Attorney-General v. Interborough-Metropolitan Co.

Clarke, J.:

The questions arising upon this appeal have been so recently an d bo thoroughly considered in Matter of Attorney-General (124 App. Div. 401) that further consideration by this court seems unnecessary except to point out that the grounds for the present application seem more unsubstantial than in the gas company case, for in the gas case a commodity was manufactured and sold, while in the present case transportation only is furnished. Railroads, because they were common carriers and because ex necessitate rei they had conferred upon them the power to condemn property under the doctrine of eminent domain, have been peculiarly the subject of legislation. The policy of the State towards such corporations has been illustrated by a continued series of enactments regulating and controlling them to a minute degree. In the face of those enactments and that control, it seems to us a violent warping of the intention of the .Legislature to attempt to apply the provisions of section 7 of the Stock Corporation Law* that “ Ho domestic stock corporation and no foreign corporation doing business in this State shall combine with any other corporation or person for the creation of a monopoly or the unlawful restraint of trade or for the prevention of competition in any necessary of life; ” and chapter 690 of the Laws of 1899,† which provides that “ Every contract, agreement, arrangement or combination whereby a monopoly in the manufacture, production or sale in this State of any article or commodity of common use is or may be created, established or maintained, or whereby competition in this State in the supply or price of any such article or commodity is or may be restrained or prevented, or whereby for the purpose of creating, establishing or maintaining a monopoly within this State of the manufacture, production or sale of any such article or commodity, the free pursuit in this State of any lawful business, trade or occupation is or may be restricted or prevented, is hereby declared to be against public policy, illegal and void ” to the railroads of the State.

Chapter 218 of the Laws of 1839 authorized one railroad corporation to lease the lines of another or to enter into traffic contracts. It applied to hoth street and steam roads. (Ingersoll v. Nassau Electric R. R. Co., 157 N. Y. 453 ; Griffin v. Interurban Street R. Co., 179 id. 438.) It permitted the leasing of parallel and competing railroads. (Beveridge v. New York Elevated R. R. Co., 112 N. Y. 1.)

Chapter 305 of the Laws of 18S5‡ granted the right to street railroads to lease or make traffic contracts subject to the burden of exchange of transfer facilities between the connecting lines. (Griffin v. Interurban Street R. Co., supra.) In 1890* the Legislature passed the Railroad Law applicable to both steam and surface railroads. Sections 78,79 and 80 related to steam lines, and section 80 contained a prohibition against the leasing of parallel and competing roads, but that section did not apply to street railroads. This was amended by chapter 676 of the Laws of 1892by providing-that “No railroad corporation or corporations owning or operating railroads whose roads run on parallel or competing lines, except street surface railroad corporations, shall merge or consolidate or enter into any contract for the use of their respective roads or lease the same the one to the other unless the Board of Railroad Commissioners of the State or a majority of such board shall consent thereto.”

Under section 78 of chapter 565 of the Laws of 1890† and section 80 as amended supra, there was an absolute grant-of power for the lease or merger or contract for the use of parallel or competing street railways, and a similar grant for all other railroads conditioned only on the consent of the Railroad Commission. That was the law at the time of the formation of the Interborough-Metropolitan Company. Under these provisions this court held valid a lease of the property and franchises of the Metropolitan Street Railway Company to the Interurban Street Railway Company for a period of 999 years, which lease contemplated a virtual abandonment of everything connected with the lessor road and the vesting of it in the lessee, and brought under one control practically all the street surface lines of Manhattan. (Wormser v. Metropolitan Street R. Co., 98 App. Div. 29 ; affd., 184 N. Y. 83.)

At the time the respondent company was formed the Legislature had passed laws governing the rate of fare and providing for transfers. By section 79 of the Railroad Law, in force at the time of the incorporation of the respondent company, it was provided that a railroad corporation which was the lessee of another railroad corporation might take a surrender or transfer of all the capital stock of the lessor road upon agreed terms and issue its stock therefor, which section must be read in conjunction with section 80 quoted supra and section 58 of the Stock Corporation Law,* a general statute allowing merger of any stock corporation with another stock corporation engaged in similar business.

Section 40 of the Stock Corporation Law of 1890,† amended by chapter 601 of the Laws of 1902, provides. that “ Any stock corporation * * * may purchase, acquire, hold and dispose of the stocks, bonds * * *. of any corporation, * * * if authorized so to do by a provision in the certificate of incorooration, * * * or if the corporation whose stock is so purchased * * * is engaged in a business similar to that of such stock corporation.”

It would seem from the foregoing citations of the laws and the cases that the precise thing of which the Attorney-General complains has been expressly authorized by laws which have been interpreted and upheld by the courts of the State. The consideration of this legislation and of these cases, in addition to the views expressed by us in the gas company case, leads to the conclusion that there is no warrant upon the facts set forth and under the law for the proposed action by the Attorney-General, and that, therefore, in the exercise of that discretion which the law has imposed upon the Supreme Court, it is our duty to affirm the order of the Special Term refusing the application for leave to institute the action, and it is so ordered, with ten dollars costs and disbursements.

Ingraham, McLaughlin, Laughlin and Scott, JJ., concurred.

Order affirmed, with ten dollars costs and disbursements.

* See Laws of 1890, chap. 564, § 7, as amd. by Laws of 1892, chap. 688, and Laws of 1897, chap. 384.— [Rep.

† See § 1.— [Rep. .

‡ Amd. by Laws of 1889, chap. 532.— [Rep.

* Laws of 1890, chap. 565.— [Rep.

† Amd. by Laws of 1892, chap. 676, Laws of 1893, chap. 433, and Laws of 1905, chap. 695.— [Rep.

* Added by Laws of 1896, chap. 932, and amd. by Laws of 1900, chap. 476, and Laws of 1902, chap. 98.— [Rep.

† See Laws of 1892, chap. 688, § 40.— [Rep.