Court Opinion

ID: 3587747
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:37:14.647487+00
Date Added: 2024-06-11T07:41:56.175655
License: Public Domain

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I concur in the view of Judge GRAY that this defendant cannot in any way be foreclosed by our decision in the action ofConway v. City of Rochester (157 N.Y. 33) (an action to which it was not a party), from asserting that the immunity from contributions to the expense of new pavements in the city of Rochester, enacted by chapter 34 of the Laws of 1869, was a contract right of which it could not be deprived by subsequent legislation. On the merits, however, I am of opinion, first, that the statute mentioned did not constitute a contract between the state and the railroad company; second, that if it did, the exemption granted by the statute was personal to the defendant's predecessor in title and has not passed to it.
I assume that the provision of the General Railroad Law (section 98) requiring street surface railroad companies to pay the cost of paving between their tracks and for two feet outside thereof is an exercise of the taxing power (Sioux City St. Ry.Co. v. Sioux City, 138 U.S. 98; Worcester v. Worcester St.Ry. Co., 196 U.S. 539), though if an exercise of the police power the result would be the same. The statute of 1869 (sec. 5) enacted that the defendant's predecessor should put, keep and maintain the surface of the street inside the rails of its tracks in thorough repair, but whenever any of said streets was by ordinance permanently improved said company should not be *Page 113 
required to bear any part or portion of such improvement or of the expense thereof, but should make its rails conform to the grade of the street. This certainly did exempt the company from any expense of repavement so long as the statute remained in force, but the question is, did the statute confer upon the company any contract right immune from subsequent recall or was it the mere exercise by the legislature of the taxing power, which could at any time be changed, modified or repealed? To determine this question it is necessary to consider the condition of the parties when the statute was enacted and in that consideration to keep constantly in view the well-settled rule for the construction of statutory exemptions from taxation as declared by the Supreme Court of the United States in a long and unbroken line of decisions. In Yazoo, etc., Ry. Co. v. Adams
(180 U.S. 1) it is said: "Exemptions from taxation are not favored by law, and will not be sustained unless such clearly appears to have been the intent of the legislature. Public policy in all the states has almost necessarily exempted from the scope of the taxing power large amounts of property used for religious, educational and municipal purposes; but this list ought not to be extended except for very substantial reasons; and while, as we have held in many cases, legislatures may, in the interest of the public, contract for the exemption of other property, such contract should receive a strict interpretation and every reasonable doubt be resolved in favor of the taxing power. Indeed, it is not too much to say that courts are astute to seize upon evidence tending to show either that such exemptions were not originally intended, or that they have become inoperative by changes in the original constitution of the companies." (See cases there cited, particularly New Orleans City  L.R.R. Co. v. New Orleans, 143 U.S. 192, and Memphis Gas Light Co. v.Shelby Co., 109 U.S. 398.)
In 1862 the Rochester City  Brighton Railroad Company was incorporated under the General Railroad Act of 1850 (Ch. 140) for the purpose of operating a street railroad on certain streets in the city of Rochester extending into an *Page 114 
adjoining town. That statute authorized the incorporation under it of street surface railroad companies. (Matter of WashingtonSt. A.  P.R.R. Co., 115 N.Y. 442.) This proposition was never questioned till the decision of this court in Matter of New YorkCable Company v. Mayor, etc., of N.Y. (104 N.Y. 1), and, in fact, most of such companies outside of the old city of New York were organized under that statute. Whatever doubts were cast on the application of the General Railroad Act to street railroads by the opinion in the Cable Company case were removed by the decision in the Washington Street case, where the remarks in the earlier case were expressly retracted. By the General Railroad Act plenary power was given to any railroad company incorporated under it to lay out and construct its road between the termini mentioned in the articles of association, except that subdivision 5 of section 28 provided that the statute should not be construed to authorize the construction of any railroad upon, along or across any streets in any city without the assent of the corporation of the city. It was, therefore, necessary for the construction of any street railroad within a city that the company should obtain the consent of the city to the use of the street. The city of Rochester by an ordinance consented to the construction of the proposed railroad. It exacted by that ordinance compliance with the terms and conditions which appear in Judge GRAY's opinion. The road was built, the company failed and its road and franchise were sold in 1868 under a foreclosure, the purchaser at which conveyed to a new company, bearing the same name, also organized under the general statute of 1850. In 1869 the new company represented to the common council that the terms of the ordinance under which the road was built and being operated were too onerous and asked for relief. Thereupon the common council passed a new ordinance, the most material points of which were that the fare for children was fixed at three cents, and the company was relieved for the term of five years from its obligation to contribute to the expense of the repavement or *Page 115 
