X 
 
 
 ' PUBS.I 
 
 IN THE MATTER 
 
 OF THE 
 
 FORFEITURE OF THE AUTOMATIC TELEPHONE SYSTEM 
 
 OF THE 
 
 CHICAGO TUNNEL COMPANY 
 
 
 
 
 
 7 
 8 
 7 
 
 1 | 
 7 j 
 9l 
 
 OPINION 
 
 RENDERED THE COMMITTEE ON GAS, OIL AND 
 
 ELECTRIC LIGHT OP THE CITY COUNCIL 
 
 OF THE CITY OF CHICAGO 
 
 By 
 STEPHEN A. FOSTER 
 
 Special Counsel for the Committee
 
 TABLE OF CONTENTS. 
 
 Page 
 OPINION. 
 
 Introductory 1,2 
 
 City Council can legally forfeit franchise and property 3, 4 
 
 Forfeiture clauses 5, 
 
 Natural meaning of the words employed fi 
 
 "Equity abhors a forfeiture" 7-0 
 
 The issue stated 9, 10 
 
 The principles of construction to be borne in mind 10 
 
 Municipal license strictly construed against grantee 10-14 
 
 Rnle against forfeiture not applied when forfeiture for public 
 benefit , . 14-16 
 
 Correct construction of clauses (a) and (b) 16-18 
 
 Contention by counsel that 20.000 subscribers must be secured in 
 one day 10, 20 
 
 Great significance attached by counsel to the word "also" 20-24 
 
 Alleged inability of company to perform conditions of ordinance.. 24-26 
 
 Effect of Chicago Telephone ordinance of 1907 26 
 
 Contention that the clauses amount to a bet 27, 28 
 
 City will get plant and equipment of company for telephone pur- 
 poses 28-32 
 
 Conclusion 32-35 
 
 ADDENDUM. 
 
 Introductory 37, 3-8 
 
 The Tunnel Company has in effect abandoned its effort to comply 
 with the requirements of its ordinances 38-40 
 
 The Tunnel Company by its agreement to sell out to the Bell inter- 
 ests violated the terms of the 1899 ordinance and rendered com- 
 petition inoperative 40-43 
 
 Conclusion 44 
 
 DRAFT OF ORDINANCE. 
 
 Recitals 45-52 
 
 Sections 1 and 2 declaring defaults 52, 53 
 
 Section 3 declaring forfeiture of right to do business 53, 54 
 
 Section 4 declaring forfeiture of plant and equipment 54 
 
 Section 5 making demand for surrender of plant and equipment. .54, 55 
 
 Section 6, demand on Tunnel Company for space for carrying on 
 telephone business 55 
 
 Section 7. Commissioner of Public Works directed to deliver copies 
 of ordinance to parties interested 55, 56 
 
 Section 8, Corporation Counsel directed to take any necessary action 
 in court 56 
 
 Section 9, invalidity of any part not to affect other parts 56 
 
 Section 10, ordinance to take effect upon publication 56
 
 CASSODAY BUTLER LAMB & FOSTER 
 
 L-AwveR s 
 
 RUSH C. BUTLER 
 
 W.LUAM E. LAMB M O N AO N O C K B LO C K 
 
 STEPHEN A. FOSTER CHICAGO 
 
 C. R. HILLY6R 
 
 ERNEST o. BEST 
 
 CORNELIUS LYNDE 
 
 July 1, 1915. 
 
 Hon. Leicis D. Sitts, Chairman, and Members of the 
 Committee on Gas, Oil & Electric Light, 
 City Hall, Chicago. 
 
 IN THE MATTER OF THE FORFEITURE OF THE AUTOMATIC 
 TELEPHONE SYSTEM OF THE CHICAGO TUNNEL COMPANY. 
 
 GENTLEMEN : 
 
 At the meeting of the Committee held Thursday, June 
 24th, 1915, a motion was passed requesting me specifically 
 to answer questions ] and 3 that had been propounded 
 by his Honor, the Mayor, to Mr. Walter L. Fisher and 
 by your Committee to me in your letter of June 
 21st. I was by the action of the Committee on June 
 24th excused from replying to the other three questions 
 propounded to Mr. Fisher and which may be described 
 generally as questions of policy and was requested to 
 direct my attention particularly to the legal questions in- 
 volved in any action that might be taken by the City 
 Council for the forfeiture of the Automatic Telephone 
 System of the Chicago Tunnel Company. 
 
 The preparation of this opinion on the two legal ques- 
 tions propounded to me has involved the examination of 
 all of the printed and typewritten briefs and opinions 
 submitted to this Committee by the former Corporation 
 Counsel and by the attorneys for the Chicago Tunnel 
 Company and its bondholders, and the examination of a
 
 very large number of legal decisions, some of which are 
 cited in this opinion and the footnotes thereto. 
 
 In the very limited time at my disposal, owing to con- 
 stant engagements in court since the date of my being 
 retained in this matter, I have been unable to examine 
 the voluminous records of the previous hearings before 
 this Committee, but I assume that the discussions there- 
 in contained relate for the most part to questions of pol- 
 icy and that my examination of the printed and type- 
 written opinions above referred to have sufficiently ad- 
 vised me of all legal contentions made in opposition to 
 the possible forfeiture of the Tunnel Company's fran- 
 chises and property. The eminence of the attorneys who 
 have rendered these opinions and their well known dili- 
 gence justify this assumption on my part and my exami- 
 nation of the authorities confirms me in the belief that 
 these attorneys have stated the case against the right to 
 forfeit as strongly as it can be stated. 
 
 I have therefore devoted special consideration to the 
 positions taken by them and have sought to determine 
 whether or not their conclusions are justified by the 
 weight of legal authority. I have not had as much time 
 to devote to an examination of the authorities as I 
 might have desired, but my examination has progressed 
 sufficiently to convince me of the controlling force of the 
 principles upon which I rely and the authorities which 
 I cite. 
 
 First Question. 
 
 Referring then to the questions to which you particu- 
 larly directed my attention, I would say in answer to the 
 first question which reads as follows:
 
 WHETHER THE CITY COUNCIL CAN LEGALLY FORFEIT THE 
 TELEPHONE FRANCHISES 1 AND TELEPHONE PROPERTY OF THE 
 CHICAGO TUNNEL COMPANY? 
 
 that my conclusion is : 
 
 THAT IT CAN so FORFEIT SUCH TELEPHONE FRANCHISES 
 
 AND TELEPHONE PROPERTY. 
 
 In the former Corporation Counsel's opinion of Oc- 
 tober 2nd, 1914, addressed to you, it is stated : 
 
 "It may be considered as established by the au- 
 thorities that if an ordinance granted by a city to a 
 public service company authorizing such company to 
 use the streets of the city for the installation of its 
 equipment and the operation of its system, express- 
 ly provides in clear and unequivocal terms for for- 
 feiture of the rights granted by the ordinance upon 
 the failure of the company .to comply with the condi- 
 tions specified in the ordinance, then such rights 
 may be forfeited if the company fails to comply 
 with the conditions specified." 2 
 
 'His Honor, the Mayor, uses the word "franchise" in the question pro- 
 pounded to Mr. Fisher in the sense that such word is often used as 
 designating privileges and rights to the use of streets conferred by a 
 municipality. The word "franchise" however has a legal meaning of a 
 somewhat different nature and for example applies to the powers of a 
 corporation derived from the sovereign authority, that is from the 
 state. In considering cases involving grants of privileges or rights in 
 the use of streets given by municipalities to private corporations the Illi- 
 nois courts frequently make a distinction between the franchise of the 
 private corporation as obtained from the state, namely its charter, and 
 the privileges which are given by the ordinance. The latter privilege is 
 ximkcn of as a license, which, on acceptance by the private corporation 
 tn irliich the (jrant is made, become* a contract bcticecn the municipal- 
 ity and the private corporation. 
 See: 
 
 Chicago City Raihcay Co. v. People, 73 111., 541, 548. 
 
 Chicago Municipal Gas Light Co. \. Town of Lake, 130 111., 42, 55. 
 
 City of Belleville v. Citizens' Horse Railway Company, 152 111., 
 171, 185. 
 
 City of Chester \. Wabfuh, Chester rf Western Railroad Com- 
 pany, 182 111., 382, :!v. ( . 
 
 l',plc v. Central I nion Tel. Co., lf>2 111.. 307. 311. 
 
 Citu of Chicago v. Rothschild rf Co., 212 111., 590. 
 
 "In snpixu't of the proposition above quoted the former Corporation 
 (Yinnsfl cited the following authorities : 
 
 City of liellcrillc v. Railiraii Compaiu/, 152 111.. 171. 
 
 Blo<-];i v. People, 220 111.. 444. 
 
 People v. Central Union Tel. Co., 232 111., 2fiO.
 
 The former Corporation Counsel's opinion goes on to 
 set forth the several ordinances which have been granted 
 to the predecessor of the Chicago Tunnel Company, the 
 Illinois Telephone & Telegraph Company. A summary 
 of these ordinances is set forth below. 3 
 
 Wheeling, etc. R. R. Co. v. TriadelpMa, 58 W. VM., 487. 
 Union St. Ry. Co. v. Snow. 113 Mich., 694. 
 Pacific R. R. Co. v. Lcarm worth, 1 Dill., 393. 
 
 To these may lie added the following authorities among many others : 
 Wliitiiif/ v. 1 illage of Ncic Baltimore. 127 Mich.. <i<>. 
 ('it// of Detroit \. Peoples' Telephone Co., 135 Mich., GOO. 
 People v. Broadiraii Railroad Co. of Brooklyn, 126 New York, 29. 
 City of Tower v. Tower d- Soudan Railway Co., (is Minn., r.nu. 
 
 38 L. R. A., 541. 
 Farns worth v. Minnesota Railroad Company, 92 TJ. S.. 4!, ". 
 
 Lawyers' Edition, 530. 
 
 Atlantic d Pacific Railroad Co. v. Minoua, 165 U. S., 413. 
 Palestine Water cC- Power Co. v. Palestine, 91 Texas, 540, 40 L. R. 
 
 A., 203. 
 St. Cloud v. Water Light & Power Co., 88 Minn., 329, 92 N. W., 
 
 1112. 
 State v. Light & Development Company, 246 Mo., 618. 
 
 The first ordinance granted to the Illinois Telephone & Telegraph Co. 
 passed February 20, 1899, gave permission and authority to construct 
 and operate in the streets of the City of Chicago a line of conduits 
 and wires for a telephone system during a period of 30 years. Said ordi- 
 nance prohibited any sale or agreement by which competition would 
 become inoperative and provided that a certain percentage of the gross 
 receipts of the telephone system be paid to the city as compensation 
 for the privileges conferred. Section 5 provided that on certain con- 
 ditions the company would forfeit to the city all rights acquired under 
 the ordinance together with its plant, wires, poles and conduits then in 
 the streets. The condition of this forfeiture was the failure of the 
 company to have in operation within five years from date of the ordi- 
 nance a telephone exchange serving 2,000 telephones of bona fide sub- 
 scribers. 
 
 By the ordinance of July 15, 1903, said company was granted permis- 
 sion and authority to construct and operate in and through tunnels 
 already constructed under the terms of the ordinance of February 20, 
 1899, or which would thereafter be constructed under said ordinance 
 of July 15, 1903, for and during the term of the ordinance of Febru- 
 ary 20, 1899, not only wires and electrical conductors as provided 
 in said last mentioned ordinance but also any appliances or apparatus 
 for the transmission or transportation of newspapers, mail matter, pack- 
 ages, parcels or merchandise. This ordinance contained provision for 
 the payment of compensation to the city for the privileges conferred of a 
 certain percentage of the gross receipts from the transportation business. 
 Section 4 gave to the company authority to lease space in the tunnels to 
 such persons or corporations as might be designated by the city. This 
 ordinance was amended in minor changes in phraseology by the ordi- 
 nance of July 20, 1903, passed five days later. 
 
 Section 11 of the above ordinance of July 15, 1903, provided that the 
 company should under certain conditions forfeit all rights acquired under 
 said ordinance together with its plant and equipment for transporta- 
 tion purposes and that under certain conditions the company should 
 forfeit to the city all rights acquired under said ordinance of February
 
 THE FORFEITURE CLAUSES. 
 
 As the former Corporation Counsel points out, the 
 provision of the ordinances which is of most importance 
 for our consideration is that portion of Section 11 of the 
 ordinance of July 15th, 1903, as amended June 28, 1909, 
 and which provides that the company shall forfeit all 
 rights acquired under the ordinance of February 20th, 
 
 20, 1899. together with its plant and equipment for telephone pur- 
 poses. On February 1, 1909, Section 11 was amended by ordinance 
 passed on that date and on June 28, 1909, another amendment to Section 
 11 was made by ordinance passed on the latter date. 
 
 Section 11 of said ordinance of July 15, 1903, as finally amended by 
 said ordinance passed June 28, 1909, and which has continued in force 
 and effect until the present time is in part as follows : 
 
 "Section 11. If said company, its successors and assigns, shall fail 
 to construct or shall cease 'to operate fifty (50) miles of such tun- 
 nels within ten years from the time this ordinance goes into effect, 
 then and in that case said company, its successors and assigns, 
 shall also forfeit to the city all rights acquired under this ordi- 
 nance, together with its plant and equipment, for transportation pur- 
 poses then installed ; and if said company, its successors and assigns, 
 shall fail to construct, equip and install a telephone system under 
 the terms of said ordinance to said company of February 20, 1899, 
 adequate for the services of 20,000 subscribers prior to June 1, 1911, 
 or if at any time after said June 1, 1911, said company, its suc- 
 cessors and assigns shall not have in operation or shall cease to 
 operate a telephone system serving 20,000 bona fide subscribers, then 
 and in each such case said company, its successors and assigns, shall 
 also forfeit to the city, or to any licensee or grantee of the city 
 (designated or authorized by the city for this purpose), all rights 
 acquired under said ordinance of February 20, 1899, together with 
 its plant and equipment for telephone purposes, and shall forthwith 
 turn over the ownership and possession of said plant and equipment 
 to the city, or to any licensee or grantee of the city (designated 
 or authorized by the city for this purpose), and shall be under obli- 
 gations to furnish the city, or to any licensee or grantee of the 
 city (designated or authorized by the city for this purpose) without 
 charge, all space in any or all of its tunnels and conduits necessary 
 for the carrying on of said telephone business; such space at no time 
 to be less than that required to reasonably accommodate equipment 
 for the service of 20,000 telephone subscribers ; provided, however, 
 that nothing herein contained shall impair the obligation of said 
 company under said ordinance of February 20, 1899, to construct 
 and have in operation within five (5) years from the date of said 
 ordinance of February 20, 1899, a telephone exchange serving two 
 thousand (2,000) telephones, or shall vary the provisions of for- 
 feiture therein contained except as herein expressly provided. * * * 
 This ordinance, so far as it conflicts with or varies from the provi- 
 sions of the said ordinance of February 20, 1S99, or of said ordinance 
 of July 15. 1903. or of said ordinance of July 20. 1903. or of said 
 ordinance of February 1, 1!KH>. shall be taken and construed as and 
 is iicn-liy declared to be amendatory of said ordinances, respec- 
 tively."
 
