New York Law Review

Tag: legislative power

  • People v. Ulster & Delaware R.R. Co., 128 N.Y. 280 (1891): State’s Power to Waive Corporate Forfeiture

    People v. Ulster & Delaware R.R. Co., 128 N.Y. 280 (1891)

    The state retains the power to waive forfeiture of a corporate charter, even after initiating legal action to dissolve the corporation, especially when a subsequent statute alters the conditions for forfeiture.

    Summary

    The People, by the Attorney General, sued the Ulster & Delaware Railroad Company, seeking to annul its corporate existence for failing to complete its originally planned railway line. The defendant argued that a subsequent statute, combined with a certification from the railroad commissioners, absolved them of the obligation to extend the line and thus prevented forfeiture. The Court of Appeals held that the state, through legislative action, could waive the forfeiture, and the railroad commissioner’s certificate acted as a bar to the action, demonstrating the state’s broad authority over corporate existence and the enforcement of forfeitures.

    Facts

    The Rondout & Oswego Railroad Company was formed in 1866 to build a railroad from Rondout to Oneonta. The company built the line from Rondout to Stamford but failed to complete the Stamford-to-Oneonta section. The Ulster & Delaware Railroad Company succeeded the Rondout & Oswego Company through reorganization following foreclosure in 1875. The State initiated an action to dissolve Ulster & Delaware, alleging forfeiture of its charter due to the failure to build the complete original route.

    Procedural History

    The Attorney General brought the action in the name of the People to dissolve the corporation. The defendant argued a subsequent statute barred the action. The trial court awarded an extra allowance to the defendant which was appealed. The Court of Appeals reviewed the judgment annulling the corporation’s existence and the order denying an extra allowance, ultimately affirming both.

    Issue(s)

    1. Whether the state, through legislative enactment, can waive a cause of action for corporate charter forfeiture after initiating legal proceedings to enforce such forfeiture.

    2. Whether a certificate from the railroad commissioners, stating that no public interest required the extension of the railroad, bars an action to annul the corporation’s existence for failure to complete the original route.

    3. Whether the trial court correctly determined the motion for an extra allowance.

    Holding

    1. Yes, because the state retains absolute control over actions for forfeiture and can waive such forfeitures through legislative action, even after an action has been initiated.

    2. Yes, because the legislature gave conclusive weight to the railroad commissioners’ certificate, thereby barring actions to annul the corporation’s existence for failure to extend its road.

    3. Yes, because the undisputed evidence did not show that the corporate franchise had any definite value.

    Court’s Reasoning

    The court reasoned that an action to forfeit a corporate charter is not about recovering a benefit for the prosecutor but rather about punishing an offender for violating the law. The state has absolute control over these actions and can discontinue them or waive the forfeiture at will. The court emphasized, “By enforcing the forfeiture of corporate existence the state receives no benefit and acquires no property, and by waiving such forfeiture it loses no privilege and interferes with no vested right.”

    The court cited chapter 286 of the Laws of 1889, which amended chapter 430 of the Laws of 1874, stating that “Nothing herein contained shall be construed to compel a corporation, organized under this act, to extend its road beyond the portion thereof constructed at the time said corporation acquired title to such railroad property and franchise, provided the board of railroad commissioners shall certify that, in their opinion, the public interests, under all the circumstances, do not require such extension…” The court interpreted this to mean the state gave the railroad commissioners the power to determine whether enforcing a forfeiture was in the public interest. The court found that the statute effectively removed the penalty for failing to complete the railroad if the commission certified it was not in the public interest. Citing Nash v. White’s Bank of Buffalo, 105 N.Y. 243, the court stated “there being no clause in the act of 1889 saving ‘pending prosecutions or existing rights from the effect of the statute, by settled rules, the abolition of the penalties left all actions in which judgments had not been obtained subject to the rule created by the amended statute alone.”

    Regarding the extra allowance, the court found that the evidence failed to show any definite value of the corporate franchise, and therefore the motion was correctly denied.

  • Fort Plain Bridge Co. v. Smith, 1863 N.Y. Gen. Term. LEXIS 104 (1863): Legislative Power to Grant Competing Franchises

    1863 N.Y. Gen. Term. LEXIS 104

    A state legislature can grant a franchise that impairs or destroys the value of a previously granted franchise, absent an express prohibition in the original grant.

    Summary

    Fort Plain Bridge Co. sued Smith for building a competing bridge near its own, alleging it infringed on their franchise. The court held that the state legislature’s repeal of a section in Fort Plain Bridge Co.’s charter that prohibited competing bridges meant the company had no exclusive right. Absent an express prohibition in the original grant, the legislature could authorize a competing bridge even if it diminished the value of the original franchise. Furthermore, to claim nuisance, the plaintiff needed to prove special damages distinct from the general public.

    Facts

    Fort Plain Bridge Co. was incorporated with the right to build a bridge and collect tolls. Initially, their charter prohibited any other bridge within a mile. Smith constructed a competing bridge near Fort Plain’s bridge after the legislature repealed the exclusive provision in Fort Plain’s charter. Fort Plain Bridge Co. claimed Smith’s bridge infringed upon their franchise and was a nuisance.

