
    The Ohio Traction Co. v. Huwe, Treas.
    (Decided July 6, 1931.)
    
      Mr. Joseph B. Wilby and Messrs. Taft, Stettinius & Hollister, for plaintiff.
    
      Mr. Robert N. Gorman, prosecuting attorney, and Mr. Leonard H. Freiberg, for defendant.
   Hamilton, J.

This case is here on appeal from a judgment of the court of common pleas granting a perpetual injunction enjoining the county treasurer from enforcing collection of an assessment against the Ohio Traction Company to pay the cost of relaying, reconstructing, and changing the grade of the traction company’s tracks through the village of Wyoming, Ohio.

The Ohio Traction Company is the successor to the franchise granted to the Millcreek Valley Street Railway Company to construct, operate, and maintain a single or double track street railway in the village of Wyoming, Hamilton county, Ohio. This grant was enacted August, 1900.

In 1902, the board of county commissioners of Hamilton county granted to the Cincinnati, Glendale & Hamilton Traction Company a franchise conferring certain rights, privileges, and powers, including the right to maintain, operate, own, and lease a street railroad having the city of Cincinnati, in Hamilton county, and the City of Hamilton, in Butler county, as its termini, running over and along the Carthage turnpike, and rights of. way in said counties through certain villages, including the village of Wyoming, in Hamilton county, Ohio.

The plaintiff, the Ohio Traction Company, is operating said street railroad company on the Carthage turnpike between the termini aforesaid, including the village of Wyoming, under a lease to the Cincinnati Interurban Company, an Ohio corporation, under date of September 30, 1902, from said the Cincinnati, Glendale & Hamilton Traction Company of all its property, rights, franchises, and privileges, for and during the unexpired term of the grants then existing, including grants of franchise by certain villages within the termini of its line of street railroad, including the grant of franchise from the village of Wyoming, Hamilton county, which lease was duly assigned by the said Cincinnati Interurban Company to this plaintiff, the Ohio Traction Company, on July 5, 1905. The grant of franchise from the village of Wyoming, as aforesaid, was given by ordinance of the council of said village of Wyoming, passed March 30, 1900.

Under authorization of the statute, the state highway commissioner created and designated as intercounty highway No. 43 the Springfield and Carthage pike, which passes through the village of Wyoming and over the route covered by the franchise of the plaintiff, Ohio Traction Company.

On April 15, 1919, the board of county commissioners of Hamilton county adopted a resolution declaring it necessary to improve the Hamilton-Carthage pike, also known as intercounty highway No. 43, between the south corporation line of the village of Wyoming and the north corporation line of the village of Wyoming, according to plans and specifications prepared by said county commissioners. The necessary resolutions were passed and notices were given. The improvement called for a change of grade in the village and the relocation of the street car tracks of the company. The proceeding provided for the paving of- said street with asphalt, brick, or granite block, or other kind of paving as prescribed by the ordinances of said village.

On May 6, 1919, the county surveyor of Hamilton county, Ohio, submitted an estimate for laying a double street railroad track on Carthage-Hamilton pike, known as intercounty highway No. 43, from the south line of the village of Wyoming northerly for a'distance of 7,250 feet, at an estimated cost for labor, material, engineering, and inspection in the amount of $108,341. The county commissioners advertised for bids for the lowering of the tracks of said traction company, and for making the grade conform to the grade established by the county surveyor of Hamilton county, in accordance with the plans and specifications for said improvement, and ordered that the entire cost of the laying of the tracks be levied against the plaintiff, the Ohio Traction Company.

It is alleged that the county commissioners awarded the bid to one Joseph A. Byrnes in the sum of $93,884.

On June 6, 1919, the board of county commissioners adopted a resolution to issue bonds in anticipation of the collection of taxes assessed against the plaintiff, the Ohio Traction Company, to defray the cost of lowering the tracks of said traction company and making the grade thereof conform to the grade established by the county surveyor of Hamilton county, and the plans and specifications of said proposed improvement of Carthage Turnpike within the limits of said village of Wyoming, under authorization of Section 6956 of the G-eneral Code of Ohio.

Thereafter on July 8, 1919, bonds amounting to $108,000 were awarded to Field Richards & Co. in anticipation of collection of taxes assessed against this plaintiff.

