
    The State, ex rel. Krichbaum, Pros. Atty., v. The Northern Ohio Traction & Light Co.
    
      Franchises — Continuing contract — Effect of omission authorising transfer — Grant runs with land, -when — Vested rights unaffected by alteration of charter, when — Complaint of excessive rates of fare — In absence of forfeiture clause — Implied conditions - zoill not defeat rights■ of successors, when — Demurrer to petition in quo warranto — Statute of limitations — Section 12340, General Code.
    
    J. A resolution adopted by a hoard of county commissioners, granting to the person named therein the right to locate, construct, maintain and operate an electric railway along a public highway, is not any the less a continuing contract because of the omission of terms in the grant which authorize a transfer to others’of the rights therein granted; but the covenant in such a case must be regarded as a grant which runs with the land or subject-matter of the contract, and the addition of the word “assignee” or "assigns” is not necessary to make the covenant effective to all persons to whom the property or rights may pass.
    2. When franchise or contract rights have been granted by an exercise of power duly conferred and such rights have become vested, no amendment or alteration of the charter or contract can take away the property or rights so vesting; and where the grant is without a time limit, and there are no limitations upon the'powers of the commissioners making the grant, the rights so conferred are not a mere grant at will, but are indeterminate or perpetual, and canno^ be terminated by the commissioners, nor can such rights always be revoked by the general assembly.
    3. Where there is no complaint against a company, occupying a public highway with an electric railway line, of omission to do any act stipulated to be done or violation of any of the privi- . leges granted, and the only allegation upon which it is sought to revoke the grant is the charging of excessive rates of fare, the relators have no standing in court, but must seek relief before the public service commission.
    
      4. Moreover, where the grant contains no express condition of forfeiture, no implied condition can be read into the contract which would deprive successors of the original grantee of the right to exercise the privileges so granted.
    5. But demurrer does not lie against a petition to oust a corporation from its franchise, where the petition does not allege that the action was commenced within five years after the act complained of was done or committed, or that the company has exercised the franchise for twenty years, exclusive of the time it was enjoyed by predecessors in title.
    (Decided April 1, 1913.)
    Quo Warranto: Court of Appeals for Stark county.
    Voorhees, J.; Powell, J., concurring; Si-iields, J., dissenting.
   This is a proceeding in quo warranto instituted under favor of Section 12340, General Code, in which it is provided that “nothing in this chapter contained shall authorize an action against a corporation for forfeiture of charter, unless it be commenced within five years after the act complained of was done or committed; nor shall an action be brought against a corporation for the exercise of a power or franchise under its charter, which it has used and exercised for a term of twenty years; nor shall an action be brought against an officer to oust him from his office unless within three years after the cause of such ouster, or the right to hold the office, arose.”

Charles Krichbaum, as prosecuting attorney of Stark county, Ohio, on the 13th day of August, 1912, filed a petition in the circuit court of Stark county, alleging in substance that The Northern Ohio Traction & Light Company is a corporation duly organized under the laws of the state of Ohio and engaged in operating an interurban electric railroad in Stark county, in the state of Ohio, on a public road or highway, known as the CantonMassillon road, between the cities of Massillon and Canton. The defendant is operating said interurban electric railway by virtue of the authority and right which it claims to have as assignee or transferee under a certain resolution passed by the commissioners of Stark county on or about February 22, 1892, and recorded on pages 17, 18 and 19 of volume 8, commissioners' journal of Stark county, and which resolution is set out in full in said petition. In said resolution it is resolved that the right is thereby granted to William A. Lynch, and to such railroad company as he may cause to be incorporated for that purpose, to locate, construct, maintain and operate an electric railroad along either side of said road running between Canton and Massillon between the line of the Canton street railway and the corporate limits of the city of Massillon. Then the petition proceeds to describe the manner of constructing said railway under said resolution and the condition that said William A. Lynch, or the railroad company, before commencing any part of said work should enter into a bond in the sum of ten thousand dollars, conditioned for the faithful performance of the condilions enjoined upon them by said resolution; it being further understood and provided that said William A. Lynch, or the railroad company, before commencing any part of said work, should enter into bond in the sum of five thousand dollars, conditioned that said William A. Lynch, or said railroad company, should keep said county and said board perfectly harmless from any and all liability to abutting property owners growing out of the construction of said road. Said resolution was adopted and entered under the minutes of February 22, 1892.