    Procedural History

    The case originated in a lower court, which ruled in favor of Smith. Fort Plain Bridge Co. appealed to the General Term of the Supreme Court of New York, arguing that Smith’s bridge unlawfully interfered with their franchise. The General Term affirmed the lower court’s decision.

    Issue(s)

    1. Whether the state legislature’s repeal of the exclusivity clause in Fort Plain Bridge Co.’s charter allows the legislature to authorize a competing bridge.
    2. Whether the construction of a bridge without legislative authority constitutes a nuisance that can be challenged by a party who does not suffer specific damages different from the general public.

    Holding

    1. Yes, because after granting a franchise, the legislature can grant a similar franchise to another party, even if it impairs the first franchise’s value, unless expressly prohibited in the original grant.
    2. No, because to maintain an action against a public nuisance, the plaintiff must demonstrate special damages distinct from those suffered by the general public.

    Court’s Reasoning

    The court relied on The Charles River Bridge v. The Warren Bridge to establish the principle that a state legislature can grant a franchise that diminishes the value of a prior franchise unless explicitly prohibited. The repeal of the exclusivity clause in Fort Plain’s charter removed any such prohibition. The court stated, “Since the case of The Charles River Bridge v. The Warren Bridge (11 Peters, 420), it has been understood to be the law, that it is competent for the legislature, after granting a franchise to one person, or corporation…to grant a similar franchise to another…the use of which shall impair or even destroy the value of the first franchise, although the right so to do may not be reserved in the first grant; unless the right so to do is expressly prohibited by the first grant.” Regarding the nuisance claim, the court reasoned that even if Smith’s bridge obstructed navigation, only those who suffered unique damages could bring a cause of action. The court cited precedent that “no one has the right to abate it, or sustain an action for damages occasioned by the erection, unless he has himself sustained some damages not sustained by the rest of the community.” The court acknowledged the possibly unfair outcome, stating, “I am free to say that I would be glad to see the old common law restored, which denied to the legislature the power to take away or impair a franchise granted by it; but the law is settled the other way, and we must conform to it.”

  • People v. Allen, 42 N.Y. 486 (1870): Interpreting ‘Canal Revenues’ in the New York Constitution

    People v. Allen, 42 N.Y. 486 (1870)

    When interpreting constitutional language, courts should give words their ordinary and popularly understood meaning unless the context clearly indicates a different, technical sense was intended by the framers.

    Summary

    This case concerns the interpretation of the term “canal revenues” within the context of the New York State Constitution of 1846. The central issue was whether a tax imposed on merchandise carried by railroad companies should be considered part of the dedicated “canal revenues” under Article 7 of the constitution, thus preventing the legislature from repealing that tax. The court held that “canal revenues” referred solely to income derived directly from the State canals (tolls, water rents, etc.) and not to auxiliary taxes or fees, affirming the legislature’s power to repeal the tax on railroads. The court emphasized interpreting the Constitution according to the plain meaning of the words used, considering the context and purpose of the provision.

    Facts

    The New York Constitution of 1846 contained provisions (Article 7) directing how “canal revenues” were to be used, primarily for paying canal debt. Laws had been enacted imposing a tax on merchandise transported by railroad companies, arguably as a substitute for canal tolls, to protect canal revenue. In 1851, the legislature repealed these laws, eliminating the tax on railroad merchandise. The plaintiffs argued that the tax was a form of “canal revenue” that the legislature couldn’t repeal due to the constitutional provisions.

    Procedural History

    The case originated from a challenge to the 1851 law repealing the railroad tax. The lower courts upheld the repeal. The case then went to the New York Court of Appeals.

    Issue(s)

    Whether the toll or tax imposed by laws on merchandise carried by railroad companies at the time of the adoption of the Constitution was included within the term “canal revenues” as appropriated by Article 7 of that instrument, thus restricting the legislature’s power to repeal that tax.

    Holding

    No, because the term “canal revenues,” as used in the Constitution, refers only to revenues directly derived from the operation of the State canals themselves (tolls, rents for surplus water, etc.) and does not encompass taxes imposed on other industries, even if those taxes were initially intended to benefit the canals.

    Court’s Reasoning

    The court based its decision on several key principles of constitutional interpretation. First, the court emphasized that the words in a constitution should be understood in their “plain, obvious and common sense.” Quoting Chief Justice Marshall, the court noted that the framers “must be understood to have employed words in their natural sense, and to have intended what they said.” The court reasoned that “revenues of the canals” naturally refers to the direct income from the canals themselves. The court found no ambiguity in the language, precluding the need to resort to external sources of interpretation. The court also examined the context of Article 7, noting that provisions regarding expenses of collection and repairs clearly referred only to the canals themselves. The court highlighted that the framers of the Constitution distinguished between “canal revenues” and “auxiliary funds,” implying that the railroad tax belonged to the latter category. The court rejected the argument that the Constitution of 1821 restricted the legislature from taking any action that might divert trade from the canals. It found no clearly expressed intent to cripple the legislature’s power to develop the state’s resources and attract commerce. Finally, the court noted that the legislature retained “uncontrolled discretion over the tolls” of the canals, suggesting a lack of intent to rigidly protect canal revenue at all costs. The court stated, “There is, then, nothing in the provisions of the act, or in the language or terms in which these provisions are embodied, to give countenance to the idea that these tolls were in any sense regarded as ‘canal revenues.’”