On August 8, 1919, a resolution was adopted by the board of county commissioners of Hamilton county, ordering that the assessment of $108,000 against the Ohio Traction Company should be paid into the county treasury on or before the 8th day of September, 1919, at 11 o’clock a. m., and further ordering that, if unpaid, said amount of $108,000 be certified to the county auditor and placed by him upon a special duplicate to be collected, as other taxes are collected, in twenty semi-annual installments, one-half of each installment on or before the 1st day of January and July of each year, beginning January, 1920, and continuing each year until all assessments have been paid.

Said assessment of $108,000 against the Ohio Traction Company was thereafter so certified to the auditor of Hamilton county and by the auditor placed on the records of his office, upon a special duplicate, to be collected as other taxes. Thereupon this suit was filed to prevent the county treasurer from collecting said assessment against the Ohio Traction Company, plaintiff herein, for the reason as claimed, that the assessment is invalid and without warrant of law.

To the petition a general denial was filed. A temporary restraining order was granted in the year 1920. Nothing further was done in the case until April 15, 1930, when an entry granting leave to file an amended answer was given.

The second cause of action as pleaded in the petition charges that the assessment of $108,000 is unreasonable, unwarranted, and improper, and out of all proportion to any benefit accruing to this plaintiff, that the reasonable cost of said improvement should not have exceeded $72,000, and the petition states that, if the assessment is held to be valid, plaintiff is willing to pay a reasonable tax and assessment.

By leave an amended answer was filed by defendant.

The amended answer in the first defense admits the statement of facts in substance as pleaded in the petition, and as a second defense pleads that the plaintiff is estopped to deny the validity of the said assessment.

For a third defense, the amended answer pleads the proceeding of the commissioners, the necessity for the change in the grade in intercounty highway 43 in the village of Wyoming, the relaying and reconstruction of the tracks, the service of notice at various times on the traction company; and recites that no objection was made to the proposed change of grade or to any part of the improvement. The tracks as ordered by the board of county commissioners were lowered to conform to the grade of the highway, at a cost of $108,000, and the bonds were issued in. anticipation of the collection of said amount.

The fourth defense to the first cause of action sets up the previous condition of the tracks and the cross-ties, in that they were old and decayed, and that they no longer furnished an adequate support for the rails on which the plaintiff operated its cars; that the foundation in the road in which said ties were imbedded had given way, that the continued operation of the cars over said tracks in their then condition was of great expense to plaintiff, and that said rails, ties, and foundation were in need of replacement and reconstruction; that plaintiff company knew that the proposed construction of Springfield pike, together with the relocation of its tracks to conform to the change in grade was pending, that it represented to the hoard of county commissioners and to the council of the village of Wyoming that it was unahle to finance such repairs and reconstruction, that it falsely represented that such repairs and reconstruction would confer no benefit upon it, but that it nevertheless on the 30th day of December, 1918, suggested that the board of county commissioners contract, not only for the entire paving, but also for the work necessary for the plaintiff to do in connection with the relaying of its tracks, and suggested that half of the cost of the excavating, concreting, and paving, together with the cost necessary to relay its tracks, be assessed against plaintiff over a period of ten years, that plaintiff knew the board of county commissioners was expending the amount of money hereinbefore set forth as the cost of lowering plaintiff’s tracks; and that plaintiff was duly notified and knew that the entire cost of lowering its tracks was to be certified and charged against it, and took no steps to contest or stop the lowering of said tracks or to contest or stop or attempt to prevent the expenditure of said money; and that it actively co-operated in said work in that it installed cross-overs for the continuation of the operation of its street railway system wherever and whenever necessary to consummate said work. The fourth defense further sets up the notice of the time for the hearing of objections, and that the traction company had knowledge of the same.

By way of answer to the second cause of action, the defendant denied each and every allegation therein contained and asked for a dissolution of the temporary restraining order and that the petition be dismissed.

To this answer the traction company filed a demurrer on two grounds: First, that the amended answer did not state facts sufficient to constitute a defense to the causes of action set forth in the petition, and second, that the assessment was contrary to and in violation of Section 6 of Article VIII of the Constitution of Ohio, and was invalid, unlawful, without warrant or power in law, and void.

