Case Name: Toledo v. Toledo Railway & Light Co.
Court: Lucas Circuit Court
Jurisdiction: Ohio
Decision Date: 1903-10-03
Citations: 15 Ohio C.C. Dec. 441
Docket Number: 
Parties: Toledo v. Toledo Railway & Light Co.
Judges: 
Reporter: Ohio Circuit Court Decisions
Volume: 15
Pages: 441–451

Head Matter:
FORFEITURES — MUNICIPAL CORPORATIONS. ■
[Lucas (6th) Circuit Court,
October 3, 1903.]
Parker, Hull and Haynes, JJ.
Toledo v. Toledo Railway & Light Co.
1. The Facts Stated.
A street railway grant provided that the road should be built and in operation within six months from the time the city had completed certain grading; otherwise all rights and privileges thereby granted should be forfeited. A large part of the road was built and put in' operation. Ten years later the city caused the stipulated grading to be done, which was immediately accepted and paid for. During the winter months following the “fill” thus made settled from six inches to one foot. It was leveled up, and the construction of the road begun, when work was stopped by the mayor and police on the ground that the time limit had expired, and suit was brought to enjoin further work and forfeit the franchise as to this part of the route. Held:
2. COMPLETION OF GRADING DATES FROM WHAT TIME.
(1) That the completion of the grading contemplated by the ordinance granting the franchise should date, not from the acceptance of and payment for the work, but from the date of its being put in such condition that a street railway could safely be built upon it.
3. Forfeiture Strictly Construed — No Partial Forfeiture of Franchise.
(2) The rule requiring that forfeitures be strictly construed against those for whose benefit they are provided, together with the entire failure of the city to show that any damages have been suffered by reason of the delay, and the further fact that if any part of the franchise is to be forfeited, it must be forfeited as a whole, including the portion of the road which was built ten years before the city did the stipulated grading, forbids the granting of the relief asked.
4. Suit for Forfeiture of Franchise Must be Based Upon Determination by. Council That it Should be Declared.
(3) Moreover a suit for the forfeiture of such a franchise will not lie, unless based upon a determination by the city council that a forfeiture should be declared.
Appeal from the court of common pleas of Lucas county.
U. G. Denman, city solicitor, for plaintiff.
Smith & Baker, for defendant:
The universal rule in Ohio is that courts proceed with great caution in matters of forfeiture. If a contract is fairly subject to the interpretation, that upon the happening of a default it should be enforced and not forfeited, it receives that interpretation. Watterson v. Ury, 3 Circ. Dec. 171 (5 R. 347, 355) ; Hornback v. Railway Co. 20 Ohio St. 81, 88; Webster v. Insurance Co. 53 Ohio St. 558 [42 N. E. Rep. 546; 30 L. R. A. 719] ; Chicago City Ry. Co. v. People, 73 Ill. 541, 549.
And we believe in every case where the question has arisen, the courts have required the street railway company to perform the contracts of the ordinance under which it was acting, irrespective of the severity of the terms of forfeiture contained in such ordinance. Columbus v. Railway Co. 45 Ohio St. 98, 104 [12 N. E. Rep. 651],
Where the conditions of the ordinance do ,not clearly appear to be conditions precedent, they will be regarded as conditions subsequent. State v. Boyce, 43 Ohio St. 46 [1 N. E. Rep. 217],
The law strictly construes provisions working forfeitures. Such statutes are to reach no further in meaning than their words; no person is to be made subject to them by implication, and all doubts concerning their interpretation are to preponderate in favor of the accused. Only those transactions are covered bjr them which are within both their spirit and their letter. State v. Boyce, 43 Ohio St. 46, 50 [1 N. E. Rep. 217].
We believe a mere technical violation of a condition subsequent in an ordinance involving no substantial loss or injury is never construed to be a cause of forfeiture. People v. Railway Co. 125 N. Y. 513 [26 N. E. Rep. 622] ; Chicago City Ry. Co. v. People, 73 Ill. 541, 549.
A court of equity will not take the place of the city council and both create and enforce the forfeiture. When a condition subsequent is contained in an ordinance and the street railway company has violated its terms and the proper legislative power of the city has elected to avail itself of the right to declare a forfeiture, then and not till then will, a court of equity declare that a forfeiture exists and decree its enforcement. Hamilton St. Ry. Elec. Co. v. Electric Transit Co. 3 Circ. Dec. 158 (5 R. 319, 323).
City authorities may waive the forfeiture of a franchise, and an abutting owner cannot be permitted to enjoin the exercise of the franchise, and thus prevent the city from executing its right of waiver. Barney v. Railway Co. 11 Re. 880 (30 Bull. 286).
