Mayor of New York v. Second Avenue Railroad

By the Court.—Clerke, P. J.

—This action is brought to recover from the defendants, as owners of a certain railroad car, a penalty of fifty dollars for running it below one hundred-and-twenty-fifth-street without a certificate of license, according to an ordinance of the Common Council requiring every passenger railroad-car running below that street to pay into the city treasury annually the sum of fifty dollars, “ for a license or certificate of such payment, to be procured from the mayor,” under the penalty of fifty dollars for every car run contrary to the regulation, to be recovered of the proprietors of the car by the corporation attorney, as in case of other penalties.

The defendants set out at length the agreement between their assignors and the corporation, entered into on the 15th of December, 1852, by which they were authorized to lay fails in certain streets and run their cars thereon; and they allege that they have constructed their railroad in pursuance of said agreement, that they have in all respects complied with its terms and conditions, and claim that they have full authority under the agreement to run their cars without paying fifty dollars annually for a license.

The agreement contains no stipulation on the part of the defendants or their assignors to pay any license for running their cars, nor does it require any additional action, or any further assurance or authority, to enable them to do what this agreement, of itself, expressly and unconditionally permits; unless it may be considered that the resolution of the Common Council, recited in the agreement and made a part of it, imports a liability to pay any sums' which the Common Council may thereafter think proper to impose. This resolution requires that the parties shall, before the permission takes effect, enter into an agreement with the mayor, &c., of the city of New York, binding themselves “ to abide by and perform the stipulations and provisions therein contained, and also all such other regulations or ordinances as may be passed by the Common Council relating to the said railroad.” ,

A demurrer to the answer, as not constituting a defence, was overruled at special term.

I. Without at present considering the effect of the reservation contained in the resolution above referred to, the first question which presents itself is, whether the corporation could, without such a reservation, require the defendants to take out and pay for a license after the execution of the agreement.

If an agreement of this kind were entered into, on behalf of a sovereign State possessing the power qf imposing imposts or taxes for the support of government, the mere permission to do a certain thing would not exempt the grantees from liability to any tax, to which persons in a similar occupation were made liable, even after the permission was given. All citizens are liable to contribute to the support of the government which protects them; they cannot be exempted from this except by á special provision of law; and it would be just as reasonable to suppose, because a State conveyed land in fee simple absolute, with covenants, that it exempted the land from taxation, as to suppose that a permission like that involved in the present case exempted the defendants from the payment required, if it was imposed by an authority possessing the taxing power.

But no municipal corporation of .the present age, at least in this country and in England, possesses any such power. The supreme Legislature of the State could not constitutionally delegate it. The Common Council has full authority, indeed, by virtue of the charters of James II. and Queen Anne, to make laws, orders, and ordinances for the good-will, oversight, correction, and government of the city, and may impose and tax reasonable fines and amercements against and upon all persons offending against such laws, orders, and ordinances. It may, consequently, limit and prescribe the rate of speed, designate the stations or places where they should stop, and require them to adopt some method by which their approach may be made known to persons crossing the street; and as it may be indispensable to the public safety and convenience, that railroad cars should, like other vehicles, be subject to supervisory regulation, it may ordain that they should be licensed; and if the company should neglect to take out the license, that they should be subject to a penalty. But, if the Common Council enter into a specific agreement with a company, prescribing the regulations to which the latter shall be subject, requiring no further license, and reserving no right to require one, I think they are excluded by their contract from afterwards enacting that a license shall be a condition to entitle them to run their cars. This contract is nothing more or less than a license.

This does not in any respect gainsay the doctrine l&id down in the Brick Presbyterian Church a. The Mayor, &c., of New York (5 Cow., 538), and in Coates a. The Mayor, &c., of New York (7 Ib., 585). I do not deny that no contract entered into by the Corporation can curtail or supersede its action as a legislative body, within the sphere of its legislative powers.^* But T do deny that the right to establish ordinances, &c., for the good rule and government of the city, and to provide penalties for their breach, confers any right to impose a tax. In the language of a former counsel of the Corporation, I may reiterate that the Common Council may provide that vehicles of a certain description shall be used, rates of speed may be limited, the particular places in which they shall' stop may he designated, and penalties may he imposed for any breach of these regulations. This, however, is a very different power from that which provides that vehicles may be run, if a certain sum shall be paid $ otherwise they shall not run. This is only a taxing power in the guise of establishing ordinances for good rule and government. Thus, as I have already said, the Corporation may ordain that all public vehicles shall be licensed, and if their proprietors should neglect to take out this license, that they should be subject to a penalty. But if they ordain that the proprietors shall pay a license-fee for the privilege of running, and not as a penalty for disobedience, it is an attempted exercise of the taxing power, which no subordinate legislative body under our institutions can possess. The license to run, in the present instance, had been granted by solemn agreement, and, of course, in running pursuant to that license or agreement, the defendants violated no ordinance, so as to have made themselves liable to the imposition of a penalty.