 1899 (the ordinance Tantini the right to establish a tele- 
 phone system), together with the plant and equip- 
 ment for telephone purposes : 
 
 (a) "if said company, its successors and assigns 
 shall fail to construct, equip and install a telephone 
 system under the terms of said ordinance to said 
 company of February 20th, 1899, adequate for the 
 service of 20,000 subscribers prior to June 1st, 
 1911," 
 
 or 
 
 (b) "if at any time after said June 1st, 1911, said 
 company, its successors and assigns shall not have 
 in operation or shall cease to operate a telephone 
 system serving 20,000 buna fide subscribers 
 
 * * * > i 
 
 THE NATURAL, MEANING OF THE WORDS EMPLOYED. 
 
 After thus accurately stating the issue presented the 
 former Corporation Counsel proceeds to discuss the 
 proper interpretation of the language employed and 
 states : 
 
 "If this clause be interpreted in accordance with 
 what we consider to be the most natural meaning of 
 the words employed, the context also being consid- 
 ered, it would in our opinion mean that the grantee 
 company, its successors and assigns, shall forfeit to 
 the city all rights acquired under said ordinance of 
 February 20th, 1899 (the telephone system grant), 
 together with its plant and equipment for telephone 
 purposes, if at any time after June 1st, 1911, said 
 company did not have in operation a telephone sys- 
 tem serving 20,000 bona fide subscribers whose sub- 
 scription contracts were in force and who had in- 
 struments and wires in their residences or places of 
 business at all times ready for their use."
 
 "THE LAW DOES NOT FAVOR AND EQUITY ABHOKS A 
 
 FORFEITURE. ' ' 
 
 The former Corporation Counsel comes to the con- 
 clusion, however, that, in spite of the fact that according 
 to his view this is the more reasonable interpretation of 
 the language of the ordinance, such interpretation would 
 not be adopted by the courts if the matter were pre- 
 sented to the courts, because of the well known doc- 
 trine ''that the law does not favor, and equity abhors a 
 forfeiture. ' ' 4 
 
 Counsel for the bondholders in an opinion dated June 
 2nd, 1914, submitted to me adopts a similar line of 
 reasoning. In this opinion counsel states after refer- 
 ring to the forfeiture clauses above quoted : 
 
 "I think that in all candor it must be admitted 
 that if this language were contained in a clause ex- 
 pressing a condition precedent or if it were in an 
 ordinary contract which did not contain provisions 
 for the forfeiture of rights and confiscation of prop- 
 erty, the adjective phrase 'serving 20,000 bona fide 
 subscribers' would be interpreted to define the sub- 
 stantive term which it qualifies 'a telephone sys- 
 tem,' as one which had 20,000 bona fide subscribers 
 whose subscription contracts were in force and 
 which had instruments and wires in the residences 
 or places of business of such subscribers at all times 
 ready for their use. * 
 
 But the counsel for the bondholders as does the former 
 Corporation Counsel, holds that the doctrine that "the 
 law does not favor and equity abhors a forfeiture" pro- 
 hibits the adoption of this interpretation of the lan- 
 guage which counsel for the bondholders, also, admits is 
 the more natural interpretation. 
 
 '.fin-nit* \. .s'/""'W'".'/. 71 Wisconsin, 177. 1HO, cited by tbe Corporation 
 Counsel in support: of the above doctrine. \v;is a case involving the con- 
 struction of a inii'<it< coiitnn t for conveyance of real estate. 
 
 The quotation of the Corporation Counsel from 17 Am. & Kng. Knc. of 
 Law, 1'nd Kdition. page is, is taken from an article on interpretation and 
 construction, which, as is said at the beginning of said article under 
 the heading "seoj>e of title," treats particularly of instruments inter 
 
 /;</,/r.v, xildl nn dccilll Utld COHtl'ttCtlt.
 
 Counsel for the bondholders further states in his 
 opinion : 
 
 "To avoid this very consequence (that is a for- 
 feiture) the courts have established the rule that if 
 the words of a forfeiture clause or penal ordinance 
 are susceptible of two meanings that meaning must 
 be chosen which avoids the forfeitures or penalty. 5 
 
 5 In support of the above proposition Mr. Shaw in his brief cites a large 
 number of authorities. It is believed, however, that these cases are dis- 
 tinguishable from the present situation and that the rule applied therein 
 is not properly applicable to this situation. The cases of 
 
 Voris v. Ren show, 49 111., 425, 431-5. 
 
 ('nine \. Hyde Park, 135 Mass., 147. 
 
 Gage v. School District, 64 New Hampshire, 232, 234, 
 
 French v. Inhabitants of Quincy, 3 Allen, 9, 13, 
 
 Carter v. Branson, 79 Ind., 14, 
 
 llailcu v. Wells, 47 N. W., 988, 989 (Iowa). 
 
 Rose v. Han-lei/, 118 New York, 502, 518, 
 
 Jackson v. Silver Nail, 15 Johnson, 278, 
 
 Waldron \. Toledo A. A. & G. T. Railway Co., 55 Mich., 420, 
 all involve the construction of a deed or lease of real estate, which pro- 
 vided for a reversion on the happening of some condition subsequent. 
 These cases were all matters of private contract and none of them in- 
 volved the construction of a grant of privileges or rights by the public to 
 a private corporation. 
 The cases of 
 
 Chicago & Alton Railroad Company v. People, 67 111., 11, 2G to 27, 
 
 City of Chicago v. Runipff, 45 111., 90. 
 
 Diversey v. Smith, 103 111., 378, 390, 
 
 .1. T. d 8. F. Railway Company v. People, 227 111., 270, 278, 
 
 Manhattan Trust Company v. Davis, 23 Montana, 273, 279. 
 
 Philadelphia v. Costcllo, 17 Pennsylvania Superior, 339, 340, 
 
 Truman v. Casks of Gunpowder, Thacher's Criminal Cases 
 
 (Mass.), 14, 
 
 all involve the construction of statutes or ordinances which provide 
 penalties for the doing of acts declared to be unlawful. In all of these 
 cases the forfeiture was of a punitive nature for the doing of an unlaw- 
 ful act. The forfeiture provision in the ordinance under consideration is 
 nut a /nniitire provision for the doing of fin unlawful act, l>ut is a provi- 
 sion to enforce performance of the company's contractual obligation. The 
 attorneys for the Company at page 13 of their brief on the "Conse- 
 quences of a Declaration of Forfeiture," state that the real purpose of 
 i lie clause here under discussion was the "recalling of a grant the con- 
 ditions of which had not been fulfilled." 
 
 Tlie rule of construction against forfeiture applies to criminal statutes 
 find to statutes and ordinances providing penalties for violations of law 
 but these cases are not analogous to the present situation. 
 
 Two other cases cited by Mr. Shaw are Mill Creek Toirnship 
 v. E. R. T. T. Railroad Company, 216 Pennsylvania State, and State v. 
 Boyce, 43 Ohio State, 46. The former Mr. Shaw did not cite as directly 
 bearing on the rule of construction and nothing was said in the opinion 
 of the court about this rule. In the latter case the court referred to the 
 rule that equity abhors a forfeiture and applied it to the question there 
 involved of whether the delay in commencing work within the time re- 
 quired, was excused by reason of injunction proceeding instituted by the 
 city solicitor. Here then the court was really construing the conduct 
 of the city and not the words of the franchise or ordinance.
 
 Of course 1 do not mean that a forfeiture will be 
 avoided by ^unreasonably straining the meaning of 
 the words employed. The words must be suscep- 
 tible of that construction without violence, and yet 
 it will be seen by an examination of the authorities 
 that where the line is to be drawn depends upon the 
 particular cases. Where the injustice is manifest 
 the courts seem to stop at nothing in the application 
 of this rule of construction." 
 
 Counsel for the Company also rely upon this doc- 
 trine. 6 
 
 THE ISSUE STATED. 
 
 I have referred at considerable length to the opinions 
 of the Corporation Counsel, the counsel for the bond- 
 holders and the counsel for the Company in order to de- 
 fine as accurately as possible the issues that are pre- 
 sented in this connection and to eliminate the discussion 
 of unnecessary questions. 
 
 It is admitted by all that the power of forfeiture exists 
 provided the language of the forfeiture clause is plain 
 and unambiguous. The test laid down by counsel for 
 the bondholders when he says that: 
 
 U 0f course I do not mean that a forfeiture will 
 be avoided by unreasonably straining the meaning 
 of the words employed." ''The words must be sus- 
 ceptible of that construction (that is the construc- 
 tion avoiding the forfeiture) without violence" to 
 the meaning of the words, 
 
 "In the opinion of Messrs. Schuyler, Kttelson & Weinfeld, the following 
 cases were cited in support of the doctrine that forfeitures are not 
 favored : 
 
 low v. Rcnshair, 49 111., 425, 432. 
 
 Palmer v. Ford, 70 111., 309, 377. 
 
 Mnnxon v. Hraydon, 159 111., 61, 65. 
 
 St. Louis, Jacksonville d Chicago Railroad Co. v. Mathers, 71 111., 
 
 592, 597. 
 
 Tin-so cases all involve the construction of deeds or leases to real estate 
 1>H \voen private parties and did not involve the construction of a grant 
 l>y the public to a private corporation. The rule contended for b]/ 
 roiiHxd in Hint itiiiiii'ui /.v undtmhtcdl)/ applicable to cases of private grant 
 innl iirirnti i-ntitrurt hut ire believe the same rule is not applicable with 
 anything like the same strictness to public grants or contracts in which 
 the public gives privileges and rights in public property to prirate cor- 
 porations.
 
 10 
 
 is in my view a correct statement of the principles with 
 which we have to deal. If the forfeiture clause has two 
 interpretations equally reasonable, the one authorizing 
 a forfeiture and the other interpretation not authoriz- 
 ing a forfeiture, undoubtedly that interpretation which 
 avoids the forfeiture would be the one adopted by the 
 court. But if, on the other hand, as counsel states, the 
 interpretation avoiding the forfeiture involves "unrea- 
 sonably straining of the words employed" and cannot 
 be arrived at "without violence" to the ordinary mean- 
 ing of the words, then the doctrine that the law does not 
 favor and equity abhors a forfeiture would not go so 
 far as to require the adoption of such strained and vio- 
 lent interpretation of the words employed. 
 
 THE PRINCIPLES OF CONSTRUCTION TO BE BORNE IN MIND. 
 
 In any attempt to arrive at the correct interpretation 
 of the forfeiture clauses, there are two principles of law 
 in addition to that above cited and relied upon to such 
 a marked extent by counsel who have heretofore dealt 
 with this question which ought to be considered, and 
 those are the well recognized principles : 
 
 FIRST PRINCIPLE. 
 
 That the law will construe the grant of a fran- 
 chise or license by a municipality in favor of the munici- 
 pality and against the grantee. This principle of strict 
 construction of municipal grants has been recognized by 
 the courts of all jurisdictions and in a great variety of 
 cases. 7 
 
 7 In Hlwki v. People, 220 111., 444, an ordinance had granted to a street 
 railway company the authority to construct tracks on certain of the 
 streets in the City of Chicago with the condition that within two years 
 after the date of said ordinance a single track line should be put in 
 operation and within five years a double track line should be com- 
 pleted. For failure to perform this condition the privileges under the
 
 11 
 
 Of the cases bearing- on this principle cited below, I 
 would call attention particularly to the leading authority 
 in this state of Blocki v. People, 220 111., 444, a case in- 
 
 ordinance were to cease and terminate unless such delay was excused. 
 The railway company had laid its tracks on some of the streets hut 
 had failed to complete its construction on certain other streets within 
 the five year period. It applied to the Commissioner of Public Works 
 for a permit to allow the construction on certain streets included within 
 the grant and said permit was refused on the ground that the time 
 within which the privileges were to be exercised had elapsed. The rail- 
 way company sought to mandamus the Commissioner of Public Works to 
 issue such permit and set up as an excuse for the failure to complete the 
 construction within the time specified the fact that an injunction had 
 been issued against the construction of the tracks on one of the streets 
 contained in the grant. It was the contention of the railway company 
 that the ordinance was to be construed as granting the right to construct 
 a single system and that anything which caused delay in 
 the construction of any part thereof would excuse the con- 
 struction on any other of the streets covered by said ordi- 
 nance. The ordinance was open to this interpretation or to 
 the interpretation that tracks should be laid on all of the streets as 
 fast ;is possible and delay in the construction would be excused only on 
 those particular streets which were affected by the injunction against 
 laying tracks. The first interpretation would prevent a forfeiture ; the 
 second interpretation would result in the loss to the railway company 
 of its privileges under the ordinance. The Supreme Court held that 
 the latter interpretation was the proper construction of the ordinance 
 in question and in so holding referred to the rule that ordinances grant- 
 ing rights in certain states are to be construed most strictly against 
 the grantee and in favor of the public. Quotations from the opinion of 
 the court in this case are set out above. 
 
 The case of Citji of Chester v. W abash, Chester and Western Railroad 
 Company, 182 111., 382, adopted the same rule when it held in favor of the 
 city in an action of ejectment to recover possession of the city streets 
 after the expiration of an ordinance granting to the defendant the right 
 to lay tracks on those streets for a period of twenty years. The court 
 said : 
 
 "The right granted by a city council to -a railroad company to lay 
 its tracks in a street and operate its cars thereon is not a franchise 
 but a property right merely contractual, and subject to the same con- 
 ditions, restrictions and limitations as an;/ other property owned by 
 other persons. And such contract rights, so far as they affect the 
 iniblic, are to be strictly construed in faror of the public." p. 389. 
 In Chicago v. Oalc Park Elerated Company, 2fil 111., 478, 492, the court 
 said : 
 
 "Ordinances granting the right to construct and operate a street 
 railway system are to be construed most strictly against the 
 grantee." 
 In Turnpike Co. v. People of Illinois, 96 V. S., 03. the court said : 
 
 Grants of franchises and special privileges are always to be con- 
 strued most strongly afiaimt the donee and in faror of the pub- 
 lic." 
 
