LIBRARY UNIVERSITY OF CALIFORNIA RIVERSIDE DURATION OF V MUNICIPAL STREET GRANTS BY FRED A. gAKER OF THE DETROIT BAR. Pro bono publico. PUBLISHEO FOR THE AUTHOR BY RECORD PRINTING CO.. DETROIT, MICH., 1010. Copyright, 1910, BY FRED A. BAKER. CONTENTS. PAGE Preface vn Introduction. Statement of a case in Michigan.... x CHAPTER I. The omission from the existing express contracts of the parties, of any covenant on the part of the street railway company to surrender possession at the end of the thirty years, or of any covenant on the part of the city to permit a continuation of the public service after the thirty years have expired, makes the question, whichever way it may be decided, one of implied contract, and the city must rely on the law of implied contracts, as well as the street railway company. Applying the law of implied contracts to the grants made to the Detroit City Railway in 1862 and 1879 the conclusion is irresistable that the right of the company, its successors and assigns, to main- tain and operate its street railways on the streets of the city extends beyond the designated period of thirty years 1 CHAPTER II. The Detroit United Railway is under an obligation to the State of Michigan from which it received its corporate franchises to operate its street rail- ways for the public use, during the entire period for which the company was incorporated, and at or before its expiration, to reorganize itself or to turn the property over to another company, to con- tinue the service it renders the public 33 11. CHAPTER III. The streets and highways of the city of Detroit are not the property of the city, or of the inhabitants of the city. They belong to the general public, that is, to the people of the state and their visitors from other states and countries. So far as the municipal authorities have been given any title to or power of control over the streets, the same is held in trust for the benefit of the general pub- lic ; and any ordinance or resolution of the common council, which would be detrimental to the general public, would be a breach of the trust, and illegal and void 55 CHAPTER IV. Whatever view may be taken of the original con- tracts between the street railway company and the city, it is certain that under the conditions exist- ing in 1909 and 1910, the city has no power at the expiration of the thirty years to expel the street railways from the streets of the city 73 CHAPTER V. Retrospectively and prospectively considered the Michigan constitution of 1908 strengthens the prop- osition that street grants for public utilities of a permanent nature necessarily contemplate that the public service is to continue beyond the period of limitation fixed by the local authorities 84 CHAPTER VI. Conclusive proof of the implied obligation of the city of Detroit to permit the street railway service to continue after Nov. 14, 1909, is found in the 111. fact that the public service is of such paramount and overwhelming importance that the common council of the city could not be induced, with any intention that its order would be obeyed or en- forced, to pass a resolution directing the Detroit United Railway to stop operating its cars Nov. 14, 1909, and to remove its tracks and overhead structures from the streets 97 CHAPTER VII. A municipal street grant does not establish the tech- nical relation of landlord and tenant, which ex- ists in the case of a private landlord and his priv- ate tenant; and for two reasons: (1) the munici- pality, as the alleged landlord, is a mere trustee for the public; and (2) the company grantee, as the alleged tenant, is under a legal obligation to serve the public. Hence, whatever the contract between the municipality and the company may be, it is subject to the superior and predominate rights of the public 119 CHAPTER VIII. The correct construction of the Michigan street rail- way act is, that the "consent" of. the local author- ities, is in its nature perpetual; that the local authorities are given power to fix the rules, regu- lations and conditions on which they will grant their consent and to agree with the grantee on the rates of fare and may limit the duration of their contract, but can not put a time limit on the local "consent" ; and that at the expiration of any period of time agreed upon, the grantee, its successors or assigns, may continue to occupy the streets, sub- IV. ject to such rules, regulations and conditions and rates of fare as the law (in the absence of a local agreement) imposes 140 CHAPTER IX. The rule that public grants are to be construed strict- ly, in favor of the grantors and against the grantee, furnishes abundant proof that the Detroit United Kailway has a right to continue to occupy the streets and to serve the public beyond the period of thirty years 155 CHAPTER X. Recent street railway history in Ohio shows the necessity of avoiding similar conditions in Michi- gan 161 CHAPTER XI. The final and conclusive argument in support of the proposition that the local consent is perpetual, and only the terms and conditions and the rates of fare are subject to time limitations, is found in the fact that in making a street grant the local authorities act in two different capacities: (1) in granting the local consent and designating the streets, the Aldermen act as the agents of the state under authority delegated to them by the legisla- ture; and (2) in agreeing with a street railway company on rates of fare, and the other terms and conditions, the Aldermen act by permission of the legislature as the contractual agents and repre- sentatives of the people of the municipality, in virtue of their election by the people to manage and control their local affairs. . 186 V. CHAPTER XII. There are many practical reasons concerning the welfare and happiness of the people, why the street railway business of the city of Detroit, and its suburbs, cannot be conducted on the theory, that at the expiration of municipal street grants, the municipalities have the power to dictate terms and conditions and rates of fare, regardless of the ques- tion whether they are reasonable or unreasonable 205 CHAPTEE XIII. "No more public service franchises on any terms, and the termination of all existing grants at the earliest possible date. "Government by the people, and not by private cor- porations" 225 CHAPTER XIV. One of the great merits of requiring or permitting street railway corporations to maintain and oper- ate their railways subject only to the legal obli- gation to charge reasonable fares, is, that it does away with the real and pretended reasons for municipal ownership 228 CHAPTER XV. The Supreme Court of the United States has author- itatively established the doctrine that the reason- ableness of a given rate of fare or freight of a pub- lic service corporation, is a judicial question, and that any legislative or executive action, anywhere in the United States or in any territory subject to their jurisdiction, purporting to conclusively fix rates or charges, without permitting a determin- vi. ation of the question by the judiciary, after a full hearing, is a deprivation of property without due process of law, and unconstitutional and void. . . . 233 APPENDIXES. No. 1. Indiana Street Railway Statute 239 No. 2. Chicago Street Railway Ordinance 253 No. 3. Cleveland Street Railway Ordinance 324 No. 4. Tables showing influence of gold on prices . . 375 Vll. PREFACE. My only excuse for publishing in book form for gen- eral circulation, a brief written in the interest of a client, is, that the subject of the duration of street grants and franchises is of great importance to the legal pro- fession and municipal authorities, and to bankers, trust companies, and other investors, not only, in Michigan, but also throughout the United States and Canada; and no discussion of a legal question is as valuable as that which concerns an actual case. For eighteen years it has been assumed and the im- pression has prevailed in municipal, partisan and news- paper circles in the city of Detroit, that when a street grant to a public service corporation expires by its own limitation, the municipal authorities have power to de- stroy the property of the grantee, by compelling it to stop operation and to remove from the streets; or, by imposing such rates of fare, or prices for the services rendered, as to amount to a practical destruction of the property; and that this can be done without interference on the part of the judiciary. My object in bringing together the authorities on which the question depends, and to which the learned judges must resort in determining it, is to show that the municipal authorities have no such arbitrary and con- fiscatory power. When an original street grant is made by a municipal- ity to a public service corporation the local authorities are in a position to impose such terms and conditions as Till. are satisfactory to them, but the corporation grantee, not having yet made any investment, is in a position to reject a grant that is not satisfactory to it. When a grant expires after the public improvement has been constructed and perhaps has been in operation for many years, the situation of the parties is radically different, and they are not on an equal footing. Obvious- ly neither of them ought to have any absolute power in the premises; and the courts on a proper presentation of the controversy ought to exercise their jurisdiction, and ought to have power to determine, what under all the facts and circumstances is just and reasonable. In writing this brief the effort has been to show that such is the law. It must not, even for a moment, be assumed that my contention is that a municipal street grant, with all its terms and conditions and rates of fare, or prices, is perpetual. Where the grant is for a limited period, the terms and conditions and rates do expire at the end of the period; but the right to maintain and operate the property does not expire. That right continues but it must be exercised, in the absence of a new agreement, subject to the legal obligation of all public service cor- porations to perform the service for which they are created, for reasonable compensation. In that sense the right to maintain and operate is perpetual. The old terms and conditions will be regarded as prima facie reasonable, but if they are found to be other- wise, the courts will overturn them. I do not think I have made myself sufficiently clear and plain to convince any one against his will; but to those of my dear readers, who are in a position to exer- cise an independent, impartial and just judgment, the IX. following pages are submitted, with full confidence that the arguments therein set forth, will not be lightly re- jected. In the Appendix will be found the Indiana street rail- way law of March 3, 1899; the Chicago street railway ordinance of February 11, 1907; and the Cleveland street railway ordinance of December 18, 1909; each of which was for the purpose of settling a great street railway controversy. My primary purpose in publishing these as an appen- dix, is to show the careful way in which they preserve the street railways as permanent public improvements and perpetual investments and wholly eliminate the al- leged power of municipalities at the expiration of local grants to confiscate or destroy street railway property. But the Indiana statute, and the Chicago and Cleve- land ordinances are also very instructive in their details, as they were framed and agreed upon after protracted controversy and discussion and great consideration. They deserve a careful reading by every one called upon to frame, recommend, or adopt or accept, a municipal street railway grant. FRED A. BAKER. Detroit, Mich., March 1, 1910. INTRODUCTION. STATEMENT OF A CASE IN MICHIGAN. The Michigan constitution of 1850 contains the follow- ing provisions: "Corporations may be formed under general laws, but shall not be created by special act except for municipal purposes. All laws passed pursuant to this section may be amended, altered or repealed." "No corporation except for municipal purposes or for the construction of railroads, plank roads and canals shall be created for a longer time than thirty years." These provisions are significant in two particulars: (1) they recognize the principle that the franchises of corporate existence and to conduct a given business as a corporation are rights or privileges granted by the state, and not by the county, township, village or city in which the corporation may be located; (2) they also recognize the fact that public service corporations, such as railroad, plank road and canal companies are organ- ized to construct permanent public improvements, the usefulness of which would be much longer than thirty years. Railroad, plank road, and canal companies were the only public service corporations known to the people of the state in 1850, and there can be no doubt that if street railways had then been in existence, they would have been included in the exceptions. As a street car line is in every sense of the word a railroad, the legislature could, under any fair and reason- XI. able construction of the constitutional provision, author- ize the formation of street railway corporations to exist for more than thirty years. The United States Circuit Court of Appeals for the Sixth Circuit has expressed an opinion to the contrary. (Detroit, etc., Co. vs. Detroit. 12 C. G. A. 365; 64 Fed. 628). However, the question is not of very much practical importance because the street railroad laws of Michigan have always limited the existence of street railway cor- porations to thirty years; but this lias not been done on the theory that street railways were only to exist for thirty years. Their permanent nature has never been questioned. Under the national bank act the stockholders of a bank, are only permitted to maintain corporate succes- sion for twenty years; but that does not signify that the business and good will of the bank are to be destroyed at the end of the twenty years, for the stockholders, or such of them as see fit to join therein, are at liberty to organ- ize a new corporation, and take over the assets and lia- bilities of the old corporation, the charter of which has expired or is about to expire. The twentj- years limitation simply compels liquida- tion. A stockholder can not be forced to join the new corporation. He can compel those who do, to make n fair and just liquidation, if need be, by a public and properly conducted sale of the assets. (Mason vs. Peuxi- bic Mining Co., 133 U. S. 50.) But that does not necessitate a destruction of the business, or of its good will. These would remain in- tact even on a public sale. A street railway corporation incorporated for a lim- ited period, occupies a similar position, with the addi- tional feature that it maintains and operates a property devoted to the public use, and the necessity of preserv- ing the property and continuing the service, after the corporate life of the company has expired, creates a greater necessity for the organization of a new corpora- tion to become its successor. The laws of Michigan per- mit this to be done, and contemplate that it will be done. In 1855 the Michigan legisulature passed the Train (Tram) railway act (Laws of 1855, page 338; 2 C. L. 1897, p. 2027.) The principal purpose of that act was to provide tram- ways for the transportation of copper and iron ores, coal and lumber from the mines and mills of the state to the lakes. A toll of four cents a mile for each car and for each ton of ore, coal er lumber carried, was authorized (Sec. 13.) In 1861 the act was amended by the addition of two sections authorizing the organization under it of street railway corporations. (Laws of 1861, />. 12; 2 C. L. 1897, p. 2035.) It was enacted that "no such company or corporation shall be authorized to construct a railway under this act through the streets of any town or city without the con- sent of the municipal authorities of such town or city and under such regulations and upon such terms and conditions as said authorities may from time to time prescribe." (Sec. 34.) In 1867 the following proviso was added to Sec. 34: "Provided further that after such consent shall have been given and accepted by the company or corporation to which the same is granted, such authorities shall make no regulations or conditions whereby the rights or fran- chises granted shall be destroyed or unreasonably im- nil. paired or said company or corporation be deprived of the right of constructing, maintaining and operating such railway in the streets in such consent and grant named pursuant to the terms thereof." (Laios of 1867, p. 257.) At the same session of the legislature an independent street railway act was passed. (Id., p. 46; 2 C. L. 1897, p. 2057.) That act provides for the incorporation of street rail- way companies, and authorizes them to construct and operate street railways on the streets "with the consent of the corporate authorities of the city or village given in and by an ordinance or ordinances duly enacted for the purpose and under such rules, regulations and con- ditions as in and by such ordinance or ordinances shall be prescribed." A written acceptance of the terms and conditions is required. (Sec. 13.) The act further provides : "After any city, village or township shall have con- sented as in this act provided, to the construction and maintenance of any street railways therein, or granted any rights and privileges to any such company, and such consent and grant have been accepted by the company, such township, city or village shall not revoke such con- sent, nor deprive the company of the rights and privileges so conferred." (Sec. 14.) "The rates of toll or fare which any street railway company may charge for the transportation of persons or passengers over their road, shall be established by agreement between such company and the corporate au- thorities of the city or village where the road is located, and shall not be increased without consent of such au- thorities." (Sec. 20.) XIV. The first street railway grant by the city of Detroit was by an ordinance approved November 24, 1862. This ordinance was amended December 27, 1862, and January 12, 1863, and soon afterwards it was accepted and acted upon by the corporation known as the "Detroit City Railway." By section 20, it was stipulated: "The power and privileges conferred by the provisions of this ordinance shall be limited to thirty years from the date of its passage." And it was further stipulated: "The rate of fare for any distance shall not exceed five cents in any one car or on any one route named in this ordinance," etc. (Sec. 8.) Authority to make extensions and to build new lines was given the Detroit City Railway from time .to time, and it acquired lines built by other companies. By an ordinance approved Nov. 14, 1879, an extension of the time limitation was granted the Detroit City Rail- way, by the following stipulation: "The powers and privileges conferred and obligations imposed by the ordinance passed November 24, 1862, and the amendments thereto are herebj* extended and limited to thirty years from this date." (Sec. 5.) The thirty years expired November 14, 1909, and as no extension or new grant and contract between the Detroit United Railway (which has succeeded to the title of the Detroit City Railway) and the city of Detroit has been made or entered into, the question whether the street railway company, since November 14, 1909, has any rights the city is bound to respect, becomes a practical one. XV. The street railway routes concerned are the main, cen- tral lines of the city; they constitute the back bones and ribs of a much larger system, and furnish the means of transportation for a city and suburban population of over 500,000 people. The interests of the public demand that the service these lines render shall not be suspended for a single day or hour. What then are the rights and obligations of the Detroit United Railway and the city of Detroit in the premises? Conversely stated the question is: Has the city of Detroit the right, by a resort to force or by legal proceedings, to compel the Detroit United Railway to cease the operation of its railways on the streets covered by the expired grants; or Has the Detroit United Railway the right after the expiration of the thirty 3*ears to remain in the streets and continue to serve the public? DURATION OF MUNICIPAL STREET GRANTS. I. The omission from the existing express contracts of the parties of any covenant on the part of the street railway company to surrender possession at the end of the thirty years or of any covenant on the part of the city to permit a continuation of the public service after the thirty years have expired makes the question, whichever way it may be decided, one of implied contract, and the city must rely on the law of implied contracts, as well as the street railway com- pany. Applying the law of implied contracts to the grants made to the Detroit City Railway in 1862 and 1879 the conclusion is irresistible that the right of the com- pany, its successors and assigns, to maintain and operate its street railways on the streets of the city extends beyond the designated period of thirty years. All well drawn leases of real estate for a term of years, by private owners, contain an express covenant on the part of the tenant to surrender and yield up posses- sion of the premises at the expiration of the term. The blank leases sold by Eichmond & Backus of Detroit, the principal blank printers in Michigan, contain such a clause. The tenant agrees to surrender the property a; the end of the term "in like condition as when received by him, reasonable use and wear thereof and damages by the elements excepted." If a lease, either oral or written, is made without such a covenant, the obligation of the tenant to surrender possession at the end of the term will be implied. The implied covenant arises from the rights attaching to the private ownership of land, and from the nature of the transaction between the parties when the tenancy is created. Whether in any contract there is an implied covenant or obligation depends on the subject matter and all the surrounding facts and circumstances. This is well illustrated by the case of Carpenter vs. United States., 17 Wall., 489, where it was held that when defendant has entered and occupied land by permission of the plaintiff without any express contract, the law im- plies a promise on his part to make compensation or pay a reasonable rent for his occupation ; but if the entry has been made under an agreement to purchase, the pur- chaser is not liable for rent, because: "A contract can- not arise by implication of law under circumstances the occurrence of which neither of the parties ever had in contemplation." In the Michigan case of Marquette Houghton & On- tonagon R. R. vs. Harlow, 37 Nidi., 554, the railroad company had taken possession of Harlow's land, and he sued in assumpsit for use and occupation of land. Campbell, J., for the court said : "Harlow never expected to get rent and never had any expectation of getting any settlement except for the entire appropriation of the land. He repudiated any rights in the company to remain in possession. He chose to keep himself in an adverse position and not under con- tract. There could be no plainer denial of privity than he has given. It needs no discussion to determine that a party who asserts adverse rights cannot at the same time claim the existence of rights or duties arising out of a tenancy by contract. Ward vs. Warner, 8 Mich., 508." It is plain that the fact that the ordinances constitut- ing the contract now existing between the Detroit United Railway and the City of Detroit contain no provision fixing the rights of the parties after the expiration of the period of thirty years, makes the case one of implied contract. If the city claims it has the right to compel the com- pany to remove its tracks from the streets, it can only establish that right by demonstrating that such was the implied understanding that is, the city must resort to an implication. If the company claims that it has the right in the absence of an extension or a new agreement, to remain in the streets and to continue its service to the public, beyond the thirty years, it too must resort to an impli- cation. Neither party has any advantage over the other. Whether the implied contract should be held to be the one thing or the other, depends on a full and candid consideration of the subject matter, the relations of the parties to each other, and to the general public, and all the material facts and circumstances. IMPLIED CONTRACTS. The books of the law are full of cases enforcing im- plied contracts, covenants and promises, but before we undertake to review the authorities it is advisable to get thoroughly in mind the distinction which divides implied contracts into two classes: (1) Contracts implied in fact, that is, actual contracts, and (2) contracts implied in law, or contracts imposed and created 1 by the law, where there is no pretense that the obligor agreed or intended to agree to do or not to do the particular thing in question. This distinction is commented upon in a recent case in Illinois (Chudnovski vs. Eckels, 232 III., 312). The municipal court of Chicago had jurisdiction in "all actions on contracts express or implied," and an action was brought in that court on the implied contract of a street railway company to carry safely passengers who enter its cars. The jurisdiction was sustained, on the ground that there was an actual contract arising from the invitation of the street railway company to the public to ride on its cars and the acceptance of the plaintiff as a passenger. As the company was a common carrier and a public service corporation it was under a legal obliga- tion to carry passengers, and the case is one where there was not only an implied contract in fact, but also an implied contract in law, which shows that legal obliga- tions may have an important bearing on the question whether the parties have entered into an actual contract. The court cited a case in California decided by Field, J., when he was one of the judges of the State Supreme Court, and a case in the Supreme Court of the United States in which he delivered the opinion of the court. (Ar -genii vs. Francisoo, 16 Col., 282; Steamship Co. vs. Joliffe, 2 Wall., 450. ) Judge Field cited Maines Ancient Law, which says: "The part of Bornan Law which has had most exten- sive influence on foreign subjects of inquiry has been the law of Obligation, or, what comes nearly to the same thing, of Contract and Delict. The Romans themselves were not unaware of the offices which the copious and malleable terminology belonging to this part of their system might be made to discharge, and that is proved by their employment of the peculiar adjunct Quasi in such expressions as Quasi-contract and Quasi-Delict. "Quasi," so used, is exclusively a term of classification. It has been usual with English critics to identify the quasi- contracts with implied contracts, but this is an error, for implied contracts are true contracts, which quasi- contracts are not. In implied contracts, acts and cir- cumstances are the symbols of the same ingredients which are symbolized in express contracts, by words; and whether a man employs one set of symbols or the other must be a matter of indifference so far as concerns the theory of agreement. But a quasi contract is not a contract at all. The commonest sample of the class is the relation subsisting between two persons, one of whom has paid money to the other through mistake. The law, consulting the interests of morality, imposes an obliga- tion on the receiver to refund, but the very nature of the transaction indicates that it is not a contract, inasmuch as the convention, the most essential ingredient of con- tract, is wanting. This word "quasi," prefixed to a term of the Roman law, implies that the conception to which it serves as an index is connected with the conception with which the comparison is instituted by a strong superficial analogy or resemblance. It does not denote that the two conceptions are the same, or that they belong to the same genus. On the contrary, it negatives the notion of an identity between them; but it points out that they are sufficiently similar for one to be classed as the sequel of the other, and that the phraseology taken from one department of law may be transferred to the other, and employed without violent straining in the statement of rules which would otherwise be imperfectly expressed." In a case in Massachusetts the court said : "A contract may be expressly made, or a contract may be inferred or implied when it is found that there is an agreement of the parties and an intention to create a contract, although that intention has not been expressed in terms of contract; in either case there is an actual contract. But a contract is sometimes said to be implied when there is no intention to create a contract, and no agreement of the parties, but the law has imposed an obligation which is enforced as if it were an obligation arising ex contractu. In such a case there is not a con- tract, and 1 the obligation arises ex lege. (Milford vs. Commonwealth, 144 Mass., 64. ) In that case jurisdiction was given to the Superior Court "of all claims against the commonwealth which are founded on contract for the payment of money." And their statute provided that the commonwealth should reimburse a city or town for the support of a person in- fected with smallpox or other disease dangerous to the public health; and the question was whether this statu- tory liability was a claim founded on contract. The state not being subject to action, except with its own consent, the court was of the opinion that it was not the intention to give the superior court jurisdiction over obligations for the payment of money imposed by statute upon the commonwealth. In other words, the court held that the statute conferring jurisdiction on the superior court had reference to actual contracts, as dis- tinguished from obligations imposed by the law. Except as it may affect the remedies open to the obligee, it can be of little consequence to the obligor whether his obligation is regarded as an implied contract, ex contractu, or an implied contract ex lege, for whether it is the one or the other, he is equally bound. Hence it is that the most learned law writers and 1 judges have not in many instances attempted to classify implied con- tracts, but have treated them all as belonging to one general class. Blackstone, in his Commentaries, 3 Vol., p. 158, after defining express contracts, continues as follows: "Prom these express contracts the transition is easy to those that are only implied by law, which are such as reason and justice dictate, and which, therefore, the law presumes that every man has contracted to perform; and. upon this presumption makes him answerable to such persons as suffer by his non-performance." He then considers the class of implied contracts found- ed' upon a person's obligations to society and to the government under which he lives. He then says: "A second class of implied contracts are such as do not arise from the express determination of any court, or the positive direction of any statute; but from natural reason and the just construction of law. Which class extends to all presumptive undertakings or assumpsits; which, though never perhaps actually made, yet con- stantly arise from this general implication and intend- ment of the courts of judicature, that every man hath engaged to perform what his duty or justice requires." Chitty on Contracts, p. 18, adopts Blackstone's defini- tion of implied contracts. 2 Parsons on Contracts, p. 575 : "The general ground of a legal implication is that the parties to the contract would have expressed that which the law implies had they thought of it, or had they not supposed it was unnecessary to speak of it because the law provided for it." 8 Addison on Contracts, p. 23 : "Implied contracts have sometimes been divided into inferred contracts, implied contracts properly so called, and constructive contracts. A contract is said to be inferred where the intention of the parties is not ex- pressed in words, but may be gathered from their acts and surrounding circumstances. In these cases the law enforces what it deems to have been the intention of the parties." "It not infrequently happens that in the course of car- rying out a contract circumstances arise which have not been contemplated by the parties, and consequently where no intention has been expressed by them, or can be inferred from their acts. In such cases the law pre- scribes their respective rights and liabilities according to the dictates of justice that is, of general expediency, according to what it is presumed their intention would have been had they had those circumstances in their consideration when they made the contract." Chief Justice Marshall, in Ogden vs. Saunders, 12 Wheat., 214, said : "A great mass of human transactions depends upon implied contracts; upon contracts which are not written, but which grow out of the acts of the parties. In such cases the parties are supposed to have made those stipu- lations which, as honest, fair and just men, they ought to have made. When the law assumes that they have made these stipulations, it does not vary their contract or introduce new terms into it, but declares that certain acts, unexplained by compact, impose certain duties and that the parties had stipulated for their performance." The Supreme Court of Iowa, recently, Ottumwa, etc., vs. Manchester, 115 N. W., 911, in a case calling for an application of the law of implied contracts, said: "A contract or promise to do a certain thing may, of course, be implied from circumstances or from the con- duct of the party sought to be charged. Implied con- tracts are such as reason and justice dictate, and which, therefore, the law presumes that every person under- takes to perform." In Turner vs. Jones, 1 Lansing (N. I 7 .), 147, 148, Mar- vin, P. J., said : "But in the absence of an express promise, I under- stand it to be a general principle to imply a promise if the facts are such as in equity and good conscience re- quire a promise. Promises are implied in a large por- tion of the transactions of life." In Brackett vs. Norton., 4 Conn., 517, 524, Hosmer, C. J., cites Blackstone's definition of implied contracts, that they are such as reason and justice dictate, and then says : "Upon this principle the court may, and often does presume, the extent of an agency from the nature of the case; and hence a contract, either necessary or highly expedient in the attainment of a given object, is reason- ably to be inferred." In Webster vs. Upton, 91 U. S., 65, 72, the court held that a transferee of stock in an incorporated company is liable for calls of the unpaid portion of his stock, made after he has been accepted by the company as a stock- holder, and after his name has been registered as a stockholder. The court held that there was a necessary implication that such transferee would complete the payment of all that was unpaid of the shares he held whenever it should be demanded. 10 "To constitute a promise binding in law, no form of words is necessary. An implied promise is proved by circumstantial evidence; by proof of circumstances that show the party intended to assume an obligation. A party may assume an obligation 1 by putting himself into a position which requires the performance of duties." Hunter vs. New York and Saginaw Solar Salt Com- pany, 14 Michigan, 90, is a case where the defendant, the salt company, contracted for the purchase of two million feet of lumber from Babcock and Bliss, and a like quan- tity from F. P. Sears & Company, and then entered into a contract with Hunter, the plaintiff, for the removal of the lumber to the docks of the defendant, where the lum- ber was to be used by one Burrell, who had the contract for constructing solar salt works for defendant. Bab- cock and Bliss and F. P. Sears & Co. did not saw and deliver on their docks the full amount of lumber. Hunter removed to the docks of the salt company all the lumber that was sawed and delivered, and was paid the contract price of $1.00 per thousand feet. He then brought an action to recover damages from the salt company for not having been permitted to remove the whole amount of lumber and for having been prevented from earning the contract price of $1.00 per thousand for that portion of the lumber not furnished at all. The theory of the plaintiff's action was that the de- fendant was bound to provide the whole amount of lum- ber, and that it guaranteed the performance by Babcock and Bliss and by F. P. Sears & Company of their con- tracts. The court, in an opinion by Christiancy, J., was of a contrary opinion. He said: "Taking the whole contract together, it is clearly im- plied that these stipulations are subject to the implied 11 condition that Babcock and Bliss and Sears & Company should first saw and deliver the lumber under their contracts." In Ex parte Ford, In re Chappell, 16 Q. B. Div., 305, a second mortgagee, in order to enable the mortgagor to obtain a further advance from the first mortgagee, agreed to postpone his mortgage and make it subordinate to the fresh advance. The mortgagor became bankrupt, and when the property was afterwards sold by the first mort- gagee, the proceeds were insufficient to pay the whole amount due to him, though they did exceed the amount originally secured by the first mortgage. Held, that the second mortgagee was entitled to prove in the bankruptcy for the amount which he would have received out of the proceeds of the sale if he had not con- sented to postpone his charge, on the ground that the court was entitled to infer an implied promise by the bankrupt to indemnify the second mortgagee against any loss which might result from the postponement of his charge. "Lord Esher. M. K. It seems to me that whenever circumstances arise in the ordinary business of life in which, if two persons were ordinarily honest and careful, the one of them would make a promise to the other, it may properly be inferred that both of them understood that such a promise was given and accepted. When, in the present case, one brother, at the request of the other, gave up and postponed a right which he had, from which postponement it was very probable that a loss might result to him, it seems to me that ordinary people would have intended that the brother, for whose benefit the postponement was made, should promise to indemnity the other against any resulting loss. I think there is 12 evidence from which the proper tribunal might infer that such a promise was given. The proper tribunal has drawn that inference, and I see no reason for interfering with their conclusion. "Cotton, L. J. I am of the same opinion. The point is a nice one. The brother, at the request of the bank- rupt, agreed to deal with his security in such a way that it became liable to be defeated. I do not see that there is any evidence that Dr. Chappell intended to make a present of his security to his brother. I think, therefore, that the proper inference to draw is that it was intended that he should be indemnified by his brother in case any loss should result to him." "Lindley, L. J. I am of the same opinion. No doubt there is at first sight a little difficulty in the case; but, in substance, Dr. Chappell's interest in the property has been applied in paying his brother's debt, and it seems to me that there is good ground for inferring a promise on the part of his brother to indemnify him. It is said that this promise ought not to be implied, because the deed which was executed at the time contains no provi- sion for indemnity, but that deed was executed for a limited purpose, viz: the postponement of Dr. Chappell's security, and it appears to me quite consistent with the deed that a promise to indemnify him should be implied." Genet vs. Delaware & Hudson Canal Co., 136 N. Y., 593, 608, involved the construction of an agreement to work a coal mine and pay Mrs. Genet, the owner, a roy- alty. The mine had three veins, and the defendant negli- gently mined the middle vein and left such insufficient support that the rock, earth and coal above fell down into and ruined the mine and the whole body of coal was lost. Held, that although there was no express stipulation 13 in the contract against such negligent destruction of the mine, it was to be implied, and an action could be main- tained upon the implied promise. At page 608 the court said 1 : "I know very well that implied promises are to be cautiously and not hastily raised. What they are was very well stated in Scranton vs. Booth (29 Barb., 174), in Allamon vs. Mayo?' of Albany, (43 id., 36), and in Booth vs. Cleveland Rolling Mills Co. (6 Hun., 597). They always exist where equity and justice require the party to do or to refrain from doing the thing in ques- tion; where the covenant on one side involves same cor- responding obligation on the other; where by the rela- tions of the parties and the subject-matter of the contract a duty is owing by one not expressly bound by the con- tract to the other party in reference to the subject of it. In this court we have thrown some safeguards about the doctrine to secure its prudent application, and have said that a promise can be implied only where we may right- fully assume that it would have been made if attention had been drawn to it (Dermott vs. The State. 99 N. Y., 101), and that it is to be raised only to enforce a mani- fest equity or to reach a result which the unequivocal acts of the parties indicate that they intended to effect. (King vs. Leighton, 100 N. Y.; 386.) "It seems to me that within the rule of these cases the plaintiff has a right of action upon the implied promise of the defendant not wilfully or negligent!}- to incapaci- tate itself from taking out more than the minimum quan- tity of coal. The acceptance of a minimum royalty for the safety and benefit of the lessees equally with that of the lessor, when a larger one was contemplated on both sides, involves an obligation of the lessee not wilfully or negligently to prevent the expected accruing of the 14 greater royalty. For, examine the situation at the mak- ing of the contract. The plaintiff owned a tract of coal land, the veins under which held about four millions of tons, which, at twenty thousand tons a year, it would take two hundred years to exhaust, and worth at the small price of this contract, above the mining and mar- keting and the operator's profits, half a million of dol- lars. She desired to utilize so valuable a property. Un- able or unwilling to plant a colliery upon the land, she turns to the defendant. That is a rich and powerful corporation engaged both in mining and transportation. It had mines adjacent, adequate and sufficient plants, large capital, numerous customers, complete control of transportation. The parties sat down to agree. The rate per ton as royalty and the quality and inspection of the coal were settled. Then came the vital inquiry of how much the company would bind itself to mine. It said twenty thousand tons per year. Of course it pro- posed and expected to mine much more than that, and its own business interest would impel it to mine more, but it would not be bound for more than twenty thousand tons. Imagine Mrs. Genet reflecting on the proposition. As an offer to mine twenty thousand tons per year, and no more, she would instantly have refused it. A contract to run for two hundred years was not to be endured, but as an offer to mine at least twenty thousand tons per year, and as much more as the company, with due regard to its business interests and convenience, would take out, the offer was better and not to be curtly rejected. It would be taking a chance, yes; but business largely con- sists in taking chances more or less hopeful or perilous. Mrs. Genet studies this chance. It involves within its possibilities the chief and principal and only tolerable consideration of her bargain. She measures that chance narrowlv. She reasons: there is the coal; I know it. 15 I am sure of its quality. These men will want it; to get out the twenty thousand tons they will need to sink a shaft, to put up pumps, to establish a plant. Having done so much, their own interest will impel them not to stop at the minimum; they never will stop there, and I will take the chance. Suppose somebody had said to her they may wilfully or negligently destroy your mine, and, with her attention drawn to that suggestion, she had asked the company to agree that it would not do that, is there any doubt that it would have so promised, or that if it deliberately refused, that Mrs. Genet would have declined a contract with such a destructive possi- bility within its admitted scope? But neither party thought of it; both would have deemed it an absurd sug- gestion. There is not the least doubt of the manner in which Mrs. Genet viewed the chance offered to her, of the measure which she took of it, of its boundaries in her mind, nor that the company which held it out to her knew how she regarded it and understood it in the same way on its part. The equity of an implied promise is strong and clear. Good faith, honest dealing, business candor and fairness require that this contract should be enforced in the sense and with the meaning which was in the mind of both parties at the time of its execution. The mine which was to be exhausted and paid for as exhausted is today as much exhausted as if every ton of coal had been taken out and sold. To the plaintiff there is no difference. In either event the coal is gone; and to say that she shall be paid for it at the annual rate of twenty-five hundred dollars a year for two hundred years is to put upon her a contract which she never made and never dreamed of making, and which never entered the mind of the defendant itself until the "squeeze" in the mine suggested an equally destructive pressure of literal construction." 1C The foregoing was quoted from and followed in a later case (Wilson vs. Mech Orguinette Co., 170 N. Y., 550). Another case (Creamer vs. Met.,, etc., Co., 120 App. Div., 422, 429). A contract to receive milk at a factory and manufac- ture it into butter and cheese was held subject to the implied condition that the factory remained in existence (Stewart vs. Stone, 127 N. Y., 500, 507). A railroad construction contract provided that the contractors should not sub-contract any part of the work without the consent of the railway company. Held, that a sub-contract let without such consent was subject to the implied condition, that if the railway com- pany should interfere, the sub-contractor should be ex- cused from further performance and the contractor re- leased from all liability thereafter accruing (Do-Ian vs. Rogers, 149 N. Y., 489). If on a contract for the sale of personal property the title has not passed, and the property is destroyed by fire, the loss falls on the vendor; but he is released from his contract to sell and deliver because of the implied condition, that the property sold should continue in existence until the sale was complete (Dexter vs. Mor- ton, 47 N. Y., 62). Contracts for personal services are subject to the im- plied condition that the person shall be able, at the time appointed, to perform them; and if he dies or without fault on the part of the covenanter becomes disabled, the obligation to perform is extinguished. This is so well settled by authority that it is unnecessary to do more than refer to a few of the authorities directly in point 17 (People vs. Manning, 8 Cow., 297; Jones r.s-. Jndd, 4 A T . Y., 411; Clark vs. Gillbert, 26 N. Y., 279; Wotf/e vs. Howes, 24 #ar&., 174, 666; Grew/ vs. Murray, 3 J. (7. 72.. 167; Robinson vs. Davison L. R., 6 Exch., 268). In Meyer vs. Richards, 163 ?7. 8., 385, the defendant sold to the plaintiff thirteen bonds of the State of Louisi- ana for $8,383.75. As a matter of fact, the bonds had been fraudulently issued by the state treasurer, who put them on the market surreptitiously and without author- ity, and they were void. Held, that under the civil law which prevails in Louisi- ana and the common law of England and the United States, there was an implied warranty by the vendor of the existence and identity of the thing sold, and that the plaintiff was entitled to recover. The very learned opinion of the court by Mr. Justice White, in which he made a most careful examination of both the civil and common law, concludes as follows: "In passing, however, it is worthy of note that whilst the civil law enforces in the contract of sale generally the broadest obligation of warranty, it has so narrowed it, when dealing with credits and incorporeal rights, as to confine it to the title of the seller and to the existence of the credit sold, and exconverso, the common law, which restricts warranty within a narrow compass, virtu- ally imposes the same duty by broadening the warranty as regards personal property so as to impose the obliga- tion on the vendor to deliver the thing sold as a condi- tion of the principal contract or by implication of war- ranty as to the identity of the thing sold. By these processes of reasoning the two great systems, whilst ap- parently divergent in principle, practically work sub- stantially to the same salutary conclusions." 18 In West River Bridge Co. vs. Dix, 6 How., 508, the court, at page 532, said: "But into all contracts, whether made between states and individuals or between individuals only, there enter conditions which arise not out of the literal terms of the contract itself; they are superinduced by the pre-existing and! higher authority of the laws of nature, of nations, or of the community to which the parties belong; they are always presumed, and must be presumed to be known and recognized by all, are binding upon all, and need ever, therefore, toe carried into express stipulation, for this could add nothing to their force. Every contract is made in subordination to them, and must yield to their control, as conditions inherent and paramount, wherever a neces- sity for their execution shall occur." United States vs. Speed, 8 Wall.., 77: The government entered into a contract with the plaintiff to slaughter and pack 50,000 live hogs for it, the government to furnish the hogs, the cooperage, salt and other necessary materials. 'The government furnished 17,132 hogs, which were killed and packed, and this service paid for; and failed to fur- nish more. The plaintiff sued in the court of claims for damages and recovered a judgment for |19,720.80, which was affirmed by the Supreme Court. Justice Miller, for the 'Court, said : "Without entering into a discussion of the general doctrine of the implication of mutual covenants, we deem it sufficient to say that where, as in this case, the obliga- tion of plaintiffs requires an expenditure of a large sum in preparation to enable them to perform it, and a con- tinuous readiness to perform, the law implies a duty in the other party to do whatever is necessary for him to do to enable plaintiffs to comply with their promise or cov- enant. But the last article of the agreement seems to be 19 an express promise to furnish all the hogs mentioned in the contract." The foregoing review of some of the very- large number of decisions concerning actual implied contracts, to be found in the law reports, are sufficient to give us correct information of the principles involved and of the mental processes of the learned judges, in upholding and enforc- ing implied obligations. Implied meanings arising out of express contracts, or from the acts and conduct of the parties, are one of the most important elements in the law of contracts, without which there would be a vacuum in the law and a truly chaotic condition, in every case requiring a determination of the rights of the parties to a contract. This is also true in the interpretation of constitutions, statutes, and ordinances, including legislative grants of corporate rights and franchises. IMPLIED CONTRACTS ARISING FROM CON- TRACTUAL RELATIONS COUPLED WITH A DUTY OR OBLIGATION IMPOSED BY LAW. It has always been the law that in the absence of an express contract on the subject, a common carrier is liable in assumpsit on his implied contract, or in tort on his legal duty to carry safely the goods or passengers tendered to him for transportation. Joseph Chitty, writing in 1808, said that the action of assumpsit lies "against attorneys and solicitors, wharf- ingers, surgeons, inn-keepers, carriers and other bailees, for neglect or breach of contract" (1 Chitty on Pleadings, 102). 20 And further on at page 134 : "And though we have seen that assumpsit is the usual remedy for neglect or breach of duty against bailees; as against carriers, wharfingers, and others having the use or care of personal property, whose liability is founded on the common law as well as on the contract; yet it is clear that they are also liable in case for an injury re- sulting from their neglect or breach of duty in the course of their employment. For any misfeasance by a party in a trade which he professes, the law gives an action upon the case to the party grieved against him; as if a smith in shoeing my horse prick him, and other like cases. And it seems that although there be an express contract, still if a common law duty results from the facts, the party may be sued in tort for any neglect or misfeasance in the execution of the contract." The best general statement of the law on the subject I have been able to find is in 1 Gooley on Torts, 103, 106. In a note a quotation is made from the opinion of the court by Finch, J., in Rich vs. New York, etc., Co., 87 N. ., 382. We quote the following: "It may be granted that an omission to perform a con- tract obligation is never a tort, unless that omission is also an omission of legal duty. But such legal duty may arise, not merely out of certain relations of trust and confidence, inherent in the nature of the contract itself, as in the cases referred' to in respondent's argument, but may spring from extraneous circumstances, not constituting elements of the contract as such, although connected with and de- pendent upon it, and born of that wider range of legal duty which is due from every man to his fellow, to re- spect his rights of property and person, and retrain from 21 invading them by force or fraud. It has been well said that the liability to make reparation for an injury rests not upon the consideration of any reciprocal obligation, but upon an original moral duty enjoined upon every person so to conduct himself, or exercise his own rights as not to injure another (Kenvhacker vs. C. C. & C. R. R. Co., 3 Ohio St., 188). Whatever its origin, such legal duty is uniformly recognized, and has been constantly applied as the foundation of actions for wrongs; and it rests upon and grows out of the relations which men bear to each other in the framework of organized society. It is then doubtless true that a mere contract obligation may establish no relation out of which a separate or spe- cific legal duty arises, and yet extraneous circumstances and conditions in connection with it, may establish such a relation as to make its performance a legal duty, and its omission a wrong to be redressed. The duty and the tort grow out of the entire range of facts of which the breach of the contract was but one. The whole doctrine is accurately and concisely stated in 1 Chit. PL, 135, that "if a common-law duty result from the facts the party may be sued in tort for any negligence or misfeasance in the execution of the contract." In Piquet vs. Allison, 12 Mich., 328, crops had been put in on the defendant's land on shares. The tenant mortgaged the crops while they were growing to the plaintiffs, who caused them to be harvested, when the defendant drew them off, threshed the grain and put it in his granary, and refused to recognize any rights of plaintiffs or to deliver their share. Held, that assumpsit would lie. 'Campbell, J., for the court, said: "The question then arises, whether an action properly lies in assumpsit. It is said in several of the cases that, where property has been tortiously taken, and converted by sale, the owner may affirm the sale and sue for the pro- 22 ceeds in assumpsit, but that where there has been a con- version without sale, the tort cannot be waived. It cer- tainly is somewhat anomalous to place parties in< contract relations against their will, where no privity exists; and the cases where it is permitted seem to be justified only on the ground that no ^prejudice can result to the defend- ant by allowing it. But where a party commits a breach of a duty, which the law implies from his express con- tract, assumpsit is as appropriate a remedy as any other, if a plaintiff sees fit to resort to it. The plaintiffs here derived their rights, as tenants, from the contract of de- fendant with the grantor, creating the tenancy. The grain being in marketable condition', the co-tenant in pos- session was bound, on reasonable request, to have the plaintiffs' share measured out to them. His own contract precludes him from claiming more than his proportional amount. When he concludes to retain the remainder he certainly is bound to pay for it; and the plaintiffs may, by their consent, convert the transaction into a sale; as it would have been a sale originally had such consent been given at the time. We think no principle of law is vio- lated by allowing the action to be maintained in its present form. In Watson vs. Stever, 25 Mich.., 286, the court, per Cooley, J., said: "If one has taken possession of property, and sold or disposed of it, and received money or money's worth therefor, the owner is not compellable to treat him as a wrongdoer, but may affirm the sale, as made on his be- half, and demand in this form of action the benefit of the transaction. But we cannot safely say that the law will go very much further than this in implying a promise, where the circumstances repel all implication of a promise in fact. Damages for a trespass are not in general re- coverable in assumpsit; and in the case of the taking of 23 personal property, it is generally held essential that a sale by the defendant should be shown" (Jones vs. Hoar, 5 Pick. Glass Co. vs. Wolcott, 2 Allen, 227; Stearns vs. Dillingham, 22 Vt., 627; Mann vs. Locke, 11 2V. H., 248; Smith vs. Smith, 43 N. H. 536; Willet vs. Willet, 3 Watts, 277; Pearsoll vs. Chapin, 44 Pe?w. St., 9; Gutft- rie vs. Wickliffe, 1 A. K. Marsh, 83 ; Fuller vs. Duren, 36 A to., 73; Sanders vs. Hamilton, 3 Dana, 552; Barlow vs. Stalworth, 27 #eo., 517; Pifce vs. Bright, 29 AZa., 332; Tucker vs. Jewett, 32 Conn., 563 ; Emerson vs. McNamara, 41 Me., 565; Morrison vs. Rogers, 2 Scam., 317; O'Reer vs. Strong, 13 /ft., 688; J&'ZZio** vs. Jackson, 3 Wis v 649). "The case of Fiquet vs. Allison-, 12 Mich., 330, on wjiich reliance was placed by defendant in error, is clearly dis- tinguishable from this. There the parties stood in con- tract relations as tenants in common in respect to the property in question; and when the defendant appropri- ated his co-tenant's share, and refused to recognize his right therein, he was, as the court pointed out, guilty of breach of a duty which the law implied from his express contract. This case presents no corresponding feature, and to sustain an action as upon an implied contract here, would be to disregard the primary distinctions in the forms of actions." In Tuttle vs. Campbell, 74 Mich., 652, the court, by Champlin, J., said: "The general rule is that before a party can waive a tort for the conversion of personal property and bring assumpsit the property in the hands of the tort-feasor must have been sold and converted into money, upon the theory that the money has been received for the plaintiff's use. There is, however, another class of cases, where the property has been converted but not sold, where the tort may be waived and assumpsit brought for the value of the 24 goods converted. This class belongs to those relations where a contract may exist and at the same time a duty is superimposed or arises out of the circumstances sur- rounding or attending the transaction, the violation of which duty would constitute a tort. In such cases the tort may be waived and assumpsit be maintained, for the reason that the relation of the parties, out of which the duty violated grew, had its inception in contract. These relations are usually those of trust and confidence, such as those of agent and principal, attorney and client, or bailee and bailor. When an owner in common of per- sonalty has the exclusive possession of the property he is a bailee of his co-owner ; s share. In such case there is a contract of bailment implied between the parties, the law implying a delivery from the nature of the case and the peculiar rights which one owner in common has to such property when reduced to his possession. He takes it and holds it upon the trust and confidence that he will care for it and use it, if he uses it, in an ordinarily careful manner, and will not sell or convert his co-owner's share to his own use. If he violates this trust and confidence by converting the property to his own use, his co-owner may bring trover for the conversion, or, waiving the tort, may sue in assumpsit to recover its value. This has been the settled law in this state for many years, and was ex- plicitly declared in Piquet vs. Allison, 12 Mich.., 328, which case is decisive of this." In Williams vs. Rogers, 110 Mich., 418, 'Montgomery, J., for the court, said : "But the right to maintain assumpsit in any case of a conversion by a co-tenant rests upon the fact that the parties maintain contractural relations, and that it is a violation of duty arising out of contract for the co-tenant to convert property, which fact distinguishes the con- version from the case of a conversion by a trespasser, in which, before assumpsit can be brought by waiving the tort, it must be shown that the property has been con- verted into money or money's worth." In Plefka vs. Detroit United Ry., 147 Mich., 641, Mont- gomery, J., for the court, said : "There was no contract between the plaintiff and de- fendant. Can the plaintiff, being entitled to maintain an action on the case to recover these damages, waive the tort and sue in assumpsit? At the common law a party suffering injury through the tortious wrong of another could waive the tort, and sue in assumpsit only in case the tort arose out of contract relations between the parties or the tort consisted of a conversion of plaintiff's prop- erty into money or money's worth" (Watson vs. Stever, 25 Mich., 386; Tuttle vs. Campbell, 74 Mich., 652; Wil- liams vs. Rogers, 110 Mich., 418). CONTRACTS IMPLIED BY LAW WHERE THERE ARE NO ACTUAL CONTRACTS. Quasi-contractsi or contracts implied by law are those where the plaintiff can waive the tort and sue in as- sumpsit, although there is no possible ground for reach- ing the conclusion that the defendant entered into an actual contract, his tortious act showing a clear intent to the contrary. The law imposes the obligation be- cause it enforces honesty, morality and justice ; it assumes that every person agrees to observe the rules essential to the existence of civilized society, and to the enjoyment by all of the protection of organized* government, and that a member of society and a party to the social com- pact cannot avoid his obligations by a breach of them no matter how tortious. Waiving the tort and suing in 26 assumpsit may be a fiction, but if so, it is a fiction founded in common sense and reason. In Lamine vs. Dorrell, 2 Ld. Raymond, 1216, decided in 1705, the defendant pretending to a right to be admin- istrator, got administration granted to him, and by that means got certain debentures into his hands and sold them; then his administration was repealed, and admin- istration granted to the plaintiff, who sued the defendant in indebitatus assumpsit for money received by the de- fendant to the use of the plaintiff as administrator. It was objected that assumpsit would not lie because the defendant sold the debentures as one that claimed a title and interest in them, and therefore could not be said to receive the money for the use of the plaintiff, which indeed he received to his own use. Held, that assumpsit would lie. "Powell, Justice. It is clear the plaintiff might have maintained detinue or trover for the debentures; but when the act that is done is in its nature tortious, it is hard to turn that into a contract, and against the reason of assumpsits. But the plaintiff may dispense with the wrong, and suppose the sale made by his consent, and bring an action for the money they were sold for, as money received to his use. It has been carried thus far already. Howard and Wood's case, 2 Lev., 245; Sir T. Jones, 126, is as far; there the title of the office was tried in an action for the profits. "Holt, chief justice: These actions have crept in by degrees. I remember, in the case of Mr. Aston, in a dis- pute about the title to the office of clerk of the papers in this court, there were -great counsel consulted with; and Sir William Jones and Mr. Saunders were of opinion, an indebitatus assumpsit would not lie, upon meeting and conferring together, and great consideration. If 27 two men reckon together, and one overpays the other, the proper remedy in that case is a special action for the money overpaid, or an account; and yet in that case you constantly bring an indebitatus assumpsit for money had and received to the plaintiff's use. Suppose a per- son pretends to be guardian in socage, and enters into the land of the infant, and takes profits, though he is not rightful guardian, yet an action of account will lie against him. So the defendant in this case pretending to reecive the money the debentures were sold for in the right of the intestate, why should he not be answerable for it to the intestate's administrator?" "And Holt said, that he could not see how it differed from an indebitatus assumpsit for the profits of an office by a rightful officer against a wrongful, as money had and received by the wrongful officer to the use of the rightful." Welch vs. Begg, 12 Mich. 41, is a case where the plain- tiff sued the defendant in assumpsit for pasturing cattle on his land. Manning, J., with the concurrence of Martin, C. J., said that if defendant pastured cattle on the plaintiff's land "without plaintiff's consent he was a trespasser, and the plaintiff might sue him in trespass, or waive the trespass and sue him in assumpsit, as he has done, for pasturing his cattle." In Bowen vs. School District, 36 Mich. 149, the defend- ant wrongfully procured a district order. The court said : "It is objected that an action of tort should have been brought and not assumpsit. But as the defendant made use of the order as money, the law will raise an implied promise to pay the amount. The district perhaps might have sued in tort, but was not compelable to do so." 28 Followed in a case where a supervisor converted town- ship orders to his own use. (Buckeye vs. Cook, 90 Mich. 432.) The foregoing review of the law of implied contracts as actually enforced by the courts, makes it perfectly plain, that on any view that can be taken of the case the Detroit United Railway has a legal right to continue the service it renders the public, beyond the period of thirty years, expiring November 14, 1909. 1. On the general principle of the law of implied con- tracts, that it will be presumed that a party to an ex- press contract, impliedly agrees to do that which under all the facts and circumstances, he ought to do, and which he would have expressly agreed to do, if his at- tention had been called to it. 2. On the principle of the law of implied contracts, that if contractual relations exist between the parties, and these relations are coupled with a duty imposed by law, then a contract to perform that duty will be im- plied. 3. On the principle of the law of quasi contracts, that where reason, justice, and the protection of society de- mands it, the law will imply an obligation, even in the absence of any actual implied contract, and directly con- trary to the intention of the party as indicated by his words or conduct. On the facts and surrounding circumstances as they existed at the time the existing contracts between the Detroit United Railway and the City of Detroit, were entered into, there is ample room to hold that both par- tiesi understood and agreed that the company should continue, and the city should permit the company to con- 29 tinue, the service beyond the period of thirty years, on the old 1 terms and conditions and rates of fare, or on such as the law imposes. There can be no doubt about this, when it is remembered and considered, that the contractual relations existing between the parties, are coupled with a duty imposed by the law on both of them, to serve the general public. Going a step further, it may be truthfully asserted that the demands and requirements of the public service, are such that although it is held, that the Detroit United Railway is under an implied contract to stop the oper- ation of the cars and surrender the streets on November 14, 1909, yet, the rights of the general public, consisting of all the people of the State of Michigan, and their visi- tors from other states and countries, are of such para- mount importance, that the local contract must give way, and yield to the superior right. If it had been expressly stipulated that at the end of the thirty years, the street railway company must ac- cept such rates of fare as the city might dictate, whether reasonable or unreasonable, or remove from the streets, the fact that the contract was accepted by the company, would not prevent the courts from rejecting the stipula- tion as unreasonable, and therefore, illegal, void and non-enforceable. That is just what was done in the natural gas com- pany case of Pittsburgh Appeal, 115 Pa. St. 4, and in the exclusive privilege case of Citizens' 1 Street Ry. Co. vs. Detroit Ry., 171 U. S. 48. But I am getting ahead of my argument. I only men- tion these subjects here to show that the implied t-mi- tract contended for, is a necessary implication, as all 30 contracting parties are presumed to have contracted with knowledge of the law, and subject to its requirements. An implied covenant on the part of the City of De- troit that it would not prevent the Detroit City Railway, its successors and assigns, from continuing beyond the period of thirty years the service the street railways render the public, is much more in accord with the facts of the case and the law applicable thereto, than an im- plied covenant on the part of the company that at the end of the thirty years it would cease operating its rail- ways, and would remove the tracks and other structures from the streets. Any such surrender by the company would be a public disaster. New street railways could not be built and put in operation for many months; and when we give due consideration to the legal obligation of the company to continue to serve the public, and to the legal obliga- tion of the city as trustee for the general public, to pro- tect and improve its streets so as to make them conven- ient and useful, the conclusion is inevitable that the city must have contracted with a full recognition of its own and the company's obligation, and that the company has a right to remain in the street beyond the thirty years. This implied right might be considered strong enough to mean that all the terms and conditions of the original contracts would be continued in force, but. it is not neces- sary to go that far. An argument which proves too much does not prove anything. Iv may well be held that the agreement fixing the rates of fare expires at the end of the thirty years, and that thereafter the company will be subject to its com- 31 mon law obligation to carry passengers for reasonable fares. Agreements fixing rates of fare are not intended to authorize unreasonable fares, but are a means of de- termining as between the company and the public what is to be regarded as reasonable. When any such agree- ment expires by its own limitation, the street railway company is not authorized to charge any fare it sees fit, but as a common carrier it becomes subject to the rule which has prevailed for centuries, that a common carrier is only entitled to reasonable compensation for his services. There is no reason why we should doubt the -rule of construction laid down by Blackstone and Chief Justice Marshall that the law presumes "that every man hath engaged to perform what his duty and justice requires,'- and that contracting "parties are supposed to have made stipulations they ought to have made." The cases I have cited on the subject of implied con- tracts show that the courts are constantly restorting to implied contracts and reaching the conclusion that they exist whenever required by fair dealing, justice and equity. Without such implications it would be almost impossible to conduct the ordinary affairs of life or to carry on business. No lawyer or other scrivener could put every desire or thought of the contracting parties in express words or anticipate every possible contingency that might arise in the execution of their contract; and the whole mass of implied contracts arising from con- tract relations and duties imposed by law, as well as those imposed by the law where there are no actual con- tracts would have to be eliminated from the books of the law. 32 Public service corporations would be released from all duties and obligations except those expressly imposed by statutes, and the whole body of statutory law relating to corporations would have to be revised, reformed and very greatly enlarged. Our whole system of jurispru- dence, which is the principal reliance and protection of organized society, would be disturbed and rendered use- less. 33 II. The Detroit United Railway is under an obligation to the State of Michigan, from which it received its corporate franchises, to operate its street railways for the public use, during the entire period for which the company was incorporated, and at or before its ex- piration, to reorganize itself or to turn the property over to another company, to continue the service it renders the public. It is impossible to escape the conviction that street railways and other public utilities, are at their incep- tion, intended to be permanent public improvements, and not mere temporary affairs. In 1862 and 1863 and again in 1879, everybody in the city of Detroit believed and knew that in thirty years, the population of the city would be very greatly increased, and that the importance of the street railways, as a public convenience would steadily increase year by year. If an express stipula- tion, that at the end of the term, the tracks should be taken out of the streets, and the service stopped, even for the length of time it would take to build new street railways, it would have been laughed at as absurd, and some provision would have been found to prevent any such thing. Every public corporation, accepting the franchises granted to it by the state either under a special charter or a general law, impliedly agrees to perform the ser- vice for which it is incorporated. If it does not do so, the public has two remedies, which depend somewhat on the circumstances surrounding each case. The state can enforce a forfeiture of the franchises by quo warranto. f I 34 or it can compel the company by mandamus to perform its contract. This is well illustrated by a case in New York. (Peo- ple vs. Albany & Vermont Railroad, 24 N. Y. 261). The railroad company was engaged in taking up and remov- ing its railroad on twenty-one miles of its route, when the attorney general commenced a suit for an injunction and specific performance of the alleged contract of the company to maintain and operate its railroad for its entire length. Wright, J., examining the terms of the charter of the company came to the conclusion that the charter did not impose any obligation on the part of the company to exercise its franchises when against its own interests. One of the six judges siting in the case agreed with him. All of them agreed that it was not a case for the equity jurisdiction of the courts. Four of them, "however, were of the opinion that a corporation is under a legal obliga- tion to exercise its franchises, and that it has not the option to discontinue a part of its road and forfeit its franchises. They agreed that the remedy is not by ac- tion in equity for a specific performance but by man- damus or indictment, or at the election of the people by proceeding to annul the existence of the corporation.'' In another case in New York, a mandamus was or- dered to be issued to compel the New York Central Rail- road Company, to forthwith resume the discharge of their duties as common carriers and the exercise of their fran- chise by promptly receiving, transporting and delivering all such freight or other property as might be offered to them for transportation at their stations in and to the city of New York upon the usual and reasonable terms and charges. (People vs. N. Y. C>, 28 Hun. 543). 35 The court cited a large number of cases in which writs of mandamus had been issued against railroad companies, and then said: "These are all express or implied obligations arising from the charters of the railroad companies, but not more so than the duty to carry freight and passengers. That duty is, indeed, the ultima ratio of their existence; the great and sole public good for the attainment and accomplishment of which all the other powers and duties are given or imposed. It is strangely illogical to assert that the state, through the courts, may compel the per- formance of every step necessary to bring a corporation into a condition of readiness to do the very thing for which it is created, but is then powerless to compel the doing of the thing itself. "We cannot bring our minds to entertain a doubt that a railroad corporation is compellable by mandamus to exercise its duties as a carrier of freight and passen- gers; and that the power so to compel it rests equally firmly on the ground that that duty is a public trust, which having been conferred by the state and accepted by the corporation may be enforced for the public bene- fit; and also upon the contract between the corporation and the State, expressed in its charter or implied by the acceptance of the franchise (Abbott vs. Johnstone R. R. Co., 80 N. Y. 31) ; also upon the ground that the com- mon right of all the people to travel and carry upon every public highway of the state has been changed in the special instance, by the legislature for adequate rea- sons into a corporate franchise, to be exercised solely by a corporate body for the public benefit, to the exclusion of all other persons, whereby it has become the duty of the state to see to it that the franchise so put in trust be faithfully administered by the trustee." 36 In the case cited, the court, 80 3T. Y. 31, said: "The legislature conferred upon the defendant corpor- ation a corporate existence to carry on the business of common carriers, and its obligation to properly discharge the duties of that position is as binding and operative <7.s- // specified in the act" Bridgeton vs. Traction Co., 62 N. J. L. 592, is a cast' where it appeared that the tracks of the traction com- pany passed over a bridge which was not in the control of the municipality but in that of the board of chosen freeholders of the county. The traction company en- gaged in a controversy with the board of chosen free- holders over the use of the bridge, and ceased to operate its cars on the west side of the stream. The city ap- plied for a mandamus and the writ was granted. The court, at page 600, said: "It became the duty of the respondent company to operate the railway over its entire route under the fran- chises as acquired by it. Its exercise of franchise in the operation of its railway upon this street was exclusive, and it was its duty to construct, maintain and operate a railway on the surface of the street to carry passengers and demand tolls, and that was in so far exclusive that others could not use the road without the grant of the legislature, nor exercise that same or similar franchise upon that street without such grant. Citizens' Coach Co. vs. Camden Horse Railroad Co., 6 Stew. Eq. 267, 279. "In Messenger et al vs. Pennsylvania Railroad Co., 7 Vroom., 407, Chief Justice Beasley, speaking of the duties of a common carrier in a case involving a contract creat- ing illegal preferences, on page 410, says: " 'A person having a public duty to discharge, is un- 37 doubtedly bound to exercise such office for the equal benefit of all.' Again, 'A company of this kind is in- vested with important prerogative franchises, among which are the rights to build and use the railway, and to charge and take tolls and fares. These prerogatives are grants from the government, and public utility is the consideration for them.' Again, he says, 'It cannot be supposed that it was the legislative intention, when such privileges were given, that they were to be used as pri- vate property at the discretion of the recipient, but, to the contrary of this, I think an implied condition at- taches to such grants, that they are to be held as a quasi public trust for the benefit at least to a considerable degree, of the entire community. In their very nature and constitution, as I view this question, these com- panies become, in certain aspects, quasi public agents/ "The grant being exclusive they must be held to a good faith in the performance and fulfillment of their duties. I cannot perceive any excuse whatever by which the respondent company can be permitted to abandon the operation of any part of it. That a portion is un- profitable or that a portion is more difficult to operate, are not valid reasons for abandonment. Its application to the city was for the location of its tracks over the whole route. The terms and conditions of the ordinance, and the ordinance passed on the faith of the duty of the company, were to operate its road over the entire route located. In view of this ordinance it must be conclusively said that if one part was to be operated and that another part might be abandoned at the dis- cretion of the company, the terms and conditions of the ordinance would have been different. This must be con- clusively assumed in a case of this character. It ap- pears clear from the statute and the ordinance that it is the duty of such company organized under the statutes 38 to operate the roads mentioned in its certificate of in- corporation for the benefit of the public, in consideration that it shall have the franchise of transporting the pas- sengers and taking the tolls from them, and that it can- not escape the performance of this duty as a public agent." Speaking of the contract existing between the state and a railroad corporation created by it, Mr. Justice Brewer for the court, in Reagan, vs. Farmers' Loan & Trust Co., 154 U. 8. 