
    The People ex rel. Abraham Abraham, Isidor Straus, Nathan Straus, Simon F. Rothschild, Edward C. Blum and Lawrence Abraham, Constituting and Doing Business Under the Firm Name and Style of Abraham & Straus, Relators, v. Frank E. Perley, Egbert E. Woodbury and Benjamin E. Hall, as and Constituting the State Board of Tax Commissioners, Defendants.
    (Supreme Court, Kings Special Term,
    May, 1910.)
    Franchises: Definition: Power of local government to grant.
    Taxes —Taxation of special franchises — Property and interest subject to tax.
    Taxable public franchises can only be granted by the Legislature representing the sovereign power of the State, or by some agent duly authorized thereby.
    A municipality, as such, has no power to grant a franchise except when acting as an authorized agent of the Legislature.
    
      The city of New York 'has received certain -powers to act as the agent of the State in granting franchises in the public streets, but it is not authorized so to do for private purposes.
    The grant by the city of New York under a resolution of the board of estimate and apportionment of the right to maintain a tunnel or passageway under a street and between. the buildings of the grantees on each side thereof, the whole property including both buildings and the passageway being used for the purposes of a retail dry-goods store, is not a grant of a public franchise.
    Certiorari proceeding.
    Edward M. Grout and Paul Grout, for relators,
    Edward R. O’Malley, Attorney-General (William Austin Moore, Special Deputy Attorney-General, of counsel), for defendants.
   Blackmar, J.

This is a certiorari proceeding to review the action of the State Board of Tax Commissioners in assessing as a special franchise the right of the relators to maintain a tunnel or passageway under Livingston street and between their buildings on each side thereof; the whole property, including both buildings and the passageway, being used for the purposes of a retail dry-goods store. The right was granted to the relators by resolution of the board of estimate and apportionment dated December 15, 1905, and applied to that portion of the land under the street which is owned in fee by the city of Mew York.

Whatever right the relators acquired under the resolution of the board of estimate and apportionment of December 15, 1905, does not constitute a special franchise and is not taxable as such. This species of property was first subjected to taxation by chapter 112 of the Laws of 1899. The act is entitled “An act to amend the tax law, in relation to the taxation of public franchises as real property.” It did not purport to and did not render taxable anything except “ public ” franchises, including therein tangible property in the streets used in connection therewith. This does not include easements, licenses, leasehold interests, or any other rights unless they fall within the definition of a franchise. Blaekstone defines a franchise as a “ royal privilege or branch of the King’s prerogative subsisting in the hands of the subject. Being derived from the Crown, it must arise from the King’s grant.” Commentaries, book 2, chap. 3, subd. 7. Substituting the “ People ” for the King ” and the definition may apply to-day. A franchise, therefore, can be granted only by the Legislature, or by some agent duly authorized thereby. A municipality as such has no power to grant a franchise; or, if it has, it acts simply as the authorized agent of the Legislature. .It- is said that even the Legislature has no power to grant a franchise except for public purposes; or, at least, public considerations must enter into the grant. Fanning v. Osborne, 102 N. Y. 441. The city of FTew York has received certain powers to act as the agent of the State in granting franchises in the public streets; but it is not authorized so to do for private purposes. Hatfield v. Straus, 189 N. Y. 203. The right acquired by the relators under the resolution of the board of estimate and apportionment is for private purposes only. It does not, therefore, constitute a franchise such as the Legislature has authorized the city to grant. Rhinehart v. Redfield, 93 App. Div. 410; affd., 179 N. Y. 569. As it is not a franchise, it is not a special franchise. The word special ” limits the word franchise.”

It is not necessary to consider what, if any, rights the relators secured under the resolution. The city is not only a governmental agency, but a proprietor. It owns as proprietor the fee of a strip of land thirty feet wide under the southerly portion of Livingston street. Its ownership is in trust for highway purposes for the benefit of the public. Because the trust is for the people at large and not for the city or the. inhabitants of the city, the control of the streets is vested primarily in the Legislature; but the city has power to grant certain licenses and privileges therein, provided the same do not interfere with the rights of the public, and such power has been long exercised. Granting the right to construct vaults under the sidewalks is one of the-most common methods of exercising the power. I suppose that, although the city holds the fee in trust for street purposes, it has all proprietary rights not inconsistent with such purposes. The rights of the relators, if they secured any under the resolution, were granted by the city as proprietor of this strip of land and not as' agent of the State in granting a franchise. Such rights are of the same nature as, and certainly no greater than, if granted by private parties owning the fee in the street subject to highway easements. Such rights do not constitute a franchise. People ex rel. Retsof Mining Company v. State Board of Tax .Commissioners, 75 App. Div. 131; affd., 175 N. Y. 511. '

The assessment is illegal and must be stricken from the rolls, with costs to the relators.

Assessment stricken from the rolls, with costs to relators.  