[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 88 The determination of the public service commission, which the certiorari brought under review, was *Page 90 made in the proceeding instituted by the respondent, the Long Acre Electric Light and Power Company, to obtain authority to issue stock and bonds under section 69 of the Public Service Commissions Law. The first question to be considered is whether or not we should dismiss the appeal of the relator, the New York Edison Company, and the answer to that depends, in turn, upon the question whether the relator was, within the meaning of section 2127 of the Code of Civil Procedure, aggrieved by the determination. Section 69 of the Public Service Commissions Law (L. 1907, ch. 429), provides: "A gas corporation or electrical corporation organized or existing, or hereafter incorporated, under or by virtue of the laws of the state of New York, may issue stocks, bonds, notes or other evidence of indebtedness payable at periods of more than twelve months after the date thereof, when necessary for the acquisition of property, the construction, completion, extension or improvement of its plant or distributing system, or for the improvement or maintenance of it service or for the discharge or lawful refunding of its obligations, provided and not otherwise that there shall have been secured from the proper commission an order authorizing such issue, and the amount thereof, and stating that, in the opinion of the commission, the use of the capital to be secured by the issue of such stock, bonds, notes or other evidence of indebtedness is reasonably required for the said purposes of the corporation. For the purpose of enabling it to determine whether or not it should issue such an order, the commission shall make such inquiry or investigation, hold such hearings and examine such witnesses, books, papers, documents or contracts as it may deem of importance in enabling it to reach a determination. Such gas corporation or electrical corporation may issue notes, for proper corporate purposes and not in violation of any provision of this or of any other act, payable at periods of not more than twelve months without such consent; but no such notes shall, *Page 91 in whole or in part, directly or indirectly be refunded by any issue of stock or bonds or by any evidence of indebtedness running for more than twelve months without the consent of the proper commission. * * *"
When the present proceeding was commenced, section 68 of the Public Service Commissions Law contained this provision: "No gas corporation or electrical corporation incorporated under the laws of this or any other state shall begin construction, or exercise any right or privilege under any franchise hereafter granted, or under any franchise heretofore granted but not heretofore actually exercised without first having obtained the permission and approval of the proper commission."
The Public Service Commissions Law took effect July 1, 1907.
The Long Acre Company was incorporated April 23, 1903, pursuant to the provisions of article VI of the Transportation Corporations Law. Its objects were to manufacture and distribute electricity for light, heat, power or other purposes throughout the boroughs of Manhattan and The Bronx of the city of New York. By the statute and incorporating certificate it became empowered to lay, erect and construct suitable wires, poles and conduits on and under the streets and public places, with the consent of the municipal authorities and in such manner and under such reasonable regulations as they might prescribe.
In February, 1908, the respondent commenced this proceeding. The public service commission, by its order of June 26, 1908, refused to authorize the issuance of the securities upon a ground, among others, that no authority to begin construction had been obtained from the commission or its predecessor, the commission of gas and electricity. The Appellate Division, upon a review under a writ of certiorari, reversed the order and ordered that the application be referred back to the commission for consideration and action within the limits of its authority. *Page 92 (People ex rel. Long Acre Electric L. P. Co. v. PublicService Commission, 137 App. Div. 810.)
In December, 1910, the commission, by its order, fixed the time and place for proceeding under the order of the Appellate Division and caused the order to be served upon the appellant. The respondent at the outset urged upon the commissioner, who was hearing the application under section 11 of the Public Service Commissions Law, its assertion that the appellant had not the right to intervene in or be a party to and had no standing in the proceeding; that the only question remaining for the commission to decide was the amount of stock and bonds to be authorized and the purposes to which their proceeds should be applied. The appellant, in opposition, asserted that the hearing and the determination involved the right of the respondent to construct a plant and operate, and the questions: whether the franchise under which the respondent claimed the right to operate had been actually exercised prior to July 1, 1907; whether the respondent had the right to begin construction without first having obtained the permission and approval of the commission, and asserted that it as the operating company had the right to intervene and appear as a party to the proceeding and produce evidence in its behalf. The commissioner, without making a ruling, permitted the appellant to introduce the evidence received upon the prior hearing and to call "on behalf of the New York Edison Company" two witnesses. At the close of their examinations the counsel for respondent formulated their position in the motions "that the Edison Company be not allowed to appear or give evidence in this proceeding except as to the securities to be allowed and the application of the proceeds," and that the testimony of the two witnesses be stricken from the record as improper and as relating to irrelevant matters. The motions were denied, with exceptions to the respondent, and the ruling made that the commission "will hear such testimony as *Page 93 may be presented, that is germane upon the question whether the franchise has been or has not been exercised." Testimony in behalf of the appellant was then given by a score of witnesses. The respondent called witnesses in rebuttal and the issues and proof were submitted to the commission as a body upon oral and written arguments. Their order authorized the issuance of stock and bonds. Under a writ of certiorari granted the appellant the order was affirmed by the Appellate Division and the writ dismissed (People ex rel. New York Edison Co. v. PublicService Commission, 151 App. Div. 832) and this appeal is from the order of affirmance and dismissal.