362, 393, said: "Obviously, one obligation assumed by the corporation was to construct and operate a railroad between the termini named; and on the other hand one obligation as- sumed by the state was that it would riot prevent the company from so constructing and operating the road.'' The same learned justice delivering the opinion of the court in Missouri Pacific Railway Co. vs. Larabee Flour Mills Co., 211 U. S. 612, held that even in the absence of legislative enactment, the order of a commission or other administrative board, or special contract, a rail- road company as a common carrier, can be compelled by mandamus to perform its common law duty to treat all shippers alike. He said: "Coming directly to that, counsel for plaintiff in error contend that no duty was imposed on the railroad com- pany by act of the legislature or mandate of commission or other administrative board. Conceding this, it is also true that the Missouri Pacific was a common carrier, and as such was engaged in the work of transferring cars from the Santa Fe track to the mill company, and after this controversy arose continued like transfer for all industries located on the Missouri Pacific at Stafford, 39 except the mill company. While no one can be com- pelled to engage in the business of a common carrier, jet when he does so, certain duties are imposed which can be enforced by mandamus or other suitable remedy. The Missouri Pacific engaged in the business of transfer- ring cars from the Santa Fe track to industries located at Stafford, and continued to do so for all parties except the mill company. So long as it engaged in such trans- fer it was bound to treat all industries at Stafford alike, and could not refuse to do for one that which it was doing for others. No legislative enactment, no special mandate from any commission, or other administrative board was necessary, for the duty arose from the fact that it was a common carrier. This lies at the founda- tion of the law of common carriers. Whenever one en- gages in that business the obligation of equal service to all arises, and that obligation, irrespective of legisla- tive action or special mandate, can be enforced by the courts." In Thomas vs. West Jersey R. R. Co., 101 U. 8. 71, the court in an opinion by Justice Miller, said : "That principle is, that where a corporation, like a railroad company, has granted to it by charter a fran- chise intended in large measure to be exercised for the public good, the due performance of those functions be- ing the consideration of the public grant, any contract which disables the corporation from performing those functions which undertakes, without the consent of the state, to transfer to others the rights and powers con- ferred by the charter, and to relieve the grantees of the burden which it imposes, is a violation of the contract with the state, and is void as against public policy. This doctrine is asserted with remarkable clearness in the 40 opinion of this court, delivered by Mr. Justice Campbell, in the case of R. R. Co. vs. Winans, 17 Hoiv. 30." In the case cited the court said : "Important franchises were conferred upon the cor- poration to enable it to provide the facilities to communi- cation and intercourse, required for the public conven- ience. Corporate management and control over these were prescribed, and corporate responsibility for their insufficiency provided, as a remuneration to the commun- ity for their grant. The corporation cannot absolve itself from the performance of its obligations, without the con- sent of the legislature. (Beman vs. Rufford, 1 Simon, N. 8. 550; Winch vs. B. & L. Railway Co., 13 L. & E. 506." The two foregoing cases were cited approvingly in Central Transportation Co. vs. Pullman Palace Car Co., 139 U. 8. 24. In Union Pacific Ry. Co. vs. Chicago., Etc., Ry. Co., 163 U. 8. 564, 581, the court said': "The general rule is that a contract by which a rail- road company renders itself incapable of performing its duties to the public or attempts to absolve itself from those obligations without the consent of the state, or a contract made by a corporation beyond the scope of its powers, express or implied, on a proper construction of its charter, cannot be enforced, or rendered enforceable by the application of the doctine of estoppel. Thomas vs. Railroad Co., 101 U. 8. 71; Central Transportation Co. vs. Pullman Car Co., 139 U. 8. 24." State vs. Hartford & New Haven R. R. Co., 29 Conn. 538, is a case where a railroad company discontinued 41 the running of passenger ears over a portion of its road terminating at tide water. The object of the company was to divert passenger traffic from a steamboat line run- ning from the terminus to New York. Held, that mandamus should issue to compel the com- pany to restore the passenger service. The court said: "We forbear going into other questions raised on the trial, or commenting on the authorities cited by counsel. We think it unnecessary, and prefer to place our deci- sion upon the simple ground of the corporate duty of the respondents. All jurists and judges will at once agree that chartered companies are obliged fairly and fully to carry out the objects for which they are created, and that they can be compelled by mandamus to do it; and it will not be questioned that in the case of public high- ways, whether turnpikes or railroads, they are bound to keep them fit for use, and, in the case of railroads, to keep them furnished with suitable cars, engines and at- tendants, without which they can not be used at all." Gates vs. Boston & New York Air Line R. R. Co., 53 (Jonn. 333, is a case where a mortgage on a railroad was foreclosed, and the legislature authorized the bond hold- ers by a vote of the majority, to reorganize as a new cor- poration with the rights of the old corporation. A min- ority stockholder objected but it was held, that where a company has taken private property and constructed its road, it has come under an obligation to carry into effect the objects of its charter and its capital stock fran- chises and property stand charged primarily with this public trust; and that the legislature could authorize a majority of the bond holders to reorganize the corpora- 42 tion, because that was a proper means of securing the performance of the paramount public trust. The court, at page 34, said : "The broad claim is now made by the plaintiff, that, as he was not personally a party to the re-organization scheme, had no actual notice of it, and has not assented that his bonds should mature and the trustee be dis- charged, therefore his bonds with their coupons are out- standing subsisting obligations of the old corporation, charged upon this railroad property, and that either by an absolute sale, or by operation of the railroad by the trustee, said property and franchises must be appro- priated to the discharge of the obligations held by him, notwithstanding that a different mode of appropriating the property in liquidation of the bonds has been agreed upon by a majority of his co-bondholders, and has been sanctioned by the state and by a court of equity having jurisdiction of the subject matter. "The plaintiff's contention in this behalf rests upon his assumption that he has a constitutional property right to have the property appropriated in the manner claimed by him. "In making this claim the plaintiff ignores, or subor- dinates to his own claim, both the private rights of his co-bondholders and public rights vested in trust in the state, while upon every true theory and exposition of his contract the rights of the public are superior to his private rights, and the rights and interests of his co- bondholders are equally with his own to be protected by the law. The plaintiff's argument treats this matter as one of strict legal private right of an individual creditor, against or to private property of an individual debtor, instead of a claim of exceptional character upon property of peculiar nature, in which private rights of others and 43 the right of the public exist, which must be regarded and protected. "One public right consists in the continuous uses of the railroad, its franchises and corporate property, in the manner and for the purposes contemplated by' the terms of the charter. All these corporate franchises and this property are held subject to, and charged with, this obligation. "It is true that the charter is permissive in its terms, and probably no obligation rests upon the corporation to construct the railroad; the option to exercise the right of eminent domain and other public rights is grant- ed. And when that option has been made, and the cor- poration has located and constructed its line of tracks, exercising the power of the state in taking property of others, and in so locating and constructing its road, has invited and obtained subscriptions upon the implied promise to construct and operate its road, has com- menced to operate the road under the granted 1 powers, thereby inducing the public to rely, in their personal and business relations, upon that state of affairs; by so ac- cepting and acting upon the chartered powers a contract exists to carry into full effect the objects of the charter, and the capital stock, franchises and property of the corporation stand charged primarily with this trust. The large sovereign powers given by the state to railroad corporations are granted and exercised only upon the theory that these public rights are to be used to promote the general welfare. Having exercised those powers, the corporation has no right against the will of the state to abandon the enterprise, tear up its track, and sell its rolling stock and other property, and divide the pro- ceeds among the stockholders." "The possible effects of the exercise of such a claimed power are utter disaster to the great interests of the 44 state, certain destruction of private property in which whole communities created and existing upon the faith of the continuous use of the chartered powers are inter- ested, and, indeed, the life of the citizen as well as his property rights are thus jeopardized. Upon principle it would, seem plain that railroad property once devoted and essential to public use, must remain pledged to that use, so as to carry to full completion the purpose of its creation; and that this public right, existing by reason of the public exigency, demanded by the occasion, and created by the exercise by a private person of the powers of a state, is superior to the property rights of corpor- ations, stockholders and bondholders." In State vs. Spokane Street Ry, Co., 19 Wash. 518, the court in a carefully considered opinion, by Reavis, J., reviewed the authorities, and held : (1.) Where a street railway company attempts to dis- continue the operation of a line, after acquiring the right and commencing the performance of the service, its duty to continue the operation of the railway may be enforced by mandamus. (2.) A street railway company which has occupied public highways for several years in the operation of its line without a grant or privilege or franchise from the municipality, cannot urge that objection for the purpose of relief against its enforced continuance to operate its line thereon, when its use and occupation of such high- ways has been undisturbed. (3.) A street railway company which receives its franchises from the state and enters upon the enjoyment of them cannot cease to perform the functions which 45 were the consideration for the grant of such f ranch isos without the consent of the granting power. In New York an electric surface street railway is re- garded as an additional burden on the street, and be- before a street railway company can occupy a street, it must have the consent of the abutting owners, as well as that of the municipality. The franchises of the com- pany are derived from the state. Paige vs. Schenectady Ry. Co., 178 N. Y. 102, is a case where a receiver of a street railway company in a mortgage foreclosure suit, took up and abandoned the street railway on Washington avenue in Schenectady. He did this with the consent of the common council of the city, and a portion of the abutting owners who had consented to the original construction of the road, but without the consent of the company or its stockholders, and without the consent of the state. The purchaser at the foreclosure sale sought to re- build the road. Held: (1) That the receiver had no authority to abandon the road, "without the consent of the company, of the stockholders and the consent of the legislature of the state." (2) "Nor was the common council clothed with any authority to compel or to authorize an abandonment of any portion of such street railway. While its consent might possibly waive any right the city possessed to en- force or compel the .enforcement of a continued operation of the road, still it could not by an/y action on its part deprive the railway company of its rights, affect the rights of the stockholders, or the rights of the state and 46 general public to require the company to continue the maintenance and operation of its railroad as originally constructed." (3) "The right to construct and operate a street rail- way is a franchise which must have its source in the sovereign power, and the legislative power over the sub- ject has this limitation, that the franchise must be grant- ed for public and not for private purposes, or at least the grant must be based upon public considerations. It is well settled on the soundest principles of public policy that a contract, by which a railroad company seeks to render itself incapable of performing its duties to the public, or attempts to absolve itself from its obligations without the consent of the state, is void and cannot be rendered enforceable by the doctrine of estoppel, and any contract which disables the corporation from performing its functions without the consent of the state, and to re- lieve the grantees of the burden it imposes, is in viola- tion of the contract with the state, and is void as against public policy. (Fanning vs. Osborne, 102 N. Y. 441; Union Pacific R. Co. vs. Chicago, R. I & P. Ry. Co., 163 U. S. 564, 581; State vs. Hartford & N. Haven R. R. Co., 29 Conn. 538 ; State vs. S. C. & P. E. R. Co., 7 Neb. 357 ; City of Potwin Place vs. Topeka Ry. Co., 33 Pacific Rep. 309; State ex rel. Frinsf elder vs. Spokane St. R. Co., 53 Pacific Rep. 710; King vs. Severn & Wye R. Co., 2 B. & Aid. 646.) (4) "Within the principle of the cases cited it is obvious that the public had an interest in that portion of the Schenectady street railway which was constructed in Washington avenue, which could not be destroyed or abandoned without the consent of the state, and that the 47 consent given by the plaintiffs survived the attempted abandonment of the railway upon Washington avenue." The Federal court in New York reached the same con- clusion. (Thompson vs. Schenectady, 131 Fed. 577.) Potwin Place vs. Topeka Ry. Co., 51 Kan. 609, is a case where a street railway company was compelled by mandamus to operate a street railway which it had aban- doned. King vs. Severn & Wye Ry. Co., 2 B. & Aid. 646, is an English case where a railroad company was compelled by mandamus to restore a road it had taken up. Speaking of a street railway, Chief Justice Shaw, in Commonwealth vs. Temple, 14 Gray, 69, 76, said: "The accommodation of travelers, of all who have oc- casion to use them, at certain rates of fare, is the lead- ing object and public benefit for which these special modes of using the highway are granted and not the profit of the proprietors. The profit to the proprietors is a mere mode of compensating them for the outlay of capital in providing and keeping up this public ease- ment." In Fanning vs. Osborne, 102 N. Y. 441, a street rail- way company abandoned a portion of its road, and turned it over to Osborne to use for the passage of freight cars to his manufacturing establishment- Held: (1) The right to construct and operate a street rail- way is a franchise which must have its source in the sov- ereign power. (2) The legislative power over the subject is subject to the limitation that the franchise must be granted for public, and not for private purposes, or at least public 48 considerations must enter into every valid grant of a right to appropriate a public street for railroad uses. (3) The construction and maintenance of a street railway by any individual or association of individuals, without legislative authority would constitute a public nuisance, and subject the persons maintaining it, not only to indictment, but also to private action, in favor of any person sustaining special injury. State vs. Dodge City, etc., Ry. Co., 53 Kan. 377 : The action was by the state for an injunction restraining the railroad company from tearing up and removing the track, ties and iron from that part of the roadbed of the company in Gray county. The court said: "While the title to a completed railroad is vested in the corporation, it is only private property in a quali- fied sense. Railroads, like all other public thorough- fares, are public instrumentalities. The power to con- struct and maintain railroads is granted to corporations for a public purpose. The right to exercise the very high attributes of sovereignty, the power of eminent do- main and of taxation, to further the construction of railways, could not be granted to aid a purely private enterprise. The railway corporation takes its franchises subject to the burden of a duty to the public to carry out the purpose of the charter. The road, when constructed, becomes a public instrumentality, and the roadbed, sup- erstructure and other permanent property of the corpor- ation are devoted to the public use. From this use neither the corporation itself, nor any person, company or corporation deriving its title by purchase, either at voluntary or judicial sale, can divert it without the 49 assent of the state. It matters not whether the enter- prise as an investment be profitable or unprofitable, the property may not be destroyed without the sanction of that authority which brought it into existence. Without legislative sanction, railroads could not be constructed. When once constructed, they may only be destroyed with the sanction of the state. The legislature unquestionably has the power to authorize the abandonment of railroads when they cease to be of public utility. It may be, also, that in an action prosecuted by the attorney general, on behalf of the state, to forfeit the charter and wind up the affairs of a railroad corporation, for any proper cause, the court might make all necessary orders for the disposi- tion of the property of the company; but in this case the state appeared, by the county attorney of the county in which the road was located, protesting against the removal of the superstructure of the road. The court erred in refusing the injunction asked. "The general propositions stated above are abundantly supported by authority: E. & N. E. Rd. Co. vs. Casey, 26 Pa. 287; The State vs. S. C. & T. R. R. Co., 1 Neb. 357; People vs. L. & N. Rid. Co., 10 N. E. Rep. (III). 657; Railroad Comm'rs vs. P. & 0. C. Rid. Co., 63 Me. 269; RaAlway Company vs. Mining Co., 68 III. 489; Gates vs. Railroad Co., 53 Conn. 333; Thomas vs. Rail- road Co., 101 U. 8. 71; Railroad Co. vs. Winans, 17 How. 30 ; Pierce vs. Emery, 32 N. H. 484 ; People vs. N. Y. C. d H. R. Rid. Co., 28 Hun. 543. "These views are also in accordance with prior de- cisions of this court: Commas of Leavemvorth Co. r.s. Miller, 7 Kas. 479 ; St. J. & D. C. Rid. Co. vs. Ryan, 11 id. 603 ; The State ex rel vs. Bridge Co., 22 id. 438 ; City of Potwin Place vs. Topeka Ry. Co., 51 id. 609." 50 The Supreme Judicial Court of Massachusetts refused to grant a mandamus to compel a street railway com- pany of small capital and limited resources to operate a branch line which was not an integral part of its main system and which did not have sufficient patronage to meet its running expenses. (Selectmen of Amesbury vs. Citizens Electric St. Ry., 199 Mass., 394.) The charter held by the company and the laws of the state provided for the approval of the location of street railways by the Board of Aldermen of a city or the Se- lectmen of a town, who, after the expiration of one year from the opening for use of a street railway in their city or town, were authorized to revoke the location, and com- pel the company to remove its tracks and put the street in as good condition as it was in immediately before being occupied by the track. (Public Stat. of Mass. 1882, p. 645, 646). The Court based its decision on the precarious nature of the rights of the company in the streets, as the com- pany held "its location upon the public way, without having any estate of its own .in the lands." It does not appear by the report of the case whether at the time of making the locations an agreement be- tween the company and the local authorities was entered mto fixing the rate of fare. In the absence of such an agreement the board of directors of the company were authorized to establish the rates of fare, but their action was subject to revision by the board of railroad commis- sioners, on the application of the aldermen or selectmen or fifty legal voters of the city or town ; subject, however, to the restriction that the fares should "not without the consent of the company, be so reduced as to yield, with other profits derived from operating its road, an income of less than ten per cent upon the actual cost of the con- 51 struction of the road and the purchase of property for its necessary use." (Id. p. 648.) The public can have but little interest in a street rail- way that it does not patronize to an extent sufficient to pay operating expenses; and this is an explanation of the reasons which actuated the Court in denying the manda- mus prayed. Mr. Walter S. Allen was secretary of the Massachu- setts Special Street Railway 'Commission of 1897, and in his brochure on street railway franchises in Massachu- setts, he said: "It may be well here to note the fact that the control of the streets and highways in Massachusetts rests in the Legislature, and that the Courts have repeatedly held that when acting on questions concerning these, the alder- men are not acting as municipal representatives but as the direct servants of the Legislature which has by stat- ute delegated certain of its powers to them." Again : "As regards the tenure of franchises, the existence of perpetual revokable franchises was seen by the special committee to be an anomaly, but they had worked Avell under Massachusetts conditions, and in practice but two attempts had been made to revoke franchises. In both cases public opinion caused the speedy repeal of the revo- cation order." The Massachusetts statutes now provide that if not consented to by the company an order of revocation shall not be valid until approved by the board of railroad com- missioners. (Acts and Resolves of Mass., 1898, Chap. 578, Sec. 17; 2 Rev. Laws of Mass., 1902, p. 1051, Sec. 32; Id. Sup. 1906, p. 665, Sec. 66.) It is also provided that the directors of a street rail- way company may establish rates of fare, and freight, , 52 but subject to revision and alteration by the general court (state legislature) or by such officers or persons as it may appoint for that purpose. (2 Rev. Laws of Mass., 1902; p. 1029, Sec. 225; p. 1059, Sec. 73; Id. Sup. of 1906, p. 773, Sec. 96.) The course of the legislation which resulted in taking the rates of fare out of the control of the aldermen' and selectmen is shown by the case of Keefe vs. Lexington and Boston Street Railway, 185 Mass.. 183, in which the Court said: "Knowlton, C. J. The plaintiff seeks to recover five cents paid under protest for his fare, demanded by the conductor on one of the defendant's cars. The defendant corporation was organized under the laws of this Com- monwealth, after the 'St. 1898, c. 578, went into effect. The selectmen of the town of Concord and the selectmen of the town of Bedford, in granting the defendant a lo- cation in> their respective towns, prescribed conditions as to the fares that might be charged for the transporta- tion of passengers 1 within the limits of the town. The plaintiff contends that the fare charged and collected in his case was in violation of these conditions. The first and most important question before us is whether such a condition could be imposed legally by a board of select- men in granting a location. "Under the St., 1898, c. 578, Sec. 13, the board of al- dermen> of a city 'or the 'selectmen of a town, in granting a location to a street railway company, may prescribe the manner in which the "tracks shall be laid, and the kind of rails, poles, wires, and other appliances which shall be used, and they may also impose such other terms, conditions and obligations in addition to those applying to all street railways under the general provisions of law, as the public interest may in their judgment require." The question is whether a condition may be imposed reg- 53 ulating and restricting the fares to be charged. The stat- ute contains other provisions in regard to fares. By the Pub. Sts. c. 113, Se>c. 43, which was in force when the defendant corporation was organized (R. L. c. 112, Sec. 69) the directors of a street railway company "may es- tablish the rates of fare on all passengers and property conveyed or transported in its cars, subject, however, to the limitations named in its charter, or hereinafter set forth." Section 44 provided for a revision and regula- tion of the fares by the railroad commissioners, and Sec. 45 provided that nothing contained in the two preceding sections should authorize the company or the board to raise the rate of fare above the rate established by agree- ment, made as a condition of location or otherwise, be- tween the company or its directors and the mayor and aldermen of a city or the selectmen of a town, except by a mutual arrangement with the parties. This section rec- ognized the validity of such agreements under the former statute. But this and the next preceding section were repealed by the St. 1898, c. 578, Sec. 26, leaving the sec- tion as to the authority of the directors to stand with no limitations upon their right. A new section in regard to the revision of the fares by the railroad commissioners was enacted, which is St. 1898, c. 578, Sec. 23. Under this last section, the "fares shall not, without the consent of the company, be reduced below the average rate of fare charged for similar service by other street railway com- panies which, in the judgment of the board of railroad commissioners, are operated under substantially similar conditions." This statute gives to the directors prima- rily the right to fix and regulate fares. It then makes their action subject to revision by the railroad commis- sioners, who are to act, according to the terms of the section, upon broad considerations of public policy. The conditions which may be imposed in granting a location 54 are of a different character, and do not include those for which special provision is made in other parts of the statute. See Newcomb vs. Norfolk Western Street Rail- way, 179 Mass., 449. With street railways extending long distances and passing through numerous cities and towns, it would be unwise and inexpedient to permit each town to fix the fares within its boundaries, as a condition of granting a location. The purpose of the Legislature to prescribe broad and general provisions for the regulation of fares is further emphasized by the St. 1901, c. 180 (R. L. c. 112, Sec. 73.) Which puts street railways upon precisely the same ground as railroads, as to provisions relative to changes and regulations of their fares. "The acceptance by the defendant of the locations granted by these towns did not make valid these condi- tions as to fares which the towns could not legally im- pose, nor did it make a contract as to fares between the corporation and the selectmen, or the town. The defendant might, therefore, at least prescribe for its passengers the payment of any fare which was reasonable. It is not contended that the fare collected of the plaintiff was more than was reasonable, or more than the company was accustomed to collect from other passengers who were traveling as he was. Indeed, it is contended 'by the defendant that it has complied with the terms prescribed by these towns, according to a proper understanding of them, certainly according to its own understanding of them, and that the charge complained of by the plaintiff was for a through passenger, to whom these conditions were not intended to apply. "We need not consider this contention particularly, as we deem it unimportant. The plaintiff, in his brief, does not contend that he is entitled to recover, except upon the ground that the conditions imposed as to fares were binding upon the defendant." 55 III. The streets and highways of the city of Detroit are not the property of the city, or of the inhabitants of the city. They belong to the general public, that is, to the people of the state and their visitors from other states and countries. So far as the municipal authori- ties have been given any title to or power of control over the streets, the same is held in trust for the benefit of the general public; and any ordinance or resolution of the common council which would be detrimental to the general public, would be a breach of the trust, and illegal and void. This is universal law in the United States. The Michigan town plat law has been in force since 1839. (1 C. L. 1897, p. 1038.) That act originally vested the fee of the streets in the county; it now vests it in the township, village or city; but it has always provided, that the fee should be held in trust for the public. In People vs. Kerr, 27 N. Y., 188, it was held that the title in fee to the streets in the city of New York, was held by the city in trust for the public. The Court said: "Whatever may be the quantity or the quality of the estate of the city of New York in its streets, that estate is essentially public and not private property, and the city in holding it is the agent and trustee of the public and not a private owner for profit or emolument." To same effect: (Glasgow vs. St. Louis, 87 Mo., 678.) While the city of New York owns the fee of the lands occupied by the streets of that city, whether laid out under the Dutch regime, during the colonial period, or 56 after the organization of the state government, its ten- ure is in trust for street uses. (Kane vs. N. Y. E. R. R., 125 N. Y., 182.) In People vs. Albany, 4 Hun., 675, 679, it was held that the city could sell a ferry property to a bridge company "but property of a public nature such as streets, squares and parks, so long as they are held for the public use, can not be sold. Doubtless the same rule would ap- ply to a ferry franchise if the public were, by its sale, to be shut off from means of intercommunication." In Rhinehart vs. Redfield, 93 App. Div. (N. Y.), 410 (affirmed 179 N. Y., 569), the common council of Brook- lyn granted to private parties the power to lay pipes in the streets for the conveying of gas generated from am- monia to houses and buildings for the purpose of refrig- eration and it appeared that the grant was made in aid of a private enterprise and not for the convenience of the general public, but for a limited number of people within a limited district. Held, that the grant was void as beyond the power of the common council, it being fundamental that a muni- cipal corporation holds its public streets and places in trust for the public. Knickerbocker Ice Co. vs. 2nd St. R. R. Co., 176 N. Y., 408, 417, involved the title to a pier and the lands occu- pied by it, at Forty-third street and the Hudson river in New York city. In disposing of the case the Court said: "There are several fundamental facts 1 which must be kept in view in the effort to adjust the rights of the par- ties to this litigation. First. The title of the city of New York in the tideway and the submerged lands of the Hud- 57 son river granted under the Dongan and Montgomerie charters and the acts of the legislatures of 1807, 1826 and 1837, was not absolute and unqualified, but was and is held subject to the right of the public to the use of the river as a water highway. (Sage vs. Mayor, etc., of N. Y., 154 N. Y., 70; Matter of City of New York, 168 N. Y. 139.) Second. The title of the city of New York in and to the lands within its public streets is held in trust for public use. (Story vs. N. Y. El. R. R. Co., 90 N. Y., 122; Kane vs. N. Y El. R. R. Co., 125 N. Y-, 165.) Third. The general public has a right of passage over the places where land highways and navigable waters meet; and when a wharf or bulkhead is built at the end of a land highway and into the. adjacent waters, the highway is by operation of law extended by the length of the added structure. (People vs. Lambicr, 5 Denio, 9; Matter of the City of Brooklyn, 73 N. Y., 179.) Fourth. It was competent for the Legislature in granting additional sub- merged lands to the city of New York in 1837, to pre- scribe that such lands should be used for the purposes of an exterior street, to which other streets then intersect- ing the river should be extended." In Sweet vs. Buffalo, 79 N. Y-, 293, the city was au- thorized to condemn the fee of lands for the purpose of maintaining a sea wall or breakwater. The Court in an opinion by Andrews, J., said: "But we perceive no inconsistency in declaring the par- ticular use for which the city is to take and hold the land and at the same time providing that it should take a fee. The particular use declared is in the nature of a trust engrafted on the fee, and the people through its proper officer could compel the city to observe the trust, or re- strain it from any use of the land inconsistent with it." 58 The Supreme Court of Ohio in Elster vs. Springfield, 49 Ohio St., 82, 97, said : "The municipality is given the exclusive care, super- vision and control of the streets. Hand in hand with this power goes a corresponding duty to keep them open, in repair, and free from nuisance. This implies a duty to see that the right of the public therein is not encroached upon. An encroachment which would prevent the rea- sonable use of the street by the municipality would be a nuisance, and power to validate such nuisance by a grant would be utterly inconsistent with the duty enjoined to keep the street free from nuisance. "As we have seen, the city as to its streets, is a trustee for the use Of the public. A trustee of property for the benefit of the public could not, any more than could a trustee of private property held for known specific and continuing uses, alien or encumber the property to the prejudice of the beneficiary." etc. In Gleason vs. Cleveland, 49 Ohio St>, 431, it was held that the donation of the "Public Square" in Cleveland was not made to the city but to the public generally, and the Legislature could authorize the erection of a soldier's monument thereon without the consent of the city. The very recent case of Louisville & Nashville Railroad Company vs. City of Cincinnati, 76 Ohio, 481, applies this doctrine to a grant made by the city to the railroad com- pany to build elevated railroad track across a public common or landing. At p. 504 the court say : "This property was not given to Cincinnati to be used or disposed of as it might determine to be for its best interests, but it was dedicated to the inhabitants of the town, long before the state had an existence, for the pur- poses of a common, and while the legal title now is vest- 59 ed in the city it is held by the city in trust for the inhab- itants for that purpose, and when the property is no longer desired or the purpose for which it was dedicated attainable, it will revert to the dedicator. Until then, its diversion from that use by the city, or by the legisla- ture, may be prevented by owners of lots whose property rights may be affected and by the city solicitor as the representative of the inhabitants." Marine Ins. Co. vs. St. L. etc., Ry. Co., 41 Fed., 643, 649, involved the validity of a lease by the municipality of the foot of a street. Caldwell, District Judge, said : "I have had no difficulty in excluding the lease from the city council. To say nothing about the clause against assignment of the lease, it was plainly ultra vires, and void. The streets of the city do not belong to the coun- cil, but to the public and by that I mean the public at large, and not merely the inhabitants of the city, and to their use they are forever dedicated. The city charter makes it the duty of the city council to keep them open and free from nuisance. It provides that the city coun- cil shall have the care, supervision, and control of all the public highways, bridges, streets, alleys, public squares, and commons within the city; and shall cause the same to be kept open and in repair, and free from nuisance,' See Mansf. Dig., 737. The only legal effect of the lease, it would seem, is to render the city liable for the damages resulting from such a licensed nuisance. Cleveland r.v. King, 132 U. S., 295, 10 Sup. Ct. Rep., 90. It makes no difference that, owing to the declivity at the foot of 'Main street, the street at that point was not commonly fre- quented by vehicles. The requirements of the public as to property set aside for its perpetual use was not a mat- ter to be passed on by the council, and it is plain that, GO by the establishment of a ferry or the building of a bridge at that point, it might at any time become one of tht> most frequented of all the thoroughfares of the city, the expansion and amelioration of which cannot be hindered by leases of the streets by the city council. The law is well settled, as it ought to foe, that all such leases are void. (2 Dill Mun. Corp.,, 660; McDonald vs. Major, (N. J.) 1 Atl. Rep., 855; Harrisburg's Appeal (Pa.), 10 Atl. Rep., 787; Gas Co. vs. Teel, 20 Ind., 131).-' Nordhurst vs. Ft. Wayne & 8. W.' Traction Co., 163 Ind., 268, is a case where the Supreme 'Court of Indiana examined with care the question whether an interurban electric railway was an additional burden on the high- ways, and in the course of an opinion holding that it was not, said: "A street platted or otherwise laid out in a city or town of this state is thereby dedicated to the use of the public, and not exclusively to the use of abutting prop- erty, nor to the convenience or profit of any or all of the inhabitants of the particular municipality. It forms a part of the great system of highways of the state, and its use for inter-communication with other neighborhoods, towns, and cities is one of its most important purposes. In many respects it is governed by the general laws reg- ulating public ways. Discriminations in the terms and conditions on which it could be used in favor of the abut- ting lot owners, the residents on the particular street, or the inhabitants of the city, and * * * against non- residents, could not be tolerated." "Kapid and cheap transportation of passengers, light express and mail matter between neighboring towns and cities may be quite as necessary and as largely conducive to the general welfare of the places so connected and their inhabitants as the like conveniences within the town or city." (il A bridge owned by a county is public property and the county is not entitled to compensation if the legislature appropriates it to public use by a turnpike company. (Freeholders of Monmouth Co., vs. Turnpike Co., 18 N. J. Eq., 91). In McDonald vs. Neuxvrk, 42 N. J., 136, it was held that the city could not, authorize the use of the streets for the purpose of a market. A like ruling was made in Pennsylvania: (City of Har- risburg's Appeal, 10 Atl., 787. In Fessler vs. Town of Union, 67 N. J. Eq., 14, 27, the town erected a building on a square devoted to the public use as a park or pleasure ground. The court said : "If as I hold, the defendant was without authority to erect buildings on the square, then their so doing was a breach, of the trust on which it held the right of posses- sion, and the control of this property; and it is hardly necessary to say that the law ought to be, and is, that a trustee shall not be permitted to gain any advantage or increase his power by a breach of his trust unless it be, and that necessarily to a limited degree, where the breach has been approved and acquiesced in by the cestui que trust" Roberts vs. Louisville, 92 Ky., 95, is a case concerning the public wharves owned by the city, and it was held that the city was a mere trustee for the public; that its duties and obligations to the public and individuals could no be ignored or shifted; that the municipality was bound "to maintain and preserve wharf property for the benefit of the public without discrimination or unreasonable charges for individual use;" and that the title of t.lie 62 city was held "in trust for use of the public and in aid of trade and commerce." In Labry vs. Gilmour, 89 8. W., 231, the Court of Ap- peals of Kentucky held that the authorities of a munici- pal corporation hold the public ways of the city in trust for the use of the public and cannot sell or lease them for private use. To same effect: Bennett vs. Mt. Vernon, 124 Id-, 537. In Dubuque vs. Maloney, 9 la., 450, it was said: "The city, by virtue of its corporate authority, has the power to regulate the public use of the streets and squares and may be regarded as the representative of the public for the purpose of vindicating the public right. But neither the ownership of the soil, nor of the ease- ment is in the corporation." In Sherburne vs. Portsmouth, 72 N. H., 539, the court sustained 1 a bill to enjoin the city from making a baseball park on the public common known as the Plains and on the ground that such action would be a breach of trust. Speaking of public ways, Elliott on Roads and Streets, 2d Ed., Sec. 442, says: "The ownership of the easement is exclusively in the public for whom the governmental corporation is trustee, and as such trustee it is in duty bound to protect the rights of the beneficiary." In San Francisco vs. Itsell, 80 Cal., 57, it was held that the city of San Francisco holds its public squares in trust for the public and the municipal authorities have no power to dispose of them by way of compromise or in any other manner and the legislature has no power to ratify an ordinance disposing of land srranted to the city to be held in trust for the public. 63 In Oakland vs. Oakland Water Front Co-, 188 Cal., 160, the same doctrine was applied to the title vested in the City of Oakland to the water front of that city. Townsend vs. Epstein, 93 Md., 537, 555, is a case where the city had authorized a structure over a street, and seventeen feet above it, to connect the upper stories of buildings on opposite sides of the street. The court said: "The Corporation, the Mayor and City Council of Bal- timore, is invested with the title to and control over the public streets. This control, however, is not an arbitrary control. The streets and highways are held in trust for the benefit, use, and convenience of the general public. There are many ways in which the power to control and regulate the use of the streets can be and must be exerted by the municipality to meet the necessities and the con- venience of an urban population; but the exertion of this power must have for its object a public purpose. It is not in accord with the trust upon which the municipality holds the streets, nor with the nature of the control which it has over them to make use of the power and authority with which it is invested in that regard to promote a mere private purpose, 1 to subserve a mere private interest or to subordinate the right, of one citizen in the streets, or in a street of the city to the private interest and con- venience of any other." In Beebe vs. lAttle Rock, 68 Ark., 39, 68, it was said: "It is the duty of a city to open and keep in repair its streets, and it may be compelled to do so by a proper pro- ceeding at the instance of a proper party ; and a city can not divert the grounds given for streets to other uses, but if it does, its unlawful or negligent acts can not divest the cestui que trust the public of title in the streets." 64 In Simon vs. Northrop, 27 Oreg., 487, it was held that the public highways of a city are not its private property, and hence tie legislature? may transfer their supervision and control to another governmental agency if it does not thereby divert them to a use substantially different from that for which they were originally intended. In F. C. & P. R. R. Co. vs. Ocala Street & Suburban, 39 Fla., 306, 320, the court said : "The correct view is that the powers of a municipal corporation 'in respect to the control of its streets are held in trust for the public benefit, and cannot, unless clearly authorized by a valid legislative enactment, be surrendered or delegated to private parties either cor- porate or natural.' ' A city is powerless to confer a right so to use its streets as to hinder or obstruct the concurrent use by the public thereof. ( Chicago, etc., vs. Quincy, 32 III. App. 377 ; Dubach vs. Hannibal, etc., 89 Mo. 483. ) Action of a city council in vacating a platted' street in order to aid defects in the title of private persons to the land embraced within the streets so as to enable such parties to appropriate and use the street for private purposes is> ultra vires and void. (D eland vs. Dixon Power Co., 225 III, 212.) The trust in favor of the public is so strong, that an elevated superstructure for the use of the public, can be built in a street without compensation to abutting lot owners. (Sauer vs. New York, 180 N. Y. 27; Sauer vs. New York, 206 U. S., 536.) Abutting property owners may maintain a bill to en- join a city from erecting buildings on a park in violation 65 of the trust for the general public under which the park is held by the city. (Chicago vs. Ward, 169 III, 392.) A city cannot grant the immanent use of a portion of the street for the purposes of an awning over a street en- trance. (Hibbard & Co. vs. Chicago, 173 III., 91.) Nor the right to use a well in the public streets. (Sny- der vs. Pulasld, 176 III., 397.) Nor the exclusive use of the streets by a railroad com- pany. (Chicago, etc. vs. The People, 222 111., 427.) In re Albers Petition, 113 Mich., 640, is a case where the city of Grand Kapids claimed compensation for the value of the land covered by a street which was vacated. The court in an opinion by Mr. Justice Hooker, said : "Our understanding is that the city has no proprietary interest in the land, all of its authority over it growing out of its legal duty to maintain the public ways which are placed in its charge. (City of Detroit vs. Railway Co., 76 Mich., 421.)" In the case cited a street railway grant was involved and the court by Campbell, J., said : "The cities in this state have no proprietary interest in city streets as their private property, and, whether the fee is nominally in county, city, or private owners, the public cnotrol is only in trust to secure to the public those rights of a public nature that exist in public ways of that kind. While a considerable discretion is vested in cities concerning the terms of user, and the proper rate to be paid to the city for permitting it, the city sells the roads none of its property, and whatever it exacts must necessarily be by way of tax or license, which is the same thing." 66 In Fairchild vs. St. Paul,, 46 Minn.,, 540, the court sus- tained a statute authorizing the city to condemn for street a title in fee simple but did so on the ground that the title so acquired would be held in trust for the pub- lic for street purposes ; that the title was not proprietary ; that it was held by the city as an agency of the state; and that the: city could neither sell the land or devote it to a private use. In Massachusetts great ponds containing more than ten acres were made public to lie in common for public use, and in West Roxbury vs. Stoddard, 1 Allen 158, it was held that the township had no such property in the ice on Jamaica Pond as would enable it to maintain an action against individuals for trespass in cutting ice therefrom, even if the fee of the pond be considered to be in the town. A township does not own the highways within its lim- its. The easement belongs to the public and not to the township. Hence the township cannot maintain an ac- tion for an injury to a highway until it has made repairs and been put to expense in regard thereto. (Freedom vs. Weed, 40Me.,383.) In Denver Circle Ry. Co. vs. Nester, 10 Colo., 403, a statute vested the fee of the streets on a recorded plat in the city or town "in trust for the uses there ex- pressed." The Court said: "The alleged power of the city to authorize the occu- pation of the public street called 'Willow 'Lane' by an ordinary railroad with trains of cars propelled by steam engines, without liability for injuries to property occa- sioned by the construction and operation of the railroad, seems to be based on the proposition that the city, by 67 virtue of the dedication mentioned, was vested with title to the streets in fee absolute under the statutes then in force. This proposition is defeated by the express words of the statute just cited." A resident taxpayer of a municipality has the right to maintain a suit to prevent the unlawful disposition by the municipal authorities of the money or property of the town, and to restrain the diversion of property in his town from any public use, in which he shwes, to which it has been dedicated. The Colorado Court of Appeals so held in a case where it was proposed to build a county court house on a public square in Colorado Springs. (Mclntyre vs. El Pa$o County, 15 Colo. App., 78, 88.) The most noted case to be found in the books in which the doctrine for which we contend was affirmed and ap- plied is that of Illinois Central R. R. Co. vs. Illinois, 146 U. 8. 387. In that case the legislature of the state had passed an act granting to the Illinois Central Kailroad Company title in fee to submerged lands in Lake Michigan in front of the city, and a subsequent legislature had repealed the act. The court in an opinion by Mr. Justice Field, said: "The question, therefore, to be considered is whether the Legislature was competent to thus deprive the State of its ownership of the submerged lands in the harbor of Chicago, and of the consequent control of its waters; or, in other words, whether the railroad corporation can hold the lands and control the waters by the grant, against any future exercise of power over them by the State. 68 "That the State holds the title to the lands under the navigable waters of Lake Michigan, within its limits, in the same manner that the State holds titJe to soils under tide water, by the common law, we have already shown, and that title necessarily carries with it control over the waters above them whenever the lands are subjected to use. But it is a title different in character from that which the State holds in lands intended for sale. It is different from the title which the United States hold in the public lands which are open to pre-emption and sale. It is a title held in trust for the people of the State that they may enjoy the navigation of the waters, carry on commerce over them, and have liberty of fishing therein freed from the obstruc- tion or interference of private parties. The interest of the people in the navigation of the waters and in com- merce over them may be improved in many instances by the erection of wharves, docks and piers therein, for which purpose the State may grant parcels of the sub- merged lands; and, so long as their disposition is made for such purposes, no valid objection can be made to the grants. It is grants of parcels of lands under navi- gable waters, that may afford foundation for wharves, piers, docks and other structures in aid of commerce, and grants of parcels which, being ocupied, do not sub- stantially impair the public interest in the lands and water remaining that are chiefly considered and sustained in the adjudged cases as a valid exercise of legislative power consistently with the trust to the public upon which such lands are held by the State. But that is a very different doctrine from the one which would sanc- tion the abdication of the general control of the State over lands under the navigable waters of an entire har- bor or bay, or of a sea or lake. Such abdication is not consistent with the exercise of that trust which requires 69 the government of the State to preserve such waters for the use of the public. The trust devolving upon the State for the public, and which can only be discharged by the management and control of property in which the public has an interest, cannot be relinquished by a transfer of the property. The control of the State for the purposes of the trust can never be lost, except as to such parcels as are used in promoting the interests of the public therein, or can be disposed of without any substantial impairment of the public interest in the lands and waters remaining. It is only by observing the distinction be- tween a grant of such parcels for the improvement of the public interest, or which when occupied do not substan- tially impair the public interest in the lands and waters remaining, and a grant of the whole property in which the public is interested, that the language of the ad- judged cases can be reconciled. General language some- times found in opinions of the courts, expressive of abso- lute ownership and control by the State of lands under navigable waters, irrespective of any trust as to their use and disposition, must be read and construed with reference to the special facts of the particular cases. A grant of all the lands under the navigable waters of a State has never been adjudged to be within the legisla- tive power; and any attempted grant of the kind would be held, if not absolutely void on its face, as subject to revocation. The State can no more abdicate its trust over property in which the whole people are interested, like navigable waters and soils under them, so as to leave them entirely under the use and control of private par- ties, except in the instance of parcels mentioned for the improvement of the navigation and use of the waters, or when parcels can be disposed of without impairment of the public interest in what remains, than it can abdi- cate its police powers in the administration of govern- 70 merit and the preservation of the peace In the adminis- tration of government the use of such powers may for a limited period be delegated to a municipality or other body, but there always remains with the State the right to revoke those powers and exercise them in a more direct manner, and one more comformable to its wishes. So with trust connected with public property, or property of a special character, like lands under navigable waters, they cannot be placed entirely beyond the direction and control of the State. "The harbor of Chicago is of immense value to the peo- ple of the State of Illinois in the facilities it affords to its vast and constantly increasing commerce; and the idea that its Legislature can deprive the State of control over its beds and waters and place the same in the hands of a private corporation created for a different purpose, one limited to transportation of passengers and freight between distant points and the city, is a proposition that cannot be defended." The King of England is the owner of all the navigable waters of the kingdom and of the soil under them, but it is settled law that since Magna Charta, the king holds the title in trust for the public, and grants by the crown in derogation of the public right of navigation and fishing are void. (Martin vs. Waddell, 16 Pet. 367, 410 ; Blundale vs. Catterall, 5 Barn. & Aid. 287, 294, 304, 309 ; Duke of Somersett vs. Fogwell, 5 Barn & Cress 883, 884.) And the court of Kings Bench in Williams vs. Wilcox. 8 Ad. & El, 314, 333-4, held that such was the law before Magna Charta. Attorney General vs. Parmeter, 10 Price 378, affirmed by the House of Lords, 10 Price 412, concerned the val- 71 idity of a grant made by Chas. I in 1628 of lands between high and low water in the harbor of Portsmouth, and on which the defendants were constructing a dry dock and other works which would interfere with the navigation of the harbor. On a bill by the attorney general for an injunction it was held that where a part of the sea coast or shore, being the property to the Crown, and giving jus priva- tum to the king, is granted to a subject for uses, or to be enjoyed so as to be detrimental to the jus publicum therein, such grant is void as to such parts as are open to such objection, if acted upon so as to effect nuisance by working injury to the public right; or it is a grant which does not divest the crown or invest the grantee. Eldon, Lord Chancellor, advising the house of lords, said: "It is my judgment that on the circumstances now be- fore your lordships there is matter sufficient to put in issue on this record the question of the validity of this grant that looking to these letters patent, with respect to this soil, I am of the opinion that the Court of Ex- chequer have stated a proposition, true in law, that the title is in his majesty." There can be no possible doubt about the proposition that the right of the public to pass and repass by vessels or vehicles along all public highways, on water or land, is a paramount right, and all private or local rights are subordinate and inferior. The city of Detroit has no more right to stop the pas- sage of street cars along the public streets of the city than it has to stop the passage of other vehicles or of persons. 72 The common council has no more power to stop the passage of street cars on the streets of the city than it has to stop, within the city limits, the passage of craft on the Detroit river. In the recent case of Ainsworth vs. Munoskong Hunt- ing and Fishing Glub, 123 N. W. 802, the Supreme Court of Michigan said: "It is the established law of this state that riparian owners along the Great Lakes own only to the meander line, and that title outside this meander line, subject to the rights of navigation, is held in trust by the state for the use of its citizens. Among these is the common right to fish and hunt." IV. Whatever view may be taken of the original con- tracts between the street railway company and the city, it is certain that under the conditions existing in 1909 and 1910, the city has no power at the expira- tion of the thirty years to expell the street railways from the streets of the city. The obligation of the city as trustee for the general public to keep the streets in good condition, and open and free for travel and traffic thereon, is a continuing one, and the duty it imposes may vary from time to time, that is to say, what it may do or authorize to be done at one time it may not do or authorize to be done at an- other time. This doctrine was declared and enforced by the Sup- reme Court of the United States, in affirming a decision of the Supreme Court of Illinois, in a controversy over a street railway tunnel under the South Branch of the Chicago river at or near Van Buren street in Chicago. (West Chicago R. Co. vs. Chicago, 201 U. 8. 506; 8. C. 214 III 9.) The South Branch was a navigable stream in Chicago. It was a public highway for the passage of vessels the same as a street is a public highway for the passage of vehicles and persons. The street railway company by permission of the city built a tunnel under the river, with a depth of water above it of seventeen feet, which was sufficient for any craft that could then navigate the river. Some ten years afterwards Congress made an 74 appropriation to deepen the river so as to have a channel twenty-one feet deep, but provided that the work of removing and constructing bridges and piers and lower- ing tunnels should be done or caused to be done by the city of Chicago without expense to the United States. The common council passed an ordinance directing the street railway company to lower its tunnel at its own expense and applied for a mandamus to compel the com- pany to do so. The company contended that the order of the common council impaired its contract with the city, and that as the tunnel was its private property to take it without compensation would deprive the company of its property without due process of law. Held: (1) That in a navigable stream the public right is paramount and the city was under a continuing duty of protecting the free navigation of the river and its branches. (2) That the city could not be exempted from its duty by an agreement it may have made with the rail- road company. (3) That the railroad company built the tunnel sub- ject to the duty resting on the city, and to compel it to lower the tunnel at its own expense was not a vio- lation of the due process of law clause of the constitution of the United States. Applying these rulings to the case we have in hand, it is plain, that the right of the general public to ride in street cars in the streets of Detroit is paramount and superior to any right possessed either by the municipal- ity or by the street railway company; and if they have 75 entered into any contracts express or implied, which would destroy or seriously impair the street railways, such contracts whether originally valid or not must give way to the paramount right. The common council of the city of Detroit has no more right to stop the operation of the street cars on the streets of the city, November 14, 1909, than it has to build stone walls across the streets and to stop all travel and traffic thereon. It is an irrefragable proposition that if the existing contract between the city of Detroit and the Detroit United Eailway contained an express covenant on the part of the company that it would at the expiration of the thirty years, cease to operate its cars and remove the tracks from the streets, or if it is held that there is an implied covenant to make such a surrender, then such covenant, whether express or implied, must be regarded as void and of no force as against the right of the general public to have the street railway service continued beyond the thirty years, without any serious interruption. The Supreme Courts of Ohio and Minnesota have each made a practical application of the paramount rlgnt of the general public as affecting the obligations of interur- ban street railways. In Townsend vs. City, 78 Ohio 122, the traction com- pany obtained permission of the city of Circleville to construct and operate its railroad along certain streets, and the ordinance granting the permission stipulated "that all cars, excepting special cars, shall stop at cross streets and at street intersections." 76 After the road was built and in operation the city passed an ordinance making it a penal offense for any conductor of an electric interurban or street car to fail or refuse to stop the car at any street intersection when signaled or requested so to do by any person desiring to board the car or to alight therefrom. Without determining what, if any, civil remedies the city might have to enforce the stipulation contained in the ordinance granting permission, the court held that the city had, under the laws of Ohio, no power to en- force it by penal ordinance. In reaching that conclu- sion the court, at page 134, said: "If every city and village through which such a rail- way passes may require its cars to be stopped at every street intersection to take on or to discharge passengers, and to serve the purposes of a street railway, then its usefulness as a means of interurban transportation may be very much limited, because so much time will be con- sumed in passing through cities and villages that it will no longer be practicable for many to travel in that way. Councils may reasonably be expected to be actu- ated by considerations of local convenience rather than those of the public and in view of the importance of the subject, and its comparatively recent origin, it would seem to be a matter for consideration by the legislature, and it is in view of these considerations that we reach Hie conclusion that the power has not been conferred ft?/ general terms of Section 28." In Village of Excelsior vs. Minneapolis & St. Paul S. Ry. Co., 122 2V. W. 486, the village sought to compel the company by mandamus to obey an ordinance requiring it to stop all cars at street crossings and intersections. The District Court of Hannepin County granted the writ. 77 The opinion of the Supreme Court state the facts, and that there may be no misunderstanding as to what was decided, I quote it in full. "Jaggard, J. On the petition of the village of Excel- sior, the district court issued a writ of mandamus to the defendant and appellant suburban railway company. To an answer and return of the defendant the plaintiff vil- lage demurred on the ground that it did not state facts sufficient to constitute a defense. The demurrer was sustained, with leave to defendant to amend. This ap- peal was taken from the order to that effect. "It appeared that defendant was authorized by ordin- ance to operate its lines within the limits of the village under provisions which included the following: 'Sec. 8. Said Minneapolis & St. Paul Suburban Railway Com- pany, its successors and assigns, shall have the right to charge and collect five cents, and no more, for each pas- senger traveling on any of said lines of street railway or parts thereof, within the village limits of the village of Excelsior; provided, however, that the payment of said five cents shall entitle the passenger so paying the same to one continuous ride from any point in the village limits in the village of Excelsior located along any of said lines; provided, however, that no fare shall be required for children under six years of age when traveling with or attended by an adult having paid one full fare.' Subsequently to the construction of defend- ant's lines, the village passed an ordinance which is as follows: 'Any person, company, or corporation driving or propelling, or requiring to be driven or propelled, any raiload car or street car which occupies the public- streets, avenues or alleys of the village of Excelsior for the purpose of operating upon and along same, shall stop such cars at any and all of the intersections or 78 crossings of streets when any person or persons require to enter or alight from such cars, provided such cross- ings are grade crossings.' It was sought under this or- dinance to compel defendant to stop its cars at a place where its line in plaintiff village was intersected by George street. In point of fact defendant was willin*; to establish a stopping place three-fourths of a mile dis- tant, where its lines divided, and one line passed up Water street. Within the village limits west of this stop- ping place six village streets intersected defendant's tracks. "The plaintiff contends that the ordinance requiring defendant to stop at George street was a legitimate ex- ercise of police power. For present purposes it may be conceded that the village council had the authority to pass a proper ordinance in the exercise of such power. Such an ordinance must have reference, however, to pub- lic peace and safety and the good order of persons or agencies upon the streets. Upon the assumption that such power existed, the village had the right to pass reasonable ordinances regulating, inter alia, the speed of traffic and the stoppage of cars. Incidentally such or- dinances would conduce to the convenience and comfort of the community. It by no means follows, however, that an ordinance designed entirely for the comfort and con- venience of the inhabitants is a valid exercise of the police power. The ordinance in question cannot by any reasonable construction be regarded as the result of the exercise of the police power. Under its terms cars are allowed to operate without restriction, except 'when any person or persons require to enter or alight from such cars.' The element of danger to users of the highway is effectually ignored. The right to mandamus based upon the police power must therefore be eliminated. 79 "The question then arises whether the terms of tin* ordinance applied to the facts in this particular case. The defendant urges that their fair construction com- pels the conclusion that they do not apply. They refer expressly to lines of the defendant which occupy and which are located upon any public street. At the place in question defendant did not occupy a street had not constructed its lines along the street, but on its own right of way. On Water street it had constructed its lines along the street. The mandamus, however, did not purport to affect Water street. It is true that de- fendant's lines crossed streets and alleys; but that fact did not bring defendant within the provisions of the or- dinance, for it was held in Railway Co. vs. Manitou Forest Syn., 101 Minn. 132, 112 N. W. 13, that 'the crossing of streets and alleys, incidental to constructing a railroad from place to place, does not constitute the occupancy of such streets or alleys for the purpose of operating a railway thereon, within the provision of this Section 2841, Rev. Laws 1905, and a railroad company has the right to acquire the right by condemnation, un- der Section 2916, Rev. Laws 1905, a right of way over the streets and alleys of cities and villages and over pri- vate property within such limits, without securing a franchise from the municipal authorities.' There is ob- vious cogency in this argument ; but in view *of the great importance of the public question involved we feel un- willing to rest the decision on this ground alone, or to abstain from the determination of the larger questions involved. "We are of opinion that the contract with the village under which defendant operated its lines did not author- ize the ordinance. It is obvious that section 8 must be reasonably construed. It is clear that the provisions, literally construed, would be void. An ordinance mav 80 require under given conditions that a street car must stop at the end of any block, or at the middle of long blocks, or at railroad crossings, or at places where fire engines may suddenly emerge. But a requirement that a car must stop at every point at which a passenger may wish to enter or alight would be destructive, not only of the purposes for which the corporation was authorized to transact business, but would also completely demoralize traffic, and would be, the authorities generally agree with- out legal force. It is equally clear that a proper construc- tion of the charter provisions must have reference to the situation as a whole, and be determined with due regard to all relevant circumstances. The subject is not to be regarded from a narrow or local point of view. The reasonableness of an ordinance, it is elementary, is a question of public policy. Public policy necessarily in- volves a consideration of a number of important facts appearing on this record. "One of these considerations is that the respondent company has a somewhat anomalous legal status. Under the charter provisions which have been herein quoted, it would appear to 'be a street railroad. In Railroad Co. vs. Manitou Forest Syn., 101 Minn., 132, 112 N. W., 13 (supra), however, it was held that defendant was not a mere street railroad company, but was organized to con- struct and operate interurban railroads from place to place, and as such had the right to exercise the power of eminent domain. A construction which would give to special legislation by a village or city an effect which would render nugatory rights exercisable under general laws would be subject to obvious and substantial objec- tions. "Another consideration is that the principal business of the respondent is to furnish rapid transportation of passengers between various points around Lake Minne- 81 tonka and the people of cities to the east and of the sur- rounding district to the west. In this business respon- dent had the competition of two steam railroads. If the principle for which the village contends would be adopted, respondents might be compelled to stop at so many street crossings as to seriously hamper, and possibly to destroy, its competitive power. It is clearly opposed to public policy to secure to steam railroads monopoly of local pas- senger traffic. As Summers, J., said in Townscnd r.v. t'ir- rfrrille, 78 Ofa'o, 122, 134, 84 N. E. 792, 16 L. R. A.. (N. S.), 914: 'If every city and village through which such a railway (as the one at bar) passes may require its oars to be stopped at every street intersection to take on or to discharge passengers, and to serve the purposes of a street railway, then its usefulness as a means of intemrban transportation may be very much limited, because so much time w r ill be consumed in passing through cities and vil- lages that it will be no longer practicable for many to travel in that way.' "A final consideration is that the ordinance does sub- serve the public convenience in the village. The distance between the place at which the cars are sought to be stopped, George street, and the place at which defendant offers to stop the cars, at Water street, is in considerable. The population between the two points is sparse. How many people would use a stopping point is conjectural; but it is plain that the number would be very small. The inconvenience resulting to the altogether larger number of persons carried to more distant points would inccita- bly tend to decrease the extent of train service. The even- tual diminution in the number and speed of cars, especial- ly if the principle invoked teas applied to a great extent, would appear to more than equal any possible advantage. The weight to be given to this custom is undoubtedly diminished by the fact that this matter rests largely in the discretion of the village council. 82 "After examination of the question as a whole, we have concluded that the proper course is to reverse the de- cision of the trial court. Keversed 1 ." Neither the supreme court of Ohio or that of Minnesota announced the doctrine of the paramount right of the general public, but they did that which makes their de- cisions in these interurban cases much better precedents than any mere statement of the rule could possibly be, for they each based the judgment of the court on the rights of the general public, and made the local rights and regu- lations give way to the more important and superior rights. In short, they enforced the rights of the general public as superior and paramount. It would be difficult to cite more authoritative decisions if we are to pay any attention to the distinctions between actual decisions and obiter dicta, or statments of rules of law, having only a remote bearing on the cases actually decided. The 'Michigan supreme court, in a case recently decided, was evidently actuated by the same considerations as those which influenced the supreme courts of Ohio and Minne- sota. The City of Kalamazoo claiming that the street railway company occupying the streets of the city had no right to operate interurban cars thereon, applied to the circuit court of the county and obtained an injunction restraining the company from operating such cars. As the interurban cars served the people of the city as well as outsiders, it is difficult to understand on what legal ground such relief could be prayed, but the circuit judge granted the injunction. The supreme court issued a mandamus vacating the order for an injunction, on the ground that it did not 83 appear that the citizens of Kalamazoo would suffer any injury if the operation of the cars was continued until the final termination of the case, and an injunction pendente lite was not proper. The court refused to determine the merits of the controversy, although it might have done so as there was no dispute about the facts, and the bill of complaint of the city was devoid of equity, if regard is had for the right of the general public to have the inter-- urban service continued in spite of the litigious idiosyn- cracies and demands of the common council of the City of Kalamazoo. (Michigan United Railways vs. Kalamazoo Circv.it Judge, 123 N. W., 1100.) Wlien a street railway company and a municipality enter into a contract, fixing the terms and conditions on which the company -will be permitted to construct and operate street railways, it must, necessarily be understood that the contract is subject to the paramount rights of the general public, which is the third party to he contract, and is represented by the legislature of the state as its trustee. The obligation resting upon all the parties, at the expiration of any term that may have been agreed upon, is that the company, will do and the municipality and the state will permit to be done, whatever the needs and exigencies of the general public may require. As I have shown by the lake front cases in Chicago, the state itself, as trustee for the general public, has no more power to ignore or violate the trust reposed in it, than has a municipality or any other trustee. Streets and nav- igable waters are constructed or improved, and exist, for the use of the puWic, which is the beneficiary of the trust and the real owner. 84 V. Retrospectively and prospectively considered the Michigan constitution of 1908 strengthens the prop- osition that street grants for public utilities of a per- manent nature necessarily contemplate that the pub- lic service is to continue beyond the period of limita- tion fixed by the local authorities. By far the most important and far-reaching change, made by the new constitution in the constitutional and statutory law of this state, relates to the use of the public streets and highways by public utility corporations. Un- der the constitution of 1850 and the laws passed there- under, the consent of the local authorities to the occu- pancy of the streets, by a street railway or gas company, or other public utility corporation, was not a franchise, but a mere contract between the municipality and the company. The franchises of the company came from the state in virtue of the incorporation of the company under a general law permitting corporate organization. These franchises consisted of the privilege of being a corporation, and the right to conduct the business of own- ing and operating street railways, gas works and mains, or the like, and the consent of the local authorities to the use of the streets, was a mere contract, expressed in an ordinance, and accepted by the company, as the grantee therein. This has been the settled law of this state for many years and because it was the law, it was perfectly competent for the contract to extend beyond the corporate life of the company receiving the grant. The contract was a right of property which survived the dissolution and death of the company. 