On the margin of page 18 of said commissioners’ record is written, with red ink, “Transferred to Canton-Akron Ry. Co. July 2, 1902. W. M: Reed, Auditor.”

Plaintiff avers that said resolution, under which defendant is operating its electric interurban railway, is silent as to duration and is indeterminate, and exists only so long as the parties thereto mutually agree; that the board of commissioners, being the same authority originally granting said resolution under which defendant is operating its electric interurban railway, on or about March 27, 1912, adopted by a unanimous vote of the members of said board a resolution which is set out .fully in the petition. Said resolution, among other things, provided that whereas an electric railroad is being operated on the public highway between Canton and Massillon by The Northern Ohio Traction & Light Company, under the right conferred by a former board of county commissioners by virtue of a resolution passed February 22, 1892, in favor of William A. Lynch and such railroad company a$ he might cause to be incorporated, said electric railroad is not being operated under any regular franchise. The fare charged by said company at the'present time is twenty-five cents per round trip between Canton and Massillon, or fifteen cents one way, and no transfers are given for transportation on either of the city lines in Canton or Massillon, in connection with said above-mentioned fare. It is declared in said resolution that in the opinion of said board of commissioners the sum of ten cents for the fare one way between said cities of Canton and Massillon, with the privilege of a transfer on all lines operated by said company in either of the cities of Canton or Massillon, would be a fair compensation for transporting people the distance of eight miles between the two cities, and that the sum of five cents for the fare one way from Reed-urban or any intermediate points to either the city of Canton or the city of Massillon, with the privilege of similar transfer as mentioned above, would be a fair compensation for transporting the people said distance. Therefore, said board resolves thac unless said The Northern Ohio Traction & Light Company comply with the above-mentioned matters of reduction of the amount of fare charged for transporting people between the cities of Canton and Massillon and their intermediate points, together with a transfer on the city lines of Canton and Massillon, on or before the 27th day of April, 1912, the said grant given to said William A. Lynch, on February 22, 1892, to operate an electric railroad between said cities of Canton and Massillon, is hereby declared terminated, and the prosecuting attorney of this county is hereby instructed to take such legal proceedings as may be necessary to have said grant made null and void and the said electric railway removed from said public highway between said cities of Canton and Massillon.

Immediately upon the adoption of said resolution said board notified said defendant company of its election to terminate said franchise unless certain conditions, in said resolution and notice contained, were complied with by said defendant by the 27th day of April, 1912. It is averred that said defendant company failed to comply with the conditions named in the notice and resolution by the 27th day of April, 1912, and that said election to terminate the right of the defendant to operate said interurban railway became operative on said 27th day of April, 1912. It is further averred that the defendant has wholly refused and still refuses and fails to comply with the conditions of said resolution and notice. It is further averred that on or about the-day of April, 1912, said board of commissioners reaffirmed its election to terminate said franchise and the right of defendant to operate its electric interurban railway between Massillon and Canton, by adopting, by a unanimous vote of the members of said board, a resolution which, among other things, provided that a proposition is submitted to said board on the 26th day of April, 1912, at 3:40 o’clock p.m., by Mr. Charles Currie, general manager of The Northern Ohio Traction & Light Company, that the public highway between the cities of Canton and Massillon be widened from the width of 66 feet to the width of 100 feet; and further provided that a franchise be given the defendant company for a double-track electric railway to be constructed in the center of the highway, with center-pole construction, with the further provision that said franchise extend for a period of twenty-five years, and that the cities of Massillon and Canton extend their franchises to said company so as to expire at the same time as the said proposed twenty-five-year county franchise expires. If said proposition were accepted by said board of commissioners said company further proposed certain terms to be incorporated in said proposed twenty-five-year franchise. It is further averred that a majority of the owners of land lying along said public highway are opposed to any widening of said road and it would be a useless and extravagant expenditure of the public funds of the county and would be doing a wrong to the taxpayers over the entire county for said board to pay one cent towards said widening of said public highway for the purpose of giving said defendant company a double track on said highway. And it is further averred that whereas said board had formerly, March 27, 1912, passed a resolution which provided that unless the said company meet the demands of said board in regard to the question of fare, etc., a former resolution, passed in February, 1892, whereby said company was given the right to construct and operate said electric railway, as at present operated, would be annulled and rescinded. Therefore the said proposition as submitted by the said defendant company was rejected. It is further averred that whereas, in consideration of the fact that the defendant company is operating an electric railway on the public highway between the cities of Canton and Massillon, and since submittmg- the above proposition has made no statement or agreement to the effect that the demands of this board, as set forth in a resolution passed March 27, 1912, would be complied with, therefore that in the event that said demands of the board are not met by said company on or before .the time mentioned in said resolution of March 27, 1912, the prosecuting attorney be and is hereby instructed to immediately proceed to have injunction proceedings filed against said company restraining. said company from operating- said electric railway on said public highway between the cities of Canton and Massillon or running cars thereon, and to further compel said defendant company to remove said railway from said public highway. It is further averred that said' resolution provided that the same be contingent upon and in accordance with the conditions of said resolution passed by said board on March 27, 1912. It is further averred that shortly after the passing of said resolution of said commissioners, recorded in volume 8, cotiimissioners’ journal aforesaid, that The Cantori-Massillon Electric ■ Railway Company, an Ohio corporation, was organized by William- A. Lynch under the terms Of said grant, and it did operate on said franchise and grant. The plaintiff further avers that the rights and privileges contained in said grant were personal to said Wiliam A. Lynch, the grantee, and The Canton-Massillon Electric Railway Company, organized by said William A. Lynch, for operating: under said grant -and frailchise, and could not be assigned under the terms and conditions of said grant without the consent and authority and additional action of said board of commissioners. It is further averred that at the time of the assignment to The Canton-Akron Railway Company said consent was not granted.