The ordinance would seem to vest in the village the power to act and remove the tracks from the street if the council concluded that the conditions had not been complied with. Stewart v. Ashtabula, 13 O. F. D. 307, 312; New Orleans, C. & L. Ry. Co. v. New Orleans, 44 La; Ann. 748, 751'[11 So. Rep. 77] ; Hodges v. Railway Co. 58 Md. 603, 605, 623.
At no time did this ordinance become void and no act of the street railway company alone could make it so, and the right still remains in the city of Toledo, if it sees fit, to require the defendant company to perform its part of the agreements of this ordinance. The city solicitor has no power to take this right from the city, and before this court can declare that a forfeiture exists, there must be some evidence that the proper legislative authority of the city has elected not to enforce the ordinance as against the street railway company, but to declare it null and void. Pol-wen v. Railway Co. 8 Am. Ry. Corp. Rep. 419.

Opinion:
HULL, J.
This action comes into this court on appeal. It was brought by the city of Toledo to enjoin the defendant from constructing a piece of railroad track, about a quarter of a mile long, on Central avenue, in this city, and to have declared a forfeiture of all the rights, franchises and privileges of the street railway company in that street for the purpose of building, maintaining and operating a street railroad. The claim of the plaintiff is, as set forth in the petition, that on December 14, 1901, the common .council of the city of Toledo passed an ordinance giving and granting to The Metropolitan Street Railway Company, its successors or assigns (of which the defendant in this action is the successor), the right to construct, maintain and operate the same over Central avenue from Cherry street to the westerly limits of the city of Toledo, being a distance of about one mile, and running between Cherry street and Collingwood avenue a portion of the way.
The ordinance, as set forth in the petition, required that the street railway company should complete the construction of the street railroad and have it in operation by September 1, 1902; but it contained further provision that the city of Toledo was to grade and fill in that portion of the route that lay between Cherry street and Collingwood avenue — which was lower than the grade line, there being a ravine at that point which it was necessary to fill in and grade before the street railroad could be properly constructed. And it is set forth in the petition that the ordinance provided that the city was to do this work of filling in and grading Central avenue, and that if the city did not complete the work of grading and filling in within the time limited, to wit, by September 1, 1902, the time limit for the building of the street railroad, then that the railroad should be built and its operation commenced within six months after the city completed the filling and grading of this portion of the route. And the petition sets forth and complains that the street railway company did not build its track on this part of the route lying between Cherry street and Col-lingwood avenue, within six months after the city had completed its filling in and grading, but that on July 1, 1901, it had commenced the work of laying its tracks and building a street railroad over this part of its route, the petition alleging that the city had completed its work of filling in and grading more than six months prior to July 1, 1901, and therefore, it is claimed by the city in its petition that the street railway company has forfeited all of its rights and franchises in this portion of the route lying be tween Cherry street and Collingwood avenue, and the petition asks that such forfeiture be declared and asks that the street railway company be enjoined from building and constructing said railroad at that point.
The ordinance passed by the city of Toledo oa December 14, 1891, contained substantially the provisions set forth in the petition, and, that I may be exact, I will quote from the ordinance this provision:
"Section 4. The work of the construction of said extension of said street railway shall be under the direction of the city civil engineer and shall be commenced as soon as practicable after the passage of this ordinance and shall be completed and in operation on or before September 1, 1892; provided, that work thereon shall not be required until after said Central avenue is graded to the established grade between Cherry street and Collingwood avenue, and in case the same is not graded and the road herein authorized to be constructed is not completed within the date named, then said extension shall be constructed and put in operation within six months from the completion of said grading."
And Sec. 6 of said ordinance provides:
"Section 6. If said company, its successors or assigns, shall fail or refuse to compfy with the conditions of this ordinance or with an ordinance entitled 'An ordinance to grant to The Metropolitan Street Railway Company the right to reconstruct its tracks and extend its charter,' passed March 11,1889, or the general ordinances of the city of Toledo, regulating the operation of street railways, and amendments existing or hereafter made thereto, so far as the same are applicable and not inconsistent with the conditions of this ordinance, the rights and privileges hereby granted shall be deemed forfeited and the city of Toledo shall have the right to reenter and take possession of the same to the exclusion of said company. Passed December 14, 1891."