85 For years it has not been legally correct to speak of these local consents as franchises; but a radical change has been made by the constitution of 1908. It authorizes cities, villages and townships to grant franchises to use the streets and to do a local business therein, but no "municipality" can grant such a franchise for a longer period than thirty years. A security franchise as the basis of municipal ownership bonds can only be granted for twenty years. Strictly speaking, townships are not municipal corporations but the word "municipality" as used in the new constitution includes townships, for it is not reasonable to believe that it was intended to limit grants by cities and villages to thirty years, and to permit townships to make perpetual grants. It is, however, ex- pressly provided that cities and villages can not grant a public utility franchise, that is not revocable, without the approval of three-fifths of the electors voting thereon ; and that in townships a majority vote is sufficient. Another provision prohibits public utility corporations from using the streets of any city, village or township without the consent of the city, village or township, and from transacting any local business therein without first obtaining a franchise therefor from such city, village or township. Thus it appears that the people of the state in their new constitution have authorized townships, villages and cities to grant irrevocable local franchises for thirty years. Corporate franchises granted by the state are subject to the power reserved to the legislature of amendment, alter- ation or repeal, but no such reservation is made in behalf of townships, villages or. cities. On the contrary it is ei- pressly provided that irrevocable grants may be made by them. 86 Here we have two conflicting matters of fact: (1) A grant or franchise to use the streets is more difficult to obtain, because it must be approved by the electors in an election; (2) But a franchise that has been so approved is sacred and inviolable, and wholly beyond the reach of any power in the state. What effect can this change in the legal situation have upon the rates the public must pay for riding on the street railways, or for a thousand feet of gas? Under the constitution of 1850 and the laws passed in pursuance thereof, it was not contemplated that street railways or gas works and mains, should cease to exist when the corporation, owning and operating them ex- pired, or the local contracts under which they were per- mitted to occupy the streets came to an end. On the con- trary it was contemplated and expected by all the parties to these grants and contracts, that the public service should go on forever. It was not contemplated that when the service these utility corporations perform should be- come thousands of times more important and desirable for the people, they should cease to exist and their plants and conveniences go out of business. While the fran- chises of the corporation might expire, and the local con- tracts might come to an end by their own limitation in point of time, yet, it was implied and understood that the street railways and gas works should continue in oper- ation as long as the people need transportation and light, that is, as long as the people shall go and come, and night follows the day. Can this be said of grants to be made under the situa- tion of 1908? Does not that instrument in the time limi- tations placed upon grants of franchises by townships, villages and cities mean that such franchises shall wholly 87 cease to exist at the expiration of the twenty or thirty years for which they may be granted? Prior to the taking effect of the new constitution, Jan- uary 1, 1909, there was no constitutional or statutory pro- vision placing a time limit on local grants to public serv- ice corporations. In Ohio they have a stautory limit of twenty-five years, but in Michigan there has been nothing of the kind prior to the new constitution. The local con- sents have been in some cases expressly made perpetual, in other cases they were made without any limit and were therefore perpetual, and in other instances a limit of twenty or thirty years or other period of time was fixed by the agreement of the parties, accompanied with such implied obligations as were inferable from its express terms, the subject matter, and the relation of the parties toward each other and the general public. It would be difficult to foretell what the supreme court of the state of thirty or forty years hence will take of a municipal franchise granted under the new constitu- tion, but we can now form an intelligent and trustworthy opinion of the intention of the constitutional convention and of the people, in adopting and approving time limita- tions on all local franchises granted by cities, townships and villages. For some fifteen or sixteen years preceding the conven- tion, a street railway controversy had been going on in the city of Detroit, and the corporation counsel of the city and some other delegates were sent to the convention with special reference to that controversy, which became one of the leading subjects of discussion in the delibera- tions of the convention. The constitution makers could have expressed their views in two different ways. They could have recognized the permanent nature of investments in public utilities, 88 and at the same time protected the public by a simple pro- vision that all public service corporations should serve the public efficiently and that in the absence of a local contract or franchise fixing rates and fares reasonable compensation only for the service rendered should be charged by them, or they could insert provisions in the constitution fixing time limitations on local grants. They chose the latter course, but it does not follow that they did this with the view of putting all investments in pub- lic utilities, at the mercy and caprice of the localities, whenever a local franchise expires. That such was the scheme of some members of the convention is beyond ques- tion, but it is very doubtful whether the convention as a whole so understood the provisions, and it is certain that the people had no such view when they adopted the con- stitution. It is hardly within the limits of legitimate argument to contend or assume that the people intended to confer any such absolute arbitrary and confiscatory power upon townships, villages and cities. The constitutional conven- tion and the people must have known that it would be im- possible to enlist capital in a public utility, if the entire investment must be earned in net profits over and above operating expenses and interest in thirty years, which will be the case, if the plant of the public utility is to have no value at the end of that period, except what it may be worth as junk. On the other hand they must have realized that a secur- ity franchise collateral to the property of a public utility would be of little value, if at the end of twenty years the municipality had the power to almost completely destroy the value of the physical property. Is it reasonable to believe that street railway bonds, whether issued by a city, or by a private corporation, with 89 no other security than a twenty or thirty-year franchise, can be sold in any money market in the world, unless the rates or fares have been fixed high enough to allow the whole investment to be realized as profits within the life of the franchise? It may be urged that private capital will be willing to run the risk of getting a new franchise at the expiration of an old one, but what rates of interest and compensa- tion will it charge for running such a risk? If the city of Detriot should seek to acquire by pur- chase or condemnation the street railways within, or part- ly within and partly without the city, how is it going to get the money to pay for the property, with no other ulti- mate security, than a twenty-year franchise and the tan- gible property as junk? And if the Detriot United Railway surrenders its pres- ent franchises and accepts a new one under the constitu- tion of 1908, how is it going to borrow any money to make the extensions and betterments the increase in the popu- lation and business of the city has made necessary, with no security but a franchise which expires absolutely in thirty years? These are important questions, as it is very plain that the new constitution is a barrier to low rates of fare unless some scheme can be devised by which the perma- nent investment in a public utility can be saved from de- struction at the mere unrestrained will of the locality when a municipal franchise expires. The only possible way of avoiding this dilemma is to adopt the very doctrine for which I contend, viz: That the constitutional and statutory provisions limiting the life of local franchises to twenty and thirty years, were not intended to be absolute limitations, but that all local franchises carry with the grant an implied covenant on 90 the part of the grantee that at the expiration of the period agreed upon, it or its successors and assigns will continue the public service, and an implied covenant on the part of the municipality that it will not do anything to pre- vent the company from so doing. The public will be protected because the company as a public utility corporation will be legally bound to per- form the service it renders the public for reasonable com- pensation, and it can be assumed that in the absence of a local contract, or franchise, fixing the rates of compen- sation, the state will interpose its authority. It has already done so, as far as street railway com- panies, whose business is not wholly within the corporate limits of a single municipality, as it has conferred author- ity on the Michigan State Railroad Commission to fix, in the absence of local agreements, rates of fare for street railway companies, not "engaged solely in the transpor- tation of passengers within the limits of cities or within a distance of five miles of the boundaries thereof." (Pub- lic Acts, 1909, p. 708.) Some persons have assumed that the city of Detroit can borrow money to pay for the street railways, on a security franchise for twenty years, because the Detroit United Railway was able to borrow millions of money on local grants expiring in fifteen or twenty years, but the local grants under which the Detroit United Railway owns and operates street railways in the city of Detroit, were made under the constitution and laws in force prior to the adoption of the constitution of 1908, and neither the company or the bond holders or the city expected that a renewal of the grants on reasonable terms could not be obtained. The grants carried with them the neces- sary implication that if the terms for a renewal could not be agreed upon, the company was to go on with the 91 operation of its lines, after the time limits expired, but subject to its obligation as a common carrier to charge reasonable fares. This implication was necessary and legitimate, in order to preserve the rights of the public, and to prevent the city from having and exercising the power to confiscate or destroy a very valuable property devoted to the public use. And a like implication in the case of local franchises granted under the constitution of 1908, is equally neces- sary and legitimate in order to prevent that constitution from becoming a delusion and a snare, and from being properly characterized as the most arbitrary, unjust and impolitic, constitution ever adopted in the United States. Having considered these provisions of the new consti- tution from a radical point of view, I now pass to their consideration from a more conservative and much better standpoint. In my judgment these new constitutional limitations do not accomplish as much as is claimed for them. One thing they certainly do. They put an end to what- ever power the legislature had under the constitution of 1850, to grant the use of the streets to public service cor- porations without the consent of the local authorities. But could the legislature itself under the constitution of 1850, grant the use of the streets to street railway cor- porations? I have had occasion to make a strong con- tention to the contrary, based upon the provisions of the constitution of 1850 localizing the public highways of the state. In the first place the state being prohibited from engag- ing in any work of internal improvement could not itself improve the highways. The legislature \vas prohibited from vacating or altering any road laid out by commis- sioners of highways or any street in any city or village 92 or in any recorded town plat. The commissioners of high- ways were township officers, designated by the constitu- tion, who could not be wholly deprived of their powers; and the boards of supervisors of counties, were given power to provide for laying out highways and the con- struction of bridges. Under these restrictions on the legislative, the town- ships, cities and villages of the state could not be de- prived of a reasonable control of their highways and streets, and the new constitution in reserving to them such reasonable control, simply gives expression to and affirms that doctrine. (Art. VIII, Sec. 28.) It is true, the supreme court sustained the power of the legislature under the constitution of 1850 to grant the use of 'the streets to telephone and telegraph companies without the consent of the local authorities, but such com- panies make very little use of the streets, and their poles and wires are not an improvement of the streets for high- way purposes, like the tracks of a street railway company. A distinction might have been made between street rail- ways, and other uses of the street not facilitating public travel thereon, but the question never arose and was of no practical importance because in the case of street rail- ways the legislature did always require the local assent. The new constitution is not as revolutionary in this re- spect as one might at the first blush believe it to be. Whether the provision requiring a local franchise is more revolutionary depends upon what may be covered by a city, village or township in making a local grant. The legislature retains its power to provide by general laws 1 for the incorporation of street railway companies and other corporations, including its right to amend, alter or repeal such laws. Can the local authorities in granting a local franchise abridge the power of the legislature to amend, alter or repeal; and if a local franchise fixed rates of fare or charges, or imposed regulations concerning, say, the pav- ing of the streets, could not the legislature change the rates of fare or charges, or the paving regulations, not- withstanding the terms of the local franchise? My opinion is that the legislature could do so. (In- dianapolis vs. Navin, 151 Ind., 139; Stanislaus Co. vs. Sa-n Joaquin Etc. Co., 192 U. 8., 201 ; Fair Haven R. R* Co. vs. New Haven, 203 U. S., 379.) It must be remembered that the power to amend, alter and repeal was reserved 1 in constitutions and statutes, on the suggestion of Justice Story in- the Dartmouth Col- lege case, to prevent the charters of corporations from becoming inviolable contracts, and this object would be defeated, if municipalities in making street grants could put them beyond the reach of the power of the legislature to amend, alter or repeal. That power must be exercised subject to the rights of property guaranteed by the state and federal constitu- tions, but with the restrictions thus imposed 1 , the legis- lature retains full power. Local street grants, contracts and franchises, are neces- sarily subject to the power of legislature, and while these must be regarded as inviolable contracts as far as action by the municipalities is concerned, it cannot be truth- fully said, that the legislature is equally without power to change the terms and conditions of such contracts. In Taylor vs. Street Railway/ Co., 80 Mich., 77, the supreme court of this state sustained the power of the legislature to modify the local contract. 94 Justice Grant, for the court, said: "The power to grant immunity to such corporations from legislative regulation and control is an important one. A village of a few hundred inhabitants may in much less than thirty years grow to a city of many thou- sands. Bay City well illustrates this fact. What in the one would cause no damage might in the other cause great damage. The village council cannot well provide regulations and ordinances applicable to a large city. It is, therefore, highly important that the legislature should retain the power to pass enactments for the con- trol of these quasi public corporations suitable to the changed state of affairs." In the Indianapolis Street Kailway case of Citizens Street R. Co. vs. City Ry. Co., 64 Fed., 647, the local grant was for thirty-seven years, and the court held that limitation was invalid, and the franchise perpetual, but subject to the power of the legislature. Woods, Circuit Judge, said: "Subject to the reserved power of the legislature to amend or repeal the act, perpetual corporate existence was given in explicit terms; and, in the absence of express or implied limitation thereon, the necessary presumption is that the franchise granted was intended to be of like duration, subject only to legislative revocation. It is not to be supposed that the legislature intended that there should be corporate existence without a franchise the only reason for such existence. It is not a question of perpetuity or of irrevocable right. If it were, different rules of construction would prevail. No presumption or inference could be allowed in favor of a perpetual right, and every reasonable intendment against it should be in- dulged. But danger in that direction lurks rather in the 95 supposed power of the common council. If it had author- ity to agree to a franchise for thirty years, it might, with equal collusiveness, have stipulated for one of sixty or ninety years, or any longer term, imposing upon the city, it might be for generations, the evils of a monopolistic perpetuity. Thirty years are too many for a burdensome or unjust grant. As was> said in Taylor vs. Railway Co., 80 Mich., 77, 45 N. W., 335, it is highly important that the legislature should retain the power to pass enact- ments for the control of these quasi public corporations suitable to changed conditions of affairs. The village or small city cannot well provide regulations and ordinances applicable to a large city. "If agreements by common' councils like the one in question are authorized 1 and binding, they must, when made, operate to suspend, pro tanto, the reserved power of the legislature, by repealing the act, to terminate the life of companies organized under it. They are incon- sistent with that power. On the contrary, if, when made, the agreements create no vested right because made sub- ject to the power of the legislature to revoke or modify them, then in legal contemplation they are without force, and the power of city councils to make them is a mere pretense. It is a delegated power to make an agreement which cannot bind, or ought not to bind, one party, the corporation, because it does not bind the other party, the state. In respect to such power the city is the agent of the state; and, besides being anomalous, the proposition that the city and company will be bound by such con- tracts, and the state not bound, is manifestly unju.pt and unfavorable to the public interests." And this power of the legislature is my answer to the proposition heretofore stated that when a local franchise is granted with the approval of the electors it is beyond any power in the state. 96 On this view of these new constitutional provisions the legislature can grant relief from an improvident local franchise, whether for thirty years or any less period. The danger of a thirty-year grant, which is irrevocable and inviolable, is that long before the thirty years have expired, the terms of the franchise may become alto- gether unreasonable and unjust to either the one or the other of the parties to it. The construction which retains the power of the legis- lature, is much more to be preferred than that which per- mits either the grantor or the grantee to bind itself absolutely for thirty years. 97 VI. Conclusive proof of the implied obligation of the city of Detroit to permit the street railway service to contiune after Nov. 14, 1909, is found in the fact that the public service is of such paramount and over- whelming importance that the common council of the city could not be induced, with any intention that its order would be obeyed or enforced to pass a reso- lution directing the Detroit United Railway to stop operating its cars and to remove its tracks and over- head structures from the streets. This is a practical and most instructive illustration of the obligation 1 of Tx>th> the city and 'the street railway com- pany to serve the general public. That the common council of the city of Detroit appre- ciates the nature of the dilemma with which it is con- fronted, is shown by an ordinance which it has passed, but was prevented from giving effect 1>y publication, by an injunction issued by the United States circuit court for the eastern district of Michigan at the suit of the Guaranty Trust Company of New York. The first >and second sections of that ordinance are as follows : Section 1. On and after the passage of this ordinance, every street railway company, its successors or assigns, operating street railways in the city of Detroit, which operates any street car on any street in the whole or any part of which its right to operate cars has expired, or on any street in the whole or any part of which its right to operate street cars was never legally obtained, shall oper- ate all of its cars over the whole of said line or route of 98 which said street is a part upon the following terms and conditions : Section 2. The operation of a single car by said cor- poration on any street over that portion where its right to operate street cars has expired, or on any street over that portion where its right to operate street cars was never legally obtained, shall constitute an acceptance of the terms herein set forth. Other sections obligate the street railway company to sell on its cars five tickets for fifteen cents, with rights of transfer to any other line or route operated by the company. Other obligations are also imposed on the street rail- way company. Although the city has never been able to give this or- dinance effect and force, it may be referred to for the purpose of showing the attitude of the municipal author- ities. It is a frank and open confession on the part of the common council that it does not propose to take the responsibility of ordering the Detroit United Railway to stop the service on the lines in question. But it is a very simple and plain proposition that the city cannot force a contract on the Detriot United Rail- way in any such way. The Detroit United Railway being in the adverse and hostile possession of the streets and rights in controversy, it is legally impossible to raise any implied or express promise on its part to pay rent or do any other thing in recognition of the alleged superior title and claims of the city of Detroit. The attitude of the parties toward each other forbids the creation of any new contract between them, and the 99 declaration of one of the parties that a continuance of the hostile relations shall amount to an acceptance of con- tract obligations, is a manifest absurdity. The Supreme Court of Michigan has so held. (Hogsett vs. Ellis, 17 Mich., 351-367; Wilmarth vs Palmer, 34 Mich., 347.) lu Hogsett vs. Ellis, Judge Christiancy said: "It is very clear that assumpsit for use and occupation cannot be maintained where the relation of landlord and tenant did not exist during the occupancy, or when the holding was adverse to the owner, because, among other reasons, a disputed title can not be tried in an action of assumpsit," In Wilmarth r*. Palmer, Judge Campbell said: "The suggestion that the tenant held adversely would destroy the relation of landlord and tenant entirely, and be equally fatal as an objection to recovering rent." The law applicable to the case was settled by the Supreme Court of Michigan as long ago as Ward vs. War- ner, 8 Mich. 508. In that case the owner of a private canal which had been cut on his land and for the major part at his ex- pense, gave notice that parties using the canal would be charged twenty-five cents for each 1,000 feet of logs that they might run through it. Some of the parties notified replied that they denied the right of the owner to charge tolls for the use of the canal. In an action of assumpsit to recover compensation for a subsequent use of the canal, the court, by Chief Justice Martin, among other things said : 100 "For the purpose of a revocation of the general li- cense, and a declaration that compensation would there- after be demanded, the notice, having come to the knowl- edge of the defendants, was sufficient and competent to impose upon them a liability to pay for its use, accord- ing to the terms of the notice, if subsequently used, Jiad the right to demand any compensation been acknowl- edged, or recognized and not denied; for in such case the law will presume that they used it upon the terms imposed, and raise the corresponding duty, and imply the contract accordingly. But in the present case all such implication is precluded by the fact that the de- fendants denied any right to demand compensation for the use, and used it in defiance of the plaintiff's claim, and under the claim of right in themselves; and they cannot therefore be presumed to have acceeded to the terms imposed. "If, then, any duty can be implied, it is to pay what such use is reasonably worth. Now, as already re- marked, the plaintiff had a right to require payment, as a condition to the use of the canal; and had he re- quired such, but fixed no price, and the defendants had used it with knowledge of such terms, and under the condition, beyond doubt the duty would be raised to pay what such use would be reasonably worth; but if the effect of a denial of the right to demand compensation, and use of the canal in contravention of the claims as- serted by the plaintiff, will prevent the implication of a duty to pay a specific rate imposed, how can it be said that it will still raise the duty of paying according to its w r orth? If the denial goes to anything, it must go to the whole claim of the plaintiff for compensation, and will preclude every presumption of the recognition of a duty upon which a contract can be implied; while, on the other hand, if the law will imply a duty, it will 101 imply one co-extensive with the terms imposed. It goes to the whole remedy, whether for a specific price, or for reasonable compensation. But the law implies the duty only where the right of dominion over the subject mat- ter is conceded, or not questioned; and never where the use is under an adverse claim of right,, or a denial of that asserted." The common council of the city of Detroit has still further recognized the paramount importance of the public service by passing the preambles and resolutions of October 19, and October 26, 1909, and by failing to reject and tacitly accepting the counter proposition of the company contained in the communication and notice served on the city on the 13th day of November, 1909, and printed in the published proceedings of the council of November 16, 1909. PREAMBLE AND RESOLUTION. October 19, 1909. By Aid. Heineman: Whereas, Street railway franchises of the Detroit United Railway or its predecessor in title, and all right to operate street railways upon the following streets and portions of streets in the city of Detroit have heretofore expired, or will have expired on November 14, 1909, to- wit : MICHIGAN AVENUE. The north track from Woodward avenue to Rowland street, and from Porter street to Livernois avenue; the south track from Abbott street to Livernois avenue. 102 CONGRESS AND BAKER STREETS. On Mt. Elliott avenue, from Jefferson avenue to Fort street east; on Fort street east to Brush street; on Brush street, from Fort street east to Congress street. The north track on Congress street, from Brush street to Woodward avenue; all tracks from Woodward avenue westerly to Sixth street ; on Brooklyn avenue from Porter street to Baker street; on Baker street from Brooklyn avenue to Twenty-fourth street; on Twenty-fourth street from Baker street to Dix avenue; on Dix avenue from Twenty-third street to Livernois avenue. CASS AVENUE AND THIRD STREET, On Larned street from Third street to Griswold street; on Griswold street from Larned street to State street; on State street, a single track from Griswold street to Rowland street; all tracks on State street, between Row- land street and Cass avenue; on Cass avenue from State street to Ledyard street; on Ledyard street from Cass avenue to Third avenue; on Third avenue from Ledyard street to Holden avenue; on Holden avenue from Third avenue to Greenwood avenue. TRU-MBULL AVENUE. From Abbott street northerly to the railroad crossing. ATWATER STREET. From Woodward avenue to Brush street; on Brush street from Atwater street to Jefferson avenue. WOODWARD AVENUE. From Pallister avenue to the railroad crossing; from the railroad crossing southerly to Grand River avenue; from Fort street west southerly to the river, all tracks except one. 103 BRUSH AND RUSSELL STREETS. On Brush street from Gratiot avenue to Kowena street ; on Kowena street from Brush street to St. Antoine street; on St. Antoine street from Rowena to Farns- worth street; on Farnsworth street from St. Antoine street to Russell street; on Russell street north from Farnsworth street to the end of the line. CHENE STREET. On Atwater street from Jos. Campau avenue to Chene street; on Chene street from Atwater street northerly to Newton street. JEFFERSON AVENUE. From a point 194 feet west of the west line of Fifth street to Concord avenue; from Field avenue to a point 200 feet east of Baldwin avenue. GRATIOT AVENUE. On Monroe avenue, the northwest track from Wood- ward avenue to Farmer street; on Monroe avenue, both tracks from Farmer street to Randolph street; on Ran- dolph street from Monroe avenue to Gratiot avenue; on Gratiot avenue from Randolph street to Sheridan ave- nue. MACK AVENUE. From Gratiot avenue to Baldwin avenue. Therefore be it Resolved, and the common council of the city of De- troit especially declare, That all right and title on the part of said company, the Detroit United Railway, to such franchises and tracks maintained thereunder in the said streets above mentioned, have heretofore termin- ated or will have terminated on November 14, 1909; and that any further use on the part of said company of said 104 tracks located as above set forth, where the right to operate cars has expired, is by sufferance only and with- out express or implied waiver upon the part of the city of Detroit to enforce its rights in regard to such streets and to re-possess itself of the same; and that any further use on the part of said company of said tracks where the right to operate cars will have expired November 14, 1909, after said date, is by sufferance only and without express or implied waiver upon the part of the City of Detroit to enforce its rights in regard to such streets and to re-possess itself of the same. Adopted as follows: Yeas Aid. Allan, Burton, Deimed, Ellis, Field, Friewald, Garvey, Glinnan, Goeschel, Grindley, Gutman, Harpfer, Heineman, Keating, Koenig, Konkel, Korte, Lempke, Os- trowski, Owen, Reinhardt, Rosenthal, Rutter, Schulte, Shapland, Skrzycki, Theisen, Thompson, Tossy, Trevor, Vernor, Walsh, Watson, Zoeller, Zink and the President pro tern 35. Nays None. PREAMBLE AND RESOLUTION. October 26, 1909. By Aid. Heineman: Whereas, There is now pending in the Circuit Court of the United States for the Eastern District of Michi- gan, Southern Division, a case entitled: Guaranty Trust Company of New York vs. City of Detroit and others, which involves the validity of an ordinance passed by the common council of the city of Detroit and commonly called the Hally Ordinance, which ordinance among other things prescribed the terms and conditions under ior> which a street railway might continue to operate cars when and where its franchise right to do so had ex- pired; and. Whereas, The court has issued a temporary injunction whereby the city of Detroit, its agents, servants and at- torneys are strictly restrained and enjoined from pub- lishing or attempting to publish that ordinance and are likewise enjoined from enforcing or attempting to en- force by any means whatsoever the said ordinance; and Whereas, Said ordinance is without force or effect until published and it is the duty of the city of Detroit to respect and obey the mandate of the court; and Whereas, The franchise right of the Detroit United Railway, as the successor in title, to operate a street railway on Woodward avenue from Pallister avenue to the railroad crossing expired July 13, 1906, and has not been renewed by the City of Detroit ; and Whereas, The franchise right of the Detroit United Railway, as the successor in title, to operate a street railway line on Twenty-fourth street from Baker street to Dix avenue, and on Dix avenue from Twenty-fourth street to Livernois avenue, either expired on April 17, 1906, or will have expired on November 14, 1909, and the city of Detroit has granted no franchise to operate cars on said streets after November 14, 1909 ; and Whereas, The franchise right of the Detroit United Railway, as the successor in title, to operate a street railway line on the following streets and portions of streets will have expired on November 14, 1909, to-wit : MICHIGAN AVENUE. The north track from Woodward avenue to Rowland street, and from Porter street to Livernois avenue; the south track from Abbott street to Livernois avenue. 106 CONGRESS AND BAKER STREETS. On Mt. Elliott avenue, from Jefferson avenue to Fort street east; on Fort street east to Brush street; on Brush street, from Fort street east to Congress street. The north track on Congress street, from Brush street to Woodwad avenue; all tracks from Woodward avenue westerly to Sixth street; on Brooklyn avenue from Porter street to Baker street; on Baker street from Brooklyn avenue to Twenty-fourth street; on Twenty-third street to Dix avenue from Baker street; on Dix avenue from Twenty-third street to Twenty-fourth street. CASS AVENUE AND THIRD STREET. On Lamed street from Third street to Griswold street; on Griswold street from Lamed street to State street; on State street, a single track from Griswold street to Rowland street; all tracks on State street, be- tween Rowland street and Cass avenue; on Cass avenue from State street to Ledyard street ; on Ledyard street from Cass avenue to Third avenue; on Third avenue from Ledyard street to Holden avenue ; on Holden avenue from Third avenue to Greenwood avenue. TRUMBULL AVENUE. From Abbott street northerly to the railroad crossing. ATWATER STREET. From Woodward avenue to Brush street; on Brush street from Atwater street to Jefferson avenue. WOODWARD AVENUE. From the railroad crossing southerly to Grand River avenue; from Fort street west southerly to the river, all tracks except one. BRUSH AND RUSSELL STREETS. On Brush street from Gratiot avenue to Rowena street ; on Rowena street from Brush street to St. Antoine 107 street; on St. Antoine street from Rowena to Fansworth street; on Farnsworth street from St. Antoine street to Russell street; on Russell street north from Farnsworth street to the end of the line. CHENE STREET. On Atwater street from Jos Campau avenue to Chene street; on Chene street from Atwater street northerly to Newton street. JEFFERSON AVENUE. From a point 194 feet west of the west line of Fifth street to Concord avenue; from Field avenue to a point 200 feet east of Baldwin avenue. GRATIOT AVENUE. On Monroe avenue, the northwest track from Wood- ward avenue to Farmer street; on Monroe avenue, both tracks from Farmer street to Randolph street; on Ran- dolph street from Monroe avenue to Gratiot avenue; on Gratiot avenue from Randolph street to Sheridan ave- nue. MACK AVENUE. From Gratiot avenue to Baldwin avenue. And the city of Detroit has granted no franchise right to operate cars on said streets or portions of streets after November 14, 1909 ; and Whereas 1 , All of said streets and portions of streets would after November 14, 1909, be subject to the terms and conditions of the Hally Ordinance, if the same is n valid enactment and is accepted by the Detroit United Railway; and Whereas, No term franchise or agreement under the 108 revised constitution can be valid or binding unless the franchise or agreement shall have first received the affirmative vote of three-fifths of the electors of the city; and Whereas, Under the revised constitution every street railway company is denied the right to use the highways, streets, alleys or public places of any city without the consent of the duly constituted authorities of such city, and is denied the right to transact a local business in the city without first obtaining a franchise therefor from such city. Therefore, be it Resolved, That consent, permission and authority is hereby granted to the Detroit United Eailway to con- tinue from day to day after November 14, 1909, to oper- ate its cars upon the streets and portions of streets above set forth under the same terms and conditions, except as to percentages on gross receipts now prevail- ing in the City of Detroit, whether due to contract agree- ment or not, upon the payment weekly by the Detroit United Railway to the city treasurer of the sum of three hundred dollars for each day that the streets and por- tions of streets above set forth are used by said company in the operation of its railway or railways ; and be it fur- ther Resolved, That this resolution is subject to revocation at any time at the will of the common council or of the people of the city of Detroit. Adopted as follows: Yeas Aid. Allan, Burton, Deimel, Ellis, Field, Gar- vey, Glinnan, Goeschel, Grindley, Gut man, Harpfer, Heineman, Keating, Koenig, Konkel, Korte. Lempke, Os- trowski, Owen, Reinhardt, Rosenthal, Schulte, Shapland, Skrzycki. -Theisen, Thompson, Trevor, Vernor, Walsh, Watson, Wing and the President 32. Nays None. 109 RECONSIDERATION. Aid. Field moved to reconsider the vote by which the resolution was adopted. Aid. Heineman moved to suspend Rule 28 for the pur- pose of indefinitely postponing the motion to reconsider, which motion prevailed. Aid. Heineman then moved that the motion to recon- sider be indefinitely postponed, which motion prevailed. The regular order was resumed. COMMUNICATION AND NOTICE. November 13, 1909. To the Honorable the Mayor and Common Council: Gentlemen: This company has been informed of the passage by your honorable body of two certain resolu- tions concerning the operation by the company of its lines of street railway on certain streets, the purpose of said resolutions being intended to express certain claims made by your honorable body in behalf of the city respecting the right of the company to operate its cars on said certain streets, and also to state certain terms and conditions which may be enforced against the company after the 14th of November, 1909. It is noted that one of these resolutions, that adopted by your honorable body October 19, 1909, which only came to the knowledge of this company through the or- dinary channels of publication, states that certain fran- chises have heretofore terminated or will have termin- ated on November 14, 1909, and that any further use by the company of its tracks and franchises on the streets 110 and parts 1 of streets therein named, will be by the suffer- ance only and without express or implied waiver on the part of the city respecting its rights in regard to such streets. The other resolution, namely, that passed at a meeting of your honorable body October 26, 1909, a certified copy of which was served on this company November 11, 1909, recites that the city claims that on the certain streets and avenues therein named that no franchise right has been granted to operate cars on said streets or parts of streets after November 14, 1909, and said resolution pro- vides that the continued operation of cars by the com- pany on said streets after said date, shall be conditioned on their operation by the company under and subject to all the terms and conditions under which they are now operated, except as to the collection of a specific tax as heretofore provided, and upon an added condition that the company shall pay to the city a stated sum of three hundred dollars ($300.00) per day. The company does not agree with the views and claims stated in said resolutions, which, in its opinion, are con- trary to the rights of the company, and believes that after due investigation and consideration, you will con- cede that your position is erroneous. The company, however, recognizes that you are equally desirous with the company that the public shall not be deprived of any service that they have heretofore enjoyed, and that the interest, comfort and convenience of the public will be best served by continuing uninterruptedly the service as now rendered, pending the results of an adjustment of all matters of difference which it is believed all par- ties desire. The company, therefore, without waiving any rights or privileges to which it is entitled under present con- ditions, and conceding that the city does not waive any Ill of its rights or privileges, and without prejudice to the rights or privileges of either the city or the company, will, in the exercise of its rights and duties, continue to maintain and operate the lines in question under the terms and conditions under which the same are now maintained and operated, and to render service as hereto- fore, and for the reasons above indicated and to avoid litigation will in addition pay to the city the sum of three hundred dollars ($300.00) per day f&r the time being, or until such time as the relations between the company and the city are readjusted. Yours very truly, J. C. HUTCHINGS, President. Ordered printed in proceedings and placed on file. By this truce, neither the city of Detroit or the De- troit United Railway gained anything. The general public gained everything. The right of the people to continue to go and come on the street cars was recog- nized by both combatants. It is like a truce between two opposing armies, to permit them to perform the higher duty of removing their dead and wounded from the field of battle. I submit this question. Which would be more in ac- cord with the American system of jurisprudence, and with the sentiments of a thoroughly civilized race of men, to make the truce permanent, and settle the con- troversy by submitting the question whether the rates of fare charged by the street railway company are excessive or not, to a court of competent jurisdiction, possessed of the necessary legal machinery, and charged with the duty, of doing equal and exact justice, or to renew a barbarous struggle, in which each of the husky warriors seeks to deride to issue himself, and proposes to use 112 whatever power lie may possess to accomplish bis own purpose. Arbitration or war! Which is the best? The constitution and laws of Michigan rightly con- strued do not permit a street railway war at the ex- piration of each local grant or franchise. A matter so important to the general public, to the people of a muni- cipality, and to the street railway company concerned, should not be made the football of local politicians, the food of the sensational press, and the war cry of schem- ing and ambitious demagogues. The city of Detroit is Charybdis. The Detroit United Railway is Scylla. The Public is Odysseus sailing, be- tween them. He will lose some of his men to Scylla, but he will escape from the engulfing water of Charybdis. Earth Shaker himself cannot stop Odysseus, the pub- lic, from navigating the streets of Detroit. Of his ship this may be said: "Now from the rocks the rapid vessel flies, And the hoarse din like distant thunder dies; To Sol's bright isle our voyage we pursue, And now the glittering mountains rise to view." Odyssey, Pope's Translation, XII. Since the foregoing paragraphs were written and on December 14, 1909, just thirty days after the alleged expiration of the local grants in question, the common council passed a resolution, introduced by Aid. Glinnan, and approved by the mayor, and which resolution as re- ported by the committee on franchises, with the action of the common council thereon, is as follows: 113 GLIXXAX RESOLUTION. December 14, 1901K To the Honorable Common Council : Gentlemen: Your committee on franchises, to whom was referred the resolution presented by Aid. Glinnan at the session of the common council of November 30th (J. C. C., p. 1586), respectfully report that we have given the matter careful consideration. Your committee has been in consultation with the corporation counsel on this matter and is in receipt of a written opinion, under date of December 13, 1909, on the various legal points, etc., involved. This resolution provides for a lower rate of street car fare, pending the permanent settlement of the entire street railway question, and is, in the opinion of your committee a proper measure for adoption by your honorable body. A few changes in the phraseology and certain other amendments are recommended by the cor- poration counsel and have been incorporated into the resolution which is herewith submitted as amended with the recommendation that it be adopted. Respectfully submitted, JOHN HARPFER, THOS. E. GLINNAN, GEO. A. OWEN, Louis E. TOSSY, Committee on Franchises. Accepted and leave being granted the following resolu- tion was offered : By Aid. Harpfer : Whereas, The franchise right of the Detroit I'liim! Railway, as successor in title, to operate a street railway on certain streets -and avenues in the City of Detroit, 114 some of which are hereinafter designated, has now ex- pired, and ceased to exist, and, Whereas, negotiations and litigation looking toward a satisfactory arrangement for the operation of street cars on said several streets and avenues in the city of Detroit, either by franchise right or otherwise, are in progress; and, Whereas, said arrangement has not yet been perfected and no definite information is at hand as to w r hen said arrangement will be perfected; and, Whereas, it is contrary to the laws and the constitution of the State of Michigan for the said Detroit United Rail- way or any other person, persons, corporation or com- pany to operate a street car line upon and along any street or avenue in the city of Detroit without authority from the "said city; and, . Whereas, there is now in force a temporary arrange- ment or agreement, embodied in a resolution of this body which was adopted on the 26th day of October, 1909, and accepted by the Detroit United Railway, between the city of Detroit and the Detroit United Railway, whereby the said Detroit United Railway is permitted to operate street cars upon and along certain streets in the city of Detroit upon the payment by the Detroit United Railway to the city of Detroit of the sum of $300 per day, payable weeKly, which said arrangement or agreement in no way effects pending litigation and negotiations looking to a permanent settlement of the differences between the city of Detroit and the said Detroit United Railway. Therefore, Be it Resolved, That in addition to all other requirements, and in addition to said resolution adopted the 26th day of October, 1909, and referred to commonly as the "rental resolution," which was passed as a tem- porary arrangement pending litigation and negotiation, consent, permission and authority is hereby granted to 115 the Detroit United Railway to continue from day to day after the acceptance of this resolution, as hereinafter designated, to operate its cars upon and along those streets, avenues and portions of the same hereinafter set forth, upon the following terms and conditions as to rate of fare, to- wit: The rates of fare for a single ride for a continuous trip in any one direction over any one of the streets, avenues, or portions thereof hereinafter set out, shall be 5 cents, for which the passenger shall be entitled to such ride and to a ticket or transfer check to be given to the passenger by the conductor on the car, good for a ride over any intersecting line or route operated by said Detroit United Railway, provided such ticket is presented on the next regular car on such other route within 15 minutes after such passenger leaves the car on which he paid the 5-cent fare and received such transfer check. Said Detroit United Railway shall keep on all cars operated pursuant to this resolution, between 5:15 a. m. and 7 :30 p. m. of each day, tickets to be sold in strips or packages of 8 for 25 cents, each of which tickets shall be accepted by said Detroit United Railway for a single fare in either direction over the line or street on which it is presented, and which is hereinafter set out. Said Detroit United Railway shall also keep on sale on its cars operated in pursuance of this resolution, be- tween the hours of 7:30 p. m. and 5:15 a. m. of each day, tickets to be sold in strips or packages' of six tickets for 25 cents, each of which tickets shall be accepted' by the said Detroit United Railway for a single fare in either direction over the street or line on which it is presented, and which is hereinafter set out in this resolution, and a passenger presenting such a ticket shall be entitled to a transfer good for a continuous ride over any other line or route operated by said Detroit United Railway for the same or lower rate of fare, as provided in this resolution, 116 and intersecting the street or line of the car upon which the passenger presented such ticket and requested such transfer check. The streets and avenues and portions thereof above re- ferred to are described as follows, to-wit : MICHIGAN AVENUE. The north track from Woodward avenue to Rowland street, and from Porter street to Livernois avenue; the south track from Abbott street to Livernois avenue. GRATIOT AVENUE. On Monroe avenue the northwest track from Wood- ward to Farmer, both tracks from Farmer to Randolph; on Randolph from Monroe to Gratiot avenue; on Gratiot from Randolph street to Sheridan avenue. MACK AVENUE. From Gratiot avenue to Baldwin avenue. BAKER STREET. On Brooklyn avenue from Porter street to Baker street ; on Baker street from Brooklyn to Twenty- fourth street; on Twenty-thrid street from Dix to Baker street; on Dix from Twenty-third to Twenty-fourth street. CHENE STREET. On Atwater street, from Jos. Campau avenue to Cheue street; on Chene street from Atwater street northerly to Newton street. BRUSH STREET. On Brush street from Gratiot avenue to Rowena street ; on Rowena street from Brush to St. Antoine street; ou St. Antoine from Rowena to Farnsworth street; on Farnsworth from St. Antoine to Russell street; on Rus- sell street from Farnsworth northerly to the end of the line. 117 ATWATEE STREET. From Woodward avenue to Brush street; on Brush street from Atwater street to Jefferson avenue. WOODWARD AVENUE. From the railroad crossing southerly to Grand River avenue and from Fort street west southerly to the river, all tracks except one. Be it further resolved that the common council reserves the right to at any time repeal this resolution, and it is understood that its passage by this body is not to alter or amend or to be a substitute for the ordinance passed at a session of the common council on the 3rd day of March, 1908, and entitled, "An ordinance to provide for the operation of cars by street railway companies oper- ating cars on any street in which the franchise right has expired," and that this resolution or agreement, if in ex- istence at the time when the injunction issued by the United States Cricuit Court for the Eastern District of Michigan, Southern Division, in the case entitled Guaran- ty Trust Company vs. City of Detroit et al., shall be modi- fied or dissolved so as to permit the publication and en- forcement of said ordinance, tkis resolution shall be null and void, and all authority to act under it and the ar- rangement made pursuant to it shall cease, and ,this reso- lution shall likewise be of no force or effect unless con- sent in writing is given hereto by the Detroit United Railway and the Guaranty Trust Company of New York within ten days after its passage. Aid. Harpfer moved the adoption of the resolution. Aid. Heineman moved to refer the matter back to the Committee with instructions to ascertain from the rail- way company if there is any probability of the company accepting the resolution, which motion was lost as fol- lows : 118 Yeas Allan, Field, Freiwald, Garvej, Heineman, Keat- ing, Koenig, Lempke, Vernor, Watson 10. Xays Burton, Ellis, Glinnan, Goeschel, Grindley, Gut- man, Harpfer, Konkel, Ostrowski, Owen, Reinhardt, Ro- senthal, Rutter, Schulte, Shapland, Skrzycki, Thompson, Tossy, Trevor, Walsh, Wing, Zoeller 23. Aid. Rosenthal offered the following amendment: Resolved, That the resolution be amended by adding there to this proviso: Be it further resolved, that the commissioner of public works, be and he is hereby instructed in the event of the refusal of acceptance to this resolution to notify the D. U. R. to immediately remove its tracks from the streets and if the company refused to comply within a reasonable time that the commissioner do so and charge the expense to the company. The amendment w 7 as lost. The question being on the motion of Aid. Harpfer, the motion prevailed as follows: Yeas Aid. Burton, Ellis, Freiwald, Garvey, Glinnan, Goeschel, Grindley, Gutman, Harpfer, Konkel, Lempke, Ostrowski, Owen, Reinhardt, Rosenthal, Rutter, Schulte, Shapland, Skrzycki, Thompson, Tossy, Trevor, Walsh, Wing, Zoeller and the president 26. Nays Aid. Allan, Field, Heineman, Keating, Koenig, Vernor and Watson 7. 119 VII. A municipal street grant does not establish the technical relation of landlord and tenant, which exists in the case of a private landlord and his private ten- ant, and for two reasons : ( 1 ) the municipality, as the alleged landlord, is a mere trustee for the public; and (2) the company grantee, as the alleged tenant, is under a legal obligation to serve the public. Hence, whatever the contract between the muncipality and the company may be, it is subject to the superior and predominate rights of the public. Street railway tracks are imbedded in the soil; they usually consist of a cement foundation into which the ties are imbedded ; the rails are spiked to the ties ; and the ties, spike heads, and the lower flanges of the rails are covered with cement or brickwork. The whole structure becomes as much a part of the realty as any structure known to the art of building, and it cannot be removed without serious injury to the street and great inconven- ience to the public. , If the relation of landlord and tenant exists, witli the municipality as landlord and the street railway com- pany as tenant, the question would arise whether the tracks are a fixture which can be removed by the tenant at the expiration of the term. There would be no doubt about the right of the tenant to remove the tracks if no inconvenience and injury to the traveling public would result. (Wiggins Ferry Co. vs. Ohio, etc., R, Co., 142 U. 8. 396.) 120 The injury to the public would be so great that it might well be held that the street railway tracks cannot be re- moved by the tenant; but it is certain, that the tracks would remain the property of the street railway company, and the city or its assigns could not take possession of them. Such was the ruling of the Supreme Court of the United States in Cleveland Electric Ry. Co., vs. Cleve- land, 204 U. 8., 117-142. In that case the laws of Ohio prohibited municipalities from making street grants to street railway companies for a longer period than twenty-five years, and the court found that the Garden street grant expired March 22, 1905. January 11, 1904, the common council of Cleveland had made a grant of Garden street to a rival company, known as the Forest City Railway Company, which grant became operative March 22, 1905. One of the conditions of the grant was that the grantee should pay to the owners of the tracks, poles and the other property being in the street, an amount to be agreed upon therefor or such sum as should be finally adjudicated by a court. The United States Circuit Court (137 Fed. Ill), held that the grant made to the rival company was inoper- ative so far as it assumed to confer any legal right to take the tracks, poles, wires and appliances, as it would be the taking of property without due process of law. The rival company was, therefore, enjoined from inter- fering with the complainant in the peaceable possession of the property mentioned, and the city was enjoined from attempting in any manner to put the rival company into possession of the same. Both parties appealed to the Supreme Court of the United States, and that court in affirming the decree be- low said: 121 "Upon the appeal of the defendants, we think little need be said. The defendants insist that, upon the term- ination of the grant to the Garden street branch, the rails, poles and other appliances for operating that road, and then remaining on the various streets, became the property of the city or at least that the city had the right to take possession of the streets and of the rails, cracks, etc., therein existing. , We agree with the court below in the opinion that the title to the property re- mains in the railroad company which had been operating the road, and we are of opinion that The Forest City Railway Company had no rights in the streets, so far as affect the right of the complainant to its property then existing in such streets. How that property may be dis- j>ox(><l ttf j'.v not now a matter before tlilx court. \Vc only hold that the defendant company cannot avail itself of the provisions of the ordinance of January 11, 1904, so fas as taking possession of the property of the com- plainant is concerned."* That decision left the Cleveland Electric Railway Company in possession of the street railway on Garden street with a perpetual injunction enjoining the defend- ants from taking possession of the property, except by some due process of law. It is evident that the only way the Cleveland Electric could have been dispossessed was by condemnation proceed- ings. If the defendants had no authority to condemn street railway property to the public use they would District Judge Tayler in the court below held that the Garden street grant expired Mar. 22, 1905, but he did not undertake to determine what the rights and remedies of the parties might be, if the City undertook to dispossess the company; and in the short opinion delivered when the final decree was entered he concluded with this significant comment. "The court holds that the Forest City Railway Company has no more rights in the streets than the complainant, and not so many, because the complainant's prop- erty is there; and this property, if removed by the city, must be removed in some way that corresponds tinth the properties of the /air." (Printed Record, p. 275, IN Supreme Court of United States in Cleveland Electric Ry. Co. vs. City of Cleveland. 204 U. S., 116. 122 have had to wait until they got such authority from the state legislature, under the power to amend, alter or re- peal, as in Greenwood vs. Union Freight R. R. Co., 105 U. 8. 13. The Cleveland Electric Railway Company was engaged in a controversy with the city of Cleveland, concerning its whole system, and presumptively for tactical reasons it took up its railway tracks on Garden street and re- moved its poles and wires, and wholly abandoned the street, giving the city complete and undisputed control. In a subsequent chapter I will show that in doing this the company was guilty ot a great strategical blunder. Again, if the relation of landlord and tenant exists, with the city as landlord and the street railway company as tenant, both are subject to the rule of law, that if the tenant holds over after the expiration of his term, the landlord is at liberty to treat him as a trespasser and by a proper legal proceeding to eject him from the prem- ises, or he can recognize the tenancy, by accepting rent, or other equivalent action, and hold the tenant for an- other term, at the same rent, and the other conditions of the original lease. In this view of the case the two per cent on its gross receipts, the Detroit United Railway is required by its contract with the city, to pay into the city treasury semi-annually, must be regarded as rent, and if the city accepts the percentage on gross receipts after November 14, 1909, it will renew, the lease for another term of thirty years, on the old terms and conditions. I do not believe that any such consequence would re- sult from an acceptance of the percentage, but it would be inevitable if the relation of landlord and tenant is held to exist. 123 The fundamental reason why a street grant to a pub- lic utility corporation is not a lease, and does not create n tenancy, is that the city has no private ownership of the streets, but is a mere trustee for the general public, and its control of the streets, is for the purpose of im- proving them and keeping them in good order and con- dition for the passage of persons and vehicles. The actual owner, the real landlord (if there is one), is the general public, which consists of the vast multitude and concourse of persons who make use of the street railways. Over 100,000,000 passengers ride on the De- troit street railways in a year. A rough estimate of a 1000 rides per year for each family, and 5 persons a family, shows that a population (including visitors from without the city) of 500,000 persons make use of the street cars as the most convenient and expenditious way of traveling from one point in the city to another. This general public insists on a continuation of the service, and its action in continuing after November 14, 1909, to ride on the cars, is entitled to more potency to continue the tenancy (if there is one), than any ac- tion the common council may take. There are three parties to these street grants, the municipality, the street railway company, and the state as the representative of the general public. The state authorizes the company to make use of the streets with the local consent, and. that consent having been once given it can not be withdrawn. The state permits the local authorities to make rules, regulations and conditions, and agreements fixing rates of fare, and permits the local authorities to limit the duration of the same, but it nowhere permits them to limit the duration of the consent and permission granted. 124 Tlio state assumes that in the absence of lawful local action, its own general laws will be ample to protect its own beneficiary, the general public. That the interests of the public prevent a street grant for a term of years from being considered the same as a lease of real estate between private parties, is abun- dantly settled by the authorities. If a land owner should rent to a railroad company a strip of land for a right of way, and the ties and rails laid thereon became a component part of the railroad, the landlord could not at the expiration of the term, maintain ejectment for the strip of land, and dispossess rhe railroad company; nor could he maintain an action of trespass. His only remedy would be an action for compensation. He could apply for an injunction, but if the company had the power of condemnation, the injunction would not be issued pending proceedings to condemn; and if the company did not have the power of condemnation the injunction would not be issued, if the company promptly paid such compensation as the court, by a proper proceeding, determined to be adequate. The authorities on this subject were reviewed by the Supreme Court of the United States in an instructive opinion by Mr. Justice Brewer, in the interesting case of New York City vs. Pine, 185 U. 8. 93. In that case the city of New York had no power to condemn property in Connecticut, which was being dam- aged by the construction by the city of a water w r orks dam, in the state of New York, on a river which flowed into the state of Connecticut and back into the State of New York. Connecticut landowners filed a bill in the Circuit Court of the United States for the Southern Dis- 15 trict of New York, for an injunction restraining the city from maintaining the dam. The Circuit Court suspended its decree from June 27, 1900, to November 1, 1900, to enable the parties to come to an agreement; which they failed to do. Thereafter, no agreement having been made, a decree was entered as follows: "That the complainants in this suit and each of them are entitled to an injunction order of this court restrain- ing the defendant, its successors and assigns, their and its officers, agents and employes, each, all and any of them, from diverting the water or any part of the water of the West Branch of the Byram River or any part of the water of the Byram Kiver, or in preventing in any way said water or any part thereof at any time from flowing through its natural channel, before, at and below the junction of the two branches of said river; and "It is further ordered, adjudged and decreed that the defendant, its successors and assigns, their and its offi- cers, agents and employes, each, any and all of them, be and they and each of them are hereby perpetually en- joined from diverting the water or any part of the water of the West Branch of the Byram River, or any part of the water of the Byram River, or in preventing in any- way said water or any part thereof at any time from flowing through its natural channel, before, at and be- low the junction of the two branches of said river."' On appeal to the Circuit Court of Appeals for the Second Circuit this decree was, on October 30, 1901, af- firmed by a divided court. On a review of the case by the Supreme Court of the United States, that court took into consideration the 126 general subject, but confined its actual decision to the neglect of the complainants to file their bill, until the dam was nearly completed. The opinion of the court concludes as follows: "On that ground alone, and without deciding whether plaintiffs have a legal right to recover damages, the decrees of the Circuit Court of Appeals and the Circuit Court will be reversed and the case remanded to the lat- ter court, with instructions to set aside its decree and to enter one providing for an ascertainment, in the way courts of equity are accustomed to proceed, of the dam- ages, if any, which the plaintiffs will suffer by the con- struction of the dam and the appropriation of the water, and for which the defendant is legally responsible, a proposition upon which we express no opinion, and fix- ing the time within which the defendant will be required to pay such sum, and that upon the failure to make such payment an injunction will issue as prayed for; and, on the other hand, that upon payment, a decree will be entered in favor of the defendant. If the plaintiffs shall prefer to have their damages assessed by a jury, leave may be given to dismiss the bill without prejudice to au action at law." Justice Brewer, in stating the case, made these com- ments, which are directly applicable to the attitude of the city of Detroit in regard to the expired street grants held by the Detroit United Railway: "This is not a case between two individuals in which is involved simply the pecuniary interests of the respec- tive parties. On the one side are two individuals claim- ing that their property rights are infringed rights which can be measured in money, and that not a large sum; 127 on the other, a municipality undertaking a large work with a view of supplying many of its citizens with one of the necessities of life. According to the averments in the bill the city had been engaged in this work, and it stands as an admitted fact that for two years prior to the commencement of this suit the work had been under way. It is true the testimony discloses that the plain- tiff and the city had been trying to agree upon the amount of compensation, but that shows that the plain- tiffs were seeking compensation for the injuries they would sustain, and were not insisting upon their alleged right to an abandonment of the work. It is one thing to state a right and proffer a waiver thereof for compensa- sation and an entirely different thing to state the same right and demand that it should be respected. In the latter case the defendant acts at his peril. In the former he may ivell assume that payment of a just compensation ivitt be accepted in lieu of the right. In the latter the plaintiff holds out the single question of the validity and extent of the right; in the former he presents the rii/lit as the foundation of a claim for compensation, and lii* threat to enforce the right., if compensation i-s not made is simply a club to compel payment of the sum he deems the measure of his damages. Further, the testimony shows that the city was settling with other parties simi- larly situated, and paying out large sums of money for the damages such parties would sustain. So, it is not strange that the city acted on the assumption that the only matter to be determined was the amount of the com- pensation." "If the plaintiffs had intended to insist upon the strict legal rights (which for the purposes of this case we as- sume they possessed), they should have commenced at once, and before the city had gone to expense, to re- strain any work by it. It would be inequitable to per- IL'S mit them to carry on negotiations with a view to com- pensation until the city had gone to such great expense, and then, failing to agree upon the compensation, fall back upon the alleged absolute right to prevent the work. If they had intended to rest upon such right and had commenced proceedings at once, the city might have concluded to abandon the proposed undertaking and seek its water supplies in some other direction. If this injunction is permitted to stand the city must pay what- ever the plaintiffs see fit to demand, however extortionate that demand may be, or else abandon the work and lose the money it has expended. While we do not mean to intimate that the plaintiffs would make an extortionate demand, we do hold that equity will not place them in a position where they can enforce one." The opinion quotes approvingly from the opinion of the Supreme Court of Georgia in Charleston Railway Co. vs. Hughes, 105 Ga. 1, where Justice Cobb said: "When a railroad company, without warrant or author- ity, enters upon the land of another, it is as a general rule no less a trespasser than any other person who is guilty of an act of a similar nature. If, however, a railroad company enters upon the land with the consent of the owner, or under license from him, the property thus taken. possession of becomes such a necessary component part of its railroad that to surrender its possession would interfere seriously with the interests of the company. The landowner, although entitled to compensation for his property, might by his conduct in allowing the entry upon his land and permitting the company to so use it as that it could not be abandoned without great preju- dice to its rights, estop himself from asserting against the company the legal title to the property by an action 129 of ejectment. The propositions above stated are simply the application of familiar principles of law which gov- ern in all transactions of the character above referred to, whether the controversy be between natural persons alone, or between such persons and corporations, and whether the corporation be public or private. A rail- road corporation, being one charged by the law with tin performance of certain <lntirx to the public, is allowed, under some circumstances, to set up rights connect <d ir-ith the land over which it operates its line or railirm/. of which an individual or an ordinary private corpora- tion would not generally be allowed to avail itself. Con- troversies in reference to possession of land, where the rights of individuals only are involved, are purely mat- ters of private concern. Controversies in which a cor- poration charged with the duties incumbent upon car- riers of passengers, freight and mails, in which an effort is made by private individuals or others to take away from such corporation a part of the property in its pos- session, which is absolutely essential to its complete per- formance of the public duties required of it, become mat- ters of more than private conce"-n, and in which the pub- lic is deeply and seriously interested. For this reason it has become settled law that the harsh remedies which would be allowed to one individual against another in reference to the possession of land will not be allowed to one who is seeking to recover such property from a rail- road company, when exact justice can be done to such owner by giving him remedies .vhich are less severe in their nature, and by which he \ruld secure substantially the same rights, thereby saving to the public the right to require a performance of the public duties incumbent upon the corporation whose property is the subject mat- ter of the controversy. That a railroad corporation has a right to deprive a person of his property for its uses 130 by doing acts which in an individual would be dealt with as a trespass is not contended for; but when a rail- road company enters upon land and constructs its road without lawful authority, and the land owner acquiesces in the wrongful act, and the consequent appropriation of the property to a great public use until the same has be- come a necessary component part of the property re- quired by the railroad to perform its public duties, such land owner will be held to have waived his right to re- take the property., and will be remitted to such other remedies for the wrong done him as will not interfere with the rights of the public to have the railroad main- tained and operated." Such is the law everywhere. The Supreme Court of the United States has had oc- casion to examine the state decisions in railroad cases, and to fully concur in the views expressed by the Sup- reme Court of Georgia. (Roberts vs. Northern Pac. R. R. Co., 158 U. S. 1, 11; Northern Pac. R. R. Co. vs. Smith, 171 U. 8. 260; Donohue vs. El Paso, etc., R. R. Co., 214 U. 8. 499.) The state decisions cited are (Lexington & Ohio Rail- road vs. Ormsby, 7 Dana 276 ; Harlow xs. Marquette, etc.. Railroad, 41 Mich. 336; Cairo & Fulton Railroad vs. Tur- ner, 31 Ark. 494; Pettibone vs. LaCrosse, etc., R. R., 14 Wis. 443; Chicago & Alton Railroad vs. Goodwin, 111 III. 273; McAuley vs. Weston, etc., R. R., 33 Vt. 311; Provolt vs. Chicago, etc., R. R., 37 Mo. 256; Omaha, etc., R. R. vs. Redick, 16 Neb. 313; Kanaga vs. Railway Co.. 76 Mo. 207; Dodd vs. St. Louis, etc., R. R., 108 Mo. 581; Evansville, etc., R. R. vs. Nye, 113 Ind. 223.) 131 The Supreme Court of the United States (171 U. S. 273), quotes approvingly from the opinion of Chief Jus- tice Redfield, in the Vermont case. (33 Vt. 311.) "In these great public works the shortest period of clear acquiescence, so as fairly to lead the company to infer that the party intends to waive his claim for present payment, will be held to conclude the right to assert the claim in any such form as to stop the company in the pro- gress of their works, and especially to stop the running of the road after it has been put in operation, whereby the public acquire an important interest in its continu- ance. The party does not, of course, lose his claim or the right to enforce it in all proper modes. He may pos- sibly have some rights analogous to the vendors lien in England, and here until the legislature cut it off. But it is certain, according to the English decisions, that he cannot stop the work, especially the trains upon the road, if he has, in any sense, for the shortest period, clearly given to the company, either by his express consent, or by his silence, to understand that he did not intend to object to their proceeding with the construction and oper- ation. * * * If there was then a waiver, in fact, either express or implied, by acquiescence in the proceed- ings of the company, to the extent of not insisting upon payment as a condition precedent, but consenting to let the damages be and remain a mere debt, with or without a lien upon the roadbed, as the law may turn out to be, then it is impossible to regard the defendants in any sense in the light of trespassers or liable in ejectment." It appears from the foregoing review of the authorities that a trespass committed by a railroad company in tak- ing possession of land to devote it to a public use, is judged on a different basis than a trespass committed by a private party for his own private purposes. In such a 132 case the rightful owner is entitled to regain the posession by ejectment, and to recover his damages. In the case of a railroad company the lawful owner is not entitled to maintain ejectment; he can only recover compensation for his land either by an action at law, or by a bill in equity praying for an injunction and other relief. A railroad company holding possession of land after the term for which it was demised and let to it, is cer- tainly in a more favorable position, than if its original entry into possession was wrongful; and it follows that a railroad company when it holds possession of land be- yond the term of its lease, cannot, even if regarded as a trespasser, be ejected by any process known to the law. This doctrine has not been confined to actions of eject- ment and bills to enjoin the further operation of the railroad over the property trespassed upon. At the common law improvements made by one upon the land of another without his consent, even if made in perfect good faith, became the property of the owner of the soil. The rule of the civil law was more liberal and allowed one who had made the improvements on land in his possession under the bona fide belief that he was the owner of it, to exact compensation for the value of such improvements', less the value of the use of the land, before he could be compelled to surrender it. The rigid rule of the common law has been somewhat modified in cases where the improvements were made in good faith. The history of these modifications is given by Dillon, J., in Parsons vs. Moses, 16 Id. 444. The first modification was by the court of chancery when it was held that if for any reason the real owner was compelled to seek equitable relief he would be re- quired to pay for the improvements so far as they had permanently enhanced the value of the property. 133 Courts of law next modified the strict rule of the com- mon law to this extent that where the real owner brought his action for mesne profits the bona fide occupant might set off or recoup the value of his permanent improve- ments to the extent of the rents and profits, but no fur- ther. Eventually statutes were passed in all or nearly all the American states providing that the unsuccessful defend- ant in ejectment should be allowed compensation for his improvements provided he occupied the property under color of title and in good faith, or his possession had been so long continued as to indicate good faith. These statutes were found to be subject to constitu- tional restrictions, for if they went too far they would violate constitutional guaranties. (Childs vs. Shower, 18 la. 261, 267; Madland vs. Benland, 23 Minn. 372, 379; McCoy vs. Crandy, 3 Ohio St. 463.) In Indiana the courts have refused to apply the statute of 'betterments to structures wrongfully placed upon the property of a private owner by a railroad company, and in subsequent condemnation proceedings have allowed the property owner to recover the value of the improvements as constituting a part of the property belonging to him. In California this ruling has been applied to a lighthouse wrongfully built by the government on the land of a per- son without his consent. And in New York it has been applied to a reservoir and pipes for water works wrong- fully constructed by a village on private property before condemning it to the public use. (Graham vs. Conner- mile, etc. R. R. Co., 36 Ind. 463; United States vs. Land in Monterey County, 47 Cal. 515; St. John son viUe vs. Smith, 184 N. Y. 341.) 134 But the great weight of authority including the Michi- gan decisions in railroad cases are the other way. (Mor- gan's Appeal, 39 Mich. 675; Toledo, etc. R. R. Co. vs. Dunlap, 47 Mich. 456; Justice vs. Nesquehoning R. R. Co., 87 Pa. St. 28; 2 Lewis on Eminent Domain (3rd Ed.) 347, ca. ci. n. 68.) The Pennsylvania case has been approvingly quoted from by the Supreme Court of the United States (171 U. 8. 273), as follows: "This is not the case of a mere trespass by one having no authority to enter, but of one representing the state herself clothed with the power of eminent domain, hav- ing a right to enter, and to place these materials on the land taken for a public use materials essential to the very purpose which the state has declared in the grant of the charter. It is true the entry was a trespass, by reason of the omission to do an act required for the security of the citizen, to-wit, to make compensation or give security for it. For this injury the citizen is entitled to redress. But his redress cannot extend be- yond his injury. It cannot extend to taking the personal chattels of the railroad company. They are not his and cannot increase his remedy. The injury was to what the landholder had himself, not to what he had not. Then why should the materials laid down for the benefit of the public be treated as dedicated to him? In the case of a common trespasser the owner of the land may take and keep his structures, nolens volens, but it is not so in this case; for though the original entry was a trespass, it is well settled, that the company can proceed, in due course of law, to appropriate the land, and conse- quently to reclaim and avail itself of the structures laid thereon." 135 The only reason that has ever been advanced for mak- ing a distinction between structures wrongfully built by a railroad company on the land of another, and structures built by a private trr /passer, is the public nature of rail- road property, and the power possessed by railroad com- panies to condemn property to the public use on the pay- ment of just compensation. In the Dunlap case I made out a case of bad faith by showing that the railroad company made its entry under a fraudulent service of process. (46 Mich. 190.) But the court would have none of it ; and Judge Camp- bell, speaking for the court, said that to apply the rule for which I contended to the case before the court would be absurd, and not good sense; and that was the language of a judge who was noted for the tenacity with which he upheld private rights. The public purposes for which railroad companies are incorporated adds to the law of implied contracts; modi- fies the law of landlord and tenant; qualifies the law gov- erning actions of trespass and ejectment; limits the title of private owners of land, to less than they would pos- sess, as against private trespassers; and liberalizes the rule of strict construction. It is summed up in the maxim : "The public welfare is the supreme law." Comparing this principle of law, which we have found to be so well settled with the case of the Detroit United Kailway, we are taught that it is directly applicable thereto. (1) The street railway property of the company has been kept in as good condition as at any period of its 136 history, up to the very last day of the expiring local grants; and since the grants expired the excellent service the company renders the public has continued undimin- ished and impaired. (2) The city of Detroit neither before or since Novem- ber 14, 1909, has given any notice that it will insist on dispossessing the company of the streets covered by the expired grants. (3) The tracks on the streets in question are a com- ponent part of street railway routes which are of much greater length, and which are in part used by the inter- urban lines of the company, some of which are sixty miles long and none less than twenty miles. (4) Instead of taking steps to eject the company from the portions of the streets in question, the common coun- sel of the city has passed the Hally ordinance of March 3, 1908, and the Heinernan resolutions of October 19 and 26, 1909, and the Glinnan resolution of December 14, 1909, set forth in another subdivision of this brief, thereby put- ting the city into a position where it is forever barred from ousting the street railway company from the streets. (5) The city can file a bill in equity in which it can allege that the three-cent fares proposed by the Hally or- dinance and the Glinnan resolution are reasonable and sufficiently remunerative to escape being confiscatory, but it can not get any injunction or other process to dis- possess the company, if the company can show and the court finds, that the fares proposed are not reasonable. (6) In that way the question of reasonableness will become a judicial question, to be determined by the courts of justice the same as other legal controversies. 137 State vs. Cincinnati (las Light & Coke Co., 18 Ohio 8t. 262 concerned the use of the streets of the city by a gas company under a contract entered into in 1841 between the city and James F. Conover and his associates, their heirs, assigns and successors. At page 291, the court made this ruling : "We think it cannot be doubted, that the right to use the streets of a city for the purpose of laying pipes to convey gas, whether in the hands of a private corporation or a natural person, is a franchise, and as such can only emanate directly or indirectly from the sovereign power of the state. And the position that the city council of Cincinnati in making the contract with Conover is to be regarded as a private corporation, granting an easement in its own property, can not be maintained. In one sense and to a certain extent the streets may be said to belong to the city. But as highways, the public have an interest in them, the owners of adjoining lots have a special prop- erty interest in them, and the city council can not change the character of the public use to which they may have been dedicated by the original proprietors. Wherever the statute may have, from time to time, provided that the fee in the streets shall be considered as being vested, it has always declared that it shall be so vested for the uses of the dedication. Whatever powers of supervision and con- trol the legislature may have conferred upon the city council for the purpose of rendering the enjoyment of the public easement or use more convenient amj beneficial, or with a view to the safety health, convenience, or comfort of the inhabitants of the city, these powers are all of a public municipal character, and their exercise is quite dif- ferent from the acts of a private corporation dealing, at its discretion, with property over which it mai/ all the rights incident to absolute ownership." 