Case Name: In re WOOD et al.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1904-12-23
Citations: 91 N.Y.S. 225
Docket Number: 
Parties: In re WOOD et al.
Judges: 
Reporter: West's New York Supplement
Volume: 91
Pages: 225–239

Head Matter:
(99 App. Div. 334)
In re WOOD et al.
(Supreme Court, Appellate Division, First Department.
December 23, 1904.)
1. RAmnoADS—Construction—Certificate by Board of Railroad Commis-
sioners—Public Convenience—Elements for Consideration.
Under Railroad Law (Laws 1892, p. 1395, c. 676) § 59, providing that no railroad corporation shall exercise the powers conferred on it or begin the construction of its road until the Board of Railroad Commissioners shall certify that the public convenience requires the construction of the proposed road, the board, in determining an application by a railroad corporation for a certificate for the construction of a proposed road, cannot take into consideration the fact that another corporation has a franchise to construct a road in the territory involved, where the conditions of the franchise are so burdensome as to render the building of a road under it improbable, but can only consider the facilities for transportation afforded by an existing line.
2. Same.
It is error for the Board of Railroad Commissioners to refuse to issue a certificate that public convenience requires a proposed railroad merely because it is parallel to the line of another corporation, when, in view of the topography of the country, the proposed road will serve a district which the existing line cannot reach.
3. Same.
The Board of Railroad Commissioners, in determining whether public convenience requires the construction of a proposed railroad, must take into consideration the future growth of population in the territory involved, together with the fact that the local authorities have consented to its construction.
4. Same.
It is proper for the Board of Railroad Commissioners to refuse to issue a certificate that public convenience requires the construction of a proposed railroad parallel to an existing line of road which can afford all the facilities needed for the territory involved.
5. Cobpobations—Payment of Stock in Cash—Sufficiency.
Ten per cent, of the capital stock of a railroad company was deposited with a bank to the credit of the company, subject to be drawn out only on checks signed by the officers of the company. The bank in which the deposit was made was interested tin the company, but was absolutely responsible. R'eld a compliance with the statute requiring the payment in cash of at least 10 per cent, of the capital stock of a company as a condition precedent to a valid incorporation.
Hatch and Laughlin, JJ., dissenting.
Application by Robert C. Wood and others, directors of the New York City Interborough Railway Company, for an order directing the Railroad Commissioners to grant a certificate that the public convenience requires the construction of railroads proposed by the company.
Granted in part, and refused in part.
Argued before VAN BRUNT, P. J„ and HATCH, PATTERSON, O’BRIEN, and LAUGHEIN, JJ.
George W. Wickersham, for applicants.
Paul D. Cravath, for Union Ry. Co.
W. H. Page, Jr., for People’s Traction Co.

Opinion:
PATTERSON, J.
This application is made pursuant to the provisions of section 59 of the railroad law (Laws 1892, p. 1395, c. 676), which relates to the granting by the board of Railroad Commissioners of certificates of public convenience and necessity before a railroad corporation formed under the laws of the state shall exercise the powers conferred by law upon such corporation or begin the construction of its road. The act in question provides that in case of a refusal of the Railroad Commissioners to grant such certificate, after such refusal the board shall certify a copy of all maps and papers on file in its office and of the findings of the board, when so requested by the directors of the applying corporation ; and that such directors may thereupon present the same to a General Term of the Supreme Court of the department within which such railroad is proposed to be constructed in whole or in part, and such General Term shall have power, in its discretion, to order such board, for reasons stated, to issue such certificate, and it shall be issued accordingly. It has been held in several of the departments of this state that the application to the General Term (or, as it now is, the Appellate Division) is in the nature of an appeal from the determination of the Railroad Commissioners. In view of the language of the section it may very well be doubted if that construction is correct, or expresses what was intended by the Legislature. It is to be observed that all that is required to be certified to the Appellate Division is a copy of all maps and papers on file ;n its office and of the findings of the board. There is nothing which re quires á return of the testimony taken by the board; and, further, the Appellate Division is to act in its discretion, and is not confined to disposing of legal questions or ruling upon legal errors committed by the board. In view of the absence of any direction to certify the evidence taken before the commissioners, it may well Have been intended that the Appellate Division should take evidence for itself, and then pass upon the question in its discretion, and determine whether a certificate should be issued or not. Where appellate jurisdiction only is to be exercised, it has never been provided that the court, in its discretion, might reverse the action of the lower tribunal. It may no't, perhaps, be necessary to determine that question on this application, as the parties have assumed in its presentation that the evidence ought to be certified, as well as the maps and papers on file in the office of the Board of Railroad Commissioners, and have chosen to submit the application upon that evidence.