The grading of this portion of the street was not done by the city for nearly ten years after the passage of the ordinance, but was let by contract in the year 1901, and the work was accepted by the city council on November 11, 1901, by formal resolution of the council and the contractor ordered paid. So that more than six months had expired from the time this work was accepted by the city when the street railway company began its work of constructing the street railroad on this part of the route, to wit, on or about July 7 in the following year (1902). It is claimed by the city that on account of this failure to comply with this provision, of the ordinance, that the whole of this road or route (about ono mile in length) should be completed and in operation within six months after this filling and grading had been done, that all of the company's rights as to this 'part of the road have been forfeited.
It is claimed by the defense that this is not true as a matter of law or fact; and further, that no forfeiture has ever been declared by the city; also as a matter of fact, notwithstanding its acceptance by the council,, that this work of filling and grading was not done by the city and finished and completed within six months before the commencement of this work by the railway company. Evidence was offered, both by the city and by the defendant.
It seems that prior to July, 1902, the street railway company had built and completed and had under operation about three-fourths of this entire route — about three-quarters of a mile. The company had not waited for the city 'to do this filling and grading before commencing the building of the street railroad, and, within probably six months after the "ordinance was passed, the entire route, as contemplated by this ordinance, had been built, except that portion which could not be built on account of the condition of this grading, and cars had been maintained and operated upon this portion of the road for nearly ten years before this grading was done by the city. After the grading had been completed and finished, which the railway company claims was in fact early in the spring of 1002, the company, in the fore part of July, commenced the' work of building the street railway at this point, but were stopped by the mayor of the city and the police, and the work of building a railroad there was prevented by policemen on the ground, for a period of about ten days, until this action was commenced by the city solicitor, to have determined in a court of equity the rights of the respective parties.
An issue of fact, then, in the case is, whether tire city had finished and completed its work of filling and grading as contemplated by this ordinance, more than six months before the work was commenced by the street railway company over this part of the route ?
Several witnesses were called by the plaintiff, and some by the defendant. The assistant city engineer, Mr. Ridenour, was called by the city, and testified that it was necessary after such work as this had been done that it be given considerable time to settle before it would be feasible to lay a pavement upon the street, or to build a street railroad upon it. This grading was accepted by the city in November, 1901. He testified that, as a rule, they gave some six months for settling before they did such a thing as to pave a street, and that it, should be allowed an entire winter for settling, in his judgment, and that before a street railroad should be built there should be a solid substructure.
Mr. Miller, who was an inspector, in the employ of the city during a portion of the time that this grading was going on, testified that he saw it in the spring of 1902; that there were holes in it, and that it had settled in spots. It was shown on the part of the defense that complaints were made by some of the citizens who resided upon the line of the street that the grading had not been properly done.
Mr. Sheehan, the contractor, who did the work for the city, was called as a witness and testified that he filled in with almost anything that he could get — Band, quicksand, and the roots of trees, rubbish, street sweepings and anything that would fill a hole; that when the engineer, or the proper officer, pronounced the work up to grade it was accepted by the council and he got his pay, but that the grading had no sooner got up to the grade line than it began to settle and it settled from one foot to two feet at various places during the winter months, and he testified that it was a usual and ordinary thing for such work to settle in the six months that follow the doing of the work so that it was necessary to go on It again and bring it up to the grade line, and he testified that the street commissioner did work upon this street during the winter, filling it up here and there as it settled; and, after it load been accepted by the council, he testified that he went back and filled in at places and did work in that way in the latter part of November; and he says that the commissioner filled in some late in the winter; that it had settled at the sewer connection points, and he says that the street was at that time below grade probably from six inches to fifteen inches at different places, and that in the spring of that year it was from six inches to one foot below grade.
There was other testimony on this question, and we find that the overwhelming weight of the evidence is that this work of grading in question was not completed and finished as contemplated by this ordinance until the spring of 1902, a short time before this work was commenced by the street railroad company.
• The acceptance of the work by the city council, by resolution, and the direction to pay the contractor, would not bind the street railway company, the other party to the contract made by the ordinance. The ordinance imposed upon the city the duty and the burden of filling this in to the grade line and completing it, and it gave the street railway company the privilege of waiting six months after that filling was completed or waiting so long as they pleased, so that the railroad was completed and in operation within six months after the grading was finished by the city, the ordinance providing:
"That work thereon shall not be required until after said Central avenue is graded to the established grade between Cherry street and Col-lingwood avenue, and in case the same is not graded and the road herein authorized is not completed within the date named, then said extension shall be constructed and put in operation within six months after the completion of said grading."