138 It appeared in above case that in 1853 the legislature gave the city council general legislative authority to fix the price of gas in Cincinnati, and that in 1854 the city council was authorized to make ten year contracts with the gas company. The court, at page 299, said : "The act of 1853 authorized city councils, from time to time, to regulate, by ordinance, the price at which gas companies should furnish gas, and under this authority the price of gas might be changed as often as the council might think proper. The act of 1854 provided a mode by which stability might be given to prices for a period not exceeding ten years, and gas companies be secured against any change of price to their prejudice during such period. This object might be effected by an ordinance fixing the price for a definite period, which should have the effect of a contract, when assented to by written acceptance of a gas company. But if no such assent were given by the company, the ordinance would still remain valid as such, and be subject to modification by the council as before. An acceptance by the company would bind the council not to lower the price during the period specified in the ordi nance, but a failure to accept would not affect the valid- ity of the ordinance, but would leave the council free and untrammeled in the exercise of the power conferred by the act of 1853." Further on at page 301: "The intention of the legislature in the 30th section of that act was to require incorporated gas companies, over whose charter it had the power of absolute control, to dis- pose of the gas which they might furnish for public or private use, at fair and reasonable prices. As such prices might vary, with change of times and locality, the act pro- vides for their ascertainment from time to time, through C7 139 the agency of the city councils of the cities in which such companies might be established. The discretionary power given by the act to city councils, might have been vested elsewhere, but wherever vested, the gas companies whose property interests are so vitally affected by it, have a right to demand that it shall be honestly exercised for the purpose for which it was given. Suppose the purpose and object to be accomplished by the passage of this ordinance, as alleged in the rejoinder, had been avowed by a pre- amble, and the price of gas had been fixed by its pro- visions at twenty-five cents per thousand cubic feet, could this court be called upon to declare any of defendant's franchises or rights forfeited by non-compliance with the requirements of such an ordinance? Both public and pri- vate rights are to be protected, and for that purpose we must recognize the fact that a municipal as well as a pri- vate corporation can do wrong." 140 VIII. The correct construction of the Michigan street railway act is, that the "consent" of the local authori- ties, is in its nature perpetual; that the local authori- ties are given power to fix the rules, regulations and conditions on which they will grant their consent and to agree with the grantee on the rates of fare, and may limit the duration of their contract, but can not put a time limit on the local "consent;" and that at the expiration of any period of time agreed upon, the grantee, its successors or assigns, may continue to occupy the streets, subject to such rules, regula- tions and conditions and rates of fare as the law (in the absence of local agreement) imposes. Under the constitution of 1850 the legislature could authorize public utility corporations to make use of the streets without requiring the consent of the localities. This was done in the case of telegraph and telephone com- panies and it was sustained by the Supreme Court. (Mich. Telephone Co. vs. St. Joseph, 121 Mich. 502; Mich. Telephone Co. vs. Benton Harbor, 121 Mich. 512.) The court held that such legislation did not deprive municipalities of their police powers, and while they could not prohibit the erection of telegraph and telephone poles along their streets, they could adopt and enforce reasonable regulations. Kequiring the local assent in the case of street rail- ways, gas works, and some other public utilities, relates to their inception and original location in the streets; but after any such utility has been once located and con- 141 structed, there is no reason why a further consent on the part of the municipality should be necessary to authorize their continued existence in the streets. Gas and water mains and pipes are laid deep in the ground, and the cost of taking them out would be more than they would be worth. Is it possible that at the ex- piration of the local contract, gas and water mains and pipes would be regarded in law as dead property, of no value whatever, at the will of the local authorities, and the entire investment therein, a total loss. A construction of the street railway act which has any such result, would be in violation of all the rules of in- terpretation resorted to and relied upon by the courts, in their efforts to ascertain and declare the true meaning of legislative enactments. Giving the consent of the municipality and designating the streets on which the street railway is to be con- structed, is an act separate and distinct from that of fix- ing the terms and conditions of the grant. The one is the act of consenting to the use of the streets named, during the corporate life of the grantee, and of its assigns and successors, and the other is the act of fixing the terms and conditions, a time limitation on which has no neces- sary connection with or effect on the consent, as that, in its nature and purpose, is designed to be permanent and perpetual. The two acts 1 on the part of the municipality might well be held to go hand in hand, and to be inseparably con- nected, like the Siamese Twins, if at the expiration of the time limit placed on the terms and conditions and rates of fare, no rates of fare or terms and conditions were to exist, and the street railway company was to be at lib- erty to do as it pleased; but that is not the case, as the company would still be bound by such rates of fare and 142 other terms and conditions as the common law or the statutory law of the state imposes upon common carriers. The object of the street railway addition of 1861 to the tram railway act of 1855, and of the general street rail- way act of 1867 was not to hamper, obstruct or impede, the construction of street railways; nor was it intended to authorize the local authorities to agree to terms and conditions and rates of fare, that would in the then un- developed condition of the street railway business, be ex- cessive and unreasonable. The correct view of this legislation is that the object sought to be accomplished was to give the local authori- ties such power in the premises as would enable them to hold out inducements, and to make such permanent ar- rangements for such period of time as might be agreed upon, as would lead private capital to construct and oper- ate street railways. To illustrate: Suppose in 1862, or in 1879 it had been suggested that at the end of the thirty years, the city might destroy the street railway in either one of two ways, by compelling the company to remove from the streets, or by imposing upon it such low rates of fare or such onerous other terms and conditions, that the opera- tion of the street railway would be financially unprofit- able, can there be any doubt, as I have hereinbefore con- tended, but that the city would have promptly agreed that at the expiration of the thirty years the company should be entitled to continue in the streets on reasonable terms and conditions and rates of fare to be agreed upon, or to be adjudicated upon by the courts. All I contend for is that such an understanding is a fair implication if any consideration whatever is to be given to the interests and rights of the state as the rep- 143 resentative of the public and as the third party to the contract. The merit of this construction is that it puts an end to street railway wars and the municipal agitation and disturbance incident thereto. An intermittent street railway war has prevailed in Detroit since 1891, and similar strife has prevailed in some of the cities of Ohio for a number of years. I will give some account of these further on. In Detroit and Cleveland the strife has been over expir- ing grants and the rates of fare to be subsequently im- posed. In both the popular cry has been for three-cent fares, and this demand has been steadily resisted by the companies concerned, with no tribunal and no means of settling the dispute, except an appeal to the electors of the municipality, who constitute the constituency of the local authorities, thus presenting the spectacle of one of the three parties to the controversy, acting as the final arbiter, fully clothed with the authority to hear the case and pass judgment on its own cause. And yet we are told this is the law. Could anything be more absurd or unjust? If my construction of the Michigan statute is correct, when a local contract has expired, and the local authori- ties and the company can not agree upon a renewal or a new grant, the city can file a bill to have it determined by the court whether the fares charged by the company are reasonable, with a certainty that both of the parties would be given a full and fair hearing, and that equal and exact justice would be done. If the courts in this country do not exist for such a purpose, what are they for? They have jurisdiction of all kinds of controversies, great and small, for the very purpose of having a peaceful method of settling the rights and remedies of litigants; aud it is a 144 time honored maxim of the law that no man shall be the judge of his own case. The only answer to this argument so far suggested, is that the electors of the city of Detroit will decide for themselves what the rates of fare shall be, and that they will not submit to the interference of the judges. While it is true, the courts have no jurisdiction by the exercise of either legislative or executive power, to fix rates of fare, yet they have undoubted authority to deter- mine whether a rate of fare fixed by a legislature, a city, or by a street railway company is reasonable or not. The common council of the city of Detroit has never been given any legislative power to fix rates of fare. The acts of the legislature limit the power of the local authori- ties to the making of mutual agreements with street rail- way corporations concerning the rates of fare, and in the absence of such an agreement, a street railway company can fix its own rates of fare, but subject always to the power of the courts to determine on the facts and the law, whether the rates of fare charged by the company are reasonable or otherwise. All statutory construction has for its object the dis- covery of the intention of the legislature. If the statute is valid, the intention of the legislature absolutely con- trols. The rule of strict construction, in all cases where it applies, is a valuable rule, having for its object,, in the case of grants of power, rights or privileges to either pri- vate or public corporations, the protection of the public interests. When the rule would result in injury to the public, it is relaxed and a more liberal construction adopted. In- deed, the rights and interests of the public, affect and modify all rules of construction. 145 The Michigan street railway laws are to be strictly con- strued as far as they confer power either on the street railway corporations organized under them, or on the local authorities of cities, villages and townships. These municipalities are authorized to consent to the exercise on the streets designated of the franchises of the company to which a grant is made, and to agree with the company on the rates of fare and other terms and condi- tions. They are not authorized to do more, and any at- tempt on their part to exercise a general legislative au- thority in the premises would be without authority and illegal. That was the vital p^int in the case of Detroit vs. Detroit Citizens' Street Railway Co., 184 U. 8. 368, in which the city undertook to reduce the agreed rates of fare by passing an ordinance under alleged legislative power to do so. The expiration of an agreement fixing the rates of fare, does not increase or add to the legislative power of the municipality. It still has power to enter into an agree- ment with the street railway company; it has that power and no more or greater authority. The laws of the state are not changed or enlarged by the expiration of any such agreement; they remain as they were. The tracks and poles and wires of the street rail- way company being in place in the streets, it is the plain duty of the company to continue the service, and a cor- responding duty rests on the local authorties, to permit the service to continue, as they have no authority to do anything else; and are powerless except to negotiate and enter into a new agreement. The argument that this would be giving the street rail- way company too much power, as by refusing to make a new agreement, it would practically be in possession of a perpetual franchise, is fallacious. The company would be 146 bound to observe its common law obligation to charge reasonable fares only, and whether a given rate of fare is reasonable or not is a judicial question, easily litigated and adjudicated, without the possibility of any injustice or wrong, except so far as the learned judges are human beings, and possessed of human weaknesses. As the con- stitution of Massachusetts expresses it, "It is the right of every citizen to be tried by judges as free, impartial and independent as the lot of humanity will admit." When a municipality refuses, or for any reason is un- able to make a contract with a street railway company which is mutually satisfactory, and assumes to dictate terms and decide the controversy itself, it is in the posi- tion of a judge who decides his own case, and is not wil- ling to have it adjudicated by an independent, disinter- ested and impartial tribunal. In Kennedy vs. Gies, 25 Mich. 83, the Supreme Court of Michigan r had occasion to construe the provision of the state constitution of 1850 that "The board of super- visors or in the county of Wayne, the board of county auditors shall have the exclusive power to prescribe and fix the compensation for all services rendered for and to adjust all claims against their respective counties, and the sum so fixed or defined, shall be subject to no ap- peal." The question presented was whether the board of county auditors of Wayne County had a right to fix the amount of their own compensation. The opinion of the court was delivered by Judge Christiancy, w T ho was dis- tinguished for the clearness of his arguments and the force of his logic. He said : "As the services of the county auditors are 'services performed for the county/ it is insisted that the power 147 of the auditors to fix the compensation for their own ser- vices is necessarily included under this provision. And if constitutions and statutes were always to be con- strued like mathematical axioms, this reasoning would be very conclusive, since the whole must include all its parts; and 'all services rendered for the county,' would necessarily include the services of the auditors, so far, at least, as they were performed exclusively for the county. But in legal reasoning, and in the construction of constitutions and statutes, we are often compelled to content ourselves with conclusions somewhat less certain than those involved in mathematical axioms; because neither conventions nor legislatures always use language with mathematical accuracy, and neither the human mind nor human affairs, will always submit to merely mathematical rule. For various reasons, and upon var- ious grounds, exceptions or qualifications are sometimes implied, though not expressed. An act or constitution which should give to justices of the peace, or to a certain court, the right to try all cases involving certain amounts, or of a certain character, would give neither the justice nor the judge the right to try his own cause, or give final judgment in his own favor, though the case in every other respect should fall within the class he was expressly authorized to try. An exception of such cases would be implied; and the exception would be just as valid and just as readily recognized by all courts as if it had been expressed. I do not mean to say that the like exception in the present case, if any can be implied, is as clear as in the instance supposed. I use the illustration now only to show that the mathematical argument is by no means necessarily conclusive. This provision, whatever may be the proper inference from it, does not expressly declare that the board shall have the right to fix their own compensation, or allow their own claims, as has 148 generally, if not always, been done in the few innstances of minor importance, in which it has been the real in- tention of legislative bodies to grant such a power; it does not expressly refer to the subject of their compen- sation, or their claims, and it is entirely legitimate to inquire whether there is not something in the nature of the provision itself, considered in connection with the legislative and judicial history of the state, and the action of the convention which framed it, which may furnish a satisfactory inference that such an exception was intended, and should therefore be implied in refer- ence to the services and claims which this board of audi- tors were empowered to fix and prescribe, and the claims they were authorized to adjust, as would be implied in case of power given to judicial officers, in the instance already mentioned. "As to the nature of the provision itself, if it is to be construed, as claimed by the relator, to give the board the power, exclusive of that of the legislature, to fix the amounts to be allowed to all officers, for services to be performed for the county, their own included, and to preclude the legislature from prescribing the fees or salary to be paid, and to determine, without control from the legislature or the courts, all claims of every nature for which the county is liable, including claims in their own favor; then, it gives to the board both a legislative and a judiciaj power, absolute, and unlimited, upon all questions of this kind; legislative, in prescribing in ad- vance the rule and rate of compensation, and judicial, in determining, without appeal or review, the just and rea- sonable compensation for any service for the county, though performed by themselves, for which they have not, in their legislative capacity, already prescribed a definite compensation; and such would seem to be the 149 nature of the allowance of the claim of fifty dollars to the relator in the present case. "Now, the maxim, that no man shall be judge in his own cause, is one so deeply rooted in the minds of the American people, and, up to the time the constitution was adopted, so uniformly applied to this and the like boards, that to give them this power of final adjudication upon their own claims and of fixing the amount of their own compensation without appeal or review, the language should be so clear as to admit of no other reasonable construction." Judge Campbell said: "In regard to the power of the county auditors over claims generally, I think the language of the constitu- tion is so much broader than that of any previous statute as to give them legislative, as well as quasi judicial, authority, to the exclusion of any other interference. "But I agree that, in regard to their own claims, there is such an incongruity in their acting on both sides, and representing adverse interests, that there should be an exclusion of the power asserted, unless clearly given be- yond mistake. They are not a general legislative body, but officers acting only within a limited sphere, and the general common-law disabilities of such officers, which would exist if this provision were statutory, should ap- ply as well to constitutions as to statutes, so long as they are within the same equity. I agree, therefore, in the result arrived at by my brethren." As the street railway act of 1867 does not contain a single word or clause expressly authorizing the local authorities to put a time limit on their consent, and the act itself treats the consent as separate and distinct from the terms and conditions and the rates of fare, no vio- 150 lence is done to the act by construing the consent as perpetual, and the terms and conditions and rates of fare, as subject to time limitations. Sec. 14 of the act reads : "After any city, village or township shall have con- sented, as in this act provided, to the construction and maintenance of any street railways therein, or granted any rights and privileges to any such company, and such consent and grant have been accepted by the company, such township, city or village shall not revoke such con- sent, nor deprive the company of the rights and privileges so conferred." It is one thing to put a time limit on the terms and conditons and the rates of fare, and quite another thing to put a time limit on the consent. Power to place a time limit on the one may be fairly implied, but the implication should not be carried so far as to authorize a time limit on the other. The consent is so connected with, and has such a relation to, the fran- chise to maintain and operate as to preclude any time limitation thereon. The street railway act of 1867 expressly authorizes the formation of corporations "for the purpose of con- structing, owning, maintaining or using any street rail- way in any city, village or township in this state." The state grants the franchise of corporate existence and the franchise to construct, maintain and operate street railways. The terms and conditions and the rates of fare, and the designation of the streets on which the franchise to construct, maintain and operate is to be exercised, are left to be fixed by agreement with the 151 local authorities. The lapse of such an agreement, can have no effect on the franchise granted by the state. A similar grant was made by special act by the Wis- consin legislature, to the Milwaukee Gas Light Company. To fix the terms and conditions reference was made to a contract between the city of Milwaukee and John Lock- wood, which contract was for the term of fifteen years; but the Supreme Court of Wisconsin held, that the fran- chises granted by the state did not expire with the fifteen years. (State vs. Milwaukee Gas Light Co., 29 Wis. 454.) A Detroit street grant to a gas company provided, that "if it shall at any time enter into a combination with any gas-light company concerning rates to be charged for gas, either to the city or private consumers, then the consent given by this ordinance shall cease and this ordinance shall become null and void." Marston, C. J., held that an agreement between two companies dividing the city between them, was a combin- ation concerning prices; but he then said: "It does not, however, follow that the city can have the relief prayed for in this case. The violation of such an agreement would not be a forfeiture of the consent given by the city, nor of the property of the corporation acquired thereunder. This would be a measure of dam- ages for the violation of an agreement recognized neither in courts of law nor of chancery." Cooley, Graves and Campbell concurred in result, but did not agree with what the chief justice said about the division of territory between the two companies being in effect a combination as to prices. 152 There is nothing to indicate that if they had agreed with the chief justice about the division of territory, they would have disagreed with him in what he said in the above quotation. In effect the court held that the clause in the ordin- ance granting the consent of the city, providing that a combination concerning prices should work a termination of the consent, was void. (Detroit vs. Mutual Gas Light Co., 43 Mich. 594.) The court had previously held, that the local consent was not a franchise, but a mere contract or license, and therefore quo warranto would not lie to determine whether it had terminated. (Maybury vs. Mutual Gas Light Co., 38 Mich. 154.) The designation of the streets is a part of the consent, and the streets having been once designated and occupied, there is no occasion for another designation, and no occa- sion for a renewal of the consent. The power of the local authorities as to these has been exhausted, and the only power that remains to them, at the expiration of any term agreed upon, is to come to another agreement with the street railway company, its successors or as- signs. At the inception of a street railway the local authori- ties have an undoubted power to withhold their consent entirely, and to impose any terms and conditions and rates of fare they see fit; their power is absolute; but the street railway company is under no obligation to ac- cept the grant. Both of the parties occupy a position of independence. At the expiration of a grant for a limited period, the situation has changed. The street railway company has its property in place in the streets and is serving the 153 public to the extent of its capacity. To remove from tho streets is to reduce the value of the physical property enormously, and to deprive the company of its business. This is not a position of independence, if the company is obliged to accept the terms and conditions and rates of fare demanded by the local authorities, or get out of the streets. The one course, may be quite as destructive as the other. Ought it not to be the law, that the local authorities can only demand reasonable terms and conditions and rates of fare, and that the street railway company can not insist upon any thing more? Who is to decide this question of reasonableness? Most assuredly neither of the parties in interest! Who then? Where is the disinterested and impartial tribunal, with a competency of jurisdiction, to decide such a question and such a case? It is a case where the state ought to intervene. The state has intervened! (1) The state has accepted and adopted the common law as its general body of (2) The state has enacted statutes prescribing and fixing the rights, duties and powers of both municipal and street railway corporations, which laws, if rightly construed, relegate the question of reasonableness to the judicial department of the government. (3) The state has established an elaborate system of courts, of legal and equitable jurisdictions, with no limitation except that the courts are only to exercise their jurisdiction in actual legal or equitable controver- sies duly brought before them by the parties in interest. 154 (4) The state has created an executive board, known as the Michigan Railroad Commission, clothed with the authority to decide in the first instance, whether the rates of fare and freight charged by common carriers are rea- sonable or not, and to fix such rates as are reasonable ; and it has provided that any party feeling aggrieved by any decision and order of the commission, may have the same reviewed by the circuit court in chancery, with the right of appeal to the supreme court of the state as in other cases. Thus it appears that the state itself has vested the ul- timate power to decide the question of reasonableness in its own judiciary. And the one grand object and purpose of the state is to compel persons and corporations, both public and private, who seek a redress of grievances, to submit them- selves to the arbitrators and judges established and maintained by the state, and not in any wise whatsoever to take the law into their own hands and to redress or avenge their own wrongs. Such was the constant prac- tice in barbarous times and is still the practice in bar- barous nations. A well ordered judicial system is the highest evidence of civilization. The people of Michigan are not barbarians. 155 IX. The rule that public grants are to be construed strictly, in favor of the grantor and against the grantee, furnishes abundant proof that the Detroit United Railawy has a right to continue to occupy the streets and to serve the public beyond the period of thirty years. In this connection it must be remembered that there are three parties to the contract: (1) the state as repre- sentative of the general public (2) the street railway company, and (3) the municipality; and that the in- terests and rights of all three must be considered. Under all the more authoritative decisions, the rule of strict construction has no other foundation than the protection of the public interests. The rule recognizes an inherent weakness, a want of contractual ability, in all public bodies and functionaries, and the courts, with- in the limits of the judicial power, assume to act as the guardians of the public interests, and conservators of the public rights. And for that very reason when the public interests re- quire it, the rule of strict construction is rejected and a more liberal construction is adopted. United States vs. Denver & Rio Grande Railway Co., 150 U. 8. 1, involved the construction of the act of con- gress of 1875, granting rights of way through the public lands to railroad companies, "with the right to take from the public lands adjacent to the line of said road, ma- terial, earth, stone, and timber necessary for the con- struction of said railroad." 15G If the act was given a narrow construction, the timber taken from lands adjacent to the line could only be used for construction at or near the place from which it was taken, but if given a liberal construction the timber could be taken and used at remote places on the line of the railroad. The court in an opinion by Justice Jackson, said: "It is undoubtedly, as urged by the plaintiffs in error, the well settled rule of this court that public grants are construed strictly against the grantees, but they are not to be so construed as to defeat the intent of the legislature, or to withhold what was given either ex- pressly or by necessary or fair implication." After quoting from the opinion of the court by Jus- tice Field in Winona & St. Peter Railroad vs. Barney, 113 U. 8. 618, 625, the opinion continues: "When an act, operating as a general law, and mani- festing clearly the intention of congress to secure public advantages, or to subserve the public interests and wel- fare by means of benefits more or less valuable, offers to individuals or to corporations as an inducement to un- dertake and accomplish great and expensive enterprises or works of a quasi public character in or through an immense and undeveloped public domain, such legislation stands' upon a somewhat different footing from merely a private grant, and should receive at the hands of the court a more liberal construction in favor of the purposes for which it was enacted. (Bradley vs. New York & New Haven Railroad, 21 Connecticut, 294; Pierce on Rail- roads, 491.) "This is the rule, we think, properly applicable to the construction of the act of 1875, rather than the more strict rule of construction adopted in the case of purely private grants; and in view of this character of the act, 157 we are of opinion that the benefits intended for the con- struction of the railroad in permiting the use of timber or other material, should be extended to and include the structures mentioned in the act as a part of such rail- road." If a local grant is to be strictly construed, it must be done in subordination to the grants of power by the legis- lature to municipalities and street railway companies, which are also to be strictly construed. It would be a plain contradiction to strictly construe a grant by a municipality, and to give a liberal construction to a grant of power to it, where both relate to the same sub- ject matter. In making a street grant the local authorities reserve all power and rights not granted expressly or by necessary or fair implication; but that does not enlarge their own power as that is also subject to the rule that the legisla- ture reserves all power not granted expressly or by neces- sary or fair implication. This amounts to a reservation of power by the municipality coupled with a reservation of power by the state. The power reserved is somewhere; it has an abiding place. The municipality only reserves (on a strict con- struction), so much of the power conferred on it by the state as the municipality does not grant, and the state reserves so much of its power, as is not granted to the municipality. The state is the source, the fountain head, of all the power possessed by either a municipality or a street rail- way company, and the public objects sought to be accom- plished by the state, have, therefore, a controlling in- fluence. The state expressly grants to each street railway com- pany, the right to exist as a corporation, and the right to maintain and operate the street railwavs constructed bv * 158 it, and to charge tolls or fares for their use by the public. These two franchises are separate entities, as the right to operate a railroad passes to the purchaser of the physical property constituting the railroad, but the franchise of corporate existence does not pass. (Memphis R. Co. vs. Commissioners, 112 U. S. 609; New Orleans, etc. R. Co. vs. Delamore, 114 U. 8. 501.) The constitutions of New York of 1874 and 1894 con- tain this provision: "But no law shall authorize the construction or opera- tion of a street railroad except upon the condition that the consent of the owners of one-half in value of the property bounded on, and the consent also of the local authorities having the control of that portion of the street or highways upon which it is proposed to construct or operate such railroad be first obtained, or in case the con- sent of such property owners cannot be obtained, the appellate division of the Supreme Court, in the depart- ment in which it is proposed to be constructed, may, upon application appoint three commissioners who shall deter- mine, after a hearing of all parties interested whether such railroad ought to be constructed or operated, and their determination, confirmed by the court-, may be taken in lieu of the consent of the property owners." Another provision provides that all general laws and special acts for the creation of Corporations, may be al- tered from time to time or repealed. In 1884 the New York legislature passed a general law for the incorporation of surface' street railway cor- porations. The act did not limit the duration of such corporations, but they were required to state in their ar- ticles of association the period of time for which they were organized. The provisions relative to the local con- 159 sent were in accord with the constitutional provision above quoted. The Broadway Surface Railroad Company was organ- ized under that act. Its articles of incorporation fixed the duration of the company at one thousand years. Not being able to obtain the consent of the majority in value of the owners of the property bounded on the street, the company obtained the appointment of commissioners who reported in favor of the construction of the railroad, and their report was approved by the appellate division of the Supreme Court. The company also obtained the consent of the local authorities of the City of New York. This was done by a system of wholesale bribery, but the resolution of the common council was never attacked on the ground that it was obtained by fraud. The legislature of the state took other means to undo the work of Jacob Sharp and his associates in crime. The legislature at its 1886 session first passed an act providing that the local consent for the use of the streets by street railway companies should be sold at public auc- tion to the bidder who would give the largest percentage of its gross receipts derived from the operation of its railway, which should not, in cities of 250,000 population, be less than three per cent for the first five years, and five per cent thereafter. The legislature expressly reserved the right to regulate and reduce the rate of fare. (Laws of 1886, Chap. 65, p. 81.) The legislature then passed an act annulling and re- pealing the charter of the Broadway Surface Railroad Company. (Id. Chap. 268, p. 443.) It followed this with an act that when a surface street railroad company shall have been dissolved or annulled or its charter repealed, the consent of the local aut.hori- 160 ties, the consent of the property owners, and the order of the general term confirming the report of any commis- sioner, shall not be in any way impaired, revoked, termin- ated or otherwise affected, but the same shall be sold at public auction by the municipal authorities in the same manner as provided by the previous act. (Id. Chap. 271, p. 445.) A little later an act was passed to provide for the wind- ing up of corporations which have been annulled and dis- solved by legislative enactment, and authorizing the at- torney general of the state to bring suit for that purpose. The receiver authorized to be appointed was given au- thority to pass on all claims, his report thereon to be con- firmed by the court. (Id. Chap. 310, p. 492.) All this legislation was passed upon by the New York Court of Appeals, in People vs. O'Brien, 111 N. Y. 1. It was held that the repealing act was valid; that although the Broadway Surface Railroad Company was created for a limited period, it could acquire title in fee to property necessary for its use; that the grant in this case, not being limited by its terms was in perpetuity; that the tracks of a railroad company and the franchise of maintaining and operating its road are inseparable; and that the acts of the legislature, Chap. 271 and Chap. 310, were unconstitutional and void. The case did not present the question, whether the fran- chise to maintain and operate the railroad, would termin- ate at the expiration of a limited period, if the local con- sent had been made with such a limitation. The case is, therefore, without authority on that question. I cite the case as an authority where it was held that the franchise to maintain and operate is connected with the physical property, and is not lost by the dissolution of the company, resulting from a legislative repeal of its charter. 161 X. Recent street railway history in Ohio shows the necessity of avoiding similar conditions in Michigan. In the VII subdivision of this brief the decision of the Supreme Court of the United States in Cleveland Electric Ry. Co. vs. Cleveland, 204 U. 8. 117, is considered and the opinion expressed that the street railway company, when it removed its tracks, poles and wires from Garden street, was guilty of a great strategical blunder. The Garden street line had been in operation for thirty- seven years. It was originally built under an ordinance adopted January 14, 1868, which limited the duration of the grant to twenty years; but by an ordinance adopted March 22, 1880, the grant was extended for twenty-five years from that date, and hence expired March 22, 1905. Large residence and business districts tributary to Garden street had been built up in reliance on the street railway, and the company in abandoning the street, vio- lated its duty and obligations to the public, without any advantage to itself. The ties, rails, poles and wires re- jnoved from the street had only a second hand value, less the cost of removal. The original cost of placing them in the street was wholly lost. While in the street, and in actual use, the tracks and overhead works, were worth as much as it would cost to replace them, less the depreci- ation due to their age and the extent to which they were worn. In any condemnation proceedings, or other adjust- ment the city or the rival street railway company would have been required to pay a just compensation for the property as it was, and not as junk. 162 The actual loss sustained by the Cleveland Electric in removing its railway from the street must have been very large, conservatively estimated at $250,000, and it lost possession of the street. About 4% miles of double track, which had been rebuilt with concrete foundations three or four years before, were taken up. The rails and ties were removed, and the mutilated street was repaved and put in good condition. The service was stopped on the 23rd day of April, 1907, and the work of digging up the tracks, and removing the poles and wire was commenced on April 29, 1907. The work of removal and repaving was completed in thirty days. A controversy arose over the making of a new grant, but eventually a rival company, known as the Neutral Street Railway Company, obtained such a grant and re- built the road. Use was made of the concrete foundations and paving material left in the street, and the actual cost of rebuilding was about $200,000. But the greatest loss was sustained by the public. Street railway service on the line was not resumed until June 8, 1908. A population that had had a street railway service for thirty-seven years was deprived of it for over thirteen months. The Garden street tracks connected with those on Pros : pect street at or in the vicinity of Ninth street, and they ran out on Garden street, now Central avenue, to Eighty - Third street. A branch line started at Fifty-fifth street, and ran out Quincy street to the Woodhills road, which is the next street beyond One Hundred and Fifth street. The nearest street car line on the north was the Cedar avenue line, and the nearest line on the south was the Scovill street and Woodland avenue line. Between these two lines on the north and south was located a dense pop- 163 ulation which was served by the Garden street line and its Quincy street branch. This part of Cleveland is not oc- cupied by the wealthy,' but by a plain and common people, much more in need of adequate street railway service. They were put to great inconvenience and much actual loss, especially in the depreciation of the rental and sale- able value of property. It would be difficult to estimate in dollars and cents the total actual loss these people sustained, but it was very large, and the whole proceeding can only be character- ized as an outrage, chargeable to the Cleveland Electric Railway Company and the corporation known as the City of Cleveland. Here we have a specimen of the results of the landlord and tenant theory of street grants to public utility cor- porations. The constitution and laws of Ohio are supposed to sanction and require just such a wanton destruction of property, and public inconvenience and injury, whenever a public utility corporation and the municipality in which it is located, are not able to agree on terms for a renewal grant. I do not believe the laws of Ohio, rightly construed, re- quire any such unwise and impolitic interpretation, but the decisions of the courts in that state seem to support that view. Rev. Stat. of Ohio of 1880, contain the following sec- tions: Sec. 2501. No corporation, individual, or individuals shall perform any work in the construction of a street railroad until application for leave is made to the council, in writing, and council, by ordinance, shall have granted permission, and prescribed the terms and conditions upon, and the manner in which the road shall be constructed ;i 164 operated, and the streets and alleys which shall be used and occupied therefor, and cities of the first and second grades of the first class may renew any such grant at its expiration upon such conditions as may be considered conducive to the public interests. Sec. 2502. No ordinance for such purpose shall be passed until public notice of the application therefor has been given by the clerk of the corporation, in one or more of the daily papers, if there be such, and if not, then in one or more of the weekly papers published in the cor- poration for the period of three successive weeks, and no such grant shall be made except to the corporation, in- dividual, or individuals that will agree to carry passen- gers upon such proposed railroad at the lowest rates of fare, and shall have previously obtained the written con- sent of a majority of the property holders on the line of the proposed street railroad, represented by the feet front of lots abutting on the street along which such road is proposed to be constructed; provided that no grant, nor renewal of any grant for the construction or operation of any street railroad shall be valid for a greater period than twenty-five years from the date of such grant or renewal ; and after such grant or renewal of a grant is made, whether by special or general ordinance, the municipal corporation shall not, during the term of such grant or renewal, release the grantee from any obligation or lia- bility imposed by the terms of such grant or renewal -of a grant. The above sections without any change material to this discussion are still in force. (1 Bates Anno. Ohio Stat., 6th Ed., Sees. 1536-184, 1536-185.) These statutory provisions absolutely prohibit local street grants for more than twenty-five years, but it was 165 not the intention of the Ohio legislature that street rail- ways built under such grants should be ripped up and destroyed at the end of the term agreed upon, for ample provision is made for renewals without a reletting to the corporation or person who will on advertised proposals, bid the lowest rates of fare. Municipalities are author- ized to "renew any such grant at its expiration upon such conditions as may be considered conducive to the public interests." These words recognize the public rights as paramount; they do not authorize "conditions," antagonistic to the public interests; nor were they intended to confer any ab- solute power to destroy a valuable property devoted to the public use, by a capricious refusal to grant a renewal. The courts have no power to compel renewals or to fix their terms and conditions, but they have control of the remedies, which a municipality must resort to in order to dispossess the company in possession. The only remedy open to a municipality would be a bill of complaint in a court having the powers of a court of equity, praying for an injunction to enjoin the company from continuing the operation of the street railway, but no court would grant such an injunction, if it would result in great public in- convenience and injury, and the attitude of the municipal authorities was capricious and wanton. Such an injunction was granted by the Superior Court of Cincinnati, in the case of City of Cincinnati vs. Cincin- nati Inclined Plane Ry. Go., 30 Ohio Wkly. Law Bui., 321 ; but on the suggestion of the corporation counsel the issu- ing of the writ was deferred for six months to enable the company to apply to the city authorities for a new grant. The case was appealed to the Supreme Court of Ohio, where October 23, 1894, the judgment below was affirmed for the reasons stated in the opinion of the court below. 166 52 Ohio St. 609. The opinion of the superior court is not in the state report, but will he found in the report of the case, 44 N. E. 327. The Louisville Trust Company held a, mortgage on the property of the Cincinnati Inclined Plane Ry. 'Co., and as it was not a party to the suit in the state courts, it was not bound by the judgment therein. The Louisville Trust Company filed a bill in the United States Circuit Court under which the case decided by the state courts was re-litigated. District Judge Sage held that the decision of the state Supreme Court was con- clusive, and binding on the federal courts, and dismissed the bill, 73 Fed. 716. The Louisville Trust Company ap- pealed to the United States Circuit Court of Appeals for the sixth circuit, where the case was heard by Lurton and Taft, Circuit Judges, and Hammond, District Judge. 76 Fed. 296. In the meantime the Louisville Trust Company filed a bill in the United States Circuit Court to foreclose its mortgage on the property of the Cincinnati Inclined Plane Railway Company and obtained the appointment of a receiver, who was in possession of the property, and operating the street railways when the case was heard in the Court of Appeals. That court in an opinion by Judge Lurton disagreed with the state courts and with Judge Sage in some particulars, and agreed with them in others ; that is, in effect it modified the decree of the state courts. The decree of Judge Sage was reversed and the case re- manded for such further orders and decrees not inconsist- ent with the views expressed in the opinion of the Court of Appeals. The city of Cincinnati then filed an inter- vening petition in the foreclosure suit pending in the United States Circuit Court, and in which petition it prayed that an order be made directing the receiver to 167 . cease from holding possession of the streets in question, and from using said streets, and from maintaining and operating the street railway thereon, and directing the receiver to surrender full possession of the streets to the city of Cincinnati. The Louisville Trust Company filed an answer to the intervening petition and showed, among other things, that on December 14, 1896, it applied in good faith to the leg- islative body of the city, for renewal grants, and that on the 19th day of December, 1896, it obtained an order of the Superior Court, suspending the writ of injunction granted by that court for six months, with leave to fur- ther apply, and a copy of the order of the court and of the opinion of Judge Smith, granting the same, was made a part of the answer. The hearing on the intervening petition and the answer thereto was heard in the Circuit Court, before Taft, Cir- cuit Judge, who was one of the judges who had heard and decided the other case in the Court of Appeals. Judge Taft's decision on the intervening petition is reported in 78 Fed. 307. It was rendered January 4, 1907, before the six month' suspension of the writ of injunction en- joining the company from operating on the streets in question, had expired. Judge Taft, now president of the United States, and equally distinguished as a jurist and a diplomatist, in dis- posing of the case, was confronted with the fact that all of the courts had agreed that some of the grants under which the street railway company occupied streets or parts of streets had expired and the city was entitled to dispossess the company. In view of the fact that the Superior Court had sus- pended the issuing of its injunction, to enable the street 168 railway company to negotiate renewal grants, and such negotiations were then being conducted, Judge Taft de- clined to grant the intervening petition of the city. He said: "Negotiations have been opened by the inclined plane company with the board of legislation of the city, looking to the renewal of former grants. The Superior Court, which in 1893 granted a perpetual injunction against the use by the inclined plane company of the invalid part of its line as a street railway, has -suspended the operation of its injunction for six months from December 11, 1896, to permit such a negotiation. "The vigor of Judge Smith's language in granting the suspension leaves no room to doubt that in his judgment the situation of the parties justifies him in withholding his hand, as chancellor, in the enforcement of the decree, until a full opportunity is given to the inclined plane company to obtain, if possible, new concessions from the city. I concur with Jndge Smith in this view, and do not think that the time allowed is unreasonable, when one considers the somewhat slow movements of a municipal legislature. It is urged upon the court that such an af- firmative order of the kind here prayed for was made upon a receiver in the case of Felton vs. Ackermom, 22 U. 8. App. 154, 9 O. C. A. 457, (md 61 Fed. 225. The circumstances of that case were very different. There the receiver, while operating a railroad, erected a fence across a public highway, under a void order of a road commis- sioner. He was required by the court to undo the wrong he had unwittingly done. It was no sacrifice of the prop- erty in his charge. The fence reduced the number of rail- way crossings by one, and to that extent lessened the dan- ger of crossing accidents, but its removal caused but a slight change in the receiver's situation, or that of the railway company's line which he was operating. So far 169 as the petition of the city asks for affirmative relief against the inclined plane company and the trust company in the form of an 'order for the removal of tracks, poles, wires, bridges and buildings, it is denied." The denial of the city's petition did not, in Judge Taft's judgment dispose of the whole case made by that petition. The court was in possession of the whole line of railway, valid and invalid, and the city could pursue no remedy for the enforcement of its rights except by leave' of the court ; and Judge Taft thought that barrier ought in some way to be removed. Counsel for the street railway com- pany had urged four different reasons to the contrary, all of which were taken into consideration. His comments on the second reason advanced by counsel, were as fol- lows : "2. Nor do I think that the other proposition that the city may not oust the inclined plane railway from the enjoyment of its admittedly illegal occupation of the streets, by using only so much force as is necessary, has been so clearly established as to admit of no doubt. The cases cited by the counsel for the trust company and the inclined plane company are Easton 8. E. & W. E. P. Ry- Co. vs. City of Easton, 133 Pa. St. 505, 19 Atl. 486, and Asheville St. Ry. Co. vs. City of Asheville, 109 N. C. 688, 14 8. E. 316. In the first of these cases a street railway company had an admitted right to ocupy a street with its tracks. In a change of grade made by the city, the com- pany had to take up and relay its tracks for a short dis- tance. The city claimed the right to require it to lay a particular kind of rail. The company laid another. The city tore it up, and stopped the operation of the road. The company relaid it, and then procured an injunction against the city's further interference. The Supreme Court of Pennsylvania held that an injunction would 170 properly issue against the city, whatever the merits of the controversy over the different kinds of rail, "because the city could not, before submitting the question to the courts, take the law into its own hands, decide a doubtful question of law, and upon the assumption that its de- cision was right, inflict great loss upon the railway com- pany's business, especially when the convenience of the public might be seriously affected thereby. The North Carolina case was similar in principle. In both cases the companies were rightfully in the streets, in neither case had the rights of the parties been adjudicated at all in a court, and in each the contention of the city authorities, out of which the action grew, was combated by the rail- way company. In the case at bar it has been decided finally, and it is not now denied by either the trust com- pany or the inclined plane company, that the grants to the latter to occupy the streets in question have all ex- pired. This would seem to make a broad distinction be- tween the case at bar and those cited. By the common law, a tenant at will, who is notified by the landlord to leave the premises, may be forcibly ejected, without giving the tenant any cause of action, if no more force than is necessary to remove the tenant and his goods is used. Low vs. Elwell, 121 Mass. 309. If a man build his house upon a common, a commoner may, after notice tear down the house, though the man be in it, and this without in- curring liability to the ejected person. Davies vs. Wil- liams,, 16 Q. B. 546. More than this, it has been generally held that an injunction will not issue against threatened trespasses where the complainant cannot allege that he has good title to the property about to be entered upon. Hart vs. Mayor, etc., 9 Wend. 571 ; Schoonover vs. Bright., 24 W. Va. 698; Cox vs. Douglass, 20 W. Va. 175; Tate vs. Vance, 27 Oral. 571. Whether these cases, which nearly all concern the occupation of private property, would ap- 171 ply to the case at bar, may admit of question, but they certainly suggest forcible analogies of it."* Judge Taft omitted to refer to what Judge Lurton, with his approval, had said in the Court of Appeals, 76 Fed. 317, speaking of the remedies of the city: "A litigant may not execute his own decree. If tin; adversary will not quietly surrender the subject of liti- gation resort must be had to the court in which the right was declared for the proper legal writ, and for its regular execution. It is, therefore, proper under the allegations of the bill as to the purposes of the defendant (the city of Cincinnati), to enjoin it from taking into its own hands the enforcement of the decree of the state court." This was more than an authority; it was an adjudica- tion in the very matter before the court; and it was as conclusive and binding on the Circuit Court as any other part of the opinion of the Court of Appeals. Thus it appears that the learned Circuit Judge cast a doubt on a proposition of law, which he had helped to settle, and finally so, as far as the parties to this litiga- tion were concerned. Having considered the four questions raised by the counsel for the street railway company, Judge Taft proceeds to say : The doubts cast by Judge Taft on the question whether the city had a right to dispossess the inclined plane company by force, were wholly dispelled by him in delivering the opinion of the United States Circuit Court of Appeals, Lurton, Circuit Judge, and Clark, District Judge concurring, in the subsequent case of Iron Mountain Ry. Co. v. Memphis 37 C. C. A. 410, 421, 422; 96 Fed. 113. On the authority of Railroad Co. v. Johnson 119 U. S. 608, and other English and American cases it was held that the city had no such right, but was compelled to resort to legal means. Judge Taft's action, at the circuit, in the case of the inclined plane company was more a display of his skill in diplomacy than his skill in the law. What he thought the court could not do directly, he accomplished by restoring possession to the inclined plane company, and reading the riot act to the legislative board of the city of Cincinnati, and to the Cincinnati Street Railway Company. His diplomacy was exercised in the interest of the public, and it is no stretch of authority for a judge to act as a conservator of the peace. 172 "As will be seen, I am not deciding definitely any of the issues of law raised by the counsel for the inclined plane company. I am only stating what appears to be sufficient to show that the claims made by them are at least of doubtful validity. This court does not decide that Judge Smith's order may not operate as an injunc- tion, or that the city has the right to abate the wrongful occupation of the streets by the inclined plane company. All that is held is that, if the obstacle of the receiver- ship is removed from the course of the city, it could urge reasonable arguments to sustain both propositions in defense of action taken by it on the faith of their validity. In such a case this court ought not, by the possession of its receiver, to prevent the city from taking such course with respect to a remedy as it may be ad- vised. The whole risk of any course taken must be upon the city. If it does an act in contempt of the superior court, its agents must answer there. This court assumes no responsibility for any action the city may take, but it is the court's duty to remove the insuperable obstacle to the city's exercising a choice of remedies interposed by the receiver's possession of the invalid portion of the line." Judge Taft then pointed out that the city could not exercise the power to remove the street railways as a nuisance, until the legislative board had declared them such, and he concluded by announcing the decree of the court as follows : "The order of the court upon the petition of the city will therefore be as follows: That from and after the receipt by the receiver of a notice from the board of legis- lation that his operation of the inclined plane railway in any of the streets in which by the decree of the Circuit Court of Appeals and grants owned by said inclined com- 173 pany have expired, is unlawful and forbidden, the re- ceiver is enjoined from operating the railway in such streets, and he is directed to surrender possession of the property of the inclined plane company in place in such streets to said inclined piane company; and it is fur- ther ordered that, upon written application filed herein by the Louisville Trust Company, the receiver shall de- liver possession of all the remainder of the property of the inclined plane company now in his custody to said company, on the condition, consented and agreed to in writing, and filed herein by said company, that it will turn over to the receiver herein the monthly net earn- ings from the operation of its property, after payment of the running expenses thereof, including salaries, wages and supplies. And the receiver is ordered, within two weeks hereof, to file a full and complete account of the receipts and disbursements for the entire period of his receivership. Each party will pay its own costs in this proceeding." Judge Taft wound up his opinion by reading the riot act to the legislative body of the city, in the following emphatic language: "What has been said disposes of the pending questions. I only wish to add, in order that my language may not be misunderstood, that I have not intended, in the slight- este degree, to advise a resort by the city to violence to enforce its rights in the streets. On the contrary, I think it would be deplorable if the city authorities, not accepting the weighty suggestion of the superior court in its order of suspension, and not abiding the expiration of that order, should foreclose reasonable negotiation, and disgrace the city's fair name by a course probably lead- ing to a breach of the peace. If the city disregards the 174 suggestion contained in the superior court's order of suspension, it does so at its own risk, and cannot rely on any approval of such a course by this court. All that this court decides is that, when the city demands the right to pursue remedies to enforce rights in the streets adjudged to belong to it by two courts of last resort, this court will not. protect a party which is violating those rights by throwing the shield of its receivership over such violation. It will discharge the receiver, and let the inclined plane company, on the one hand, take the risk of operating the invalid portions of the road, if it chooses, and the city, on the other, that of any course it may see fit to pursue. The relation of this court to the controversy is merely incidental and ancil- lary, and imposes no duty upon it of distinctly deciding as to the* lawful remedies of the parties, if it can free itself from that relation, as it can and will by the order above set out." Xot long' after the delivery of Judge Taft's opinion, the board of legislation following the words of the order of the court, notified the receiver that his operation of the inclined plane street railway in the streets where the grants had expired was "unlawful and forbidden," and thereupon, the receiver surrendered possession of the property to the Cincinnati Inclined Plane Railway Com- pany, first requiring that company to agree to turn over to the receiver the monthly net earnings. The board of legislation refused to make renewal grants to the Cincinnati Inclined Plane Railway Co., but did grant the streets in question to the Cincinnati Street Railway Company. The Cincinnati Inclined Plane Railway Company, then filed a cross-complaint, in the case in the Superior Court, 175 and April 13, 1897, obtained an order restraining the city of Cincinnati and the Cincinnati Street Railway Company from interfering by force or otherwise with the operation of the street railway until the expiration of the stay of the injunction for six months from Decem- ber 19, 1896. On June 18, 1897, the day before the stay expired, a further stay was granted until June 25, and on June 24, it was further extended to June 30, 1897. On June 23, 1897, the state Supreme Court, constru- ing the statutes fixing the jurisdiction of the Superior Court in special and in general term, held that the order of suspension of December 19, 1897, the injunction of April 13, 1897, and the orders of suspension of June 18 and 24, 1897, were void. (Cincinnati vs. Railway Co., 56 Ohio St. 675.) June 24, 1897, the Superior Court vacated its orders, and the litigation was at an end. This left the city of Cincinnati, and the Cincinnati Street Railway Company at liberty to dispossess the In- clined Plane Railway Company, but they were appar- ently unwilling to stop the operation of this street rail- way line, which ran from the business portion of the city to the Zoological Garden, as they permitted the Inclined Plane Company to continue the operation of the line under the financial supervision of the receiver, until all the property of the Cincinnati Inclined Plane Railway Company was purchased at foreclosure sale, by the Cin- cinnati Street Railway Company, April 14, 1898. There are two significant things connected with this litigation: 176 (1) The State Supreme Court and the United States Circuit Court of Appeals, both held, that the power vest- ed by statute in the local authorities to agree on the terms and conditions on which they would consent to the occupation of the streets by a street railway com- pany included the power to fix the duration of the grant, and after its expiration the street railway company would not be lawfully in the streets and might be enjoined from operating therein. (2) That in Cincinnati, the city, its new grantee, the Cincinnati Street Railway Company, and its old grantee, the Cincinnati Inclined Plane Railway Company, recog- nized the paramount right of the public, to have the operation of the street railway continued after the ex- piration of the grant, and it was so continued until title to the property lawfully passed, and possession could be surrendered and taken without stopping the oper- ation of the street cars. In the case of the Cincinnati Inclined Plane Railway Company, the state court held, that the grant made in 1864 for twenty years, expired by its own limitation in 1884, and another grant made in 1871, expired in 1891, and that these grants had not been extended by an act of the legislature passed in 1877, giving inclined plane railroad companies, organized as steam railroads, power to own and operate street railways. The company held other grants which had not ex- pired by their own limitation and one that was without a time limit, but the state courts disposed of them, by holding that they were invalid because they were granted as extensions of a steam railroad, and not as extensions of a street railway line. 177 The opinion of the superior court which was adopted by the state supreme court did not discuss or consider the question whether the act of 1877 had not validated the grants .which were held void. Judge Lurton, in de- livering the opinion of the court of appeals, held tlui inasmuch as the state courts had not touched upon the question, the federal court was at liberty to dispose of it on its own judgment. He said: "This is a question res Integra. The opinion of the state court does not directly deal with this as a distinct question. It is true that the court did hold that the ordinances of 1871 and Ocober, 1875, by which the in- clined plane railroad company has been permitted to ex- tend its railroad from the base of its incline to the heart of the city, at Walnut and Fifth streets, and from the top of the incline to the corporation line at the Zoological Garden, were invalid, on the ground heretofore stated, but the court does not consider the curative effects of the act of 1877. This question is one upon which the Ohio court has expressed no definite opinion, and if the decree is of no effect, as res adjudicata, this court is clearly at liberty to pronounce an independent judgment as to the legal effect of the act in question in validating the then existing contracts between the city and the Cincinnati Inclined Plane Railroad Company, and this independently of the ground stated in a former part of this opinion." Having held that the judgment of the state supreme court was not res adjudicata, Judge Lurton proceeded to hold that the act of 1877 did validate the grants held void by the state courts, and that the grant without any time limitation was perpetual. To this extent thie court of appeals overruled and modified the judgment of the state court, and remanded the case to the United States 178 Circuit, with directions to enforce the views expressed by Judge Lurton. % Four elaborate opinions were delivered in that con- troversy, one in the state courts, and three in the federal courts. In neither of them was any consideration given to the rights of the public. Judge Lurton did incident- ally say, "The city was but a trustee, acting for the pub- lic in respect of the granting of street easements." And Judge Taft in remiting the parties to such reme- dies as they might have after the possession of the prop- erty was restored to the Cincinnati Inclined Plane Rail- way' Co., did say: "The question whether the public would or should be inconvenienced by practically destroy- ing this line is one the responsibility of deciding which may justly be put upon this chief municipal body, and ought to be avoided as far as possible by this court." Whether the general public had any rights which the city authorities or the courts were bound to respect, was not considered or passed upon, and I am, therefore at liberty to follow the example set by Judge Lurton, and to say, that the question is res 'Integra, that is, untouched and not decided or adjudicated. The grant, without any time limit, held by the Cincin- nati Inclined Plane Railway Co., was made in December, 1871, and .before there was any statute in Ohio prohibit- ing street grants for more than twenty-five years. Such an act was not passed until May 14th, 1878. The act of May 1, 1852, under which the Cincinnati Inclined Plane Railway Co. was incorporated as a steam railroad, con- tained this section. "Sec. 12. If it shall be necessary, in the location of any part of any railroad, to occupy any road, street, alley, 179 or public way, or ground of any kind or any part thereof, it shall be competent for the municipal or other corpor- ation or public officer or public authorities, owning or having charge thereof, and the railroad company to agree upon the manner and upon the terms and condi- tions upon which the same may be used or occupied; and if said parties shall be unable to agree thereon, and it shall be necessary in the judgment of the directors of such railroad company to use or occupy such road, street, alley, or other public way or ground, such company may appropriate so much of the same as may be necessary for the purpose of such road, in the same manner and upon the same terms as is provided for the appropriation of the property of individuals by the tenth section of this act." The Ohio street railway act of 1861 provided that no street railway should be constructed or commenced until the consent of the corporate authorities had been obtained, and such authorities were made competent to agree "upon the manner and upon the terms and conditions," upon which the street railway should be constructed. (Line* of Ohio, 1861, p. 66.) But in cities of the first class having a population ex- ceeding 80,000, the consent of a majority in interest of the 'owners of the abutting property was required, and no grant could be made, except to the person or corporation which would, on advertised proposals, agree to carry pas- sengers at the lowest rates of fare. (Laics of Ohio, 1860, p. 19, Sees. 15-16.) These statutory provisions, coupled with the provision of the act of 1878 prohibiting local grants for more than twenty-five years, and a provision providing for renewal grants without a letting on advertised proposals, are still in force, and have been hereinbefore quoted. 180 The state and federal decisions in Ohio, on which I have commented, may be entitled to great weight, in any future case in that state in which the rights of the general public are presented and insisted upon, but they are not authority in Michigan, and can have no weight in deter- mining the law of Michigan. In Ohio, a local street grant is held to be a state fran- chise, subject to inquiry by proceedings in the nature of a quo warranto. (State vs. Cincinnati Gas Light & Coke Co., 18 Ohio St. 262.) In Michigan it is settled law that a municipal street grant is a mere contract or license and is not a franchise subject to inquiry by quo warranto. (Maybury vs. Mutual Gas Light Co., 38 Mich. 154.) The Ohio court evidently was of the opinion that the local authorities in making a street grant act entirely in the capacity of agents of the state, and therefore, a time limitation prescribed by them is the act of the state, and determines the duration of the grant. On the other hand the Michigan court was of the opin- ion that the local authorities in fixing the terms and con- ditions and rates of fare, of a street grant, act in their own behalf as representatives of their local constituencies, and do not, as to these matters, act as agents of the state at all. Hence, a time limitation prescribed by them, can only relate to the terms and conditions and the rates of fare and cannot affect the franchise to maintain and operate granted by the state, nor limit the duration of the local consent to the exercise of that franchise on the streets designated in the grant. Will have something more to say on this subject bye and bye. 181 Other street grants held by the Cleveland Electric Rail- way Company expired February 10, 1908. The routes affected were much more important to the public than the Garden street line, and the experience of the public, the company and the city in the case of that line, put the company and the city administration in a more amicable state of mind. A public appraisal of the property and franchises of the company was made in open sessions of the common council. That appraisal is known as the Goff-Johnson appraisal. All of the street railways in Cleveland were then put in the possession and control of the Municipal Traction Company, organized under the auspices of the Mayor Johnson, with a nominal capital, for the purpose of acting as a holding company, and to enable it, if it could, to operate the street railways of Cleveland, for three-cent fares. This plan proved a failure, although every effort was made to reduce the cost of the service, with the result that a bill in equity was filed in the United States Circuit Court by the Central Trust Company, of New York, which held mortgages on the property of the Cleveland Electric Railway Company. Receivers were appointed November 12, 1908, and they have since iJien been in charge of the property under the direction of the court. Finally the company and the city agreed upon terms of an adjustment and a renewal grant for twenty-five years to the Cleveland Railway Company, the successor of the Cleveland Electric, with certain exceptions, among them the value of the street railway property and the rates of fare, below the maximum of four cents cash fare, seven tickets for twenty-five cents, and one cent for a transfer. As to these matters the parties were not able to agree. 182 but were constrained to leave them to the arbitration of United States District Judge Robert TV. Tayler, not in his judicial capacity, but as a private arbitrator. Judge Taylor's decision as arbitrator was delievered to the common council of the city December 18, 1909, and that body immediately passed the ordinance, previously drafted, partly in blank, giving his decision effect. Judge Tayler's Decision. "Cleveland, O., Dec. 17, 1909. "To the council of the city of Cleveland and the Cleve- land Railway Co., Cleveland, O. Gentlemen: I make the following report, in reply to your communication of October 5, submitting to me, as an arbitrator, the decision of certain questions involved in the settlement of the street railway situation in this city, and, also, my report on the question submitted to me by the Municipal Trac- tion Co., the Forest City Railway Co., and the Low Fare Railway Co., respecting the obligation arising out of the guarantee of the stock of the Forest City Railway Co., and of so much of the stock of the Cleveland Railway Co. as was sold through the Municipal Traction Co. and by it guaranteed in certain terms: "1. The value of the physical property of the Cleve- land Electric Railway Co., as of January 1, 1908, was 117,511.305.64. "2. The franchise value of the company's franchises, as of that date, was $3,615,843.89. "3. The total value of all of the property of the Cleve- land Electric Railway Co., I find, therefore, to be 121,127,149.53, being something more than $1,000,000 less than that which was found by the Goff-Johnson appraisal. "4. I allow nothing for good will. A street railway company which has a monopoly, and especially if it has a franchise value remaining, can have no good will value. 183 "5. I allow nothing for going value, except in so far as that is the result of the necessary expenditure of money in building the road, acquiring its land, power houses and equipment and putting them into successful operation. The expenditures for these purposes are, and necessarily must be, included in the valuation of the physical prop- erty. "6. I offset the franchise value of suburban grants, whatever they may amount to, against the burdens of suburban contracts, to whatever extent they may exist, for the reason that all the territory covered by the Cleveland Electric lines is one homogeneous community, destined soon to become one municipality in which a zone system will be intolerable. "7. I am of opinion that there is a moral, and, perhaps a legal obligation on the community in connection with the guarantee by the Municipal Traction Co. of stock of the Forest City Railway Co., and of stock of the Cleve- land Railway Co. sold by the Municipal Traction Co. In view of the fact that the settlement recommended by me, should it become operative, will make the stock of the Cleveland Railway Co., in my opinion, intrinsically worth par, I recommend that the obligation created by the guar- antee be adjusted by the payment, to the persons who originally purchase the same on the faith of the guarantee, of an amount equal to 7^ per cent, of the par value of such guaranteed stock so owned, and that the principal be applied, to fractional shares according to the actual amounts paid thereon; such payments to be in full satis- faction of all liability under the guarantee. "I fix the amount at 7y 2 P er cen t because, prior to October 1, 1908, all such stockholders had received inter- est, or dividends at the rate of 6 per cent per annum. "Something less than 10 per cent of the guaranteed stock has been sold by the original purchasers. To wlinr 184 extent, if any, these former owners of such stock may be entitled to any reimbursement under the guarantee I am willing to consider hereafter. The amount involved can in no event be a very large sum, as less than 10 per cent of all the guaranteed stock has changed hands. "The practical result of the reduction in the value of the Cleveland Railway Co. property will be to make the stock of that company not having an origin in the Munici- pal Traction Co.'s guarantee -worth, as of January 1, 1910, par and 1% per cent, being the amount accruing to such stockholders for the quarter ending October 1, 1908, and thus equalizing for that period those stockholders with the stockholders whose stock came under the guarantee. "As to the guaranteed stock still in the hands of the original purchasers, it will be worth, as of January 1, 1910, par and 7^/2 P er cent. "8. The initial rate of fare should be 3 cents and 1 cent for a transfer, without rebate, and the maximum rate should be 4 cents for a single fare, seven tickets for 25 cents and 1 cent for a transfer, without rebate. "9. I approve the suggestion that, if consents of abut- ting property owners are secured, the company be required ' to extend its line on Lorain avenue to the city limits, if no fair arrangement can be made with the interurban company for the use of its tracks. Yours truly, "ROBERT W. TAYLER." After eight years of street railway war, peace was finally reached by the decision of a United States judge, but how much better it would have been, if at the expira- tion of the Garden street grant, the City of Cleveland had filed a bill in equity in a state court of competent juris- diction, alleging that the rates of fare being charged by the Cleveland Electric Railroad Company were excessive, and in an orderly and legal manner, under the safeguards and restrictions of a regular legal proceeding, the question 185 of the reasonableness of the rates of fare charged, had been judicially determined and decreed. The decree of the trial court could have been reviewed in the state Su- preme Court, and if need be in the Supreme Court of the United States. If the citizenship of some of the parties in interest, or the questions presented, justified it, the case could have been removed to the Federal Court, and the Supreme Court of the United States reached by that route. No one having any regard for law, order and justice can doubt the superiority of such a method of settling the matters in dispute, as compared with what did actu- ally take place. For eight years the people of Cleveland were disturbed by a series of plots, and counter plots, suits and injunc- tions, appeals to popular and class interests, and election after election, all over tne street railway question and three cent fares. After the opposing forces had exhausted their energies, the ability, honesty and sense of justice, of a trained jurist, holding a responsible official position and having no mentor but reason and truth, settled all the serious matters in .dispute, and brought peace and harmony to the disquieted city. Is there any possible reason in law or logic why the result finally reached could not have been worked out at the inception of the controversy, and the street railway war brought to a close before it had fairly commenced. The ordinance designated to settle the Cleveland street railway controversy is an extraordinary instrument and is an attempt to automatically adjust the rates of fare, from time to time, according to the net earnings of the company. It will be printed in the appendix and com- mented on in the XII. subdivision hereof. ISO XI. The final and conclusive argument in support of the proposition that the local consent is perpetual, and only the terms and conditions and the rates of fare are subject to time limitations, is found in the fact that in making a street grant the local authorities act in two different capacities: (1) in granting the local consent and designating the streets, the aldermen act as the agents of the state under authority delegated to them by the legislature; and (2) in agreeing with a street railway company on rates of fare, and the other terms and conditions, the aldermen by per- mission of the legislature act as the contractual agents and representatives of the people of the municipality, in virtue of their election by the people to manage and control their local affairs. A municipal street grant duly accepted by the grantee is an inviolable contract according to the decisions every- where in the United States, but it must not be assumed that in granting their consent the local authorities do not to any extent act as agents of the state, and wholly in their own behalf. Under the Michigan constitution of 1850 the control of the streets and highways was vested in the legislature, and street railway companies and other public service corporations could be authorized to occupy the streets without the assent of the local authorities. If the legisla- ture saw fit to fix the terms and conditions and the rates of fare, and simply required the local consent, without any power in the local authorities, except that of consenting or 187 refusing, there would be no question, but that they would be acting as the agents of the state and in no other ca- pacity whatever. In such a case the act of the legislature would not take effect until the local consent was granted. It would be like the Michigan local option law, which does not take effect in any county until prohibition is adopted by a vote of the people of the county, and like many other laws which do not become operative until approved and adopted by a popular vote. Requiring a popular vote or the ap- proval of the board of supervisors of a county, or of the common council of a city, is the same thing, and it has never yet been supposed that either the electors or the local legislative body, could place a time limitation on their consent, approval or adoption. They can only say yes or no; and to qualify their action by limiting it to a fixed period of time would be wholly beyond their au- thority. This view of the local power is not changed because in addition to the power to consent, approve or adopt, or not, the local authorities are given power to impose terms and conditions and rates of fare. These they can prescribe for a limited period, but they can not so qualify their consent, approval or adoption. When the local authorities have consented to the occu- pation of certain designated streets by a street railway company, and the grant has been accepted and the road Constructed, the consent is as permanent and perpetual as the public improvement itself is intended to be, and any time limitation agreed upon can only apply to the terms and conditions and rates of fare. The local consent when granted gives force ami cilVrt to the act of the legislature conferring on street railway 188 corporations the franchise of constructing, maintaining and operating street railways on the public streets. It is indeterminable and irrevocable. National Foundry and Pipe Works vs. Oconto, 52 Fed. 29, is a case where Judge Jenkins, a distinguished and able member of the federal judiciary, had occasion to con- sider the nature of a local street grant. The law under which the Oconto Water Company was organized provided that "any corporation formed for the purpose of constructing and operating waterworks in any city or village to supply such city or village with water for fire and other purposes upon such terms and condi- tions as may be agreed upon, and may, by the consent of, and in the manner agreed upon with the proper authori- ties of such city or village, use any street, alley, lane, park or public grounds for laying water pipes therein; * * * and any such city or village may, by contract duly executed by the proper authorities, acquire the right to use the water supplied by such corporation, or such portion thereof as it may desire, upon such terms and con- ditions as may be agreed upon by such corporation and authorities of such city or village." By Sec. 930a, of the statutes of the state, the common council of every city was authorized to permit, subject to such rules and regulations as may be imposed, the laying of pipes in the streets of the city, and their maintenance and use for the purpose of conveying water or steam under the surface of the streets. On July 9, 1890, the city of Oconto made a grant to the Oconto Water Company for the period of thirty years, and September 13, 1890, the company transferred to Andrews & Whitcomb, as security for a loan, the entire issue of the stock of the company together with "all the rights, priv- 189 ileges, immunities, franchises and powers, of whatsoever name and nature, which were granted unto the said Oconto Water Company in and by that certain ordinance passed by the common council of said city of Oconto and approved by the mayor of said city on the 9th day of July, 1890." The mains, pipes and plant of the company were not transferred, and the question in the case was whether An- drews & Whitcomb got any rights by the transfer of the local contract, and whether the transfer carried with the local contract the franchise to operate the plant. After referring to the statutory provisions, the learned judge said: "The city is therefore only authorized to permit the lay- ing of pipes in the streets, and their maintenance and use. (Section 930a). That is not a grant of power to bestow a franchise, but permission to suffer an easement. The law of its incorporation confers upon the Oconto Water Company its franchise (1) to oWn and operate the water- works, and (2) to use the streets of the city. Sanb. & B. St., 1780. The former power is without condition ; the latter is subject to the assent of the municipality. The practical efficacy of the franchise may depend upon the discretionary act of the city. The franchise is not, how- ever, derived from that discretion, but from the will of the legislature. The law authorizes the city to assent to the exercise of a power granted by the statute. The grant of power to the water company as to the use of the streets- becomes operative only upon the happening of that contin- gency of municipal assent. That is not a grant of power to a city to confer a franchise. Sims vs. Railway Co., 37 Ohio St. 556. The matter is somewhat analogous to tin- case of an act of the legislature taking effect only upon the assent of the people expressed at the polls, which is 190 now generally held to be valid, upon the ground that the law derives its potency from legislative will, and not from the assent of the poll. So, here, the right to use the streets was conferred upon the Oconto Water Company by the law of its incorporation, subject to the contingency of the assent of the city. The franchise emanates from the legislature, not from the municipality. The ordinance is not an exercise of legislative power, but of the right to contract. (Indianapolis vs. Gaslight Co., 66 Ind., 396.) "The case of State vs. Madison St. Ry. Co., 72 Wis. 612, 40 N. W. Rep. 487, is not in conflict The ruling there was to the effect only that, considering the terms of Eev. St. Wis., 1862, the provisions of the ordinance there under review, by force of the statute, became part of the law of the incorporation of the railway company, and for violation of such provision an action could be maintained by the attorney general to vacate the charter or annul the existence of the railway company, under the provision of Rev. St. Wis., 3241. Applying the doctrine of that case to the one in hand, the most that can be said is that the conditions of the assent of the city to the use of its streets inhere and are part of the law of incorporation of the defendant water company. None the less, however, are its franchises derived from the legislature, and not from the municipality. It is also to be noticed that there is a marked difference in the statute under consideration in that case and those in question here. Section 1862, there considered, provides that "any municipal corporation * * .