The petition by which the respondent instituted the proceeding alleged as uses to which the securities to be issued were to be put, the acquisition of property upon which to construct power houses and substations, their construction and the purchasing and laying of underground cables and ducts.
The legislature did not intend or enact that a corporation subject to the provisions of section 69 or section 55 (of identical effect in relation to railroads, street railroads and common carriers) of the Public Service Commissions Law should be given authority by the commissions to issue stock and bonds for the purposes prescribed in those sections until its right to effect those purposes was certain and complete. That law was enacted in response to a pronounced and insistent public opinion and was a radical and important modification of the relations and policy of the people toward the corporations which are its subjects. Its paramount purpose was to protect and enforce the rights of the public. It made the commissions the guardians of the public by enabling them to prevent the issue of stock and bonds for other than statutory purposes or in appreciable and unfair excess of the value of the assets securing them, and to prevent also unneeded or extortionate competition, or indifferent and *Page 94 unaccommodating methods of operation or oppressive or discriminating charges or rates. It provided for a regulation and control which were intended to prevent, on the one hand, the evils of an unrestricted right of competition and, on the other hand, the abuses of monoply. (People ex rel. D. H. Co. v.Stevens, 197 N.Y. 1.) The purpose and intent of the law forbids the commissions to authorize the issue of stock and bonds under sections 69 or 55 when prescribed requirements and conditions precedent to the right of the applicant to construct and operate a plant and system or a railroad have not been fulfilled or complied with and when, perhaps, the property to be acquired or constructed may never be acquired or constructed and the bonds or stock, the issue of which is applied for, have no substantial security to rest upon. A contrary conclusion would make the authorization and avouchment of the commissions a bait and a trap for ensnaring the investing public.
The language of the sections 69 and 55 establishes the conclusion that the commissions are not empowered to authorize the issue of securities upon the application of a corporation which has not received the permission and approval provided in sections 68 or 53 or is not validly superior to the provisions of those sections. Those sections cannot be evaded by obtaining an order under sections 69 or 55 and the permission to construct implied through it. The issue of the stock and bonds is to be authorized "when necessary for the acquisition of property, the construction, completion, extension or improvement of its plant or distributing system, or for the improvement or maintenance of its service * * * provided and not otherwise that there shall have been secured from the proper commission an order authorizing such issue, and the amount thereof, and stating that, in the opinion of the commission, the use of the capital to be secured by the issue of such stock, bonds, notes or other evidence of indebtedness is reasonably required for the said *Page 95 purposes of the corporation." The commission cannot, under this language, order the issue of the securities for the purposes mentioned, unless it is satisfied that the applicant has the present and absolute right to accomplish the uses for which the securities are authorized. Problematical uses or purposes do not necessitate or require funds or capital for their execution. The commission may, perhaps, be thus satisfied from its own records, of which, of course, it may take judicial notice. Otherwise it must require allegation and proof. For the purpose of enabling it to determine whether or not it shall issue an authorizing order, it is empowered to hold hearings and examine witnesses. In the present case the petition alleged that the respondent "has the right to place wires for electric light, heat and power in the boroughs of Manhattan and The Bronx as appears by the franchise, a copy of which accompanies this petition." Inasmuch as it had not made an application under section 68 and the records of the commission did not evidence the existence of the alleged right, it was bound to establish it by proof.