We hold that that language in the ordinance requiring the city to complete this grading, means that it shall be in fact completed — not that it shall be accepted by the city council, but that it shall be put in such condition as that it would be proper and safe to build a street railroad upon it. This was part of the work which the city was to perform in the construction of this improvement and means' of travel in the city and for which the street railway company had been given this grant by the ordinance. The city was required to do this filling in such a way that it would be safe and practicable to construct a street railroad upon it, and when the filling was done with quicksand and roots and street sweepings and with any rubbish, as the contractor testified, that he could get, the city had not finished the work as contemplated by the ordinance, and it began to settle immediately and settled from six inches to a foot and two feet, in different places, as shown by the evidence. It was conclusively shown that this part of the street on Central avenue between Cherry street and Collingwood avenue was not in a fit condition to build and construct a railroad upon in the fall or winter of 1901, 1902, and it was not in such condition until the spring of 1902, a very short time before the work of building the railroad w^s commenced by the street railway company.
To warrant a court in declaring a forfeiture of the rights and privileges granted to a company under an ordinance of this kind, the evidence must be clear and conclusive that the company has violated the provisions of the ordinance in such a manner as to warrant a forfeiture; a court would not forfeit the privileges so granted or take from the company the right to build and finish building a street railroad upon any doubtful case. The authorities upon this question are numerous.
It should be noted that the city does not ask for the forfeiture of this entire grant and of the rights and privileges extending along this entire route, but only of a portion of the line. There is no provision in the ordinance for a forfeiture of a portion of the grant — the only provision is for a forfeiture of all the rights and franchises. The city has.no authority, under this ordinance, to select such á portion of the route as it sees fit and ask to have a forfeiture declared upon it; if it is entitled to a forfeiture, it is for all. Provisions of forfeiture are to be strictly construed, and have been from time immemorial — from Shy lock's case and before down to the present time.
There is no provision in the ordinance for a partial forfeiture. For feitures are not favored by courts, and especially where it appears that the provision of forfeiture is put into a contract, agreement or franchise only to secure the performance of the work; and forfeiture of the property or of the rights of a person, natural or artificial, because of a slight failure to perform all the provisions of the contract, is not favored by the courts, and where compensation may be had in lieu of forfeiture, a court of equity will grant that instead. As the Supreme Court of this state has said in Union Central Life Ins. Co. v. Bernard, 33 Ohio St. 459:
"Forfeitures are odious, and there must be no cast of management or trickery to intrap a party into a forfeiture."
And in Webster v. Insurance Co. 53 Ohio St. 558 [42 N. E. Rep. 546 ; 30 L. R. A. 719] :
"Provisions for forfeitures are to receive, where the intent is doubtful, a strict construction against those for whose benefit they are introduced.
"If it be left in doubt, in view of the terms of the instrument and the relation of the contracting parties, whether given words were used in an enlarged or a restricted sense, other things being equal, that construction will be adopted which is most beneficial to the promisee."
And on page 563 of the opinion:
"Relief against forfeitures is matter of equitable cognizance, but rules applicable to the subject are resorted to in courts of law, and there seems no good reason why the principles which govern courts of equity should not he available in a suit at law where the facts make such cognizance necessary to the ends of justice.
"A primal rule is that forfeitures are not favored either in equity or at law; indeed, it is declared as a universal rule that courts of equity will not lend their aid to enforce a forfeiture. Following as a corollary from this, provisions for forfeitures are to receive, when the intent is doubtful, a strict construction against those for whose benefit they are introduced."
It has been held by some courts that where there is in an ordinance a condition precedent, where something is required to be done before a right can vest, that the courts cannot relieve against that. But it has been held by the Supreme Court of this state that a condition of the kind involved here is to be regarded as a condition subsequent. Tire right to build the road was vested in the company when the ordinance was passed; it had built its road upon three-quarters of the route and was operating it; and this condition should be regarded as a condition subsequent. The Supreme Court say in State v. Boyce, 43 Ohio St. 46 [1 N. E. Rep. 217] :
"Where the conditions of the ordinance do not clearly appear to be conditions precedent, they will be regarded as conditions subsequent."
No action has ever been taken by the city council to declare a forfeiture, or by ally other .duly authorized officer of the city. Tlie city never complained that the railway company had not completed this part of t'he work within the time limit until this suit was commented, and not then until after the work was stopped by the mayor and police force. The city council has never authorized or directed the city solicitor to commence this action and ask that a forfeiture be declared. Whether the city solicitor had authority to begin such an action without a resolution passed by the city council we need not now determine, but I speak of this fact as in line with what I have said — that the city has not done anything to indicate a desire for the forfeiture of these rights of the railway company. In State v. Boyce, 43 Ohio St. 46 [1 N. E. Rep. 217], the court say, on page 52 :
"The solicitor is a public officer eletted by the people, and, when required so to do by resolution of the council he shall prosecute or defend, for and in behalf of the corporation, except in certain cases. Section 1774 Rev. Stat."
