\nunder contract by the applicant for an extension, and also respecting\nany other matter concerning which, in their judgment, further conditions\nwould be for the public interest. Nothing herein contained shall apply\nto, or affect any grant hereafter made under the provisions of title\none, chapter three of chapter three hundred and seventy-eight of the\nlaws of eighteen hundred and ninety-seven and the amendments thereto\nknown as the Greater New York charter.\n