
    The People of the State of New York ex rel. South Shore Traction Company, Relator, v. William R. Willcox and Others, Commissioners Constituting the Public Service Commission of the State of New York of the First District, Respondents.
    First Department,
    July 13, 1909.
    Railroads — certificate of convenience and necessity — Public Service Commission — no control over conditions on which municipal authorities shall grant consent — constitutional law.
    Where the Public S'ervice Commission has found that a proposed' street surface railroad is both convenient and necessary, it cannot refuse' to grant a certificate to-that effect merely because-it disapproves of the- terms', and conditions; prescribed by thes authorities of the: municipality, where the railroad- is- to operate.
    As the consent of the local authorities to; the construction: of such railroad is required by section 18 of article 3 of the State Constitution, neither the Legislature, nor the Public Service Commission created by it, can díctate to the local1 authorities the conditions upon which: such- consent shall be- given.
    The Legislature- may determine the- conditions under; which a-, franchise- shall be granted-, but it can only grant a franchise for a street surface, railroád! where ■the consent of the local authorities has been obtained. Although the Legislature is not, bound-to grant a. franchise because the local authorities want it, or have consented to it, and can- impose other conditions- -both at and after- the grant of á franchise, it has-no-power t® determine the conditions; upon- which the- local authorities shall grant their- consent.
    
      Certiorari issued out of the Supreme Court and attested on the 18th day of June, 1909, directed to William R. Willcox and others, commissioners, constituting the Public Service Commission of the State of New York of the first district, commanding them to certify and return to the office of the clerk of the county of New York all and singular their proceedings had in relation to the application of the relator for the permission and approval of the respondents to the construction of a railroad authorized by a contract between the relator and the board of estimate and apportionment of the city of New York.
    
      Clarence Lexow, for the relator.
    
      Francis K. Pendleton, Corporation Counsel, for the city of New York, in support of the relator.
    
      George S. Coleman, for the respondents.
   Ingraham, J.:

The relator was organized as a street surface railroad company to construct a street surface railroad on Long Island, extending to the city line. Its certificate of incorporation was filed on the 27th of February, 1903, and it complied with all the conditions and requirements of the laws of this State, and the State Board of Railroad Commissioners granted to the relator a certificate of public convenience and necessity, under section 59 of the Railroad Law (Laws of 1890, chap. 565, added by Laws of 1892, chap. 676, and amd. by Laws of 1895, chap. 545). On December 24,1908, the relator duly filed a certificate for the extension of its route from the city line through the borough of Queens, to and over the Qneensboro bridge, into the borough of Manhattan in the city of New York, under section 90 of the Railroad Law, and subsequently applied to-the board of estimate and apportionment of said city for the consent of the local authorities and for a contract with the city of New York for the construction, operation and maintenance of the extension of the relator’s road over the streets of the city of New York and the Qneensboro bridge, and on May 20, 1909, such consent was duly given and a contract duly executed between the city of New York and the relator, under which the relator was authorized to-construct, maintain and operate its railroad over its extended route on certain conditions therein specified and on making certain payments to the city of Hew York for the use of its streets and the Queensboro bridge. On the 28th day of December, 1908, the relator applied to the defendant for its permission and approval to its extension, which after a hearing was denied, and a final order was subsequently made by the defendants whereby after reciting the application of the relator “ for the permission and approval of the Commission to the construction and exercise of the franchise to operate an extension of its street surface railroad upon the route therein described,” the hearing had by the defendants, and that testimony having been taken upon said hearing, “ and the Commission having determined that the exercise of the franchise upon the terms and conditions imposed in the franchise contract is not convenient for the public service,” it was ordered that the application of the relator be denied, and this proceeding is to review that determination.