* may grant to any such corporation" a street railway corporation "such use, and upon such terms as the proper authorities shall determine, of any streets or bridges. * * * Every such road shall be subject to sue! i reasonable rules and regulations * * * as the proper municipal authorities may by Ordinance from time to time determine." There the legislation does not directly 191 grant to the railway corporation any power to use the streets, but delegates to the municipality the right to grant the power. Here the power is in terms conferred by the legislature upon the water company, subject to the assent of the municipality. There the street railway is subject to constant municipal control. Here the water company is independent of municipal direction except in the use of its streets. It is, I think, clear that the power possessed by the city of Oconto was only to yield its assent to a legislative grant of the use of its streets, and to con- tract for a supply of water. The franchises of the water company were conferred by the legislature of the state, and not by the ordinance of the city. "The question then recurs, what rights passed to An- drews & Whitcomb under the instrument of transfer and their foreclosure? By their terms they convey or assign only such rights and privileges as were granted to the water company by the ordinance of the city. No other franchise or rights are attempted to be conveyed. If the right to the use of tie streets may be said to have pro- ceeded from the municipality, it was standing alone, a mere easement. The transfer of such naked right could not carry with it the ownership of the mains, nor the title to the plant as an entirety, nor the franchise to oper- ate the plant, nor to the land upon which the plant was situated. So that if it be true, as is here claimed, that a naked franchise is transmissible ; that the franchise is the main and the plant the incident; and that a transfer of the former carries with it the title to the tangible prop- erty essential to its use and beneficial enjoyment, it still remains that here there was no transfer of the franchise to operate the plant, and consequently no transfer of tangible property. It therefore results that the claim of Andrews & Whitcomtf to the plant is unfounded in law. 192 and its possession by them wrongful as against the com- plainant." In short the court held that the franchise to maintain and operate granted by the state was so connected with, and had such a relation to, the physical property, that a transfer of the local consent without a transfer of the physical property, was inoperative and void. * A mechanic's lien on the physical property had been filed and perfected, and on a bill to foreclose that lien, the court held, that the state franchise to maintain and operate should go with the physical property and be in- cluded in the sale thereof. (National Foundry and Pipe Works vs. Oconto Water Co., 52 Fed. 43. ) That is to say, whoever owns the physical property, owns the franchise to maintain and operate. Hence a lapse of the local contract can not terminate the franchise to maintain and operate, or in any wise prevent a con- tinuation of the public service. The Detroit United Kailway owns the street railways in the city of Detroit and it has a right to operate them, although the local grant has expired by its own limitation. The decision of the United States Circuit Court of Ap- peals in Detroit Citizens' Street Railway Company vs. City of Detroit, 12 C. C. A. 365, 64 Fed. Rep. 628, ap- proved by the Supreme Court of the United States in De- troit vs. Detroit Citizens' St. Ry. Co., 184 U. S. 368, 395, that a street grant may extend beyond the life of the cor- poration to which the grant is made is of itself when rightly understood and applied, conclusive authority, that the physical property and the franchise to maintain and operate continue to exist after the expiration of the local grant. 193 The old Detroit City Railway was organized on the 9th day of 'May, 1863, for the period of thirty years, and its corporate life expired May 9, 1893, but the franchise granted by the state to maintain and operate did not ex- pire, because it was so connected with and was so essen- tial to the physical property, that it was not separable from that property, but became a part of it, as the main thing necessary to give it value, and hence that franchise passed to the corporation to which the Detroit City Rail- way before or at its dissolution transferred the property. The very same reasoning applies to the situation at the expiration of the local grant. The physical property is still in existence, and the franchise to maintain and oper- ate is still necessary and essential to its further existence. This fact is of just as much consequence, and is entitled to just as much weight at the expiration of the local grant as at the expiration of the grant by the state of the fran- chise of corporate life. By what sort of legal reasoning can a greater and more disastrous effect, be given to the expiration of a local contract, than is given to the expiration of a franchise granted by the state. The state franchise to maintain and operate survives the one, why not the other? If any dif- ference is to be recognized should it not be that the local grant being of an inferior nature, and of lesser conse- quence, its expiration ought not to be given as much effect as the expiration of the franchise of corporate existence. The physical property with the franchise to maintain and operate may be mortgaged, and sold on foreclosure sale, and may be levied on, and sold on execution sale. A& we have seen a natural person may become the purchaser, although not possessed in his own right of any franchise to maintain and operate. 194 If a corporation possessed of such a franchise should become the purchaser it could maintain and operate under its own franchise, or under the franchise obtained on its purchase of the property. A corporation competent to hold the property could be- come the purchaser, although it did not itself possess any franchise to maintain and operate. Is there any doubt but that a trust company, or a simple bond holding company could become the purchaser and acquire the franchise to maintain and operate? "The franchise of being a corporation need not be im- plied as necessary to secure to the mortgage bondholders or the purchasers at a foreclosure sale, the substantial rights intended to be secured. They acquire the ownership of the railroad and the property incident to it and the franchise of maintaining and operating it as such," etc. (Memphis R. R. Co. vs. Commissioners, 112 U. S. 609; New Orleans, etc. R. R. Co. vs. Delamore, 114 U. S. 501.) To hold that a municipality in making a street grant could prescribe terms and conditions that would over- throw this wise and wholesome rule of law, would in effect give it a greater power to destroy a right of property than is possessed by the state itself. Indeed it would give it a power that can not be exercised in this country as long as our constitutional guaranties prevail and are enforced. Detroit has it's Caesar, and he is wearing a mantle of expired street grants. The lean and hungry Cassius may well inquire of the noble Brutus : "Now, in the names of all the gods at once, On what meat doth this our Caesar feed, That he has grown so great?" In the Indianapolis street railway case of City Railway Co. vs. Citizens' Railroad Co., 166 U. $. 557, it appeared 195 that in 1861 the Indiana legislature passed an act author- izing the incorporation of street railway companies, and it was provided that the stockholders in such companies should be a corporation in perpetuity and should have power to construct, maintain and operate street railways, but should not do so in any incorporated city without first obtaining the consent of the common council to the loca- tion, survey and construction of the railroad through or across the public streets of the city. The Citizens' Street Railway Company was organized under that act, and the common council of Indianapolis, January 18, 1864, passed an ordinance making a grant to the company for thirty years. April 7, 1880, the ordinance was amended by making the period thirty-seven years in- stead of thirty. In 1893 the common council made a grant to a rival company known as the City Railway Company, which authorized it to lay and maintain street railways upon certain streets, many of which were already occupied by the Citizens' Street Railroad Company, which had suc- ceeded the Citizens' Street Railway Company. In the United States Circuit Court, Woods, Circuit Judge, delivering the controlling opinion, it was held that the consent of the city had relation, not to the termina- tion of street railway franchises, but rather to the manner of their exercise, and that the provision of the ordinances limiting the duration of the grant was void. It was further held that if the original limitation of thirty years was valid, so was the seven years' extension, and the Citizens' Railroad Company was entitled to relief to protect it during the remaining portion of the extended period, viz., to January 18, 1901, (64 Fed. 647). 196 The Supreme Court of the United States modified the decree below by striking out the words "without regard to any limitation of time mentioned in any ordinance of the city," and the word "forever," but expressly declined to express an opinion upon the question whether the fran- chise from the city was perpetual. Mr. Justice Gray and Mr. Justice White only concurred in the result. Mr. Jus- tice Shiras was of the opinion that the decree should be affirmed without modification. Mr. Justice Harlan did not sit in the case. This Indiana case can not "be regarded as an authority on the question of the duration of such municipal street grants. Nevertheless, the reasoning of Judge Woods is entitled to its full weight, because it was not reviewed or overruled by the Supreme Court. In the Chicago street railway case, reported as Govin vs. City of Chicago, 132 Fed. 848, and Blair vs. Chicago, 201 U. 8. 400, it appeared, that August 15, 1858, the com- mon council of the city of Chicago, passed an ordinance making a street railway grant to three persons, and those who should become associated with them, and which grant, in case the grantees became incorporated, was to pass to the corporation. The ordinance contained terms and con- ditions and fixed the rate of fare at five cents, and it was to "extend to the full time of twenty-five years," and until the city purchased the property. The Illinois legislature, February 14, 1859, passed an act making the grantees, and their successors, a corpora- tion for the term of twenty-five years under the name of "The Chicago City Railway Company." This act referred to the ordinance, affirmed its terms and conditions, and vested the local grant in the corporation. 197 It also created another street railway corporation under the name of "The North Chicago City Railway Company," and conferred on it the like rights, powers and privileges. By an act approved February 21, 1861, another street railway company was incorporated for twenty-five years, under the name of "The Chicago West Division Railway Company." The act referred to the act of February 14, 1859, as containing the powers granted. An act of the Illinois legislature passed over the gov- ernor's veto, February 6, 1865, amended the act of Febru- ary 14, 1859, and the act of February 21, 1861, by striking out of each the words, "for the term of twenty-five years," and inserting in lieu thereof "for ninety-nine years." It was expressly provided that the extension of the period of corporate existence was to be "upon such terms and con- ditions and with such rights and privileges, immunities and exemptions as the common council has or may by con- tract with said parties or any or either of them, prescribe, and any and all acts or deeds of transfer of rights, priv- ileges or franchise, between the corporations in said sev- eral acts named or any two of them, and all contracts, stipulations, licenses and undertakings made, entered into or given, and as made and amended, by and between the said common council, and any one or more of the said cor- porations, respecting the location, use, or exclusion of railways in or upon the streets, or any of them of said city, shall be deemed and held and continued in force during the life hereof" etc. In 1903 the property of these Chicago street railway companies passed into the custody of receivers appointed on judgment creditor's bills by the United States Circuit Court for the Northern District of Illinois. The receivers filed ancillary bills to establish the rights of the companies under the act of 1865. 198 The case was heard before Grosscup and Jenkins, Cir- cuit Judges, who held that as to all the street grants made before the Illinois constitution of 1870 was adopted, the period of their duration had been extended by the act of 1865, for ninety-nine years. Their decision was reviewed in the Supreme Court, of the United States. The opinion of the court was delivered by Mr. Justice Day. Looking at each of the local grants as an entirety, and antedating as they did the creation of the corporations, and regarding them as within the charter powers of the common council, without other legislative sanction, it was held that the local grants were not ex- tended by the act of 1865. Justices McKenna, Brown and Brewer dissented in an opinion by Justice McKenna, in which the majority opin- ion was reviewed and criticised. Both opinions are learned and able, but the conflict of arguments and reasons leaves the subject in a sort of in- tellectual Gordian knot, difficult to untie, but easily sev- ered and separated into two parts. Applied to the rates of fare and the other terms and con- ditions of the municipal street grants, the majority opin- ion is sound and convincing, but in so far as it fails to separate the franchise, emanating from the state, of main- taining and operating the street railways and the local consent to its exercise in the streets designated and occu- N pied on the one hand, from the terms and conditions and rates of fare of the local grants and contracts on the other, it is, from my point of view, clearly erroneous. The minority opinion applied to the franchise to main- tain and operate and the local consent, is unanswerable, but when applied to the terms and conditions and rates of 199 fare, it is erroneous, and is fully answered by the majority opinion. The one opinion goes too far in one direction, and the other goes too far in the other direction. Neither is alto- gether sound or unsound. The counsel for the street rail- way companies claimed too much and lost all. If they had made a strong contention in support of the distinction I have endeavored to establish, they might have obtained a decision, that although the local contracts had expired, the right to maintain and operate the street railways, sub- ject in the absence of new contracts, to common law obli- gations, had been extended for ninety-nine years, and for as much longer as the physical property of the companies remained in existence, and in their ownership or that of their successors and assigns. It is quite clear that all of the learned judges of the Supreme Court of the United States could have harmon- ized their views on the line of demarkation which I have attempted to draw. This much can be said in behalf of the counsel for the street railway companies, that they had a very strong case on both aspects of the question, and they are pardonable for not having been able to foresee that Mr. Justice Day and his associates would have the learning and ability to defeat a good part of their case, and in doing so would sweep their whole case away. The decision of the Supreme Court of the United States in the Chicago street railway case can have no value as an authority in the determination of the Michigan case we have in hand, for the very good reason that the question presented was one of statutory construction, concerning the meaning of an extraordiary act of the legislature of Illinois extending the corporate life of certain street rail- 200 way companies from twenty-five to ninety-nine years, and which act it was claimed, also made a like extension of the municipal street grants held by the companies. The local grants had all been made for twenty-five years, or less, and it was claimed that the act of the legislature ex- tended them for ninety-nine years, as well as the corporate life of the companies. The court, without violating any of the recognized rules of construction, reached the conclusion that the local grants were not extended. Whatever conclusion one may reach as to the merits, as an authority in other cases, of the decision of the Supreme Court of the United States in the Chicago street railway case, it can be asserted without any danger of successful contradiction, that the court did not express any opinion on what the rights and remedies of the parties and of the general public would be in case the city of Chicago had undertaken by injunction or otherwise to dispossess the street railway companies and to compel a cessation of the public service. It is not conceivable that any court would ever have required or permitted the street railway companies of Chicago (serving as they do, in whole or in part two mil- lions of people), to stop operating their cars over the streets of the city for even one day. The Supreme Court of the United States has never ren- dered a decision making such a result possible, and from what we can judge of the decisions in the analogous cases cited in other parts of this brief, it is not likely the court ever will render any such decision. The decision of the Supreme Court of the United States in the Chicago Street Railway case of Blair vs. Chicago, 201 201 U. S. 400, left the street railway companies in pos- session of the streets under a number of local grants which had expired. The state legislature passed an act authorizing muni- cipal ownership, but the proposition was defeated by the electors of the city, whereupon the city and the street railway companies came to an amicable adjustment. It was found and agreed that the property, owned and con- trolled and to be acquired by the Chicago City Railway Company was of the value of $21,000,000 and that of the Chicago Railways Company was $29,000,000. The rates of fare, with transfers, were fixed at five cents for each passenger twelve years of age or over, and three cents for each passenger under twelve years of age; children under seven years of age accompanied by a per- son paying fare to be carried free. The gross earnings of the street railways and from all sources, are to be applied: (1) Operating expenses, maintenance and repairs and taxes; and after three years, six per cent of gross receipts shall be set apart for a maintenance and repairs fund, and eight per cent for a renewals and depreciation fund. (2) Interest at five per cent on the capital investment of $50,000,000 and such additions thereto as are author- ized by the ordinances. (3) The residue of the gross receipts to be divided between the company and the city; forty-five per cent to be retained by the company, and fifty-five per cent, to be paid to the city. The city is given the right to purchase the property at any time on payment to the company of the capital in- vestment; and, subject to certain qualifications, the city 202 can authorize any other street railway company as its licensee to purchase the property at the same price, plus twenty per cent thereof. If the city or its licensee does not purchase the property prior to February 1, 1927, the city agrees not to grant the streets to a new company, except on the condition that such new company will purchase the property upon the same terms as the city might then purchase it. The two ordinances of February 11, 1907, have the same general terms and provisions, and are only different in matters of detail, necessary to adapt them to each com- pany separately. A copy of the ordinance granted to the Chicago City Railway Company will be printed in the appendixes as No. 2. It is a recognition by the city of the permanent and per- petual nature of street railway property, and it precludes any destruction or confiscation of the property by the city. As I have said such recognition is absolutely necessary to secure as low a fare as five cents. The financial results of the Chicago street railway or- dinances for the first year, expiring January 31, 1908, are shown by the published "Report of the Board of Sup- ervising Engineers." Bion J. Arnold is chairman of the board. The number of revenue passengers was 372,123,199, and the number of transfers and free passengers was 246,177,- 067. The following figures were compiled by the board for the purpose of showing what became of the five cents paid by each revenue passenger. cents. Paid in wages to employees 2.24 Paid for materials, supplies, and other expenses incident to the maintenace, operation and management of the railways 1.16 203 Paid for taxes 10 Interest on value of properties 75 Profit paid to the railways 34 Profit paid to the city ; . .41 Total 5.00 The additions to the capital investment during the year, including some made between June 30, 1906, and February 1, 1907, amounted to $11,641,192.65, which was mainly ex- pended for the rehabilitation required by the ordinances. CHICAGO RAILWAYS COMPANYCHICAGO CITY RAILWAY COMPANY. Combined Income Account. For the year ended January 31, 1908. Earnings : Passengers $18,464,553.85 Chartered cars 6,227.50 Mail cars 56,420.41 Newspaper cars 1,800.00 Advertising 78,208.32 Rent of land and buildings 3,472.00 Rent of equipment 37,569.16 Sale of power 40,424.57 Interest on deposit (net) 52,350.48 Miscellaneous 82,068.02 Gross earnings $18,823.094.31 Expenses: Schedule No. 1. Maintenance of way and structures. ..$ 1,230,035.42 Maintenance of equipment 1,473,763.46 Operation of power-plants 1,933,456. 7: > Operation of cars 5,835,092.26 General expenses 2,039,424.62 Expense, account investment real estate 53,519.04 204 Taxes 439,305.53 Renewals 171,568.95 Total expenses $13,176,166.01 Net earnings from operation $ 5,646,928.30 From which deduct: Interest on capital invested at 5# 2,802,167.43 Net earnings f 2,844,760.87 Divisible thus: City of Chicago, 55# f 1,564,618.47 Companies, 45# 1,280,142.40 Operating expenses and renewals, per cent gross earnings 70$ 205 XII. There are many practical reasons concerning the welfare and happiness of the people, why the street railway business of the city of Detroit and its suburbs, cannot be conducted on the theory, that at the ex- piration of municipal street grants, the municipalities have the power to dictate terms and conditions and rates of fare, regardless of the question whether they are reasonable or unreasonable. If street railways are regarded as permanent public improvements, and the investment therein not subject to destruction at the expiration of the local grants, by an enforced removal from the streets or by an arbitrary re- duction of fares having a like result, the question what is a reasonable rate of fare, is not difficult; but if the capital invested is subjected to these risks, the question is fathomless. In all of the reasonable rate cases decided by the Su- preme Court of the United States the investments were permanent. Steam railroads: (Reagan vs. Farmers Loan & Trust Co., 154 U. 8., 362; Smyth vs. Ames, 169 U. 8., 466; Ex- parte Young, 209 U. S., 123; Southern Ry. Co. vs. St. Louis Hay & Grain Co., 214 U. 8., 297.) Water and irrigation works: (San Diego Land <& Town Co. vs. Jasper, 189 U. S., 439; Stanislaus County vs. San Joaguin, etc. Co., 192 U. S., 201 ; Knoxrlllc rs Water Co., 212 U. 8,1) Gas works: ( Wilco vs. Consolidated Gas Work*. 212 U. S., 578.) 206 Permanent turnpike: (Covington. etc.,, Turnpike Co. vs. Sandford, 164 V. 8., 578.) Telephone system: (Home Telephone Co. vs. Los Angeles, 211 U. 8., 265.) In the Knoxville water works case, the court summar- ized its leading prior decisions; and as it was not satis- fied that the rates in question were confiscatory, dis- missed the bill of the water company without prejudice to the filing of a new bill if the rates proved to be in- adequate. The court in an opinion by Mr. Justice Moody, said : "It cannot be doubted that in a clear case of confis- cation it is the right and duty of the court to annul the law. Thus in Reagan vs. Farmers' Loan & Trust Co., 154 U. 8., 362, where the property was worth more than its capitalization, and upon the admitted facts the rates pre- scribed would not pay one-half the interest on the bonded debt; in Cov-ington etc. Turnpike Co. vs. Sanford, 164 U. 8., 578, where the rates prescribed would not even pay operating expenses; in Smyth vs. Ames, 169 U. 8., 466, where the rates prescribed left substantially nothing over operating expenses and cost of service; and in Expartc Young, supra, where, on the aspect of the case whicli was before the court, it was not disputed that the rates prescribed were in fact confiscatory, injunctions were severally sustained. But the case before us is not a case of this kind. Upon any aspect of the evidence the com- pany is certain to obtain a substantial net revenue un- der the operation of the ordinance. The net income, in any event, would be substantially 6 per cent, or 4 per cent after an allowance of 2 per cent for depreciation. See Stanislaus County vs. Sam, Joaquin Co., 192 U. S. 201. We cannot know clearlv that the revenue would not much 207 exceed that return. We do not feel called upon to de- termine whether a demonstrated reduction of income i<> that point would or would not amount to confiscation. Where the case rests, as it does here, not upon observa- tion of the actual operation under the ordinance, but upon speculation as to its effect, based upon the opera- tions of a prior fiscal year, we will not guess whether the substantial return certain to be earned would lack some- thing of the return which would save the effect of the ordinance from confiscation. It is enough that the whole case leaves us in grave doubt. The valuation of the prop- erty was an estimate and is greatly disputed. The ex- pense account was not agreed upon. The ordinance had not actually been put into operation ; the inferences were based upon the operation of the preceding year; and the conclusion of the court below rested upon that most un- satisfactory evidence, the testimony of expert witnesses employed by the parties. The city authorities acted in good faith, and they tried, without success, to obtain from the company a statement of its property, in capitali- zation and earnings. "The courts, in clear cases, ought not to hesitate to arrest the operation of a confiscatory law, but they oii.uht to refrain from interfering in cases of any other kind. Regulation of public service corporations, which perform their duties under conditions of necessary monopoly, will occur with greater and greater frequency as time goes on. It is a delicate and dangerous function, and ought to be exercised with a keen sense of justice on the part of the regulating body, met by a frank disclosure on the part of the company to be regulated. The courts ought not to bear the whole burden of saving property from confiscation, though they will not be found wanting where the proof is clear. The legislatures and subordi- nate bodies, to whom the legislative power has been dele- 208 gated, ought to do their part. Our social system rests largely upon the sanctity of private property, and that state or community which seeks to invade it wiH soon discover the error in the disaster which follows. The slight gain to the consumer, which he would obtain from a reduction in the rates charged by public service corpo- rations, is as nothing compared with his share in the ruin which would be brought about by denying to private prop- erty its just reward, thus unsettling values and destroy- ing confidence. On the other hand, the companies to be regulated, will find it to their lasting interest to furnish freely the information upon which a just regulation can be based. "If hereafter it shall appear, under the actual opera- tion of the ordinance, that the returns allowed by it oper- ate as a confiscation of property, nothing in this judg- ment will prevent another application to the courts of the United States or to the courts of the State of Tennessee. But as the case now stands there is no such certainty that the rates prescribed will necessarily have the effect of denying to the company such a return as would avoid confiscation." A careful reading of the opinions of the Supreme Court of the United States in the foregoing reasonable rate cases, and applying the rules laid down by the court, to the case of the Detroit United Kailway, leads us to the following conclusions. (1) That a just and fair valuation must be placed on the property of the company, not at its cost, but at what it would now cost to reproduce it, less any actual depreciation as it has annually occurred, and is likely to occur in the future; but which depreciation must be added to the operating expenses of the company. Any unexpired street grants held by the company must be 200 included in -the valuation; and a valuation must also be placed upon the franchise to maintain and operate, as that franchise has become permanently attached to the physical property, which must be given the value it has as a system of street railways to be maintained and oper- ated, and not to be destroyed by removal from the streets, or 'by inadequate rates of fare. (2) That a net income of six per cent upon the value of the property thus ascertained, would not be regarded as confiscatory ; but in view of the net earnings in Detroit and Michigan of investments in banking, manufacturing, merchandizing, and newspaper publishing, judged on a strict cash basis, ten per cent on the present cash value of the property would not be excessive and would be al- together just and reasonable. The question of reasonable rates is primarily for the authorities of the state, and the courts of the state. Where the state law provides for a determination of the question of reasonableness, by an executive board or com- mission, and permits a review of its decisions by the courts of the state with an appeal to the State Supreme Court, the jurisdiction of the federal courts to restrain the imposition of confiscatory rates should not be invoked until resort has been had to the state tribunal and courts. (Prentiss vs. Atlantic Coast Line, 211 U. S., 210.) These decisions of the Supreme Court of the United States in rate cases bring one feature of the federal juris- diction in such cases into great prominence. That jurisdiction can only be sucessfully invoked to prevent actual confiscation, and in the consideration of that question the federal courts are necessarily confined to the property concerned as it is, and cannot have re- gard for collateral matters which may properly be given 210 consideration by the state or local authorities when they determine a question of reasonable rates. There is a great deal of difference between a public service corporation which is doing business on compen- sation which barely escapes from being conns-eatery, and a like corporation earning a liberal conpensation. The one must hold down the wages of its employes to the low- est possible point; exercise the utmost economy in the purchase of material and supplies, and in the erection of its buildings and plant; render just as little and as poor a service to the public as is permissible; and for- bear to the limit from making extensions and improve- ments. On the other hand a corporation earning a fairly ade- quate compensation, can pay good living wages to its em- ployes; make extensions and improvements; and main- tain a good, efficient and steadily improving service; and be of great and continuous benefit to the community in which it is located. Nothing could be more detrimental to a growing and progressive American city, than a street railway corpo- ration constantly on the verge of bankruptcy. Old, out of date and dirty cars; rough tracks and battered rails; flattened wheels, and ill-clad and overworked employes, are inevitable with a street railway company whose rates of fare just escape from being denounced by the federal judiciary. State authorities in fixing, and local authorities in agreeing to rates of fare, may well prefer to establish rates, not on an extravagant, but on a wholesome basis, such as would encourage the street railway company in maintaining and justify the public in demanding and en- forcing a service of $ie highest quality attainable. In every growing city, where the population and busi- 211 ness of the city and its suburbs is constantly increasing, the demand for new street railways and extensions of old lines, is incessant, and unless adequately remunerated and permanently secured, private capital will not engage in such undertakes; and public capital, managed by the municipality, cannot be employed, except with the cer- tainty that the service will not be as good and will be more expensive to the public, than that of a private cor- poration. During the street railway agitation in Detroit there has not, for about thirteen years, been any construction of new lines or extensions within the city. Some exten- sions and improvements have been made in the suburbs, but these were made under grants from suburban town- ships and villages and not under city grants. A number of new lines, and a rearrangement of the existing system, is now a prime necessity, and an ade- quate terminal station for the interurban lines is of the utmost importance to the business interests of the city, Which have been so greatly promoted and advanced by the interurban traffic and can be still further benefited by an up to date service. It is safe to say that ten millions of dollars should be invested in permanent street railway improvements in the immediate future. Now, turn into the question of reasonable rates, as good law, the contention that at the expiration of a street grant the street railway company must submit to the option of getting out of the streets, or of accepting ruinous rates of fare, and does it not become perfectly clear, that a street railway company must build up a sinking fund equal to the then value of its property, less only the value of that property as jugk removed from the streets; or run the risk of being unable to pay its bonds 212 and other indebtedness, and of making no return what- ever to its stockholders. How can any person of plain, ordinary understanding seriously and in good faith contend that the street rail- ways of Detroit have been in the past and should be in the future, constructed and operated upon a legal theory so utterly destructive to the actual investments therein, and such a complete and absolute barrier to the low rates of fare which have so far prevailed. With such a theory established as the law in Michigan it is a certainty that the Supreme Court of the United States would hold enforced five cent fares to be confls- catory and a deprivation of property without due process of law. The report of the Comptroller of the Currency for 1908, shows that the net earnings of the national banks of the United States, on a cash capital of $893,932,010 were $131,335,288, or 14.69 per cent; and that the divi- dends actually paid were $97,336,282, or 10.89 per cent. State banks, reporting their dividends to the comp- troller, paid in 1908, dividends of 10.19 per cent; loan and trust companies paid 10.08 per cent; and private banks paid 13.57 per cent, It is well known that the net earnings of the national and state banks and the trust companies of Detriot, ex- ceed the above averages. The stove companies in Detroit have paid more than 10 per cent for years, and in addition each company has accumulated a large surplus, justifying stock dividends in addition to the regular dividends. Other manufactur- ing companies, and mercantile corporations, have been equally successful. No business enterprise in Detroit would be regarded 213 as a success if it did not earn net, 10 per cent of the capital actually invested. The business which more nearly resembles that of a public service corporation is the business of publishing a newspaper. It is similar to that of a telegraph or telephone com pany, which transmits written or oral messages. A news- paper corporation conveys, transmits and carries news, advertisements and literary matter, including editorial comments, propaganda and sermons, all of more or less value to the general public. In the absence of a statute making them such, tele- graph and telephone companies are not in Michigan re- garded as common carriers. (Birket vs. Telegraph Co., 103 Mich. 261.) But the legislature can make them common carriers, and it has enacted many provisions regulating them. How would the owners of our newspapers like to have their business subjected to the control of a state commis- sion, with power to reduce their net earnings to 6 per cent of the actual cash value of their physical property, or the money actually invested. They make great use of the railroads, telegraph and telephone lines, and perform a public service of the same general character. The street railways of Detroit have been of as much benefit to our newspaper corporations as they have been to any other interest in the community, and there is quite as much need of regulating their charges for advertisements, as there is need of regulating the charges of other corporations engaged in serving the public. There are no published reports showing either the gross or the net earnings of our newspapers, but they are known to be very large. More than 100 per cent on the 214 cash capital actually invested is not uncommon among them. Under the constitutional guaranties which prevail in the United States, it is not competent for state legisla- tures or congress to regulate prices for a purely private business; but the line between that which is private, and that which is public is not clearly drawn. Under mod- ern conditions many things which have been heretofore regarded as private, have been charged with a public in- terest, warranting governmental interference. The business of the Standard Oil Company may be regarded as purely private, but its pipe lines have in some of the states been declared common carriers, and the Michigan statute, for the incorporation of pipe line com- panies for the transportation of brine expressly makes such companies common carriers. (2 C. L. 1897, Sec. 6497, subd. 7.) It would be difficult to define the limits of the power of our governments to fix prices; but it is certain that many 'things which have not yet been touched, are within that power, and will be subjected to it when the public inter- ests make it necessary. It would be easy to extend the present limits of gov- ernmental interference so as to include newspaper cor- porations as common carriers of news, advertisements and mental pabulum. There should be no governmental regulation of private enterprises except in the face of a supreme necessity, and then the action of the government should be direct, firm and decisive. Our newspaper friends are safe for many years, but that does not change the fact that the newspaper corpo- rations of the present day, are but little if any different 215 from such as are universally regarded as public service corporations. It may be urged that a newspaper is not a monopoly, as anyone can enter into that business; but the truth is a newspaper with an old established circulation has the greatest kind of a monopoly; no one can disturb it; it would take many millions of dollars to supplant the Detroit Evening News or the Detroit Free Press, if it could be done at all. Further than that our leading newspapers have press associations which are openly and avowedly maintained as monopolies. Where a street railway company is under the risk of having its property destroyed by being compelled to re- move from the streets or to accept inadequate rates of fare, it is certainly entitled to deduct from its net earn- ings over and 'above operating expenses, a sufficient an- nual percentage to build up a sinking fund to restore the investment in its capital stock and to pay its bonded and other indebtedness in full. The courts of Ontario, and the learned judges of the privy council in England have had occasion to consider a similar case. (International Bridge Company vs. Can- ada Southern R. R. Co., 8 Ont . App. 226 ; S. C. 8 Appeal Cases, 723.) In that case the tolls of the bridge company were at- tacked 'by the railroad company as unreasonable, and it appeared that the net earnings were as much as 15 per cent But it further appeared that the bridge was liable to bo swept away or destroyed, in whole or in part, as the Tay bridge was, and it was held that the bridge company was entitled to build up a sinking fund. The Ontario court said "To speak of six per cent upon capital laid out in such an enterprise, is most unreasonable." 216 Seasonable rate cases in the United States have only concerned permanent investments and the question of building up a sinking fund to preserve the investment, has not been presented; but it has been mentioned in two cases in Pennsylvania, one of which concerned the plant of a water company, and the other a steam railroad. (Bry- mer vs. Butler Water Co., 179 Pa. St., 231 ; Penna. R. R. Co. vs. Phila. County, 220 Pa., 100.) In the case of the Pennsylvania Railroad company it appeared that the company had $53,600,598.74 invested in its intrastate passenger business, of which $21,051,- 795.96 represented mortgage or otherwise funded indebt- edness, giving rise to an annual interest charge of $894,- 701.33; and $32,548,802.74 represented the amount of money contributed by the stockholders, plus the amount set aside from surplus earnings in past years. The Pennsylvania, Railroad Company was incorporated in 1846, and under the rates of fare it was charging, the stockholders investment of $32,548,802.78 was earning 5.1 per cent. The legislature passed an act reducing its rates of fare to two cents per mile, which it was found would reduce the earnigs of the stockholders to 1.94 per cent. Held that the act of the legislature was confiscatory and unconstitutional. At pages 114, 115, the court said : "The court below conceded the general rule and held that "any attempt by the legislature at the regulation of charges is presumptively reasonable. The burden of dem- onstrating the unreasonableness lies on him who objects to the regulation enacted." And further: "Public service corporations in Pennsylvania are entitled to look for a rate of return, if their property will earn it, not less than the legal rate of interest, and a system of charges 217 that yields no more income than is fairly requisite to maintain the plant, pay fixed charges and operating ex- penses, provide a suitable sinking fund for the payment of debts and pay a fair profit to the owners of the prop- erty cannot be said to be unreasonable. Brymer vs. But- ler Water Co., 179 Pa., 231." In so holding the court committed no error of which the appellant can complain. The presumption in favor of the prescribed rate is no more than the ordinary presumption in favor of the con- stitutionality of the acts of assembly. It has no special strength or sanctity, and in view of the public history of the passage of the act of 1907 without investigation and in obedience to a popular agitation for the same rate not only in Pennsylvania but over the whole country, it might be said that very slight evidence would rebut the pre- sumption in this case. "What was said in Brymer vs. Water Co., 179 Pa., 231, was that the company was entitled to a fair return, not less than the legal rate of interest. In naming the legal rate the court was naming a minimum, not maxi- mum, rate. Six per cent is the legal estimate of the legit- imate profit from the ordinary safe use of money. No business man in 1846, even if now, went into a new and extensive venture of uncertain outcome without the hope of more than common interest. Because his judgment 01* foresight was good is no reason that he should be shorn of his profits in the result. What is a fair profit is a com- plicated and difficult question, but there are certain ele- ments that are plainly to be regarded to avoid injustice, such as the original investment, the risks assumed at that time, the returns as compared with other enterprises as nearly similar as may be, the cost of maintenance and improvement, the prospects of increase and the present value in view of the preceding elements. Injustice is done by anything that fails to consider these, and to deal equitably with the private as well as the public interests 218 involved. It is not necessarily regulated by what others would now make the venture for, under the present cir- cumstances and with present knowledge. The public hav- ing long reaped the incidental profits from the develop- ment of the country by the enterprise and venture of cap- ital, in the increased value of land, the opening of new and wider markets for crops and manufactures and the facility of intercourse and exchange for persons and property, the courts should not now ignore this aspect of the subject in considering the question of injustice to the corporators. In view of the evidence before the court and the proper elements with which it must be considered the court below certainly did not err against the appel- lant in finding that the statutory rates of fare would do injustice to the corporators." The sinking fund recognized by the Pennsylvania court was for the purpose of building up a fund to pay the bonded debt of the company, but any reduction in that debt would be a reduction of the capital invested and cause a corresponding decrease in the annual charges for interest. That kind of a sinking fund is one of prudence to en- able the company to pay its bonded indebtedness or some portion of it at maturity, in case of any difficulty in mak- ing a renewal of the loan. It is not a sinking fund to protect the property from destruction, by dismantling it or by inadequate rates of fare forced upon the company. The Detroit United Railway, has a capital investment of |25,000,000 equally divided into a stock issue and a bonded indebtedness of $12,500,000 each. If the company, whenever its local contracts fixing rates of fare have ex- pired, and it is operating its street railways without any such contract, is subject to adverse municipal action com- pelling it to remove from the streets or to charge ruinous 219 rates of fare, it is entitled, on any view that can be taken of the risk, to set a part for the purposes of a sinking fund, as much as $1,000,000 a year; and any additions to the cash capital invested should be safeguarded in the same way. The Cleveland street railway ordinance of December 18, 1909, guards against any such destruction of the prop- erty, and in that connection provides for a sinking fund. The city reserves the right to purchase the property at its capital value, plus ten per cent; it also reserves the right after January 1, 1918, to designate a purchaser of the property, on the same terms; and if the grant ex- pires and is not renewed, and the city makes a grant to another company, that company is required to purchase the property on the same terms as the city might have purchased it. When the grant has less than fifteen years to run the company is authorized to charge the maximum rates of fare, of four cents cash fare, seven tickets for twenty-five cents, and one cent transfer, no rebate; and the surplus earnings are to be applied (1) to the payment of floating indebtedness; (2) the payment of any outstanding bonds which can be paid, and (3) by creating a sinking fund to assist in securing a reduction of capital value, in case the city or its licensee or grantee should purchase the property. The Cleveland ordinance is wisely designed to prevent the city from exercising at the expiration of the grant, that arbitrary and confiscatory power, it is supposed to possess under the laws of Ohio. It is a better construc- tion of those laws than that of the state and federal courts in the case of the Inclined Plane Railroad Com pany, and it is to the credit of Mayor Tom L. Johnson that he wound up his administration by consenting to and approving it. 220 The law, like everything else, is evolutionary in its nature. At times it may be a laggard, but eventually it reaches the truth and justice. The Cleveland ordinance is a practical precedent of in- estimable value to the people of Ohio; but it has one fea- ture of great danger to the street railway company. It is more than likely that under the provisions of the ordinance for an automatic adjustment from time to time of the rates of fare, the maximum rates will be reached before the first ten years of the twenty-five year grant has expired, and that they will not be sufficient to main- tain such a street railway service as the city is entitled to have and demand. The company is bound by its con- tract, and it may become financially embarrassed long be- fore the property is purchased by the city, its licensee or grantee, to the great injury and loss of its stockholders. In the presidential campaign of 1896 I had occasion to publish a series of tables designed to show the extent to which the relative shortage for a number of years in the worlds' production of gold, had enhanced the value or purchasing power of that metal and made a corresponding reduction in the prices of all the staple crops of American farms. I made my comparison with a table of the prices of 22 farm products prevailing in Chicago July 1, 1874, and a similar table of the prices in Chicago July 1, 189-6, and found that gold had appreciated about 105 per cent. July 1, 1901, I published a table of prices then prevail- ing and it showed that the purchasing power of gold had receded so that it was only 26 1-2 per cent greater than it was in 1874. In that connection I said : "The annual production of gold is now more than $300,- 000,000 with the prospect that each succeeding year will see a substantial increase, and in nrr judgment it indi- 221 cates that we are at the threshold of the greatest era of prosperity the world has ever seen." As a matter of fact the annual production of gold has steadily increased, and in 1909 it reached the enormous sum of $450,000,000 with every indication that by 1912 it will be $500,000,000. As gold is practically imperishable, only a small por- tion of it, being actually consumed, destroyed or lost, the production each year increases the worlds' stock of that metal which greatly decreases its value or purchasing power; and it will continue to do so, as long as the quan- titative theory of money, and the law of supply and de- mand rule the economic world, and the increased produc- tion of gold continues. I am not a prophet or the son of a prophet, but I now predict that we are only on the eve of higher prices. There does not appear to be any way of stopping it. The exertable power of all the gov- ernments in the world is not equal to the exigencies of the situation. During the second administration of President Cleve- land, bonds were issued under the obsolete resumption act, to keep a reserve fund in the treasury of $50,000,000, and now there is over $1,000,000,000 in the vaults, the greater part of which is in circulation in the form of gold certificates or yellow backs. The best evidence of the effect on prices of the in- creased production of gold will be found in the third of the tables set forth in the appendix. It shows that since 1896 gold has depreciated in value over 50 per cent, mus- ing a rise of prices of 100 per cent. There is only one restraining influence. Inflation feeds on itself; it produces great business and productive ac- tivity, which over-leaps itself, and a set back becomes in- 222 evi table. Such was the financial depression of 1907. The peculiar thing about that "panic," was that it had but little effect on the general business of the country, and did not produce a general fall in prices; indeed, some of the more staple productions, actually increased in prices. It is proposed to remedy the alleged evil of such set- backs by authorizing an emergency currency, which, how- ever, is more likely to prove a permanent inflation rather than a temporary one. If a greater volume of circulating medium is necessary, gold can be purchased in the markets of the world., de- posited in the treasury and gold certificates obtained for it. That is the only kind of inflation needed, and it would have a restraining influence on the increase in prices; not- enough, however, to prevent a gradual rise, as long as the deluge of gold continues. Like all other employes, those of a street railway must have wages sufficient to feed, clothe and shelter them; and this element in the operation of street railways may have a very serious effect on their finances in the near future, accompanied as it will be, by an equal rise in the prices of all material and supplies entering into construc- tion, maintenance and repairs. Whatever merit the agitation for three-cent fares may have possessed in the nineties has been absolutely oblit- erated; and. the end of the upward tendency in prices is not yet in sight. The Cleveland street railway ordinance was borrowed in part from the laws of Indiana. The Supreme 'Court of the United States in deciding the Indianapolis street railway case, (166 U. S., 557), having declined to express an opinion on the question whether the local grant extended beyond the designated 223 term of thirty-seven years, that question remained unset- tled until it was disposed of by the state legislature. At the next ensuing session of the legislature, an act, approved March 5, 1897, provided that in any city having a population of more than 100,000 inhabitants, the local grants should expire at the time designated, and the right of the grantee to remain in the streets should cease; but it was further provided that at or before the expiration of the contract period, the city should open to free com- petition the further occupancy of the streets for thirty years, and if the occupying company was not the success- ful competitor, the new or other company, which was suc- cessful, could not take possession of the streets, until it had condemned the street railway property of the old company to the public use and had paid to the old com- pany the appraised value of its. property as ascertained in the condemnation proceedings. (Laws of Ind. 1897, p. 154.) Another act, approved March 6, 1897, fixed the rate of fare at three cents, with a right to a transfer. (Id.. />. 201). The three-cent fare law was attacked in the state courts, not on the ground that the rate was inadequate, but on the ground that the legislature had no power to impair the terms of local grants which had not expired. The state Supreme Court held the act valid as within the power to amend or repeal. (City of Indianapolis vs. Navin, 151 Ind., 139.) The United States Circuit Court held the act invalid on another ground, not agreeing thereon, with the state court. (Central Trust Co. vs. Citizens Street R. Co., 80 Fed., 218.) An appeal to the United States Circuit of Appeals was dismissed on the jurisdictional ground that the question 224 of impairment of contract should have been appealed to the Supreme Court of the United States. (City of In- dianapolis vs. Central Trust Co., 83 Fed., 529.) The state legislature again intervened and passed the act of March 3, 1899, which fixes the rates of fare at five cents for a single cash fare, with transfer; six tickets for twenty-five cents; and twenty-five tickets for one dollar, with transfers. The city is given the right to purchase the property at any time within two years and not later than one year, before the expiration of the local contract, and if the city and company are unable to agree on the value of the property, the city may institute condemnation proceedings to fix the value. If the local grant expires, and a renewal has not been granted, and a new or other company, on free and open competition, is the successful bidder, it must condemn and pay for the property of the occupying company as under the act of 1897. (Laws of Ind., 1899, p. 260.) The above act is still in force. (2 Burns' Anno. In- diana Statutes, 1908, Sec. 5648-5657, see sec. 5665.) It has been sustained as constitutional. (Smith vs In- dianapolis Street Railway Co., 158 Ind., 425.) 225 XIII. "No more public service franchises on any terms, and the termination of all existing grants at the earliest possible date. "Government by the people, and not by private corporations." One of the leading newspapers of Detroit has had the above motto or legend at the head of its editorial columns for a long time. I want to express my entire approval of it, and endorsement of every idea or sentiment con- tained in it; but perhaps not quite in the same sense it is understood by the authors of it, or by some who have read it Government by the people, does not in this country mean the mere unrestrained will of the people. The peo- ple themselves have adopted a constitution, which divides the government into three branches or principal depart- ments, the legislative, executive and judicative. The judi- cial is as much a part of government by the people as the legislative or executive. In addition to this division of the powers of government the people in their constitution have placed certain restrictions on all the departments, and on themselves, among others, that no person shall be deprived of his life, liberty or property without due process of law, and they have made it the particular duty of the judiciary to see that this restriction is observed and enforced. This is government by the people as it exists in the United States. It is not government by the mere will or caprice of majorities, but by sound, sensible and imper- 226 ative law. It is not government by editorial opinion, or by temporary outbursts of popular feeling. In its true meaning the government by the people clause of the motto of the Evening News is absolutely correct. The public- service franchises mentioned are contracts fix- ing for a long or short period the rates of fare or prices to be charged by the grantee. These contracts, if they are for any considerable length of time, are objectionable, because they may become very burdensome to one or the other of the parties, without any possible chance for re- lief. The Supreme Court of the United States has re- cently npheld a contract of the City of Minneapolis for fifty-years. (Advance Sheets, Feb. 1, 1910, p. 118.) It is good advice to give to municipalities and to pub- lic service corporations, do not make any long-time con- tracts, but leave the rates of fare, or prices, to be deter- mined from time to time, on common law principles, as changes in economic conditions, in the one direction or the other, actually occur. That is the only safe, sound and just way of handling so troublesome a question. The Supreme Court of the United States has always been very careful not to make any permanent decrees in rate cases, but has invariably left it open to either of the parties, to make a new application to the trial court in case the rates sustained by the court prove to be inade- quate or excessive. What could be more in harmony with the American regard for fair play and equal and exact justice? Some of the street grants of the Detroit United Rail- way have expired, and others will expire. Is it good sense on the part of the city or the company to continue the policy of making long time contracts, to become, in course 227 of time, subjects of dissatisfaction and controversy? The automatic adjustment of fares provided for in the Cleve- land street railway ordinance will become a matter of legal controversy to be settled by Judge Tayler or some other good judge, and it would have been better to have left the question of reasonable fares wide open, for judi- cial action whenever there is any occasion to revise the rates. This is no idle dream ; it is plain 'and simple common sense; and the Evening News is right when it says, "No more public service franchises." If its learned and accomplished editors, or any other citizens, or the city itself, are of the opinion that the rates of fare now (being charged by the Detroit United Railway are excessive, the courts are open to them, with a certainty that they will be given a full and fair hearing, and as just a decision as is attainable by any known means of adjusting matters of dispute and controversy. The decisions of the courts are far from being always right, but the judiciary is the result of many centuries of human experience, and the tendency among all the more civilized nations is to settle their disagreements by arbitration. Eventually there will be a great international court, which will exist and have jurisdiction for that very purpose. 228 XIV. One of the great merits of requiring or permitting street railway corporations to maintain and operate their railways subject only to the legal obligation to charge reasonable fares, is, that it does away with the real and pretended reasons for municipal owner- ship. The ownership and operation of street railways by municipalities can have but one or both of two objects: (1) To secure the same service a private corporation would render for less cost to the public; or (2) to secure a better service for the same cost. The best service attainable at the lowest possible cost is the thing that is desired, and is much more desirable than a poorer service at less cost. At the inception of a street railway enterprise, a long time contract may be advisable to enable the grantee to apply its surplus earnings to extending and building up a street railwav system. Such was the history of the old Detroit City Eailway under its thirty year contracts. The city and the public got the service wanted, which was the consider- ation for the grants, and made them inviolable contracts. When the Detroit United Railway acquired the prop- erty it got the tail-end of a number of the grants, among them those on four of the most important streets in the city, Jefferson, Woodward, Gratiot and Michigan, but it continued the policy of maintaining and improving the property and not allowing it to deteriorate in efficiency or value. 229 Now, that these grants have expired, and the property is in good working condition, and only needs to be fur- ther improved, and a few new lines and extensions built, here and there, a contract for any considerable length of time, would, as a business proposition, be ridiculous, for it would more than likely prove injurious and burdensome to one or the other of the parties, before the contract period expired. The longer the contract period, the more likely it is, that a serious change in economic and other conditions will occur. All the sentiment there is in United States in favor of municipal ownership has been created by these long-time contracts. The greater portion of those who believe in municipal ownership, think it is the only way to get rid of such contracts. A contract for twenty-four months is to be preferred to one for twenty-four years, but what is better yet is no contracts whatever fixing rates of fare. The private ownership and operation of street railways on such a plan has great advantages over municipal own- ership. (1) It would enable the public to have the benefit of private management and control, which is universally more economical and efficient than that of public officials. The public would also have the benefit of private enter- prise in making betterments and improvements in tracks, power plants, and equipment. In short the public would get the benefit of the best service for the least cost. (2) Whenever the privately owned company was earn- ing too much money the rates of fare could be reduced, and when it was not earning enough to keep up with the advance in improved means and facilities for rendering the most efficient service, the rates could be increased. (3) Street railway wars and controversies would be eliminated from municipal politics, whereas municipal- 230 ized street railways would be a subject of interminable controversy in the conduct of municipal affairs. Take the one matter of new lines and extensions, with the pub- lic treasury open for their realization. How could an or- dinary common council be held in sufficient restraint, and how many real estate speculations would be exploited in the outlying wards and nearby territory. Here is where the restraints resting on private enterprise and private capital would be particularly valuable. (4) Under the manhood suffrage which prevails in the United States, the electors in a city would be divided in tw r o classes with opposing interests. The taxpayers of the city would desire high rates of fare to enable a por- tion of the net earnings of the street railways to be paid into the city treasury for their relief; and the non-tax- payers, or rather those who only pay taxes indirectly and hardly realize that they are taxpayers, would demand the lowest rates of fare, regardless of the needs of the public treasury. (5) Who and by what means could any abuses involv- ing the rates of fare fixed by a municipality be corrected or remedied. Every monopoly has some disadvantages, but would not a monopoly owned and operated by a public corporation be a great deal more obnoxious than a private one subject to the judicial control (for which I contend), of its rates of fare. (6) A municipality owning and operating a street railway system, would be in possession of a perpetual franchise with the power to charge whatever rates of fare it pleased, and that power would certainly be abused in the one direction or the other. The rates would be less than they ought to be or higher, and the general public would suffer either from an inadequate service, or exces- sive rates of fare. 231 (7) The restricted area or the unrestricted area of territory to be served by a municipal street railway sys- tem would be detrimental to the public interests. The Detroit United Railway owns and controls directly or indirectly eight suburban lines. They extend to Tren- ton, Toledo, Jackson, Northville, Pontiac, Flint, Port Huron and Mt. Clemens. These lines and the lines in the city of Detroit are operated as one great system, with the resulting economies, and advantages, incident to such relations. The present statute authorizing municipal ownership restricts such ownership to an area, not more than five miles from the territorial boundaries of the municipality, which means that the street railway system of the Detroit United Railway would have to be severed, with the certainty that the city in acquiring the urban property must pay the damage done to the suburban lines, and that neither the municipal system or the interurban system can be operated as economically or as satisfac- torily as when operated as one system. If the five-mile restriction is removed the municipality could acquire the whole property and the city of Detroit by its common council and its public officials, would come into the control of one of the largest street railway sys- tems in the country. Bond issues to improve or extend the lines would have to be authorized by the common council, and the management of the property would be subject to all the delays, annoyances and controversies incident to municipal government in the United States. With time contracts fixing rates of fare eliminated from the subject, municipal ownership is a wild and chaotic dream. The postal service of the United States is frequently referred to as a sample of governmental ownership, but 232 the greater part of that service is performed by privately owned railroads. The postal service is good because pri- vate enterprise has enabled it to distribute the mails all over the country with the greatest possible speed. It must also be remembered that the postal department has an annual deficit of many millions of dollars. 233 XV. The Supreme Court of the United States has authoritatively established the doctrine that the rea- sonableness of a given rate of fare or freight of a public service corporation, is a judicial question, and that any legislative or executive action, anywhere in the United States or in any territory subject to their jurisdiction, purporting to conclusively fix rates or charges, without permitting a determination of the question by the judiciary, after a full hearing, is a deprivation of property without due process of law, and unconstitutional and void. Cannot bring my arguments and observations to a close in any better way than to call the attention of my read- ers to an evolution that has already taken place in the law on the relation of the judiciary to the question of the reasonableness of the rates of fare or charges of public service corporations. In the famous case of Mnnn vs. Illinois, 94 U. 8. 