co.
'V.
'JONES.
579
sense is true,-but that the defendf1htS 'must be deemed to take, as distributees under complainant's bill, the remainder left in their possession, 1tnd therefore should be required to contribute to. the compensation of ,complainants' solicitors ratably, and not only in proportion to the amount of their demands against the common debtor, but also upon the surplus over and above all demands dor;ived from the enhanced value of the property? In respect to the costs of the first reference to the master, which the <defendants ask to have taxed against the complainants, it is tr1le, as stated in the former opinion, that the charges of actual fraud, in spect to which mainly the evidence on that reference was taken, were not sustained, but nevertheless much of this evidence was more or less pertinent to the inquiry made on the last reference into the amount of the demands of the defendant bank against the Shaw Carriage Company, and it would doubtless be quite difficult to make a fair or exact apportionment of these costs; therefore, as the nearest practicable approximation, it is ordered that all costs in the case be taxed against the defendant banks, and the amount thereof deducted from the fund in their hands, and that the remainder be distributed as indicated. Decree accordingly.
CITIZENS'ST.
Ry.
Co. '!1. JONES. l
(Oirc'Uit Court, B. D. Arkan8as. March 15,1888.)
t.
MUNICIPAL CORPORATIONS-CONTROL OF STREETS-DELEGATION OF AUTHOR' ITY.
When a statute authorizing a municipal corporation to contr.act "for the purpose of providing street railroads," and conferring, "for the time which may be agreed upon, the exclusive privIlege of using the streets and alleys of such city for such purpose, " it is the actual use of the streets for the purpose which confers the exclusive privilege, and the exclusive right to use the same attaches only when the use or itS equivalent begins, and the city has no power under such a to devolve on any contractor the duties it owes to the public of determming when and on what streets the public convenience requires allneof road. 2. SAME-CONSTRUCTION OF GRANT.
Where an Instrument is susceptible of two interpretations, one of which will antagonize the law and render it invalid, and the other will harmonize with law an<;lgive it vll,lidity, the latter interpretation will be adopted. OF FRANCHISES-CONSTRUCTION.
8.
Grants o'f franchises by public corporations are to be strictly construed, and no exclusive privifeges pass unless by express words or necessary implication. 1
In Equity. Bill to restrain the building of a street railway by defendant, plaintiff claiming the exclusive privilege in. the city by virtue of a contract with the city. 1 Reported by Messrs. Stephenson &. Trieber, of the Helena bar. tRespecting the power of a state or municipality to. create a monopoly, Bee Stein v. Supply Co., 84 Fed. Rep. 145, and note; Teachout v. Railway Co., (Iowa,) 88 N. W. Rep.
145.
_.---- - - - - - - - - - -
580
J'EDERAL BEPOBTlIlBe
J. M. J. G. Taylor, for plaintiff. White <to Parker, for defendant. CAI.nWELL,J. The foundation of the plaintiff's case is an ordinance of the city of Pine Bluff, passed on the 4th day of February, 1885, and adopted as a contract on the 24th day of March, 1885. The provision of the contract on which the case turns reads as follows: "That for the purpose of providing for a single-track street railway or street railways, the said party of the first part [the city of Pine Bluff] does hereby grant uuto the said party of the second part [John O'Connell, Frank Silverman, and Sam Fies] and their assigns, for the term of ninety years from the date of this contract, the right of wayan, over, and along the following streets, to-wit: All of Barrague street, all of Broadway street, all of Fugate street" all of Newton street, their present and future limits, and all other within the present anll future corporate limits of the city of Pine Blult, as the parties of the second part think public necessities require, with the exclusive privilege of using said streets and said designated portions thereof for the purpose of constructing, operating, maintaining, and owning such street railway thereon." The contract required the construction, within three years from its date; of a railway over the following streets: On Fugate from Broadway to Batrague, thence on Barrague to Newton, thence on Newton to Broadway, and thence on Broadway to Fugate; but by a later ordinance this requirement was so modified that the company was only required to build, within three years,'a railway on Barraque street for a distance of 10 blocks, and the company is under no obligation to construct finy more railroad in the city during the life of the contract-90 years. The plaintiff is assignee of the contract. On the 9th day of August, 1886, the citYeIItered into a contract with the defendant, Wiley Jones, whereby he was authorized to build and operate a street railway on certain named fltreets in the city, on which the plaintiff has not constructed, and does not propose to construct, such a railway The object of this suit is to enjoin the defendant froll1constructing or operating a street railway on the streets of the city included in his contract, upon the ground that the plaintiff under its contract has an exclusive right to the use of all the streets of the city for street railway purposes, and that this exclusive right i,s not restricted to the streets on which it has constructed its railway, but extends as well over all the streets of the city upon which it: has not constructed,and does not propose to contruct, such railway. The power granted to the mayor and council to contract on this subject, is, as the act in terms declares, "for the purpose of providing * '" * street railroads," and it is for that pur'lose they are authorized to grant "for the time which may be agreed upon the exclusive privilege of using the streets and alleys of such city for such purpose. * * *" Section 755, Mansf. Dig. It is the actual use of the street for the purpose that confers the exclusive privilege. The city council has not the power to agree that if the contractor will build a street railway on one street in the city he shall be under no obligation to build on any' other street for 90 years, and that for that period the city shall not itself build
CITIZENS'ST. BY. 00. II. JO.NEl!l.