The petition upon which the writ of certiorari was granted alleged that the terms and conditions upon which the consent of the city was. granted, provided for in the contract- between the relator and the city of H,ew York, were the most favorable to the city and the most stringent upon the relator that had ever been secured in the public - interest; that at the hearing before the defendants the necessity and convenience of the relator’s route was conceded, and there was no testimony or evidence of any kind denying or in any manner questioning such convenience or necessity, nor any testimony or evidence objecting to the terms- and conditions of such franchise rights or any thereof; that the reasons for the denial of the application of the relator appeared from the opinion of Commissioner Bassett, a copy of which is annexed to the petition, from which it appeared that the necessity and convenience for the public service of the construction of the route specified in the consent of the city and contract with the city is absolutely conceded, and that the same is directly decided in the relator’s favor, but that some of the terms and conditions prescribed by the local authorities of the city of Hew York for the protection of- the interests of the public do not meet with the "approval of a majority -of the Commission, and ' that the application of thq relator for permission and approval was, therefore, denied; that such denial was not based upon any testimony, oral or documentary, with respect to the terms or conditions of such consent or contract, but is founded wholly upon the defendants’ construction of the terms and conditions thereof and their interpretation and deductions therefrom; that the defendants were without jurisdiction or power to decide upon the terms and conditions established by the local authorities in the public consent or contract; that said denial was based upon and related to terms and conditions in said public consent and contract which were peculiarly within the power and authority of the board of estimate and'apportionment, and did not relate to any of those matters which under the law are intrusted to said Commission or with reference to which they are invested with any power or authority whatever.

From the opinion of Commissioner Bassett, which was 'adopted by a majority of the Commission, the Commission found that the relator’s “ route is a trunk line admirably adapted to the development of a great territory within easy reach of the myriads who are now crowding Manhattan because they must live where they can have reasonable access to their work; ” that the Commission looks with unusual favor upon the proposed route of the relator; that under these circumstances the Commission would not think of withholding its prompt approval for the construction of the proposed railroad and the exercise by the 'relator of the franchise granted by the local authorities, if it were not compelled to do so by controlling considerations of public policy affecting the future welfare of the greater city; and these considerations were, that under the franchise granted by the local authorities the relator is put in a position of control for street railroad purposes over the only available thoroughfare between Long Island City and Jamaica for a period of fifty years, and no provision is made, by which the relator can be compelled to build the extensions necessary for the full development of the territory dependent upon this thoroughfare-as its needs may arise. The conditions that the local authorities had inserted in their contract with the relator are then criticised, and the Commission say : “ It should not be the aim of such a franchise to obtain the greatest possible payment to the city or impose the greatest possible burdens upon the company. To do these things is usually to prevent the company from rendering proper service to the people. In the case of the franchise now before us, I think that the financial burdens imposed upon the company might well be mitigated, and the rendition of good service, together with the construction of needed extensions, made more readily obtainable.” Commissioner McOarroll submitted a memorandum stating as his reasons for dissenting from the determination, of the other commissioners that it was within the right and power of the city to decide upon the terms on which it would grant a franchise to a street railroad' company, and that in this case the consent and contract carefully protect the city’s interests. By the return of the defendants it.appears that 'the report of Commissioner Bassett, annexed to the ¡Detition, was adopted-by a majority of the commissioners; that the Commission was unanimous in believing that a railroad constructed and properly operated over the route described in said franchise contract would, under proper conditions, be of great benefit to the community, but that a majority of the Commission believed that, upon the facts and for the reasons set forth in the opinion of Commissioner Bassett, a copy of which was attached to the petition, and for other reasons, the exercise of such franchise under the terms and conditions contained in said contract is neither necessary nor convenient for the public service, and the approval of the exercise of the said franchise would be against the best interests of the public and would prevent the proper future transit development of the very territory through which the proposed road would run. The testimony taken before the Commission is annexed to the return, but there was nothing to sustain the determination of the Commission.