The plaintiff therefore contends and asks that, by reason of the matters and things set forth in the petition, the defendant company be required and compelled to answer by what warrant it claims to have the use of and to enjoy the rights, privileges and franchises used and exercised by it in the operation of its interurban electric railroad between the cities of Canton and Massillon; that it be ousted from exercising the same and be compelled to remove its tracks and switches from said road between said cities.

To this petition, upon leave granted, the defendant filed a special and also a general demurrer, setting forth in the special demurrer:

“1. That this action was not brought within the time limited for the commencing of the same.
“2. That this action is barred by laws of Ohio, and was not commenced within the time prescribed and provided for therein, and is therefore barred by the statute of limitations placed upon such action.”

For its general demurrer the defendant sets forth five grounds, namely:

“1. That the petition does not state facts- sufficient to constitute a cause of action against the defendant.
'“2. That the petition does not state facts sufficient to entitle the plaintiff to the relief prayed for.
“3. That this court has not jurisdiction to hear and determine this action or to grant the relief prayed for therein.
‘‘4. That this action is barred by the statute of limitations.
“5. That the plaintiff has not legal capacity to try or to bring suit.”

This cause was submitted to this court on the demurrers of the defendant.

The plaintiff sets out at great length the various proceedings had by the commissioners of this county in regard to the occupancy of said road by said defendant company.

The action is a very important one, not only as .to the property rights involved but also as to the interests of the general public therein. The case has been ably argued, both by written briefs and in oral argument. In the short time that the court has had. to consider the questions submitted on the demurrers it can not be expected that the court will enter into extended reasons for the conclusions it has reached, but its conclusions will have to be in many respects dogmatically announced for want of time to give the reasons therefor. In stating the facts set forth in the petition we have epitomized an analysis of the petition in order to present the material questions raised by the demurrers in the c’ase.

It is contended by the plaintiff that the resolution adopted by the board of commissioners on February 22, 1,892, granted to William A. Lynch and to such railroad company as he might cause to be incorporated for that purpose the right to locate, construct, maintain and operate an electric railroad along said highway running between the cities of Canton and Massillon.

ft is contended that this resolution, if it is to be considered as a contract, is only personal to William A. Lynch, and therefore could not be transferred or assigned by him to any other person or corporation, for the reason that it lacked terms in the grant‘that would authorize the transfer by him of said privileges granted to him by the resolution of February 22, 1892. In other words, the omission of the words "successors or assigns” made the contract or grant only personal to said William A. Lynch, and an assignment or transfer of the grant by him to any person or corporation would be void.

The covenant or grant given by the county commissioners to said William A. Lynch, and to such railroad company as he might cause to be incorporated to locate, etc., an electric railroad on said road or highway, was authorized by a statute in force at the time the grant was given, said statute being Section 3438, Revised Statutes, now Section 9101, General Code, and is a covenant or grant that runs with the land or subject-matter of the contract, and the word "assignee” or the word "assigns” is not necessary to make the covenant effective as to all persons to whom the property or rights pass.

