City of New York v. Interborough Rapid Transit Co.

McLaughlin, J.:

This action was brought for the purpose of procuring a judgment enjoining the defendant, the Interborough Eapid Transit Company, from furnishing, and the defendant, the New York City Interborough Eailway Company, from receiving, electric currents through certain ducts built in the walls of the subway and for an accounting of currents theretofore furnished and received. The trial court rendered .a decision in favor of, the plaintiff, upon which an interlocutory judgment was entered restraining the defendants and directing an accounting as prayed for in the complaint, from which this appeal is taken.

There is substantially no dispute between the parties as to the facts. The Interborough Eapid Transit Company is the lesse.e of the rapid transit railroad in the city of New York, constructed pursuant to a contract dated February 21, 1900, between the city and John B. McDonald, and agreements amendatory thereof and supplemental thereto, and is now engaged in operating such railroad under the terms of its lease. The New York City Interborough Eailway Company operates a street surface railroad in the city of New York, running from the intersection of One Hundred and Eighty-first street and Broadway in the borough of Manhattan to points within the borough of The Bronx. The Interborough Eapid Transit Company has constructed and owns a central power house at or near the corner of Fifty-eighth street and Twelfth avenue in the borough of Manhattan, in which electricity in large quantities is produced at its own expense. The currents of electricity from this power house are conducted by means of ducts laid through the streets of the city to the subway and then conducted through ducts laid partly within the walls of the subway and partly under the surface of the streets to sub-stations. There the tension of the electric currents is reduced and, as reduced, fed to various parts of the rapid transit railway for the operation of trains and other purposes. The power plant has the capacity of producing electric currents largely in excess of what is now used in the operation of the rapid transit railroad, and the power required for the operation of the Xnterborongh Railway Company can be supplied without in any way affecting the quantity required in the operation of the former company. The rapid transit company, by means of cables laid in ducts in the walls of the subway, is engaged in transmitting electric currents from its power house to the Interborough Railway Company for motive power in the operation of its cars under an agreement between the two companies providing for an exchange of traffic. The delivery of such currents to the Interborough Railway Company has not necessitated the use of any ducts in the subway which are now required in the operation of the rapid transit railway, and the furnishing of such currents does not now, nor will the furnishing of the maximum amount to be furnished under the agreement require the rapid transit company “ to generate any more electricity than prudent management requires it to have on hand at all times as a reserve for its own purposes in case of emergency.”

The sole question presented by the appeal is whether the rapid transit company can use the ducts in the subway for the purpose stated, and its answer necessarily depends upon the construction to be put upon that company’s lease which was made in pursuance of what is known as the Rapid Transit Act (Laws of 1891, chap. 4, as amd. by Laws of 1892, chaps. 102, 556; Laws of 1894, chaps. 528, 752 ; Laws of 1895, chap. 519 ; Laws of 1896, chap. 729).* Under this act there was created the board of rapid transit commissioners and a method was provided by which to it, acting for and in behalf of the city of New York, was committed the construction — with money furnished by the municipality — of an underground railroad. The city had nothing to do with the construction except to furnish the money required therefor, and through its corporation counsel to approve of the contract for construction and subsequent operation. The board was required, at the expense of the city, to • make plans for the building of a road, which were to include all devices and appurtenances deemed by the board necessary to secure the greatest efficiency, public convenience and safety. It was also authorized, in its discretion, to include in said plans provisions for subways or tunnels for sewers, gas or water pipes, electric wires and other conductors proper to be placed under ground, whenever it became necessary or advisable to do so, and it was specifically directed as soon as the necessary consents liad been obtained for a rapid transit railroad and the detailed plans and specifications had been prepared to “ enter into a contract with any person, firm or corporation, which in the opinion of said board shall be best qualified to fulfill and carry out said contract, for the construction of such road or roads upon the routes and in accordance with the plans and specifications so adopted, for such sum or sums of money, to be raised and paid out of the treasury of said city, * * * and on such terms and conditions, not inconsistent with the aforesaid plans and specifications, as said board shall determine to be best for the public interests. * * * Such contract shall also provide that the person, firm or corporation so contracting to construct said road or roads shall at his or its own cost and expense equip, maintain and operate said road or roads for a terul of years to be specified in said contract, not less than thirty-five, nor more than fifty years, and upon such terms and conditions as to the rates or fare to be charged and the character of service to be furnished and otherwise as said board shall deem to be best suited to the public interests and subject to such public supervision and to such conditions, regulations and requirements as may be determined upon by said board. * * * Such contract shall further provide by proper stipulations and covenants on the part of the said city that the said city shall secure and assure to the contractor, so long as the contractor shall perform the stipulations of the contract, the right to construct and to operate the road as prescribed in the contract, free of all right, claim or other interference. * * * Such contract shall further provide that the person, firm or corporation so contracting to construct, maintain and operate said road shall annually pay into the treasury of said city as rental for the use of said road a sum which shall not, except as hereinafter provided, be less than the annual interest upon the bonds to be issued by said city for the construction of said road as hereinafter provided for, and in addition to said interest a further sum which shall be equal to a percentage of not less' than one per centum upon the whole amount of said bonds. * * *” (lb. § 34, added by Laws of 1894, chap. 762, and amd. by Laws of 1896, chap. 729.)

