Case Name: In the Matter of the Application of Robert C. Wood and Others, as Directors of the New York City Interborough Railway Company, for an Order Directing the Board of Railroad Commissioners to Issue a Railroad Certificate under Section 59 of the Railroad Law
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1904
Citations: 99 A.D. 334
Docket Number: 
Parties: In the Matter of the Application of Robert C. Wood and Others, as Directors of the New York City Interborough Railway Company, for an Order Directing the Board of Railroad Commissioners to Issue a Railroad Certificate under Section 59 of the Railroad Law.
Judges: 
Reporter: Appellate Division Reports
Volume: 99
Pages: 334–353

Head Matter:
In the Matter of the Application of Robert C. Wood and Others, as Directors of the New York City Interborough Railway Company, for an Order Directing the Board of Railroad Commissioners to Issue a Railroad Certificate under Section 59 of the Railroad Law.
Application to the Railroad Commissioners for a certificate of public convenience and a necessity — when authority will not be given to parallel another railroad — what proposed railroad, already granted a franchise, will not be considered — proof that ten per cent of the capital stock has been paid in — deposit thereof with a banker who uses it in his business — the Appellate Division map examine the question de novo.
Upon an application by the directors of the Hew York City Interborough Railroad Company, pursuant to section 59 of the Railroad Law (Laws of 1890, chap. 565, added by Laws of 1893, chap. 676, and amd. by Laws of 1895, chap. 545), to the Appellate Division for an order directing the Board of Railroad Commissioners to issue a certificate that public convenience and a necessity required the construction of the proposed railroad of the said corporation, which certificate the Board of Railroad Commissioners had refused to grant upon the ground that the territory in question could be sufficiently served by the existing lines of the Union Railway Company and by a railroad which the People’s Traction Company had a franchise to construct, the Appellate Division considered that it was improper for the Board of Railroad Commissioners to consider the proposed railroad of the People’s Traction Company, for the reason that an examination of the conditions of its franchise disclosed that those conditions were so onerous that there was no probability of its ever constructing any part of such railroad.
The court also considered, upon an examination of the evidence adduced before the Railroad Commissioners, that it was the duty of that body to grant the Interurban Company the right to construct its proposed railroad except upon those routes which directly paralleled the lines of the Union Railway Company.
Where it appears that the ten per cent of the capital stock of the Interborough Company, after being paid to its directors in cash as required by the provisions of the Railroad Law, was deposited with a firm of bankers to the credit of the Interborough Company, the fact that the bankers, who were interested in the Interborough Company, did not keep the deposit as a separate sum on hand all the time, but used it in their business, does not establish that the payment of the required ten per cent of the capital stock was merely colorable.
Semble, that in view of the omission of section 59 of the Railroad Law to direct that the evidence taken before the Board of Railroad Commissioners shall be certified to the Appellate Division, and of the express provision of the section that the Appellate Division shall have power in its discretion to direct the board to issue the certificate, it is doubtful whether an application to the Appellate Division under such section is strictly in the nature of an appeal from the determination of the Railroad Commissioners and whether it is not permissible for the Appellate Division to take evidence upon the question itself and determine such question de novo in its discretion.
Hatch and Latjghlin, JJ., dissented.
Application to the Appellate Division by Robert 0. Wood and others, as directors of the Few York City Interborough Railway Company, pursuant to section 59 of the Railroad Law, for an order directing the Board of Railroad Commissioners of the State of Rew York to grant a certificate that public convenience and a necessity require the construction of the railroad proposed by the applicants.
George W. Wickersham, for the applicants.
Paul D. Gravath, for the Union Railway Company, opposing.
W. H. Page, Jr., for the People’s Traction Company, opposing.

Opinion:
Patterson, J. :
This application is made pursuant to the provisions of section 59 of the Railroad Law (Laws of 3 890, chap. 565, added by Laws of 1892, chap. 676, and amd. by Laws of 1895, chap. 545), 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 section in question provides that in case of a refusal of the Board of 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 of 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 Board of 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 in the office of the Board of Railroad Commissioners, and of the findings of the board. There is nothing which requires a 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 not, 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 its road.
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 tó 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 for 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 applicant, 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 Board of 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. These 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 certifícate of incorporation is void because it affirmatively appears from the evidence that, at the time of the filing of the said certificate, ten 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 Oommissioners 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 ten 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 ten per cent, upon which it was paying 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 ten 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. That board has so found, and there is no reason whatever why its 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 Board of 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.
Yah Brunt, P. J., and O'Brien, J., concurred; Hatch and Laughlin, JJ., dissented.