privilege to operate for all purposes under the franchise." given a corporation by a city to use its street for conducting electricity.

[Ed. Note. For cases in point, see Cent. Dig. vol. 36, Municipal Corporations, §§ 141, 1482.]

3. ELECTRICITY-SUBWAY COMPANY-QUESTIONING RIGHT OF APPLICANT FOR

SPACE.

So far as concerns the Electrical Subway Company, which is required to lease space in its conduits in New York City to any corporation having "lawful power" to operate electrical conductors in the streets of the city, it is enough that an applicant for space has such a special franchise by assignment, and that under such assignment electricity has been furnished to customers by way of the streets, with the acquiescence of the city.

[Ed. Note. For cases in point, see Cent. Dig. vol. 18, Electricity, § 1.] 4. CORPORATIONS-TRANSFER OF SPECIAL FRANCHISE TO INDIVIDUAL.

It is no defect in the chain of title to a special franchise to operate electrial conductors in the streets of a city that it was first assigned, by the corporation to which it was granted, to an individual, especially where he served merely as a medium for the transfer to another company.

5. ELECTRICITY-SUBWAY COMPANY-APPLICATION

COMMISSIONER.

FOR SPACE-CONSENT OF

Under the rules of the commissioner of water supply, gas, and electricity of the city of New York providing that when application has been made to the Electrical Subway Company for space in its conduits, and space has been assigned, the consent of the commissioner must be obtained before any conductors of electricity are placed in the space so assigned, the subway company may not refuse an application for space because such consent of the commissioner has not been first obtained. Ingraham and Laughlin, JJ., dissenting.

Appeal from Special Term, New York County.

Application of the Long Acre Light & Power Company for mandamus to compel the Consolidated Telegraph & Electrical Subway Company to assign space in its subway. From an order (101 N. Y. Supp. 460) granting a peremptory writ, said subway company appeals. Affirmed.

Argued before PATTERSON, INGRAHAM, LAUGHLIN, CLARKE, and SCOTT, JJ.

Alton B. Parker and Beardsley & Hemmens, for appellant.
Austen G. Fox and A. J. Dittenhoefer, for respondent.

SCOTT, J. This proceeding involves the right of the relator, an electric light company, to obtain an allotment of space for its wires in the under ground conduits belonging to the Consolidated Telegraph & Electrical Subway Company (hereinafter for brevity's sake called the "Subway Company"). The organization of the Subway Company, and its erection and maintenance of underground conduits for electrical conductors, marked the culmination of the long struggle, now passed into familiar history, to compel the removal from the streets and public places on Manhattan Island of the poles and wires once used for telegraph, telephone, and electric light wires. The powers, duties, and obligations of the respondent company are derived from and defined by two certain contracts, dated, respectively, July 27, 1886, and April 7, 1887, between said company and the commissioners of electrical subways for the city of New York, which were ratified and confirmed by the

and 136 New York State Reporter

Legislature by chapter 716, p. 928, Laws 1887. By these contracts the Subway Company was authorized to construct conduits for carrying wires, and, among other things, it was provided that the spaces in such conduits should be leased to any corporation "having lawful power to operate electrical conductors in any street, highway or public place in the city of New York that may apply for the same, including any company or corporation having or which shall acquire lawful power to manufacture, use or supply electricity." The contract also undertook to provide against the danger that some one company, by leasing more space that it required, should prevent other companies from acquiring space, and further provided for the building of additional conduits as they might be needed. The commissioners of electrical subways agreed on their part to use all lawful means to compel companies operating electrical conductors to rent space in the subways, and the Legislature, by section 3 (page 929) of the ratifying act, provided that wherever the conduits has been built all poles and wires should be removed, forcibly if necessary, from public streets and places, and in point of fact such poles and wires, including those erected and operated by the predecessor in interest of this relator, were subsequently removed by the public authorities of the city. The ratifying act of 1887 also included a remedy by writ of mandamus in case the Subway Company should fail to perform the duties and obligations assumed by it. The present relator, claiming to be entitled to lay and operate electrical conductors in this city, has applied to the subway company for an allotment of space in the subway now constructed in Forty-Second street, and has tendered payment of rental for one year in advance at the rate fixed and charged by said Subway Company. That company has refused to allot such space, and resists the application for a mandamus upon several grounds, but chiefly relies upon the objection that the relator's company has not "lawful power to operate electrical conductors in the streets." But first it says that by its answer to the petition it has raised issues of fact, and that, for this reason, if any mandamus at all is to issue, it should be in the alternative and not the peremptory form. This objection is satisfactorily answered by the learned justice at Special Term, and requires no extended discussion at our hands. As he points out, the allegations of the petition are positive and explicit in detail, and are met for the most part by denials of knowledge or information, or by denials, positive in form, but which obviously put in issue not facts, but the conclusions of law arising from the facts as stated in the petition. The principal controversy arises over the denial by the Subway Company that the relator has any legal right or lawful power to operate electrical conductors under the streets, or has lawful power to manufacture, use, or supply electricity. The right which the relator asserts, and which is thus called in question, rests upon a franchise granted by the municipal authorities of the city of New York to the American Electric Manufacturing Company in 1887.