In 1 Smith’s Leading Cases (9 ed.), 208, it is said: "It may be observed that the question of whether it is necessary to covenant for 'assigns’, as to anything not in esse at the time of the covenant, discussed in the first and second resolutions of the leading case, has generally been passed over lightly in this country, and the use of the word 'assigns' considered of little importance if an intention that the covenant run can be gathered from the whole instrument/’

In Masury v. Southworth et al., 9 Ohio St., 351, the suprerpe court, in passing upon the question as to the necessity of the use of the word “assigns” in connection with the covenant which runs with the land, said on page 351: “The important consideration is, whether the covenant is annexed to the estate and runs with the land. If this be so, the rights and liabilities of those who take the estate and possess the land during the term, flow from a privity of estate, and not from any assignment of right or contract. If the covenant can not, or does not, run with the land, no words of assignment can create a privity of estate; if a privity of estate be created, no words of assignment are necessary.”

The language of the grant given to William A.. Lynch in the resolution of Feb. 22, 1892, granted to him and'to such railroad company as he might cause to be incorporated the right to locate, construct, etc., an electric road on said public highway. We are of the opinion that it was not a mere personal grant to Mr. Lynch, to be confined to his rights under the grant, but that the grant in this case, under this resolution, was a grant securing to Mr. Lynch the right to transfer the same to a third person or to a corporation.

There being no conditional limitations upon the powers of the commissioners granting the franchise, they could grant privileges which were perpetual, or for a definite period which might extend beyond the corporate life of the grantee. Since in this grant there was no time limit, the privileges are perpetual. When under power in a franchise or contract rights have been acquired and become vested, no amendment or alteration of charter or contract can take away the property or rights vested under the legitimate exercise of the powers granted.

Property rights acquired under and by virtue of franchises thus granted are perpetual, unless otherwise limited in the grant; and there was no limit in this case, and this franchise is not void as a consequence thereof. Booth on Street Railways, Section 17, and authorities there cited.

It is further contended that the grant to Mr. Lynch was without a time limit and therefore a mere grant at will, and that the commissioners could terminate the same at any time they saw proper to do so.

In support of this contention on the part of the plaintiff, we are cited to East Ohio Gas Co. v. City of Akron, 81 Ohio St., 33, as sustaining this contention.

We are of the opinion that the case of East Ohio Gas Co. v. City of Akron, supra, does not apply in this case; that a corporation like the corporation in the 81st Ohio St., is of a different nature than a corporation for public, service, such as a railroad company or an electric railroad company, and therefore the principles announced in that case do not apply, but rather that the principle recognized in the case of State, ex rel. Taylor, v. Columbus Ry. Co., 1 C. C., N. S., 145, does apply in this case. In the latter case it is held that a franchise or privilege to construct and operate said railway, granted and consented to without limitation of time, is perpetual, subject only to be terminated by the general assembly, under Section 2, Article I, or Sections 1 and 2 of Article XIII of the Constitution of the state. Consent given without limitation of time to a corporation is not always revocable even by legislative authority. The case of City of Detroit v. Detroit & Howell Plankroad Co., 43 Mich., 140, we cite, in which Judge Cooley says: “It cannot be necessary at this day to enter upon a discussion in denial of the right of the government to take from either individuals or corporations any property which they may rightfully have acquired.”

The commissioners in this case, having granted to William A. Lynch the right to occupy said public highway, fixing no time limit-for its occupancy and permitting improvements to be made with reference thereto, are without authority to revoke said right and the grant is indeterminate.

The only complaint made by the commissioners against the defendant company is that it charges an excessive rate of fare between Canton and Massillon for a round trip and for a single trip, and that no privilege of transfers is given. In other words, there is no complaint by the commissioners of any violation of any privilege or grant given to Mr. Lynch or a corporation to be organized by him, or its successors, as to any act done by it, or the omission of any act to be done by it, but the complaint is as to the excessive charges for fare complained of in the resolution of March 27, 1912.

As a relief for this complaint the legislature has provided, we believe, the exclusive remedy for such complaint, and that is to apply to the public service commission under favor of the act of the legislature found in 102 Ohio Laws, pages 553, 556 and 557, and if we are right in this conclusion the plaintiffs have no standing in this court and are not entitled to the relief prayed for in their petition.