On this question of forfeitures, see 1 Pomeroy, Eq. Jurisp. Sec. 381, where the author says, on page 415:
"The general doctrine was finally settled that, wherever a penalty or forfeiture is inserted merely to secure the payment of money, or the performance of some act, or the enjoyment of some right -or benefit, equity regards such payment, performance, or enjoyment, as the real and principal intent of the instrument, and the penalty or forfeiture as merely an accessory, and will therefore relieve the debtor party from such penalty or forfeiture, whenever the actual damages sustained by the creditor party can be adequately compensated. The application of the principle in such cases, and the relief against penalties or forfeitures, must always depend upon the question whether compensation can or cannot be made."
In this case there is no complaint that the city is damaged. If it were true that a few weeks had gone by beyond the time limit in the ordinance, there is no claim made that the city has been damaged in the slightest respect by this failure on the part of the street railway company to complete this work within the exact time limit. There is no complaint made by any citizen of the city of Toledo that he has been damaged. No one is requesting that any officer of the city, the city solicitor' or the council, or any other body or officer, go into court and ask to have a forfeiture declared. The purpose and object of the city council and the railway company in entering into this contract by ordinance was to have a railroad built in'the streets of the city for the benefit of the street railroad company and also of the people of the city, in order that they might have additional transportation facilities throughout the city. The purpose was not to get hold of and destroy the property of the street railway company, and the fact that the road was not completed exactly within the time fixed, if that were true, does not materially affect the rights of the city or damage in any appreciable amount the city or any of,the citizens thereof. The city had delayed for ten years the completion of this work of grading. The street railway company had built the rest of the road between nine and ten years before they were required to build it and it would be clearly contrary to both law and equity and a violation of the fundamental principles of right and justice to declare a forfeiture of this small portion of the route on the ground that it was not completed within the exact time fixed in the ordinance.
A case in Illinois is in point (Chicago City Ry. Co. v. People, 73 Ill. 541), where the supreme court of Illinois say:
"Where a railway company was authorized by its charter to construct and maintain a railway in a certain part of the city of Chicago, over and along such streets, etc., as the common council had or might authorize, in such manner and upon such terms and conditions as the common council had or might 'contract with the company, and, bv ordinance of the city, license was given to lay a single track along a certain street half the way within the time required: Held, that the common council had the right and power to waive the condition as to the time for completing the same, it being a provision in favor of the city to secure the public interests."
And on page 549 of the opinion, the court say:
"Courts proceed with great caution in proceedings which have for their object the forfeiture of corporate franchises. It is not every nonperformance of the condition in the act of incorporation, or every misuser, that will forfeit the grant. A substantial performance according to the intent of the charter is all that is required."
And another case upon the proposition that the city had the power to waive this provision of the ordinance is found in Hamilton St. Ry. & Elec. Co. v. Transit Co. 3 Circ. Dec. 158, 159 (5 R. 319). The opinion was rendered by Judge Smith, in which, speaking for the court, he said:
"Nor do we think that we should in this case, at the instance of the defendants, determine or adjudicate, whether for any reason the plaintiff company has forfeited the right given to it by the ordinance, to construct and operate its road. This also, in the first instance, is a matter for the consideration and decision of the city council, which (if the forfeiture has occurred) may insist upon, or waive it."
As I have said in this case, there has been no act of the council looking towards a forfeiture of this franchise. The question is still open whether the city desires to forfeit it, and before the property of the railroad company is declared forfeited and taken from it and its tracks torn from the streets, the company has a right to be heard before the council.
I will cite a case, Stewart v. Ashtabula, 13 O. F. D. 307, 312 [98 Fed. Rep. 516], opinion by Judge Taft:
"The ordinance would seem to vest in the village the power to act, and remove the tracks from the streets, if the council concluded that the conditions had not been complied with."
It seems to us very clear that the city council is the proper body to determine whether the city desires that these rights and privileges shall be forfeited, or. not, or whether a slight failure on the part of the street railroad company in the matter of time in doing this work shall be waived. We are very clear that under the evidence offered here no court of equity would declare a forfeiture of these rights or enjoin the street railroad company from building and constructing its road upon this street. On the contrary, we find from the evidence in the case that the street railroad company has complied with the conditions imposed upon it; that it commenced the work within the time fixed and was proceeding properly and in order and according to law to fulfill its part of the ordinance when it was stopped.
The petition of the plaintiff will be dismissed at its cost, and injunction denied.