 In Coosair Mining Co. v. State of South Carolina, 144 V. S., r.TO, the 
 court bad before it the construction of a mining grant on which the 
 question was raised as to whether It gave a perpetual or limited grant. 
 It was held that the latter was the proper construction on the rule that 
 such grants should IK- construed strictly against the grantee. At page 
 562 the court said : 
 
 "If the Act of 1876 is fairly susceptible of either of the construe-
 
 12 
 
 volving the interpretation of an ordinance granted by 
 the City of Chicago to a street railway company for the 
 laying of its tracks in a number of streets. There were 
 
 tions we have indicated, as we think it is, the interpretation must 
 be adopted which is most favorable to the state. The doctrine is 
 firmly established that only that which is granted in clear and ex- 
 plicit terms passes by a grant of property, franchises or privileges 
 in which the government or the public has an interest. Rice v. Minne- 
 sota & N. W. R. Co., 66 U. S., 1 Black, 358, 380 (17, 147, 153) : 
 NorthiOestern Fertilizing Co. v. Hyde Park, 97 U. S., 666 (24: 1038) ; 
 Hannibal & St. J. R. Co. v. Missouri River Packet Co., 125 U. S., 271 
 (31 : 735) ; Central Transp. Co. v. Pullman Palace Car Co., 139 U. S., 
 24, 49 (35 : 55, 64) ; Stein v. Bienville Water Supply Co., 141 U. S., 
 <rr, 80 (35: 622, 627) ; State v. Pacific Guano Co., 22 S. C., 50, 83, 86. 
 * * * This principle, it has been said, 'is a wise one, as it serves 
 to defeat any purpose concealed l)y the skilful use of terms to ac- 
 complish something not apparent on the face of the Act, and thus 
 sanctions only open dealing with legislative bodies' Slidell v. Grand- 
 jean, 111 U. S., 412, 438 (28: 321, 330)." 
 
 The case of People v. Broadway Railroad Company of Brooklyn, 126 
 New York. 29, involved an action to have the franchise of the defendant 
 forfeited for non-user. The railroad company was given the right to lay 
 its tracks upon various streets and it was required that the tracks be 
 laid as soon as the streets were opened and graded. Upon failure 
 to comply with the condition of the act it was provided that all rights 
 and privileges thereunder should be forfeited. This act was open to two 
 possible interpretations : the one, insisted upon by the railroad company, 
 that it did not require the company to build any part of the system until 
 all of the streets were opened and graded ; the other, insisted upon by the 
 city, that it required the railroad company to lay its tracks upon such 
 streets as were opened and graded and to extend the system as soon as 
 other streets were opened and graded. In the lower court the interpre- 
 tation urged by the railroad company was adopted (see 56 Hun., 45) but on 
 appeal it was held that the latter construction of the act was the proper 
 one and the franchise of the defendant railroad company was declared 
 forfeited for failure to construct its tracks as provided by the act. In 
 rendering this decision the court states at length the rule of strict con- 
 struction against the grantee when the public has granted privileges or 
 franchises to private corporations. 
 The court says at page 36: 
 
 "The act of 1860 was obtained by the defendant or in its interest. 
 It may be assumed that the language therein contained was the 
 language chosen by it to define the rights arid franchise which it 
 sought by the act. As the act conveyed to it franchises and special 
 privileges its language must be construed most favorably to the peo- 
 ple and all reasonable doubts in construction must be solved against 
 the defendant. Words and phrases which are ambiguous or admit 
 of different meanings arc to receive in such cases that construction 
 which is most favorable to the public. * * * The act must now 
 lie construed as the courts would have construed it if it would have 
 come in question soon after its passage. The defendant cannstt claim 
 a liberal or enlarged construction of the act to shield itself against a 
 forfeiture alleged to have been voluntarily incurred. It would be 
 quite a paradox to hold that it could enlarge its franchise or extend 
 its rights by exposing them to condemnation for non-user. The lan- 
 guage of the act must under all circumstances and in all proceedings 
 and actions receive the same construction and have the same scope 
 and meaning. But while the act is to be strictly construed in such 
 a case the conduct under the act which is claimed to constitute the
 
 13 
 
 was more favorable to the grantee, and upon such inter- 
 pretation depended the question of the forfeiture of the 
 privileges granted. 
 
 The Supreme Court held that the interpretation of the 
 ordinance authorizing the forfeiture was the one that 
 should be adopted and in support of their conclusion 
 cited the principle of strict construction to which I have 
 referred. The court said: 
 
 "We agree with counsel for appellant that the 
 grants by the public such as are given by the City 
 of Chicago in its ordinance are to be construed 
 most strongly against the grantee." 
 
 forfeiture of the corporate rights and franchises is to have a char- 
 itable and liberal construction like any conduct tending to penal con- 
 sequences. In considering such conduct courts will lean against for- 
 feitures and the doctrine that courts are reluctant to enforce for- 
 feitures can have no other application than this.'' 
 If there were any doubt or ambiguity as to whether the Chicago Tun- 
 nel Company had 20,000 bona fide subscribers, its "conduct" to use the 
 phrase in this case would receive a "charitable and liberal construc- 
 tion," but there is no doubt as to the "conduct" of the Company. It 
 is frankly admitted by its own counsel that it has not this number of 
 bona fide subscribers. 
 
 It was held by the court in the above case that the proper construc- 
 tion of the act required the railroad company to lay its tracks upon 
 streets as soon as any part of the street was opened and graded. The 
 court further said : 
 
 "But even if it were absolutely certain that the defendant could 
 have made no profit by building the roads to the extent which we 
 have indicated, yet that is no answer to the proposition that it is the 
 duty of the defendant to build them." 
 
 This case involves the construction of a forfeiture clause con- 
 tained in an act granting to a private corporation rights and privileges 
 in the city streets and seems closely analogous to the present situa- 
 tion. 
 
 In Cumberland Gas Lit/lit Co. v. W. Va. d Mart/land Gas Co., 188 Fed.. 
 585, at page 589 the court cites the leading case on this proposition of 
 Cliarlcs Hirer liridf/e Co. \. Warren Krirtac Co., 11 Pet.. 420, viz., that 
 legislative acts granting franchises to private corporations are to be 
 construed strictly according to their terms. The court then says: 
 
 "In Rose's notes on this case (Vol. 3, p. 081). it is said touching 
 this rule 'it may be questioned whether the Supreme Court has ever 
 laid down a more military doctrine than the principle here announced 
 and the cases which follow show how firmly it has become embedded 
 in our jurisprudence.' 
 
 And more than 100 cases from substantialli/ all the courts of this 
 roiintr-u in support of this statement are cited." 
 See also: 
 
 Cleveland v. \orton, HO Mass., 380. 
 State \. St. Paul M. A M. Itaihrait Co.. 08 Minn.. 380. 
 Ifoycrs /'ark Water Co. \. Citii of Chicago, 131 III. App., 35. 
 Kx I'artc Unwell, 1<>3 California, 008.
 
 14 
 
 two possible constructions of this ordinance, one of 
 which was the more favorable to the city and one of which 
 
 And again in the same opinion : 
 
 "And as we before stated, a grant similar to the 
 one at bar is to be most strongly construed against 
 the grantee and in favor of the public." 
 
 The facts involved in this case are set out below in 
 the note, containing this and other citations. 
 
 Among the different opinions that have been rendered 
 in this matter and which have been submitted to us for 
 examination, only one, that of Messrs. Fairleigh & Fair- 
 Icigh, mentions this rule of construction here referred 
 to and it is contended by them that this rule simply ap- 
 plies when the question under consideration is the ex- 
 tent of the grant. It is true that some of the cases do 
 deal with the extent of the grant in laying down this 
 principle of strictness of construction against the 
 grantee; but, the leading case in this state that of 
 BlocJfi v. People, as I have already stated, was a case of 
 forfeiture and on the authority of this case and of other 
 forfeiture cases cited in the note I have come to the opin- 
 ion that this rule of strict construction should be applied 
 to forfeiture as well as other cases. 
 
 SECOND PRINCIPLE. 
 
 The other principle which should be borne in 
 mind in seeking to arrive at a correct construction of the 
 language used in the forfeiture clauses above referred 
 to is that recognized by a few well considered cases 
 holding that the rule above stated requiring a construc- 
 tion of an ordinance against the interpretation author- 
 izing a forfeiture will not be followed when the provi- 
 sions authorizing the forfeiture were inserted for the
 
 15 
 
 public benefit and for the purpose of securing the per- 
 formance of a service in which the public is interested. 8 
 In Farnsworth v. Minnesota & Pacific R. R. Co., 92 
 U. S., 49, 23 Lawyer's Ed., 530, Mr. Justice Field in 
 delivering the opinion of the Supreme Court of the 
 United States said: 
 
 "But it is said that provisions for forfeiture are 
 regarded with disfavor and construed with strict- 
 ness and that courts of equity will lean against their 
 enforcement. This as a general rule is true when 
 applied to cases of contract and the forfeiture re- 
 lates to a matter admitting of compensation or resto- 
 ration. But there can be no leaning of the court 
 against a forfeiture which is intended to secure the 
 construction of a work in which the public is inter- 
 ested where compensation cannot be made for the 
 default of the party, nor where the forfeiture is im- 
 posed by positive law." 
 
 8 In Farnsicorth \. Minnesota cf Pacific Railroad Co., 92 U. S., 49, 
 23 Lawyers' Edition, 530, the State of Minnesota had granted to the 
 defendant railroad aid in the construction of its road hy state bond issues. 
 The act provided that the railroad company complete the construction of 
 certain parts of the road within certain specified times and in default 
 thereof that all the property and the franchise of the said railroad 
 company should be forfeited to the state. The railroad company failed 
 to complete the construction as required by the act and thereafter 
 the legislature passed an act creating a new company and granting to 
 it all the rights, property, franchise and interest of the Minnesota & 
 Pacific R. R. Co. This case involved the construction and validity of the 
 last mentioned enactment and the court held that the legislature might 
 declare a forfeiture upon non-compliance with the conditions of the 
 grant. It was strongly urged by the railroad company that the rule of 
 strict construction against forfeiture should be applied and the act so 
 construed as to prevent the forfeiture. The court, however, held that 
 in the construction of a forfeiture clause inserted to secure the building 
 of a work in which the public was interested there could be no appli- 
 cation of the rule of construction against forfeiture. The forfeiture was 
 upheld on considerations of public policy. 
 
 The doctrine laid down by the above case is also followed in the case 
 of ('it H of Tower v. Tower & Soudan Railway Company, 68 Minn., 500, 
 where the court had before it the construction of a clause in the city 
 ordinance providing for forfeiture of road and franchise of a street rail- 
 way company if said company ceased operation for a period of one year 
 or more. The court in discussing the question of Interpretation of the 
 ordinance and in declining to adopt a construction against forfeiture uses 
 the language quoted from Farnmcorth v. Minnesota, supra. 
 See also: 
 
 N'// //,* v. Liverpool Water Works Co., 13 Ves. Jr., 428. 
 
 At1<iiiti<- { I'aciflc Railroad Company \. Min<iiix. 1(K> U. S., 413. 
 
 / . N. v. Orci/on & C. Railroad Co., lx<; Fed., S(i1.
 
 16 
 
 That the forfeiture clause in the ordinances now un- 
 der consideration was inserted for the purpose of se- 
 curing the construction by the Chicago Tunnel Com- 
 pany or its predecessor of a public work, to-wit, the Au- 
 tomatic Telephone System, and the maintenance of com- 
 petitive telephone service, is self-evident and the public 
 interest was directly involved in securing the carrying 
 out of these purposes by the grantee. The attorneys for 
 the Company admit that the clause was inserted for the 
 purpose of "recalling a grant the conditions of which 
 had not been fulfilled. ' ' See note 5. 
 
 THE CORRECT CONSTRUCTION OF CLAUSES (A) AND (B). 
 
 Bearing in mind the above principles relating to the 
 proper construction of such a franchise or license as is 
 here involved, and coming to a consideration of the exact 
 language employed in the forfeiture clauses, it is most 
 significant that the forfeiture provision contains two 
 separate clauses; the clauses (a) and (b) set forth in 
 the Corporation Counsel's opinion and quoted above. 
 Clause (a) has to do with the adequacy of the telephone 
 system to be constructed by the grantee prior to June 
 1st, 1911. The grantee was required to construct, equip 
 and install a telephone system adequate for the service 
 of 20,000 subscribers prior to June 1st, 1911. It is con- 
 tended by those who are opposed to a forfeiture being 
 declared in this matter that clause (b) also refers 
 merely to the adequacy of the plant and that it simply 
 requires that the grantee at all times after June 1st, 
 shall continue to have in operation a telephone system 
 sufficient and effective for the service of 20,000 subscrib- 
 ers. Such an interpretation of clause (b) minimizes the 
 effect of such clause and ignores as it seems to me the 
 distinction that was evidently intended by those who
 
 17 
 
 drafted this ordinance between clause (a) and clause 
 (b). 9 
 
 Clause (a) as already stated relates to adequacy of 
 plant. Clause (b) relates to the actual operation of a 
 plant and the number of bona fide telephone subscrib- 
 ers which such plant serves. It is contended that the 
 word ''serving" as used in clause (b) means "adequate 
 or sufficient to serve" and it is stated that definitions of 
 that general character can be found in dictionaries of 
 recognized authority. But it is not denied that the word 
 "serving" of course has another and more usual mean- 
 ing and the context in which it is used makes it clear to 
 me that when the words "a telephone system serving 
 20,000 bona fide subscribers" was used it was intended 
 to require that there should be 20,000 bona fide subscrib- 
 ers enjoying and using at the time the service of this 
 telephone system. Telephone service is a phrase too 
 well known to need any definition or explanation from 
 me. Everv one knows what it means. 
 
 In Rothschild v. Xcic York Life Insurance Co., 97 111. App., 547, the 
 court had before it for construction a section in the insurance statute 
 which provided in substance that life insurance companies ";/ make dis- 
 tribution of such surplus" and in the next sentence said that in determin- 
 ing the amount of the surplus "there shall be reserved an amount not 
 less than," etc. It was contended that the word "may" as used in the 
 first sentence quoted should be construed as indicating an imperative 
 duty, that is to say, as meaning the same thing as though the word 
 "sliair had been used there. In its opinion the court called attention 
 to cases in which the word "may" had been construed in the 
 sense of "shall." but it refused to />/>/// to the icord ";//" the imiiera- 
 tin nicdiiiiKj irhen that word teas used in the same section as the icord 
 "xlnill" and the tico rcfctred to different situations. The court said 
 at page 555 : 
 
 "Applying these rules to the words 'may' and 'shall' in Section 14, 
 the former must be regarded as permissive and the latter as impera- 
 tive. We can conceive of no good reason, nor are we aware of 
 any rule of interpretation which would warrant the holding that the 
 words 'may' and 'shall' are used in the same sense in the section, 
 and that imperative." 
 