In pursuance of this provision of the Eapid Transit Act the city entered into the contract by which the contractor agreed to construct and equip the rapid transit railroad upon the route and according to specified plans “ and to put the same in operation and thereafter to use, maintain and operate the same under a lease thereof from the City for the term of fifty years.” The contract is divided into three chapters; the first is designated “ General; ” the second ‘r Agreement for Construction,” and the third “ The Lease.” The opening sentence of the chapter designated “ The Lease ” is : “ The City hereby lets the railroad to the contractor for the term hereinafter mentioned.” Then follows a description of the railroad, together with a provision that the contractor is to equip, maintain and operate the road for fifty years and is to surrender possession of the same at the end of the term, and in the meantime to pay a rental therefor at the minimum rate specified in the Eapid Transit Act. The lease then provides the manner in which the road is to be operated, the kind of trains to be run, the rates of fare to be charged; the lessee is required to keep the railroad and its equipment and each and every part thereof in thorough repair, so that at all times and at the termination of the lease the same shall be in “ thoroughly good and solid condition and fully and perfectly equipped, presently ready for continuous and practical operation for the full limit of its capacity; ” he is also to keep the stations, tunnels and all other parts of the railroad clean and free from unnecessary dampness; to thoroughly light and heat the stations and cars; to keep the waiting rooms in comfortable condition and to provide therein proper seating capacity; to cause the tunnels, stations and cars to be thoroughly ventilated with pure air ; to keep the tunnels sufficiently lighted at all times to permit the tracks, walls and roofs to be clearly visible for inspection ; to provide, equip and maintain a plant for the generation and transmission of the necessary power, which may be either electricity or compressed air; he is not to permit advertisements in the stations or cars which shall “ interfere with easy identification of stations or otherwise with the efficient operation ; ” he can use the railroad for the carriage of freight or express matter, provided, however, that such* use shall not in any event or in any way interfere with the use of the railroad to its fullest capacity for all passengers. “ Nor shall the contractor make any use of the railroad or any part of it, or of its equipment, which shall to any extent or in any way interfere with such use to its fullest capacity for passengers.”

After the commencement of the work of construction provision for the operation of the road by electricity instead of compressed air necessitated certain modifications of the plans, including the building of a number of chambers or ducts in the side walls of the subway for the transmission of electric currents. A question was then raised as to who should bear this expense — that is, whether the construction of such ducts was a part of the construction of the road itself or part of the equipment — and it was finally determined that the same was part of the construction and for that reason the expense was to be borne by the city. (Matter of McDonald, 80 App. Div. 210; affd., 175 N. Y. 470.) In the plans thus changed a larger number of ducts were constructed than have up to the present time been required for the proper operation of the road. The lease to McDonald was assigned to the Interborough Rapid Transit Company, in whose place it now stands. The court found as a fact that the rapid transit company is obliged, for the proper management of the road, to generate more power than it can use — except in a case of emergency — and the question is thus squarely pre. sented whether it can, in the manner proposed, use certain ducts in the subway for the transmission of this surplus power and receive therefor the benefits provided in the traffic agreement between it and the Interborough Railway Company. The arrangement is beneficial to the rapid transit company; does not injure the city in any way, and in some degree, at least, facilitates in furnishing rapid transit.

The road, it is true, was built with money furnished by the city, but it was built under a contract by the terms of which, as soon as completed, it passed into the possession and control of the contractor for the purpose of operation. The right thus given to the contractor was a part of the consideration of the contract. The city owns the road, subject to the rights which were given to the lessee to use and operate it during the term of the lease, and at the termination of which it must be delivered to the city in good condition. The primary object for which the road was built must not be lost sight of. It was for the rapid transportation of passengers from one end of Manhattan island to the other, or along the route of such road. The statute under which it was built declares the object, and this is made prominent in the contract, as well as that part of it which is termed “ The Lease.” To fully accomplish this object, certain restrictions are placed upon the lessee as to the use which shall be made of the road during the term of the lease. The lessee cannot permit advertisements in the stations or cars which will interfere with efficient operation; cannot make any use of the road which will to any extent interfere with such operation. But that the lessee was intended to be given rights to use the road for-purposes other than the transportation of passengers cannot, as it seems to me, be seriously questioned. He is expressly authorized, if such use does not interfere with the transportation of passengers, to use it for the carriage of freight or express matter, and I think, under a fair construction of the lease, he is given the right to use it for any purpose, provided that the use to which he puts it does not interfere with the primary object. Otherwise, there is no meaning to the clause, “Nor shall the contractor make any use of the railroad or any part of it, or of its equipment, which shall to any extent or in any way interfere with such use to its fullest capacity for passengers.” This is a recognition of the right of the lessee to use the demised premises for such collateral purposes as such property might be customarily used. A lessee of real property is entitled to the exclusive use of demised premises for any purpose not prohibited by the lease, not amounting to waste or destruction of the subject-matter. This is the general rule. (Baldwm v. Morgan, 43 Hun, 355; Riddle v. Littlefield, 53 N. H. 503; Lowell v. Strahan, 145 Mass. 1.) The lessee of this road, as it seems to me — subject to the duty to operate the road to its “ fullest capacity ” for the transportation of passengers, including their comfort and convenience — has under its lease all the "other rights usually conferred upon a lessee of real property.

A somewhat similar use of public property was recognized and approved in New York Mail & Newspaper Transportation Co. v. Shea (30 App. Div. 266).

There is nothing in the lease which prevents the lessee from using the ducts for the transmission of the electric currents to the Inter-borough Bail way Company. Such use does z not interfere with the operation of the rapid transit railroad, nor does it interfere with the comfort or convenience of passengers; on the contrary, it must add to the convenience of some by furnishing an easy access to and from the subway. The right to make this use of the ducts, so long as it does not interfere with the operation of the rapid transit railroad, I am of the opinion passed to the lessee as one of the things granted.. It is an incident to the full enjoyment of the demised property.

I am of the opinion that the judgment appealed from should be reversed and a new trial ordered, with costs to appellants to abide event.

Ingraham and Houghton, JJ., concurred; Scott and Clarke, JJ., dissented.

* The statute has been since amended.—[Rep.