City of Denver v. Mercantile Trust Co. of New York

Decision Date11 November 1912
Docket Number3,010.,3,009
Citation201 F. 790
PartiesCITY OF DENVER et al. v. MERCANTILE TRUST CO. OF NEW YORK. MERCANTILE TRUST CO. OF NEW YORK v. CITY AND COUNTY OF DENVER.
CourtU.S. Court of Appeals — Eighth Circuit

W. H Bryant, of Denver, Colo. (Thomas R. Woodrow, J. A. Marsh Paul Knowles, William A. Bryans, W. R. Kennedy, H. A Lindsley, F. W. Sanborn, and N. Walter Dixon, all of Denver Colo., on the brief), for City and County of Denver.

Gerald Hughes, of Denver, Colo. (Clayton C. Dorsey and Howard S. Robertson, both of Denver, Colo., on the brief), for Mercantile Trust Co. of New York.

Before SANBORN and CARLAND, Circuit Judges, and WM. H. MUNGER, district judge.

WM. H MUNGER, District Judge.

In 1885 the city of Denver was a municipal corporation, one of the subdivisions of the state of Colorado. On February 5, 1885, the Denver Electric & Cable Railway Company incorporated under the general laws of the state of Colorado. The objects for which it was formed were stated in the articles of incorporation as follows:

'To construct, equip, maintain, operate and own electric and cable railways in the state of Colorado; to deal in patent and other rights therefor, and to do any and all things necessary to carry out such objects.'

The life of the corporation was stated to be 50 years from that date.

On February 5, 1885, the city council of the city of Denver passed an ordinance known and designated as 'No. 3, 1885.' Said ordinance contained 10 sections.

The first section was in the following words:

'That the right of way be, and the same is hereby granted to the Denver Electric & Cable Railway Company, its successors and assigns, to build, operate, and maintain a single or double track railway, with switches, turn-outs, side tracks, and other appliances necessary for the operation of the same, in, along and across the streets of the city of Denver, said railway to be operated by power transmitted by use of electricity or by cable.'

The second section related to the grade of the tracks.

The third required the company to execute and file a bond to hold the city harmless from all damages it might sustain by reason of the location, construction, or operation of its railway within the city.

The fourth related to the gauge of track and required certain paving or planking to be done.

The fifth section required that, before entering upon the occupancy of any street, the company should 'obtain and file with the city clerk the written permission for such occupancy of the owners of more than one-half of the frontage upon so much of said street as said company proposes to occupy.'

The sixth section related to the rate of fare to be charged.

The seventh related to the time within which the company should begin the construction of said railroad, and requiring two miles of railroad to be in operation within two years.

The eighth related to the maximum speed at which the cars should be moved.

The ninth section was as follows:

'That the city council reserve the right to pass any ordinance with reference to the operating of said railway which the comfort of the inhabitants of this city or the safety of the passengers of the said railway may require, reserving, also, all legislative and police powers and functions with respect to the streets that may be used and occupied by said company that it had before the passage of this ordinance.'

The tenth section related to the construction and maintenance of culverts.

This ordinance was approved by the mayor the following day, February 6, 1885. Thereafter the Railway Company filed the bond required by the ordinance and entered upon the construction of its road upon some of the streets of the city. For that purpose, it filed in the office of the city clerk on various dates between April 28 and July 10, 1885, the written consent of the owners of more than one-half of the frontage for the occupancy by its road of portions of certain of the streets in the city.

