Est Jersey & S. R. Co. v. Bd. of Pub. Util. Com'rs

• Decision Date: 22 April 1915
• Citation: 94 A. 57,87 N.J.L. 170
• Parties: EST JERSEY & S. R. CO. v. BOARD OF PUBLIC UTILITY COM'RS.
• Court: New Jersey Supreme Court

94 A. 57

87 N.J.L. 170

EST JERSEY & S. R. CO.

v. BOARD OF PUBLIC UTILITY COM'RS.

Court of Errors and Appeals of New Jersey.

April 22, 1915.

(Syllabus by the Court.)

Appeal from Supreme Court.

Mandamus by the West Jersey & Seashore Railroad Company against the Board of Public Utility Commissioners. From a judgment sustaining a demurrer to an alternative writ of mandamus (85 N. J. Law, 468, 89 Atl. 1017), plaintiff appeals. Affirmed.

Alan H. Strong, of New Brunswick, for appellant. Frank H. Sommer, of Newark, for respondent.

GUMMERE, C. J. This appeal is taken from a judgment of the Supreme Court sustaining a demurrer to an alternative writ of mandamus sued out by the West Jersey & Seashore Railroad Company against the board of public utility commissioners, to compel that board to approve a lease proposed to be made by the relator of its railroad and franchises to the Pennsylvania Railroad Company. The determination of the case involves a consideration of two questions: First, the scope of the power of the board when acting upon an application for its approval of a lease by one railroad company to another; and, second, the question of the supervisory power of the Supreme Court over the action of the board in dealing with such an application.

First, as to the scope of the power of the board: That body was created by the act of April 21, 1911, entitled "An act concerning public utilities; to create a board of public utility commissioners, and to prescribe its duties and powers." Pamph. Laws, p. 374. That act, after conferring upon the board general supervision and regulation of, jurisdiction and control over, all public utilities, so far as might be necessary for the purpose of carrying out the provisions of the act, and defining a "public utility" as any individual, copartnership, corporation, or joint-stock corncompany, owning, operating, or controlling, within the state of New Jersey, any steam railroad, street railway, traction railway, canal, express, subway, pipe line, gas, electric light, heat, power, water, oil, sewer, telephone, telegraph system, plant or equipment for public use under privileges granted by the state, or by any political subdivision thereof, declares (section 18) that no public utility, as therein defined, "shall, * * * without the approval of the board, * * * lease * * * its property, franchises, privileges or rights, or any part thereof," and that "every * * * lease * * * made in violation of any of the provisions hereof shall be void and of no effect."

Counsel for the appellant contends that the limit of the power of approval thus conferred is to determine "whether the conditions exist under which the statute authorizes a lease to be made, and whether the statutory procedure with relation thereto has in all respects been followed." An examination of the legislative enactments bearing upon the authority of a railroad company of this state to lease) its property and franchises will, we think, show the fallacy of this contention.

Prior to 1873 all the railroad companies of this state were incorporated under special charters; and proposed leases of their properties and franchises were submitted to the Legislature for its approval. The confirmation by that body of the lease of the Morris & Essex Railroad Company on February 9, 1869 (Pamph. Laws, p. 28), and of the lease by the United New Jersey Railroad & Canal Company to the Pennsylvania Railroad Company on March 27, 1873 (Pamph. Laws, p. 1298), are examples of such legislative action.

On April 2, 1873, the Legislature passed what is commonly known as the General Railroad Law (Rev. of N. J. p. 925); and since the enactment of that statute all railroad companies which have come into existence in this state have been incorporated thereunder. By the seventeenth section of that act all companies so incorporated were authorized to lease their roads to any other corporation or corporations of this or any other state; and by the supplement to the act passed March 11, 1880, the section was amended so as to extend the power of leasing to corporations created by special charter, as well as those incorporated under the General Railroad Law. Supp. to Rev. of N. J. p. 828. But neither in the original act nor in the supplement did the Legislature restrict this power by the imposition of any conditions or limitations, nor provide any course of procedure to be followed by the companies seeking to avail themselves of the privilege thus granted, apparently leaving the whole matter of the term of the lease, the rent to be be reserved and the mutual conditions and covenants thereof, as well as the procedure with relation thereto, to be determined solely by the boards of directors of the contracting companies.

Between March 11, 1880, and April 14, 1903, other statutes were enacted regulating the power of one railroad company to lease its property and franchises to another, but all of them were afterward repealed, except so far as they are embodied in "An act concerning railroads (Rev. of 1903)," approved on the latter date. Comp. Stat. p. 4219. The sixty-fourth section of that revision, after practically re-enacting the provisions of section 17 of the General Railroad Law of 1873, as amended in 1880, contains the following limitation upon the power conferred, viz.:

"No such lease shall take effect until the parties thereto file in the office of the secretary of state an agreement surrendering to the state all rights of exemption and contract privileges with respect to taxation, and reserving to the state any existing right to take the property of any of the parties."

A second limitation is contained in the sixty-fifth section of the act, to wit:

That every lease "shall be made by a contract approved either in writing or by vote at a meeting of stockholders by the holders of two-thirds of all the capital stock of the railroad company of this state party to such contract, and filed with the secretary of state."

After the enactment of the Revision of 1903 the power of railroad companies to lease their property and franchises was left untouched by the Legislature until the passage of the Public Utilities Act of 1911. From the above recital it appears that at the time of the passage of this act the only limitations which were placed upon the untrammeled power to lease their roads, conferred on railroad companies of this state by the act of 1873, and its supplement of 1880, were the requirements contained in sections 64 and 65 of the Revised Act Concerning Railroads, of 1903, which have already been set out in full, and that the evidence of compliance with those requirements is provided for in the sections themselves, namely, by the filing in the office of the secretary of state, in the one case, the agreement surrendering tax exemptions and privileges, and the reservation of the state's right to take the property of any of the parties to the lease, if such right exists, and, in the other case, the approval of the lease by the holders of two-thirds of the stock of the domestic corporation. It seems hardly necessary to point out that, as an observance of these requirements is necessary to give life to the lease, an approval of the instrument by the board of public utility commissioners in the absence of such observance would be absolutely nugatory, and that an approval by it which was a mere declaration that these two requirements had been observed would be of no benefit either to the parties to the lease or to the public at large; for, as to the parties, they would already know it, and, as to the public, the Legislature had already provided a means of knowledge—that is, by inquiry at the office of the secretary of state.

It seems clear from a consideration of...