improvements of the streets, though it was required to keep the space between its tracks and one foot additional on each side in good repair. Both parties sought the action of the legislature and the statute of 1869 was passed. Now, let us see what were the rights of the parties at the time of the enactment of this statute. The company had, by the construction of the railroad by its predecessor, under the consent of the common council, and its own purchase on the foreclosure, acquired a valid franchise to operate its railroad. It is not necessary to determine what was the effect of the conditions attached by the city of Rochester to its consent. If there was no authority to impose those conditions, nevertheless the consent was effective and the franchise valid. (Matter of Kings Co. El. R.R. Co., 105 N.Y. 97. ) On the other hand, it is equally clear that under the power given by the General Railroad Act to the municipality to consent to the construction of such a road, the municipality could in no degree contract away or limit the taxing power or the police power possessed by the legislature. (People ex rel. Met. St. Ry.Co. v. Tax Comrs., 174 N.Y. 417; Sioux City St. Ry. Co. v.Sioux City, supra. See, also, Worcester v. Worcester St. Ry.Co., supra.) The rights and immunities, therefore, of the company at that time must be determined by the provisions of the act of 1850, which gave no exemption from the future exercise by the legislature of either power. In the exercise of the police power the legislature could prescribe the maximum fares to be charged by the company (Buffalo E.S.R.R. Co. v. B.S.R.R. Co.,111 N.Y. 132; Railroad Commission Cases, 116 U.S. 307; Norfolk Western R.R. Co. v. Pendleton, 156 U.S. 667), and such right was reserved by section 23 of the statute subject to the qualification that the fare should not be reduced so that the net returns to the company should be less than ten per cent on the sum actually invested. So equally in the exercise of the taxing power it could relieve the company from the burden of any provisions imposed on it by the ordinance of the common council in 1862. (Worcester v. Worcester St. Ry. Co., supra.) Neither of these powers was *Page 116 
necessarily to be exercised once for all. Unless contracted away the right to their exercise was continuous and statutes passed under them could be varied or altered from time to time. The statute does not assume to ratify or authorize any contract between the railroad company and the common council of the city. It does not recite that application has been made to the legislature by either party for its adoption. It merely enacts what the legislature was empowered to enact, whether with or without the consent of either or of both parties. Indeed, it would seem a conclusive objection to considering the statute as ratifying any contract of the common council that the ordinance of the common council gave the railroad company immunity from contribution to the expense of improvement of the street only for five years, a term long since expired, while that enacted in the statute is not limited in duration. The statute did not grant the franchise; that had been already acquired. Nor does the record disclose even a suggestion that there was entertained any question as to its validity. It is settled by authority that an exemption from taxation or regulation of charges granted by statute to be irrevocable must be based on a consideration; when a mere gratuity or privilege it may be recalled at any time. (Rector, etc., of Christ Church v. County of Philadelphia, 24 How. [U.S.] 301; Tucker v. Ferguson, 22 Wall. 527.) When such exemptions are granted in the charter of a corporation then the acceptance of the charter is assumed to be the consideration for the grant of the exemption. (Home of Friendless v. Rouse, 8 Wall. 430.) But the act of 1869 neither amends nor assumes to amend the charter of the company, and if it did it would be subject to the constitutional reservation of amendment or repeal. The true test of whether there was any consideration for the exemption granted by the statute is whether any acceptance of its terms and provisions was necessary to make it effectual. If not, how can it be said that the exemption is other than a privilege? Here lies the distinction between this case and that of NewJersey v. Yard (95 U.S. 104). In the case cited the *Page 117 