113 the Supreme Court of the United States held that it was competent for the legislature of Illinois to fix the maxi- mum charges for the storage of grain in warehouses in Chicago and other places in the state, and if the legisla- ture abused its power, the remedy must be a resort to the polls and not to the courts. This doctrine was applied and enforced in the railroad cases decided at the saim- time. In one of them the court said : "As to the claim that the courts must decide what is reasonable^ and not the legislature. This is not new to this case. It has been fully considered in Munn vs. People 234 of Illinois. Where property has been clothed with a pub- lic interest, the legislature may fix a limit to that which shall in law be reasonable for its use. This limit binds the courts as well as the people. If it has been improp- erly fixed, the legislature, not the courts, must be appealed to for the change." That doctrine was completely overturned by the subse- quent decisions of the court I will only refer to one of them (Smyth vs. Ames, 169 U. S. 466 )_, in which the court in an opinion by Justice Harlan reviewed the prior cases and then said: "In view of the adjudications these principles must be regarded as settled: "1. A railroad corporation is a person within the meaning of the fourteenth amendment declaring that no state shall deprive any person of property without due process of law, nor deny to any person within its jurisdic- tion the equal protection of the laws. "2. A state enactment, or regulations made under the authority of a state enactment, establishing rates for the transportation of persons or property by railroad that will not admit of the carrier earning such compensation as under all the circumstances is just to it and to the pub- lic, would deprive such carrier of its property without due process of law and deny to it the equal protection of the laws, and would therefore be repugnant to the fourteenth amendment of the constitution of the United States. "3. While rates for the transportation of persons and property within the limits of a state are primarily for its determination, the question whether they are so unreason- ably low as to deprive the carrier of its property without such compensation as the constitution secures, and there- fore without due process of law, cannot be so conclusively determined by the legislature of the state or by regula- 235 tions adopted under its authority, that the matter may not become the subject of judicial inquiry." In that case the railroad rates fixed by a Nebraska statute were found to be unreasonable and confiscatory, and their enforcement was enjoined, with leave on the part of the state, if conditions changed, to open the de- cree. The state legislature cannot impose unreasonable rates upon the Detroit United Railway or any other street rail- way company, and it cannot be done by the common council of the city of Detroit under any authority that has been or can be conferred upon it by the legislature. At the common law the question whether the rates or charges of a common carrier were reasonable was neces- sarily a judicial question to be determined by appropriate litigation between the carrier and its patrons. Legislative interference in the United States has never been anything more than advisory. The state legislatures as to intrastate carriers, and the congress as to interstate carriers, can by duly enacted statutes, declare what in their judgment are reasonable rates ; but as we have seen, their action is not conclusive, and it may be reviewed by the courts. The legislative declaration, usually made without investigation, is merely preliminary to a full and complete investigation by a court of competent jurisdic- tion. That fixing rates of fare is not an exercise of the legis- lative power is shown by the rulings of a number of state Supreme Courts, that the power to fix reasonable rates may be vested in executive boards or commissions. It is n fundamental principle of American constitutional law that legislative power cannot be delegated; it cannot be exercised except with the consent and approval of a legis- 236 lative body directly and immediately elected by the peo- ple; and the representatives so chosen, cannot delegate their authority, which limitation arises from the nature of the power, and the division of the government into three co-ordinate branches. In the Minnesota railroad cases, 134 U. S. 418, 467, a state statute allowing a railroad commission to establish rates, which were to be conclusive and final, was declared a violation of the constitution of the United States. Among other things the court said: "The question of the reasonableness of a rate of charge for transportation by a railroad company, involving as it does the element of reasonableness both as regards the company and as regards the public, is eminently a ques- tion for judicial investigation, requiring due process of law for its determination. If the company is deprived of the power of charging reasonable rates for the use of its property, and such deprivation takes place in the absence of an investigation by judicial machinery, it is deprived of the lawful use of its property, and thus, in substance and effect, of the property itself, without due process of law and in violation of the constitution of the United States; and in so far as it is thus deprived, while other persons are permitted to receive reasonable profits upon their invested capital, the company is deprived of the rea- sonable protection of the laws." With this high authority in support of the arguments set forth in the foregoing pages, I respectfully submit that the question now pending between the common coun- cil of the city of Detroit and the Detroit United Railway, concerning rates of fare, can only be authoritatively de- termined by a court of equity, and that it ought to be so determined, and no new contract fixing the rates of fare, 237 should be discussed, considered, or entered into, on any pretext whatever. "But truth shall conquer at the last; For round and round we run, And ever the right comes uppermost, And ever is justice done." 239 APPENDIXES. No. 1. INDIANA STATUTE FIXING RATES OF FARE AND CONSERV- ING STREET RAILWAYS AS PERMANENT PUBLIC IMPROVE- MENTS AND PERPETUAL INVESTMENTS. "An Act concerning street railroad companies in cities, the population of which exceeds one hundred thou- sand, repealing all laws in conflict with this act, and de- claring an emergency. (March 3, 1899.) Section 1. Be it enacted by the General Assembly of the State of Indiana, that it shall and may be lawful for any street railroad company now or hereafter organized under the laws of the State of Indiana for the purpose of operating a street railroad in any city the population of which by the federal census immediately preceding the incorporation of such railroad company exceeds one hundred thousand persons, and for such city to enter into a contract defining the terms upon which such rail- road company shall exercise its franchise within such city, subject to all the provisions of this act. Sec. 2. In any such contract shall be specified the term, not exceeding thirty-four years from the taking effect of the contract, during which the franchise of such corporation shall continue; the rate of fare to be charged, which shall be for a single cash fare not more than five cents for each passenger over the age of five years, with provisions in the contract securing the right of transfer 240 for such cash fare to and over any other line of said company, and that six tickets, entitling the holder to passage and such transfer, shall be sold for not to exceed twenty-five cents, and that twenty-five of such tickets with like transfers, shall be sold for not to exceed one dollar, and said contract shall provide that such tickets shall toe kept for sale on all cars when the same are carrying passengers, and all such tickets shall be received as fare from any passenger presenting the same. The ordinance granting such franchise and approving such contract shall specify the method or methods of propul- sion that shall or may be used under such contract, pro- viding that such ordinance and contract shall reserve to such city the right to require that such methods of propulsion shall at any time be introduced as will insure first-class and efficient service; and shall state the con- sideration to be received by said city. Said ordinance shall provide further, that the company making such con- tract shall be required to pave the space occupied by and between its tracks, and for a space of eighteen inches on the outside thereof by the board of public works, and to keep the same in repair; said paving and repairing to be done under specifications, both as to material and manner, as provided by the board of public works, and under the supervision of the city engineer, and shall further provide that, at all times during the period of such franchise, said city may require such seasonable extensions of the lines of said company or the construction of such new lines as may be necessary for the efficient operation of such railway and for the convenience of the public, and shall provide further that said company shall not extend any of its lines or enter upon any new streets in said city without the consent of the common council of said city first had and obtained, and in making such contract said city shall reserve to itself the right to at all times 241 exercise such reasonable control over such company and the operation, maintenance and construction of its lines as will secure efficient and first-class service. And such ordinance and contract may contain such other terms, conditions or requirements, not inconsistent with the pro- visions of this act, as may be agreed upon between the parties, or may be necessary to make effectual all the terms of the contract. As a part of any contract entered into pursuant to the provisions of this act, and as a part of the consideration therefor the company entering into said con- tract shall first make an absolute surrender to such city of all franchises and rights to the use and occupancy of the streets, alleys and public places of such city owned, held, or claimed by such company within the corporate limits of such city at the time of the making of such contract pursuant to the provisions of this act, or theretofore owned, held or claimed by such company. Any city en- tering into any contract with any company under the provisions of this act for the use and occupancy of the streets, alleys and public places in such city for street railroad purposes may at any time within two years and not later than one year before the expiration of said contract, purchase of such company its property of every description whatsoever, and if any such city and com- pany shall be unable to agree upon the terms of such pur- chase, then such city may file its complaint or petition in the circuit court of the county in which such city is situated for a determination of the value of such prop- erty in the manner prescribed in section 8 of this act, and when the value of such property is so ascertained, such city may, upon the expiration of such contract after tendering the amount of the value of such property as determined by said court at once take possession of such property and operate such street railroad for its own use and purposes, and such city is hereby authorized 242 to issue bonds for the payment in whole or in part of such sum fixed as the value of such property. Should said company habitually, continually or continuously violate any of the provisions of this act, or fail to com- ply with the ordinance approving said contract or such other ordinances as are passed by the common council under the provisions of this act, then said company shall forfeit all its rights, title and interest in or to the use and occupancy of the streets, alleys and highways of said city for street railroad purposes, its contract and franchise for the same shall be at an end, and the prose- cuting attornej- of the county in which such city is lo- cated shall, upon the writen complaint of five hundred resident freeholders of said city stating wherein said company shall have violated the terms of such contract or ordinances or provisions of this act, bring an action in the circuit or superior court of the count}* in which such city shall be situated on relation of the State of In- diana, to forfeit the said contract and franchise and de- clare the same at an end, and such action shall be tried as other actions are tried, and upon a finding and judg- ment that such company has violated its said contract or said ordinances or provisions of this act, as herein- before provided, then said court shall enter a judgment and decree declaring said contract and franchise for- feited and at an end, and said city shall, through its board of public works, proceed to relet the use and occu- pancy of its streets, alleys and public places for street railroad purposes in the manner and upon the terms and conditions provided in section 8 of this act, and if said action shall be determined in favor of such company, then the petitioners shall be liable for the costs of said action. Any such company so contracting with said city shall permit the use of its track or tracks by any incor- 243 porated suburban or interurban railroad company from the corporate limits or from the nearest connecting point within the corporate limits of such city to some central point in such city, for the purpase of discharging and re- ceiving passengers, with the right of such company to run its cars thereon to some loop and return thereon out of said city whenever such use has been permitted by the board of public works and common council of said city by contract approved by ordinance. That the board of public works shall require in any such franchise granted hereunder, such consent to be given in such fran- chise with the right on the part of the board of public works and common council to establish such central point and designate the track or tracks to be used in going to and from the same in such city. That such use shall be upon such conditions and under such regulations as the board of public works and the common council of such city shall prescribe, and upon such terms as to con- pensation as may be agreed 1 upon by such companies; and in case such companies cannot agree as to such com- pensation within thirty days after application made for the same, then such use shall be permitted upon such terms as to compensation as may be fixed and determined in an action instituted by either of such companies in the circuit court of the county in which such city may be situated; and pending such controversy or suit, such suburban or interurban company shall have the right to use the track or tracks designated by the board of public works or common council, upon executing a bond in such amount and with such security as shall be approved by said court, conditioned for the payment to such company owning and operating such railway in such city the com- pensation which may accrue up to the time of the final decision in said action, shall be fixed 'by the court : And, 244 provided, that in case the company owning and operat- ing such railway in such city cannot furnish power to propel the cars of such suburban or interurban company, then, in that event, such snlburban or interurban company shall have the right to construct and maintain a feed and trolley wire on the poles or in the conduits of such company to such terminal points as may be designated by the board of public works and common council of such city, and compensation for the use of poles and con- duits for the construction and maintenance of such wires is to be fixed as above provided for the use of the tracks; and in such case such suburban or interurban company shall have a right to establish and maintain power houses and place its wires on such poles or in such conduits. Provided, however, that the provisions of this section shall not apply to any suburban or interurbau railway company whose line, including the track or tracks so designated within said city, does not extend to a distance of six or more miles for such central point. Sec. 3. All the terms and covenants of any contract so made, as aforesaid, shall be binding and conclusive for the period fixed therein, and no longer, and the mutual rights, powers, obligations and liabilities of the parties thereto, shall be as therein expressed, subject, however, to all the provisions of this act. Sec. 4. It shall be lawful for any such railroad com- pany contracting as aforesaid with such city, to acquire by purchase, lease or otherwise, the property and fran- chises, or any portion of the same, of any other street railroad company or companies now or hereafter incor- porated under the laws of the State of Indiana, owning or operating or possessing a franchise, to own and oper- ate a street railroad within such city, or connecting 245 therewith in territory adjacent thereto, for money, shares of stock, or bonds or other obligations; and to issue in payment for the property and franchises so purchased or otherwise acquired, its bonds, obligations or shares of stock to such amount, in such manner, and upon such terms, as its board of directors may think proper and contract; and it shall also be lawful for such company, in addition to the powers possessed under the general laws for the incorporation of street railroad companies and the amendments thereto to secure payment of all bonds or obligations so issued by it, by mortgage upon its corporate franchises, rights, privileges, property, real and personal, and. mixed as well as upon the franchises, rights, privileges, property, real, personal and mixed, purchased by it as aforesaid : Provided, that no bonds shall be issued by said company for a period extending beyond the time of the expiration of the contract executed under the pro- visions of this act. Sec. 5. Any street railroad company now or hereafter incorporated under the State of Indiana owning or oper- ating or possessing a franchise to own and operate a street railroad in such city or connecting therewith in territory adjacent thereto, may sell, lease or otherwise transfer its property, franchises and assets of every de- scription and wheresoever situated or any portion of the same to any other company authorized to acquire the same by purchase, lease or otherwise, under section 4 hereof, for money, stock or bonds or other obligations: Provided, however, that such sale, lease or transfer shall be authorized by the vote of a majority in value of all the shares of said company, given at a meeting of the shareholders called for the purpose; at such meeting a resolution specifying the consideration, terms and con- ditions of such sale or transfer shall be submitted to 246 the shareholders for their approval or disapproval; and upon the vote of a majority in value of said shareholders the board of directors of the said company shall cause the contract authorized by such resolution to be duly executed and delivered to such purchaser, lessee or trans- feree by the proper officers of the company; such meet- ing of said company shall be called in pursuance of a resolution of its board of directors instructing the proper officers of the company to call the same, and after twenty days' notice, which shall be given by writen or printed notice, mailed to every stockholder at his last known postoffice address. Sec. 6. If a sale be made, approved by a vote of the majority in value of all the shares of the company as aforesaid, any shareholder or shareholders of such com- pany not voting in favor of such sale, and who may be dissatisfied with the terms thereof, may apply by petition to the circuit court of the county in w T hich such railroad is located, within thirty days after such shareholders' meeting, praying said court to appoint three disinterested persons to estimate and appraise the value of the prop- erty so sold, over and above any liens or incumbrances thereon and claims or indebtedness for the payment of which the same may be liable, and having so appraised said property and franchises, to estimate and ascertain the value thereof, and the value of said shares having been so appraised by the said commissioners by the vote of a mapority thereof, shall be reported to said court, and when confirmed by the said court shall be final and conclusive on all parties. The value of the shares thus ascertained shall be paid to the said petitioning share- holder by the street railroad company purchasing the property and franchises and other assets sold as aforesaid upon surrender to the purchasing company of the shares 247 so appraised. In case said petitioning shareholder shall not present their shares to the purchasing company for surrender within sixty days from the date of said award, or in case of minority or other legal disability said pur- chasing company shall make payment of the amount of said award to the clerk of the court, and upon such pay- ment to the clerk of the court, the property or franchises purchased shall be released from the lien of said award. The cost of such proceeding shall be paid by the purchas- ing company. Sec. 7. All rights of creditors and liabilities for dam- ages and all liens or incumbrances upon the property or franchise sold or transferred, pursuant hereto, shall con- tinue unimpaired, and may be enforced as against such property and franchises as if said sale or transfer had not been made. Sec. 8. No street railroad company shall hereafter have the right to use or occupy for street railroad pur- poses the streets, alleys, highways or other public places of any such city except under and in pursuance of an or- dinance or contract specifically stating the period of such use or occupancy. Where such use or occupancy is now or shall hereafter be had by any street railroad company under any ordinance, or ordinances, contracts or agree- ments in which is fixed or limited, or attempted to be fixed or limited, the period of time of such occupancy, or in which an extension of time originally so fixed or limited, has been made, and the right and franchises of such use or occupancy shall not in nine or more months prior to the final expiration of the period of time so lim- ited or extended, have been granted for a further definite period of time to said company, or some company which has acquired the property and franchise of said company 248 by a contract entered into by such city, and said com- pany under the provisions of this act, and in all such cases, upon the final expiration of the time so originally limited or extended, the right to such use, or occupancy by said company, its successors and assigns, or any other company claiming under such ordinance, contracts or agreements, shall immediately terminate and cease for- ever. Thereupon, such company, its successors or as- signs, may remove its tracks and appurtenances from such streets, alleys and other public places, doing no more damage thereto than is necessary, and when the same are removed such company, its successors or assigns, shall restore such streets, alleys and public places as nearly as may be, to the condition in which the same were prior to such removal ; which removal shall be made within a time to be fixed by the mayor of such city, and the work shall be done under the supervision of the street commissioner or other officer having the charge and supervision of the streets therein, and upon failure so to remove the same, and to elect to have the same ap- propriated 1 by its successor in such use and occupancy as hereinafter provided, the city may cause the same to be removed at the expense of the owner: Provided, how- ever, that not later than nine months before the expira- tion of the period of time so originally limited or ex- tended, in the event that no contract for the further use and occupancy of such streets, alleys and public places has been entered into under the provisions of this act between such city and the said company, its successors or assigns, such city, through its board of public works, shall open to free competition the further occupancy for a period not exceeding thirty years of the streets, alleys and public places of such city, for the purpose of operat- ing therein an electric or other street railroad, and such city, through its board of public works, shall prescribe 249 in the form of a contract to be entered into by the suc- cessful bidder, all conditions and limitations for such use of said streets, alleys and public places as prescribed in section 2 of this act; and such other conditions as shall best promote the interests of said city and the public, and also a bond or undertaking with sureties to be ap- proved by said board of public works, conditioned that the bidder, if successful, will enter into the prescribed contract in accordance with the terms and conditions thereof and of the bid, and in case of failing or refusing or forfeiting as hereinafter provided, the right to enter into such contract, to pay to such city all damages it may sustain by reason of such failure, refusal or forfeiture, and, as to bidders other than the occupying company, that the bidder, if successful, and in case the occupying company elect not to remove its tracks and other prop- erty from the streets, will immediately institute as here- inafter provided, proceedings to appropriate the property of said company and pay the assessed value of such property to said company or other person entitled there- to as hereinafter provided. In such competition no com- pany now or hereafter organized for such purpose shall be excluded. If the occupying company shall not be the successful competitor, and elects not to remove its tracks or other property from the streets, then the company that shall be successful in the competition shall imme- diately after the acceptance of its bid by such city through its board of public works, file in the circuit court of the county where such city is located, a complaint or petition for an appropriation of the property of the oc- cupying company and an assessment of its damages by reason of such appropriation, describing the plant, prop- erty, power houses, cars, electric lines and poles, and all other appurtenances and appliances connected with and 250 used as a part of the railway system of the occupying company to be appropriated, and showing the execution of the bond or undertaking aforesaid, to which proceed- ings all persons having an interest in or lien upon such property shall be made parties. The practice and pro- ceedings upon such appropriation, and in ascertaining the value of such plant and property, shall be as is now provided for the appropriation of property for railway purposes under the general laws of this state. When the value of this property is so ascertained upon the expira- tion of the contract of the occupying company, or if such contract has expired before the ascertainment of such value, then, within a time to be fixed by such court, such appropriating company shall pay such value to the clerk of the court for the use of the occupying company, or other person entitled thereto as determined by the court; and upon such payment, the appropriating company shall be seized and become the owner, free and unincumbered, of all the title to and of the property so appropriated, and shall take possession of and operate such railroad system from and after the expiration of the contract of the occupying company; and upon failure to institute such proceedings, or to enter into or perform the con- tract in accordance with the bid, all right of the success- ful bidder to enter into the contract, or to the use and occupancy of the streets, shall be forfeited, and such city, through its board of public works, shall proceed to relet the use and occupancy of the streets, alleys and public places for street railroad purposes in the manner and upon the terms and conditions heretofore provided in this section, and several actions may be maintained upon such bond or undertaking by such city, occupying com- pany or other company or person interested, for such failure to perform its conditions. In case the railroad 251 company owning the property to be appropriated has theretofore acquired rights to lay and maintain tracks outside, of the corporate limits of such city secured from the board of commissioners of the county, which tracks at the time of such appraisement, by reason of the ex- tension of the corporate limits, are within such city, the same, at the election of the owner, may be embraced in such proceedings and appraisement. Sec. 9. Nothing contained in this act shall be so con- strued as to take away from the board of public works and common council of any such city, the exclusive powers now exercised over the streets, highways, alleys and bridges within such city, or the rights and powers now possessed by such board of public works and com- mon council to enter into contract with reference to the? use of the streets, alleys and public places in such city for streets railroad purposes, except insofar as such powers and rights shall be affected by contracts entered into pursuant to the provisions of this act, and except as such powers are reserved to such city by the provisions of this act. Sec. 10. It shall be unlawful for any railroad com- pany operating under a contract secured under the pro- visions of this act or an employe of the same to charge or receive any greater amount for fares than that pro- vided for in this act, and it shall be unlawful to fail or refuse to keep on sale tickets as provided in this act, and anyone violating any of the provisions of this section shall be fined in any sum not to exceed one hundred dol- lars. Sec. 11. All laws and parts of laws inconsistent with the provisions of this act are hereby repealed. 252 Sec. 12. It is declared that an emergency exists for the immediate taking effect of this act, and the same shall therefore be in full force from and after its pas- sage. 253 No. 2. AN ORDINANCE. Authorizing the Chicago City Railway Company to Con- struct, Maintain and Operate a System of Street Kail- ways in Streets and Public Ways of the City of Chi- cago. (February 11, 1907.) PREAMBLE. Whereas, the Chicago City Kailway Company, herein- after called the Company, now maintains and operates a system of street railways in the streets and public ways in the south division of the City of Chicago; and Whereas, the said city desires, for the proper accom- modation of the public, to provide for the reconstruction, re-equipment and extension of the said street railway system now maintained and operated by the Company and for the unified operation of said street railway sys- tem together with the street railway system now main- tained and operated by the receivers of the Chicago Union Traction Company, and to be in a position as soon as practicable freely to deal with the subject of transpor- tation in its streets as a whole, and to fix and determine the definite terms and conditions upon which the said city shall have the right to purchase and take over at any time the street railway system of the Company; now, therefore, Be it ordained by the City Council of the City of Chicago : AUTHORITY. Section 1. That in consideration of the acceptance by the Company of this ordinance, subject to all of tlu> 254 provisions, conditions, requirements and limitations here- of, consent, permission and authority are hereby granted to the Company, its lessees, successors and assigns, to construct, reconstruct, maintain and operate a system of street railways in, upon and along the streets and pub- lic ways or portions thereof, in the City of Chicago, set out in the schedule marked "Exhibit A" hereto attached and made a part hereof. The said consent, permission and authority hereby granted to said Company, its lessees, successors and as- signs, to construct, reconstruct, maintain and operate the said street railways in, upon and along 22d street from the east bank of the Chicago river to Wabash avenue, are granted subject to all of the rights, franchises and privileges of the Chicago General Railway Company upon said 22d street between the points mentioned, under and by virtue of a lease of said tracks from the Chicago City Eailway Company to the Chicago General Railway Com- pany dated July 5, 1897; but shall wholly cease and de- termine on the 8th day of February, A. D., 1912, and are subject at all times to all the provisions, conditions and limitations of this ordinance, including the right of the city or its licensee to purchase and acquire said tracks and all of the rights hereby granted, at the times and upon the terms hereinafter provided 1 . The said consent, permission and authority hereby granted to said Company, its lessees, successors and as- signs, to construct, reconstruct, maintain and operate the said street railways in, upon and along Main street, from Archer avenue to 31st street, and Laurel street from 31st street to 39th street, are granted subject to all of the rights, franchises and privileges of the Chicago General Railway Company upon said Main and Laurel 255 streets between the points mentioned, under and by vir- tue of a lease of said tracks from the Chicago City Rail- way Company to the Chicago General Railway Company, dated October 1, 1897, but shall wholly cease and deter- mine on the 4th day of February, A. D., 1915, and are subject at all times to all the provisions, conditions and limitations of this ordinance, including the right of the city or ite licensee to purchase and acquire said tracks and all of the rights hereby granted, at the times and upon the terms hereinafter provided. For the purpose of carrying into effect the desire of the said city to provide for the unified operation of said street railways, an ordinance similar to this ordinance in general provisions and character, running to the Chi- cago Railways Company, as grantee, covering the system of street railways now maintained and operated by the receivers of the Chicago Union Traction Company in the north, west, and a portion of the south divisions of said city, has been presented for passage concurrently with this ordinance, and it is hereby expressly provided that, upon the passage and acceptance of said last mentioned ordinance, then in all cases where this ordinance and the said ordinance relating to the street railways now main- tained and operated by the receivers of the Chicago Union Traction Company confer grants upon more than one company in the same part of any street, the rights granted to the respective companies in such part of any street shall be construed to be for a mutual and joint use of tracks, and the rights of each company therein shall be the same as though tho said ordinances making such grants had been passed and had taken effect con- currently, without regard to the actual dates of their respective passage and acceptance. Whenever such tracks are to bo used jointly, they shall be constructed, main- 256 tained and operated at the equal joint expense of the said companies. RECONSTRUCTION. Sec. 2. The Company shall proceed at once to recon- struct portions of its track and roadbed and put its en- tire street railway system, plant and equipment in first- class condition, in full compliance with the specifications and provisions for such work in this ordinance and in the exhibit hereto attached, marked "Exhibit B" and made a part of this ordinance, with the same force and effect as though herein fully set forth, and to operate and main- tain said system in accordance with the provisions of this ordinance and of said "Exhibit B." Such provisions of this ordinance as are in the nature of specifications shall be given at all times full force and effect, except in cases, if any, in which they conflict with express provisions of "Exhibit B," in which cases the lat- ter shall prevail. The provisions of this ordinance and those of "Exhibit B," however, shall be construed to- gether, and both, so far as practicable, be given full effect throughout the life of this grant. EXTENSIONS. Sec. 3. The said city shall have the right, subject to the limitations contained in this ordinance, at any time to require the Company to make extensions of and addi- tions to the lines of street railway enumerated in said "Exhibit A." Such extensions and additions shall be made under the supervision of the board of supervising engineers, as hereinafter in section 7 provided, and the cost thereof shall be determined as provided in said sec- tion. The character and quality of such work shall com- 257 ply with the specifications set forth in said "Exhibit B," so far as the same may be applicable thereto. The Company shall promptly and within a reasonable time after the passage of this ordinance construct and equip the extensions of its street railway system provided for in "Exhibit A," and also in section 36 hereof, subject to the provisions of said section, and shall operate same as a part of its system in conformity with the provisions of this ordinance, and at any time after three (3) years from the acceptance of this ordinance, the Company shall upon the order of the city council of the city, construct and equip such additional extensions as may be required by the city and shall operate the same as a part of its system in conformity with the provisions of this ordi- nance; provided, that the Company shall not be obligated hereby to construct and operate any such additional ex- tension in any street or public way nearer any then ex- isting parallel street railway tracks of the Company than one-half mile, and that the Company shall not be obli- gated hereby to construct more than four miles of double track railway or eight miles of single track railway in any one calendar year during the term of this grant. The Company shall, however, upon the order of the city council of the city, construct, equip and operate such extensions of its street railway system in addition to those hereinabove provided for as may be required by the city council subject to the conditions and limitations contained in section 25 of this ordinance. The Company shall not be authorized or obligated to construct any extension of its street railway system upon streets on which street railways are not located when this ordinance goes into effect until the city has granted 258 to the Company whatever authority in addition to this ordinance may be necessary to comply with the frontage consent laws of the State of Illinois. MOTIVE POWER. Sec. 4. The motive power to be used in the operation of said street railways shall be electricity, applied by the overhead trolley system or otherwise, as more particu- lary set forth in said "Exhibit B" ; provided that the said city (subject to the limitations contained in section 25 hereof), at any time after three years from the date of the acceptance of this ordinance, may require by ordi- nance, that the Company shall operate under the pro- visions of this ordinance any of its street railways herein authorized by electric power transmitted through work- ing conductors carried in conduits below the surface of the street and between and underneath the rails, other- wise known as the underground trolley system, and shall thereafter cease to operate the same by overhead trolley. USE OF POLES, CONDUITS,, ETC. Sec. 5. The Company may use its trolley poles, feeder poles, trolley wires, feeder wires and the conduits author- ized and provided for in said Exhibit B, for all purposes solely connected with the operation of its street railways, such as power, light, heat and telephonic and other sig- nals. For such purposes the Company may connect such conduits, poles and wires with its transmission and feeder wires, power plants, substations, car houses, repair shops or other property of the Company, and with any transmission, feeder or other wires of any other in- dividual or corporation. 259 JOINT USB WITH THE CITY. The said city shall have the right, without the pay- ment of any compensation therefor, during the life of this grant, to use the poles of the Company to carry the signal, telephone, telegraph and electric light wires and lamps of the said city. The transmission wires of the said city for such purposes shall be placed on poles of the Company, on that side of each street or way (where poles are located on both sides thereof) designated by the said board of supervising engineers, without cost or expense to the Company, but the Company shall repair and maintain its poles as one of the operating expenses of the said street railway system under this ordinance; provided, that the said city shall indemnify and save harmless the Company against and from all damages, judgments, costs or expenses which the Company may suffer by reason of any negligence of the said city in in- stalling, maintaining or using its said wires and lamps upon said poles. SUBWAYS. Sec. 6. The Company hereby gives to said city and said city reserves the power by ordinance to require the Company to join with the Chicago Railways Company and with the said city in defraying the cost of the con- struction of a system of subways for the joint use of the said companies as down town terminals of their street railway systems, and for the use of said city and of its licensees, the legal title to said subways to be in said city, subject to the rights of the said companies under this ordinance, it being, however, an express condition of the Company being required to join in defraying the cost of such construction of such system of subways, that said subway system and the extension thereof shall not be 260 used for street railway purposes during the life of this grant except by the street railway systems of said com- panies; provided, that the companies shall not be re- quired to contribute to the cost of said subway system any amount in excess of the pro rata cost of that part of said subway system which is to be devoted to the use of said companies or either of them and that the total amount which the said companies shall be required to contribute toward the construction of said system of sub- ways shall not exceed the sum of five million dollars (15,000,000), exclusive of the cost of (1) reconstructing the present tunnels under the Chicago river, (2) or of converting said tunnels into a part of said system of sub- ways. Two-fifths of that part of the cost of the said subways (exclusive of the tunnels under the Chicago river), payable by said companies shall be borne by the Company and three-fifths of the said cost shall be borne by said Chicago Railways Company; and provided, fur- ther, the Company shall not be obligated to join in de- fraying the cost of the construction of such subway sys- tem until (1) the said city shall authorize the construc- tion of said subway system by an ordinance which shall prescribe the location, character and extent of said sub- way system and the plans and specifications therefor, which plans and specifications shall include provisions specifying the portions thereof to be devoted to the use of said companies, respectively, and to the use of the said city and its licensees, and regulating the manner of such uses, and specifying the share of the cost of such subway system to be borne by said companies and the extent of the user to which each said company shall be entitled in that part of said subway system devoted to street railway purposes, and until, (2) the board of supervising engineers shall approve the location, charac- 261 ter and extent of and the plans and specifications for such subway system. The limitation of five million dol- lars as above defined shall apply to the subway system * above mentioned, but shall have no application to the ex- tensions and additions herein next mentioned. When said subway system shall have been fully com- pleted (but not before the expiration of five years from and after the acceptance of this ordinance) the Company (subject to the limitations contained in section 25 here- of) may be required by ordinance to join with the said Chicago Railways Company and with the said city in defraying the cost of the construction of extensions and additions to such subway system and the Company agrees that it will pay to the said city the pro rata cost of constructing that portion of such extensions which is to be devoted to the use of the Company and its propor- tionate part of the pro rata cost of constructing that portion of such extensions which is to be devoted to the joint use of the said companies; provided, however, the Company shall not be obligated to join in defraying the cost of the construction of such extensions and additions to said subway system until (1) the said city shall au- thorize the construction of said extensions and additions by an ordinance which shall prescribe the location, char- acter and extent of said extensions and additions and the plans and specifications therefor, which plans and speci- fications shall include provisions specifying the portions to be devoted to the use of said companies and to the use of said city and its licensees, and regulating the man- ner of such uses and specifying the part of the total es- timated cost of such extensions and additions to be borne by the said companies, respectively, and until (2) the location, character and extent of said extensions and ad- ditions and the plans and specifications therefor shall be approved by the said board of supervising engineers. The provisions of this ordinance under which the said Company obligates itself to contribute to the cost of con- structing subways and extensions of subways and fixing the conditions under which the said Company is so ob- ligated shall not have the effect or be construed to have the effect of depriving the said city of any right which the said city may have or acquire (otherwise than by virtue of this ordinance) to construct subways or exten- sions thereof, or to compel said Company to contribute to the cost of such subways or extensions, or to compel said Company to use the subways in whole or in part, in connection with its street railways or to fix the terms and conditions of such use. By the acceptance of this ordinance the Company admits that the city has the right and authority to construct subways and extensions of subways in the streets and parts of streets described in "Exhibit A" and in all other streets or parts of streets in which the Company is now or hereafter authorized to construct or orperate street railways and the Company by such acceptance consents to the exercise of such right by the city; but the Company by the acceptance of this ordinance shall not be construed as admitting that the city now has any right otherwise than by virtue of this ordinance to compel said Company to contribute to the cost of any subway or extension thereof, or to compel said Company to use subways in whole or in part in con- nection with its street railways or to fix the terms and conditions of such use, or that it could acquire such right, and the exercise by the city of any such right shall not impair or in anywise affect the rights of the Com- pany under the provisions of this ordinance in that part of any subway, or extensions thereof, to the cost of con- structing which the Company shall have contributed. 263 Nothing in this ordinance contained shall be construed to give the said city the power to require the Company in case of the construction of said subway system, or ex- tensions and additions thereto, and the placing of its railway tracks therein, or in a part thereof, to cease the operation of its railway, during the life of this grant, upon the surface of any of the streets or parts of streets under which the said subway system, or said extensions and additions thereto, may be constructed, so long as or whenever the city shall permit the construction or opera- tion of any street railways upon the surface of such streets or parts of streets, respectively. It is expressly provided that in case the capacity of that portion devoted to street railway purposes, of any subways or extensions of subways, constructed under the provisions of this section of this ordinance, shall at any time be greater than necessarily and properly required for the use of the said company or companies which have contributed to the cost of said subways or extensions thereof in the operation of their street railways therein, the city may authorize or require any other Company operating elevated railways in said city to use said sub- ways and extensions, or parts thereof, to the extent of such surplus capacity, but only to such extent, provided that such Company shall pay a reasonable rental for such use by it, which rental shall be apportioned between the parties who have contributed to the cost of construct- ing the portion of such subways or extensions so used by such other company in proportion to the extent of their respective contributions; and the portion of such rental so paid to the Chicago City Railway Company shall be considered and treated as part of its gross re- ceipts, to be disposed of under the provisions of this ordinance as other gross receipts from the operation of 264 the street railways of said Company are to be disposed of. The city shall have the right to use the said subways and extensions for any elevated railway belonging to said city to the same extent and upon the same terms that it may authorize or require their use by any elevated railway company. CITY TO HAVE SUPERVISION OF REHABILITATION. Sec. 7. All of the construction, re-construction, equip- ment, re-equipment, extensions and additions to plant and property provided for or required by this ordinance or the exhibits thereto, including underground trolleys, new lines, extensions, and other additions to plant and property (but not subways or extensions thereof), shall be done, performed and acquired by the Company under the direction and supervision of said board of supervis- ing engineers, and the cost and expense thereof shall be borne and paid by the Company, but no contract, sub- contract or payment therefor shall be made without the written approval of said board. The Company shall purchase materials and equipment, and employ engineers, superintendents, clerks, foremen and workmen and shall pay all expenses of every nature, including legal expenses necessary to the proper, com- plete and prompt performance of the above mentioned work, upon the lowest advantageous terms and subject to the approval of the said board of supervising en- gineers, and to the actual amount paid by the Company in and about carrying out each and all of the require- ments of this section, shall be added 10 per cent of such amount as a fair and proper allowance to the Company for conducting the said work and furnishing said equip- ment and 5 per cent for its services in procuring funds therefor, including brokerage. 265 The said board of supervising engineers shall, on or before the fifteenth day of each month, make a report in writing, dated the first day of such month, to the city comptroller of the amount of money actually expended during the previous month by the Company with the ap- proval of said board of supervising engineers in and about carrying out the requirements of this section to- gether with the percentages of such amount in the next preceding paragraph provided for, and all amounts con- tributed by the Company to the cost of the said subway system or extensions thereof together with 5 per cent of the amounts so contributed; and the interest provided in section 24 hereof as a deduction from gross receipts shall begin to run upon the total amount of each sucli certificate from and after the date thereof. The total amount so certified by the said board of su- pervising engineers (including the said additional per- centages thereof as hereinabove provided) shall be final and binding upon both parties hereto and shall be con- clusively held and taken as the cost of the said construc- tion, reconstruction, equipment, re-equipment, extensions and additions to plant and property, including subways, underground trolleys, new lines, and other additions to plant and property, which shall be paid by the said city upon the taking over of the said street railway system as in this ordinance provided, except that said board may at any time within sixty (60) days after the date of any such certificate correct any error or omission therein. The said board of supervising engineers shall have power to determine what work shall be treated as con- struction, reconstruction, equipment, re-equipment, ex- tensions, new lines, underground trolleys or additions to plant or property to be paid for by the Company out 266 of the capital funds to be provided by it for that pur- pose, and what shall be treated as maintenance, repairs and renewals, to be paid for out of the gross receipts of the Company from the operation of the street railway system hereby authorized. But any such determination of said board shall be governed by the following pro- visions: During the three (3) year period of "immediate reha- bilitation" seventy (70) per cent of the gross receipts shall be set apart and shall be used so far as required in defraying the operating expenses, including mainte- nance and repairs, and the residue of said seventy (70) per cent shall be applied to the cost of renewals and no part of the cost of any renewal paid for out of such sev- enty (70) per cent shall be charged to additional capital, and all expenditures for renewals during said three (3) years in excess of such residue of said seventy (70) per cent shall be charged to capital account. After such three (3) year period of "immediate reha- bilitation," the cost of renewals shall be paid as provided in section 16 hereof, but such expenditures (and only such expenditures) as are made for the purpose of exten- sions of or additions to property shall be thereafter con- sidered as additions to capital, provided, however, that in the replacement of any principal part of the property, either existing or hereafter acquired, there snail be charged to capital the excess amount that the new prop- erty cost over the original cost of the property displaced, excepting that the value of property contained in the appraisal inventory of the property of the Company, referred to in paragraph 1 of section 20 hereof, shall be used instead of first cost for all property listed in such appraisal inventory. 267 REMOVAL OP TRACKS. Sec. 8. The Company shall forthwith remove all tracks now owned or operated by it which it is not ex- pressly authorized by this ordinance hereafter to main- tain and operate. If it shall hereafter cease to operate over any of its tracks or any portion thereof, it shall re- move such unused tracks upon the order of the city coun- cil. Failure to operate cars for the carriage of passen- gers at least once each way within every hour of each day between the hours of six (6) A. M. and eight (8) P. M. over any part of a street or public place in which tracks of the Company are laid, shall be treated as a cessation of operation of its tracks in such part of street or public place within the meaning of this section, unless such operation is interfered with by unavoidable acci- dents, labor strikes or litigation brought without conniv- ance of the Company; provided, however, that the fore- going provisions of this section shall not be construed to require or authorize the removal of curves or turn-outs or of connecting tracks specifically authorized by this ordinance or the exhibits hereto to be constructed and maintained for use during rush hours or for emergency use in case of fire or accident, or such tracks as may be necessary for a connection with the Company's prop- erty used for street railway purposes. The city shall have the right by ordinance to require the Company to remove any tracks or portions thereof, the further maintenance of which is at any time no longer warranted by the traffic, or reasonably required in the operation of the said street railway system, pro- vided that the Company shall not be required to remove such tracks but may maintain or reconstruct and operate the same during the life of this grant so long as or when- ever the city shall permit the construction or operation 268 of any street railways upon the streets or parts of streets respectively from which such tracks have been so re- quired to be removed and in every case of removal of tracks as aforesaid, the Company shall restore the street or public way to the condition of the other portion there- of, all at its own cost, such cost to be treated as an oper- ating expense. If the Company shall fail within a reasonable time (not to exceed 30 days) to remove any such tracks on order of the commissioner of pu'blic works, the said city may remove them, charging the expense thereof to the Com- pany; provided, however, that nothing in this section contained shall relieve the Company from its obligations at all times to render adequate service on its street rail- ways. RIGHT TO SELL UNNECESSARY PROPERTY. Sec. 9. The Company shall not hereafter sell any of the property belonging to it at the time of the passage of this ordinance (except that described in "Exhibit D") or thereafter acquired by it as an addition to or exten- sion of, or for use in connection with its said street rail- ways, except as the same may become unnecessary or un- adapted to the proper operation and maintenance of said street railways under the terms of this ordinance, and before making any such sale the Company shall secure the written approval of such sale and of the amount and terms thereof by the said board of supervising engineers, and such written approval of said board shall be con- clusive of the right of the Company to transfer complete title to the purchaser, who shall not be obliged to look to the application of the proceeds of such sale. In the event of any such sale made during the period of "immediate rehabilitation," the proceeds shall be de- ducted from the amount allowed to the Company for 269 such reconstruction, and in the event of a sale after such "immediate rehabilitation" is completed, the proceeds thereof shall be deposited with the depositary or deposi- taries selected under the provisions of section 16 of this ordinance and shall constitute a part of and an addition to the reserve fund provided for in said section for re- newals and depreciation. SERVICE REGULATIONS. Sec. 10. The Company hereby agrees to comply with all reasonable regulations of the service of the said street railway system which may be prescribed from time to time by the city council of said city and that the ap- proval of any such regulation by the board of supervising engineers' shall be binding upon the Company (but not upon the city) as to the reasonableness thereof. STYLE OF CARS. All passenger cars operated by the Company shall be used for the carriage of passengers only. All such cars hereafter built or purchased shall be of the best and most approved finish, style and design to be approved by the board of supervising engineers; they shall have center aisles; they shall be without running footboards along the sides, and shall be equipped with sufficient motor capacity. Cross-seats facing forward shall be used, but longitudinal seats, each seating not more than four pas- sengers, may be used at the ends of the cars. All closed cars shall be vestibuled, and shall be of the style and de- scription specified and provided in said "Exhibit B, v and at least one hundred fifty (150) cars of such descrip- tion shall be acquired by and placed in operation upon the tracks of the Company within one (1) year from passage of this ordinance, exclusive of delays occa- 270 sioned by strikes or other causes beyond the control of the Company. PUSH BUTTONS. All cars operated by the Company shall be supplied with a sufficient number of electric bells, connections and push buttons to enable passengers without inconvenience to notify the conductor of their desire to leave the car. FENDERS. All cars shall be equipped with efficient and service- able fender devices, headlights and sand-boxes. BRAKES. Each double-truck car shall be equipped with two sets of brakes, one of which shall be a hand-brake and the other an efficient power-brake of modern, improved type. CLEANLINESS AND VENTILATION. Said cars shall at all times be kept clean and in good repair, and shall be thoroughly ventilated. HEATING. The said cars shall be kept heated at the temperature of fifty (50) degrees Fahrenheit, as nearly as practica- ble, and each car shall contain a standard thermometer appropriately placed to enable passengers to see that this provision is complied with. LIGHTING. All cars shall be kept well and sufficiently illuminated by electric light or other illuminants approved by said Board of Supervising Engineers. SIGNS. Each car shall bear appropriate and conspicuous signs upon both its sides and ends so placed as to indicate, 271 both day and night, the route and destination of such car. At night such signs Shall be illuminated. ADVERTISEMENTS. The company may permit advertisements in its cars, but no advertisement shall be placed upon the outside of any car, and only the space between the top of the windows and the transom of the car shall be used for advertisements on the inside of cars. FUNERAL CARS AND MAIL CARS. The company is hereby authorized and permitted to operate funeral cars, and separate cars for the use of the United States Post Office Department, for the carriage of mail. SINGLE CARS ONLY. Every electric car shall be in charge and under the con- trol of two competent men, a motorman and a conductor, and (after the expiration of one year from the date of the passage of this ordinance, or at such earlier time as the company shall be able to acquire the necessary roll- ing stock to enable it to abandon trailers) shall be oper- ated singly. RATES OF FARE. Sec. 11. The company, except as to chartered cars to private parties and as in this ordinance provided, shall be entitled to charge passengers, during the term of this ordinance, the following rates of fare, to-wit : For a continuous trip in one general direction, within the present or future limits of the city, over its street railways covered by this ordinance and all extensions thereof (whether owned, leased or operated by it) the sum of five cents (5c) for each passenger twelve years of age or over, and three cents (3c) for each passenger 272 under twelve (12) years of age; provided that children under seven (7) years of age accompanied by a person paying fare shall be permitted to ride free. UNIVERSAL TRANSFERS. Every such passenger may demand and upon such de- mand shall receive from the conductor of the car upon which he first takes passage, or from some authorized agent of the company, a transfer. Said transfer shall entitle such passenger to ride upon any other line of said street railway system owned, leased or operated by the company or any other line of street railway operated by any other corporation from which the company is by this ordinance obligated to accept transfers, which connects with, crosses, intersects or comes within a distance of two hundred (200) feet of the line of said street railway upon which the passenger first took passage and paid his fare. But this obligation shall not apply to any connecting point in the south division of the city of Chicago north of Twelfth street, except that upon the completion and operation of subways under the provisions of this ordin- ance, transfers shall be given at all points within said subways where lines of railway of any such corporation or corporations connect with each other. The payment of a single fare shall not entitle a pas- senger to reverse his general direction of travel. If necessary to enable a passenger to reach his destination the conductor or other authorized agent of the company shall issue without additional charge, a transfer upon a transfer, the same as required upon payment of a cash fare; the intention being that for a single fare the com- pany shall carry any passenger for a single continuous ride over any of the said lines of street railway owned, operated or leased by it, within the limits of the said city, so long as such ride is in the same general direction, 273 although some of the lines necessary to be used by such passenger in arriving at his destination intersect or cross one another, or do not conform to such direction. In every instance the transfer given to a passenger may designate the point or place of transfer, and the same must be used at such point or place, within a rea- sonable time, not exceeding fifteen (15) minutes after such point or place is reached by the car from which the passenger is transferred, provided that within said fifteen minutes a car shall pass such point or place of transfer in the direction and upon the route indicated by said transfer; but if no car shall pass such point within said time the passenger shall have the right to take the first available car passing such point in the direction indicated upon the passenger's transfer. A passenger upon any car delayed through the fault, negligence or inability of the company shall be entitled to receive a transfer to a car upon the nearest line of the company going in the same general direction as the delayed car. The company shall also on its cars accept and honor as fares, transfers issued to passengers upon any line of street railway covered or authorized by the said ordin- ance to the Chicago Railways Company, hereinabove re- ferred to as presented for passage in the city council of said city, concurrently with this ordinance, which con- nects with any of said lines of the company, under the same conditions and with like effect as though both lines of street railway were owned by the company and the transfers were issued under the foregoing provisions of this ordinance, but this obligation shall not apply to any connecting points north of Twelfth street and east of the south branch of the Chicago river and south of the main Chicago river, except that upon the completion and operation of subways under the provisions of this ordin- 274 anee, transfers shall be given by and between said com- panies at all points within said subways where their lines of railway connect with each other. The company shall also accept and houor as fares transfers issued by the Chicago General Railway Com- pany at all points where the railway lines of the com- pany connect with or intersect the lines of said Chicago General Eailway Company, constructed and in operation at the time of the passage of this ordinance, with like effect as though both said lines of street railway were owned by the company and the transfers were issued under the foregoing provisions of this ordinance; upon condition, however, that said Chicago General Railway Company shall accept and honor at such transfer points, as fares, transfers issued by the company. The said proposed arrangement contemplates that in every instance the street railway company accepting any such transfer shall give to the passenger presenting it the same accommodations and the same transfers, if re- quested, to its other line or lines, as such passenger would be entitled to receive if he had paid a cash fare. The company shall also exchange transfers with all existing street car lines operating in the city of Chicago, not here- tofore mentioned, under reasonable regulations and at all points of connection between such lines and the lines of the company, after such time as said several franchises? of said other lines now operating shall have expired and shall be extended or renewed. The company, acting by itself or in conjunction with the other companies to which the provisions of this sec- tion apply, may, with the approval of the said Board of Supervising Engineers, adopt reasonable rules and regu- lations not inconsistent with the provisions of this ordin- ance, for the transfer of passengers as provided for here- 275 in, and for the prevention of the fraudulent use of trans- fer privileges. The purchase or acquisition by the city or its licensee of any street railway or railways of any company other than the Chicago City Railway Company shall not affect or impair the obligations of the company under the pro- visions of this ordinance with regard to transfers and through routes in connection with, or over the line or lines so purchased or acquired, but the same shall there- after continue in full force and effect. NO PASSES: EMPLOYES,, POLICEMEN AND FIREMEN FREE. Sec. 12. No passes of any kind or description shall be issued or given to any person, and no person, except employes of the company, policemen and firemen, respec- tively, in full uniform, shall be permitted to ride upon any street railway without the payment of fare; provided that the company may issue to its employes free tickets for use while engaged in the performance of their duties, and may permit them to ride free when wearing an offi- cial badge of the company conspicuously in view. The company shall keep a record of the number of such free tickets and to whom issued. MAIL CARRIERS. In the event that the United States Post Office Depart- ment shall pay to the company a sum of money based upon the system of sales of tickets in effect between the postoffice department and the company for the use of letter carriers during the year 1906, the said amount of money to 'be not less than ten thousand, one hundred, thirty-seven dollars and seventy-five cents ($10,137.75) per annum, with proportionate increase in said amount for any increase in the number of letter carriers em- ployed in the city of Chicago over the number of such 276 carriers so employed in the year 1906, then the company shall carry on its street railways United States letter carriers, in full uniform, at all times, without the pay- ment of fan. THROUGH ROUTES. Sec. 13. The company will co-operate with any corpor- ation operating the street railway in Halsted street, from O'Neil street north, to operate a through line of cars in said street. Whenever the said city shall so direct and shall grant to the company and to any corporation oper- ating a street railway north of the South Branch of the Chicago river in Western avenue a license or franchise to connect their lines in said avenue, the company shall co- operate with such other corporation to operate a through line of cars in said avenue; also, whenever the said city shall grant to the company and to any corporation oper- ating a street railway north of the South Branch of the Chicago river in Kedzie avenue a license or franchise to connect their lines in said avenue, the company will co- operate with such other corporation to operate a through line of cars in said avenue; and, also, whenever the said city shall grant to the company and to any corporation operating a street railway in Ashland avenue north of the South Branch of the Chicago river a license or fran- chise to connect their lines in said avenue, the company shall co-operate with such other corporation to operate a through line of cars in said avenue; and said corpora- tions shall thereafter operate and maintain said through lines of cars in the said streets and avenues, respectively ; and the company agrees to obtain forthwith the right to operate its cars over the street railways on Kedzie avenue between Thirty-first street and Twenty-second street and on Ashland avenue between Archer avenue and Twenty- second street, from said Chicago General Railway Com- 277 pany, and to use that right in the establishment of through routes, as in this ordinance provided, so long as any rights of said Chicago General Railway Company in said streets shall continue. But nothing in this ordin- ance contained shall be construed as enlarging or extend- ing any right of said Chicago General Railway Company in or over any of the streets of the city; provided, that the company shall only be required to operate said through lines across or over any river or canal, when the said city or some third party shall provide and main- tain a bridge across the same upon which it may operate its cars. The company will co-operate with any corporation or corporations operating such of the street railway lines now operated by the receivers of the Chicago Union Trac- tion Company as may be parts of the through routes in this ordinance or in Exhibit C referred to in establishing and maintaining through lines of cars over the street railway lines of the company and the street railway lines of the Union Traction system entering the south division of the said city, north of Twelfth street, which shall carry passengers from the south division of the said city to the other two divisions of the said city, or in the re- verse directions, through the portion of the south divi- sion of said city north of Twelfth street, for a single fare. As many cars shall be operated upon said through lines as the traffic shall require and warrant. The parties now concerned have agreed upon certain through routes which are particularly described in Ex- hibit C, which is attached hereto and made a part hereof, with the same force and effect as if herein fully set out. The company may establish other through routes from time to time and may discontinue the same, if and when the traffic warrants such establishment or discontinuance; 278 but no through route specifically established by this or- dinance and said Exhibit C shall be discontinued with- out the consent of the city council of said city, and the city may by ordinance at any time require the company to re-establish any through, route and to establish new and additional through routes whenever the traffic war- rants or requires such establishment or re-establishment; provided, however, that if the company shall consider that the traffic does not in fact warrant or require the establishment or re-establishment of any through route so required by the city to be established or re-established, then in such case it shall be the duty of the Board of Supervising Engineers, upon demand either of the city or of the company to furnish the certificate of said board certifying as to whether or not, in the opinion of said board, the traffic does warrant or require the establish- ment or re-establishment of such through route, and such certificate of the Board of Supervising Engineers shall be prima facie evidence as to w r hether, in fact, the traffic does or does not warrant or require the establishment or re-establishment of such through route; and the obliga- tion of the company in respect to such routes shall be governed by such certificate pending a judicial determin- ation of its obligations in respect to the establishment or re-establishment of any such through route under this ordinance. The through routes herein mentioned shall be estab- lished and put in operation immediately after the neces- sary reconstruction of the tracks covered by such routes. To carry out the establishment of the through lines provided for in this section, the company will enter into a reasonable operating agreement approved by the said Board of Supervising Engineers, with any other corpor- ation or corporations concerned, whenever required by 279 the said city. If the company and the corporation or corporations operating the lines of street railway consti- tuting said through routes, or any of them, shall be un- able or fail to agree upon terms as between themselves for establishing, maintaining and operating all of said through routes within sixty (60) days after the passage of this ordinance, then and in such case it shall be the duty of the Board of Supervising Engineers to fix and determine the basis and terms, as between said company and said corporation or corporations, upon which said through routes shall be established, maintained and oper- ated and to notify each of the companies operating the lines of street railway constituting said through routes of said basis and terms, and thereupon it shall be the duty of the company to proceed forthwith to establish, maintain and operate said through routes upon the basis and terms so fixed and determined by said Board of Sup- ervising Engineers. Said companies may by agreement (with the approval of said Board of Supervising En- gineers) modify such basis and terms or they falling to agree, the Board of Supervising Engineers may from time to time modify said basis and terms as to said Board shall seem fit and just. Passengers upon the through cars operated upon any through routes, while traveling over the tracks of each company shall be entitled to the same facilities as to transfers as such companies shall be required to give to their own passengers paying cash fares. STREET SPRINKLING AND CLEANING. Sec. 14. The company shall sprinkle, sweep, keep clean and free from snow that portion of each of the streets oc- cupied by its right-of-way, as provided in Exhibit B, and if it shall be found practicable to have the streets oc- 280 eupied bj its tracks swept and sprinkled their entire width by the company, or to have street sweepings, gar- bage or other refuse removed by means of street cars at night, the company shall perform said service, or so much thereof as shall prove practicable, when so ordered by the mayor and commissioner of public works, and it shall receive for such service reasonable compensation. In case the company is called upon to remove street sweepings or other refuse, the said city shall furnish suit- able and convenient dumping grounds and permit the connection of the company's tracks therewith. The com- pany shall have the right to carry on suitable cars the snow required by this ordinance to be removed by it, and also, materials for its own use or for the use of the said city, and to connect its tracks and wires with property necessary to be used for such purposes. STREET PAVING. Sec. 15. The company shall at its own expense fill, grade, pave and keep in repair that portion of the streets occupied by it, as more specifically provided for in said Exhibit B. GROOVED RAILS. All new tracks 'hereafter laid and all tracks in streets hereafter newly paved or repaved shall be of grooved pat- tern more particularly described in said Exhibit B. MAINTENANCE, REPAIRS, RENEWALS AND DEPRECIATION. Sec. 16. After the expiration of the three (3) year period of reconstruction and re-equipment, particularly required by the terms of said Exhibit B, under the head- ing of "Immediate Rehabilitation" and until the rights conferred upon the company by this ordinance are ter- minated by the purchase of the said street railway sys- tem by the said city or its licensee or by reason of the 281 default of the company or otherwise, the company at all times shall maintain the said street railway system and its entire equipment, plant and appurtenances (including pavement and any subways or extensions thereof, to- gether with their appurtenances and equipment, which may be built under the provisions of this ordinance) in first class condition, by making from time to time such expenditures thereon for maintenance, repairs and re- newals, as may be necessary or appropriate to give to the public first class street railway service in all respects. To this end, the company shall make the following expendi- tures : (1) The company shall expend for maintenance and repairs during each and every year that the company con- tinues to operate said street railway system after the ex- piration of the said three (3) year period of "Immediate Rehabilitation/' at least a sum equal to six (6) per cent of the gross receipts for the particular year, and if the said amount is not so expended for the said purpose by the company during any one year, then at the end of such year the unexpended portion thereof shall be de- posited in a fund, appropriately designated, with one or more of the banks or trust companies authorized to act as depositaries of such funds, under the terms and sub- ject to the conditions of this ordinance (herein referred to as the depository) for the purpose of being used when- ever necessary for such maintenance and repairs. The said depositaries or depositary shall make pay- ment out of said fund upon the order of the company, countersigned by the said Board of Supervising En- gineers. (2) On or before the fifth (5th) day of each and every month of each and every year that the company 282 continues to operate said street railway system after the expiration of said three (3) year period of "Immediate Rehabilitation," the company shall deposit with one or more of the said depositaries in a separate fund, appro- priately designated, a sum equal to eight (8) per cent of the gross receipts of said street railways and property, which shall constitute a reserve fund, for taking care of renewals and depreciation of said street railways and property for the preceding month; and out of the said fund the Board of Supervising Engineers shall from time to time authorize the payment by the company of such amounts as are necessary to pay for renewals of the said street railways and property, the portion of said fund remaining unexpended to continue in said fund as a provision for the depreciation of said street railways and property; and shall be disposed of as hereinafter pro- vided. No payments shall be made by said company out of said fund except on the written certificate of the Board of Supervising Engineers for renewals, which are hereby defined to be the replacement of any principal part of said street railways or of their equipment or appurten- ances; and the Board of Supervising Engineers shall de- termine by classifications made from time to time what particular items of expenditure shall be considered as renewals and what particular items of expenditure shall be considered as maintenance and repairs under the pro- visions of this ordinance. The whole or any portion of such reserve fund for maintenance and repairs may be used for maintenance and repairs in addition to the annual expenditure for maintenance and repairs. The fixing of the said amount herein as the minimum amount to be expended annually for maintenance and repairs, and the fixing of the said amount herein as the minimum amount to be deposited 283 for renewals and depreciation, shall not be held or con- sidered as lessening or limiting in any way the obligation of the company to expend whatever sum or sums may be necessary to be expended for maintenance and repairs and to expend whatever sum or sums may be necessary for renewals, to keep the said street railway system and equipment in first class condition in every respect and at all times. The amounts expended or deposited respectively as re- serve funds, under the foregoing provisions of this sec- tion, shall be considered a part of the operating ex- penses of the street railway system hereby authorized, but in the event that the said street railway system shall be purchased by the said city or its licensee at any time under the provisions of this ordinance, the amount then on deposit in each of said reserve funds, or due to be deposited therein at the time of such purchase, shall be turned over to and become the property of the said city or of its said licensee. The obligation herein assumed by the company as to the maintenance, repairs and renewals of subways and extensions thereof, shall be held to be confined to that portion of any such subways or extensions, together with the structures and the appurtenances and equipment thereof, which may be used by or be subject to the use of, the said company under the provisions of this ordin- ance, and to its fair proportionate share of the cost of maintenance, repairs and renewals of that part of any such subway or extensions or the appurtenances or equip- ment thereof, which may be used by or be subject to the use of the company jointly with the said city or its licensees or with the said Chicago Railways Company, such proportionate amount to be fixed and determined by the Board of Supervising Engineers. 284 INSURANCE. Sec. 17. The company shall at all times keep insured to its full insurable value, in responsible companies, all buildings, cars and other insurable property, against loss by fire, and the premiums for such insurance shall be paid out of the receipts of said company, as one of the operating expenses thereof, and in case of the destruction or damage by fire of any such property, the company shall restore the same or its substantial equivalent at its own cost and not out of the receipts of its said street rail- ways, or in lieu of such restoration, the company shall deposit, as a part of the reserve fund required by the preceding Section 16, the value of the property so de- stroyed or damaged, which value shall be estimated by the Board of Supervising Engineers. The company shall apply to any such deposit or to the cost of any such rest- oration the insurance moneys received on account of any such loss or damage. If such moneys are not equal in amount to the cost of such restoration or to the amount of the said deposit hereinabove required, the company will at its own cost and not out of the receipts of said street railway system supply any deficit, and if the amount of such insurance moneys is greater than the said cest or deposit, the overplus shall be deposited with and become a part of and be an addition to the fund provided for in the preceding Section 16 for renewals and depreciation. PERSONAL INJURY CLAIMS. Sec. 18. Out of the gross receipts derived from the operation of the street railway system hereby authorized the company shall pay as a part of the operating expen- ses, all damages arising or growing out of injuries to persons or to the property of others incident to the con- struction, reconstruction or operation of said street rail- 285 way system accruing subsequent to January 31st, A. D. 1907, and the company may set aside as a separate fund such percentage of said gross receipts as the said Board of Supervising Engineers shall estimate to be sufficient to protect the company against all such claims, to the end that if the said city, or its licensee, shall elect to purchase the street railway property of the company as provided by this ordinance, there shall be then available to the company a fund sufficient to meet and discharge all legitimate claims for such damages. The percentage thus reserved may be changed from time to time by said Board of Supervising Engineers if and whenever they shall consider that the percentage theretofore reserved is either inadequate or excessive. In case the balance of said fund at any time remaining shall be, in the judgment of the Board of Supervising Engineers, more than sufficient to protect the company against all then unsettled claims, the company shall pay to the said city fifty-five (55$) per cent of the estimated excess, and the company at the same time shall be en- titled to apply to its own use and benefit forty-five (45$) per cent of such estimated excess. If the city or its licensee shall purchase the property of the company as in this ordinance provided, the com- pany shall deposit with one or more of the depositaries herein authorized the fund then accumulated under the provisions of this section, together with all of the "net receipts" of the company from the operation of its street railways as shall not have been divided between the com- pany and the city prior to the giving of the notice by the city or its licensee of its intention to purchase, and the company shall assume and pay and save the said city or such licensee harmless from all such claims for dam- 286 ages, payment for the same to be made out of the fund so deposited, upon the order of the company counter- signed by the said Board of Supervising Engineers; but if the fund so retained and deposited shall be more than sufficient to pay and discharge said claims in full, then the said depositary or depositaries shall pay to the said city (or its licensee, as the case may be) fifty-five (55) per cent of such excess and to the company forty-five (45) per cent of such excess. The salaries and expenses of the Board of Supervising Engineers after any such purchase and so long as said board shall continue to act under the provisions of this ordinance shall be paid out of the fund deposited under the provisions of this section. REGULATION OF SALARIES. Sec. 19. The company may pay to the directors, offi- cers, agents and attorneys of the company as a part of the operating expenses, compensation for their services commensurate with the service actually rendered by them respectively, taking into consideration the compensation paid to directors, officers, agents and attorneys of other corporations or enterprises of similar magnitude and general character for like services, but the said city by written notice thereof may object to the payment there- after of compensation in excess of an amount or rate specified in such objection to any such director, officer, agent or attorney, and in the event of a disagreement be- tween the company and the said city as to the proper amount to be paid as such compensation, the matter shall be submitted to the judgment of the said Board of Sup- ervising Engineers whose decision shall be final and bind- ing upon the parties, except that, if either party shall be dissatisfied with such decision of said board, then such dissatisfied party may make application to any court of 287 competent jurisdiction to pass upon such objection and to determine the amount of the compensation or salary to be paid. EIGHT OF CITY TO PURCHASE AT ANY TIME. Sec. 20. The company by the acceptance of this ordin- ance, shall and does grant to the said city, and the said city hereby reserves to itself the right, upon the first day of February or upon the first day of August of each and any year after such acceptance upon giving at least six (6) months' previous notice in writing of its inten- tion so to do, to purchase and take over (but only for municipal operation in case of purchase prior to Feb- ruary first, A. D. 1927), the entire street railway system of the company within the said city, including all prop- erty then existing which now constitutes the said street railway system of the company (except such as is en- umerated in Exhibit D thereto attached), with all renew- als and repairs thereof, and including all the property, franchises, rights and claims described in the appraisal inventory of said street railway system as of June 30th, 1906, made by Bion J. Arnold, Mortimer E. Cooley and A. B. du Pont, a copy of which has been filed with the comptroller of the said city on the fourth day of Feb- ruary, A. D. 1907, except such as may have been sold or extinguished as authorized by this ordinance, destroyed or impaired (ordinary wear excepted), and all property then existing which has been purchased or acquired by the company after June 30th, 1906, for use as a part of or in connection with the said system of street railways, the cost of which shall have been certified by the Board of Supervising Engineers, as in this section and in sec- tion 7 hereof provided, and also all extensions of and additions (including underground trolleys, if any) to said street railways made under the provisions of this 288 ordinance, and all rights of every kind under this ordin- ance in or to any subways or extensions thereof con- structed under the provisions of this ordinance. PRICE TE BE PAID BY THE CITY. In case the said city shall purchase and take over the street railway system of the company, as in this ordin- ance provided, then it shall pay for the same the aggre- gate of the following items : 1. The value of the property described in the said ap- praisal inventory and the value of all the franchises, rights and claims of every description, to construct, main- tain or operate street railways in the said city now be- longing to the company, or claimed by it, which said value of such property and all of said franchises, rights and claims is hereby fixed (for the purpose of such purchase) at the sum of twenty-one million dollars ($21,- 000,000). 