The trial court sustained the demurrer to the answer in toto, and the defendant not desiring to plead further, judgment was entered, granting a perpetual injunction against the collection of said assessment of $108,000, or any installments of said assessment.

The defendant treasurer thereupon filed his appeal in this court, and the case is here on a demurrer to the answer.

In support of the demurrer the plaintiff relies on the claim that the assessment is contrary to and in violation of Section 6 of Article VIII of the Constitution of the State of Ohio.

Section 6, Article VIII, of the Constitution of Ohio, provides, in part: “No laws shall be passed authorizing any county, city, town or township, by vote of its citizens, or otherwise, to become a stockholder in any joint stock company, corporation, or association whatever; or to raise money for, or to loan its credit to, or in aid of, any such company, corporation, or association.”

The proceeding by the commissioners in making the improvement and assessing the costs under the provisions of Section 6956, General Code, is challenged. The pertinent part of the section is as follows: “Whenever a road or street is improved where a street or interurban or other railroad or railway lies within the improved portion of the roadway, snch railroad or railway grade shall in all respects be changed to meet the approval of the county surveyor * * * and costs of such change of grade be paid by such company under the law or by the terms of its franchise or grant, shall be a lien upon the property of such company and the proper authorities may provide for the payment of the amount chargeable against said company under the law or by the terms of its franchise or grant, in installments as in the case of other property owners, and such installments shall bear interest as in other cases, and the board of county commissioners or other authorities may issue bonds in anticipation of the collection of said installments.”

If the entire proceeding is invalid as contravening Section 6 of Article VIII of the Constitution of Ohio, then the demurrer should be sustained. To so hold, however, would be to hold Section 6956, General Code, and any proceeding thereunder, violative of Section 6 of Article VIII of the Constitution.

The franchise under which the plaintiff traction company operated, and holds by lease assignment, provided:

“Should council at any time during the continuance of this grant, or its renewal, change the grade of said streets, the said company shall raise or lower its tracts to conform the same to the new grades, entirely at its own expense within the period of ten days after the change in the grade of said streets shall have been made. Wherever the pavement of street surface is disturbed by the construction, repair, or maintenance of the tracks herein authorized, the same shall be restored to like conditions as before disturbed, by the company, at its own expense, keeping the dirt and macadam separate, and filling in the dirt first, and the macadam last, the same to be done to the satisfaction of council and the village engineer. The said company shall pay the charge of the village engineer for giving grades and the charge of the village solicitor for proving the consents. * * *
“Said company shall at all times keep the street between its tracks and for a space of eighteen inches on either side of .the same, in good repair to the satisfaction' of the village council.
“Section VI. In case said village shall at any time pave said street or avenue on which said railroad is constructed, with asphaltum, brick, granite block, crushed granite or any other kind of paving, said railroad company hereby concedes the right to said village to pave all that portion of the street which is contained between the tracks and also a space eighteen inches outside the outer rails of such tracks with a similar material and at the expense of said railroad company, to be paid for in the same way and on the .same terms as the property holders of the village are required to pay * # * >>

One of the points claimed is, as alleged in the petition, that this right to have the paving between the rails and eighteen inches outside is a right which accrues to the village of Wyoming only, and does not pass as a right to the county of Hamilton. The grant of franchise was to the Millcreek Valley Street Railway Company, its successors and assigns. The state by law gave the power to the county commissioners to make the street in question through the village of Wyoming an intercounty highway, and to improve the same through the village of Wyoming, which it did.

Section 6956, General Code, gives the power to charge the company with the change in grade, and the cost of such change of grade shall be paid by such company under the law, or by the terms of its franchise or grant.

In this case, under the terms of its franchise or grant, the company was bound to pay the costs of the paving between the tracks and eighteen.inches on either side.

Plaintiff relies on the case of City of Cincinnati v. Harth, 101 Ohio St., 344, 128 N. E., 263, 13 A. L. R., 308. In that case Harth, a taxpayer, brought the action to enjoin the delivery to the trustees of the sinking fund of the city of Cincinnati of certain assessment bonds for the improvement of Freeman avenue, by the furnishing of ties, rails, and tracks. In the Harth case-the proceeding by council was under Sections 3812-2 and 3812-3, General Code, which authorized such expenditure and improvement by constructing a new roadbed, and laying new rails and ties for the railroad company.

