City of New York v. Bryan

• Decision Date: 19 October 1909
• Citation: 196 N.Y. 158,89 N.E. 467
• Parties: CITY OF NEW YORK v. BRYAN et al.
• Court: New York Court of Appeals Court of Appeals

196 N.Y. 158

89 N.E. 467

CITY OF NEW YORK

v.BRYAN et al.

Court of Appeals of New York.

Oct. 19, 1909.

Appeal from Supreme Court, Appellate Division, First Department.

Action by the City of New York against Edward P. Bryan and others. From a judgment of the Appellate Division (130 App. Div. 658,115 N. Y. Supp. 551) in favor of defendants on an agreed state of facts, plaintiff appeals. Reversed, and proceedings dismissed.

The New York & Long Island Railroad Company was incorporated on July 30, 1887, under the General Railroad Act of 1850 (Laws 1850, p. 211, c. 140), for the construction, maintenance, and operation of a railroad from Long Island City through a tunnel under the East river, and under streets and lands in the city of New York, to a connection with the New York Central & Hudson River Railroad at Ninth avenue and Thirtieth street, with two branches, one extending to the Grand Central Depot and the other to the Hudson river tunnel in the vicinity of Washington Square.

By an ordinance passed by the board of aldermen on December 23, 1890, the city of New York consented to the construction of a double-track railroad by the New York & Long Island Railroad Company through a tunnel under Forty-Second street from its east end to a point therein between Tenth and Eleventh avenues, in accordance with plans and profiles deposited with the board of aldermen. This assent was given upon certain terms and conditions therein specified. On October 27, 1891, the board of aldermen of Long Island City (of which municipal corporation the city of New York is the successor), by an ordinance approved by the mayor, assented to the construction of a double-track railroad by the same company, beginning at a point in the middle of Fifth street at low-water mark on the east side of East river, and thence running easterly beneath streets and private property to a point on Fourth street, thence along Fourth street to Van Alst avenue, and thence northeast to Meadow street.

On August 13, 1891, the directors of the railroad company changed its profile and route so as to conform to the foregoing consents, and extended its route in New York City from Forty-Second street, between Tenth and Eleventh avenues, to Forty-First street and Eleventh avenue, and to Twelfth avenue to the pier line, with a branch in Eleventh avenue from Forty-Second street to Forty-Third street. On January 11, 1892, the board passed a resolution accepting the rights, privileges, and grants set forth in the resolution of the board of aldermen of the city of New York, adopted December 23, 1890, as already mentioned, and a copy of such resolution was filed with said board of aldermen in the following month. Fourteen years later, in February, 1906, the New York & Long Island Railroad Company brought an action in the Supreme Court against the city of New York and others, in which the court (on December 26, 1906) duly determined ‘that said plaintiff had complied with all laws and done all lawful acts to entitle it to construct, maintain, and operate its proposed line of railroad as then under construction by it in portions of the routes as to which the assents of the former city of New York and of Long Island City had been given, as hereinbefore stated’; that the company had acquired and then (at the time of the rendition of the judgment) had due legal power and lawful authority to construct and operate its tunnel and railroad; that the time of the company to complete the construction of its tunnel would expire December 31, 1906, and in that action a judgment was duly entered restraining the city of New York and its officers, employés, and agents from molesting or interfering with the plaintiff in the construction of its tunnel and railroad. This determination and judgment still remain in full force and effect.

After the passage of the ordinances by the New York City and Long Island City boards of aldermen, which have been mentioned, and the acceptance by the company of the grants and privileges therein contained, the company commenced and prosecuted the construction of a portion of its railroad upon the specified routes as follows: (1) In Fourth street, Long Island City, from Van Alst avenue to West avenue; (2) from Fourth street and West avenue in Long Island City through private property to the East river at the bulkhead line of 1898; (3) in the borough of Manhattan from the pier and bulkhead line of 1857, westerly along Forty-Second street to the Grand Central Depot, and under the East river the construction of the line of railroad (tunnel) was upon a strip of land under water duly granted to the company by the state of New York through the commissioners of the land office. On January 1, 1907, the company had not completed its railroad or tunnel or operated the same on any part of its route, but the same had only been partially constructed or completed. ‘By reason of the failure of the said New York & Long Island Railroad Company to construct its tunnel and railroad before the 1st day of January, 1907, the corporate existence of the said railroad company lapsed, and by virtue of the provisions of section 30 of the general corporation law the then directors of said railroad became trustees of the creditors, stockholders, and members of the said New York & Long Island Railroad Company.’ The defendants were such directors on January 1, 1907.

Upon the foregoing facts the present controversy was submitted to the Appellate Division of the Supreme Court. It was asked to decide whether the franchises, rights, and privileges granted by the boards of aldermen of the city of New York and Long Island City to the New York & Long Island Railroad Company did cease and determine on January 1, 1907, and whether such franchises, rights, and privileges passed to the defendants as trustees, as aforesaid; and the parties agreed that the court should render such judgment as should be proper upon the facts which have been stated. The Appellate Division rendered judgment that the franchises, rights, and privileges aforesaid did not cease and determine, but passed to the defendants as trustees under section 30 of the general corporation law, that the occupation by the defendants of the tunnel, tracks, structure, and property of the New York & Long Island Railroad Company on and after January 1, 1907, was and is lawful, and that the city of New York be enjoined from interfering therewith. The judgment of the Appellate Division is now brought by the city before the Court of Appeals for review.

Francis K. Pendleton, Corp. Counsel (Theodore Connoly, of counsel), for appellant.

Morgan J. O'Brien, for respondents.

CULLEN, C. J. (after stating the facts as above).

The learned Appellate Division seems to have disposed of the case on the theory that what it terms the ‘secondary franchise’-that is to say, the consent or permission of the municipal authorities to the railroad company to construct its tunnel and railroad in the city streets-not having prescribed any limit of time within which the road should be constructed, was, when acted upon to some extent, a property right not subject to defeasance or forfeiture by the failure of the company to comply with the terms of the general railroad act under which it was incorporated, which prescribes that, on the failure of the company to finish its road and put it in operation within 10 years from the time of filing its articles of incorporation, its corporate existence and powers shall cease. Railroad Law 1850 (Laws 1850, p. 234, c. 140) § 47, as amended by Laws 1867, p. 1903, c. 775; Railroad Law 1890 (Laws 1890, p. 1084, c. 565) § 5. In other words, it treated such consent as if it were a grant of a franchise) wholly disconnected from the legislation of the state which authorized the incorporation of the railroad company, and therefore held that it passed to the directors of the corporation at the time of its dissolution, with the other property which the company might have had at that time, to be administered for the benefit of its creditors and stockholders. It is unquestionably true that the franchise to construct and operate a railroad is different from the franchise to be a corporation. As pointed out by Judge Vann in Lord v. Equitable Life Assur. Soc'y, 194 N. Y. 212, 87 N. E. 443, the former may be granted to individuals. It is not necessary that it be granted to a corporation (Village of Phoenix v. Gannon, 195 N. Y. 471, 88 N. E. 1066), and when granted it becomes property. It cannot be arbitrarily recalled unless a reservation of that power is contained in the grant. Coney Island, Ft. H. & B. R. R. Co. v. Kennedy, 15 App. Div. 588,44 N. Y. Supp. 825;Suburban Rapid Transit Co. v. Mayor, etc., of N. Y., 128 N. Y. 510, 28 N. E. 525. But though property, it is subject to defeasance...