But if we are wrong in this conclusion, there is another reason why the plaintiff is not entitled to the relief asked for in his petition, the forfeiture of the charter and grant under which said defendant is operating said railroad. Under the resolution of February 22, 1892, there is no provision or condition of forfeiture, and the resolution, being a contract between the parties and failing to provide an express condition of forfeiture, no condition of forfeiture by implication can be exercised by the board of commissioners. If the contract made with the commissioners and Mr. Lynch by resolution of February 22, 1892, is to be considered as a contract of lease, and it makes no provision for forfeiture for failure to comply with any express condition, the commissioners can not exercise the right of forfeiture by any implied covenant or condition. not expressed in the resolution or contract. As no conditions of forfeiture are expressed in the resolution or contract none can be implied. There is no implied or express covenant in the resolution of Feb. 22, 1892, for a forfeiture of said grant for a breach of any covenant contained therein. Therefore, we hold that there is no ground for a forfeiture of the grant secured by Mr. Lynch or enjoyed by said defendant company as his successor or assign, but even assuming that the board of commissioners has the authority to declare a forfeiture of said grant, have they so declared? You can search the various resolutions adopted by the board of commissioners at different periods and you will fail to find any unconditional declaration of forfeiture of said grant, but what they have done has been conditional and uncertain as to forfeiture, and as their pleading is to be tested by the facts alleged in the petition, let the facts not alleged be as they may, they are to be construed most strongly against the pleader. Therefore the fact not being alleged that there has been a forfeiture, in testing it on the demurrer it is to be construed most strongly against the plaintiff, and is to be construed as though the allegation was that there was no forfeiture on the part of the plaintiff. That being so, the petition does not state facts sufficient to •constitute a cause of action in this case.

It is contended by the defendant that the plaintiff’s cause of action is barred by the statute of limitations, and our attention has been called to Section 12340 of the General Code in support of this contention.

Upon a careful reading of this section it will be noticed that nothing contained in the chapter in quo ivarranto shall authorize an action against a corporation for forfeiture of charter, unless it be commenced within five years after the act complained of was done or committed. As we have seen, the only complaint made in the petition upon which a forfeiture could be based is the excessive fare charged by the defendant company, but just when said company commenced to charge its excessive rate of fare is not declared by the petition and as the ground of demurrer for limitation must appear on the face of the petition, it does,not clearhf appear in this case when the defendant company commenced to charge this excessive rate of fare. Therefore, the ground of demurrer as to the stat-' •ute of limitations is not well taken. . For that reason the same is overruled, as the statute for forfeiture in such case would require the action to be commenced within five years after the act complained of was done or committed.

It is contended by the defendant that the action is barred by said section on the ground that the twenty-year statute bars the action. The time in.which the defendant company has exercised the franchise has not been twenty years, unless the time that the defendant company has enjoyed said franchise can be tacked on to the time exercised by its predecessors in title.

We are of the opinion that this can not be done. That period must embrace the time that the defendant company has enjoyed said franchise independent of the time enjoyed by its predecessors in title.

“The general rule is that possession can not bé tacked to make out title by prescription where the deed under which the last occupant claims title does not include the land in dispute. It must cleariy appear in the deed that the particular premises were embraced in the deed or transfer, in whatever form it may have been made.” 1 Cyc., 1007.

Mr. Hubert C. Pontius and Mr. Franklin M. Sweitser, for plaintiff.

Messrs. Wclty & Albaugh, for defendant.

In other words, where the party occupying is not claiming under any color of title, but simply by occupancy, such party must be in possession during the required period of limitation. Therefore, it not appearing in the petition that the defendant company has been in possession twenty years without tacking on the possession of its predecessor in title, namely, Mr. Lynch and his successors, the defendant is not entitled to the contention that this action is barred by the twenty-year limitation provided for in Section 12340.

Therefore, the demurrer as to the statute of limitations is overruled; but we hold that the general demurrer is well taken and that the plaintiff has no cause of action and has not the legal capacity to bring this action. The general demurrer is sustained on the grounds that the petition does not state facts sufficient to constitute a cause of action and that the plaintiff has not the capacity to bring the action.

In the event that the plaintiff does not desire to plead further by amendment, the petition of the plaimiff will be dismissed at the costs of the plaintiff.

Demurrer to petition sustained.  