Court Opinion

ID: 3600312
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:46:54.152282+00
Date Added: 2024-06-11T09:21:00.614157
License: Public Domain

At the threshold of this case the question arises whether, in the eyes of the law, the appellant is the party aggrieved by the determination it seeks to review on appeal, for otherwise, no matter how erroneous that determination may have been, the appellant has no standing in court to prosecute the appeal, and it must be dismissed. In 1908 the respondent, claiming to be the owner of a valid franchise to furnish electric light and power in the city of New York, applied to the public service *Page 103 
commission for authority to issue stock and bonds as required by section 12 of the Gas Commission Act (Laws of 1905, chap. 737). The application was denied by the commissioners on the ground, among others, that the existing companies were properly serving public interests, and that it would not be to the advantage of the community to have a new company. On a writ of certiorari obtained by the petitioner this determination was reversed by the Appellate Division and the matter remitted to the commissioners for a further hearing (137 App. Div. 810). At the second hearing, at which the present appellant appeared in opposition to the application, the commission made an order granting leave to issue stock and bonds. The order of the commission grants merely this authority and nothing more. The present appellant thereupon sued out a writ of certiorari, and the determination of the commission was confirmed by the Appellate Division (151 App. Div. 832), and from the order of the Appellate Division this appeal is taken.
The restriction upon the authority of a gas and electric light company to issue stock and bonds without the approval of the proper public service commission was enacted to protect the public who may invest in such securities, and also to some extent to protect the public so far as it might become a patron of the company; for every one knows that when the question of rates or price arises the appeal is always strenuously made that the holders of the securities who have invested in the same should be allowed an adequate return on their investment, though the securities may not represent a real investment of capital or outlay in the construction or maintenance of the company's plant.
In People ex rel. Delaware  Hudson Company v. Stevens
(197 N.Y. 1, 9), Judge HAIGHT, writing for this court, said: "We understand that the paramount purpose of the enactment of the Public Service Commissions Law was the protection and enforcement of the rights of *Page 104 
the public. * * * For a generation or more the public has been frequently imposed upon by the issues of stocks and bonds of public service corporations for improper purposes, without actual consideration therefor, by company officers seeking to enrich themselves at the expense of innocent and confiding investors. One of the legislative purposes in the enactment of this statute was to correct this evil by enabling the commission to prevent the issue of such stock and bonds, if upon an investigation of the facts it is found that they were not for the purposes of the corporation enumerated by the statute and reasonably required therefor."
That this view, that the statutory provision was intended to protect the investing public, is correct is made clear by the terms of the provision itself. The company does not require the consent of the commission to enable it to borrow money or incur debt, unless it issues therefor securities of some kind, stock, bonds or evidences of indebtedness, and in the case of evidences of indebtedness, only when they are payable more than twelve months after date. Therefore, if the Long Acre Company was to borrow the money on open account or on short term notes, no consent would be necessary. It is said by the learned counsel for the respondent: "To allow securities to be issued and then not to permit the proceeds to be used in the business of the company would be an inane and futile act; and it would also be practicing a gross deception on investors who might have purchased such securities relying upon the order of the Commission." Assuming for the argument the correctness of this position, the question remains, how was the appellant made the champion of the rights of the investing public so as to give it a standing in court to appeal from what it deems an erroneous decree? It does not propose to invest in the securities of the Long Acre Company or to become a patron of its services. If the appellant can prosecute an appeal because the order of the Appellate Division *Page 105 
may injuriously affect the public, then any or all of the nine million citizens of this state, or, at least, all the adults, have the same right. The real object of the appellant is to cripple a proposed competitor by rendering it difficult for the latter to obtain funds to prosecute its enterprise. In this respect it is interested in the result of this proceeding, but it is not such an interest as the law recognizes. It often occurs that the question which determines a litigation in court is of vital importance to other parties who have controversies depending upon the determination of the same question. At such times it is the common practice of the court to allow such third parties to file briefs on the argument of the case so that their rights may not practically, though not in the eyes of the law, be decided without their having an opportunity to be heard. But such persons cannot become parties to the suit. Though they should be heard at the Appellate Division it would give none of them any right to appeal from an adverse decision. On the argument it was conceded that no decision that we make in this case would be conclusive on the appellant in any litigation that may arise between the two companies, and, apart from any concession of counsel, the proposition is clear. We have already decided on an application of the Long Acre Company to compel the subway company to assign space in the subway for the Long Acre Company's wires, that that company had a valid franchise and the right to furnish electric light. (Matter of Long Acre Elec. L.  P. Co.,188 N.Y. 361.) Yet, even the counsel for the respondent does not claim that that decision is conclusive as to the rights of the company when challenged in this proceeding, while the counsel for the appellant claims that the true facts were not made to appear in the mandamus litigation. I think, therefore, that we should not strain to assume jurisdiction of an appeal and render a decision which will have little practical effect when rendered. If we should affirm the order *Page 106 
appealed from it would not preclude the people of the state or the officials of the city of New York, or, as already said, the appellant, from questioning the existence or the validity of the Long Acre Company's franchise; while if we should reverse the order it would not preclude the Long Acre Company from borrowing money so long as it did not issue bonds or securities payable more than a year after date in acknowledgment of it.
