Pennsylvania Steel Co. v. New York City Ry. Co.
Decision Date | 23 September 1911 |
Citation | 191 F. 216 |
Parties | PENNSYLVANIA STEEL CO. et al. v. NEW YORK CITY RY. CO. et al. |
Court | U.S. District Court — Southern District of New York |
The following is the report of William L. Turner, Special Master:
The claims above alluded to are of three kinds viz., for car license fees, for percentages of the gross receipts, and for paving in and about tracks owned or leased by the street railway companies named. These claims will be considered in the order indicated.
On hearings had, these claims were reduced by the withdrawal of claims for cars operated on roads other than those owned by the Sixth, Eighth, Ninth, and Third Avenue Companies, so that those now insisted on by counsel for the city in his brief filed, stand as follows:
Third Avenue Company........................... | $ 42,660 00 |
Sixth " " | 57,621 32 |
Eighth " " | 59,794 71 |
Ninth " " | 10,685 54 |
----------- | |
A total of | $170,761 57 |
Of this total, the amount now claimed against the Metropolitan, for which it is insisted it is the primary debtor, is $41,200, made up as follows:
Third Avenue Company............................ | $11,200 00 |
Sixth " ".................................... | 15,000 00 |
Eighth " ".................................... | 15,000 00 |
The balance, $129,461.57, is the amount for which the City Company is claimed to be primarily liable, and on the items going to make up these totals interest is claimed from the date that they accrued at the end of each calendar year to September 24, 1907, the date of the appointment of the receivers of the property of these two companies.
The law with reference to the liability of a street railway company for license fees for cars operated over franchise routes which it has leased from companies which derived the franchises, either by direct grant from the state and locality, or mediately by consolidation with a company so deriving them, is not only that such liability exists if the burden was originally imposed by the charter of the lessor or constituent company, but also that it subsists only against the company operating as lessee, or successor, and that it is created by operation of law, and not as the result of express agreement between lessor and lessee, or constituent company and successor. Mayor v. Twenty-Third St. Company, 113 N.Y. 311, 21 N.E. 60; City of New York v. Third Avenue R. Co., 77 A.D. 379, 79 N.Y.Supp. 431. This makes it unnecessary to consider any contention urged by counsel for contract or tort creditors, either as to the validity of the lease between the New York City Railway and the Metropolitan Companies, or as to the legal effect of covenants which such lease may contain as to the payment of such charges, for it is a conceded fact that both companies did operate the cars for which the claims are made during the periods stated.
I do not think, however, that any liability on the part of the New York City Railway Company as to the claim against the Metropolitan resulted from any of the assumption clauses contained in the Metropolitan lease to it of 1902, as urged by the city's counsel. Assuming, for the purpose only of sustaining this conclusion, that the assumption clauses in the lease may be regarded as evidencing a contract for the benefit of the city, upon which the city might claim for charges accruing during the term created by the lease, it seems clear that the language of such clauses is prospective only, and does not contemplate the assumption of license fees for cars run during the years 1900 and 1901, prior to the making of the lease. The precise language relied upon which is contained in the lease is to be found in paragraphs 2 and 3 of that document, and possibly in paragraph 13. In paragraph 2, the City Railway Company agrees to discharge all taxes and assessments, or other charges, 'which during the term hereby granted may be imposed upon the property hereby demised, or any part thereof,' while by paragraph 3 the lessee agrees to pay from time to time 'all rentals and other sums of money which are, or may be, or become due or payable, by reason of any leases and other contracts to which the lessor is a party, and the lessee hereby assumes all obligations of the lessor under all such leases and contracts. ' The concluding portion of this paragraph, however, directs the apportionment of the rentals 'and other payments' referred to between the periods respectively preceding and succeeding the dates of taking possession under the lease, so that, if there were any clauses of assumption in the leases of the Third, Sixth, Eighth, and Ninth Avenue roads to the City Railway Company's lessor broad enough to embrace car license fees and any payments due under such clauses at the time of the making of this lease in 1902, and the taking of possession thereunder, which was April 1st of that year, those accruing during the period preceding such taking of possession were by this language to be apportioned to the Metropolitan Street Railway Company.