 The situation in the above case is somewhat analogous to the use of the 
 phrase "adequate for the services of 20,000 subscribers." and the phrase 
 "serving 20.000 bond fide subscribers" as used in the Chicago Tunnel or- 
 dinance. Them- tiro jihrases are used in the same section and refer to 
 riHiditionx arixinn <H different times. Therefore, it is clear that the two 
 phrases using different language did not mean the same thing and tliar 
 the phrase "serving 20,000 bona fldc subscribers" does not mean a tele- 
 phone system merely adequate for the service of 20,000 subscribers.
 
 18 
 
 The construction contended for that all that 
 this clause meant was that the telephone system 
 should be adequate or sufficient to serve 20,000 
 subscribers entirely ignores as it seems to me 
 the important and significant words "bona fide/' 
 which qualify subscribers and indicate that there 
 should be actual telephone subscribers having con- 
 tractual relations with the telephone company entitling 
 them to the service of this telephone system. It is most 
 significant that these words, "bona fide" do not appear 
 in clause (a) which deals with adequacy or size of the 
 plant and merely requires that the plant should be ade- 
 quate to serve "20,000 subscribers" if obtained. Nat- 
 urally the qualifying words "bona fide" were not here 
 used in clause (a). When defining adequacy there is of 
 course no need or propriety in qualifying the word "sub- 
 scribers" by the adjective "bona fide." The plant 
 should be adequate to serve 20,000 possible subscribers. 
 The use of "bona fide" in clause (b) distinguishes it 
 from clause (a) and shows that clause (b) does not 
 refer to mere adequacy of plant. 
 
 The entire clause (b) as distinguished from clause (a) 
 relates to the actual operation of the telephone system 
 and not to the mere construction of an adequate plant. 
 Clause (a) says that if the company: 
 
 "shall not have in operation or shall cease to oper- 
 ate a telephone system serving 20,000 bona fide 
 subscribers, it shall forfeit its rights under the ordi- 
 nance of February 20th, 1899, together with its plant 
 and equipment for telephone purposes." 
 
 To give this clause the construction contended for by 
 counsel would as it seems to me be doing the very thing 
 which counsel for the bondholders admits is not per- 
 missible. It would be "unreasonably straining the mean- 
 ing of the words employed" and would do "violence" 
 to the language of the ordinance.
 
 19 
 
 THE CONTENTION THAT ALL THE 20,000 SUBSCRIBERS 
 WOULD HAVE TO BE SECURED IN ONE DAY. 
 
 It remains for me to discuss a number of special con- 
 siderations urged by counsel for the company or for the 
 bondholders in support of the interpretation of these 
 forfeiture clauses for which they contend. Among these 
 I find that it is contended that if the ordinance is con- 
 strued in the manner which this opinion suggests and 
 which it has been stated by both the Corporation Coun- 
 sel and one of the counsel for the bondholders is the 
 more natural interpretation, this construction would 
 require that all these 20,000 subscribers must have 
 been secured on June 1st, 1911. Counsel urge 
 that none of them could have been secured before 
 the night of May 31, 1911, and that at all times 
 after June 1st, 1911, there must have been a full num- 
 ber so that it appears, as counsel contends, that they 
 must have all been secured during that one day. We 
 search in vain for any basis in any of the ordinances for 
 this argument. There was nothing in the ordinances to 
 suggest that the Illinois Telephone and Telegraph Com- 
 pany, the original grantee, was to postpone securing its 
 subscribers until the last possible moment but on the 
 other hand there is every indication in the ordinances 
 that the Company was expected and required to use at 
 all times all possible diligence to build up its number of 
 bona fide subscribers during the period of years inter- 
 vening between the passage of the 1903 amendatory or- 
 dinance which gave the company notice that within a pe- 
 riod of five years from the date of the ordinance and ex- 
 piring July 15, 1908, the Company must have 20,000 
 bona fide subscribers. The period allowed for securing 
 these subscribers was subsequently extended by the 
 amendatory ordinance passed February 1st, 1909, to Oc-
 
 20 
 
 tober 8, 1IHH), and then finally fixed by the further amen- 
 datory ordinance of June 28, 1909, at the date already 
 referred to of June 1st, 1911. I am not advised as to 
 how many actual subscribers the telephone system had 
 on any one of the dates of the passage of these several 
 ordinances, but -an examination of these ordinances 
 shows that the Company from the date of the passage 
 of the 1903 ordinance should have known that it must 
 within a certain limited period secure 20,000 bona fide 
 subscribers and it is, to my mind, a strange contention 
 that there was anything in the ordinance to justify the 
 company's waiting until the night of May 31, 1911, be- 
 fore seeking to secure any subscribers and then being re- 
 quired in one day's time, the day of June 1st, 1911, to 
 secure the total number of 20,000 subscribers. 
 
 THE GREAT SIGNIFICANCE ATTACHED TO THE WORD "ALSO." 
 
 Another suggestion earnestly advanced by counsel 
 is that the word "also" contained in the forfeiture 
 clause is of very great significance. It is urged that be- 
 cause under the ordinance as it now stands it is pro- 
 vided "that in each such case (that is, in case of a vio- 
 lation of either clause (a) or clause (b) already referred 
 to) said Company, its successors and assigns shall also 
 forfeit to the city * * all rights acquired under said 
 ordinance of February 20, 1899, together with its plant 
 and equipment for telephone purposes," and it 
 is urged that this word "also" must be con- 
 strued as meaning that such a forfeiture of the 
 telephone rights could take place only on condition 
 that a forfeiture of the transportation rights of the 
 Tunnel Company had previously or at least contem- 
 poraneously taken place. This contention is based on 
 the fact that just previous to the clauses authorizing the
 
 21 
 
 forfeiture of the telephone rights the ordinance pro- 
 vided for the forfeiture of the rights acquired under 
 the ordinance of 1903 for the construction of a transpor- 
 tation system together with the plant and equipment for 
 transportation purposes. On examination it appears 
 that this clause allowing this forfeiture of the transpor- 
 tation rights contains in like manner the word "also" 
 so that if the construction contended for by counsel is 
 correct the city could not proceed under this clause for 
 the forfeiture of the transportation rights and franchise 
 unless it had first or did contemporaneously therewith 
 provide for a forfeiture of the transportation rights 
 under the terms of the ordinance set out in the para- 
 graph prior to the one just referred to and so quite re- 
 moved from the clauses (a) and (b) above quoted for 
 the forfeiture of the telephone rights. Referring back 
 to this earlier clause we find that it provides first for a 
 forfeiture to the city of the sum of $200,000 to be paid 
 within sixty (60) days after the expiration of the period 
 provided for the construction of the transportation sys- 
 tem and only in case of the failure of the company to 
 pay the cash penalty was the company to forfeit the 
 rights acquired under the 1903 franchise to operate a 
 transportation system. 
 
 With all due deference to counsel it seems to me that 
 such a construction so vitally and fundamentally 
 changing the entire meaning of all of these for- 
 feiture clauses cannot be based upon the word 
 "also," a word, which, according to the admis- 
 sions of counsel, can be used in a great variety of mean- 
 ings. One of the well recognized meanings of the word 
 "also" is "likewise" or "in like manner" or "further," 
 and these meanings of the word would simply 
 indicate that in this clause the City Council was provid- 
 ing other and additional remedies by way of forfei-
 
 22 
 
 ture and not that the remedy here provided was one 
 which could be availed of only upon the condition 
 precedent that all of the earlier forfeitures had already 
 been exercised. 10 
 
 That the interpretation of the ordinance contended for 
 by counsel is not the correct one is, to my mind, shown 
 conclusively by the fact that it is provided in the ordi- 
 nance, that, if the city forfeits the telephone rights and 
 property under either of the forfeiture clauses (a) or 
 (b) already referred to, the company " shall be under ob- 
 ligations to furnish the city without charge all 
 space in any or all of its tunnels and conduits necessary 
 for the carrying on of said telephone business ; such space 
 at no time to be less than that required to reasonably 
 accommodate equipment for the service of 20,000 tele- 
 phone subscribers." The ordinance clearly contemplated 
 that the telephone rights and property might be for- 
 feited by the city in spite of the fact that the company 
 continued to own and operate the tunnels for transpor- 
 tation purposes and that in that event the company 
 must give the city space in its tunnels for the telephone 
 equipment which had already been forfeited to the city. 
 
 10 In the opinion of Schuyler, Ettelson & Weinfeld the following cases 
 are cited as supporting the construction placed upon the word "also" as 
 used in the clause relating to the conditions of the forfeiture of the 
 telephone system: 
 
 Panton \. Tefft, 22 111., 367, 376. 
 
 Morrison \. Schoor, 197 111., 554, 566. 
 
 Loring v. Hayes, 86 Me., 351, 355, 357. 
 
 Kinkle v. Wilson, 29 N. Y. Supp., 27, 31. 
 
 Stockton v. Haddock, 10 Fed., 132, 134. 
 
 Rowlings v. Hunt, 90 N. C., 270, 276. 
 
 Van Dusen v. Fridley, 43 N. W. Rep., 703, 5. 
 
 Mace v. Mace, 85 Me., 283, 286. 
 
 The above cases give to the word "also" various definitions of "in 
 ddilition to," "in like manner," "likewise," "besides," and "too." None of 
 these cases goes so far as to indicate that the pro\ r ision of the first of 
 two clauses connected by the word "also" must be fulfilled before the pro- 
 visions of the second clause can apply. None of the cases indicate that 
 the first clause is a condition precedent to the second clause. While the 
 cases indicate that the word "also" signifies conjunction or cumulation, 
 Ilicii ilo not support tlte c.rtrcnic proposition wade in the opinion referred 
 to Unit flic ironl iinlicatcs the m-ccxsity of the happening of the first 
 condition before the second condition can have any validity whatever.
 
 23 
 
 This shows that it was not necessary, as con- 
 tended by counsel, that the city should first forfeit the 
 tunnels and the transportation equipment before taking 
 any action for the forfeiture of the telephone rights and 
 equipment, and that as a matter of fact the opposite pro- 
 cedure was authorized by the ordinances. 
 Referring to this contention counsel says : 
 
 "The argument of this criticism is a logical one, 
 but subsequent study has convinced us that the 
 premise upon which it is based is not valid, and that, 
 consequently, the argument itself, depending for its 
 conclusion upon the validity of that premise, falls 
 when the falsity of the premise appears." 
 
 I will not attempt in this opinion to review in detail 
 counsel's argument in this connection. I have given 
 it consideration and it does not seem to me to justify 
 the conclusion arrived at. Counsel relies in part upon 
 Section 4 of 'the ordinance of 1903 providing that the 
 company "may lease but not beyond the term of this 
 grant space in its said tunnels * only 
 
 to such persons or corporations as may hereafter be au- 
 thorized by the city to conduct or carry on business in 
 or through conduits or tunnels authorized and 
 
 a certified copy of such lease shall be filed with the City 
 Comptroller." It is urged that under the terms of this 
 Section 4 it would have been competent for the company 
 to make leases co-extensive in time with the franchises 
 of the company and that the city could not, by any for- 
 feiture that it attempted, affect the leases thus made 
 and unexpired. I cannot take the same view of this 
 matter that counsel does. 
 
 The ordinances are matters of public record and anyone 
 dealing with the tunnel company or taking a lease there- 
 from would certainly be chargeable with full notice of 
 all the provisions of the ordinances and any rights that 
 such licensee might acquire would bo subject to the terms
 
 24 
 
 of the ordinances permitting forfeiture by the city of 
 the telephone rights and property on certain conditions 
 and of the transportation rights and property on certain 
 other conditions. Counsel in this same connection says : 
 
 "A re-examination of the ordinances since writ- 
 ing this opinion, has convinced us that the draftsman 
 of the ordinances intended to divide the tunnel prop- 
 erties in the streets into three parts, instead of two, 
 namely : 
 
 1. The tunnels themselves. 
 
 2. The transportation system (including the right 
 of way in the tunnels and the tracks, etc.). 
 
 3. The telephone plant and equipment. 
 
 I have not been able to agree with counsel in this re- 
 gard, but my views in this connection are stated below in 
 my discussion of the second of the two questions pro- 
 pounded by your Committee. 
 
 ALLEGED INABILITY OF COMPANY TO PERFORM CONDITIONS 
 OF ORDINANCE. 
 
 Another contention made by counsel in support of the 
 construction of these forfeiture clauses for which counsel 
 stand is that if it be held that the company was required 
 at its peril to secure 20,000 bona fide subscribers to the 
 telephone system, such requirement would be void because 
 it is something beyond the control of the company and 
 is impossible of performance. That is to say, it is con- 
 tended that inasmuch as the company has no power to 
 compel the people of Chicago to become subscribers 
 to its automatic telephone system the company cannot be 
 forced by the city to live up to the provisions of the ordi- 
 nance requiring the securing of such number of bona fide 
 subscribers. 
 
 It can be said in reply to this suggestion that the 
 company sought and secured from the City of Chicago a 
 franchise containing this provision. The company vol- 
 untarily entered into a contract with the city containing
 
 25 
 
 this as one of its provisions. The company then knew 
 as well as it does at present that it could not compel the 
 people of Chicago to take the automatic telephone sys- 
 tem. I do not mean by this that they knew that the peo- 
 ple of Chicago would not voluntarily become subscribers 
 to that system, but they knew that the company possessed 
 no means of compelling the making of subscription con- 
 tracts. In spite of this the company by its sol- 
 emn act in seeking and accepting this ordinance 
 assumed the burden of performing this condition 
 and cannot now be heard to complain of the 
 difficulty or even impossibility of its performance. 
 Many a contract is enforced against the parties thereto 
 involving situations not unlike that here presented. Sup- 
 pose a sales agent of a great manufacturing or mercan- 
 tile concern guaranties absolutely as a condition of se- 
 curing, say an exclusive agency, that be will sell in each 
 of several years a minimum of a named amount of goods. 
 He has no power to force the public within the territory 
 given to him exclusively to buy the goods which he sells. 
 Still if he fails to perform this condition of his employ- 
 ment I take it there can be no doubt that he would have 
 to surrender his exclusive agency and admit that his 
 employer could deprive him of the privileges which had 
 been secured to him under his contract for a long pe- 
 riod of years on condition that he should in each arid 
 every year sell the amount of goods therein named. 11 
 
 "The case of Coicasjee Nanabhoi/ v. Lallbhoy Vullubhoi/, Law Reports, 
 Indian Appeals, 1875-76, was cited by counsel for the bondholders as 
 an authority to the effect that where the defendant had hired plaintiff 
 for the term of plaintiff's life and agreed to give the plaintiff a com- 
 mission on all the business of the defendant, there would be an implied 
 condition that if the defendant found itself in financial difficulties and 
 was wound up, the plaintiff could not recover for commissions not 
 then earned. This case seems to me distinguishable from the facts 
 stated above. In this case from the Indian Appeals there was no express 
 stipulation and the court implied this condition in the absence of an 
 express stipulation. If there had been an express stipulation that the 
 commissions should continue without regard to the defendant's financial 
 condition or situation, the decision would, I take it, have been different ; 
 and in the ordinances now under discussion we have an express under- 
 taking as I view it on the part of the company to have at all times 
 20,000 bona fide subscribers.
 