Several subsequent ordinances were passed amendatory of said Ordinance No. 3. The Denver Electric & Cable Company subsequently became merged into the Denver Tramway Company, the Denver Tramway Company succeeding to all the rights of the Denver Electric & Cable Company. The Denver Tramway Company was subsequently merged into the Denver Consolidated Tramway Company, which succeeded to all the rights of the Denver Tramway Company, and the Denver Consolidated Tramway Company subsequently was consolidated into the Denver City Tramway Company, which latter company now owns and operates the street railway system in said city. On July 28, 1888, the Denver Tramway Company executed its mortgage or trust deed to the Mercantile Trust Company upon all of its railway property rights and franchises within the city of Denver to secure bonds in the sum of $1,000,000. On January 1, 1890, it executed and delivered a second mortgage to the Mercantile Trust Company, covering the same property, to secure bonds in the sum of $2,000,000. On October 11, 1893, the Denver Consolidated Tramway Company executed and delivered a mortgage or trust deed to said Mercantile Trust Company upon all of its railway, franchise rights, etc., in the city of Denver, to secure bonds in the sum of $4,000,000. On the 4th day of May, 1899, an ordinance was introduced in the board of aldermen of the city of Denver, repealing said Ordinance No. 3 of 1885, and on the 9th day of May the same was passed as Ordinance No. 65, and thereupon went for consideration and passage or rejection to the board of supervisors of said city, and was by the board of supervisors referred to the appropriate committee for consideration and a report thereon. While said ordinance was pending before said board of supervisors, and before any action thereon, excepting to refer the same to a committee, and while the same was being considered by the committee, complainant, to wit, on the 24th day of May, 1899, filed a bill in the Circuit Court of the United States for the District of Colorado, alleging the passage of Ordinance No. 3 of 1885, its acceptance by the Denver Electric & Cable Railway Company, the construction of a system of railways thereunder, the expenditure of several million dollars in the construction and operation of such railways, the transfer of all rights acquired by the Denver Electric & Cable Railway Company under said ordinance to the Denver Tramway Company, by the Denver Tramway Company to the Denver Consolidated Tramway Company, and by the Denver Consolidated Tramway Company to the Denver City Tramway Company, the execution of the mortgages from the Denver Tramway Company and the Denver Consolidated Tramway Company to the complainant; alleged that in December, 1889, the officers and employes of the Railway Company were interfered with and prevented from constructing additional portions of its line of railway within the city by certain officers and employes of the city; that the Railway Company, to protect its rights claimed under said Ordinance No. 3, instituted a suit in the district court of the county to enjoin such officers from interfering with its construction of the work; that the district court refused an injunction, holding that said Ordinance No. 3 was void; that thereupon the Railway Company appealed to the Supreme Court of the state, where a final judgment was entered, reversing the judgment of the district court, the Supreme Court holding that, whether said Ordinance No. 3 was valid or not, it was unnecessary to determine in that action; that, inasmuch as the Railway Company had acted in pursuance thereof, had constructed and operated an extensive system of railway upon the streets of the city, which had been acquiesced in by the city, and its inhabitants, the officials of the city were not authorized to determine for themselves that the ordinance was invalid, and obstruct the Railway Company in its operations, without a declaration from the legislative body of the city, disaffirming said ordinance. No further action was taken on behalf of the city contesting or challenging the rights of the Railway Company under said Ordinance No. 3 until the introduction of the repealing Ordinance No. 65.

Complainant in its bill further alleged that the validity of Ordinance No. 3, and the right of the Railway Company to occupy the streets of the city under its provisions, was publicly and extensively discussed through the newspapers and by the public, to such an extent that if repealing Ordinance No. 65 should be passed and adopted, notwithstanding its invalidity it would impair the value of the securities of the Railway Company which had been issued to complainant as trustee; that the action of the board of aldermen and board of supervisors in passing such repealing ordinance would be void as impairing the obligation of a contract, and prayed that the board of aldermen and board of supervisors be enjoined from the passage of such repealing ordinance, or passing any ordinance, or taking any action, to impair the obligation of the contract between the city and the railway company embraced in said Ordinance No. 3 of 1885, and for general equitable relief. The Circuit Court granted a temporary order of injunction, from which an appeal was taken to this court, and the judgment of the Circuit Court affirmed (102 F. 1001, 41 C.C.A. 676), this court not passing upon the question of the validity of Ordinance No. 3, or the proposed repealing Ordinance No. 65, but simply deciding that the discretion of the Circuit Court, in granting the temporary injunction, was not improperly exercised under the particular state of facts. The respondents answered the bill, admitting many of the allegations, but insisted that Ordinance No. 3 of 1885 was invalid for various stated...

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16 cases
  • City and County of Denver v. Denver Tramway Corporation
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    ...of the Ordinances of 1885 and 1888 has been sustained by this court, and is no longer open to question here. In City of Denver v. Mercantile Trust Co., 201 F. 790, this court had under consideration the validity of the Ordinance of 1885. In a carefully considered opinion the ordinance was h......
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