The facts under which the relator claims the right to operate under this franchise are set forth at length in the petition and are briefly as follows:

The American Electric Manufacturing Company was incorporated on March 28, 1885, under the general manufacturing corporation act of 1848 (Laws 1848, p. 54, c. 40), which seems to have been the only appropriate act in force at that time under which such a company could have been incorporated. The purposes of said company as stated in its certificate of incorporation are very broad, covering, "the manufacture, generation, utilization and sale of electricity," as well as the manufacture, leasing, and sale of electrical apparatus and appliances, and the purchase and sale of patent rights and the like. On May 27, 1887, the board of aldermen of the then city of New York, by resolution (approved by the mayor June 13, 1887), gave and granted to the American Electric Manufacturing Company permission and authority "to locate and erect poles, and hang wires and fixtures thereon, and to place, construct and use wires, conduits and conductors for electrical purposes in the city of New York in, over and under the streets, avenues, wharves and parks therein according to such plans as may be directed, approved or allowed by and subject to the powers of the electrical subway commissioners and to the provisions of chapter 499 of the Laws of 1885, and under the supervision of the commissioner of public works and of the department of public works within. their respective territorial jurisdiction, and subject also to all existing ordinances applicable thereto, and to all reasonable regulations of the privilege hereby conferred which the common council may hereafter impose by ordinance or otherwise." The resolution also makes provision for compensation to the city for the privilege thus conferred. This resolution constitutes the grant of franchise under which the relator claims the right to operate electrical conductors. Its title thereto is derived as follows: On April 18, 1888, the American Electric Manufacturing Company by an instrument in writing "granted" to Frederick E. Townsend, his executors, administrators, and assigns, "the sole and exclusive right and privilege to operate for all purposes, under the franchise, permission, privilege, authority or right granted to it by the board of aldermen of the city of New York by a resolution adopted by said board on the 31st day of May, 1887," reciting the terms of such resolution. The language of this instrument is criticised as being a grant of a right under a franchise, and not an assignment of the franchise itself. What was granted to the manufacturing company was the right to do certain things. That right constituted its special franchise, and was property. What was "granted" to Townsend was "the sole and exclusive right and privilege to operate for all purposes under the franchise, privilege, permission, authority or right. granted to it by the board of aldermen of the city of New York by resolution adopted by said board on the 31st of May, 1887." In other words, the company granted or conveyed to Townsend the right-i. e., the franchise which had been given to it by the board of aldermen-and it gave him the "sole and exclusive right," reserving nothing which it could use itself or transfer to any one else. It is not easy to see how, by any words, a more complete assignment could have been made. On March 14, 1889, the American Electric Illuminating Company was incorporated under the act of 1818; the objects of its incorporation being the "manufacture, sale, leasing and ownership of appliances,

and 136 New York State Reporter

letters patent and plant for electric light, heat, power and motion, and the manufacture, sale and transmission of electric light, heat, power and motion." To this corporation, by a paper dated April 19th, 1889, Frederick E. Townsend, gave, granted, sold, assigned, transferred and set over "any right, title and interest I have and hold or may have and hold, as trustee for such American Electric Illuminating Company, or individually in and to and under the paper, writing and assignment dated April 18th, 1888, made by the American Electric Manufacturing Company, a company duly organized under the laws of the state of New York, unto me, and the rights, permission, privilege, franchise and authority therein referred to." The American Electric Illuminating Company proceeded to operate under this franchise to the extent that it established a generating plant, erected poles, and strung wires, and for more than a year manufactured electricity and supplied it to customers. Its poles and wires were then cut down and removed by the public authorities, and its business, or the major part thereof, was thereupon suspended. In 1897 a judgment creditor began sequestration proceedings against the company, which resulted in the appointment of a receiver, and the sale by him, under the order of this court, of the franchise to carry on business in the city of New York. The purchaser on such sale was one Martin Minturn, and the sale to him was duly confirmed. The relator was incorporated on April 23, 1903, under the transportation corporations law, with ample powers, so far as concerned its certificate of incorporation, to generate, sell, and distribute electricity, and to construct, maintain, and operate conductors therefor. On March 21, 1906, Martin Minturn, by an instrument in writing, gave, granted, sold, assigned, transferred, and set over to the relator any and all his right, title, and interest of every nature and kind in and to and under the above-described franchise.