 26 
 
 In the same way here, this company chose to accept a li- 
 cense from the city which, under the authorities, consti- 
 tuted a contract between the company and the city and 
 the mere fact that such contract contained provisions 
 onerous or difficult of performance cannot excuse the 
 company if it seeks to continue to exercise the rights and 
 privileges which were granted to it on these express con- 
 ditions with which the company has failed to comply. 
 
 EFFECT OF CHICAGO TELEPHONE COMPANY ORDINANCE OF 
 
 1907. 
 
 Another similar consideration is suggested to the effect 
 that the city has prevented the company from perform- 
 ing this condition by reason of certain ordinances which 
 the city granted to the Chicago Telephone Company in 
 1907, regulating the rates of said company and that by 
 so doing the city made that company a still more suc- 
 cessful competitor of the automatic telephone system and 
 thus, as it is contended, prevented the automatic com- 
 pany from securing the minimum number of bona fide 
 telephone subscribers required; or, if they did not pre- 
 vent their securing such number, at least prevented their 
 retaining such number. 
 
 The contention as it seems to me amounts to this, that 
 the City of Chicago having granted certain rights to the 
 Automatic Company deprived itself of all ability to pass 
 a subsequent ordinance granting other rights or mak- 
 ing other regulations for the other public utility engaged 
 in the same line of business, the Chicago Telephone 
 Company. Certainly this contention cannot "oe sustained. 
 There is no need of the citation of authorities to the ef- 
 fect that a city council does not in this way deprive it- 
 self of its powers or relieve itself from the duty to regu- 
 late other public utilities operating within the municipal- 
 ity by the passage of ordinances of later date.
 
 27 
 
 THE CONTENTION THAT THE CLAUSES AMOUNT TO A ' ' BET. ' ' 
 
 Another suggestion is made that the forfeiture clauses 
 in the ordinances now under consideration if given the 
 construction for which I contend, will make these clauses 
 in effect a bet and so obnoxious to the general policy of 
 the law condemning transactions involving chance or 
 gambling. I fail to find in the ordinance any justifica- 
 tion for this contention. The clauses of forfeiture there- 
 in contained are, as has been repeatedly stated by coun- 
 sel for the company and the bondholders, conditions sub- 
 sequent, similar to conditions often inserted in ordinances 
 in favor of public utility corporations and in some sense 
 similar to conditions subsequent in private deeds and con- 
 tracts, although as above stated, in some particulars the 
 rules of law as applied to such private contracts differ 
 from those applicable to the construction of these public 
 contracts. But that such a condition subsequent consti- 
 tutes a bet merely because there was always the possi- 
 bility, which it would seem that all parties must have 
 recognized, that the company would never be able to 
 secure 20,000 bona fide subscribers, does not in any way 
 justify to my mind the conclusion that it was a betting 
 transaction. Undoubtedly both parties to this contract, 
 the company and the city, had confidence that t\ie com- 
 pany would be able to make good and secure the neces- 
 sary 20,000 bona fide subscribers. The City of Chicago 
 would never have granted the franchise, would never have 
 permitted its streets to be torn up and the public to be 
 inconvenienced in that and other ways if it had not been 
 confidently expected that the company would be success- 
 ful in securing the necessary number of bona fide tele- 
 phone subscribers and would continue to be an active com- 
 petitor of the Chicago Telephone Company, it being be-
 
 28 
 
 lieved at that time that competition between telephone 
 companies was desirable from the public standpoint. 
 
 I have now discussed most of the principal 
 contentions made by counsel for the company and the 
 bondholders in support of the views which they advance 
 in connection with the first of the two questions sub- 
 mitted to me by your Committee. I now pass to a con- 
 sideration of the second question propounded, which was 
 No. 3 among the questions propounded by his Honor, 
 the Mayor, to Mr. Fisher. 
 
 THIRD QUESTION. 
 
 In reply to this question, which is : 
 
 WHAT PROPERTY THE CITY WILL, GET IN THE EVENT OF 
 A FORFEITURE! 
 
 I reply that : 
 
 THE CITY WILL GET THE PLANT AND EQUIPMENT OF 
 THE COMPANY FOR TELEPHONE PURPOSES. 
 
 Just exactly what physical property will be covered 
 by the forfeiture it is impossible for me at this time to 
 determine. In fact there may be many difficult questions 
 arising as to just what is telephone equipment or prop- 
 erty as distinguished from just what is transportation 
 equipment or property of the Tunnel Company. The 
 ordinances recognize that there may be such difficulty 
 in determining the distinction between the two and in 
 Section 6 of the 1903 ordinance providing for the ap- 
 praisal of the transportation- property which the city was 
 authorized to take over at the end of 20 years, it is pro- 
 vided : 
 
 "The appraisers shall determine what tangible 
 property, real and personal in addition to the said 
 tunnels owned by the company and then used for 
 purposes of this grant is reasonably required for its 
 continued operation."
 
 29 
 
 I have not as yet even had time to consider with care 
 just what general classes of property would pass to the 
 city under a forfeiture. That is a question upon which 
 I desire more time for consideration. 12 . But that there 
 can be in a general way a distinction made between the 
 transportation property and the telephone property 
 seems to be contended by the Tunnel Company it- 
 self, for in the ordinance introduced on its behalf and 
 for the purpose of authorizing the sale to the Chicago 
 Telephone Company of the telephone property and equip- 
 ment it is stated : 
 
 "That permission and authority are hereby 
 granted to the Chicago Tunnel Company to sell its 
 telephone plant, system and equipment, including all 
 the property of the Chicago Tunnel Company nec- 
 essary and suitable to and used by it for carrying 
 on the telephone business in the City of Chicago, 
 
 "It has been informally suggested that there would perhaps l;e a dif- 
 ferent construction of the ordinance so far as it affects the forfeiture 
 of the property from the construction as to its effect upon the forfeiture 
 of the franchise or license to use the city streets. 
 
 In City of Tower v. Tower & Soudan Street Railway Company, 68 
 Minn., 500, an ordinance granted the use of the streets for a street rail- 
 way. The grant was upon a condition that the railway be constructed 
 within a certain time and be operated continuously. In default thereof 
 the railway company was to forfeit its rights to use of the streets and was 
 to forfeit its "road" to the city. Upon the failure of the railway com- 
 pany to operate for a considerable period the city declared a forfeiture 
 of the franchise and of the road and the forfeiture was upheld. In up- 
 holding the action of the city in forfeiting the franchise and the property 
 the court held that the rule that forfeitures are not favored in the law 
 could not apply to a case involving the public interest. The same rule 
 II-IIK applied to the forfeiture of the property as applied to the forfeiture 
 of the franchise. Furthermore the court gave a broad and liberal inter- 
 pretation to the word "road" as used in the forfeiture provision of the 
 ordinance. It was contended by the railway company that the word 
 "road" included only the roadbed and that the railway company was. 
 therefore, entitled to the steel rails. The court said, however, "the word 
 'road' as used in Section 12 includes the roadbed with the tics, rails and 
 nil lhat constitutes a complete superstructure on which cars transport pas- 
 xaii/crs or property or both." p. 504. 
 
 The case of Farnsworth v. Minnesota tC- I'aciflc /?. R. Co., 02 U. S.. 40, 
 likewise involved the forfeiture of property in addition to the franchise 
 of a railroad company. The court made no distinction bctii'cc'n the prop- 
 erty and the franchise in applying tbe rule that public i>olic.v and the 
 public interest forbade the application of the doctrine that forfeitures 
 are not favored and that equity abhors a forfeiture. 
 
 In the case of Whitinfl v. Village of New Baltimore, 127 Mich., 66, the 
 city granted to a railway company a license to lay its tracks on certain 
 streets and required that a sum of $2,000 be deposited with the city,
 
 30 
 
 erected, operated and maintained under the provi- 
 sions of an ordinance adopted by the City Council of 
 the City of Chicago on the 20th day of February, 
 1899, and accepted by the Illinois Telephone and 
 Telegraph Company, a predecessor of the Chicago 
 Tunnel Company, on the 3rd day of April, 1899, and 
 under the provisions of ordinances amendatory 
 thereof, separate and apart, however, from its tun- 
 nels and tunnel systems and its plant and equipment 
 for transportation and other purposes." 
 Running throughout the ordinances there seems to be 
 a distinction between the telephone system on the one 
 hand and the transportation system on the other. The 
 first ordinance of 1899, of course, referred exclusively 
 to the telephone system. The amendatory ordinance of 
 1903 granted the right to conduct a transportation sys- 
 tem and the two were expressly separated by clause 6 
 by which it was provided that 
 
 "The City Council shall have the right, at the ex- 
 piration of twenty (20) years from the passage of 
 
 which sum was to be forfeited in the event of the failure of the railway 
 company to construct its road within a certain period. Upon failure of 
 the railway company to so construct its road as provided by the ordi- 
 nance the city took possession of the sum of $2,000 and the rights of the 
 city to forfeit this sum was upheld by the court. 
 
 City of Detroit v. People's Telephone Company, 135 Mich., 696, is a sim- 
 ilar case where the forfeiture of $5,000 to the city was upheld. The tele- 
 phone company had failed to commence operation within the time required 
 by the ordinance. In upholding the right of the city to forfeit this sum 
 in accordance with the terms of the ordinance the court said : 
 
 "It is true that the law abhors forfeiture but there can 'be no other 
 construction of this charter than that the defendant was to forfeit 
 the sum as liquidated damages for the failure to fulfill the agree- 
 ment to construct the plant and operate it as provided in Section 5." 
 p. 699. 
 
 The foregoing cases distinctly uphold the right to declare a forfeiture 
 of property when the provisions of an ordinance have been violated. 
 
 See also City of Belleville v. Citizens' Horse Railway Co., 152 111., 171, 
 cited in Note 12. 
 
 Forfeitures of public land grants have been upheld by the Supreme 
 Court of the United States in numerous cases. In many such cases the 
 court applies to the construction of the acts granting to private indi- 
 viduals parts of the public domain the rule of strict construction against 
 the grantee and in favor of the public. In these cases there is an 
 application of the rule for which we contend to forfeitures of property 
 as distinct from forfeitures of franchise or license privileges. 
 In this connection see : 
 
 A tlantic and Pacific Railroad Company v. Hingus, 165 U. S., 413. 
 U. S. v. Oregon & California Railroad Company, 164 U. S., 526, 
 41 L. Ed., 541.
 
 31 
 
 this ordinance, to terminate the grant of privileges 
 to said company, provided twelve (12) months' pre- 
 vious notice in writing shall have been given of the 
 intention of the city to take over the property of the 
 grantee, suitable to and used by it for all the pur- 
 poses of this grant, including the tunnels themselves, 
 and all appurtenances, equipment and fixtures ex- 
 cept the wires, equipment and fixtures necessary to 
 the carrying on of the telephone business, which 
 wires, equipment and fixtures shall not be subject 
 to city purchase until the expiration of the period 
 named in said ordinance of February 20, 1899, it 
 being the intent and purpose of the City Council that 
 the grant by said ordinance of February 20, 1899, 
 to carry on a telephone business shall continue un- 
 abridged for the full term of said grant, but that 
 the grant, except as hereinabove provided, of new 
 privileges by this ordinance conferred, including the 
 right to construct tunnels, shall be subject to ter- 
 mination and city purchase as above provided. And 
 in the event that the City Council shall so terminate 
 the grant and take over the tunnels and fixtures as 
 above provided, except such as may be necessary to 
 the carrying on of the telephone business, then such 
 company shall be permitted for the full term of said 
 ordinance of February 20, 1899, to utilize said tun- 
 nels to such extent as may be necessary to the carry- 
 ing on of the telephone business and shall pay for 
 the use of such tunnels a reasonable rental." 
 By this clause, therefore, it is expressly provided that 
 the City Council might at the end of twenty (20) years, 
 that is, in 1923, buy the tunnel property used for trans- 
 portation purposes and that in spite of such purchase 
 the rights of the company to conduct a telephone busi- 
 ness should continue for the full grant of the original 
 license or until 1929, a period of some six years after 
 the authorized purchase of the transportation property. 
 The same distinction between transportation rights 
 and property on the one hand and telephone rights and 
 property on the other hand is recognized in Section li- 
 the forfeiture section of this amendatory ordinance of
 
 32 
 
 1903. As already noted this section includes separate 
 provisions for the forfeiture of the transportation prop- 
 erty on certain conditions and the forfeiture of the tele- 
 phone property on certain other conditions and this same 
 distinction is carried through the subsequent amendatory 
 ordinances of February 1st, 1909, and June 28th, 1909, 
 which re-enact Section 11 of the amendatory ordinance 
 of 1903 with only slight, and for this purpose inconse- 
 quential changes. 
 
 The distinction between the two systems is further em- 
 phasized by the fact that these ordinances require the 
 payment of separate and different compensation from 
 each, the transportation system being required to pay 
 one scale of percentages on its gross receipts while the 
 telephone system is required to pay an entirely different 
 scale of percentages on its gross receipts, thus necessi- 
 tating the keeping of the business of the two systems 
 distinct. 
 
 CONCLUSION. 
 