At the time this proceeding was instituted section 68 of the Public Service Act required any gas or electrical corporation before beginning construction or exercising any right or privilege under any franchise thereafter granted, or theretofore granted but not actually exercised, to obtain the approval of the public service commission. In 1910 (Chap. 480) this statute was amended so as to provide: "The Commission within whose district such construction is to be made, or within whose district such right, privilege or franchise is to be exercised, shall have power to grant the permission and approval herein specified whenever it shall after due hearing determine that such construction or such exercise of the right, privilege or franchise is necessary or convenient for the public service." (Cons. Laws, ch. 48.) To an application to exercise the franchise made under this section as amended, doubtless the appellant would be a proper party, if it saw fit to intervene. By the amendment the status of gas and electric companies is made similar to that of railroad companies, as to which we have held that an existing company has a standing to oppose the granting of a franchise to a competing company. (People ex rel. N.Y.C.  H.R.R.R. Co. v.Pub. Service Com., 195 N.Y. 157.) It is now suggested that the order made by the commission, though confined in terms solely to a grant of authority to issue stocks and bonds, necessarily imports the grant of a permission under section 68 as amended in 1910. The contention seems to me wholly groundless. The petitioner did not ask for any consent *Page 107 
to commence work, but claimed to have a valid franchise beyond the power of the commission to abrogate. The Appellate Division held that the amendment of 1910 had no application to the case because the proceeding had been commenced before its enactment. It seems that the franchise of a gas or electric light company, when duly granted, is property, the same as the franchise of a railroad company (People ex rel. Woodhaven Gas Light Company v.Deehan, 153 N.Y. 528; Matter of Long Acre Electric Light Power Co., supra), and the franchise of a railroad company cannot be repealed or abrogated by the legislature (People v.O'Brien, 111 N.Y. 1), though, doubtless, it can be forfeited for non-user in a judicial proceeding. (People v. BroadwayR.R. Co., 126 N.Y. 29.) In People ex rel. Third Avenue RailwayCompany v. Public Service Comm. (203 N.Y. 299) we held that in the case of a company succeeding to the title of a valid railway franchise no consent of the public service commission could be made a prerequisite to the right of the company to exercise the franchise.
