Court Opinion

ID: 3587748
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:37:14.655141+00
Date Added: 2024-06-11T07:41:56.181253
License: Public Domain

I am of the opinion that the transactions in 1869 between the defendant, the city and the state resulted in a valid contract, of which chapter 34 of the Laws of 1869 was the complete expression and final sanction, and that it was beyond the power of the legislature to impair its obligations by subsequent legislation. Neither the provisions of the General Railroad Act of 1884, nor those of the Railroad Law of 1890, could avail to recall, or to modify, the grant of the right of exemption from the burdens of future assessments for improving the streets of the city of Rochester. As a vested right under the contract, it was within the protection of the State and Federal Constitutions. For 28 years the city observed this contract and, upon two occasions, by ordinances, recognized the right it had conferred. It forbore to request, or to require of, the Rochester City 
Brighton *Page 120 
Railroad Company, or the defendant, that either should bear any portion of the expenses of street improvements in streets, where tracks had been laid prior to 1884, and, doubtless, would have continued to maintain that attitude of respect for its agreement, had not our decision in the case of Conway v. City ofRochester, (157 N.Y. 33), been regarded as warranting a different view of the relations established by the resolution and legislation of 1869. I think, too, that a precise consideration of the General Railroad Act of 1884, under which the defendant was incorporated and upon whose provisions the plaintiff's claim is, mainly, rested, aids in the conclusion that it was not necessarily applicable, in the respect we are considering, to a street railroad company, whose street franchises and construction antedated 1884.
The decision in the Conway case, in 1898, could not affect what rights were possessed by the defendant based upon the legislation of 1869; for it was not a party to, nor represented in, that action. In that case, the plaintiff, an abutting owner upon a street in which the Rochester Railway Company was operating its road, sought to prevent the city of Rochester from awarding any contract for the pavement of the street, until it had required the company to do the paving within, and two feet outside of, its tracks, under the provisions of section 98 of the Railroad Law. The questions certified to this court in that case were whether the plaintiff and the other abutting owners were assessable for the cost of that portion of the new pavement; or whether the municipal authorities were not obliged to require the railway company to do that much of the proposed work. It is true that the act of 1869 was relied upon, in the argument for the city, as exempting the company; but it was not discussed in the opinion. What we considered and determined was the nature of the statutory direction to the local authorities, with respect to a street railway company, when they exercised their power to repave a street, within which it was in operation. We held it to be mandatory upon them to require the company to do the particular portion of the work specified in the statute and the *Page 121 
argument based upon the case of Gilmore v. City of Utica,
(121 N.Y. 561), was answered by pointing out that there the statute was permissive and left it discretionary with the municipal authorities to require the street railway company to bear a portion of the expense of the repaving. The contractual status of the defendant and the city, if at all in mind, was not shown, as it has been here; otherwise than as the act of 1869 might be deemed to disclose it. What the defendant might claim and establish for itself was not before us. There was no complaint of an unconstitutional invasion of any contract right in the application of the General Railroad Acts and when the objection of the unconstitutionality of a law is not raised by a party, who has the right to make it, the court will not raise it. (People v. B., F.  C.I. Ry. Co., 89 N.Y. 75, 92.) That the defendant might invoke the constitutional guarantees, when it was sought to deprive it of the enjoyment of a right secured by contract, or that it might waive them, was not a matter of assumption for the court.
That there existed the essentials to a valid contract, I regard as clear upon the facts. There was nothing to take it out of the application of those legal principles, which govern transactions between persons. The grant of a right to execute the corporate purpose was made upon the agreement of the grantee to comply with certain conditions. A consideration moved each party to the transaction and there was performance. The situation is to be considered, which existed at the time when the convention between the defendant's predecessor in interest, the Rochester City 
Brighton Railroad Company, and the city of Rochester was reached; as well as what was then agreed upon between them and, eventually, sanctioned by the act of 1869. The Rochester City 
Brighton Railroad Company was organized, in 1862, under the General Railroad Act of 1850, as a horse railroad company. The act of 1854 had been passed, (Chap. 140, Laws of 1854), to regulate the construction of railroads in cities; but its application, by its terms, was to such as commenced and ended *Page 122 
within the city. The company constructed and operated a railroad between points on either side of the city of Rochester; passing to them through the streets of the city. Upon its incorporation, the common council of the city gave its consent by resolution, as required by the act of 1850, to the construction of a street surface railroad upon the routes in the city designated, with various stipulations and conditions. One of them required that the company should improve with suitable materials, as might be required by the common council, within its tracks and for two feet and four inches outside thereof, and that it should keep so much of the surface of the street in good repair. It authorized the company to collect a fare of five cents from every person; except children under five years of age, who should ride free. This resolution, being accepted and acted upon, undoubtedly, constituted a valid contract between the company and the city, so far as the consent was given to construction and operation; just as there would have been a contract had the incorporation been one under the act of 1854. (People v. Sturtevant, 9 N.Y. 273;Milhau v. Sharp, 27 ib. 611, 620; Potter v. Collis, 156 ib. 16.) But that the common council could do more than consent and that it could confer rights and make stipulations, in the absence of other legislative authority, was, at least, doubtful. In that situation of affairs, however the status of contract may be regarded, the company, in 1868, failed and its franchises and properties came, through a foreclosure sale, into the possession of a successor bearing the same name. Then it was that negotiations with the city to be relieved of the onerous conditions of the resolution of 1862 resulted in an amendatory ordinance; by which the company was only required to lay its tracks even with the surface of the streets and to put the surface of the streets, inside the rails and for one foot outside thereof, in good and thorough repair, under the direction of the committee of the common council. It was provided that, thereafter, it should keep the streets in good repair inside its tracks and between the rails during the term of five years, and that *Page 123 