statute of New Jersey required the written acceptance of its terms by the company or else it became wholly inoperative. It is to be further noticed that there was no provision in the New Jersey Constitution similar to that in ours, which reserved the unqualified right to alter or repeal charters, and the decision proceeded in part on this last ground. It is also settled that neither corporations nor individuals have a vested right that the law shall continue to be unchanged. Had, in 1869, instead of the special statute, a general law been passed exempting railroad companies from contribution towards the cost of repaving the streets, it is clear that such law might have been thereafter repealed, and there might be imposed on the company a reasonable and proper tax for the improvement. (Pennsylvania R.R. Co. v.Miller, 132 U.S. 75.) Now, how does it differ that instead of a general statute a special law was enacted? In my opinion it only goes to the intent of the legislature. If I am right in the position that the legislature could have enacted the statute of 1869, so far as its provisions are under examination here, without any assent from the railroad company, then had the act concluded, "this statute is passed in the exercise of the powers of taxation and police and not as a grant," it could not well be contended that the railroad company acquired thereby any contract or property right. I imagine that a continuous power vested in the legislature may be exercised and its exercise recalled or modified as well by special legislation as by general legislation if no provision of the State Constitution forbids, which was the case in 1869. If to-day a statute were passed repealing section 98 of the present General Railroad Law and enacting that street railroad companies shall not be compelled to pay any portion of the expense of paving the streets within their tracks, will it be denied that subsequently the legislature might change that policy and impose on the companies a burden of which it had previously relieved them? If this be so, why equally may not the legislature relieve to-day a particular railroad company from that burden and next year reimpose the burden upon it? The only difference that I *Page 118 
can see between the two cases is that in the case of a statute applicable to a particular corporation, when that statute gives the charter an intent to grant away, the right to tax may be implied, which would not be implied in the case of general legislation. But if the question comes to one merely of intent, then the rule already quoted, "that courts are astute to seize upon evidence tending to show that either such exemptions were not originally intended or that they have become inoperative," should be decisive of the question.
I am further of the opinion that any right to exemption from the cost of paving the streets, which may have been held by the Rochester City  Brighton Railroad Company, was personal and did not pass to this defendant. This has been so held in a number of decisions by the Supreme Court of the United States. (Shields
v. Ohio, 95 U.S. 319; Railroad Co. v. Maine, 96 U.S. 499;Railroad Company v. Georgia, 98 U.S. 359; Norfolk  WesternR.R. Co. v. Pendleton, 156 U.S. 667; Yazoo  M.V. Ry. Co. v.Adams, 180 U.S. 1; Morgan v. Louisiana, 93 U.S. 217;Wilson v. Gaines, 103 U.S. 417; Chesapeake  Ohio Ry. Co. v. Miller, 114 U.S. 176; Tucker v. Ferguson, 22 Wall. 527.) In the Norfolk  Western Railroad case it was said: "We have frequently held that, in the absence of express statutory direction, or of an equivalent implication by necessary construction, provisions, in restriction of the right of the state to tax the property or to regulate the affairs of its corporations, do not pass to new corporations succeeding, by consolidation or by purchase under foreclosure, to the property and ordinary franchise of the first grantee; * * * this we have stated to be a salutary rule of interpretation, founded upon an obvious public policy, which regards such exemptions as in derogation of the sovereign authority and of common right, and, therefore, not to be extended beyond the exact and express requirements of the grant construed strictissimi juris." That privilege is not at all similar to such franchises as the right to construct and operate a railroad, to lay gas mains and supply gas, and to maintain a ferry. Those franchises when granted become property *Page 119 
similar in their general attributes to other property. The grant of such a franchise, even without consideration, is, unless a right to revoke is reserved, as effectual to vest an indefeasible title in the grantee as a voluntary conveyance of a piece of land. Not so, however, as to an exemption from taxation or from the exercise of the police power. It is property only when granted on a consideration and if granted without consideration may be recalled. (See cases cited supra.) Doubtless such exemptions if attached to property itself would increase its value, but because they are against common right they will be construed to be personal and limited to the grantee unless a contrary intention clearly appears. The language of the statute before us is personal, not attached to the property. It enacts that "said company," not "said company, its successors or assigns," shall not be required to bear any part of the expense of repaving the streets.
The other questions presented on this appeal are disposed of by our decision in the Conway Case (supra) and, therefore, do not require examination.
I vote for reversal of the judgments below and for the granting of a new trial, costs to abide event.