 In conclusion, therefore, I would state that in my opin- 
 ion the City of Chicago has the right under the ordinances 
 granted to the Illinois Telephone and Telegraph Com- 
 pany to pass an ordinance declaring a forfeiture of the 
 rights of that company granted under the ordinance of 
 February 20, 1899, and of the plant and equipment for 
 telephone purposes constructed by said company or its 
 successors and assigns under said ordinance or any of 
 the later ordinances amendatory thereof. Such ordi- 
 nance would at least amount to a declaration of the pur- 
 pose of the city to declare a forfeiture. Whether or 
 not subsequent court action would be necessary on the 
 part of the city in order to secure possession of the 
 physical property so declared forfeited to the city is a
 
 33 
 
 question upon which I am not at present called upon to 
 pass and which will require further consideration. 13 . In 
 any event, the first step in the proceeding, if this Com- 
 mittee and the Council see fit to enforce the rights of the 
 city in this regard, is to pass such ordinance and then to 
 follow the same up, if need be, by court proceedings. 
 
 I have prepared a draft of an ordinance for the pur- 
 pose of declaring such forfeitures. In the first in- 
 stance I prepared drafts of two separate ordinances, the 
 one forfeiting the rights of the company to do a tele- 
 phone business and the second forfeiting its plant and 
 equipment for telephone purposes, but while it is quite 
 possible that such procedure would accomplish the pur- 
 pose for which it was intended, it has seemed to me on 
 
 "In this connection it may be well to call attention to a few cases in- 
 dicating the method of procedure to procure possession of the property 
 which may be forfeited. 
 
 In The City of Belleville v. Citizens' Horse Railway Company, 152 111., 
 171, upon the failure of the defendant to fulfill the conditions of the 
 ordinance, the city passed an ordinance repealing and revoking the rights 
 and privileges of the railway company. The right of the city to ter- 
 minate the license to the railway company was upheld but with refer- 
 ence to the right of the city to secure possession of the property of the 
 railway company the court said : 
 
 "The city had no authority without the judgment of a court to 
 forfeit to its own use the tracks, switches and turnouts of the rail- 
 way company. But there u'as no attempt to enforce it. The remain- 
 ing sections are complete in themselves and so distinct and separately 
 enforcible that they may be enforced without regard to Section 3. 
 They therefore are not invalid." p. 188. 
 
 This language implies that the city had the power to enforce a for- 
 feiture by appropriate legal proceedings. 
 
 In People v. Central Union Telephone Company, 232 111., 260, the court 
 upheld the rights of the city to terminate the license granted to the 
 defendant to use the streets of the City of Moline for telephone wires. 
 The defendant insisted upon continuing to use the city streets and 
 thereupon quo icarranto proceedings were brought to oust the telephone 
 company from the use of the streets. It was held that this was a proper 
 form of action to determine the right of the city to declare the for- 
 feiture of the franchise or license and to determine the rights of the 
 defendant to the use of the streets. 
 
 The above cases upheld the validity of ordinances passed by the city 
 declaring the termination of the rights and privileges granted to pri- 
 vate corporations. They would also indicate that such an ordinance 
 is necessary. That it is necessary to pass an ordinance declaring the 
 election of the city to forfeit the franchise or license and property as 
 provided Ity the grant in lield l>il the following two cases: 
 
 City of Toledo \. Toledo Rail ir ay and Liffht Co., 2;"> Oh. Cir., 441. 
 V. 8. v. Wanhinf/ton Improvement Co., 180 Fed., 074. 
 In the tico case* just cited it trait held that the failure to pass such,
 
 34 
 
 further consideration that it would be wiser to join in one 
 ordinance the appropriate sections for the forfeiture of 
 the right to do business and for the forfeiture of the 
 plant and equipment for telephone purposes. I do this 
 because the forfeiture clause, Section 11 of the ordi- 
 nances, provides for the forfeiture to the city of 
 
 "all rights acquired under said ordinance of Febru- 
 ary 20, 1899, together ivith its plant and equipment 
 for telephone purposes" 
 
 In view of the words here used it might be contended 
 that the two forfeitures could not be separated and that 
 a forfeiture of the telephone rights would not be valid 
 without a forfeiture of the plant and equipment. It 
 would seem clear that the plant and equipment could not 
 be forfeited without a forfeiture of the telephone rights. 
 
 an ordinance barred any procedure in the courts to oust the private com- 
 panies from the use of the streets and the possession of the property 
 forfeited. 
 
 Tn Los Angeles Railway Company v. City of Los Angeles, 152 Cal., 
 242, 92 Pac. Rep., 490, it was held that the provision for forfeiture in 
 the franchise was self-executing without the judgment of the court. 
 
 In Netv Jersey Street Railway Comnany v. the Inhabitants of South 
 Oranac. 58 X. J. Eq., S3, 43 Atl. Rep"., 53, it was held that the ordi- 
 nance in that case declaring a forfeiture and providing for the sale of 
 the property of the street railway company amounted to a decree of 
 court and was an attempt on the part of the City Council to exercise 
 a judicial function and therefore was void. The facts presented in this 
 case were exceptional in the extent to which the City Council attempted 
 to go providing for a sale of the property, etc., evidently with the idea 
 of precluding any possible judicial proceedings. I do not believe that 
 the objection that the City Council was attempting to exercise judicial 
 functions would be held to invalidate an ordinance such as it is here 
 proposed to pass in the case of the Automatic Telephone Company. 
 
 In the case of Wheeling < E. G. R. Go. v. Triadelphia, 4 L. R. A. (X. 
 S.), 321, it was held that this objection to the ordinance there under 
 discussion could not be sustained. The court said at page 331 : 
 
 "The Legislature of the State in declaring a forfeiture performs 
 exactly the same function that the Council performs in this case. 
 It necessarily ascertains the existence of a cause of forfeiture. An 
 individual in declaring the forfeiture of a contract right does the 
 same thing. But no court has ever regarded such declaration in 
 either case as an adjudication. Nor do they so regard such declara- 
 tions made by municipal councils." 
 And again at page 332 : 
 
 "Plainly this means that the forfeiture is effective only in such 
 case just as such a declaration by an individual is effective when 
 he has the right to make it, and therefore has none of the efficacy 
 of a judicial determination." 
 See also 
 
 Myrifh' \. Jirn<rJcti. 33 Minn., 377.
 
 35 
 
 Under these circumstances it has seemed to me 
 wiser to join both forfeitures in one ordinance 
 so as to prevent the possibility of the City Council 
 passing one of the two ordinances and failing to pass 
 the other, thus resulting in a situation which might lead 
 to complications in the courts. I have embodied in the 
 ordinance the familiar clause to the effect that the in- 
 validity of any one section should not affect the validity 
 of the other sections, so that even if it be assumed that 
 the right of the city to forfeit the plant and equipment 
 is not as clear as its right to forfeit the telephone fran- 
 chise and that the section attempting to forfeit the prop- 
 erty would not be sustained, such adverse decision of 
 the courts as to this one section would not, I believe, af- 
 fect the validity of the other clauses forfeiting the right 
 to do a telephone business. This is the rule announced 
 by the Supreme Court of this state in City of Belleville 
 v. Citizens Co., 152 111., 171, cited at length in note 13. 
 If this is so there seems to be no possible objection to 
 joining the two forfeitures in one ordinance and there 
 are very evident advantages in so doing. 
 
 I submit in connection with this opinion the draft of 
 such an ordinance as is above referred to declaring the 
 forfeiture of both the right to do business and the plant 
 and equipment for telephone purposes. 
 Respectfully submitted, 
 
 STEPHEN A. FOSTER.
 
 37 
 ADDENDUM. 
 
 In the above opinion I naturally attempted to deal par- 
 ticularly with such considerations as had been urged by 
 counsel in their objections to the power of the City to 
 forfeit the telephone rights and property of the Tunnel 
 Company. After my opinion was read to your Com- 
 mittee it was suggested that there might be a distinction 
 between a case involving forfeiture of rights and prop- 
 erty for failure on the part of a company to comply with 
 certain conditions as to operation and a case where the 
 company had abandoned all efforts to comply with the 
 terms of its ordinance. As a matter of fact it appears 
 that a number of the cases cited deal with the former 
 situation and sustain forfeitures for a failure to comply 
 with conditions of the ordinance, 14 but in view of the sng- 
 
 14 In People \. Central Union Telephone Co., 232 111., 260, the for- 
 feiture of the Telephone Company's rights in the streets of Moline 
 was based upon the failure of the Company to comply with the terms 
 of the ordinance as to the manner of placing the poles and hanging 
 the wires. In this case the City brought quo icarranto proceedings 
 which were held to be proper. But the point to which I here call atten- 
 tion is that there was no pretense that there had been any general 
 abandonment of the Company's franchise or any suggestion on its part 
 that it would cease to do business in Moline. This case is of particular 
 importance as recognizing the right of forfeiture by quo irarranto pro- 
 ceedings even where there is no express reservation of the right to 
 repeal the ordinance or terminate the contract and holding that where 
 there is an express reservation forfeiture can be declared even tli our/It 
 the unfulfilled conditions were not of vital Importance. The court said 
 at page 277 : 
 
 "When parties have agreed that one of them shall have an option 
 to terminate the contract if certain of its terms are not observed 
 the party may exercise his option upon the failure to comply with 
 any such terms and if he elects to treat the contract as at an end 
 it trill lie discharged, irhcther the term is vital to the contract or 
 not. but when there is a failure to comply with some term of a 
 contract and there is no agreement that the breach of that term 
 shall operate as a discharge, it 5s always a question for the courts 
 to determine whether or not the default is in a matter which is 
 vital to the contract." 
 
 And the court held that the conditions as to the manner of placing 
 the poles and hanging the wires were "vital to the contract" and so 
 .Instilled a forfeiture of the Company's rights even though there was 
 no express reservation to that effect in the ordinance. 
 
 In the case of Wheeling & E. O. R. v. Triadelphia, 4 L. R. A. (N. S.).
 
 38 
 
 gestion that the Chicago Tunnel Company in its tele- 
 phone as well as in its transportation system is a going 
 concern and still attempting to comply with all the terms 
 and conditions of the ordinances under which it is oper- 
 ating, it seems to me wise to add to my opinion some 
 brief considerations of the facts that bear upon this situ- 
 ation. 
 
 THE TUNNEL COMPANY HAS IN EFFECT ABANDONED ITS EF- 
 FORT TO COMPLY WITH THE REQUIREMENTS OF ITS ORDI- 
 NANCES. 
 
 It would seem to me that a fair consideration of the 
 facts will lead to the conclusion that the Chicago Tun- 
 nel Company has in effect already abandoned all effort to 
 comply with the terms of the ordinances and that we 
 
 321, the court reached the same conclusion that a failure to comply 
 with conditions of an ordinance, especially where those conditions are 
 expressed in the contract, would justify forfeiture of the company's 
 rights and the failure of the Street Railway Company to lay planks 
 of prescribed dimensions along the rails of its track was held to be a 
 sufficient ground for forfeiting the ordinance in view of the fact that 
 the ordinance contained an express clause giving the right to forfeit 
 for such cause. The court said at page 333 : 
 
 "The authorities relied upon to sustain the position that' sub- 
 stantial compliance with conditions, the violation of which is ex- 
 pressly made ground of forfeiture, do not support that view. They 
 are all cases in which the ordinances did not say failure to com- 
 ply with certain specific conditions, the conditions there in ques- 
 tion, should result in forfeiture of the privilege granted. There 
 was no such stipulation in the act construed by the court of appeals 
 of New York in People v. Broadway R. Co., 126 N. Y., 29, 26 N. E., 
 961. The propositions asserted in Booth on Street Kailways, Sec- 
 tion 45, are inapplicable for the same reason. At Section 46 of 
 the same work it is said : 'But if the statute provides that upon 
 such failure the franchise shall "be terminated" or shall "cease," 
 the default will put an end to the franchise without judicial pro- 
 ceedings, and the legislature may confer the franchise upon any 
 other company or person.' And this is fully sustained by the fol- 
 lowing decisions cited in support of it: Re Brooklyn, W. M. R. 
 Co., 72 N. Y., 245, 75 N. Y., 335; Brooklyn Steam Transit Co. v. 
 Brooklyn, 78 N. Y., 524 ; Oakland R. Co. v. Oakland, B. & F. V. R. 
 Co., 45 CaL, 305, 13 Am. Rep., 181." 
 And again on page 334 : 
 
 "In the absence of the stipulation for forfeiture as to the con- 
 ditions not complied with here, it could be held, consistently with 
 all authority, that there has been a substantial compliance with 
 the contract as a whole, and, therefore, no cause of forfeiture. 
 But it is competent for the parties to make any condition a ma- 
 terial and essential part of the contract. As these parties have
 
 39 
 
 therefore have presented in this case a situation where a 
 forfeiture, if made, would be of rights and property, 
 not merely because of a past failure to comply with the 
 requirements of the ordinances, but also because of the 
 company's practical admission of its inability to comply 
 with them in the future. As I read the briefs filed on 
 behalf of the Tunnel Company, it would seem to me clear 
 that the company does not contemplate any attempt in 
 the future to comply with the terms of the ordinance re- 
 quiring it to have 20,000 bona fide subscribers. It says 
 
 done so, how can. the court deny to one of them the benefit of 
 the t-ontnict, or relieve the other from its obligation? A distinc- 
 tion between conditions precedent and conditions subsequent is 
 made by the courts. The condition in this case belongs to the lat- 
 ter class, but the distinction does not seem to relieve the com- 
 pany. In the former class, no declaration or adjudication of for- 
 feiture is necessary, but in the latter it is, since non-compliance 
 may be waived. Hobelwan v. Kansas City Horse R. Co., 79 Mo.. 
 032; Chicago v. Chicago & W. I. R. Co., 105 111., 73, 78." 
 In Palestine Water & Poirer Company v. Palestine, 40 L. R. A., 203, 
 it was held that the fact that the Water Company came forward after 
 the proceedings for forfeiture were instituted and offered to perform 
 its contract did not deprive the City of the right to insist upon a for- 
 feiture. At page 208 the court said : 
 
 * * * in this case the Water Company did not mend its 
 ways nor offer to do so until after the suit had been brought, and 
 we think that, under the circumstances, the trial court did not 
 abuse its discretion, if, indeed, .it had any discretion in the mat- 
 tcr, by refusing to extend the time of performance." 
 The court also used significant language concerning the contentions 
 made by bondholders of the company, which language is applicable 
 to the situation presented to this Committee. The court said at page 
 208: 
 
 "* * * To revoke the franchise which the Water Company 
 had so flagrantly abused is a harsh remedy, and may cause loss 
 to fall upon those who hold the bonds, but it is the only adequate 
 means by which a city can surely protect itself against such wrongs 
 as were practiced in this case. Bondholders of such corporations 
 are entitled to protection to the extent that the corporations per- 
 form their duties under the law, but they take such bonds with the 
 knowledge that the continuance of the charter rights and other 
 franchises granted to corporations depends upon their faithful per- 
 formance of the duties to the public for which they were created." 
 On the authority of these and other cases it seems to me clear that 
 the power of the City to forfeit the rights and property of the Chicago 
 Tunnel Company for a non-compliance with the express terms of its 
 ordinances would not be denied, even if as suggested it should appear 
 that the Chicago Tunnel Company was trying in good faith to comply 
 with all of the requirements, but had been unable to meet the strict 
 letter of these forfeiture clauses. However, as stated in the body of 
 this opinion, I do not find that the Chicago Tunnel Company is in 
 fact making this attempt. For both of these reasons this doctrine of 
 "substantial compliance" has in my opinion no application to the facts 
 presented to this Committee.
 