2. The value of any and all property and equipment and additions thereto supplied, purchased or acquired by said company as a part of its street railway system, be- tween the 30th day of June, A. D. 1906, and February 1st, A. D. 1907, including any equipment and additions thereto which were in process on June 30th, 1906, of being so supplied, purchased or acquired, but excluding any property described in the aforesaid inventory, and repairs to and maintenance thereof and any expenditures in connection therewith properly chargeable to operating expenses. From such value shall be deducted the value of any property included in said inventory which shall have been lost, destroyed or impaired (ordinary wear ex- cepted) after the 30th day of June, A. D. 1906, and prior to the 1st day of February, A. D. 1907. The value to be allowed under this paragraph Number 2 of this sec- 289 tion shall be determined by the Board of Supervising Engineers immediately after the assumption by said board of their duties in supervising the work of recon- struction and re-equipment in this ordinance provided for, and shall be reported by said board to the city con- troller of said city; and the amount so reported by said board shall be final and binding upon the parties hereto and shall be conclusively held and taken as the value of the property and equipment in this paragraph specified. 3. The cost of reconstruction and re-equipment of said street railway lines of the company and of the construc- tion of new lines, extensions, underground trolleys and other additions to property actually paid by said com- pany at and prior to said purchase by said city and certi- fied by the Board of Supervising Engineers, or incurred for work actually done or materials furnished with the approval of said board under completed or pending con- tracts, except those for which special provision is made in subdivision 4 of this section, together with the per- centages thereon as in section 7 hereof provided, and all amounts which shall then have been contributed by the company to the city for the construction of subways or extensions thereof, together with five (5) per cent of said last named amounts as hereinbefore provided. 4. After the giving of the notice of the election of the said city to purchase said street railway system of the company, as herein provided, and prior to the date fixed for said purchase, the said Board of Supervising En- gineers shall make a written estimate (and furnish a copy thereof to the said company and the said city) of the probable cost of completing any work of construc- tion or equipment provided for by this ordinance, includ- ing the construction of new lines, extensions, underground 290 trolleys or other additions to property and including any extensions of the street railway system of said company made under the provisions of section 36 hereof, which work has, and to the extent to which it has, prior to the date of giving said notice, been contracted for by the said company, with the approval of said Board of Supervising Engineers, and the city shall either take over and as- sume said contracts and procure the release of the com- pany from all obligation thereunder, or the said city shall, at or prior to the date of the said purchase of the street railway system of said company, deposit with a depositary or depositaries (authorized to act as such by this ordinance) a sufficient amount of money to pay the cost of completing such contracts according to the said estimate of the said Board of Supervising Engineers, and the said company shall proceed, with all due diligence and care, to complete said contracts at its own expense and under the supervision of said Board of Supersiving Engineers, and the cost of completing the said contracts after the date of such purchase by the city, together with the said additional percentages thereof, shall be paid from time to time by the said depositary or depositaries out of the funds so deposited, upon the written certificates of the said Board of Supervising Engineers. In the event that the said amount so deposited shall not be suffi- cient to pay the said cost, including said additional per- centages provided for in Section 7 hereof, the said city shall pay such additional amount as may be necessary for such purpose, and in the event that the amount so deposited shall be. more than sufficient to pay the said cost, the unexpended balance shall be returned and paid over to the city by the said depositary or depositaries holding the same, and in no event shall the company be obligated to incur a greater expense in carrying out said contract than the amount so deposited. 291 PAYMENT OR DEPOSIT OF PURCHASE PRICE. Upon the deposit of the sum, if any, required by the above and foregoing paragraph numbered 4 of this sec- tion and the payment in cash of the amounts hereinbe- fore in paragraphs numbered 1, 2 and 3 of this section provided for, to the company, or the deposit of said amounts to the order of the company with one or more of the depositaries authorized to act as such by this or- dinance the said city shall have full right and lawful authority, after the notice and upon any of the dates hereinbefore fixed, to take over and possess, as its own property, all the property, plant and equipment of every sort and nature (including underground trolleys), then constituting the street railway system of the company, and all rights of every kind under this ordinance in or to any subways or extensions thereof constructed under the provisions of this ordinance, free and clear of all liens and claims of every nature, except that the said city shall take subject to the payment of a fractional part of the unpaid taxes for the current year upon the said property, rights and equipment, equal to the frac- tional part of the year for which such taxes have been levied or assessed remaining unexpired at the date of such purchase, and the balance of the taxes shall be treated and paid as a part of the operating expenses prior to the sale of the property. The company further grants to the said city, and the said city hereby reserves to itself, the right (in addition to the right of purchase hereinbefore granted and re- served) to purchase and take over from the company at any time prior to February first, 1927, the street railway system, rights and property of the company, free from any limitation and restriction as to the operation thereof, at the same times and in the same manner at and upon 292 which the city has the right under the foregoing provi- sions of this section to purchase the same. The price to be paid therefor by the city under the right of purchase in this paragraph granted and reserved shall be the price at which the city shall then have the right to purchase said property for municipal operation as hereinbefore specified, and in addition to such price a sum equal to twenty (20) per cent of such price. The property to the possession of which the said city shall then be entitled shall include all of the property then existing which constitutes the street railway system of the company and its appurtenances at the date of the passage of this ordinance (excepting property enumer- ated in said Exhibit D) and all of the property purchased or acquired thereafter by the company, and all extensions of, or additions to, said street railways, including under- ground trolleys constructed under the provisions of this ordinance, and all rights of the said company in or to any subways or extensions thereof constructed under this ordinance, and the sum then on deposit as a reserve fund, under the provisions of section 16 of this ordinance, ex- cepting such property as may have been sold as in this ordinance authorized, or worn out or destroyed, provided that in case of property destroyed and not then replaced in kind or in value as provided in section 17 of this or- dinance, adjustment shall forthwith be made at the time of such purchase and the obligation of the company in that behalf discharged either in cash or by deduction from the purchase price. In the event that it shall be determined that the city is, at the time this ordinance is passed or at the time this ordinance takes effect, without lawful power or authority to acquire or own street railways under the provisions of this ordinance or otherwise, and the city 293 shall thereafter acquire such power or authority, there- upon and after such acquirement the city shall have the right to purchase and acquire said street railways, rights and property under the provisions of this ordinance to the same extent and in the same measure as if said city had full right and lawful authority so to purchase or acquire said street railways, rights and property at the date of the passage of this ordinance and at the date when this ordinance takes effect. CITY PURCHASE DURING RECONSTRUCTION PERIOD. Sec. 21. In the event that the said city shall elect to exercise its right of purchase, as in this ordinance pro- vided, at any time prior to the completion of the work of construction, reconstruction, equipment and re-equip- ment within the time and in the manner provided for in said Exhibit B, under the head of "Immediate Rehabilita- tion" it shall take over the same subject to the right and obligation of the company to complete the said work of "Immediate Rehabilitation" as provided in this ordin- ance, carrying out the terms and conditions of said Ex- hibit B under the supervision and control of the said Board of Supervising Engineers and receiving therefor the cost thereof and the additional percentages thereon as in section 7 of this ordinance provided. In such event in addition to complying with the pro- visions of section 20 hereof the said city shall deposit at the time of such purchase with some one or more of the banks or trust companies authorized to act as deposi- taries under the terms of this ordinance a sufficient amount of money to pay for the completion of the said work of "Immediate Rehabilitation," not herein other- wise provided for, which said amount shall be estimated and determined by the said Board of Supervising En- 294 gineers, and shall include said additional percentages pro- vided for in section 7 hereof. The said cost of completing the said work of "Imme- diate ^Rehabilitation," together with said additional per- centages thereof shall be paid from time to time by the said depositary or depositaries, out of the funds so de- posited with it or them, upon the written certificates of the said Board of Supervising Engineers. In the event that the said amount so deposited shall not be sufficient to pay the said cost, including said addi- tional percentages provided for in section 7 hereof, the said city shall pay such additional amount as may be necessary for such purpose. In the event that the amount so deposited shall be more than sufficient to pay the said cost, the unexpended balance shall be returned and paid over to the said city by the said depositary or depositaries, and in no event shall the company be obligated to incur a greater expense for the work of such construction, reconstruction, equip- ment and re-equipment, including underground trolleys and other additions to plant and property, if any, than the amount so deposited. RIGHT OF LICENSEE TO PURCHASE. Sec. 22. The company by the acceptance of this ordi- nance snail and does grant to the city, and the city hereby reserves to itself, the right to designate any person, firm or corporation having lawful authority to acquire, own and operate street railways in said city (herein called the "licensee") who or which shall have the right to purchase the street railway system, rights and property of the com- pany, at the same times and in the same manner at and upon which the city hereunder has the right to purchase the same, subject to the condition that the said licensee shall purchase the same property which the city has here- 295 in reserved the right to purchase, and that tlje price to be paid therefor by the said licensee shall be the price at which the city shall have the right to purchase said prop- erty for municipal operation, and in addition to such price a sum equal to twenty (20) per cent of such price; but it is expressly provided, however, that the said licensee shall not be required to pay the said additional twenty (20) per cent or any part thereof, if, before the purchase of said property by such licensee shall be consummated, a valid and binding contract shall be entered into between the city and its licensee, either by the passage of an ordi- nance and the acceptance thereof or otherwise, which shall limit the beneficial interest of the said licensee (and its stokholders, if such licensee is a corporation) in the property purchased and any improvements thereof or additions thereto to a return of the actual moneys in- vested therein by said licensee and not exceeding five (5) per cent thereof, in addition thereto, and interest upon the said moneys and the said additional per cent at a rate not exceeding five (5) per cent per annum, and which shall provide that all net profits derived from the said property in excess of the beneficial interest of said licensee, limited as aforesaid, shall belong and be paid over to the city. Nothing in this ordinance, however, shall have the effect or be construed to have the effect of lessening or limiting the right of the city to provide for reducing the rates of fare to be charged by such licensee in the operation of said street railway system or from using the moneys so to be paid over to the said city by said licensee for the pur- pose of retiring from time to time the stock or other se- curities issued by said licensee, subject to the limitations of this section, or from using the said moneys in extend- ing or adding to or improving said street railway system. The right of the licensee of the city to acquire the said 296 street railway system rights and property by purchase under the provisions of this ordinance shall in no way be impaired by any lack of power or authority on the part of the city itself to acquire the said street railway system, rights and property for municipal use and operation or otherwise. Upon the purchase of the said street railway system, rights and property under the provisions of this ordinance, either by the city or by any licensee of the city, all rights, of the company, its licensees or assigns under this ordi- nance in or to said street railways, rights and property or any part thereof, or the operation thereof, or receipts thereof, shall wholly cease and determine. BIGHTS OP COMPANY IN CASE CITY DOES NOT PURCHASE FOB TWENTY YEABS. Sec. 23. In the event that the said street railways are not purchased by the said city or its licensee as herein- above authorized, prior to February first, A. D. 1927 (and nothing in this ordinance contained shall be construed as being in any event a grant to the company extending beyond February first, 1927), the said city shall have the right to designate any person, firm or corporation having lawful authority to acquire, own and operate street rail- ways in said city as its licensee, to purchase the said street railways, property and rights of the company at or after February first, 1927, upon the same terms that the city could then purchase, and in case such reserved right of purchase be not exercised by the said city or its licensee and the city shall grant a right to another company to operate a street railway in the streets and parts of streets constituting the said street railway system of the com- pany, such new company shall be required to and shall purchase and take over the said street railways, property and rights of the company at or after February first, 297 19*27, upon the same terms upon which the said city might then purchase and take them over. No mortgage, trust deed or other instrument given by the company shall impose any lien upon or create any rights in the said street railways, property and rights, without the same being made specifically subject to all the limitations, conditions and provisions of this ordinance, including the right of the said city or its licensee to ac- quire the said property and rights upon the terms and in the manner in this ordinance provided, and in the event of such purchase the lien of any such mortgage, trust deed or other encumbrance, and all other liens upon said street railways, property and rights, or any part thereof, shall be discharged from said street railways, property and rights and shall attach to the proceeds of the sale thereof. INTEREST RETURN OF CAPITAL INVESTMENT. Sec. 24. On or before the tenth day of April in each year the company shall come to an accounting and settle- ment with the said city as of the thirty-first day of Janu- ary last preceding, upon the following basis: From the gross receipts of the said street railway sys- tem and property from all sources and of every kind for the year ending on said thirty-first day of January there shall be deducted for such year: First: (1) All expenses of operation, including main- tenance, repairs and renewals; (2) All amounts contrib- uted during said year and then held in reserve under the provisions of Sections 16 and 18 hereof; (3) All amounts paid out for taxes and assessments levied and imposed upon the real and personal property of the company, in- cluding all capital stock or franchise taxes levied or as- sessed after the 31st day of January, 1907, but not includ- ing any taxes which may by any court be ordered to be levied, assessed or collected after the 31st day of January, 298 1907, on account of the failure of the company or any per- son, firm or corporation owning or having an interest in the said street railways or property, to pay any taxes which should have been paid for or on account of such street railways or property prior to the 31st day of Janu- ary, 1907, and not including any sums paid by the com- pany to the city for city license fees, if any, exacted from the company or its employes; (4) All salaries and ex- penses of the Board of Supervising Engineers by this ordi- nance authorized, after the period of "Immediate Rehab- ilitation"; and Second: A sum equivalent to five (5) per centum per annum for said preceding year upon the amount of the cash purchase price which the said city would then be obligated to pay on account of the items specified in sub- divisions 1, 2 and 3 of Section 20 hereof, if it were pur- chasing the property for municipal operation on such thirty-first day of January, interest being adjusted as to items added to such purchase price during said year. In case in any year the gross receipts shall not be sufficient to pay in full the items in the "first" and "second" para- graphs of this section mentioned, then the deficit shall be paid out of the gross receipts of the subsequent year or years. DIVISION OF REMAINING NET RECEIPTS. After the deduction from the gross receipts of the items hereinbefore in this section provided, the amount remain- ing shall be considered as the net receipts for such year arising from the operation of the street railway system hereby authorized, and shall be divided between the com- pany and the said city in the following proportions : forty- five (45) per cent to be retained by the company, and fifty-five (55) per cent to be paid forthwith by the com- pany to the said city, crediting thereon all amounts paid out during the preceding year by the company for city 299 license fees, if any, exacted from the company or its em- ployes. COMMUTATION OF FARES. It is understood and agreed that the company's agree- ment and obligation to pay to the city the fifty-five (55) per cent of the "net receipts," as hereinbefore provided is based upon its right to charge and receive the fares pre- scribed in Section 11 hereof and to retain as its own the forty-five (45) per cent of the "net receipts'' as is hereinabove in this section provided. The said city, how- ever, reserves the right to, and it may at any time com- mute a sum not exceeding the city's share of the net re- ceipts for the previous year into a reduction of said rates of fare; and thereafter in the event of such reduction of rates of fare the company may deduct and retain as its share of the net receipts each year an amount equal to what would have been the company's share of the net re- ceipts of such year had the passengers earned during such year paid the fares prescribed in this ordinance, but the company, after deducting and retaining its share of said net receipts so determined shall pay over to the said city the remainder, if any, of the net receipts for such year less the deductions therefrom hereinbefore provided to be made from the said city's share of the "net receipts" on account of license fees. CITY TO ESTABLISH SINKING FUND FOR MUNICIPAL PURCHASE. It is further provided that, subject to the action of the City Council of said city, the said city shall deposit the amount so paid to the said city to the credit of a separate fund to be kept and used for the purchase and construc- tion of street railways by said city; but any failure to comply with this provision shall in no way affect the rights or obligations of the company under this ordinance. 300 CAPITAL INVESTMENT LIMITATION. Sec. 25. The company shall not be required on account of any extensions of subways or on account of under- ground trolleys, or on account of any extensions of its street railways, other than the extensions provided for in Exhibit A, and in Section 36 of this ordinance, and four (4) miles of double or eight (8) miles of single track per annum, as in Section 3 hereof provided, to increase its total capital investment to such an extent that the return thereon over and above the interest charge of five per cent thereon by this ordinance authorised, would be reduced to an inadequate or unreasonably small amount. DEPOSITARIES. Sec. 26. Any state or national bank or trust company in the city of Chicago or in the city of New York which has a capital stock and surplus amounting to at least one million dollars ($1,000,000) may be selected and can act as a depositary under the provisions of this ordinance, provided, that no moneys shall be deposited with any such depositary under the provisions of this ordinance to an amount exceeding the total capital stock and one-half of the surplus of such depositary; and provided further that all deposits authorized or required by this ordinance (except deposits of purchase money in the event of pur- chase of said street railway system by the city, or its licensee) shall be made with depositaries in the city of Chicago. DEPOSITS. Sec. 27. The company shall have the right to select the particular depositary or depositaries with which it shall deposit any of the funds required to be deposited by the company under the provisions of this ordinance, and the company shall at all times be held responsible for any loss or impairment of any such deposit, and shall prompt- ly make good and restore at its own cost, and not. out of 301 the receipts of said street railways, any such loss or im- pairment. The city or its licensee, as the case may be, shall have the right to select the particular depositary or depositaries with which shall be deposited the funds re- quired to be deposited by the city or its licensee, in the event of purchase of the said street railways by the city or its licensee under the provisions of this ordinance, and the city or its licensee, as the case may be, shall at all times be held responsible for any loss or impairment of any such deposit made by it, and shall promptly make good and restore any such loss or impairment. Provided, that in all cases where, under the terms of this ordinance, the city is authorized or required to make any deposits of money, the city shall be free from any responsibility for loss or impairment of any such deposit, if not less than thirty days prior to the making of such deposit it shall give notice in writing to the company of the names of the depositaries in which it shall propose to make such deposit. And the company, if not satisfied therewith, shall give notice in writing to the city not less than twenty days after receiving such notice from the city. The notice of the company may direct the city not to make such deposit, or any specified portion of it, with any depositary or depositaries so named by the city of which the company may disapprove, and in such case such notice 'by the company shall contain the names of qualified depositaries from which the city may choose in lieu of the names so disapproved of by the company, and the number of the names of depositaries in such notice by the company, from which the city is to choose, shall be at least five in excess of the number of depositaries which the company shall disapprove of as stated in such notice. And the city, upon making deposits, in accord- ance with the terms of this proviso, shall be free from any responsibility for loss or impairment of any such deposits. 302 INTEREST ON DEPOSITS. Sec. 28. Appropriate provision for the payment of reasonable interest on any funds deposited under the pro- visions of this ordinance shall be made with the deposi- tary or depositaries of such funds by the party making such deposit. All interest which may accrue upon or be payable on account of any funds deposited under the pro- visions of this ordinance and any commission or allow- ance made directly or indirectly by any depositary on account of the funds deposited with it shall be held and considered as a part of the principal fund so deposited and shall be added to such fund as a part thereof. The company shall make daily deposits, with some de- positary or depositaries authorized by this ordinance, of all moneys received by the company from the operation of the said street railways and property, and shall make appropriate provision for the payment of reasonable in- terest on the moneys so deposited by such depositary or depositaries, which interest shall be added to and be held and considered as a part of the gross receipts of the said street railway system and property. ANNUAL REPORTS. Sec. 29. The company, so long as it continues to oper- ate any of the said street railways under this ordinance, and on or before the tenth day of April in each year shall prepare and file with the city comptroller of said city annual reports for the preceding year ending on the 31st day of January. Such reports shall be in writing, verified by the affi- davit of the auditor of the company, setting forth in rea- sonable detail according to forms prescribed by said comp- troller, the character and amount of business done by the company for the year immediately preceding such report and the amount of receipts from and the expenses of con- ducting the said business, and the said city comptroller, 303 or accountants authorized by him, under the direction of the mayor or city council of said city, shall have the right at all reasonable times to examine all the books, vouchers and records of the receipts and expenditures of the company, for the purpose of ascertaining the accuracy of the reports herein required and the rights of the said city under this ordinance. The Board of Supervising Engineers shall have the power to prescribe the form and manner in which the books and accounts of the company shall be kept subject to the approval of the city comp- troller. There shall be also an annual audit of the ac- counts of the company covering all receipts and expendi- tures for the year ending on the thirty-first day of Jan- uary next preceding, and a formal written report by pub- lic accountants selected by the city and the company, the expenses of such audit and report to be paid out of the gross receipts of the company as an operating expense. In the event of any purchase of the street railways and property of the company under the provisions of this ordi- nance, on the first, day of August of any year, there shall be an accounting and report for the preceding six months similar in character to that hereinbefore provided. COMPANY TO MAINTAIN OFFICE IN CITY. Sec. 30. The company shall not remove its principal office or any of its books (except bond registry and stock transfer books), records, accounts, contracts, or original vouchers of receipts and expenditures beyond the limits of the said city, and shall maintain an office within said city so long as the company continues to operate any part of the street railways mentioned and provided for in this ordinance under the provisions hereof. FORFEITURE FOR NON-COM I'l-I A NVK. Sec. 31. The company, by the acceptance of this ordi- nance, expressly agrees with the said city and 304 itself fully to comply with all of the terms and conditions of this ordinance throughout the period of time covered hereby, and so long as the company continues to operate any street railways in said city under or by virtue of the authority hereof. The company further agrees that in the event that it shall make default in the observance or performance of any of the agreements or conditions herein required to be kept and performed by it, and if any such default shall continue for a period of three (3) months (exclusive of all times during which the company may be delayed or interfered with, without its connivance, by unavoidable accidents', labor strikes or the orders or judgments of any court entered in any suit brought without its con- nivance), after written notice thereof to it from the said city, then and in each and every such case, the said city by its city council shall be entitled to declare this grant and all of the rights and privileges of the company to maintain and operate street railways in any of the streets or public ways of the said city to be forfeited and at an end; provided, however, that should the company, for its corporate purposes, pledge or mortgage its street railway property or any of the rights secured to it by this ordi- nance, or any security representing the said property or rights, for the security of the payment of its notes, bonds or other evidences of indebtedness maturing on or before February first, 1927, the amount thereof not being in ex- cess of the value of the property and rights of the com- pany, as defined in Section 20 hereof, such right of for- feiture of this grant by reason of any violation by the company of the provisions of this ordinance shall not be asserted or exist against such pledgee or pledgees, mort- gagee or mortgagees, or any of them, and shall not impair or affect the right of such pledgee or pledgees, mortgagee 305 or mortgagees, to recover by foreclosure or other legal process against all the property of the company, includ- ing the rights and privileges hereby granted, the face value of said, notes, bonds or other evidences of indebted- ness, or any security representing the said property or rights to an amount, however, not in excess of the sum for which the city would then have the right under the terms of this ordinance to purchase the said street rail- way property; and it is hereby stipulated that any notice of default by the company, upon which a forfeiture shall be claimed, shall also be given by the said city to the trus- tee or mortgagee of record in any trust, deed or mortgage securing such indebtedness. The purchaser at any fore- closure or other sale shall acquire no other or greater rights or privileges than are hereby conferred, and such purchaser shall hold said property, so purchased at such foreclosure or other sale, subject to the right of purchase at any time thereafter, as herein provided, by the said city, and also subject to the right of purchase by any licensee of the said city, upon the same terms as the said city might purchase and acquire said property for munici- pal operation, but without payment in either case of the additional twenty (20) per cent provided for in sections 20 and 22 of this ordinance; and also subject to the con- tinuing terms, conditions and limitations of this ordi- nance, including the forfeiture provisions to the same extent as if the said purchaser had been the original grantee hereunder, except that such purchaser shall have no right to execute or deliver any mortgage, trust deed or other encumbrance on said street railways, rights and property or any part thereof without the consent of said city. The city shall have the right to bid and become the purchaser at any such foreclosure or other sale. 306 The said company further expressly agrees that, by the acceptance by it of this ordinance, it is obligated to complete the said work of "Immediate Rehabilitation" provided for in said "Exhibit B" within the time and in the manner set forth in said exhibit (due allowance being made for any and all delays or interruptions arising with- out its connivance by unavoidable accidents, labor strikes, or the orders or judgments of any court, entered in any suit brought without its connivance), and if the company shall fail or neglect to proceed with the said work of "Immediate rehabilitation" with all reasonable diligence and promptness after the acceptance of this ordinance by the company, or to complete the said work within the time prescribed in said Exhibit, B, and said Board of Supervising Engineers shall certify to the City Council of the said city that the company has failed or neglected to so proceed with said work, or has failed or neglected to complete the work in the time specified in Exhibit B, the company shall be and is obligated to pay to the said city for each day that such default or neglect shall con- tinue, the sum of ten thousand dollars as liquidated dam- ages; and if the company shall, at any time after the ac- ceptance of this ordinance by it, fail to comply with the provisions hereof with regard to the maintenance of first class street railway service over and upon its said lines of street railways, the said city shall have the right to sue for and recover in any court of competent jurisdiction the sum of not less than fifty dollars and not more than five hundred dollars for each and every such failure and each and every day that such failure shall continue shall be taken and held to be a separate offense; but the payment of such penalties shall not in any manner release the lia- bility of the company to incur a forfeiture of all its rights and privileges under this ordinance, as hereinabove in this section provided. 307 WAIVER OF RIGHTS. Sec. 32. The company, in consideration of the grant made by this ordinance, upon the terms and conditions herein expressed, agrees to waive, surrender and release, and by the acceptance of this ordinance, the company does waive, surrender and release all and every one of tlie rights and claims of the company of every kind and na- ture, in the streets of the said city, other than the rights granted by this ordinance. CITY'S RIGHT TO INTERVENE. Sec. 33. The company 'by the acceptance of this ordi- nance shall and does grant to the said city, and the said city hereby reserves to itself the right to intervene in any suit or proceeding brought by any person, firm or cor- poration seeking to enjoin, restrain or in any manner in- terfere with the company in the doing of any work called for by this ordinance, or involving the observance or per- formance of any of the agreements or conditions herein provided to be kept or performed by the company, or in any suit to foreclose or enforce any lien, mortgage or trust deed against it and to move for a dissolution of such injunction or restraining order in such suit, and take any other appropriate steps to protect the rights of the said city in case it shall deem action necessary and appropri- ate to protect the interests of the said city. BOARD OP SUPERVISING ENGINEERS. Sec. 34. Immediately upon the acceptance of this or- dinance by the company, there shall be organized a Board of Supervising Engineers in the manner following: Within thirty (30) days after the acceptance of this ordinance as hereinafter provided, the company shall ap- point an engineer to represent it on said board, and shall notify the mayor of said city, in writing, of the name and address of such engineer; and within thirty (30) 308 days after such notice the said city shall appoint an engi- neer as its representative on said board (which appoint- ment shall be made by the mayor of the said city and shall be subject to the approval of the city council), and shall notify the company in writing of the name and ad- dress of its said engineer. Bion J. Arnold is hereby selected and appointed the third member of the said board. The said city or the company may respectively, at any time and from time to time, remove its representative on said board, and may also respectively from time to time, appoint an engineer to represent it upon said board, whenever and as often as it shall fail to have a representative upon said board from any cause whatsoever. No such removal or appoint- ment shall take effect until written notice thereof has been given to the other party by the party making such removal or appointment. The said city and the company may, at any time and from time to time, remove the third engineer from said board, and may also select and appoint a third engineer to be a member of said board, whenever and as often as a vacancy in said board shall occur from the death, resigna- tion, removal, refusal or inability to act of the third engi- neer upon said board. In the event that any vacancy in the position of third engineer upon said board shall not be filled by the selec- tion of a third engineer by said city and the company within thirty (30) days after such vacancy shall arise, then the persons then acting as judges 1 of the (main) Appellate Court for the First District of Illinois, or a majority of them, may fill such vacancy on said board by appointing a competent engineer thereto upon the appli- cation of said city or the company, after ten days' writ- ten notice having been given to the other party of such application. 309 In case either the said city or the company shall at any time desire the removal of the third engineer and the ap- pointment of another engineer in his place, the party de- siring such removal and new appointment may, upon giv- ing ten (10) days' written notice thereof to the other party, apply to the said judges for such removal, and the said judges or a majority of them shall within ten (10) days from and after such application set the same for in- formal and summary public hearing, at which the party desiring the removal shall publicly present its reasons for asking such removal. Upon such application of either the said city or the company, the said judges or a majority of them shall have the power, but shall not be required to remove the said third engineer. The third engineer shall not be re- moved by the said judges or a majority of them at. any time, except upon the application of either the said city or the company. Upon the refusal or failure of the said judges then con- stituting the (main) Appellate Court for the First Dis- trict of Illinois, or a majority of them, to make the ap- pointment herein authorized within thirty (30) days after being requested so to do, either the said city or the company may, upon giving ten (10) days' written notice to the other party of its intention so to do, apply to any judge of the Circuit Court of Cook County, Illinois, for the appointment of a third engineer to fill any vacancy existing in said position, and the judge so applied to shall have the power to appoint such third engineer, who, when appointed, shall be a member of said board, and shall be subject to removal in the manner hereinabove provided. Either the company or the city shall have the right to apply to any court of competent jurisdiction for the re- moval of any member of said Board of Supervising Engi- 310 neers for fraud, corruption, or failure to perform in good faith his duties under this ordinance. A majority of said Board of Supervising Engineers shall at all times be authorized to exercise the powers con- ferred by this ordinance on said board. All words in this ordinance contained purporting to give authority to said Board of Supervising Engineers shall be construed as giving such authority to a majority of said board. SALARIES AND EXPENSES OF SAID BOARD. The said Board of Supervising Engineers shall main- tain an office in the said city and shall employ the neces- sary assistance and purchase the necessary supplies and materials to enable it properly to perform its duties under this ordinance. The said third engineer shall be ex-officio chairman of the board, and shall be paid for his services as a member of said board compensation at the rate of fifteen thousand dollars ($15,000.00) per annum. During the period of "Immediate ^Rehabilitation," said Bion J. Arnold, so long as he continues to act as a mem- ber of said board, shall, in addition to his duties as a member of said Board of Supervising Engineers, act as chief engineer of the work contemplated in this ordinance, and shall receive as additional compensation for such service, the sum of fifteen thousand dollars ($15,000.00) per annum. In such capacity he shall have charge of the preparation of the plans and specifications, and the gen- eral direction of the entire work, and of its inspection during construction. Said plans and specifications and system of inspection shall be subject to the approval of the Board of Supervising Engineers. Each of the other two members of said board shall, in addition to attending the monthly meetings of the board, attend such other meetings as may be called by the chair- 311 man, and be paid for his services as a member of said board, compensation at the rate of one hundred dollars (f 100. 00) per day, and his traveling and living expenses while away from his home, and actually engaged upon this work, it being understood that his total compensa- tion for services shall not be less than thirty-six hundred dollars ($3,600.00) nor more than ten thousand dollars ($10,000.00) per year. The chairman of said board shall call (in addition to such meetings as he may deem de- sirable or necessary) a meeting of said board at any time upon request of the president of either of said companies, or the mayor of said city. The salaries and expenses of said Board of Supervising Engineers during the period of "Immediate Rehabilita- tion" provided for in this ordinance shall be added to and form a part of the cost of such "Immediate Rehabilita- tion," but thereafter shall be paid out of gross receipts, as an operating expense. In case the said ordinance to the said Chicago Rail- ways Company is passed and accepted by said Chicago Railways Company, the third engineer and the engineer representing the city on the Board of Supervising Engi- neers created by said ordinance shall be the same persons who act as the third engineer and the engineer represent- ing the city, respectively, in the Board of Supervising Engineers created by this ordinance; and the said Chi- cago Railways Company and the Chicago City Railway Company shall agree upon one engineer as their joint representative upon said Board; but in case they do not so agree, each of said companies may select its own rep- resentative, who shall in such case act as a member of said board only in the consideration and determination of matters relating to the street railways and property of the particular company he represents. 312 In the determination of any matter relating to subways and through routes and all other matters in which said companies are jointly interested the representative of each of said companies on said Board of Supervising Engi- neers shall be entitled to one-half of a vote. In case said ordinance to said Chicago Railways Com- pany is passed and accepted by said company, the salaries and compensation of said engineers provided for in this ordinance shall include all compensation or salaries pay- able to said engineers under said other ordinance without duplication, and shall be equitably apportioned by the said third engineer between the said two companies, tak- ing into consideration the work done by said board under the said ordinances, respectively, and the determination of said third engineer as to such apportionment shall be final and binding upon the parties whose interests are therein concerned. CITY TO RESERVE POLICE POWER. Sec. 35. Nothing in this ordinance contained shall be construed as depriving the said city of the right of exer- cising any police power which it would have possessed or enjoyed had this ordinance not been granted. The enumeration herein of special requirements and spe- cific regulations shall not be taken or held to imply the re- linquishment by the said city of its power to make other requirements or regulations, and the said city hereby ex- pressly reserves the right to make all regulations which may be necessary to secure in the most ample manner the safety, welfare and accommodation of the public, includ- ing among other things the right to pass and enforce or- dinances to protect the public from danger or inconveni- ence in the management and operation of street railways throughout the said city and the right to make and en- force all such regulations as shall be reasonably necessary to secure adequate and sufficient street railway accom- 313 modations for the people, and insure their comfort and convenience. The said council may vest any or all matters of admin- istration under this ordinance, including such thereof as are herein vested in the mayor, comptroller or other city officials named in this ordinance or in said Exhibit B at- tached hereto (but excepting those herein vested in said Board of Supervising Engineers), in a department or bureau of local transportation, or in its city engineer, or in any official or employes of said city. COMPREHENSIVE RECONSTUCTION AND UNIFIED OPERATION ASSURED. Sec. 36. For the purpose of carrying into effect the purpose and desire of the said city to provide for the uni- fied operation and the comprehensive reconstruction of all the street railways within said city, an ordinance sim- ilar to this ordinance in general provisions and character, covering the system of street railways now maintained and operated by the receivers of the Chicago. Union Trac- tion Company, granting to the Chicago Railways Com- pany the right to operate said system, has been presented for passage by the city council of said city, concurrently with this ordinance, and it is hereby expressly provided that in the event that the company accepts this ordinance and files the bond as required in this ordinance within the time herein prescribed and the said Chicago Railways Company fails to accept the said ordinance to the said Chicago Railways Company after its passage and within the time and according to the terms provided therein, or in any ordinance amendatory thereof or supplementary thereto, the company hereby obligates itself to extend and operate its street railway system over and upon the streets and parts of streets in the said city covered by the said ordinance to the said Chicago Railways Company, so far as and to the extent that the rights of the compa- 314 nies now operating the street railways upon such streets and parts of streets cease and expire by limitation or otherwise, the said street railway system of the company to he extended over each such street or part of street as rapidly as and to whatever extent the said city is able to and does confer upon the company lawful authority to construct and operate street railways upon such streets and parts of streets, respectively, and deliver to the company peaceable possession thereof for such purposes. And the company hereby agrees to construct and operate in each such street and part of street so turned over to it as aforesaid, the street railways and equipment required by the ordinance to said Chicago Railways Company to be constructed by it therein, including the reconstruction of the tunnels under the Chicago river at Washington and La Salle streets, respectively, and the making of the con- tribution for the construction of subways and extensions thereof provided for in said last mentioned ordinance. And the said company agrees that it will furnish the necessary moneys to pay or to enable said city to pay for the physical property constituting the street railways and equipment in any such street or part of street which the city or its licensee may be authorized or required to pur- chase under and in accordance with the terms of the ordi- nances of said city which have been heretofore passed and are now in force with respect to any such street or part of street, respectively, property so purchased to be turned over to the company as a part of the extension of the company's system provided for in this section, and the moneys so paid or advanced shall be held and consid- ered as a part of the expense of making such extension. For the purpose of making any such extension the com- pany agrees that it will, when authorized and required by the city, purchase and pay for the physical property constituting the then existing street railway and equip- 315 ment located upon any street or part of street turned over to the company under the foregoing provisions of this section, provided the price to be paid for such prop- erty shall not exceed the value of the same for street rail- way purposes as estimated by the Board of Supervising Engineers, and that, when acquired, said property shall be used by the company as a part of the extension of its system upon such street or part of street under the pro- visions of this ordinance, and that the amount paid for such property shall be held and considered as a part of the cost of making such extension under the provisions of this ordinance. All such extensions of the company's system and the operation thereof shall be subject to the provisions of this ordinance, in the same manner and to the same extent as if herein expressly provided for as a part of the street railway system of the company covered by this ordinance. The construction and equipment of all such extensions shall be made under the supervision of and the cost there- of determined by the said Board of Supervising Engi- neers, and such extensions shall be in all respects subject to the provisions of this ordinance as to purchase by the said city or its licensee, the determination of the charac- ter and cost of construction, reconstruction, equipment and re-equipment, the annual return to the company upon its investment, the division of profits with the said city and the operation of such extensions by the company, so far as such provisions can be made applicable thereto. The city agrees that, in case it shall require the com- pany to extend its street railway system over or upon any street or part of street covered by the said ordinance to the said Chicago Railways Company, under the provisions of this section, the company shall have the right to extend its street railway system over and upon all of the streets and parts of streets covered by the ordinance to the said 316 Chicago Kailways Company, upon the terms specified in this section, when and as soon as the now existing rights of other companies in said streets or parts of streets, respectively, shall expire or be terminated. The obligations of the company under this section to construct, reconstruct, equip, re-equip and operate street railways, tunnels and. subways, and to furnish funds to the city for the purposes specified in this section, may be discharged either by the company itself, or at its election, from time to time, either in whole or in part, through the agency of the Chicago City Railroad Company (herein- after called the railroad company), a corporation organ- ized under the laws of the state of Illinois, provided that the company shall first enter into such contracts and ar- rangements with the railroad company as shall secure and make certain the operation of the lines of street railways constructed by the railroad company as an integral part of the street railway system of the company, and also shall secure to the city and its licensee and to the public the same rights in and upon all of the said lines of the street railways, tunnels and subways of the company, falling within the provisions of this section, which would have existed if the entire obligations of the company under this section' had been discharged by it directly without the intervention of the railroad company, includ- ing the right of the city or its licensee to purchase all such lines of street railways (including all interest in tunnels and subways), in the same manner and upon the same terms and conditions as though all and every part thereof had been constructed, or the money therefor had been advanced, by the company, without any interest therein having at any time been in the railroad company. The railroad company, in consideration of the passage of this ordinance, hereby assumes and agrees to discharge all the obligations assumed or imposed, or attempted to 317 be assumed or imposed, upon the company as to street railways, tunnels and subways within the north and west divisions of the city of Chicago, in all respects the same as though it, had been named in place of the company in the foregoing clauses of this section; and agrees 1 that all the work done by it and the moneys advanced by it shall be subject to all the provisions of this section, and of all the other sections of this ordinance, to the same extent and in the same manner as though said obligations had been discharged by the company, and all moneys advanced by the railroad company had been advanced by the com- pany. The railroad company further agrees that the city and its licensee and the public shall have the same rights in and upon any and all of the lines of street railways, tun- nels and subways constructed in whole or in part by it, or with moneys advanced by it, which they would have had if the same had been constructed and the contributions to the cost, thereof had been made wholly by the company under the terms and provisions of this section, without the intervention of the railroad company, including the right of the city or its licensee to purchase such street railways and other property or interests therein, in the same manner, for the same price and upon the same terms and conditions as though all and every part thereof had been constructed or the money therefor had been ad- vanced by the company, without any interest therein h;iv ing at any time been in the railroad company; and the railroad company hereby consents and agrees 1 that the entire purchase price therefor may be included in one sum paid to or deposited to the credit of the company under the terms and provisions of this ordinance, the railroad company agreeing to rely wholly upon its agree- ment with the company for its interest in, or share of, such purchase price. The railroad company and the com- 318 pany further undertake and agree that all street railways, tunnels and subways, and other railway properties ac- quired, constructed or operated under the provisions of this section, including those constructed by, or the cost of which shall be defrayed in whole or in part by the rail- road company, shall form, and be operated as, an integral part of the street railway system of the company, under a lease or leases, or operating agreement or operating agreements, between the railroad company and the com- pany. The railroad company by its acceptance of this ordi- nance expressly agrees with the said city that all the terms, provisions and conditions of this ordinance shall apply to and control the construction and operation of any street railway properties in which it shall have any interest, or to the cost of which it shall contribute, in like manner and to the same extent as though such street railway properties were wholly constructed and operated, and the contributions to the cost thereof were made by the company. And the railroad company and the com- pany further covenant and agree with the city, that as between the city and the railroad company and the com- pany, all books of account, settlements, charges on capital account, payments or interest on capital account, expendi- tures and' deposits on account of maintenance, repairs and renewals, and the division of net receipts, shall be made with regard to the entire properties constructed under or operated by both of said companies under this ordinance, as though the ownership, operation and con- trol of the same were wholly and solely in the company, to the end that the rights of the city under this ordinance shall in no wise be different in any respect from what they would have been if the entire street railway proper- ties (including subways and tunnels) affected by this or- dinance had been constructed, operated, and the contribu- 319 tions to the cost thereof made wholly and solely by the company. The company further agrees that a forfeiture of all of its rights and privileges under this ordinance may be declared and enforced for any default of the railroad company in the observance or performance of any agree- ment or condition herein contained to be kept and per- formed by it, in like manner and with like effect as though such default was the default of the company; and the railroad company covenants and agrees that any for- feiture of the rights and privileges of the company shall operate and be effective as a forfeiture of all of the rights and privileges of the railroad company under this ordinance, to the same extent and with the same effect as the rights and privileges of the company shall have been forfeited by reason of such default. The company further agrees that if any of the agree- ments or undertakings on the part of the company in this ordinance contained shall be ultra vires such fact Shall in nowise affect or impair the right of the city to declare a forfeiture of all the rights and privileges by this ordinance granted to the company, on account of the non-performance of any such ultra vires agreement or un- dertaking, in the same manner and with like effect as though all of such agreements and undertakings were within the company's chartered powers, the grants herein made to the company being expressly conditioned on the performance of each and every one of the agreements and undertakings of the company herein contained, the for- feiture of the company's rights, however, to be made in the manner and with the effect provided in Section 31 of this ordinance. ORDINANCE BINDING UPON SUCCESSORS AND ASSIGNS. Sec. 37. This ordinance shall inure to the benefit of and be binding upon the lessees, successors and assigns 320 of the company, and they and each of them shall be bound by all and every its provisions by the company to be kept and performed, precisely as if in every case they had respectively been named herein with the company. LEASE OR ASSIGNMENT. Sec. 38. No lease, or operating agreement, and no as- signment (except by way of mortgage or trust deed, under the foregoing provisions and limitations of this ordi- nance), shall be made by the company without the con- sent of the city council of said city. WARRANTY OF TITLE. Sec. 39. Whenever the city, or its licensee, shall de- sire to purchase and take over the street railway system of the company within the said city, as in this ordinance provided, and shall comply with the provisions of this ordinance with respect to making such purchase and pay- ment therefor, the company shall, by good and sufficient written instruments to that end, transfer to the city, or its licensee, as the case may be, all its said street railway system and property, free from all claims 1 and liens what- soever, and the company shall warrant the title to all of the property so transferred to the city or its licensee, to be free from all claims and liens whatsoever, and also that there are no outstanding rights in the streets or parts of streets occupied by its street railways, in any person or corporation, derived through or under said company, ex- cept the rights of the Chicago General Railway Company on Twenty-Second, Main and Laurel streets under the leases referred to in Section 1 of this ordinance, and if at the date of said purchase there shall exist any defect in or incumbrance upon the company's title to any of the real estate now owned by the company, an amount of the purchase price equal to the appraised value of the real estate, the title to which shall be incumbered or defective, 321 as shown by the appraisal inventory made by Bion J. Arnold, Mortimer E. Cooley and A. B. du Pont, herein- before mentioned, shall remain in one or more of the de- positaries with which the city or its licensee shall deposit the purchase money for said street railway properties until such defects 1 and incumbrances shall be cured or re- moved, as security to the purchaser against loss by rea- son of such defects or incumbrances. BOND. Sec. 40. The company shall forever indemnify and save harmless the said city against and from alL damages, judgments, decrees, costs and expenses which the said city may suffer or which may be recoverable from or ob- tained against the said city, for or by reason of the grant- ing of the privileges hereby conferred upon the com- pany, or for or by reason of or growing out of or result- ing from the exercise by the company of the privileges hereby granted, or any of them, or from any act or acts of the company, its servants or agents, under or by virtue of the provisions of this ordinance. And the company shall, within the time limited for the acceptance of this ordinance, file with the city clerk of said city its bond to the said city, in the penal sum of one hundred thousand dollars, conditioned t)hat it will forever indemnify and save harmless the said city as aforesaid; provided, however, that the giving of said bond or the recover}* of a judgment or judgments thereon by the said city shall not be construed as measuring, lessen- ing or limiting the liability of the company to the said city under and provisions of this ordinance. BIGHTS AND OBLIGATIONS DATE FROM FEBRUARY 1, 1907. Sec. 41. If the company shall accept this ordinance within the time limited therein for the acceptance thereof, then the rights and obligations of the city and the com- 322 pany under this ordinance shall be the same as if this ordinance had been passed on February first, 1907, and had been accepted by the company on February first, 1907, and accounting shall be had as between the city and the company as of that date. ACCEPTANCE. Sec. 42. This ordinance shall not take effect or be in force unless and until a majority of the votes cast upon the following question of public policy at the election to be held in the city of Chicago, on the first Tuesday in April, A. D. 1907, are in the affirmative: "For the approval of ordinances substantially in the form of the pending ordinances (reported to the city council of the city of Chicago on Jan- uary 15, A. D. 1907), authorizing the Chicago City Railway Company and the Chicago Railways Com- pany, respectively, to construct, maintain and oper- ate street railways in said city, and providing for the purchase thereof by the said city or its licen- see." In the event, and only in the event, that the said ques- tion of public policy is submitted to the electors of said city at said election and a majority of the votes cast upon the said question at said election are in the affirma- tive, then, and in that event, this ordinance shall take effect and be in force from and after its acceptance by the company and by the railroad company, under their respective corporate seals, after the said first Tuesday in April, A. D. 1907; provided, that if the company shall not file with the city clerk of said city the penal bond above herein mentioned, or if either the company or the railroad company shall not file its formal acceptance of this ordinance and of all its terms and conditions within ninety (90) days from the passage hereof, then all rights 323 and privileges hereby granted shall be wholly null and void and of no effect; the acceptance of this ordinance by both of said companies being hereby made a condition of this ordinance taking effect. 324 No. 3 Ordinance No. 16238-A. AN ORDINANCE granting a renewal of the street rail- way grants of The Cleveland Railway Company, fix- ing the terms and conditions of such renewal grant, changing the rates of fare, regulating transfers and terminating existing grants. Whereas, The Cleveland Railway Company is the owner of a system of street railroads within the city of Cleve- land; and Whereas, The Forest City Railway Company, The Municipal Traction Company and The Cleveland Rail- way Company are parties to litigation affecting the own- ership of various unexpired street railroad grants for lines, all of which lines are now operated by a receiver appointed by the Circuit Court of the United States for the Northern District of Ohio, Eastern Division; and Whereas, It is the common desire of the city and The Cleveland Railway Company to have all the grants of street railway rights in the city of Cleveland now out- standing surrendered and renewed upon terms herein- after recited, to the end that the rate of fare may be reduced, the transfer privileges made definite and the right of the city as to regulation and possible acquisition made certain; and Whereas, It is agreed that a complete re-adjustment of the street railroad situation should be made upon terms that will secure to the owners of the property in- vested in street railroads securities as to their property, and a fair and fixed rate of return thereon, at the same time securing to the public the largest powers of regula- tion in the interest of public service and the best street 325 railroad transportation at cost, consistent with the secur- ity of the property and the certainty of a fixed return thereon and no more; Now, therefore, be it ordained by the council of the city of Cleveland, State of Ohio, that Section 1. Wherever in the following ordinance the words "The Cleveland Railway Company," "The Com- pany," or "said Company" are used, they shall be held to mean and include The Cleveland Railway Company; wherever the words "the City" are used, they shall be held to mean and include the city of Cleveland, and wherever officers of the city of Cleveland are mentioned by the name of their office or their descriptive designa- tion, such description shall be held to mean and include the incumbents of any offices hereafter created, perform- ing functions similar to those now imposed by law upon the officers designated herein. Wherever in this ordinance, except in Section 48, the expression "taking effect of this ordinance" is used, it shall be held to mean the thirty-first day after the pas- sage and due publication of this ordinance, no petition for its submission to popular vote having been presented or filed in accordance with the statute in such case made and provided, or if such petition has been presented or filed, the day following the official ascertainment that a majority of the popular vote at the submission of this ordinance to vote has been in favor of this ordinance. Sec. 2. The Cleveland Railway Company is hereby granted, upon the conditions herein provided, a renewal until the 1st day of May, 1934, of the right to maintain and operate its existing street railroad, by single or more tracks, as the same now exists in the city of Cleveland, with all necessary curves, street crossings, connections, turn-outs, cross-overs, Ys, loops, poles, trolley-, feed-, span-, and guy-wires, equipment and other appliances, 326 upon, over and along the following streets, parts of streets and other public ways and places in the city of Cleveland, said streets being grouped into numbered streets east of the north and south meridian, numbered streets west thereof, named streets alphabetically ar- ranged, and private rights-of-way. (Here follows a list of streets, and it is recited that the city owns the tracks in some parts thereof.) Sec. 3. The motive power for the operation of the company's railway shall be electricity, or such other mo- tive power as council shall approve, the construction and equipment first class and to the satisfaction of the city. The tracks hereafter laid in paved streets, either as new construction or as renewal of existing construction shall, with respect to their style and construction, conform to the general ordinances of the city as the same now are, or as they may be hereafter. Sec. 4. The right is hereby given to the company to maintain its present lines of poles and wires, and to erect and maintain such other lines of poles and wires as may be necessary to connect its power houses and its said street railroad system, and to maintain its feeder caWes as at present located in the city water works tun- nel, or hereafter located in said tunnel or other tunnels or conduits, with the permission of the city, and upon the payment by the company of such reasonable annual charge as the city may from time to time make therefor for all users thereof and to maintain its present intake and discharge water pipes and intake cribs between its power house on Washington avenue, N. W., and the Cuya- hoga river, and such other intakes as may be hereafter authorized by said city, and wherever any of the routes provide for or include private right-of-way or property, the company is granted the right to maintain and operate its tracks on and across any and all intervening streets, 327 and to maintain all poles and wires necessary to such purpose. Sec. 5. The city reserves the right to grant to any other person or corporation the right jointly to occupy and use for street railroad purposes, within the follow- ing described territory, the whole or any part of the tracks, poles, wires and electric current herein author- ized to be maintained and operated, and all other appli- ances and power now or hereafter used for street railway purposes, said territory being known as the central dis- trict of the city, bounded as follows: Beginning at the shore of Lake Erie at the intersection of the east line of East 12th street projected to said shore of Lake Erie; thence along the east line of said East 12th street and East 12th street projected, southerly to the southerly line of Central avenue S. E.; thence along the southerly line of Central avenue S. E. to the southerly line of the Central Viaduct and its approaches; thence along the southerly line of the Central Viaduct and its approaches to the easterly line of West 14th street; thence along the easterly line of West 14th street to the south- erly line of Abbey avenue S. W. projected; thence along the southerly line of Abbey avenue S. W. projected and the southerly line of Abbey avenue S. W. bridge and its approaches to the southerly line of Lorain avenue; thence along the southerly line of Lorain avenue to the westerly line of West 25th street ; thence along the westerly line of West 25th street to the southerly line of Detroit avenue N. W. ; thence along the southerly line of Detroit avenue N. W. to the westerly line of W r est 28th street; thence along the westerly line of West 28th street and along said westerly line projected to its intersection with Lake Erie ; thence along the southerly shore of Lake Erie, as the same now is or hereafter may be, to the place of beginning. 328 The right of joint occupancy and use herein reserved shall be upon such reasonable terms and conditions as the council may prescribe. Sec. 6. The construction, rolling stock, equipment, maintenance and operation of the street railroads herein authorized shall be su'bject to and governed by the gen- eral street railroad ordinances now in force, except as the same are herein modified, and future ordinances and regulations of the city not inconsistent herewith, except that the company shall not be required to pay any car license fee. Sec. 7. The company shall maintain in constant re- pair the pavement within a space seven (7) feet in width for single-track and for double-track the entire space be- tween the outer rails of both tracks, including the space between the two tracks and one foot outside of each outer rail, but in no event to exceed eighteen feet, except about curves, special work and where there are more than two tracks in a street in all paved streets occupied by its tracks, whether such streets were paved at the time of the passage of this ordinance, or subsequently thereto, but the company shall not be required to repave by virtue of this obligation to repair, nor by virtue of any require- ment of the general ordinances of the 'City of Cleveland during the continuance of this grant. Sec. 8. The company at once, upon the taking effect of this ordinance, shall proceed by the acquisition of new cars or by alteration of existing cars to extend the pay- enter system of fare collections, and in case it is aWe, acting in good faith, to raise the money so to do, within five months from that date, the company shall have in use upon its system not fewer than 450 pay-enter cars, and in 18 months from that date shall have all of the cars operated by it equipped as pay-enter cars, provided that small open cars now owned by the company, not in 329 excess of 100 in number, may be continued in use by the company as trailers. The phrase "pay-enter car," as used in this ordinance, shall be held to mean a car equipped with a fare-box and so arranged as effectively to provide for the prepayment of fares by passengers. The expense of the acquisition of such pay-enter cars and seventy-five per cent (75$) of the cost of reconstruct- ing or remodeling cars owned by the company at the time of the taking effect of this ordinance so as to make them pay-enter cars, shall be added to the capital value of the company, as defined in Sections 16 and 18 of this ordinance. Sec. 9. The company shall place and continue upon all of its lines cars of modern design, equipped and furnished with such improvements and appliances as shall be deemed by the city to be necessary and proper for the safety, convenience and comfort of the passengers and the public, and shall run such cars in such numbers, at such intervals of time subject to the limitation herein- after provided, and under such rules and regulations as the city may 'from time to time require, and shall cause such cars to stop at such places as the city may designate for passengers to leave or enter the same. The city re- serves to itself the entire control of the service, including the right to fix schedules and routes, including routes and terminals of interurban cars, the character of the cars, the right to increase or diminish service, provided only that the council shall not require service to an ex- tent which at the maximum rate of fare will not pro- duce, to be credited to the interest fund, money enough to make good any loss therein and to meet the requirements of Sections 16 and 18 hereof. And provided further, that whenever in the opinion of the company any resolution or ordinance of the council 330 regulating service will, if such service be installed at the maximum rate of fare provided in Section 22 hereof, not produce, to be credited to the interest fund, money enough to make good and meet the requirements of Sections 16 and 18 hereof, then and in any such event the company shall at once install such service and may require the question whether the continuation of such service would, at the maximum rate of fare, impair the ability of the company to meet the requirements of Sections 16 and 18 hereof, to be submitted to arbitration as hereinafter pro- vided, and if the board of arbitration decide that such service will not produce the moneys needed as aforesaid, then the resolution or ordinance shall not be further com- plied with by the company, and the company shall have the right to recoup any losses sustained in the manner fixed by the board of arbitration to which the question of the continuation of such service has been submitted. Sec. 10. Immediately upon the taking effect of this ordinance there may be designated by the city a City Street Railroad Commissioner, which designation shall toe made by the Mayor of the city, subject to the approval of the City Council. The city reserves the right at any time and from time to time to remove the Street Kail- road Commissioner designated by it, such removal to be by the mayor, and to fill the vacancy in the manner pro- vided for original designation, and the city shall forth- with, upon the naming of any City Street Railroad Com- missioner, notify the company in writing of the name and address of such commissioner. The City Street Railroad Commissioner shall act as the technical adviser of the council of the City of Cleve- land in all matters affecting the interpretation, meaning or application of any of the provisions of this ordinance, and of action thereunder affecting the quantity or quality of service, or the cost thereof, or the rate of fare. He 331 shall keep always informed as to all matters affecting the cost or quality or quantity of service furnished, the receipts and disbursements and property of the company, the rate of fare, the vouchering of expenditures; and if he disapproves of the vouchering of expenditures or of the manner of keeping accounts, or other matters affect- ing the bookkeeping of the company, he shall at once take the matter up with the company, and in case of dis- agreement the matter shall at once be submitted to the committee on standard classification of accounts of the American Street and Interurban Railway Accountants' Association, or to such person or persons upon whom the regulation of such matters may from time to time be devolved by law, and the decision of such committee or person or persons, not inconsistent w T ith the provisions of this ordinance, to whom this question is thus submit- ted, shall be final. In the case of any temporary absence or disability of the City Street Railroad Commissioner, the mayor may designate someone to act in his stead, notice being given to the company as heretofore provided. The president of the company, or in his absence or disability, such other person as shall have been designated by the president, and notice thereof given to the city, and if no such designation has been made, then the high- est executive officer of the company in the order named in the company's by-laws, a copy of which shall be fur- nished to the city with all amendments from time to time made, in the city at the time shall represent the company in all matters relating to the supervision or performance of the duties hereby entrusted to the commissioner. The company shall furnish to the .City Street Railroad Commissioner suitable room in connection with the gen- eral offices of the* company, and office furniture, station- ery and supplies. The City Street Railroad Corn-mis- sioner shall receive salary at a rate to be fixed from time to time by the council, but not exceeding fl,000 per month, payable by the company and charged to operating- expenses, and shall have the right to employ such assist- ants, accountants, engineers, clerks and other employes as he shall deem necessary to enable him at all times to inspect and audit all receipts, disbursements, vouchers, prices, pay-rolls, time-cards, papers, books, documents and property of the company, and the cost and expense of all such persons so employed by the City Street Kail- road Commissioner, at salaries fixed by him, shall be paid by the company monthly upon the approval of the said City Street Railroad' Commissioner, provided that the aggregate amount thereof in any one month shall not exceed 1 per cent upon the sum set aside in that month under section 19 hereof to be used for operating expenses by the company, and the sum so expended by the City Street Railroad Commissioner shall be subject to the ap- proval of the council, and shall be deemed a part of such operating expenses. Provided further, that the sums authorized to be expended by the City Street Railroad Commissioner under the provisions of section 28 hereof shall be in addition to the amount in this section author- ized to be so expended, and shall be subject to like ap- proval of the council. Sec. 11. Whenever any difference shall arise with re- gard to any of the provisions of this ordinance or of the rights of the company or the city hereunder between the company and the city, and the difference is with regard to a matter which might lawfully be arbitrated and is not herein excluded from arbitration, then the company or the city may require such question or questions to be submitted to arbitration, such arbitration to be by a board of arbitration selected in the following manner: 333 the company or the city demanding arbitration shall name its representative upon said board and notify the other party, together with notice of the question upon which arbitration is demanded. Within ten days there- after the representative of the other party shall be named by such party and notice of such selection given, failure to do which shall entitle the party demanding the arbi- tration to name such second arbitrator. The two thus selected shall within ten days after the appointment of the one last named select a third arbitrator, and if the two said parties are unable within ten days to agree upon such third arbitrator, then upon the application of either the person who is District Judge of the United States for the Northern District, Eastern Division of Ohio, or such district as shall then comprise the city of Cleveland, shall have the power to appoint such third arbitrator, five days notice of the application to said District Judge being given by the party applying to the other party, and in the application for such appoint- ment the party applying shall formulate the questions to be determined by the board of arbitration. Before making a final appointment pursuant to any such appli- cation, the person making such appointment shall jrivc three days' notice to the company and the city of the person or personsi considered by him, and either the city or the company may, within said three days pre- sent objection to any person or persons under consid- eration. When such third arbitrator shall have been appointed a majority shall have power to decide the questions submitted to it. Whenever the appointment of a board of arbitration has been made, as hereinbefore provided, and questions submitted for decision, they shall be decided within thirty days from the date of the appointment of the third arbitrator, unless the board of 334 arbitration unanimously agree to an extension of time, and should said questions not be determined within said thirty days and no such extension of time made, then either party may apply to the person who is Judge of the District Court aforesaid, for the removal of said third arbitrator, and the appointment of a third arbi- trator in place of the one removed and such third arbi- trator shall be appointed as is herein provided for the original appointment of said third arbitrator. In the event of the disqualification or refusal to act of the person who is Judge of the District Court of the United States, as hereinbefore provided, any person who is Judge of the Circuit Court, of the United States of the circuit in which the City of Cleveland shall then be situated shall on request, as hereinbefore provided, have power to appoint or to remove and appoint such third arbitrator as is hereinbefore provided. All expenses of every kind, incurred by any board of arbitration appointed hereunder, including the fees of the arbitrators, shall be fixed by the board of arbitration as a part of their award and snail be paid by the com- pany, and charged to operating expenses, provided that any such expense in any period of six months above the sum of $5,000 dollars shall be paid as an expense, and paid out of the interest fund. Wherever herein the "board of arbitration" is referred to or "the board" it shall be taken to include and mean any board of arbitration constituted as hereinbefore pro- vided, and wherever the "City Street Railroad Commis- sioner" or "The Commissioner" is referred to it shall be taken to mean and include the City Street Railroad Commissioner as provided in section 10 hereof. Wherever either in this section or elsewhere in this ordinance notice is provided to be given to the company, a notice in writing addressed to the president of the 335 company, and delivered at the offices of the company, shall be delivery of such notice, and wherever notice is provided to be given to the city, such notice in writing addressed to the City Street Kailroad Commissioner and delivered at the office provided for him in section 10 hereof shall be delivery to the city. Sec. 12. The board of arbitration herein created shall have power to determine all questions of every kind, character and description arising between the city and the railway company, subject to the limitation contained in section 11 hereof, in the carrying out of the provi- sions of this ordinance, whether expressly committed to determination by arbitration by the provisions of this ordinance or not, when submitted to such arbitration in the manner provided in Section 11 hereof, and the de- termination in writing of said board of any question submitted to them as aforesaid shall be final and bind- ing, except that the right or power of said board to de- termine any question as to control of the service and the fixing of schedules and routes shall be subject to the limitations prescribed by section 9 hereof. The City Street Railroad Commissioner may, pending the determination of any such question Try the Council, and to meet emergencies, temporarily approve changes in schedules or routes, but such schedules or routes so changed shall continue in force only until the Council shall have otherwise directed. Sec. 13. Whenever any board of arbitration herein provided for shall have considered and determined any question, its determination shall be made in writing, and copies thereof shall forthwith be filed with the com- pany and the city, as provided for the delivery of notices in section 11 hereof, and after such delivery the finding of the board shall be binding and operative. The board Shall, however, have the rig'ht in any finding made by it 336 to fix the time within which the things by it required shall be done. Sec. 14. In case of any failure on the part of the company to do and perform fully and in good faith any direction or award made by the board of arbitration, as hereinbefore provided, the rate per cent of interest pay- ments provided in Section 16 hereof upon the capital value, other than bonds and floating debts, shall be re- duced from the rate then in force by such amount as the arbitrators may determine, but not lower than one per cent, below the rate then in force, and shall continue at such reduced rate until in the opinion of the board of arbitration the said order and direction has been car- ried out by the company, and the board of arbitration shall have power to determine in every instance whether or not its orders have been carried out, and whether or not the reduction in the return upon the capital value above stipulated shall be made. Sec. 15. At all times during the continuance of the rights herein granted, and any renewal hereof, the com- pany shall keep in its office, open to inspection at all reasonable times, full, true and accurate accounts of all moneys expended' and liabilities incurred in connection Avith said business and the maintenance and operation of said property, and also complete statistical accounts of its business and operations, which accounts shall be kept in the manner prescribed by the American Street and Interurban Railway Accountants' Association, or as may be provided by law or by any authority created by law, and the said company shall make and furnish to the City Street Railroad Commissioner monthly reports of its car mileage and earnings, and such other statements and reports, as the said commissioner may from time to time direct, and said commissioner shall at all times have ac- cess to and full authority to inspect, examine, audit and 337 i verify all accounts, vouchers, documents, books and prop- erty of the company relating to the receipt and expendi- ture of money and the business done by the company in the operation of its railway. Sec. 16. For the purpose of fixing, from time to time, the rate of fare to be charged by the company, and the return to the company for the service rendered by it to the publk, and for the further purpose of fixing the price at which the property of the company may be purchased as hereinbefore provided, the capital value of all of the property of said company shall consist of the following items: (a) The bonded indebtedness of the company, the principal thereof aggregating 18,128,000.00, and any re- newal of any part, or the whole thereof, and any addi- tions thereto made pursuant to the provisions of this ordinance. (b) The floating indebtdness of the company aggre- gating 11,288,000, represented by bills payable as of Jan- uary 1, 1908, less whatever part thereof has been paid at the time of the taking effect 'hereof; also whatever sum, if any, is needed to be added to money on hand to place the sum of $500,000 in the interest fund as provided in Sec. 19, also, to the extent that there is no money on hand after deducting from the cash on hand said sum of $500,000, all existing debts of The Municipal Traction Company, The Forest City Railway Company, The Low Fare Railway Company, The Neutral Street Railway Company, including claims 'hereafter liquidated; also in- cluding a sum equal to 7 1-2 per cent upon the par value of all stock guaranteed by the Municipal Traction Com- pany and such further sum not exceeding fifty thousand dollars ($50,000) as shall be determined, should equit- ably be paid to persons who have disposed of stock held under such guarantee, also an amount equal to the par 338 value of the issued and outstanding capital stock of The Neutral Street Kail way Company; also all existing debts of The Cleveland Railway Company, and existing claims against said company hereafter liquidated, and one and one-half (11-2) per cent on $ 14,675,600, less the amount paid by the Municipal Traction Company to stockholders of the Cleveland Railway Company, on or about October 1, 1908, as for dividend, and interest at the rate of six (6) per cent per ann<uin from January 1, 1910, to the taking effect of this ordinance, upon the residue of the capital value of the Cleveland Railway Company as de- termined by the provisions of paragraph (c) of this sec- tion to be divided among the stockholders of the Cleve- land Railway Company; also all claims against the re- ceivers which the Company may be required by order of Court to pay; all of which shall be assumed, by the ac- ceptance of this ordinance, by the company upon the tak- ing effect of this ordinance. (c) The residue of the capital value of the company to wit the sum of $14,675,600, (The value of the proper- ty is agreed to be $21,127,149.53 to which must be add- ed, as the value of The Forest City property $1,805,- 600.00 and there is added the sum of $1,158,300.00, in- terest accrued, but used to equalize stock value and not to be paid, said interest being the equivalent of 9 per cent upon $12,870,000 for the period ending January 1, 1910. The total of these sums is $24,091,049.53. From this aggregate is deducted bonded indebtedness of $8,- 128,000.00, and floating indebtedness as of January 1, 1908, $1,288,000.00. The total of these sums is $9,416,- 000.00, leaving $14,675,049.53; agreed addition to equal- ize stock value, $550.47, making for residue of capital value, $14,675,600.00 with such additions thereto as may from time to time be made pursuant to the provisions of this ordinance. 