The respondent, relying upon that clause of its contract which requires it to furnish space in its conduits only to companies having "lawful power" to operate electrical conductors in this city, defends its refusal to accord space in said conduits to relator by the contention that said relator has not such lawful power, and owns no franchise to operate such conductors granted either by the Legislature or the municipal authorities, or any other body competent to grant such a franchise. The relator's title to the franchise under which it claims the right to operate, and the history of which has been given, is questioned because, as it is said, the American Electric Manufacturing Company could not assign to Townsend the franchise granted to it by the board of aldermen, and consequently Townsend took nothing under the attempted assignment to him, and could convey nothing to his assignee, the American Electric Illuminating Company. This contention is based upon the general proposition that a company chartered to perform duties of a public, or quasi public, nature, cannot, without legislative authority, alienate or convey away its right to perform such duties, or the property necessary to their performance. In support of this general proposition, there are cited to us numberless extracts from text-books and judicial opinions. That there is such a rule of law is not open to question, but like most general rules it is subject to exception and qualification both as to its applicability to specific cases

and as to the persons who may invoke it. It remains, therefore, to consider whether or not it is applicable to the circumstances of the present case, and whether or not, in any event, it may be invoked by this respondent.

The American Electric Manufacturing Company derived its primary franchise to be a corporation directly from the Legislature, and with it the power to engage, as a corporation, in the various kinds of business specified in its certificate of incorporation. The right thus conferred involved no public or quasi public duty. The secondary or special franchise to operate a line or lines of electrical conductors, which is the only franchise involved in this proceeding, was granted by the board of aldermen, the proper municipal authority to make such grant. West Side Electric Co. v. Consol. Tel. Co., 110 App. Div. 171, 96 N. Y. Supp. 609. The general rule that a special or secondary franchise is inalienable without express legislative assent has lost practically all its authority in this state. From early days railroad corporations have had legislative authority to transfer to other railroad corporations the special privilege of operating the road (Woodruff v. Erie R. Co., 93 N. Y. 609–616), and all other corporations were accorded that right by chapter 638, p. 1436, of the Laws of 1893. The relaxation of the general rule is undoubtedly due to the freedom with which corporate charters are now given, and to the universal recognition of the property, nature, and value of special franchises. A special franchise is generally accompanied by the grant of the right to use or occupy public property, or to exercise the essentially sovereign power to acquire property by eminent domain, and the consideration for the grant is found in the quasi public service to be rendered. The reason for the rule against alienation of such a franchise is that, by divesting itself of the franchise, the corporation would disable itself from discharging the public duties for which it had been chartered, and the public has, therefore, been considered as entitled to forbid such a transfer. When a charter can be obtained by merely executing and filing a certificate, as was the case when the Electric Manufacturing Company was organized, and the exercise. of the special franchise carried with it the public obligation, the reason for the rule largely disappears, especially where, as in the case. of a manufacturing company, the sale and distribution of electricity was only a part of the objects for which the company was incorporated. Whether or not a special franchise be availed of, and by whom it is availed of, is solely a question of public concern. It is not questioned. that the grantor of a special privilege might, as a condition of its grant, attach the quality of assignability to it, and the same power which conferred the franchise may ratify and confirm the alienation thereof when attempted to be effected without precedent authority. Thompson on Corporations, vol. 4, par. 5361: Shaw v. Norfolk Ry. Co., 5 Gray (Mass.) 162; Richards v. Merrimack, etc., R. Co., 44 N. H. 127. It is not essential that such ratification shall assume any particular form. It is sufficient if it be evidenced by acts which recognize the validity of the alienation or assignment, and are inconsistent with any objection thereto. The franchise was granted by the board of aldermen, not as individuals, but as the proper local authority to act, in that