681
such railway on any street in the city, or authorize it to be done by others, however much the public convenience and necessity may demand it. The effect of such a contract is not to give the exclusive privilege of using the streets for the purpose of constructing and operating a street railway o\'er them, but it is to give the contractor the exclusive privilege of preventing their use for that purpose. Under such an agreement the contractor occupies the position of"ilie dog in the manger." He need not use the streets for a railway himself, and he can prevent the city and all the world from using them for that purpose, regardless of the public wants and necessities. The power and duty of determining when and on what streets the public convenience requires street railroads is devolved by law on the city council, and that body cannot refuse to discharge this function, or devolve it on a street-car company, whose action would be controlled by its own, rather than the public interests. But this is exactly what it is said was done. Whether any more than a few hundred feet of railroad, on one street, should be constructed in a populous and growing city for a period of 90 years, is left to the discretion of the streetcar company; or, as it is expressed in the contract, "as the parties ofthe second part think public necessities require." The present company affects to "think" the public convenience and necessities do not require a street railway on the streets over which the defendant, by authority of the city, has constructed one. It declined to build the road itself, and seeks to prevent the defendant from operating the one he built. The city council was the proper tribunal to determine the public needs in this matter, and, when it did so, and authorized the defendant to build his road on streets not used or occupied by the plaintiff, and which it was under no obligation to so use or occupy, the council was discharging its duty to the public, and one of its lawful functions under the law of its creation, of which it could not divest itself by any ordinance or contract. Butit is said that when in the opinion of the city council the public needs require street railroads on stfeets over which the plaintiff declines to build, the city can purchase from the plaintiff by condemnation proceedings, if the price cannot otherwise be agreed upon, the privilege to of the right and build on such streets, and in this way repossess power to meet the public wants and necessities. The plaintiff is mistaken in supposing it could gain exclusive dominion and authority over all the present and future streets of the city, so tar as relates to their use for street railroads, without building orincurring any obligations to build a street railroad on them. The favor was greater than the city council had the power to bestow. The right to the exclusive use of a street for a: street under the statutes, attaches when the use begins, or what is equivalent to that, when it has been stipUlated for, and assured by an obligatory contract. Here there is no such use, and no such stipulation orcontract. But the coqtract does not give the plaintiff the boundless exclusive privilege claimed. It grants "the exclusive privilege of using said streets and said designated portions thereof for the purpose of constructing, op-: erating, and maintaining and owning such street rail way thereon." This clause of the contract must receive the same construction as the act au-
'1582 -thorizing the city cOunCil £0 make 'rnie'l3xc1usive privilege is liniited .tothe etreei;s used "for the purpose of constructing, operating, maintailling;and owning such street. railway thereon," or in other \Vords, to the streets on which the plaintiff shall build and operate a street railway. This construction makes the contract harmonize \vith the powers of the citycouIlcil under the law. When an instrument is susceptible of two interpretations, and one will put it in an tagonism to the law, and render it invalid, and the other will make it harmonize with the law and give it "alidity, the latter interpretation will be adopted. It is also a canon of construction that grants offranchises by public corporations to individuals or private corporations are to be strictly construed, and no exclusive privilege passes, unless it be plainly conferred by express words or necessary implication. Let an order be entered sustaining, the demurrer and dismissing the .bilUor want of equity.
MACKiNTOSH
et al. ".
FLINT&P.
M. R. Co. et aI.
YARKER et aZ. v.
SAME.
(Oirouit Oourt, B. D. Mio'higan. March 22, 1888.,
L
RAILROAD CO¥1'ANIEs-BoNDS AND MORTGAGES-REORGANIZATION AGREEMENT -DIVERSION OF FUNDS. .
A railroad being about to be foreclosed under a consolidated deed of trust, a committee of the consolidated bondholders, the members of which were largtl holders of stock and prior bonds, drafted" a plan for purchase and reorganization." This provided that the old stock should be deposited, and that the new company should issue (1) first mortgage 6 per cent. bonds, to be used onJy to fund the past due and maturing interest on the prior bonds, and for permanent construction and improvement; (2) preferred 7 per cent. stock, to represent the par value of outstanding consolidated bonds; and (8) common stock to represent the outstanding common stock. Holders of common stock Were not to be entitled to shares, or to vote, until preferred stock had been paid five su.ccessive annual dividends of 7, per cent. The property was bought in, and a reincorporation effected on this basis. The new charter providedthat the funds ap'pllcable to the uayment of dividends on preferred stock was the n.et income, 'afteJ: paying iIitereston prior bonds, repairs, expenses of equipment," etc., any surplus, after paying 7 per cent., to stand over until next dividend day. At the first meeting of the llew board it was resolved that "under operating expenses only suoh improvements and additions shall be included as are necessary to keep the prope,rty efficient, alld that all beyond this Shall be provided for out of funds other than net earnings." Held. that ,the provisions of the agreenientand the clrarter, as interpreted by the resolution. were binding. upon the directors, and, it having been made to appear that the earnings aDd income, which had beenwron/!;fully converted to pay for improvements and extensio'ns, would, if applied to dividends, be sufficient to pay 'five successive dividends 'of 7 per cent. each on the preferred stock, that the common stock was entitled tQ representation·
.. SAKE-RIGHTS OF CoKKON STOQKHOLDERS-LIENS ON LAND GRANT.
Pursuant to an agreement for p\lrchase and reorganization. a railroad company, which was about to be foreclosed under a consolidated trust deed, con. veyedto the trustees of the separate. mortgage of its land grant all its equities