It is urged, but not by counsel for the appellant, that the decision of the public service commission would conclude the appellant in any litigation that might hereafter arise between the parties on the question of the possession by the respondent of a valid franchise to furnish electric light and power. As already said, it was admitted by the appellant on the argument that the decision would not have that effect. The reason for that position to me seems plain. A franchise to furnish electric light and power and lay conduits for that purpose in the city streets is property, the same as other property, though it is doubtless liable to forfeiture by judicial decree for non-user or abandonment. (People v. Atlantic Ave. R.R. Co., 125 N.Y. 513;People v. Broadway R.R. Co., 126 id. 29.) As between it and the appellant the respondent has the right to have the question of its *Page 108 
original possession of such a franchise or its subsequent forfeiture or loss determined in the ordinary courts of justice in this state in the same manner as litigations relative to other property rights are disposed of. The legislature did not create — if it could, which I deny — of the public service commission a judicial tribunal to determine that question between the parties to this appeal, for it is settled law that to make a judicial decision binding the statute must provide for a notice to the parties affected and a hearing. Otherwise it is unconstitutional. (Matter of Empire City Bank, 18 N.Y. 199; Stuart v. Palmer,74 N.Y. 183; Remsen v. Wheeler, 105 N.Y. 573.) There is no provision in the statute requiring the public service commission to give notice to the appellant or any one else of the application of the respondent for leave to issue securities. Therefore, the decision of the commission could not conclude the appellant on the question of the respondent's franchise in any litigation where it might be entitled to raise the question. The voluntary appearance of the appellant before the commission would not give any greater validity to the determination of the commission, because consent cannot confer jurisdiction.
It may be suggested that this objection would be fatal to the rights of competitors to appear before the commission in proceedings, under section 68 of the statute, as amended in 1910, or under section 59 of the Railroad Law (Laws of 1890, chap. 565, as amended), or to appeal from its determination under those statutes. But those proceedings differ wholly in principle from the one before us. They require a determination by the commission of public convenience and necessity before the acquisition of a valid operative franchise. Such a determination decides no property right within constitutional protection. On the one hand, the legislature might allow any railroad company organized in compliance with the statute to build its railroad between the points designated in its articles of *Page 109 
association, as was the law of this state until some thirty years ago. On the other hand, the legislature might require of the corporation approval of its enterprise from just such authority or tribunal as it saw fit, as the grant of a franchise is a mere matter of grace on the part of the state. There is nothing inconsistent in the fact that while the statute does not require notice to be given to parties who might be affected by the determination of the commission, it accords them the right to intervene and protect their interests. This is the doctrine ofPeople ex rel. Steward v. Board of Railroad Commissioners
(160 N.Y. 202).
Therefore, we are brought back to the original question whether the appellant is aggrieved in law by the authority accorded the respondent to issue stock and bonds. Three cases are cited as authority for the proposition that because the appellant was allowed to intervene below it is entitled to prosecute the appeal. They are Matter of Attorney-General v. No. Am. L. Ins.Co. (77 N.Y. 297); Ex parte Jordan (94 U.S. 248), and In reMichigan Cent. R. Co. (124 Fed. Rep. 727). In these cases, however, the interest of the intervenors in the litigation was direct and substantial. They asserted the right to be awarded to them funds or property which the decrees appealed from awarded to others. They would have been necessary parties to the litigation in the first instance except for the fact that being mortgage bondholders, the trustees in law represented them. But the fact that a party is allowed to interevene does not allow him to prosecute an appeal, unless he is bound or affected by the order or judgment. The fact that it may remotely or contingently affect his interests does not give him the right to appeal. It must have a binding force against his rights, his person or his property. (Ross v. Wigg, 100 N.Y. 243. See, also, Honegger v.Wettstein, 94 id. 252.)
Indeed the certiorari should not have been allowed at *Page 110 
the instance of the appellant, for section 2122 of the Code of Civil Procedure forbids its issue to review "a determination which does not finally determine the rights of the parties with respect to the matter to be reviewed." Assuming for the argument that the determination of the public service commission imports as between the commission and the respondent that the latter has a valid franchise, that is of no importance under the section quoted unless that decision finally determines the question as between the appellant and the respondent.