it should be exempt, for that period of time, from any part of the expense of a new, or permanent, street improvement. Another requirement of the original ordinance was amended, so as to reduce the fare for children between twelve and five years of age to three cents. Both parties, however, subsequently, united in the submission to the legislature of a proposed law, legalizing the action of the common council, and the passage of chapter 34 of the Laws of 1869, in question, was the result. This act empowered the company to maintain and operate a railroad in all of the city streets, in which it had a track, or which the municipal authorities might permit it to enter upon. It authorized the collection of a fare of five cents from a passenger over twelve years of age, reduced the fare of a passenger between twelve and five years of age to three cents and provided that children under five might ride free. It required the company to "put, keep and maintain the surface of the streets inside the rails of its tracks, in good and thorough repair, under the direction of the committee of the common council," and exempted it from making, or bearing any part of the expense of, permanent street improvement, beyond conforming its rails to the grade. This act was an express grant of a franchise and it removed what doubt may have existed as to the company's legal status; or as to its rights and powers under the General Railroad Act of 1850, or under the resolution of the common council. It was a grant upon conditions; which was accepted and acted upon by the extension of the company's railroad into other streets, with the expenditure of large sums of money. It was more than a mere validation of the municipal ordinance; which was merged in the comprehensive and higher legislative enactment. There was a compact with the state, to which the city had assented; whereby franchises and powers were conferred upon the corporation, as of original grant. The corporation was obliged to carry passengers between twelve and five years of age for three cents, instead of five; it was to keep the surface of the streets inside the rails of its track, in good and thorough repair, without limitation *Page 124 
of time and it was exempted from the burden of the expense of future street pavements. There was no reservation of any right to alter the conditions, or to repeal the grant of an exemption, and no such right existed under the Constitution, or in the statutes, of the state; for whatever reservation of powers was contained therein related to the alteration, or repeal, of general laws, or of special acts, passed for the formation of corporations; to the alteration and repeal of charters; or to the annulment and dissolution of corporations. (Constitution, art. VIII, sec. 1; R.S. chap. 18, title 3, sec. 8; chap. 140, Laws of 1850, sec. 48.) Such reservations of power did not touch the case of a contract right, which had become property. (People v.O'Brien, 111 N.Y. 1, 44; Albany Northern R.R. Co. v.Brownell, 24 ib. 345.) This contract, therefore, was not subject to recall, or to modification. The covenant was implied on the part of the government not to invade the rights vested and on the part of the grantee to execute the duties and conditions prescribed in the grant. The government could not do any act to impair the grant without breach of the contract. (3 Kent, 458;Dartmouth College v. Woodward, 4 Wheat. 519; People v.Sturtevant, 9 N.Y. 273.) The city and the railroad company regarded this legislation as constituting a contract, inviolable in its provisions, and gave practical construction to it from 1869 to 1897. The company extended its operations and it and the defendant, as its successor in interest, have performed what was required of them; while the city never questioned the company's right of exemption from the burden of the expense of permanent street improvements, until compelled thereto by the action of abuting property owners. Nor was the provision of the act of 1869 in the nature of a gratuitous exemption from taxation, as it is argued. The company was not relieved from taxation; it was relieved of an obligation, with which its grant from the city had been burdened, in consideration of its agreement, during its corporate existence, to do the things required of it by the act. It was not "a mere continuing gratuity, which the Legislature was at liberty to terminate and withdraw at *Page 125 
any time;" as the legislative enactment was termed in StanislausCo. v. San Joaquin, etc., Co., (192 U.S. 201). If it were merely that, there would be lacking the contractual essential of consideration. In return for the grant of the franchise by the state, the defendant agreed to charge a lesser rate of fare than before authorized for its passengers under the age of twelve, and to permanently keep the street surface in good repair. The public was the gainer by the provisions of the act, in those respects, as in the encouragement given to the extension by the company of its railroad tracks throughout the city. In view of the protest and negotiations of the reorganized company for a less onerous franchise; the resolution of the common council assenting to a modification, upon conditions to be accepted by the company; the legislative enactment, ratifying the action of the city and conferring, directly, a franchise and an exemption from the previous burden attaching to its right to operate its road, and the action of the company in accepting the new rights and powers and in expending large sums of money in reliance thereupon, the argument that there was no contract, founded upon a consideration and beyond the power of the legislature to affect, or to recall, seems quite untenable. The doctrine of the cases of Binninger v. City of New York, (177 N.Y. 199), and of Village of Mechanicville v. S.  M. Street Ry. Co., (174 ib. 507), has no application. In those cases, the question was one of the power of the municipalities, from which the railroad companies had received grants of rights upon conditions as to the kind of pavement to be laid within and outside of their tracks, to require the laying of a different pavement. In the Binninger
case, the grant, or contract, relied upon was questionable, because without the sanction of the legislature, (having been made in 1853), and the decision went upon the ground that it was charter legislation. In the second case, the decision below, which was affirmed here without opinion, held, substantially, that the condition of the franchise was of a nature that required the pavement to be such "as made a good condition," or of the kind adopted by the village. In *Page 126 
neither case was there the legislative sanction of the contract, under which the railroad company derived rights; nor was the question now before us raised.