The appellant was and for many years had been furnishing electricity for light, heat and power in the boroughs of Manhattan and The Bronx. It was directly and seriously interested in this proceeding which thus involved the consideration and determination of the present right of the respondent to place wires for those uses in those boroughs or acquire property or construct a plant to be used in competition with it. The commission might legally and justly permit it to become a party to the proceeding and the determination adverse to it after its intervention was reviewable, under certiorari, upon its application as the party aggrieved thereby. (People ex rel.N YC. H.R.R.R. Co. v. Public Service Commission, 195 N.Y. 157;People ex rel. Steward v. Board of RailroadCommissioners, 160 N.Y. 202.) The conditions justified the ruling that the appellant should *Page 96 intervene in and become a party to the proceeding. A contrary ruling would have been erroneous. The relation of the appellant to the subject matter and the object of the proceeding and the situation between the parties, as presented to us, is the same as when the appellant was allowed to intervene. In respect of any matter within the scope of the intervention, it became an actor, with liberty to present its contention and obtain an adjudication, and a consequent right to have whatever was done reviewed by the appellate courts. (Matter of Attorney-General v. The No. Am. Life Ins. Co., Pierson, Receiver, etc., 77 N.Y. 297;Ex parte Jordan, 94 U.S. 248; In re Michigan Cent. R.Co., 124 Fed. Rep. 727.) The following language of Judge GRAY inPeople ex rel. N.Y.C. H.R.R.R. Co. v. Public ServiceCommission (195 N.Y. 157, 166) is pertinent to the present question: "It is also insisted by the appellant that the relator was not a party aggrieved by the action of the board of railroad commissioners. That was a question for the board and the Appellate Division to consider. It turned upon the facts relating to the relator's situation, as affected by the proposed railroad construction. The relator showed that it would be affected, inasmuch as it owned other roads more or less paralleling the proposed road and serving the same territory. It appeared at the hearings and was allowed to take part in the proceedings by the tribunal, as having an interest in the controversy. The certificate of public convenience and necessity is to be granted upon considerations, not alone, bearing upon the convenience of the public, but affecting the other transportation companies, which are already serving the territory. They have the right to be considered and to be protected, where there is no necessity for a wider public service, against the designs of persons more interested in forcing terms from them, than in subserving the public convenience. Certainly the rights of shareholders in the existing roads demand fair consideration." The *Page 97 respondent does not claim that the appellant may in another tribunal or in another action or proceeding attempt to establish its position that the respondent is not authorized to construct a plant or exercise the franchise. The appeal should not be dismissed.
The respondent has not applied under section 68 for the permission and approval of the commission, that it begin the construction of its electrical plant and system. It asserts that its right to construct is superior to and independent of the restrictions imposed by the section. It is manifest and admitted that the language of the section as hereinbefore quoted is equivocal and may be given either of two interpretations. The one would be fully expressed as follows: "No gas corporation or electrical corporation * * * shall begin construction without first having obtained the permission and approval of the proper commission. No such corporation shall exercise any right or privilege under any franchise hereafter granted, or under any franchise heretofore granted, but not heretofore actually exercised, without first having obtained the permission and approval of the proper commission." The other would be fully expressed as follows: "No gas corporation or electrical corporation * * * shall begin construction under any franchise hereafter granted, or under any franchise heretofore granted, but not heretofore actually exercised, without first having obtained the permission and approval of the proper commission. No such corporation shall exercise any right or privilege under any franchise hereafter granted, or under any franchise heretofore granted, but not heretofore actually exercised, without first having obtained the permission and approval of the proper commission." The commission in the first decision adopted the construction that the respondent could not begin the construction of its plant without first having obtained its permission and approval. The Appellate Division in reversal held that it could begin the construction because the franchise did *Page 98 not fall within the class of franchises "not heretofore actually exercised," thus holding in effect that any gas or electrical corporation might, under section 68 as it was at the commencement of this proceeding, begin any and all construction of its plant or system, which did not come within the franchise, without applying for and receiving the permission and approval of a commission.
The consent or franchise through which the respondent asserts its right to construct is evidenced by a resolution of the board of aldermen of the city of New York of May 31, 1887, as follows: "Resolved, that permission and authority are hereby given and granted unto * * * the American Electric Manufacturing Company * * * to locate and erect poles and hang wires and fixtures thereon, and to place, construct and use wires, conduits and conductors for electrical purposes, in the City of New York, in, over and under the streets, avenues, wharves, piers and parks therein, or adjacent thereto; according to such plans as may be directed, approved or allowed by and subject to the powers of the Electrical Subway Commissioners, and to the provisions of chapter 499 of the Laws of 1885, and under the supervision of the Commissioner of Public Works and of the Department of Public Parks, within their respective territorial jurisdiction, and subject also to all existing ordinances applicable thereto, and to all reasonable regulations of the privilege hereby conferred, which the Common Council may hereafter impose by ordinance or otherwise."
In March, 1906, the respondent became, through mesne assignments, the assignee of such permission and authority. (Matter of Long Acre Electric L. P. Co., 188 N.Y. 361.)
Certain facts and established principles guide irresistibly to the conclusion that the respondent shall not begin the construction of an electric plant without first having obtained the permission and approval of the commission. It is the settled policy of the state arising through an *Page 99 extended and instructive experience to withdraw the unrestricted right of competition between corporations occupying through special consents or franchises the public streets and places and supplying the public with their products or utilities which are well nigh necessities. (People ex rel. New York Electric LinesCo. v. Ellison, 188 N.Y. 523; Matter of New York ElectricLines Co., 201 N.Y. 321; Willcox v. Consolidated Gas Co.,212 U.S. 19.) This policy instigated and is embodied in the Public Service Commissions Law, which was adopted in the interests and for the good of the people and should receive from the courts an activity and effect in aid of that policy within the fair and reasonable meaning of its provisions. The legislature will not be deemed to have departed in that law from that policy unless there is clear and certain language to that effect. (Matter of New York, W. B.R. Co., 193 N.Y. 72.)