The majority of my brethren holding that the appellant is entitled to prosecute its appeal, I am brought to the consideration of the merits of the case and dissent from the decision about to be made as contravening both the settled substantive law of this state and also the settled method of procedure. The decision of my brethren proceeds on the proposition that under the Public Service Law all gas and electric companies must obtain the consent of the commission, under section 68 of the act, to exercise their franchises before they can apply for leave to issue stock and bonds, and this whether the company had a valid franchise at the time of the enactment of the statute or not. In the opinion of the majority of the court it is stated: "We perceive no ground for a legislative partiality towards the corporations holding consents existing at the adoption of the Public Service Commissions Law, or for the requirement that the permission and approval of the commission must be had for the construction under the franchise only. A scrutiny of other sections of the law creates the conviction that it intends to bring under its restrictions and regulation, in so far as is lawful, the franchises, powers and rights of the corporations existing at its enactment and to which it relates, and under the control of the commissions all construction of their plants." I think there is the best of reasons for so-called legislative partiality to corporations existing at the time of the enactment of the statute, that is to say, it *Page 111 
was beyond the power of the legislature to require any corporation having a valid franchise for supplying gas or electricity in a municipality to obtain the consent of the public service commission as a condition precedent to the exercise of its franchise, because, under the decisions already cited in this opinion, that franchise was property and as immune from legislative attack as any other property. We have decided exactly that principle in People ex rel. Third Ave. R. Co. v. PublicService Commission (supra). Nor is the principle affected by the fact that the franchise might not have been actually exercised at the time. A franchise, though unexercised, is property within the constitutional safeguards. (Suburban RapidTransit Co. v. Mayor, etc., of N.Y., 128 N.Y. 510.) If taken, compensation must be made for it. (Coney Island, F.H.  B.R.R.Co. v. Kennedy, 15 App. Div. 588.) As already said, the franchise may be forfeited for non-user, but unless in the statute authorizing the acquisition of the franchise it is provided that a certain lapse of time shall operate as a forfeiture ipso facto, a forfeiture can be decreed only by judicial proceedings in a direct action by the state. The franchise cannot be questioned by other parties. (Matter ofBrooklyn Elevated R.R. Co., 125 N.Y. 434.)
The only question on which the respondent's right to an issue of stock and bonds depends — the possession of a valid franchise — is not passed upon by the court. It is assumed that the respondent has exercised its franchise so far as the erection of poles, wires, fixtures and conduits for electrical purposes in the streets, avenues and public places of the city are concerned. A distinction is sought to be drawn between this franchise and a franchise to build an electric plant for the generation of electric power and current. This distinction seems to be wholly without foundation. A franchise to furnish gas in a municipality and to use the streets for that purpose necessarily includes the franchise to manufacture gas to be *Page 112 
delivered; a franchise to furnish electric power through the streets of a city necessarily includes the right to construct a plant for the generation and development of electricity; a franchise to maintain a street railroad includes the right to build a car barn for the storage of cars and a horse stable for the care of horses, if the right is to operate by horses, or an electric plant, if the road is to be operated by electricity. All these are inseparable incidents of the franchises and cannot be severed from them. Indeed, it requires no franchise for a company to build on its own property an electric plant or a horse stable, or a car barn, unless these uses constitute a nuisance against the neighbors, in which case the grant of a franchise would be no protection. (Cogswell v. N.Y., N.H.  H.R.R. Co., 103 N.Y. 10;Bohan v. Port Jervis Gas L. Co., 122 id. 18; Bly v.Edison El. Illum. Co., 172 id. 1.)
On the matter of practice it is said the court does not consider the question whether the franchise held by the respondent was actually exercised by it prior to the enactment of the Public Service Commissions Law, because the commission did not make or base the final order upon a finding of fact in regard to it. I know of no rule requiring the public service commission to make findings of fact, and, indeed, in the great mass of special proceedings — the exceptions being very few — no findings of fact are made by the tribunal of first instance, whether judicial or quasi judicial. In such cases all that is required in this court to sustain the orders appealed from is that the record should present some evidence to justify the order. The commission made no findings of fact on which the present order was based. But this is equally true of many, if not all of the orders of the public service commissions. If a new practice is to be established and the order reversed for a defect of that character, the case should be remitted to the commission for a further determination.
There are too many embarrassments attending the disposition *Page 113 
of this case on the merits for us to enter upon its decision needlessly. The right of the Long Acre Company to any franchise whatever can be properly determined in an action brought by the attorney-general on behalf of the People and there it should be determined.
HAIGHT, HISCOCK and CHASE, JJ., concur with COLLIN, J.; VANN and WILLARD BARTLETT, JJ., concur with CULLEN, Ch. J.
Orders reversed, etc.