There being, therefore, a valid contract with the city, which was confirmed by the state in a legislative enactment, of itself conferring upon the company its franchises and rights and an exemption from the burden of the expense of future permanent street improvements, upon the consideration of acts to be performed by the railroad company, this defendant, in February, 1890, succeeded, by lease, to its properties, rights, privileges and franchises "without change, or diminution, as they were before held and enjoyed," by virtue of the provisions of the statute authorizing the leasing. (Chap. 503, Laws of 1879, sec. 1.) The defendant, thereupon, proceeded to reconstruct its entire railroad for operation by electric power, or the "trolley system," instead of by horse power; permission for which had been granted by the municipal authorities to the defendant's lessor and by the state railroad commissioners to the defendant, and there were expended four millions of dollars in the work. It was expressly found, upon the evidence, that this expenditure was made in reliance upon the provisions of the act of 1869 and upon the agreement with the city, relating to the right to change the motive power. The agreement referred to had been made just prior to the lease and provided, inter alia, for the company's compliance with ordinances relating to "the general repairs of the streets within and for two feet outside and adjoining the company's tracks." But repairs, it is to be observed, only, had been required by the act of 1869.
The contractual rights vested in the Rochester City  Brighton Railroad Company through the act of 1869 were property, of which the defendant became possessed; and it was not competent for the legislature to affect, or to impair, them. The contract existed, which the legislature had validated and re-enacted, and it was within the protection of the Federal and State Constitutions. There was neither an express, nor an implied, right reserved to the state to alter, or to repeal, *Page 127 
it. The obligation upon the city to observe the provision for exemption as to future expenses of street improvements was as permanent and unalterable, as was the obligation upon the company, during its corporate life, to carry passengers between certain ages for a reduced fare and to keep the street surface within its tracks in thorough repair. The discussion by the United States Supreme Court, in the cases of New Jersey v.Yard, (95 U.S. 104), and of Stearns v. Minnesota, (179 ib. 223), is much in point upon the power of the legislature of a state to alter, or to repeal, contracts created by legislative enactments and granting exemptions in consideration of the performance of some obligation imposed upon the grantee.
The General Railroad Act of 1884, under which the defendant was incorporated, should not be construed as applying to existing railroad systems, whose tracks were constructed prior to 1884, and its plain provisions do not require such a construction. Although organized under the act of 1884, the defendant took over the franchises and rights of its lessor, as they were previously enjoyed, and operated the railroad property by right thereof and not under its act of incorporation. In so far as its lessor had constructed extensions of its tracks, under consents obtained from the municipal authorities, after the passage of the general act of 1884, to that extent, the provisions of that act would control in their operation. But, as to previously constructed tracks, their operation would be within the provisions of the legislative contract of 1869. It may be observed that the requirement of section 9 of the act of 1884, as to a corporation constructing, extending, or operating, a railroad constructed, or extended, under the provisions of the act, is to "have and keep in permanent repair the portion of every street" etc.; which would be, indeed, but the obligation resting upon the defendant, as lessee, and would impose no greater burden, apparently. But section 18 of the act expressly provides that nothing therein "shall interfere with, or repeal, or invalidate, any rights heretofore acquired under the laws of this state by any horse railroad company, or affect, or repeal, any right of any existing *Page 128 
street surface railroad company to . . . operate . . . its road in accordance with the terms and provisions of its charter" etc. The consents, under which the extensions were granted to the defendant's lessor, were upon the condition, as required by the act to be expressed, in such a case, "that the provisions of chapter 252 of the laws of 1884 pertinent thereto shall be complied with," and those granted to the defendant since the lease were upon the condition "that the provisions of Article IV of the Railroad Law pertinent thereto shall be complied with." That new extensions of tracks and the operation of the railroad franchise therewith should bring the corporation within the government of the provisions of the General Railroad Acts is not unreasonable and I do not understand the defendant to raise any question as to that.