Language similar to that quoted is contained in the lease of the Third Avenue Company to the Metropolitan Street Railway Company, and has been construed by the courts as prospective, and not as relating to car license fees accruing prior to its execution. City v. Third Ave. R.R. Co., 77 A.D. 379, 79 N.Y.Supp. 431. Other language pointed to in paragraph 13 of the lease of 1902, requiring the payment of rentals, taxes, and 'other unliquidated claims' from a fund of $23,000,000, refers to a fund that by paragraph 12 the lessee was required to pay to the lessor for the purpose, among others, indicated, and that payment, as was conceded on the hearings, it made, so that if, under this lease, the city were entitled to proceed against this fund, it could proceed only against the Metropolitan Company.
Counsel for the receivers of the Metropolitan Street Railway Company contends, with reference to the license fees claimed against that company for the year 1900, that they are barred by the statute of limitations. Actions were begun for cars operated over the lines of the Sixth Avenue Railroad Company, the Eighth Avenue Railroad Company, and the Third Avenue Railroad Company for the license fees for the year in question on the 26th day of November, 1906, which is more than 6 years from January 1, 1900, on which it is urged that the cause of action for the fees for the cars run during that year accrued. This contention could not in any event be sustained as to the fees for cars run over the Third Avenue road, since it has been judicially settled that as to that road the 20-year statute applied (City of New York v. Third Avenue R. Co., 42 Misc.Rep. 599, 87 N.Y.Supp. 584); and I am of the opinion that the claims against neither the Sixth nor the Eight Avenue roads are barred because, assuming that the 6-year statute does apply, as it probably does (Mayor v. Broadway Road, 17 Hun (N.Y.) 245), I do not think that it can be said that the cause of action accrued on the first day of the year during which cars were run. The language of the existing Code of Ordinances, quoted by counsel as creating and defining the obligation, is 'that each and every passenger car run in the borough of Manhattan shall pay into the city treasury the sum of $50 annually for a license. ' Construing this most favorably to the contention, it cannot be said that as to any car operated during the year, for which a claim is made, a cause of action arose earlier than the first day of operation in the year, but as to this there is no proof; the burden of establishing such date being, I assume, upon those resisting the claim. Six years prior to the commencement of actions includes more than one month of the year 1900 for which the claim is made, and non constat that all of the cars claimed for did begin to run during that month. I think, however, that a reasonable construction of the language quoted would be that the right accrues to the city at the end of each calendar year, instead of at the beginning. There is certainly as much justification from the language used for such construction as for the one contended for, and I am referred to no decision to the contrary.
It is now conceded that payment of the franchise tax has been made for all the years for which these car license fees are claimed, and it is urged on behalf of the New York City Railway Company that payment of the claims in controversy here should be assumed to have been included in the franchise taxes thus paid, since section 48 of the tax law (Consol. Laws 1909, c. 60) permits a deduction of such payments. That section, however, contemplates a deduction only of payments actually made, and, as the payments in controversy never have been made, it is difficult to see how they can be presumed to have been deducted.
Counsel for the city had not, as I had supposed, withdrawn on the record his claim for a preference for these car license fees; but as to that it is sufficient to say that this court has in the case of the Central Trust Company v. Third Avenue Railroad Company determined that the car license fees are not entitled to a preference, in which determination it followed the decision of the state courts to the same effect. Wise v. Wise Co., 153 N.Y. 507, 47 N.E. 788.
The claim of the city against the Metropolitan road will therefore be liquidated at $41,300, and that against the New York City Railway Company at $129,381.57. Interest on these amounts, down to the date of the appointment of the receivers, will also be allowed; the amount claimed by the city on the fees due from the Metropolitan road being $18,301, and the amount...
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