It, therefore, appears that the Commission expressly determined that the public interest required the construction and operation of a railroad upon the route over, which the relator had acquired its franchise under the General Bail road Law and the consent of and contract with the city of Mew York, but it refused its “permission and approval ” for the construction of the extension of the relator’s railroad upon the ground that it considered that the conditions upon which the city had given its consent did not meet the approval of the Commission — thus, assuming the position of dictating to the local authorities the terms and conditions which they must impose in giving the consent of the city to the construction and operation of the railroad if there was to be a railroad. By section 18 of arti- ' ele 3 of the Constitution it is provided that “ no law shall authorize the construction or operation of a street railroad except upon the condition that * * * the consent also of the local authorities having the control of that portion of a street or highway upon which it is proposed to construct or operate such railroad be first obtained.” By section 90 of the Railroad Law (as amd. by Laws of 1895, chap. 933) it is provided that “ Any street surface railroad corporation at any time proposing to extend its road or to construct branches thereof may from time to time make and file * * * a statement of the names and description of the streets, roads, avenues, highways and private property in or upon which it is proposed to construct, maintain or operate such extensions or branches. Upon filing any such statement and upon complying with the conditions set forth in section ninety-one of the Railroad Law, every such corporation shall have the power and privilege to construct, extend, operate and maintain such road, extensions or branches upon and along the streets, avenues, roads, highways and private property named and described in its certificate of incorporation or in such statement.” And section 91 of the Railroad Law (as amd. by Laws of 1907, chap. 156) requires the consent of the local authorities having control of the streets or highways before the street surface railroad or extensions or branches thereof shall be constructed.

The franchise to construct and operate a street railroad is granted by the Railroad Law and comes into existence when the provision of that law is complied with. The provision of section 18 of article 3 of the Constitution limits the power of. the Legislature in granting such a franchise, so that the law which grants it must require as a condition of the grant that the local authorities having control of the streets and highways upon which it is proposed to construct the railroad shall consent to its construction. It is obvious that the Legislature would have no power to dictate to the .local authorities the conditions upon which such a consent should be given. That question must be determined by the local authorities, and the condition that they impose must be complied with before the right to construct or operate the road comes into existence. The conditions under which a franchise shall be granted are to be determined by the Legislature. It only can grant the franchise, but it cannot grant a franchise for a street railroad except upon the condition that the consent of the local authorities shall be first obtained.” The Legislature is not bound to grant a franchise because the local authorities want it or have Consented to it, and it can impose other conditions upon the grant of a franchise or upon its operation after it is granted. The consent of the local- authorities, however, is required, before a street railroad can 'be constructed or operated. As was said in Kittinger v. Buffalo Traction Co. (160 N. Y. 377): The municipal authorities granting this consent derived their power directly from the Constitution * * *. In the-exercise of this power, the local municipal authorities are by the Constitution and the statute clothed with sovereignty and, therefore,. bej'ond the direction and control of the courts,” and we may add of the Legislature. (See, also, Adamson v. Nassau Electric R. R. Co., 89 Hun, 261.)

We have now to consider the effect of the Public S.ervice Commissions Law (Laws of 1907, chap. 429) and the powers of the Public Service Commissions over the granting of a franchise for a street railroad. This act abolished the Board of Railroad Com mis-' sióners and other commissions and transferred all the powers and' duties of such board and commissions upon the commissions appointed under the provisions of that act. Such commissioners were State officers, and the act was a general one. (Gubner v. McClellan, 130 App. Div. 721.) By section 53 of the act it is provided that “Without first having obtained the permission and approval of the proper commission, no railroad corporation, street railroad corporation or common carrier shall begin the construction of a railroad or street railroad, or any extension thereof * * * ; nor, except as above provided in this section, shall any such corporation or common carrier exercise any franchise or right under any provision of the Railroad.Law, or of. any other law, not heretofore lawfully exercised, without first having obtained the permission and approval- of the proper commission. The commission within whose district such construction is to be made, or within whose district such franchise or right is to be exercised, shall have power to grant the' permission and approval herein specified whenever it shall after due hearing determine that such construction or such exercise of the franchise or privilege is necessary or convenient for the public service.”