II. Is any such right reserved in the agreement under consideration in the present case ?

A resolution, as we have before noticed, was passed during the negotiation between the parties, that the assignors.of the defendants should bind themselves to abide by and perform the stipulations and provisions contained in the agreement, and “ also all such other regulations or ordinances as may be passed by the Common Council relating to the railroad.”

How, if the agreement, of itself, confers the right to run in a certain manner through a specified portion of the city, no subsequent enactment can curtail this right. The agreement itself, I repeat, is a license. By this agreement the Common Council has thought proper to give the defendants liberty, or license, to 'run their cars. It could not, therefore, have been in the contemplation of either of the parties to the agreement that any further license should be necessary. The license given by the agreement was unqualified; and, therefore, the ordinance incorporated into that agreement—by which the defendants are bound to abide by all other regulations or ordinances, as may be thereafter passed by the Common Council—could not have included a regulation or ordinance requiring any additional license. If this was intended, the requirement should be expressed in specific terms.

Preceding the introduction of this resolution, provisions were set forth relative to the mode of laying the rails, keeping the streets in and about them in repair, confining the propelling power to horses, regulating the number of times the cars should be run during the day, and between what hours, and providing that they should be run as much of'tener as public convenience may require, “ under such directions as the Common Council may from time to time prescribe;” also, prescribing limits to the rate of fare, and reserving to the Corporation the right to regulate the fare for the whole length of the road, when completed to Harlem River.

Immediately following this comes the resolution, that the parties shall, in all respects, “ comply with the directions of the street-commissioner and of the Common Council, in the building of the road, and in other matters connected with the regulation of the road.” This is followed by the ordinance on which I have been commenting; and I have no doubt that the words “ other regulations and ordinances,” which it contains, meant such ordinances or regulations as the Common Council may afterwards think necessary for the regulation of the road, in regard to the public safety and convenience. It gives the Common Council the power, in certain respects, to make further necessary or expedient provisions for the regulation of the road: it by no means imports a right to nullify the license which the agreement itself gives.

It reserved the right, in short, to regulate the mode of running, not to nullify the privilege of running altogether; for this would be the effect of allowing the Common Council to impose a license-fee upon the company: it would be allowing the plaintiffs to say, We now order you no longer to run your cars unless you pay us a heavy fine or penalty, although we have already promised that you should run without requiring the payment of any sum. If-they have the right to impose the payment of fifty dollars, they have the right to impose any greater sum, which may be so oppressive as to make it no longer worth while to continue running the cars, and thus in effect rescinding the agreement, without any violation of it on the part of the defendants. The power to impose this fine not being reserved in the agreement, and the Common Council not having the power to impose a tax, the claim of the plaintiffs is therefore not sustained. The plaintiffs cannot object to the assignment of the agreement by the original parties to the defendants. Since the date of the assignment the defendants have constructed the railroad, have in all respects complied with the terms and conditions of the agreement, and, during a period of several years, have been recognized and dealt with by the plaintiffs as the proprietors of the road and the assignees of the original parties.

' The order of the special term should be affirAed with costs, and there should be judgment of dismissal of the complaint.

Sutherland, J.

—I look upon the question raised by the demurrer in this case as a question of property, of vested rights, resting on or secured by grant or contract.

The resolutions and agreement set up in the defendants’ answer were in effect the grant of a valuable franchise or property. The agreement was not only in effect, but in form, a contract; and the franchise, which is the subject of it, is as much within the protection of the Constitution as any other property or right resting on or derived from contract. (Dartmouth College a. Woodward, 11 Wheat., 511.)

The question of the power of the Common Council, independent of the State Legislature, to make this grant or contract, is not in this case—it is not raised by the demurrer. This action .for the penalty of $50 under the ordinance of the 31st of December, 1858, affirms, or at least assumes, the right of the defendants to run their cars, and to enjoy,' or exercise, the fran chise originally granted by paying the license-fees exacted by that ordinance.