330 The company may at any time refund its bonds, or capitalize or issue mortgage bonds for its floating debt as denned in paragrapli ('b) provided that all bonds hereafter sold by the company shall be sold at the best price obtainable therefor and shall contain a provision making them payable on ninety days call at any interest maturing period at one hundred and five and accrued interest and the city shall have thirty days' notice in advance of all such proposed sales of bonds by the com- pany. There shall be paid out of the interest fund, as here- inafter provided, all taxes and other payments herein provided to be made therefrom and also, as return upon the Capital value above described, five (5) per cent per annum upon the total bonded indebtedness of the com- pany, payable as provided by the mortgages securing the bonds, and upon the refunding of any such bonded in- debtedness there shall be paid out of the interest fund that rate per cent upon such refunded bonded indebted- ness, not in excess of six (6) per cent, which the re- funding bonds may bear. There shall be paid out of the interest fund as herein- after provided, from time to time, interest at the rate of six (6) per cent per annum upon the aggregate amount of the debt of the company as fixed in clause (b) of this section. The company may issue and sell its capital stock or mortgage bonds, said stock being sold for not less than par, and said bonds for not less than par except with the consent of the city, or increase its floating indebted- ness in such amounts as sliall be necessary to capitalize the debt enumerated in said paragraph (b), or to pro- vide for such extensions, betterments or permanent im- provements as it is by this ordinance provided may be added to the capital value upon which interest is to be 340 paid; and the par value of the stocks or bonds sold or debt created for such purpose shall become a part of the capital value. After meeting the payments heretofore provided for by this section, there shall be paid from the remainder of said interest fund, to the stockholders, from the tak- ing effect of this ordinance, quarterly, a sum equal to six (6) per cent per annum, payable quarterly upon the residue of capital value and additions thereto as pro- vided by paragraph (c) hereof. The company may, without the consent of the City, issue and sell its capital stock or increase its bonded or floating debt; but no increase in capital stock or bonded or floating indebtedness by the company shall be considered a part of the capital value for the purposes of this section, unless made pursuant to the provision of this ordinance or with the consent of the City. Sec. 17. All debts of The Municipal Traction Com- pany, The Forest City Kailway Company, The Low Fare Railway Compan}-, The Neutral Street Railway Com- pany and The Cleveland Railway Company, including claims hereafter liquidated and including all payments to be made as determined by Section 16 hereof, less all proper credits asumed by the company as hereinbefore provided, to the extent that the same can be paid out of money on hand at the time of the taking effect of this ordinance, after deducting therefrom the sum of $500,000.00 to be credited to the interest fund as herein- after provided, shall be so paid. Sec. 18. To the capital value of the company, and as a part of the capital value of said property, as that term is defined by the provision of Section 16 hereof, there shall be added from time to time, the par value of bonds or stock sold or debt created for extensions, betterments and permanent improvements as hereinafter 341 provided. All earnings of the company from every source above the operating expenses and maintenance, depre- ciation and renewal allowance shall go into the interest fund, as that fund is defined by Section 16. Out of that, fund shall : be paid the sums provided to be so paid by Section 16. Any surplus remaining in said interest fund after the payment of taxes and other charges provided by this ordinance to be paid therefrom, over and above the sum of $500,000.00, shall constitute a fund to be absorbed in the reduction of fares, and any deficiency in the interest fund below $500,000.00, in any period of operation, shall be first made good as is hereinafter pro- vided, it being the intent hereof that the said interest fund g&all be maintained at $500,000.00, and that all the payments provided to be made by Section 16 shall be cumulative and shall be first paid out of the interest fund, without any deductions whatever, and for that purpose, and out of the interest fund the company shall pay all sums assessed against the company, its property or stock, or against any income or interest of the stock- holders by reason of their ownership of stock, by the United States, the same being by law payable by the company, or by the State of Ohio, or by any county, municipal or Township authorities in that state. The proceeds of the sale of any property of the com- pany represented in the aggregate capital value of the company, as that term is defined in Section 16 hereof, may be used by the company in the payment of floating indebtedness, or may in the company's discretion or if required by the provisions of any mortgage made by the company to secure any bonded indebtedness forming a part of said capital value be deposited with the trustee of such mortgage. All such sums at any time on deposit with such trustee shall be first taken down and used by the company in the construction or acquisition of any 342 extension, betterment or permanent improvement there- after made. All su^h property shall be sold at the best obtainable price, and the amount of the proceeds and the items of property sold shall be forthwith reported to the council. To the extent that any part of the proceeds of such sales is otherwise used by the company than in the making of extensions, betterments and permanent improvements, or depositing with such trustees as above set forth, the capital value of the company, as described in Section 16 hereof, shall be reduced;. Sec. 19. Upon the taking effect of this ordinance, the company shall, out of money on hand, or as provided in Sec. 16 hereof, place the sum of $500,000.00 less prepaid accounts and plus accrued accounts in the interest fund, which fund shall be deposited separately from the cur- rent receipts of the company and shall from time to time have credited to it interest earned thereon by being deposited in such banks as the company shall select. All other moneys on hand shall be used in the payment of debts included in Section 16 hereof. To the interest fund thus created there shall be added monthly the sum re- maining after deducting from the gross receipts for the month eleven and one-half cents per car mile for each revenue mile exclusive of car house and car yard miles, made by a car equipped with motors operated during the month, exclusive of cars operated to carry materials used in the construction and repair work of the company itself, and also sixty (60) per cent of eleven and one-half cents per car mile for each revenue mile exclusive of car house and car yard miles made by a revenue trailer oper- ated during the month, and the sums provided in Section 20 to be deducted from gross receipts for the maintenance, renewal and depreciation account and the fund thus cre- ated shall be and constitute the interest fund out of which all taxes, interest and dividend and other payments here- 343 inbefore and hereinafter provided for shall be made. Whenever the city establishes for any line a schedule which requires the operation of more cars during any hour in the day than twice the number of cars operated per hour on the base table for such line, the company shall be allowed by the city such additional car mile al- lowance for cars so operated as shall be necessary to pay the increased cost of such operation in excess of twice the base table, if there shall be any such increased cost, and in the event of disagreement thereon the amount, if any, to be allowed, shall be determined by arbitration in the manner hereinbefore provided. Sec. 20. The sum provided in Section 19 hereof to be deducted from the gross receipts of the company per car miles of operation shall be used by the company for operating expense, insurance, payment of claims and all other expenditures, exclusive of the payments required by Section 16 hereof to be made upon the capital value of the company, and taxes and interest on floating debt and payment herein provided to be made out of the in- terest fund and no part thereof in excess of $1,000 per month shall in any event be expended for any extension, betterment or permanent improvement, and all sums so expended within the limitation hereinbefore stated for such extensions, betterments or permanent improve- ments shall be reported monthly to and approved by the council and the interest fund shall annually be reimburs- ed for the full amount so expended by new capital, and all sums so expended and not approved by the Council as for extensions, betterments or permanent improve- ments shall be charged to operating expenses. In addi- tion to the car mile operating expense allowance provid- ed in section 19 hereof there shall in the following months be deducted from the gross receipts the follow- ing sums, to wit : 344 In January, February, March, April, May and Decem- ber 4c per car mile; November 5c per car mile, and. in June, Jul}-, August, September and October 6c per car mile, the deductions being made as provided in section 19 hereof for revenue miles, exclusive of car house and car yard miles made foy cars equipped with motors and 60 per cent of said rates for similar miles made by trail- ers operated during said months. The sum so deducted each month shall ! be placed to the credit of the Maintenance, Depreciation and Renewal Account and shall not thereafter be expended for any other purpose whatever. The sum so set aside shall if not needed for immediate maintenance or renewals be accumulated, and may from time to time be invested in the bonds of the company or in the payment of its float- ing indebtedness, to the extent that the same form part of the capital value of the company, as that term is de- fined in Section 16 hereof, and to facilitate the invest- ment of said fund in such bonds the company shall in any bonds hereafter issued by it stipulate the call price and conditions provided in Section 16 hereof, but if the amount so invested or paid is at any time needed for maintenance and renewals the company may for that purpose issue new mortgage bonds or incur new floating indebtedness to the amount of such investment or pay- ment with the interest that would have accrued thereon, winch new bonds or floating indebtedness shall become part of the capital value of the company, as that term is defined in Section 16 hereof. Sec. 21. The amounts per car mile allowed in Sec- tion 19 hereof, may be increased or decreased from time to time toy agreement between the city and the company so as to enalble the company to meet the legitimate ex- penses of operation, insurance, accident and damage claims, and to prevent or make good any deficit on ac- 345 count of such operating expenses, and also the amount required by Section 20 hereof to be set aside for main- tenance, renewals and repairs may be similarly increased or decreased by agreement and in the event of disagree- ment any such increase or decrease in either car mile allowance shall be submitted to 'arbitration. Any surplus in the hands of the company at the expiration of any period of six (6) months remaining unexpended for op- erating expenses, as hereinbefore provided, out of the car mile allowance provided by Section 19 hereof, exclusive of the amount required to be credited to the maintenance and renewal account by Section 20 hereof, shall be placed to the credit of the interest fund hereinbefore described. The intent hereof with regard to the sum authorized by Section 20 hereof to be set aside for maintenance, depreciation and renewal is to enable the company to maintain, renew, replace, preserve and keep its railway system and property, and every part thereof, and all extensions, betterments and permanent improvements hereafter made, pursuant hereto, in good condition, thorough repair and working order, the standard of such condition, repair and working order being an average for the entire system of 70 per cent of its reproduction value, and the car mile allowance provided by Section 20 hereof for the purpose of maintenance and renewal shall not at any time be diminished unless the value of the property of the company and the amount accumu- lated in the maintenance and renewal fund, and invested as is provided 1 in Section 20 hereof, aggregate more than 70 per cent of the reproduction value of the said entire system. Sec. 22. The maximum rate of fare for a single con- tinuous ride within the present limits of the city of Cleveland in one direction, over any route of said com- pany shall be four cents (4c) cash fare, seven tickets 346 for twenty-five cents (25c), one cent (Ic) transfer, no rebate and including said maximum rate the following schedule or scale of fares is hereby established: (a) Four cents cash fares, seven tickets for twenty- five cents (25c), one cent (Ic) transfer, no rebate. (b) Four cents (4c) cash fare, seven (7) tickets for twenty-five cents (25c), one cent (Ic) transfer, one cent (Ic) rebate. (c) Four cents (4c) cash fare, three (3) tickets for ten cents (lOc), one cent (Ic) transfer, no rebate. (d) Four cents (4c) cash fare, three (3) tickets for ten cents (lOc), one cent (Ic) transfer, one cent (Ic) rebate. (e) Three cents (3c) cash fare, one cent (Ic) trans- fer, no rebate. (f) Three cents (3c) cash fare, one cent (Ic) trans- fer, one cent (Ic) rebate. (g) Three cents (3c) cash fare, two (2) tickets for five cents (5c), one cent (Ic) transfer, no rebate. (h) Three cents (3c) cash fare, two (2) tickets for five cents (5c), one cent (Ic) transfer, one cent (Ic) rebate. (i) Two cents (2c) cash fare, one cent (Ic) transfer, no rebate. (j) Two cents (2c) cash fare, one cent (Ic) trans- fer, one cent (Ic) rebate. Each of the foregoing rates of fare, when in force, shall be the rate of fare for a single continuous ride within the present city limits of the city of Cleveland in one direction, over any route of said company wheth- er enumerated in Section 2 hereof or not; and when any of the foregoing rates of fare is in force with regard to which a ticket rate is provided, the company shall sell on all of its cars, at all times reissuable tickets at the rate provided, each of which tickets shall entitle the 347 holder to one such ride. At all times any passenger de- manding a transfer ticket at the time of paying such cash or ticket rate of fare as shall then be in force, shall be entitled under the provisions of the rate of fare then in force as to transfers to transfer from the route on which he shall have paid such fare, to any other route of said company, except in a substantially opposite di- rection on a route parallel or substantially parallel thereto, and to ride continuously to any point upon such second route within the limits of the city of Cleveland, provided the transfer to a car upon such second route within five (5) minutes after leaving the car upon which he shall have paid fare, or to the first car of such company passing such transfer point upon such second route, and at the first point of intersection of said routes reached by the car upon which he shall have paid fare. If cars upon two or more routes are operated regularly along the same street, passengers who are able to reach their destination by one of said routes, without transfer to another of said routes, shall board a car upon the route reaching such des- tination, and shall not be entitled to transfer thereto from any other route. Any passenger transferring to a car upon the East 55th Street cross town line of said company, or upon its cross town line in East 105th Street, Woodhill Road, and East 93rd Street, or upon its cross town line in W. 65th Street, shall, upon demand at the time of present- ing, within the time herein provided, a transfer ticket to such cross town line, from any intersecting line of said company, be entitled, without additional charge, to transfer to any other route of said company intersecting such cross town line, and to ride to any point upon such intersecting route, provided he transfer to a car upon such last mentioned route within five (5) minutes after 348 leaving sucli cross town car, or to the first regular car upon such last mentioned route. The company shall not be required, however, to fur- nish a round trip for a single fare, nor to carry any passenger to any point upon its railway and from such point to the vicinity of his starting point for a single fare, and the company may, subject to the approval of the city Council as hereinbefore provided, make such reasonable regulations, not inconsistent with the provi- sions of this ordinance, as may be necessary to prevent misuse of transfers. Any child under six (6) years of age, accompanied by a person paying fare, shall be carried free. Two per- sons under six (6) years of age, w^hen accompanied by a passenger paying fare, shall be carried for a single fare. The company may make and enforce proper and rea- sonable rules and regulations relating to the collection of fares and the issuance and acceptance of transfers upon the several routes of the company, subject, how- ever, to the approval of the city Council. Sec. 23. At once upon the taking effect of this ordi- nance the company shall put into operation the rate of fare stipulated in paragrah "e" of Section 22 hereof, to wit, three cent cash fare and one cent charge for a trans- fer, and said rate of fare shall continue in force for eight months from the taking effect hereof; provided that the company shall have installed 450 pay-enter cars within five months from the taking effect hereof, as is provided in Section 8 hereof; otherwise said initial rate of fare shall continue in force for three months beyond the completion of the installation of said 450 pay-enter cars. At the termination of said eight months, or such longer period as may be rendered necessary by the fore- going provision, if the amount in the interest fund, less 349 accrued proportionate payments to be made therefrom, shall be less than Five Hundred Thousand Dollars ($500,000), the company shall install the next higher rate of fare provided in Section 22 hereof, unless in the opinion of the company a rate of fare higher than the next higher to the rate in force during the said initial period shall be necessary to restore the balance in the interest fund and to provide for current disbursements therefrom as hereinbefore provided, in which event, with the consent of the city, the company may install any rate of fare not higher than the maximum provided in Section 22 hereof; or upon failure of the city to agree thereto, the question may be submitted to arbitration as hereinbefore provided, and the rate of fare so installed after the termination of said initial period, whether the next higher rate or any rate not higher than the max- imum installed with the consent of the city, or 'by award of the board of arbitration, shall continue in force for six months. Thereafter the rate of fare shall be changed from time to time as follows : Whenever the amount credited to the interest fund, less the proportionate accrued payments to be made therefrom, shall be less than Five Hundred Thousand Dollars ($500,000) by the amount of $200,000 this shall be prima facie evidence of the necessity of raising the rate of fare to the next higher rate on the scale provid- ed in Section 22 hereof. Whenever the balance in the interest fund, less pro- portionate accrued payments to be made therefrom, shall be more than Five Hundred Thousand Dollars (#500,- 000) by the amount of f 200,000 it shall be prima facie evidence of the necessity of lowering the rate of fare to the next lower rate on the scale provided in Section 22 hereof. 350 If at any time, either the city or the company shall be of opinion that the fare should be increased or de- creased otherwise than as is hereinbefore provided, such party may give written notice to the other of its opinion, stating the increase or decrease desired. If this is assent- ed to, the change shall be made. In case of disagreement, the question of increase or decrease, and the rate to be fixed shall at once be submitted to arbitration, as is pro- vided in Section 11 hereof, and the rate fixed by the award of such board of arbitration, not exceeding the maximum rate of fare provided 1 for by this ordinance, shall be at once installed. Wherever in this section or in this ordinance it is pro- vided that in determining the amount in the Interest Fund deductions shall be made for "accrued proportion- ate payments to be made therefrom," such deductions shall be made as follows: The total amount to be deducted during the year shall be the aggregate amount of interest and dividend pay- ments provided by section 16 hereof together with all taxes, and the said aggregate shall be deducted at the following rates : For January Seven per cent. For February Six per cent. For March Seven per cent. For April Eight per cent. For May Nine per cent. For June Nine per cent. For July Ten per cent. For August Ten per cent. For September Nine per cent. For October Nine per cent. For November Eight per cent. For December Eight per cent. 351 Sec. 24. The company may transport along and upon its lines in suitable cars such materials, supplies, appli- ances and tools as it may need for the construction, maintenance and operation of its road. It may carry upon its passenger cars or upon other cars mail for the government of the United States. It may operate funeral cars, observation cars, express passenger service and other special cars at rates to be fixed from time to time by the Council of the city of Cleveland not lower than the rate in force for the carriage of passengers from time to time as is provided 1 by the terms of this ordi- nance. The Company shall also operate hospital and sup- ply cars for the city, and such other cars for exclusively municipal purposes as the city shall direct, and the city shall furnish and maintain such cars and shall pay the cost of operating such cars, to wit, the wages of all em- ployes of the Company in charge thereof, plus the cost of current, but exclusive of any contribution for fixed charges or for track maintenance or renewal. The trans- portation of materials, supplies, appliances, tools, and mail and the operation of special cars shall not be per- mitted to interfere with or delay the carriage of pas- sengers and shall at all times be subject to regulation by the Council. The car miles operated by the company in transportation of city cars, materials, supplies, ap- pliances and tools shall not be counted in the car miles made for the purposes of Sections 19 and 20 hereof. Sec. 25. The cars of the company shall be operated to Garfield Park on its Broadway line, and passengers shall be carried to and from said point at the same rate of fare charged under the provision of this ordinance 03" the Company upon its lines within the limits of the City of Cleveland. By the acceptance of this ordinance as hereinafter provided, the Company agrees to accept an ordinance authorizing it to extend its Lorain Street lino 352 to the present limits of the City of Cleveland, consents of property owners having been presented, for the pas- sage of such an ordinance, and immediately thereafter to construct and extend its Lorain Street line to said city limits, and to operate said line to the present limits of the Citj T of Cleveland at the rate of fare from time to time in force under the provisions of this ordinance within the limits of the City of Cleveland. Provided, that in lieu of accepting such ordinance and building such extension, the Company shall have the right, with the consent of the city, to make any reasonable arrangement for the operation of its cars to the city limits on Lorain Street, over existing tracks therein. Sec. 26. The salaries of persons employed by the Company and receiving compensation at the rate of f 1,- 500 per annum or more shall not be in excess of those paid for similar work by other properties of the same relative size. Sec. 27. The words "extensions, betterments and per- manent improvements" as used in this ordinance, in con- tradistinction from repairs, maintenance, renewals and replacements of property, shall be held to mean the ac- quisition, construction and equipment of additional lines of street railway, power houses, switches, sidings, car houses, shops, rolling stock, machinery and other prop- erty or additions to existing equipment or difference be- tween cost of new sources of power, or new methods of propulsion and the cost of the source of power or method of propulsion replaced, if new at the time of replace- ment, and all expenses incident to such construction and acquisition, and also wherever any property of the com- pany is replaced by other property at a greater cost than would be the first cost of such property, if purchased at the time of replacement, then such excess cost shall be deemed an extension, betterment or permanent improve- 353 ment within the meaning of those words as used in this ordinance, and in the event of any disagreement between the company and the city with regard thereto a board of arbitration selected as provided in Section 11 hereof shall have power to determine under the provisions of this section what proposed expenditures by the company are for extensions, betterments and permanent improve- ments. Sec. 28. Whenever any extensions, betterment or per- manent improvement is proposed by the company other- wise than of the kind and subject to the limitations con- tained in Section 20 hereof, estimates of the cost thereof and plans and specifications therefor, shall be filed with the City of Cleveland by the company. When such extensions, betterments or permanent im- provements have been approved by the Council such ex- tensions, betterments and permanent improvements shall be made. If the company acting in good faith and using all usual means can procure the necessary money by the sale of stocks or bonds at par, or 'by an increase of float- ing debt, and the capital value, as that term is defined by Section 16 hereof, shall be increased as provided in Section 16 hereof, and the company shall be entitled to have payments made to it thereon out of the interest fund at the rate of six (6) per cent per annum, payable quarterly, if the expense is met by the issuance of stock, or at the rate of interest borne by the bonds or floating debt if the expense is met by bond issue, or increased floating debt, at a rate not exceeding that hereinbefore provided. Whenever such extension, betterment or permanent improvement is proposed, the City Street Railroad Com- missioner shall have the right to employ such assistance as he shall deem necessary for the purpose of checking 354 over such estimates; and if the work of constructing such extensions, betterments or permanent improv- ements is undertaken, he shall have the right to employ such assistance as he shall deem necessary for the pur- pose of checking material, lafoor or other costs in the supplying of such extensions, 'betterments or permanent improvements, and the company shall pay all bills for such assistance and services approved by the City Street Railroad Commissioner, provided that such bills shall be subject to the approval of the city Council, and shall not in the aggregate exceed one (1) per cent of the cost of the proposed extensions, betterments or permanent improvements, which sum, if the extension, betterment or permanent improvement is made, shall be included in the actual cost thereof; or, if the extension, betterment or permanent improvement is not made, the cost thereof, not exceeding one (1) per cent of the estimated cost thereof, shall be paid by the company as an expense out of the interest fund. Sec. 29. The company alone may propose extensions, betterments or permanent improvements. Nothing shall be added to the capital value provided in Section 16 hereof on account of any extension, better- ment or permanent improvement made by the company without the approval of the city. Sec. 30. During the continuance of this grant the company may maintain the existing suburban lines op- erated T>y it at the time of the passage hereof, but the cost of the construction of extensions, betterments and improvements upon existing suburban lines except to the extent of the increased cost of replacing property as defined in Section 27 hereof, or of the building and construction of additional suburban lines shall not be included in the capital value of the company as fixed by Section 16 hereof without the consent of the city, which 355 consent shall be secured in the manner provided in Sec- tion 28 hereof for the making of extensions, betterments or permanent improvements upon the property of the company within the city. The company shall perform all existing contracts be- tween it and any municipal corporations, or boards of county commissioners under which suburban lines are now operated, but shall not increase the service above or reduce the fare "below the requirements of such ex- isting contracts, and in the event of any dispute between the city and the company as to the requirements of such existing contracts, the dispute shall be submitted to ar- bitration, if the consent of the municipal corporation or other public authority interested can be obtained. In the event of such arbitration the city shall appoint one arbi- trator and the suburban authority one arbitrator; the third shall be appointed as provided in Section 11 here- of. Otherwise such dispute shall be litigated and the city shall have the right to be represented by counsel. The company may accept new grants for the operation of su'burban lines, or renewals of existing grants, "but after the acceptance of such grants or renewal of exist- ing grants, the amount deducted from the gross receipts of the company for car miles made in the operation of such new or renewal grant, under the provisions of Sec- tions 19 and 20 hereof, shall in no event exceed the gross receipts made in such operation of such new or renewal grant, less the distributive share of the aggregate taxes of the company, which should be paid upon the property operated under such new or renewal grant, and the car mileage allowance for expense of operation and mainten- ance within the city provided by Sections 19 and 20 here- of shall not be increased on account of any deficiency therein. The gross receipts of operation of any such new or renewed suburban grant shall be the excess of the 356 total receipts of the line above the full city rate for all passengers using any part of the line within the city limits. But should later operation under such new grants or renewal grants show a surplus of gross receipts of the company for car miles made in the operation of such new or renewal grant over the deduction from gross receipts authorized to be made under the provisions of this ordi- nance, the company may use this surplus to reimburse itself for any earlier deficiency, and when this has been accomplished the subsequent receipts shall be used as provided in this ordinance, and if the Council approve, the capital value of the Company shall 'be increased by the then value of the property used in any such exten- sions, betterments, or permanent improvements which have been so constructed. The right so to include such property in capital value and the amount to be so included shall be determined by agreement between the city and the company, and shall not be subject to arbitration. Sec. 31. During the continuance of this grant the company shall carry on its cars, free of charge, all po- licemen and firemen of the city of Cleveland, in uniform and on duty, but shall otherwise give no free passes or free transportation unless otherwise required by law except to motormen, conductors and inspectors of the company, in uniform, and the company shall have the right to furnish to its other employes, except employes in the general office, free transportation while on duty or going to or returning from work the cost of the same to be charged to operation. The company shall, by the adoption of all reasonable protective measures, and by necessary supervision of its employes and accounting force provide for the collecting of fares due the company from passengers. If at any time the City Street Rail- road Commissioner notifies the company that in his 357 judgment any laxity, carelessness or inefficiency exists in the matter of collecting the revenue of the company, or of permitting free transportation in any way, or any wastefulness in the purchase of material, or employment of persons, or their compensation, said commissioner shall have the right to employ such assistance as he may need to determine the facts, and the company shall pay the cost of all such assistance, subject to the limitations imposed by section 10 hereof. If, as the result of such investigation, it is found that any such failure to collect revenues exists, it shall be at once corrected. If there be disagreement between the city and the company as to the result of such investigation or as to the efficiency of any corrective applied by the company, and the ques- tion having been submitted to arbitration under the pro- visions of Section 11 hereof, such board finds such fail- ure to exist, or not to have been corrected, the reduction in the rate per cent of interest payments, as provided in Section 14 hereof, may be made and enforced by the board of arbitration until the failure is corrected. Sec. 32. The company, by the acceptance of this ordi- nance, agrees to grant to the city and the city hereby re- serves to itself the right whenever the city shall have legal power so to do, upon giving at least six (6) months' previous notice in writing of its intention so to do, to purchase and take over the entire street rail- way system of the company, including all property then existing which now constitutes the street railway system in the possession of and operated by The Cleveland Rail- way Company, with all renewals, improvements, better- ments and repairs thereon, and additions thereto, and including all the property, grants, franchises, rights and claims of every kind, character and description then owned by said company. In case the city shall purchase and take over the street railway property of the com- 358 pany, as is in this ordinance, provided, then it shall pay for the same the capital value of said property, as fixed by Section 16 hereof, plus 10 per cent thereof, the city at the time of such purchase assuming and agreeing to pay in addition thereto all the obligations, indebtedness and liabilities of said company, and all liens other than bonded indebtedness upon its property then existing, which bonded indebtedness the city shall, at the time of any such purchase provide for by assumption if the law authorizing such purchase permits or by payment if the law so authorizes at the time, and under the pro- visions of the bonds they are callable or by taking the property subject thereto, if that be the mode provided by law for dealing with such existing bonded indebted- ness in making such purchase. To the extent that the city takes the property subject to, assumes or pays either floating or bonded indebtedness the amount thereof shall be deducted from capital value before the addition of the 10 per cent hereinbefore provided in determining the price to be paid by the city. Upon giving such notice in writing to the company by the city, as is provided in Section 32 hereof, the law then permitting such pur- chase, of the exercise of the option to purchase herein given, the company shall, and hereby agrees that it will as soon thereafter as the law will permit, execute and deliver to the city a good and sufficient deed, conveyance and assignment, conveying a good marketable title to said railways, grants, property and franchises then held, including cash on hand and in the interest fund, less enough to pay dividends at the rate of 6 per cent to date, subject, however, to all existing liens, indebtedness, ob- ligations and liabilities of said company, and upon the delivery of said deed, conveyances and assignment, the city shall pay said purchase price as hereinbefore pro- 359 vided and execute all papers necessary to carry into ef- fect the terms of such purchase. The company agrees that to the extent that its cur- rent obligations, indebtedness and liabilities then liqui- dated, except for extensions, betterments and permanent improvements made in accordance with the terms of this ordinance, do at the time of any such purchase exceed a sum equal to ten per cent (10 per cent) of the gross receipts of the company from all sources for the next preceding calendar year such excess shall be deducted from the capital value in determining the price to be paid by the city. Sec. 33. The company, by the acceptance of this or- dinance, does grant to the city, and the city hereby re- serves to itself the right from and after the 1st day of January, 1918, to designate any firm, person or corpor- ation having lawful authority to acquire, own and op- erate street railways in the City of Cleveland (herein called the licensee) who or which shall have the right to purchase the street railway system, property and rights of the company in the same manner as the city hereunder has the right to purchase the same, subject to the conditions that the licensee agrees to accept a smaller return by at least one-quarter of one per cent upon the portion of capital value described in Paragraph (c) of Section 16 hereof than the company is then en- titled to receive, and shall purchase the same property which the city has herein reserved the right to purchase in Section 32 hereof; that the price to be paid therefor by the said licensee shall be the price at which it is pro- vided in Section 32 hereof that the city may acquire the property, and that in so acquiring the property, said licensee shall agree to hold the same, subject to all the terms of this ordinance, including as a valid and bind- ing condition the right of the city to purchase the same 360 as hereinbefore provided, and the right of the city there- after to designate any other licensee to acquire and hold the same, as is hereinbefore provided, and upon the des- ignation of any such licensee by the city, the same notice shall be given to the company as is herein provided to be given in the event of the city exercising the option re- ferred to in Section 32 hereof, and the same mode of transfer as is herein provided in case of purchase by the city shall apply to the case of purchase by such licensee. The right of the licensee of the city to acquire the street railway system, rights and property by purchase, under the provisions of this ordinance, shall in no way 1>e im- paired by any lack of power or authority on the part of the city itself to acquire the said street railway system, rights and property, for municipal operation and use, or otherwise. Before any such licensee as is herein provided shall be designated, the city shall fix a time for the receipt of bids and shall give thirty days' public notice thereof. At the time appointed proposals shall be filed, the proposal of any applicant other than the company being accom- panied by $50,000.00 in money as a guarantee of its good faith. If no proposal is filed by the company it shall be deemed to propose the rate of return then authorized. Should the company file a proposal lower than its then authorized rate, such proposal being as low as any other filed, the same shall be accepted and the rate therein offered shall become the authorized rate of the return unless (1) no other proposal be filed, or, (2) another proposal having been filed and a license designated, no purchase is made by such licensee thereunder, in either of which events the proposal of the company shall be dis- regarded and no change in the rate of return shall be required by reason thereof. All proposals received shall be opened at the hour fixed, and thereafter the council 361 may designate as licensee any bidder whose proposal is in accordance with the conditions hereinbefore set forth. Should the city determine not to designate such licensee or should no proposal complying with the conditions hereinbefore provided be received, the city shall not again give notice of the receipt of proposals within six months thereafter. Should the city designate such licensee and the bidder so designated fail to acquire the property and to comply with all the conditions of such acquisition as stipulated by this ordinance within thirty days after the expiration of the six months notice hereinbefore provided, unless prevented by bona fide legal proceedings over which he has no control, the city shall declare such fail- ure by resolution of council and upon the passage of such resolution the city shall out of the $50,000.00 deposited by such defaulting bidder pay to the company any loss or expense which, in the opinion of the council, has been incurred 'by the company in regard to the filing of pro- posals or bids, and the balance of such deposit shall be- come the property of the city and shall be deposited in the city treasury to the credit of the general fund. Sec. 34. Any such licensee in the acquisition of the property under the provisions of section 33 hereof shall pay the capital value of said property as fixed by section 16 hereof less bonded or floating debts paid or assumed plus 10 per cent of the difference, and shall be under all the obligations provided in section 32 hereof for the city, in the event of purchase, by the city, except the limita- tions as to the mode of payment, and shall assume and agree to pay, in addition to the price stipulated, all the obligations, indebtedness and liabilities of the company, and all liens upon its property then existing other than bonded indebtedness, which said bonded indebtededness the said licensee may assume, it being understood that the current obligations, indebtedness and liability of the 362 company shall be limited as provided in section 32 here- of, and that any excess thereof shall be deducted from said purchase price. Sec. 35. If at the time of the expiration of this grant, the city shall not have exercised the right reserved to it to purchase the said property or to nominate a purchaser therefor, as is provided in sections 32 and 33 hereof, then, and in either event the city reserves the right, provided it then has the power so to do, to purchase said street railroad, with all additions and extensions within the then city limits, for such price and upon such terms as may be agreed upon between the city and the company, or upon their failure to agree, then for such price and upon such terms as may be fixed by a board of arbitra- tion, consisting of three persons, a majority of whom shall decide all questions. In case of arbitration in the purchase of said street railroad, the city shall give written notice of its inten- tion so to arbitrate, and name therein one arbitrator, said notice being given not more than eighteen (18) months, nor less than twelve (12) months prior to the termination of this grant. The company shall name in writing, within ten (10) days after receiving such notice one arbitrator; the two within ten (10) days thereafter shall agree upon a third arbitrator, or on failure of the company so to name an arbitrator, or the two arbitra- tors to name the third, within the times herein specified the third arbitrator shall be appointed as provided in section 11 hereof. Sec. 36. The price which the city shall pay for such street railroad under the provisions of section 35 hereof shall be its value for street railroad purposes, and shall be obtained as follows: The cost of reproduction shall be estimated, and from this shall be deducted a reason- able amount for depreciation. All the physical property of every nature wdthin the then city limits used in the 363 operation of the railroad shall be included in the valu- ation. Separate itemized schedules, with values, shall be made under the following titles: 1 Land. 2 Power plant, including land, building and machinery. 3 All other buildings. 4 Tracks, in- cluding poles, wires and appurtenances and also includ- ing pavement to the extent paid for by the company and included in capital value subsequent to the passage of this ordinance. 5 Rolling stock. 6 Miscellaneous. To the total valuation of the above items, if the city shall exercise its right and purchase the property under this section, ten (10) per cent shall be added. But in arriving at said valuation no franchise or privileges granted by the city shall be estimated or paid for nor shall any payment be made for the amount in the in- terest fund which shall then become the property of the city of Cleveland. The city reserves the right to decline to take the property at the valuation fixed by arbitration, as above provided. Sec. 37. If, at the expiration of this franchise, no ex- tension or renewal thereof is granted by the city, and the city does not then purchase the property, any person or persons to whom a franchise may be granted to operate a railroad over the then existing lines or any of them or any part of them shall have the right and be under obligation to purchase said railroad or such portion thereof from its then owner upon the terms herein pro- vided for purchase by the city by Sections 35 and 30 hereof. Sec. 38. The company shall pay to the city three thousand dollars ($3,000.00) per year for the use of the city's tracks and appliances on the bridges, viaducts and elsewhere the use of which is authorized in section 2 hereof, in the city, and shall renew, maintain and keep said tracks and appliances in constant repair. The city 364 reserves the right, however, from time to time to adjust and fix the sum to 'be paid by the company for the uses herein provided by ordinance of the council, the sum so to be fixed, however, not to exceed at any time an amount equal to six (6) per cent per annum upon the cost of the tracks and appliances belonging to the city so used, and imposing and continuing upon the company the obli- gation of renewal, maintenance and repair above pro- vided. Should the city at any time grant to any other company the right jointly to use any of its tracks covered by this section, the payments to be made to the city for such use by the grantee herein and such other company or companies, shall be apportioned by the city as the council shall deem just, the aggregate sums paid not ex- ceeding the maximum hereinbefore provided to be paid by the company. Sec. 39. Nothing in this ordinance contained shall operate as an abridgment of the corporate rights or powers of the company, nor of the discretion of its board of directors in the selection of managers and employes or any one performing any duties imposed upon the com- pany and its officers by law, nor shall anything herein con- tained by deemed a limitation upon the amount of capital stock which shall be issued by the company or indebtedness incurred by it. The capital valuation fixed by section 16 hereof is for the sole purpose of determining the return to the company from the carriage of passengers and for the purpose of fixing from time to time the rate of fare and the price at which the purchase of the property of the company may be made. Sec. 40. The company shall have the right, whenever the unexpired term of its franchises within the limits of the city of Cleveland, shall be less than fifteen years, to fix, charge and collect the maximum rate of fare pro- vided in section 22 hereof, and during said period the 365 right to control the schedule for the operation of cars shall be in the company, and not in the city, except that the city shall not be deemed to have surrendered its police power to require such proper and reasonable service as may be required by the needs of the traveling public. Dur- ing such fifteen years, or any portion thereof, the company shall continue to receive the sums provided by section 16 hereof out of the interest fund, and whenever the amount credited to the interest fund, less the propor- tionate accrued payments to be made therefrom shall be more than $500,000.00 by the amount of $200,000.00, the excess above $500,000.00 shall be by the company applied to a reduction of the capital value of the company, as that term is defined in section 16 hereof, as follows: First, by the payment of any then outstanding floating indebtedness of the company. Second, by the payment of any bonds then outstanding of the company which can at such time, according to the conditions of the mortgage under which such bonds were issued, be paid. Third, by creating a sinking fund to assist in securing a reduction of capital value, such- sinking fund to be invested in securities with the approval of the city and after the payment of any such floating indebtedness or 'bonds, the capital value, as that term is defined by section 16 here- of, shall be reduced by the amount so paid, and there shall be no payments made thereon out of the interest fund. In the event of the city exercising the right to purch- ase the property of the company provided in section 32 hereof or designating a licensee as provided in section 33 hereof, during operation by the company in a period of less than fifteen years franchise duration, as provided by this section, the surplus earnings shall, as hereinbefore provided first by deducted from the capital value, and the price to be paid by the city, or the city's licensee, 366 shall then be determined bj adding to the residue of capital value after applying the payments and sinking fund hereinbefore provided for the percentage thereof provided in section 32 hereof, and should the city pass a grant in renewal hereof during a period of less than fifteen years franchise duration, such renewal grant shall contain as the capital value of the company the capital value set forth in section 16 hereof, increased as in this ordinance provided and diminished by any reduction thereof out of surplus earnings as is in this section pro- vided. Should the city exercise the right, reserved by section 35 hereof, to purchase the property at the expiration of this grant or any renewal hereof, there shall be deducted from the price to be paid, as determined under section 36 hereof, any sum deducted from capital value out of surplus earnings accrued in any period of operation under this section. Sec. 41. At any time after the taking effect of this ordinance the city shall have the right to pass an ordi- nance in renewal of the rights hereby granted for such period not less than fifteen years nor less than the then unexpired term of this grant, as the city may by law be authorized to make and upon the passage of any such renewal ordinance, imposing upon the company no sub- stantial burden as defined in section 43 hereof in addition to those imposed in this ordinance, the company shall at once accept the same, and upon its failure or refusal to accept the same the provisions of section 40 hereof shall cease to operate, and the city shall resume and have unimpaired all the powers as to regulation of schedule and operation provided by section 9 hereof, and the rates of fare shall continue to be those fixed by the city council or by arbitration, under various provisions of this ordin- ance without reference to the provisions of section 40. 367 Sec. 42. Should the duration of this grant or any grant made in renewal hereof come to have less than 15 years unexpired time to run, and the company, under the provisions of section 40 hereof, install the maximum rate of fare, the council may still pass such renewal grant as is herein provided, and the company shall con- tinue under obligation to accept the same under the terms and provisions of this section, and upon acceptance shall become subject to the terms thereof as though it had not operated under the provisions of section 40 hereof. Sec. 43. Any ordinance passed in renewal hereof shall be deemed not to impose any substantial burden upon the company in addition to those imposed by this ordin- ance, when such renewal ordinance is either identical in terms with this ordinance, except as to the time of ex- piration, or that the right reserved to the city in section 33 hereof may in such renewal ordinance be made con- tinuously operative from and after January 1, 1918, or differs from this ordinance in such particular only as may be agreed upon between the city and the company. Sec. 44. Should the city not have exercised the right reserved to it in section 32 hereof by purchasing the street railway property, on or before the first day of Jan- uary, 1933, then on said first day of January, 1933, the city having previously given one year's notice of its in- tention to enforce this section, the line of street railroad now known as the St. Glair Avenue line, beginning at W. 9th street and extendng through St. Glair avenue N. W. and St. Glair avenue N. E. to East 105th street, with all the physical property, rails, ties, poles, trolley, span, guy and feed wires and other fixed appliances in place in said St. Glair avenue N. W. and St. Glair avenue N. E. shall upon the city tendering to the company the value thereof, determined as provided in section 36 hereof, plus 10$, be and become the property of the city of 368 Cleveland, and. the operation of any grant or franchise then in force with relation thereto shall cease and deter- mine and the owning company shall have no right of any kind with regard thereto. If on said 1st day of Jan- uary, 1933, the city shall not have the right to own such property, or having such right determine not to exercise it, then the said property shall pass, upon making the same payment therefor as is required from the city in case it had and exercised the right to acquire this prop- erty, to such person as the city council shall by resolu- tion have designated to become the owner thereof, and the vesting of this property in such person so designated shall not be affected by any incapacity on the part of the city, itself, to own such property, and in consideration of the rights and privileges by this ordinance granted to the company, the company does hereby agree that in the event stipulated it will on said 1st day of January, 1933, execute all necessary deeds, covenants, assignments and other documents which may be necessary to confer upon the city or the city's licensee the absolute right, title and interest in and to all the property described in this section to be on said day so set over, transferred and conveyed. Sec. 45. In case of any failure of the company to do and perform each and every one of the terms and condi- tions herein stipulated to be performed by it, and failure to comply with the general ordinances of the city of Cleveland relating to street railroads now or hereafter in force, and not inconsistent with the specific provisions of this ordinance, and such failure shall continue for six months after written notice to the company from the city of its intention to exact a forfeiture by reason of such failure, the company shall thereupon forfeit all and singular the rights and privileges herein granted, and thereafter all such rights and privileges shall cease, and 369 such forfeiture shall be declared and enforced in the manner provided in section 1891 of the Revised Ordin- ances of the City of Cleveland of 1907. Sec. 46. The acceptance of this ordinance by the com- pany in the manner hereinafter provided and the ratifica- tion thereof by the stockholders of the company prior to February 10, 1910, and the taking effect of this ordin- ance shall be and constitute a surrender, termination and cancellation of all the grants and franchises of every kind, character and description received, acquired or owned by any of the companies required by this section to sign the acceptance hereof, from the city of Cleveland or from any other source of authority to operate the street railroad system or any part thereof hereinbefore mentioned, within the present limits of the city of Cleve- land, and shall be a contract between the city of Cleve- land and the Cleveland Railway Company, a contract be- tween The Cleveland Railway Company and The Forest City Railway Company, The Municipal Traction Com- pany, The Low Fare Railway Company, and The Neutral Street Railway Company, superseding and cancelling all other relations between them except such as passed title to said The Cleveland Railway Company or The Cleveland Electric Railway Company, and for and in consideration of the privileges granted by this ordinance, The Cleve- land Railway Company by the acceptance hereof shall as- sume and carry out, pay and perform all of the obliga- tions, covenants and conditions by this ordinance im- posed upon the company, and shall extend to, respect and carry into effect all rights reserved by the city of Cleveland or granted to the city of Cleveland by the company by the terms hereof, or granted to or imposed upon the company by the terms hereof; and such accep- tance shall be in writing, filed with the city clerk within five days after the passage of this ordinance, in tho 370 following form, and such acceptance shall take effect upon the taking effect of this ordinance: "Cleveland, Ohio, 1909. "The Cleveland Railway Company hereby accepts the terms of Ordinance No , passed on the day of , 1909, by the council of the city of Cleve- land, granting a renewal of the street railway rights of The Cleveland Railway Company, fixing the terms and conditions of such renewal grant, changing the rates of fare, regulating transfers and terminating existing grants, and as consideration moving from The Cleveland Rail- way Company to The City of Cleveland for the passage of such ordinance and the rights thereby granted by the city of Cleveland to said company, The Cleveland Railway Company does hereby surrender and terminate all its grants and franchises of every kind, character and de- scription, received, acquired or owned by it, or its pre- decessors, from the city of Cleveland, or any other source of authority to operate street railways within the present limits of the city of Cleveland, and the Cleveland Rail- way Company, for said consideration and for the surren- der hereinafter specified by The Low Fare Railway Com- pany, The Forest City Railway Company, The Municipal Traction Company and The Neutral Street Railway Com- pany, does hereby assume, and agree, to carry out, pay, and perform, all the obligations, covenants and condi- tions of said ordinance, and to extend to, respect and carry into effect all rights reserved therein by the city of Cleveland or granted to said city by The Cleveland Railway Company by the terms thereof; and as consider- ation moving from The Cleveland Railway Company for the surrender by The Low Fare Railway Company, The Forest City Railway Company, The Municipal Traction Company and The Neutral Street Railway Company, of all claims, demands and rights against The Cleveland 371 Railway Company of, in or to any of the properties, lines or grants referred to in this ordinance, The Cleveland Railway Company hereby assumes and agrees to pay the debts now existing of said The Forest City Railway Com- pany, The Municipal Traction Company and The Neutral Street Railway Company, as specified in said ordinance; and in consideration thereof said The Low Fare Railway Company, The Forest City Railway Company, The Muni- cipal Traction Company and The Neutral Street Rail- way Company, hereby release said The Cleveland Rail- way Company from all claims and demands whatsoever, and surrender to it all claim to or rights which they or either of them may have in or to any of the property, lines or routes referred to in the above ordinance or in the hands of the receiver or against one another and agree to execute and deliver to the Cleveland Railway Com- pany all such instruments as may be necessary to effectu- ate the same. The Cleveland Railway Company. By President. Secretary. The Low Fare Railway Company. By President. . Secretary. The Forest City Railway Company. By President. Secretary. The Municipal Traction Company. By President. Secretary. The Neutral Street Railway Company. By President. . SerrelMi'v. 372 Sec. 47. The purpose of this ordinance is to establish and settle the relations between the city of Cleveland and the Cleveland Railway Company by a contract which will secure to The Cleveland Hallway Company unim- paired the capital value described in section 16 hereof and the rates of return thereon provided in said section, and which will also secure to the city of Cleveland ade- quate and efficient service at the cost thereof, not exceed- ing the maximum rate of fare specified in section 22; and the provisions of this ordinance in respect to the fixing, from time to time, of rates of fare to be charged by the company, the provisions in respect to the ascer- tainment of the value of the property of the company and the items from time to time constituting the capital value thereof, the provisions in reference to the designa- tion of the City Street Railroad Commsisioner and the duties to be performed by him, the provisions with re- spect to the right and power of the city, through the City Street Railroad Commissioner or otherwise, to be in- formed by inspection of the 'books, papers, documents, vouchers and property of the company as to the value of said property and the cost of service, and the provisions in respect to the acquisition of the property of the com- pany by the city or by a purchaser designated by the city therefor, as set forth in the several sections of this ordinance dealing with said subjects, are mutually un- derstood and declared to be in their substance material to the accomplishment of the aforesaid purposes for which this contract is made; but nevertheless, in order to avoid an entire failure of this grant in consequence of invalidity of any of the aforesaid provisions, it is further provided as follows: 1. If any material part of the provisions of this or- dinance in respect to the fixing, from time to time, of the rates of fare to be charged by the company, includ- 373 ing the submission of such rates of fare to arbitration in case of disagreement between the parties, shall be ad- judged to be invalid, then, except as provided in section 40, all of the provisions hereof respecting the increase or decrease of fare, after the expiration of the period during which the initial rate of fare is to continue in force as prescribed by section 23, shall be abrogated and in lieu thereof the council of the city of Cleveland shall have power, from time to time, to fix by ordinance tin- rate of fare to be charged by the company for the trans- portation of passengers, not exceeding the maximum rate specified in section 22; but the council shall not at any time decrease the rate of fare unless there shall then be a sum exceeding |500,000 in the interest fund, and any rate of fare so fixed by the council shall not impair the ability of the company to earn sufficient money to meet the payments provided for in sections 16 and 18 hereof after paying operating expenses and maintenance and such other allowances for depreciation and renewals as may from time to time be made pursuant to the pro- visions of this ordinance. 2. If any material part of the provisions of this or- dinance providing for the settlement or decision by arbi- tration of questions other than the increase or decrease of the rate of fare which may arise between the city and the company shall be adjudged to be invalid, then as to any such question thereafter arising between the parties, and which by the terms hereof is to be so submitted to arbitration, the council of the city of Cleveland shall be substituted for the board of arbitration by this ordinance provided, and the said council shall be empowered to de- termine such question in accordance with the rules and principles herein prescribed so far as the same may be applicable and its action shall be binding on both parties, unless the same shall be annulled or modified by a court 374 of competent jurisdiction, and if the question involved be in reference to service, the company shall at once in- stall the kind of service directed by the council until such court shall otherwise order. 3. If at any time the provisions of this ordinance for the designation of a city street railroad commissioner shall be held invalid or if at any time there shall be no city street railroad commissioner, the city may designate the city auditor or any other officer or employe of the city to perform all the duties, and to have all the rights, privileges and powers in this ordinance described, as ap- pertaining to the city street railroad commissioner. 4. In case, however, the city, having legal authority so to do, shall determine to purchase and take over the property of the company or a part thereof, or in case the city shall designate a licensee to purchase the same, as provided in sections 32, 33 and 44, refusal by the com- pany to comply with any material provision of said sec- tions or any of them or of any other provision of this ordinance designed to carry out such purchase, by the city of by such purchaser, whether on the ground that the same are not binding on it or for any other reason, shall work a forfeiture of the grant made by this ordinance. Sec. 48. This ordinance shall take effect and be in force from and after its passage and legal publication, and the filing of an acceptance in writing, as hereinbe- fore provided. Passed Dec. 18, 1909. C. W. LAPP, President of the Council. PETER WITT, City Clerk. Approved by the Mayor, December 18, 1909. 375 No. 4. TABLES SHOWING INFLUENCE OF GOLD PRODUCTION ON PRICES. Table No. 1. Quantities, in avoirdupois pounds, of 22 staple agricul- tural products of America, purchasable at Chicago prices July 1, 1874, with one pound troy of pure gold, or with 16 pounds troy of pure silver. The prices given are in greenbacks, with gold and silver coin at Articles P] Dairy butter f 0.24 Wool, fine unwashed ..." 0.30 Turkeys 0.12 Chickens 0.10 Cotton 0.17 Hams 0.11 Cheese 0.12 Eggs 0.12 Lard 11.10 Hides 0.07 Steers, medium 6.10 Mess pork 17.75 Hogs 6.00 Sheep 4.50 Flour : 6.00 Flax Seed 1.75 Beans 2.10 Red wheat, No. 2 1.16 Barley 0.86 Rye 0.83 Oats, No. 2 0.401/0 per bu Corn, No. 2 0.59^4 per bu 161,642 Divide the aggregate of 161,642 pounds by 22, the num- ber of articles, and w r e have 7,347 as the average number of pounds of staple agricultural products purchasable with one pound troy of gold or 16 pounds troy of silver. ice. Lbs. per Ib 1,142 per Ib 913 per Ib 2,268 per Ib 2,741 per Ib 1,612 per Ib 2,492 perlb 2,284 per doz 3,426 per cwt 2,469 perlb 3,916 per cwt 4,494 per bbl 3,089 per cwt 4,568 per cwt 5,101 per bbl 8,990 per bu 8,775 per bu 7,833 perbu 14,175 perbu 15,300 perbu 1S.4U7 per bu 21,657 per bu 25,900 376 That is, in 1874 the price or value of 1 pound of gold, or 16 pounds troy of pure silver was 7,347 pounds of the staple products of the farm. Table No. 2. Quantities in advoirdupois pounds of 22 staple agricul- tural products of America purchasable at Chicago prices July 1, 1896, with one pound troy of pure gold. Articles Price Lbs. Dairy butter $ 0.12 per Ib 2,067 Wool, fine unwashed 0.12 per Ib 2,067 Turkeys 0.09 per Ib 2,756 Chickens 0.08 per Ib 3,10.1 Cotton 0.07 l/10per Ib 3,494 Hams 0.083/s per Ib 2,962 Cheese 0.07 per Ib 3,544 Eggs 0.10 per doz 3,721 Lard 3.62y 2 per cwt 6,842 Hides 0.0534 per Ib 4,314 Steers, medium 3.90 per cwt 6,360 Mess pork 6.82% per bbl 7,268 Hogs 3.20 " per cwt 7,752 Sheep 3.50 per cwt 7,087 Flour 3.65 per bbl 13,320 Flax seed 0.75y 2 per bu 19,713 Beans 0.85 per bu 18,605 Eed Wheat, No. 2 0.56 per bu 26,580 Barley 0.32 per bu 37,210 Eye 0.2914 perbu 47,109 Oats, No. 2 0.15% per bu 50,800 Corn, No. 2 0.27 per bu 55,122 331,794 Divide the aggregate of 331,794 pounds by 22, the num- ber of articles, and we have 15,081 as the average number of pounds of staple agricultural products purchasable with one pound troy of gold July 1, 1896, showing an in- crease in the purchasing power of gold over that of July 1, 1874, of 105 per cent, and a decrease in prices of a little more than one-half, or 50 per cent. 377 Table No. 3. Quantities in advoirdupois pounds of 22 staple agricul- tural products of America purchasable at Chicago prices July 1, 1909, with one pound troy of pure gold. Articles. Price. Lbs. Dairy butter $ 0.23i/ 2 per Ib 1,055 Wool, fine unwashed 0.24 per Ib 1,033 Turkeys 0.13 per Ib 1,908 Chickens 0.13i/ 2 per Ib 1,837 Cotton 0.131/2 perlb 2,067 Hams 0.16 per Ib 1,771 Cheese 0.13 perlb 1,908 Eggs 0.21 per doz 1,771 Lard 0.11 7/10 per Ib 2,120 Hides 0.101/2 perlb 2,364 Steers, medium 6.40 per cwt 3,875 Mess pork 20.00 per bbl 2,480 Hogs 7.68 per cwt 3,221 Sheep 4.70 per ewt 5,277 Flour 6.50 per bbl 7,57'. Flax seed 1.66 per bu 8,964 Beans 2.50 per bu 5,952 Wheat, No. 2 red 1.14 per bu 12,054 Barley 0.62 per bu 19,200 Eye 0.81 per bu 18,:?7L' Oats, No. 2 0.51' perbu 15,264 Corn, No. 2 0.73 per bu 1 139,000 Divide the aggregate of 139,000 by 22, the number of articles, and we have 6,318 as the number of pounds of staple agricultural products purchasable with one pi mini troy of gold July 1, 1909, or a decrease from July 1, 1896, of 8,763 pounds, or 58 per cent; which means that prices are more than twice as high as they then wort'. ( 'ompared with the prices which prevailed July 1, 1874, they arc 14 per cent higher. 378 EXPLANATORY. I started my tables with the prices of July 1, 1874, because at that date one pound troy of gold and sixteen pounds troy of silver were of equal value. For many years before that date sixteen pounds of silver had been more valuable than one pound of gold. Since then the value of silver bullion has declined, but we are not concerned about silver at present, although the question suggests itself whether the free and unlimited coinage of silver, would have produced any such elevation in prices as the deluge of gold has done. Did not compile the prices of January 1, 1910, be- cause it would not be proper to compare July prices with January prices. To what extent there has been a recent increase in prices can best be determined July 1, 1910. I have never claimed that this method of ascertaining the fluctuations in the value or purchasing power of gold is absolutely correct. It is only approximately so. Every commodity has its own supply and demand, but all commodities are affected by the value of the standard with which they are measured. The steady increase in the annual production of gold, must necessarily result in higher prices, and still higher prices. Higher prices induce great business activity and a larger consumption of all staple products, and they inflate credits, but after allowances are made for all these indirect influences of a greater production of gold, the direct influence is very large, and it can not be overcome. Prof. Jevons, writing in 1863, reached the conclusion that the gold from California and Australia, had in- creased prices fifteen per cent, after making due allow- 379 ance for the expansion of credits and other temporary causes. His tract entitled "A serious fall in the value of gold ascertained and its social effect set forth," gave him great distinction as a political economist. In it he said: "While the elasticity of credit, then, may certainly give prices a more free flight, the inflation of credit must be checked by the well defined boundary of available capi- tal, which consists in the last resort of the reserve of notes, equivalent to gold, in the banking department of the Bank of England. Prices temporarily may rise or fall independently of the quantity of gold in the coun- try; but ultimately they must be governed by this quan- tity. Credit gives a certain latitude without rendering prices ultimately independent of gold." Senator Crawford, of South Dakota, in his able speech on the subject in the Senate of the United States, February 15, 1910, quotes from Prof. Norton, of Yale, as follows: "The popular outcry, now sweeping the country, di- rected against prevailing high prices 1 , forcibly illustrates some of the social consequences of the depreciation of gold. * * * Gold ore yielding $20 gold per ton is ^relatively rare in nature. On the other hand, gold ore running from four and five dollars per ton is distributed * very widely, and the deposits are of large area. When, therefore, mining engineers and chemists succeeded in devising methods of extracting gold from ore as low in grade as $5 per ton at a profit the potential supply of gold enormously increased. As a result of these scientitir discoveries the annual production of gold began to mount at an increasing rate in the nineties. Exactly as the suc- cessive issues of greenbacks by our government during the civil war forced prices to higher and higher levels until finally commodities sold at two ami three fold previous 380 prices, so gold, ever increasing in production, has pro- duced a similar effect. "Bradstreet's Index of average prices indicates an ad- vance of 60 per cent in prices since July 1, 1896. In other words, a dollar's worth of goods today could, have been purchased for 62 cents in 1896. During the past thirteen years prices have maintained an average advance of 4 1-2 per cent per annum. "The individual, therefore, who deposited $1 in the sav- ings bank in 1896 to be compounded at 4 per cent for the thirteen years at the present time would have, principal and accumulated interest, barely sufficient to purchase the goods which he could have purchased with his original dollar im 1896. "Measured in purchasing power, the savings bank de- positors of the United States in reality have received no interest on their funds for thirteen years, since the in- terest credited just about balances the depreciation of their funds in purchasing power. "The gold inflation is world-wide, and prices every- where have moved upward in response. * * * "At the present time popular clamor seeks to fix the re- sponsibility upon the trusts, just as in Washington's day a similar agitation resulted in laws against 'forestallers and monopolists,' whereas the true cause lay in the de- preciating continental currency. 'Not worth a continen- tal' in the future may be substituted by the phrase 'not worth a gold dollar,' for how serious the situation may become nobody knows." DATE DUE PRINTED INU.S.A. A 001041205