In the consideration of the application upon its merits it is proper, in the first instance, to examine the grounds upon which the Railroad Commissioners denied it. In the opinion of the majority of the board, and as a ground for the refusal to grant the certificate applied for, it is stated that after careful consideration of the evidence the board concluded that public convenience and necessity "do not require the construction of this railroad." They also say that it was proposed to construct it in a territory now served by the Union Railway (a street surface electric line), and it seemed to them that there is little, if any, traffic which would be carried by the applicant which is not now carried by the Union Company, or cannot be carried upon the lines which the Union Company and its affiliated company (the People's Traction Company, not constructed) have franchises to construct. It will thus be seen that the decision of the Railroad Commissioners is based upon a service that can be afforded by the construction in the future by the People's Traction Company of a railroad for which it has a franchise. An examination of the record before us discloses that under the conditions on which that company holds its franchise there is no probability of its ever constructing any part of its railway. It has agreed to pay a proportion of its gross receipts as a condition of procuring its franchise which is absolutely prohibitive, and it seems strange that the board should have based a judgment upon the illusory and almost impossible prospect of the People's Traction Company to construct. This erroneous view seems to have pervaded all of the findings of the commissioners, as they are careful in every part of their decision to base it, among other things, upon the right to construct possessed by the People's Traction Company. This application must then be considered with respect to the lines which the Union Railway Company has constructed, and by which facilities of transportation are afforded to the residents of the locality under consideration.
The objection to the application which has been urged by the Union Railway Company is that the routes proposed by the applicant parallel to a very large extent the routes of the Union Railway Company, and pass through a territory transportation facilities in which are furnished by said company. While this criticism may be true in regard to two of the routes mentioned in the application, yet as to the others it will be seen on examination and comparison of the routes that facilities will be afforded for the transportation of passengers from the east to the west, and vice versa, which are in no way afforded by the lines of the Union Railway Company; and that in respect to one of the routes, which upon the map appears to parallel that of the Union Company, yet, in view of' its topographical configuration, it serves a district which the Union Railway Company cannot reach. In regard to others of the routes facilities are afforded for the crossing of the" district in question which are not, and cannot be, provided by the Union Railway Company.
It seems to us further that the Board of Railroad Commissioners have failed to appreciate the growth of population within the limits of the district involved. The completion of the subway will undoubtedly bring large numbers of inhabitants to the locality; and, if they can be afforded facilities from getting from intermediate points to the stations of the subway and the elevated railway, unquestionably the increase will be very greatly augmented. In considering this application", moreover, we must bear in mind that the local interests and authorities, after a full investigation as to the public necessity and requirements, have given their consent to the construction of these railroads. It is also to be observed that a large number of the officials residing within the district, many of the various associations formed for the improvement of the district, and representative citizens from all parts of this territory came forward and gave their evidence in favor of the applicants, and the reason why this additional transportation facility should be afforded. These witnesses testified to the inadequacy of the existing transportation facilities even for present needs, not to speak of the requirements for carrying and distributing the great increase of population in the borough which- will undoubtedly take place. It seems to-us, therefore, that it was the duty of the Railroad Commissioners, except in those instances where there was a direct parallel route with the Union Railway Company, to grant to the applicant the right to build the lines of road applied for,' and thereby afford those additional facilities which the evidence clearly shows the borough is entitled to.
We .think, however, that the board was justified at the time in refusing its consent to the building of the fifth and eighth routes. Those routes parallel the lines of the Union Railway Company to a very considerable extent; and the Union Railway Company can, if it will, afford all the facilities needed for the territory which would be reached by these proposed routes of the applicant company.
It was objected before us that the applicant's certificate of incorporate,n is void, because it affirmatively appears from the evidence that at the time of t.he" filing of the said certificate 10 per cent, of the capital stock had neither been subscribed nor paid for in good faith and in cash in the manner prescribed by law. It is to be noticed that the Board of Railroad Commissioners appear to have overruled this objection. They have found that the applicant was duly incorporated, and that it had received a franchise from the local authorities for the construction of its line, and therefore must have passed upon this subject. It, however,. becomes appropriate for us to consider whether there was a compliance with the statute in respect to the payment of TO per cent, of the capital stock in good faith and in cash. The main objection raised to the legality of the incorporation of the applicant is that the depository of the 10 per cent., upon which it was jpaying interest, did not keep the whole of the deposit as a separate sum on hand all the time. It is a familiar principle relating to the deposits of money with a bank or banker that the relation of debtor and creditor is created, and that the depositor has no right to demand the identical money which he deposited with his bank or banker-. It is also a well-known principle of banking that, where customers make a deposit with banks or bankers,. those banks or bankers have the right to use those deposits in their business, and they fulfill their contracts with their depositors when they honor the drafts which may be drawn upon them. It would be peculiar if the bank or banker, when money is deposited upon which interest, is paid, could not use the money in business. If that were so, it would be difficult to see how the fund for the payment of interest would be created. As we read the evidence in this case, that is the sole question presented concerning the payment of the 10 per cent, of the capital stock of the applicant. It was deposited with the bankers to the credit of the Interborough Railway Company, and could be drawn out only upon checks signed by the officers of the company. It is true that the bankers with whom the deposit was made were interested in the railway company, but there is not a suggestion but that they were absolutely responsible, nor an intimation that there was the slightest danger of the money being lost. If this application is to be considered as an appeal by the applicant company, there was certainly evidence enough before the Board of Railroad Commissioners to show that the money was paid in in good faith. They have so found, and there is no reason whatever why their finding in that regard should be reversed, or even questioned.
We think,' therefore, that the application should be granted so far as to direct the issuance by the Railroad Commissioners of a certificate as to the first, second, third, fourth, sixth, and seventh routes, but not as to the fifth and eighth routes.
VAN BRUNT, P. J., and O'BRIEN, J., concur.