The section referred to specifically provided for such expenditures, and they were sought to be made under the provisions of those sections. The Supreme Court held that the proceeding under these sections was a lending of credit to and in aid of a corporation, and therefore contravened Section 6 of Article VIII of the Constitution of Ohio, and the court affirmed the judgment of the Court of Appeals granting the injunction.

Section 6956, General Code, does not provide for the reconstruction of the road by installing new rails and ties and rebuilding of the road, which would be the rebuilding of the property of the railroad company. It only provides that they shall pay for the necessary change of grade, and that the cost of such change shall be paid as determined by the franchise, and such cost shall be a lien on the property of the company, and provides that it may be paid for in installments.

We are of opinion that the Harth case has no application to the present question under consideration.

We do find a principle announced in the case of City of Newark v. Fromholtz, 102 Ohio St., 81, 130 N. E., 561, 562, which is illuminating. The fourth paragraph of the syllabus is as follows: “When an electric railway company, exercising an easement in a city street about to be repaved and being liable by law and under the terms of its franchise for the cost of paving the part occupied by it, proposes that the city pave the railway’s part along with the remainder of the street, agreeing to pay its proper proportion thereof, including the preliminary cost of surveys, etc., upon the same terms as special assessments against abutting property are made payable, the city may accept such proposal and proceed accordingly. Such action is not violative of Section 6, Article VIII of the Constitution of Ohio.”

One of the facts set up in the answer is to the effect that the company not only agreed that the county should proceed with the improvement, the replacing of the tracks, and changing of the grade, etc., but requested it so to do.

The court in the course of the opinion in the Fromholtz case said, at page 93 of 102 Ohio State, 130 N. E., 561, 565:

“The street to be paved is under the control of the city. The electric railway company has a right of user, which is joint, but not exclusive. The city owes a duty to the public to keep the streets in proper repair, and, having determined to pave a certain street, is obligated to the public to pave it in its entirety, or all of it that is included within the boundaries covered by such determination.”

"While it is true the village of Wyoming in the instant case was not making the improvement directly, by its consent, authorization, and authority of law, the street was being improved by the county commissioners, which in effect was the action of the village of Wyoming. The village of Wyoming owed the duty to the public to keep its street in proper repair. This it did by the work of the county commissioners.

Continuing, the court in its opinion in the Fromhollz case, says: “The fact that a railway company with its tracks occupies a part of the area, and that the law and the provisions of the franchise obligate the railway company to pave the part occupied by it, does not in any way relieve the city of its obligations to the public. * * *

“In this case the easement of the railway company, so far as it relates to the payment of its proportionate share of the cost of the improvement is, by and with the consent of the railway company, placed in a relationship similar to that of abutting property. An arrangement of this nature is not in conflict with Section 6, Article VIII, of the Constitution of Ohio, because the primary obligation to build this part of the improvement rests with the city, the same as does the building of any other part.”

These considerations lead us to the conclusion that Section 6956, General Code, in itself does not contravene Section 6, of Article VIII of the Constitution of Ohio.

The answer, in so far as it relates to the furnishing of, new cross-ties and rails and a new foundation for and on behalf of the company, sets up no facts as a defense to the petition, for the reason that such expenditure would be a lending of credit to a corporation, in violation of Section 6, Article VIII, of the Constitution of Ohio.

The cost of changing the tracks to conform to the grade established and the cost of paving the same between the rails and for eighteen inches outside thereof is a proper item of assessment under the terms of the franchise. We will, therefore, strike from the fourth defense of the amended answer, and eliminate therefrom, all allegations with reference to the cost of furnishing new rails and ties and foundation for the tracks, and yflth these allegations eliminated from the answer the demurrer will be overruled, and an issue may be made as to the amount strictly chargeable to the cost of conformation of the tracks to the change of grade and the paving between the tracks and for eighteen inches outside thereof.

Leave is granted for further pleadings on this issue if desired.

The case will be later assigned for evidence on the question of the amount of the assessable charges, as herein indicated.

Decree accordingly.

Ross, P. J., and Cushing, J., concur.  