As to the Railroad Law of 1890, and its amendments, we must assume, in view of our decision in the Conway Case, (supra), that section 90, in making its provisions applicable "to every corporation, which under the provisions thereof, or of any other law, has constructed, or shall construct or operate, etc., a street surface railroad" etc., is unconstitutional and void as to the defendant. The argument is that the defendant has waived, or "contracted away," any claim to exemption, in extending its railroad into various streets under consents, which are so conditioned as to require compliance with the provisions of article 4 of the Railroad Law, and in the proceedings for the confirmation of the location of its tracks. With respect to the defendant's extensions of its railroad under the Railroad Law of 1890, I am of the opinion that it is entitled to insist upon the limitation that only such of the provisions of article IV apply as, in the language of the statute, are "pertinent thereto" and that the provision as to street repairs, if more is required of the company than it is already obligated to do, is not pertinent as to tracks laid under franchises, prior to 1884; because of the exemption contained in the act of 1869. Furthermore, I think that the defendant's undertaking, in obtaining, and in carrying out, the extensions of its road, should be regarded as having relation only to so *Page 129 
much of the railroad system, as was constructed and put into operation after the passage of the General Act of 1884, and not as an agreement to waive what benefit, or privilege, had been secured through the act of 1869 to its lessor. There were no words of waiver and there is nothing to justify an implication of such. What the defendant applied for was the franchise to extend an existing road into other streets and the consents had reference to such extensions, and the terms upon which they were given brought the operation of such new tracks within the requirements of the General Railroad Law.
As to the proceedings for the confirmation by the municipal authorities of the location of the tracks of the companies, under whose franchises the defendant was operating, I am unable to find any agreement to waive the protection of the Constitution as to any right secured by the act of 1869. The defendant's petition set forth the lack of formality in fixing the location of the tracks in the streets, notwithstanding that the rights had been granted and that the consents of the property owners had been obtained, and a formal resolution of ratification and approval was prayed for. The common council passed an ordinance directing a contract to be prepared, containing the terms upon which the prayer of the petition would be granted, which was to be executed by both parties. The contract, as drawn and executed, ratified the location of the railroad as then operated and stated the conditions to be observed. They were, in brief, that the provisions of article IV of the Railroad Law should be complied with; that the company should furnish transportation to two policemen at a time upon each car and should issue tickets to detectives, and that it should furnish like transportation to two firemen on each car. It was then, finally, provided by a clause of the contract that "all the provisions of any agreement between the city of Rochester and any street railroad company and all ordinances, resolutions, grants and consents heretofore passed by said city, with reference to the construction, maintenance, or operation of street railroads within said city, shall *Page 130 
remain in full and binding force and these resolutions shall not be construed as . . . repealing, modifying, or changing in any respect, the terms or provisions of any agreement previously entered into between said city and any street railroad company." There appear to be two sufficient answers to the claim of the plaintiff that by this agreement the defendant had "contracted away" the right to exemption conferred by the act of 1869. The provision for compliance with article IV of the Railroad Law was but the formal insertion of a condition, which the Railroad Law required to be inserted in grants, consents, or franchises, and it is qualified, as a general provision, by the final and saving clause of the contract. This was but a simple contract between the parties, which had for its purpose the settlement of any question about the actual location of the tracks in the streets. The city was asked for no franchise, nor did it grant any. The franchises existed and were being lawfully operated by the defendant. The contract, while desired by the defendant to prevent any question as to the proper location of its tracks, obtained for the city the right to have members of its police and fire departments carried free. But the final clause clearly operated to preserve whatever contractual rights the defendant had become possessed of under the lease, and it expressly provided that the resolution should not be considered as repealing, or changing, any agreement previously entered into. There would appear to be little if any reason for the insertion of this saving clause, unless to qualify the broad application of the provisions of article IV of the Railroad Law.
Without further discussion of the questions, I think enough has been said to show that the defendant is entitled to insist upon the right to be exempted from the burden of the expense of any new, or permanent, improvements in streets, wherein tracks were constructed and operated under franchises prior to 1884. I, therefore, advise the affirmance of the judgment.
HAIGHT, VANN and WERNER, JJ., concur with CULLEN, Ch. J.; O'BRIEN and BARTLETT, JJ., concur with GRAY, J.
Judgment reversed, etc. *Page 131