 40 
 
 frankly that it cannot compote with the Chicago Tele- 
 phone Company. At page 1.4 of the statement filed by 
 its counsel on the "Consequences of a Declaration of 
 Forfeiture" it is stated that the experiment of compet- 
 ing with the Chicago Telephone Company "has been 
 fried," and at the bottom of page 16, it is stated that 
 "the Chicago Telephone Company lias already 
 
 pushed the Automatic Telephone Company to the wall." 
 And similar expressions are to be found throughout the 
 briefs filed on behalf of the company and its bondholders. 
 
 THE CHICAGO TUNNEL COMPANY BY ITS AGREEMENT TO 
 SELL OUT TO THE BELL INTERESTS VIOLATED THE TERMS 
 CF THE 1899 ORDINANCE AND RENDERED COMPETITION IN- 
 OPERATVIE. 
 
 It is to be noted that the rights of forfeiture provided 
 in the final paragraph of Section 2 of the original ordi- 
 nance of February 20, 1899, have at all times been care- 
 fully preserved by the subsequent ordinances. The ordi- 
 nance of June 20th, 1903, which was amendatory to the 
 ordinance passed five days earlier on July 15th, 1903, con- 
 tained this provision: 
 
 "Provided, however, that nothing herein contained 
 shall impair the obligation of said company under 
 said ordinance of February 20, 1899, to construct 
 and have in operation within five (5) years from the 
 date of said ordinance of February 20, 1899, a tele- 
 phone exchange serving two thousand (2,000) tele- 
 phones or shall vary the provisions of forfeiture 
 therein contained." 
 
 The subsequent ordinances of February 1st, 1909, and 
 June 28, 1909, contained substantially the same words 
 with the additional clause "except as herein expressly 
 provided" added to the proviso. I do not find anything 
 "expressly provided" in either of these later ordinances 
 that can be construed as diminishing the rights of the
 
 41 
 
 City to declare a forfeiture under the last paragraph of 
 Section 2 of the original ordinance of February 20, 1899, 
 which reads as follows: 
 
 "It shall be expressly the condition of this grant 
 that if the Illinois Telephone and Telegraph Com- 
 pany or any of its successors or assigns shall either 
 sell out to or enter into any agreement with any exist- 
 ing telephone company or any of its successors or as- 
 signs doing business in the City of Chicago, which 
 agreement would tend to make competition inoper- 
 ative, this ordinance shall become null and void and 
 the plant of said company together with the conduits, 
 wires and poles then in the streets belonging to said 
 company shall be forfeited to the City." 
 As is well known to your Committee, the Chicago Tun- 
 nel Company did on the 8th day of July, 1913, ac- 
 cording to the papers submitted, enter into an agree- 
 ment to sell, and the American Telephone and Telegraph 
 Company, by said agreement agreed to purchase, for the 
 sum of $6,300,000 the telephone plant, etc., of the Chi- 
 cago Tunnel Company. This agreement was subse- 
 quently modified by memorandum agreement dated Oc- 
 tober , 1913, and by letter of October 20, 1913, ad- 
 dressed to the American Telephone and Telegraph Com- 
 pany by the Chicago Tunnel Company. This last letter 
 specifically mentions the Chicago Telephone Company as 
 a possible purchaser of the Chicago Tunnel Company's 
 property under the previous agreements with the Amer-. 
 ican Telephone and Telegraph Company, and the supple- 
 mental memorandum agreement of July 8, 1913, also 
 specifically refers to the Chicago Telephone Company 
 and the right which the American Telephone and Tele- 
 graph Company was to secure to construct and connect 
 conduits between the tunnels of the Tunnel Company 
 and the conduit system of the Chicago Telephone Com- 
 pany. It is, of course, common knowledge that the Amer- 
 ican Telephone and Telegraph Company owns a very
 
 42 
 
 large percentage in the neighborhood of 95% of the 
 stock of the Chicago Telephone Company and that the 
 latter is one of the subsidiary companies of the Bell sys- 
 tem of which the American Telephone and Telegraph 
 Company is the parent company. 
 
 Your Committee are familiar with the terms of the pro- 
 posed ordinance submitted to the City Council on or 
 about July 14, 1913, and amending at one and the same 
 time the aforesaid ordinances of the Chicago Tunnel 
 Company and the ordinance of the Chicago Telephone 
 Company passed November 6, 1907, so as to permit the 
 sale by the Chicago Tunnel Company of its telephone 
 plant and equipment to the Chicago Telephone Com- 
 pany. It is to be noted that this proposed ordinance in- 
 troduced on behalf of the parties seeking to effect this 
 sale re-enacted Section 2 of the original ordinance of 
 February 20, 1899, but omitted at the end thereof the 
 important provision above quoted concerning the right 
 of forfeiture, and that this proposed ordinance further 
 provided in Section 3 thereof that the Chicago Telephone 
 Company should hold and operate the telephone plant of 
 the Tunnel Company "free from all the conditions, pro- 
 visions, forfeitures and requirements imposed by the 
 terms of the ordinances adopted by the City Council of 
 the City of Chicago on February 20, 1899, and July 15, 
 1903, together with all amendments thereto and all ordi- 
 nances or parts of ordinances in conflict" with said pro- 
 posed ordinance. So that this proposed ordinance if 
 passed would have wiped out the forfeiture clauses of the 
 1899 ordinance and the forfeiture clauses of the 1903 and 
 subsequent ordinances so far as the same applies to the 
 telephone rights, plant or equipment of the Chicago Tun- 
 nel Company. 
 
 The question arises for consideration whether or not 
 the Chicago Tunnel Company did not, by making the
 
 43 
 
 above mentioned contracts with the American Telephone 
 and Telegraph Company, the purpose of which is made 
 clear by the proposed ordinance submitted to the City 
 Council, violate the terms of the forfeiture clause above 
 set forth in the original ordinance of February 20, 1899. 
 I am of the opinion that the Chicago Tunnel Company 
 entered into an agreement with an existing telephone 
 company doing business in the City of Chicago, which 
 agreement tended to make competition inoperative. I 
 have every reason to believe that the American Telephone 
 and Telegraph Company itself was doing business in 
 the City of Chicago on the date of its agreement with the 
 Chicago Tunnel Company that is the 8th day of July, 
 1913 and in reality, as appears from a consideration 
 of the contracts and the proposed ordinance taken to- 
 gether, the real purchaser of the Chicago Tunnel Com- 
 pany's property was to be the Chicago Telephone Com- 
 pany, which last named company, of course, was doing- 
 business in the City of Chicago at that time. That this 
 agreement "would tend to make competition inopera- 
 tive" is self-evident. As soon as the Chicago Tunnel 
 Company secured a contract for the sale by it of its prop- 
 erty to the Chicago Telephone Company the "tendency" 
 of such contract would be to diminish any desire on the 
 part of the Chicago Tunnel Company to push its efforts 
 to compete successfully with the Chicago Telephone Com- 
 pany. It is not necessary to find that all competition 
 ceased. It is enough, under the terms of the 1899 ordi- 
 nance, to find that there was a "tendency" to make com- 
 petition inoperative.
 
 44 
 
 CONCLUSION. 
 
 It would therefore seem to me that the case presented 
 to this Committee is not one of a going concern seeking 
 to carry out all of the terms and conditions of the ordi- 
 nances and to comply with the obligations thereby im- 
 posed but rather a case of a company which has in effect 
 abandoned all effort to comply with the terms of the ordi- 
 nances, has admitted the failure of its telephone under- 
 taking and has definitely abandoned the purpose for 
 which its original ordinance was granted that is, the 
 securing of telephone competition in the City of Chicago. 
 
 In view 7 of these considerations and the emphasis that 
 is placed by some upon the alleged fact that the 
 telephone system of the Tunnel Company is a 
 going concern it seems to me desirable to in- 
 corporate in the ordinance to be submitted to your 
 Committee appropriate paragraphs concerning the fail- 
 ure of the Tunnel Company to comply with the terms of 
 the ordinance of February 20, 1899, and concerning its 
 practical abandonment in the particulars above named, 
 of all effort to comply with that and the other amenda- 
 tory ordinances relating to its telephone business. The 
 draft of an ordinance submitted herewith will be found 
 to contain such provisions. 
 
 Kespectfully submitted, 
 
 STEPHEN A. FOSTER,
 
 45 
 
 DRAFT OF ORDINANCE. 
 Draft of 
 
 An Ordinance declaring the forfeiture of all rights 
 acquired by the Illinois Telephone and Telegraph 
 Company or any of its successors or assigns, or the 
 Chicago Tunnel Company, or any other company or 
 person, under the ordinance passed by the City Coun- 
 cil on February 20, 1899, together with the plant and 
 equipment for telephone purposes constructed by 
 said Illinois Telephone and Telegraph Company or 
 any of its successors or assigns, or the Chicago Tun- 
 nel Company or any other company or person, under 
 said ordinance passed February 20, 1899, or any or- 
 dinance amendatory thereof. 
 
 WHEREAS, on February 20, 1899, an ordinance was 
 passed by the City Council of the City of Chicago in and 
 by which permission and authority were granted to the 
 Illinois Telephone and Telegraph Company (a corpora- 
 tion formerly existing under the laws of Illinois) its as- 
 signs and lessees, upon the terms and conditions in said 
 ordinance set forth, to construct, maintain, repair and op- 
 erate in the streets, avenues, alleys and tunnels and other 
 public places in the City of Chicago, and under the Chi- 
 cago river and its several branches for and during the 
 term of thirty (30) years from the passage of said ordi- 
 nance a line or lines of conduits and wires, or other 
 electrical conductors, together with all necessary feed- 
 ers and service wires, or other electrical conductors, to 
 be used for the transmission of sound, signals and intel- 
 ligence, by means of electricity or otherwise ; and, 
 
 WHEREAS, it was provided, among other things, in and 
 by said ordinance that if said Illinois Telephone and Tel- 
 egraph Company, or any of its successors or assigns, 
 should either sell out to or enter into any agreement with 
 any existing telephone company or any of its successors 
 or assigns doing business in the City of Chicago, which
 
 46 
 
 agreement would tend to make competition inoperative, 
 said ordinance should become null and void, and the 
 plant of said company, together with the conduits, wires 
 and poles then in the streets belonging to said company 
 should be forfeited to said City of Chicago ; and, 
 
 WHEREAS, on July 15, 1903, an ordinance was passed by 
 the said City Council in and by which permission and 
 authority were granted to said Illinois Telephone and 
 Telegraph Company, its successors and assigns, upon the 
 terms and conditions in said ordinance set forth to con- 
 struct, maintain, repair and operate in and through tun- 
 nels which had theretofore been constructed by said Illi- 
 nois Telephone and Telegraph Company claiming to act 
 under the authority of the aforesaid ordinance of Feb- 
 ruary 20, 1899, or should thereafter be constructed under 
 said ordinance of July 15, 1903, or under said ordinance 
 of February 20, 1899, for and during the term of said 
 ordinance of February 20, 1899, not only wires and elec- 
 trical conductors as provided in said last mentioned or- 
 dinance, but also any appliance or apparatus for the 
 transmission and transportation of newspapers, mail 
 matter, packages, parcels or merchandise ; and 
 
 WHEREAS, on July 20, 1903, an ordinance was passed 
 by said City Council amending said ordinance of July 15, 
 1903, by inserting at the end of Section 11 thereof a pro- 
 viso to the effect that nothing therein contained should 
 impair the obligation of said Illinois Telephone & Tele- 
 graph Company under said ordinance of February 20, 
 1899, to construct and have in operation within five years 
 from the date of said ordinance of February 20, 1899, a 
 telephone exchange serving two thousand telephones or 
 should vary the provisions of forfeiture therein con- 
 tained; and 
 
 WHEREAS, on June 28, 1909, an ordinance was passed
 
 47 
 
 by the City Council of the City of Chicago amending the 
 aforesaid ordinance passed July 15, 1903, and the ordi- 
 nance amendatory thereof passed July 20, 1903, and the 
 ordinance amendatory thereof passed February 1, 1909 ; 
 and, 
 
 WHEREAS, in and by said ordinance passed June 28, 
 1909, it was and is, among other things, provided, that 
 if said Illinois Telephone and Telegraph Company, its 
 successors and assigns, shall fail to construct, equip and 
 install a telephone system under the terms of said ordi- 
 nance to said company of February 20, 1899, adequate 
 for the services of 20,000 subscribers prior to June 1st, 
 1911, or if at any time after said June 1st, 1911, said 
 company, its successors and assigns shall not have in 
 operation or shall cease to operate a telephone system 
 serving 20,000 bona fide subscribers, then and in each 
 such case said company, its successors and assigns, shall 
 forfeit to the City of Chicago, or to any licensee or gran- 
 tee of said City (designated or authorized by the City 
 for this purpose), all rights acquired under said ordi- 
 nance of February 20, 1899, together with its plant and 
 equipment for telephone purposes, and shall forthwith 
 turn over the ownership and possesion of said plant and 
 equipment to said City, or to any licensee or grantee of 
 the City (designated or authorized by the City for this 
 purpose), and shall be under obligations to furnish said 
 City, or to any licensee or grantee of the City (desig- 
 nated or authorized by the City for this purpose) with- 
 out charge, all space in any or all of its tunnels and con- 
 duits necessary for the carrying on of said telephone 
 business; such space at no time to be less than that re- 
 1 1 ni red to reasonably accommodate equipment for the 
 service of 20,000 telephone subscribers; and, 
 
 WHEREAS, in and by said ordinance passed June 28,
 
 48 
 
 1909, it was expressly provided that nothing therein 
 contained should impair the obligation of said Illinois 
 Telephone and Telegraph Company under said ordinance 
 of February 20, 1899, to construct and have in operation 
 within five years from the date of said ordinance of Feb- 
 ruary 20, 1899, a telephone exchange serving two thou- 
 sand telephones, or should vary the provisions of for- 
 feiture therein contained except as was expressly pro- 
 vided in said 6rdinance of June 28, 1909; and, 
 