The construction given section 68 by the Appellate Division, as contrasted with that adopted by the commission in its first order, thwarts the policy in two respects: thereunder any gas or electrical corporation might begin the construction of that part of its plant which did not come under the consent without applying to the commission for its permission; and might begin, without such permission, the construction of its entire plant and system, provided it held a franchise granted and actually exercised prior to July 1, 1907. The respondent has stated, and we perceive, no ground for a legislative partiality towards the corporations holding consents existing at the adoption of the Public Service Commissions Law, or for the requirement that the permission and approval of the commission must be had for the construction under the franchise only. A scrutiny of other sections of the law creates the conviction that it intends to bring under its restrictions and regulation, in so far as is lawful, the franchises, powers and rights of the corporations existing at its enactment and to which it relates, and under the *Page 100 control of the commissions all construction of their plants. Section 53 in article III of the law relating to common carriers, railroads and street railroads provides: "Without first having obtained the permission and approval of the proper commission no railroad corporation, street railroad corporation or common carrier shall begin the construction of a railroad or street railroad, or any extension thereof, for which prior to the time when this act becomes a law a certificate of public convenience and necessity shall not have been granted by the board of railroad commissioners or where prior to said time said corporation or common carrier shall not have become entitled by virtue of its compliance with the provisions of the railroad law to begin such construction; nor, except as above provided in this section, shall any such corporation or common carrier exercise any franchise or right under any provision of the railroad law, or of any other law, not heretofore lawfully exercised, without first having obtained the permission and approval of the proper commission. * * *," upon proof of public convenience or necessity. The policy which inspired the effects of this section was as applicable to gas and electrical corporations as to the corporations it affects. The law places the former under the supervision and regulation of the commission quite as broadly as the latter. Whatever inference may be drawn from the differing phraseology of the sections 53 and 68 is overborne by the purpose of the law; moreover, it may well be that the conditions which were created between the corporations to which article III relates and the board of railroad commissioners, and by the many statutory provisions relating to those corporations may have made inexpedient in section 53 the conciseness of the language of section 68. Our view is further strengthened by the fact that the amendment of section 68 taking effect June 14, 1910, provided: "No gas corporation or electrical corporation shall begin construction of a gas plant or electric plant without first having obtained the *Page 101 permission and approval of the commission of each district within which any part of the work or construction is to be performed. No such corporation shall exercise any right or privilege under any franchise hereafter granted, or under any franchise heretofore granted but not heretofore actually exercised, or the exercise of which shall have been suspended for more than one year, without first having obtained the permission and approval of the proper commission, * * *" (Cons. Laws, ch. 48, section 68), upon proof of public convenience or necessity. The amended section may correctly be deemed, through the nature of the Public Service Commissions Law, a statement in clearer terms of the intention of the original section. (People ex rel. Binghamton L., H. P.Co. v. Stevens, 203 N.Y. 7.) A further indication of the legislative intention is in section 99 of article V relating to telegraph and telephone lines and companies: "No telegraph corporation or telephone corporation hereafter formed shall begin construction of its telegraph line or telephone line without first having obtained the permission and approval of the commission and its certificate of public convenience and necessity, after a hearing had upon such notice as the commission may prescribe." (Cons. Laws, ch. 48, section 99.)
The consent of the municipal authorities, given under the provisions of the statute, was for the construction of the part of the plant on or under the streets of the two boroughs to be used in conducting and distributing electricity. (Transportation Corporations Law, § 61.) The actual exercise of the consent or franchise necessarily involved the beginning of the construction of that part of the plant. The effect of the decision of the Appellate Division, therefore, is that the corporation shall not begin construction under the consent without the permission and approval of the commission, unless it has through an actual exercise of the consent begun construction under the consent. This inharmonious conclusion does not arise *Page 102 if it is held that the words "under any franchise hereafter granted, or under any franchise heretofore granted but not heretofore actually exercised" apply only to the words "or exercise any right or privilege." Another result of the Appellate Division decision is that the construction of the part of the plant not within the franchise, including the power houses, sub-stations, machinery and appliances could be had with any application to the commission, and as a consequence the corporation could apply for and receive authority to issue stock and bonds under section 69 although it might not have or thereafter obtain the right to construct the part of its plant essential for conducting and distributing the electricity. This is contrary to the intention of the law, as we have stated in this opinion. The commission had not the power to authorize the issue of the stock and bonds for the reason that the respondent had not its permission and approval to begin the construction of its plant.
We do not consider the question as to whether or not the franchise held by the respondent was actually exercised prior to the taking effect of the Public Service Commissions Law, for the reason that the commission did not make or base the final order upon a finding of fact in regard to it.
The orders of the Appellate Division and the order of the commission of July 28, 1911, should be reversed, with costs in the Appellate Division and in this court.