The question of the right of the original grantees to assign to the defendants, is not in the case. This action affirms, or at least assumes, the right of the original grantees to assign, for it assumes the present right of the defendants to run their cars under th'e original grant or contract by paying the license-fees and taking out the certificates of license.

The franchise granted is of course held by the defendants, and is to be enjoyed by them, upon the terms and conditions specified in the grant or contract; and I think the question in the case really is, whether from the grant, contract, or agreement itself, it can fairly be inferred that the plaintiff intended to reserve the right, thereafter, at any time, and from time to time, to impose the payment of these license-fees without limitation as to amount, and thus impair, if not utterly destroy, the franchise granted.

But it is suggested, that irrespective of the terms and conditions of the contract, the plaintiffs had a right to impose the payment of these license-fees—that the ordinance imposing them was and is an act of legislation—that the plaintiffs cannot grant away their right of legislation—that the grant to the assignors of the defendants of the franchise in question must be presumed to have been made subject to the right thereafter to impose the payment of those license-fees as a legislative act; and the cases of The Brick Presbyterian Church a. The Mayor, &c. (5 Cow., 538), and of Coates a. The Mayor, &c. (7 Ib., 585), are referred to as sustaining this principle.

I do not doubt that grants of property or franchises by the city corporation must be deemed to be made and received subject to the right of future municipal police regulations, the same as if granted by an individual; and this is the principle established by the cases in 5th and 7th Cowen.

In the case in 5th Cowen, the ordinance prohibiting the use of the premises as a cemetery was strictly a municipal law or police regulation, authorized by an act of the Legislature. But suppose the ordinance, instead of prohibiting the use of the premises as a cemetery, had imposed a license-fee of fifty dollars for each body thereafter to be interred in the premises, would the court have held such an ordinance a repeal of the covenant for quiet enjoyment? I think not. No one can fail to see, I think, that such a decision would have done violence to justice and the Constitution by destroying the contract between the parties.

No doubt the grant of a ferry franchise would be deemed to be made subject to such future municipal police regulations or laws as the public safety or health might require; and an ordinance absolutely prohibiting the use of the ferry during the prevalence of an infectious or contagious disease, might be justly held not at all to interfere with the covenant for quiet enjoyment in the lease or grant of the ferry. But would the city corporation, after leasing a ferry for a certain term, at a certain rent, have a right to impose a license-fee of fifty dollars for each ferry-boat used ? It is plain it would not, independent of the contract. And yet it appears to me that that is the precise question in this case, irrespective of the express terms and conditions of the contract.

The distinction must be taken between a general municipal law or ordinance for the public safety or good, and a law (if you choose to so call it) or ordinance for the pecuniary benefit of the city corporation as a legal entity or person capable of granting . property, and entering into a contract with reference to it. No doubt the city corporation has power to impose a license-fee for the use of public carriages; but the question is, whether, after having licensed a public carriage for a certain fee for a certain term, or for a certain term without the payment of any fee, it has a right during the term to impose the condition of the payment of an additional license-fee in the former case, or of any license-fee in the latter case, without having reserved such rights. Plainly not, if the license is deemed to be a valid sub- ' sisting contract.

I presume public lands might in effect be granted by an act of Congress or of the State Legislature without the formality of a patent or other instrument. Of course such lands, after the grant, would be taxable by general laws imposing taxes. But could Congress or the State Legislature, by a special law, impose as a condition of enjoying the lands so granted, the payment of a certain annual sum of money as rent or as a tax for the use of the land ? I think not, although the act of Congress or of the Legislature would not be in the form of a grant or contract.

The question whether the plaintiffs can recover, independent of the act of 1854, affirming the grant to the defendants’ assignors, is not in this case.

The right to revoke the grant itself is one thing; the right to affirm it, or at least to assume its existence, and at the same time to impair or destroy its value, is another thing. I am free to say, however, that I do not see upon what principle it could be claimed that the grant could be revoked at the mere will of the Corporation.

If the plaintiffs have a right to impose a license-fee of $50 for each car, they have a right to impose a license-fee of $5000 for each car, and thus they could utterly destroy their own executed gift, if no consideration was paid for the grant. Or if a consideration and a large one was paid, they could thus, under the form of a license-fee, exact such other and further consideration as they saw fit.

I presume that an executed gift can no more be revoked or repudiated than a bargain and sale. Besides, if the grant could originally have been called a gift, the defendants under it have built their road, it must be assumed, at large expense, and thus they have a large vested interest under the grant.