 WHEREAS, by the several reservations in said ordi- 
 nances of July 20, 1903, and of June 28, 1909, the right 
 of forfeiture above set forth on the conditions above 
 stated reserved in said ordinance of February 20, 1899, 
 has been expressly reserved and continued in full force; 
 and, 
 
 WHEREAS, each of said ordinances was duly accepted 
 in writing by said Illinois Telephone and Telegraph Com- 
 pany and such acceptance duly filed in the office of the 
 City Clerk of the City of Chicago in accordance with the 
 terms and within the time limited by said ordinances re- 
 spectively; and, 
 
 WHEREAS, the Chicago Tunnel Company has succeeded 
 to and acquired all rights granted or acquired under the 
 aforesaid ordinance of February 20, 1899, subject to all 
 the terms and conditions contained in said ordinance and 
 the aforesaid ordinances amendatory thereof, together 
 with the aforesaid plant and equipment for telephone 
 purposes ; and, 
 
 WHEREAS, said Chicago Tunnel Company did on or 
 about the 8th day of July, 1913, enter into an agreement 
 with the American Telephone and Telegraph Company, 
 a New York corporation engaged in the telephone busi- 
 ness and at that time and for more than fifteen years 
 prior thereto doing business in the City of Chicago and
 
 49 
 
 owning a large majority of the stock of and controlling 
 the Chicago Telephone Company, a teleph6'ne company 
 at that time and for more than fifteen years prior there- 
 to doing business in the City of Chicago, by which agree- 
 ment said Chicago Tunnel Company agreed to sell to 
 said American Telephone and Telegraph Company and 
 said American Telephone and Telegraph Company 
 agreed to purchase the telephone plant, system and 
 equipment including all of the property of said Chicago 
 Tunnel Company necessary and suitable to and used by 
 it for carrying on the telephone business in the City of 
 Chicago, under certain terms and conditions in said 
 agreement named, which agreement tended to make com- 
 petition between said Chicago Tunnel Company and the 
 aforesaid telephone companies inoperative; and, 
 
 WHEREAS, said agreement of July 8, 1913, was subse- 
 quently modified by memorandum agreement supple- 
 mental thereto dated on or about the day of 
 
 October, 1913, and by a letter of the Chicago Tunnel Com- 
 pany dated on or about October 20th, 1913, addressed to 
 said American Telephone and Telegraph Company and 
 expressly providing that in the event that the purchaser 
 of all or a part of the property above referred to should 
 be the Chicago Telephone Company, the Chicago Tunnel 
 Company would grant to said Chicago Telephone Com- 
 pany certain rights to occupy without charge for tele- 
 phone purposes space in the tunnels of said Chicago 
 Tunnel Company; and, 
 
 WHEREAS said Chicago Tunnel Company submitted to 
 the City Council on or about July 14, 1913, an ordinance 
 amendatory of the aforesaid ordinance passed by the 
 City Council on February 20, 1899 (and the ordinances 
 amendatory thereof), and amendatory also of an ordi- 
 nance passed November 6, 1907, granting to the Chicago
 
 50 
 
 Telephone Company permission and authority to con- 
 struct, maintain, repair and operate in and under the 
 public streets, alleys and other public places 
 in the City of Chicago and under the Chi- 
 cago river and its several branches, a system of wires, 
 cable, electrical conductors, poles and conduits, for the 
 transmission of sounds and signals only by means of elec- 
 tricity, and said proposed ordinance so introduced pro- 
 vided that permission and authority were thereby 
 granted to said Chicago Tunnel Company to sell its tele- 
 phone plant, system and equipment, including all the 
 property of said Chicago Tunnel Company, necessary 
 and suitable to and used by it for carrying on the tele- 
 phone business in the City of Chicago and provided fur- 
 ther that said Chicago Telephone Company might be- 
 come the purchaser thereof and purported to grant to 
 said Chicago Telephone Company permission and au- 
 thority to purchase such telephone plant, system and 
 equipment of said Chicago Tunnel Company and to hold, 
 extend, maintain and operate the same in connection with 
 its own telephone plant and under the terms of 
 its own ordinances from the City of Chicago and free 
 from all of the conditions, provisions, forfeitures and re- 
 quirements imposed by the terms of the ordinances 
 adopted by the City Council of the City of Chicago on 
 February 20, 1899, and July 15, 1903, together with all 
 amendments thereto and all ordinances or parts of or- 
 dinances in conflict with said proposed ordinance and 
 said proposed ordinance further provided upon the com- 
 pletion of any sale and purchase provided for in said 
 ordinance for the repeal of the right of said Chicago 
 Tunnel Company, its successors and assigns to build, 
 maintain and operate a telephone plant under the provi- 
 sions of the ordinances of February 20, 1899, and July 
 15, 1903, and all ordinances amendatory thereof, pro-
 
 51 
 
 vicled that such repeal should not affect its or their rights 
 to operate and maintain otherwise than in conducting a 
 telephone system any tunnels or conduits constructed 
 under said ordinance of February 20, 1899, then used as 
 a part of said tunnel system; and, 
 
 WHEREAS, -the counsel of said Chicago Tunnel Com- 
 pany acting on its behalf in the matter of the aforesaid 
 proposed ordinance then pending before the City Coun- 
 cil presented to the Committee on Gas, Oil and Electric 
 Light of said City Council a statement dated December 
 3, 1914, and addressed to said Committee expressly ad- 
 mitting that the number of bona fide subscribers of the 
 telephone system of said Chicago Tunnel Company was 
 on said date less than 20,000, and also admitting that the 
 company had terminated its active campaign of solicita- 
 tion of subscribers and admitting its inability to comply 
 with the terms and conditions imposed upon it under the 
 ordinances passed by the City Council as aforesaid ; and, 
 
 WHEREAS said Chicago Tunnel Company has by the 
 statements submitted on its behalf as aforesaid and by 
 its conduct in entering into the aforesaid agreements with 
 the American Telephone and Telegraph Company and by 
 seeking authority from the City of Chicago as afore- 
 said under its proposed ordinance (which has not been 
 granted) to sell its property to the Chicago Telephone 
 Company, declared its inability to conduct a telephone 
 business in the City of Chicago in competition with the 
 Chicago Telephone Company; and, 
 
 WHEREAS, on October 5, 1914, the City Council passed 
 an order directing the Commissioner of Public Service 
 to institute an investigation to determine whether the 
 Chicago Tunnel Company had a telephone system in op- 
 eration in the City of Chicago serving 20,000 bona fide 
 subscribers and pursuant to the terms of said order said
 
 52 
 
 Commissioner of Public Service made a thorough inves- 
 tigation of the number of bona fide telephone subscribers 
 being served by the telephone system of said Chicago 
 Tunnel Company, and made a count of the same and 
 
 thereafter, on to wit : the day of February, 
 
 1915, submitted his report of said count and investiga- 
 tion in and by which report said Commissioner of Public 
 Service found and reported that said telephone system 
 of said Chicago Tunnel Company was not serving 20,000 
 bona fide subscribers, and, 
 
 WHEREAS, said Chicago Tunnel Company (and all other 
 corporations or individuals interested or claiming to be 
 interested in said telephone system or its plant and equip- 
 ment and seeking an opportunity to appear and be heard) 
 have been given full and extended hearings before the 
 Committee on Gas, Oil & Electric Light during the many 
 months that said proposed ordinance submitted by said 
 Chicago Tunnel Company has been pending and the pro- 
 posed forfeiture of the rights and telephone plant and 
 equipment of said company has been under discussion as 
 aforesaid; Now THEREFORE 
 
 Be it Ordained by the City Council of the City of Chi- 
 cago : 
 
 Section 1. That the City of Chicago does hereby de- 
 clare that neither said Illinois Telephone and Telegraph 
 Company nor said Chicago Tunnel Company nor any 
 company or person operating a telephone system in the 
 City of Chicago under said ordinance of February 20, 
 1899, now has in operation a telephone system serving 
 20,000 bona fide subscribers ; and that the telephone sys- 
 tem established by said Illinois Telephone and Telegraph 
 Company and its successors is not now serving 20,000 
 bona fide subscribers and for a long period of time im-
 
 53 
 
 mediately preceding the date of the passage of this or- 
 dinance and subsequent to June 1st, 1911, has not been 
 serving 20,000 bona fide subscribers and that said Chi- 
 cago Tunnel Company has since it succeeded to the rights 
 of said Illinois Telephone and Telegraph Company ceased 
 to operate either directly or indirectly a telephone sys- 
 tem serving 20,000 bona fide subscribers and is not now 
 operating either directly or indirectly a telephone system 
 serving 20,000 bona fide subscribers, and that said Illi- 
 nois Telephone and Telegraph Company and said Chi- 
 cago Tunnel Company have in so doing violated the 
 terms and conditions of the aforesaid ordinances and 
 the obligations imposed thereby upon them as aforesaid. 
 
 Section 2. That the City of Chicago does hereby de- 
 clare that said Chicago Tunnel Company has also failed 
 to perform and has violated the terms of said ordinance 
 of February 20, 1899 and aforesaid ordinances amenda- 
 tory thereof in that said Chicago Tunnel Company has 
 entered into an agreement as aforesaid with a telephone 
 company doing business in Chicago as aforesaid, which 
 agreement has tended to make competition inoperative 
 and that said Chicago Tunnel Company in this and other 
 ways as aforesaid has in effect abandoned its efforts to 
 comply with the obligations resting upon it under the 
 terms and conditions of the aforesaid ordinances. 
 
 Section 3. That the City of Chicago does hereby de- 
 clare that all rights acquired by the Illinois Telephone 
 and Telegraph Company, or any of its successors or as- 
 signs, or the Chicago Tunnel Company, or any other 
 company or person under the ordinance passed by the 
 ( it y Council of the City of Chicago on February 20, 1899, 
 have become and are subject to forfeiture; and that the 
 City of Chicago does hereby elect to determine and for- 
 feit all of the rights granted by said ordinance of Feb- 
 ruary 20, 1899, and all rights acquired under said ordi-
 
 54 
 
 nance of February 20, 1899, by the said Illinois Telephone 
 and Telegraph Company, or any of its successors or as- 
 signs, or the Chicago Tunnel Company, or any other 
 company or person; and that the City of Chicago does 
 hereby declare forfeited all rights granted by said ordi- 
 nance of February 20, 1899, and all rights acquired by 
 the said Illinois Telephone and Telegraph Company, or 
 any of its successors or assigns, or the Chicago Tunnel 
 Company, or any other company or person, under said 
 ordinance of February 20, 1899, and all said rights are 
 hereby terminated and forfeited to the City of Chicago. 
 
 Section 4. That the City of Chicago does hereby de- 
 clare that the plant and equipment for telephone pur- 
 poses constructed or installed by said Illinois Telephone 
 and Telegraph Company, or any of its successors or as- 
 signs, or the Chicago Tunnel Company, or any other cor- 
 poration or person, under the aforesaid ordinance passed 
 by the City Council of the City of Chicago on February 
 20, 1899, or any of the aforesaid ordinances supplemental 
 thereto or amendatory thereof, have become and are sub- 
 ject to forfeiture ; and that the City of Chicago does here- 
 by elect to forfeit said plant and equipment; and that 
 the City of Chicago does hereby declare said plant and 
 equipment for telephone purposes to be forfeited to it, 
 the City of Chicago. 
 
 Section 5. That the City of Chicago does hereby de- 
 mand of said Chicago Tunnel Company and of the Illi- 
 nois Telephone and Telegraph Company, a corporation 
 organized under the laws of the State of Illinois on or 
 about June 6, 1912, and of any and all companies or per- 
 sons now having or claiming any interest in or owner- 
 ship of or being in possession of said plant and equip- 
 ment so constructed, or any part or portion thereof, that 
 they and each of them forthwith turn over to the City of
 
 55 
 
 Chicago the ownership and possession of said plant and 
 equipment, or such part or portion thereof as they re- 
 spectively have or claim any interest in or ownership of, 
 or are in possession of, and the Commissioner of Public 
 Works of the City of Chicago is hereby designated and 
 authorized to receive and receipt for the same as the 
 representative of, and for and on behalf of, the City of 
 Chicago. 
 
 Section 6. That the City of Chicago does hereby de- 
 mand of said Chicago Tunnel Company and said Illinois 
 Telephone and Telegraph Company, which was -organ- 
 ized on or about June 6, 1912, and any and all other com- 
 panies or persons now having or claiming any interest in 
 or ownership of or being in possession of the tunnels 
 and conduits constructed by the aforesaid Illinois Tele- 
 phone & Telegraph Company (a formerly existing corpo- 
 ration) claiming to act under the authority of the afore- 
 said ordinance of February 20, 1899, or under said ordi- 
 nance of July 15, 1903, or said ordinances amendatory 
 thereof, that they or either of them, upon the turning 
 over of the ownership and possession of such plant and 
 equipment for telephone purposes to the City, furnish 
 the City of Chicago or any licensee or grantee of the said 
 City (that may be designated or authorized by the City 
 for this purpose) without charge, all space in any or all 
 of said tunnels and conduits necessary for the carrying 
 on of said telephone business; such space at no time to 
 be less than that required to reasonably accommodate 
 equipment for the service of 20,000 telephone subscribers. 
 
 Section 7. That the Commissioner of Public Works of 
 the City of Chicago be and he is hereby authorized and 
 directed to deliver or cause to be delivered a duly certi- 
 fied copy or copies of this ordinance to the said Chicago 
 Tunnel Company and the said Illinois Telephone and
 
 56 
 
 Telegraph Company, which was organized on or about 
 June 6, 1912, and to any and all other companies or per- 
 sons, if any known to him, now having or claiming any 
 interest in or ownership of or being in possession of said 
 plant and equipment or any part or portion thereof. 
 
 Section 8. That the Corporation Counsel of the City 
 of Chicago be and he is hereby authorized and directed 
 to take such action as he may deem proper and advisable 
 to enforce the forfeiture declared in Section 2 and to en- 
 force the forfeiture of said plant and equipment declared 
 in Section 4 of this ordinance, and to enforce the rights 
 of the City of Chicago in the premises and the right of 
 the City of Chicago to all space in the aforesaid tunnels 
 and conduits necessary for the carrying on of said tele- 
 phone business. 
 
 Section 9. That the invalidity of any portion of this 
 ordinance shall not affect the validity of any other por- 
 tion thereof which can be given effect without such in- 
 valid part. 
 
 Section 10. This ordinance shall take effect and be in 
 force from and after its passage and due publication.
 
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 UNIVERSITY OF CALIFORNIA 
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