City of Covington v. South Covington & C. St. Railway Company/Opinion of the Court

This is a bill in equity brought by the appellee to restrain the City of Covington from carrying out an ordinance of July 14, 1913, that provides for the grant of a twenty-year franchise for a street railway over certain streets to the best bidder. The plaintiff claims a right by grant and contract over the same streets, which will be interfered with, and sets up article 1, § 10, and the Fourteenth Amendment of the Constitution. The defendant says that the plaintiff's grant has expired, and that if it purports to be perpetual it was beyond the power of the city. These are the two propositions argued. The District Court granted the injunction as prayed and the city appealed.

We will consider first the scope of the ordinances and contract under which the plaintiff makes its claim. On January 21, 1870, Edward F. Abbott, S. J. Redgate and their associates were incorporated, with perpetual succession, as the Covington and Cincinnati Street Railway Company, with power to construct railways in the City of Covington along such streets as the council might grant the right of way to, and along such roads out of the city as the companies owning the roads might cede the right to use. The company was authorized to purchase and hold such routes and railway tracks as might be deemed necessary for its use, and to connect with and use the tracks of other railways in the vicinity upon equitable terms. Just before their incorporation, on December 13, 1869, an ordinance was passed by the city granting, according to the terms of a contract executed on December 23, 1869, to Abbott and Redgate, 'their associates, successors and assigns,' 'all the right and authority that [the city had] the capacity to grant, to construct, hold and operate a street railroad upon and along' the streets named. The only provision for a termination of the rights conveyed was in case of a failure of the grantees to keep their covenants. On December 28, 1874, an ordinance was passed extending the time for completing the work under the Abbott contract, renewing the terms of the same but somewhat changing the route, and on January 28, 1875, another authorized an extension to a suspension bridge across the Ohio. On May 1, 1875, Abbott and his associates conveyed all their rights under the foregoing ordinances and contract to the corporation that they had formed, and the title of the corporation was recognized by an ordinance of June 21, 1875. On January 25, 1876, Abbott and others were incorporated with perpetual succession as the South Covington and Cincinnati Street Railway Company, the appellee, with substantially the same powers that were granted to the Covington and Cincinnati Company, and on December 20, 1876, the last-named corporation conveyed its rights to the appellee. The latter has whatever rights were acquired by Abbott, as was recognized by an ordinance of October 13, 1881.

As there is no hint at any limitation of time in the grant to Abbott, and on the other hand the city grants all the right and authority that it has the capacity to grant, there can be no question that the words taken by themselves purport a grant in perpetuity more strongly than those held to have that effect in Owensboro v. Cumberland Telephone & Telegraph Co., 230 U.S. 58, 33 Sup. Ct. 988, 57 L. Ed. 1389. The fact chiefly relied upon to narrow their operation is found in the terms of 'an ordinance prescribing the terms and conditions of street passenger railroads within the City of Covington' passed on December 15, 1864, before the dealings with Abbott. By section 13 'all contracts made under the provisions of this ordinance shall be for the term and period of twenty-five years.' It is contended that this by implication governs later transactions. But there is little ground for even an argument upon the point. The ordinance is providing for proposals and a contract with the best bidder, concerning routes contemplated by a rival of the Covington and Cincinnati, the Covington Street Railway Company incorporated on February 9, 1864 (afterwards bought up by the appellee). The contracts referred to in section 13 are primarily at least contracts of those who should acquire the franchises offered, such as in fact were made. In no sense is the Abbott contract a contract under that ordinance. It was a contract under the ordinance of 1869, which established its substance and even its form. The ordinance of 1864 did not address itself to the construction or scope of future ordinances, but only of certain contracts of which Abbott's was not one. We regard the matter as too plain to be pursued into greater detail. This part of our decision covers all the grants to Abbott including the right to lay tracks to the suspension bridge.

There were extensions of the plaintiff's rights by acts of the Legislature of March 13, and April 5, 1878 (Laws 1877-78, cc. 423, 813), in general terms that there seems to be no reason for supposing more limited in time than the original grant. See section 3. The only part of this branch of the case needing further discussion concerns the rights acquired by the plaintiff through the purchase of its rival's, the Covington Street Railway's, lines. This company, under the ordinance of 1864 that we have mentioned got a franchise limited to twenty-five years, but with provisions that there should be a new bid after that time and that the successful bidder, if other than the Covington Street Railway Company, should purchase its property upon a valuation. It did not lose the value of that property by the ending of its right of use. On June 8, 1882, the plaintiff, already having a general authority by its charter, was authorized by 'an ordinance granting the right of way over certain streets * *  * to' the plaintiff, to contract with the Covington Street Railway Company for the right of way held by the latter and to occupy and use the streets specified in the contract of that road with the city 'subject to the conditions, limitations and restrictions contained in the ordinances regulating its (the plaintiff's) right to the streets now occupied by said South Covington and Cincinnati Street Railway Company.' This grant was on condition that the plaintiff should remove the tracks by which it connected with the suspension bridge under the ordinance of January 28, 1875, and give up its rights to the same, which as we have said were r ghts in fee. It got other access to the bridge over the Covington Street Railway line, but we agree with the district judge that it is not to be supposed that it would give up its perpetual right for a franchise having eight years to run over a less convenient route, so far as this part of its purchase was concerned. We agree also that the language of the ordinance conveys more than a license to purchase what the vendor had. The title and the operative words import a grant and the reference to the ordinances regulating the plaintiff's right in the streets adopts as the measure these, not the contract with the selling road. The ordinance was followed by the contemplated contract in July, 1882. Some further grants need no special mention. We are of opinion that the plaintiff's right in this part of its system also is a right in fee.

The question of the power of the city to grant a perpetual franchise needs but few words. By statute the streets were 'vested in the city' and the authorities of the city were given 'exclusive control over the same' and in another section the council was given 'exclusive power to establish and regulate * *  * all sidewalks, streets, alleys, lanes, spaces and commons of the city.' Acts 1849-50, c. 237, art. 1, § 2, p. 239, and article 2, § 19, p. 247. No decision of the State Court is brought to our attention that calls for any hesitation in following the authority of Owensboro v. Cumberland Telephone & Telegraph Co., 230 U.S. 58, 33 Sup. Ct. 988, 57 L. Ed. 1389, and pronouncing the authority complete. Wolfe v. Covington & Lexington R. R., 15 B. Mon. (Ky.) 404. A street railroad is one of the ordinary incidents of a city street and stands on a different footing from the steam roads habitually run over separate rights of way. See, also, Act of March 13, 1878, c. 423, and Act of April 5, 1878, c. 813, §§ 1, 3.

Decree affirmed.

Mr. Justice CLARKE dissenting.