It is quite clear that the Legislature did not intend to, as it could not, substitute the Public Service Commission for the local authorities. The consent 0*f the local authorities was still necessary before the grant of a franchise could be complete. They had power to impose such conditions as the interest of the municipality required. With such conditions for the exercise of the franchise the Public Service Commission had no concern. It could not demand that the local authorities add to or take from the conditions upon which they were willing to consent. The State, however, had the power to say that no franchise should be acquired or exercised unless it became necessary or convenient for the public service; and so it imposed upon a corporation or individual, before such a franchise could be acquired or exercised, the obligation of satisfying the “ proper Commission ” that the construction of the proposed railroad or the exercise of the franchise or privilege was necessary or convenient for the public service. The power to grant the permission and approval ” authorized by the section was given to the Commission “ whenever it shall after due hearing determine that such construction or such exercise of the franchise or privilege is necessary or convenient for the public service.”

There was thus presented to the Public Service Commission that single question. It was all they were authorized to determine, and upon the determination of that question depended the “ grant ” of the “ permission and approval.” It was a determination after a hearing and was in its nature judicial. The Public Service Commission has no right to arbitrarily reject an application because of the action of the local authorities in granting or refusing their consent. It was not constituted a court to hear an appeal from the determination of the local authorities as to conditions which it should impose on giving its consent to the construction or operation of the • proposed road. If the Public Service Commission determined that the construction of the railroad or the exercise of the franchise or privilege was necessary or convenient for the public service, it was then the duty of the Commission to grant their permission and approval.

As I understand the opinion of the majority of the commissioners and the return to the writ, the' Public Service Commission did determine that the construction and operation of this proposed railroad was both necessary and convenient for the public service. In the return it says that “they'(the -commissioners) were unanimous in believing that a railroad properly constructed and properly operated over the route described in the said franchise contract would .under proper conditions be of great benefit to fee community.” Having come to that determination, it was, as I look at it, tlieir duty to grant -the application.. The fact that the 'Commission did not concede that the exercise of the franchise .granted by the municipal authorities, upon the terms granted, was for the public interest was of no consequence. The Commission was not responsible for such ¡terms.. If a railroad over 'the proposed route was required "by the public — was ‘‘necessary or convenient for the public service ” — then I think it was the duty of the defendants to grant the application, and as I understand from the return that they have determined that the proposed railroad "was required -the denial of the ¡application was error.

It follows that the determination of the Commission must be reversed ¡and the proceedings be remitted to the Commission with direction to grant the .application, with fifty dollars costs and disbursements to the relator.

McLaughlin, Laughlin and Clarke, JJ., concurred.

Houghton, J.

(concurring) :

I concur in reversing the determination .of the Commission in the present ease with directions to grant the application of the relator, but I think the Public Service Commission has a. broader ¡lower to withhold its permission and approval to the exercise of a franchise than is stated by Mr. Justice Ingraham in his opinion.

I do not think the Commission is absolutely bound to grant a certificate of approval and permission to build and operate a street 'railway in all eases where the public authorities have granted permission. Ability to serve the public by furnishing proper transportation is an element, which the Commission is required to take into consideration as well as necessity for the construction of-a railway. A transportation coloration which faces certain bankruptcy the moment it starts cannot properly serve the public. Reasonable prosperity is necessary to reasonable service. Such a corporation only cumbers the. ground and. ¡irevents another corporation froth occupying, the same field and giving proper service. In its eagerness to build a transportation corporation, might agree to- pay such a high price for the franchise and stipulate to carry passengers at such a low fare that it would be perfectly manifest that it could never operate at a profit.

. Determination reversed and proceedings remitted as stated in opinion, with fifty dollars costs and disbursements to relator. Settle order on notice.  