TJpon the whole, upon the grounds which have been above barely suggested, I am of the opinion that the plaintiffs’ right to recover in this action must rest exclusively upon the terms and conditions of the written contract; and as I agree with Judge Clerke iu his construction of the written contract, I also concur in the conclusion to which he has arrived, that the order of the special term should be affirmed and the complaint dismissed with costs.

* This doctrine was again held and illustrated in the case of The Mayor, &c., 0| New York a. Britton. (Supreme Court, October Term, 1844.) The opinion in that case, which has never before been published, is as follows:—

By the Court.—Nelson, C. J.—The charter of the city of New York confers upon the defendants many powers and privileges that belong to them in common with private companies or individual citizens, which they hold and enjoy in the capacity of a private corporation. Thus, they are declared to be able in law, and-capable to sue and be sued, implead and be impleaded, &c., in all manner of actions, suits, complaints, pleas, causes, &c., in as full and ample a manner as any citizen; and shall'be persons capable and able in law to purchase and hold messuages, houses, buildings, lands, and tenements, in fee or for life or years, or in any other manner; and also, goods and chattels, and all other things of what kind or quality soever; and shall and may give, grant, demise, assign, sell, or otherwise dispose of the same, as to them shall seem meet and proper.

The charter also conferred upon them the ferries on both sides of the East River, and all others then or thereafter to be erected and established all round the island, and all fees and perquisites appertaining and belonging thereto; also, all the ground between high and low water mark, within a given distance, on Long Island, and all the waste unpatented and unappropriated land within the limits of the city, together with the rights of dockage, wharfage, and all rents, issues, and profits arising or growing out of the same; also all rivers, creeks, coves, ponds, &c., fishing, fowling, hunting, &c., and all mines, minerals, &c., within the limits of the city.

These grants, and many others that might be enumerated, constitute a large mass of private rights and interests in various descriptions of property, real and personal, corporeal and incorporeal, held and enjoyed by the city in the same way, and in common with any citizen upon whom like property and franchises might have been conferred; and within the limit of the grant the defendants may deal with the property, in their management and disposition of the same, in any way that would be lawful for an individual owner ; and any contracts or engagements entered into in the course of such management and disposition, would be as obligatory upon them as upon an individual.

We had occasion to examine this subject more at large in the case of Baily a. these defendants (3 Hill, 531), in which case we held that the grant of the Legislature, authorizing the city to furnish the inhabitants with pure and wholesome water by means of the Croton Aqueduct, was the grant of a special private franchise, made as well for the private emolument and advantage of the city, as for the public good ; and that the defendants quoad hoc were to be regarded as a private company, and to be dealt with accordingly. That they stood upon the same footing in this respect as would any person or body of persons, upon whom the like special franchise had been conferred.

The rights and privileges thus granted are altogether distinct and different from those in which the defendants are invested under the charter as a municipal •body. The latter class comprises a large body of political powers, granted solely for public objects and purposes, with which the private interest and estate of the defendants, strictly speaking, have no concern ; these powers are conferred for the benefit of the city as a community, and the end sought to be attained, its good government.

On looking into the charter, it will be found to embrace an extensive grant of political power,—legislative, executive, and judicial,—which, so far as granted, represent these great departments of the State government, and which are lodged with the defendants in their capacity as a municipal corporation. The legislative power is conferred upon the Common Council. That body is empowered “to frame, constitute, ordain, make, and establish, from time to time, all such laws, statutes, rights, ordinances, and constitutions, which to them, or the greater part of them, shall seem to be good, useful, or necessary for the good rule and government of the body corporate.” Power is also given to inflict penalties for the violation of any ordinance or by-law passed by this body.

The first section of the Act of 1830 (Laws of 1830,125, ch. 122) also declares that the legislative power shall be vested in a Board of Aldermen and of Assistants, who, together, shall form the Common Council of the city ; and the seventeenth makes the mayor the head of the executive department, whose duty it shall be to recommend to the Common Council all such measures connected with the police, security, health, cleanliness, and ornament of the city, and the improvement of its government and finances ; and to be watchful and vigilant in causing the laws and ordinances of the city government to be duly executed and enforced ; and to keep a general supervision over the conduct and acts of all subordinate officers; and the twenty-first section declares, that the executive business of the Corporation shall thereafter be performed by distinct departments, which it shall be the duty of the Common Council to organize and appoint for that purpose. This duty the Common Council have performed, and had before the date of the covenant or contract in question. One of the departments thus organized under the statute of 1830, is “ The Department of Cleaning Streets.”

Now, it certainly requires no argument to prove that the powers of the defendants, brought into exercise in forming and entering into the covenant and stipulations in question, providing for cleaning the streets, public wharves, and piers of the city, and sweeping the same, belonged to and were part and parcel of its legislative and executive authority, wholly independent and disconnected from the particular class or body of powers having reference to their interest and affairs as a private company. The proposition was scarcely denied on the argument. Indeed, the terms and conditions of the several covenants and stipulations on the part of the plaintiffs embraced within the contract, are little more than transcripts of the duties of the office of superintendent of streets in the city, and of the street inspectors of the several wards, as prescribed in the second, third, and fifth titles of chapter 10 of the Ordinances of the Common Council, under the head “ Of the Department for Cleaning Streets,” passed 14th May, 1839. (By-laws and, Ordinances of the Oity of N.Y., 63, 73.) So far as the agreement goes to the regulation of the mode and manner of cleaning and sweeping the streets, it partakes of the legislative power of the city; and so far as it fixes upon the individuals to execute the duties, it concerns the executive authority: both, however, are public duties, devolved upon the defendants in their municipal character, the execution of which is lodged in the Common Council. Then was it competent for this body to tie up and embarrass the execution of their public duties, whether legislative or executive, by contract or otherwise ? In other words, was it in the power of the Common Council to bind its legislative capacities by any private arrangement or stipulations, so as to disable itself from enacting any law that might be deemed essential for the public good ?

The proposition, I apprehend, is too clear for argument. It requires but little reflection to see that if this could be done by that body, or any other representing the defendants, there would soon be an end of all legislation in the city. Every public duty being the subject of private contract or arrangement, like the one in question, might be placed beyond the control of the city authorities for any given length of time, until nothing would be left for the exercise of legislative discretion ; for if it were practicable for the Common Council to divest themselves of all power and discretion over any one public duty of which they are made the sole depository by the charter, and to place it permanently in the hands of another, I do not see but the same thing might happen to all. It would be impossible to distinguish.

It appears to me, therefore, if we had no decisions on the subject, a consideration of the nature of these duties, and the object and purpose for which granted, would at once forbid all idea of any power on the part of the Corporation to divest itself of the right to exercise a constant control and supervision over the execution of them. But authorities are not wanting upon the point.

In the case of the Presbyterian Church a. these defendants (6 Cow., 538), it was expressly determined that the corporation could not abridge its legislative powers by contract. That was an action for breach of a covenant of quiet enjoyment, which the city had entered into in leasing a lot of land to the plaintiffs. An ordinance had been afterwards passed by the Common Council concerning the health of the city, by which the plaintiffs were prohibited from the use and enjoyment of the property for the purpose for which it had in part been conveyed. This was relied on as a breach of the covenant. The court say they (the Corporation) had no power, as a party, to make a contract which should control or embarrass their legislative powers and duties ; that their enactments in their legislative capacity were to have the same effect upon their own individual acts as upon those of any other persons, or the public at large.

Again, the court remark, there is a seeming inconsistency in maintaining that the ordinance constituted no breach of the covenant, where both were made by the same party. But the solution was, that the defendants had no power to limit their legislative discretion by covenant, and they were not estopped from giving that answer.

The same doctrine wag laid down in the case of dossier a. The Corporation ot Georgetown (6 Wheat., 593). “A corporation,’’ Marshall, C. J., observes, “can make such contracts only as are allowed by the acts of incorporation. The power of this body to make a contract which should so operate as to bind its legislative capacities forever thereafter, and disable it from enacting a by-law which the Legislature enables it to enact, may well be questioned. We rather think that the corporation cannot abrogate its own legislative powers.” (See, also, Stuyvesant a. The Mayor, &c., of New York, 7 Cow., 588.)

If the foregoing view be correct, of which I cannot entertain a doubt, then the pleas constitute a complete defence to the action. Take the covenant in question in any point of view presented, either as proceeding from and founded upon a public ordinance of the Common Council, or as a private contract entered into between them and the plaintiffs, involving subject-matters belonging to their legislative duties, the subsequent legislative act of that body had the effect to repeal the one and abrogate and annul the other. The remaining question is one of pleading. The third and fourth.counts, I am of opinion, are defective, in not averring the performance of the covenants and stipulations on the part of the plaintiffs, assumed by them to be kept and performed as a condition precedent to any right or claim to the stipulated compensation for their services.

Judgment for the defendants on all the demurrers.