Michigan Telephone Co. v. City of St. Joseph

Grant, C. J.

(after stating the facts). 1. It is conceded by the learned counsel for both parties that that part of the decree by which the court assumed the right to establish reasonable rules and regulations is void. This is a legislative or administrative function, and not a judicial one. The court has power to put the proper authorities in the defendant city in motion to adopt reasonable rules and regulations, and to pass upon the validity of such action when taken. This is the extent of its authority. Houseman v. Kent Circuit Judge, 58 Mich. 364 ; City of Manistee v. Harley, 79 Mich. 238 . Other courts recognize the same rule. Beagan v. Trust Co., 154: U. S. 362; Appeal of Norwalk St. Ry. Co., 69 Conn. 576 (39 L. R. A. 794); Nebraska Tel. Co. v. State, 55 Neb. 627 .

2. It is urged that the permission granted to the Telephone & Telegraph Construction Company was personal to that company, and could not be alienated without the consent of the city. That company was organized under a general law of the State, and derived its powers and obligations from that law. The only power which a city *507 could have exercised over it was that of regulation. This is also true of the complainant. The transfer was made August 31, 1895, was recognized as valid by the city, and has been acted upon by both the city and the complainant since that time; the latter having expended large sums of money upon its business and improvements. Whether the city is now in position to question the validity of this transfer is at least debatable, but, as it is not argued by counsel, we refrain from discussing it. Counsel for the defendant cite, in support of their contention, 25 Am. & Eng. Enc. Law, 751, where it is stated:

“The grant of a franchise public in nature, like that of a telegraph company, is personal to the grantee, and cannot be alienated except by consent of the granting power. Therefore a telegraph company has no power, in the absence of special authority, to alienate the privileges granted to it by the Federal or State government, and an agreement to transfer such privileges is ultra vires and void.”

*508 We are also cited to Crosw. Electricity, § 158, which reads as follows:

“A grant to a telephone, telegraph, electric light or railway company of the power to use the streets, highways, and post-roads for the stringing of its wires and the setting of its poles contains so much of an element of personal obligation that such a grant is not assignable unless such a power of assignment is expressed in the language of the grant, or in some general legislation affecting the subject.”

The same authorities are there cited to sustain the proposition as are cited in the encyclopedia, and, in addition, Atlantic, etc., Tel. Co. v. Railway Co., 1 Fed. 745 . That case involved the same act as the others.

The last clause of the above section reads, “If the grant is in terms to X., his successors and assigns, or similar language, it is assignable;” and cites Atkinson v. Railway Co., 113 N. C. 581 ; Toledo Consol. St. Ry. Co. v. Toledo Elec. St. Ry. Co., 6 Ohio Cir. Ct. R. 362; California State Tel. Co. v. Alta Tel. Co., 22 Cal. 398 ; Newman v. Village of Avondale, 31 Wkly. Law Bui. 123. In Atkinson v. Railway Co. the question is not raised or discussed. The case was disposed of upon a demurrer to the bill of complaint, which set up that complainant had obtained a license from the city to build a street railway; that he had assigned it in escrow to one M., who, in breach of the trust reposed in him, assigned it to the defendant corporation.- The right of sale and transfer of all the property of the corporation is not alluded to in the decision. In the Ohio case the contest was between two street railways, the question being as to the right of one company to use the tracks of the other. I do not find that the power to sell and transfer is even referred to in the case. In the California case the question is neither raised nor discussed. The sale there made was , opposed upon other grounds. The case of Newman v. Village of Avondale I have been unable to find.

If defendant’s contention be true, a mortgage of the *509 property and franchise of these corporations would be void. The mortgage and bonds would be valueless unless there was a right to foreclose, sell, and convey to another party a valid title to the property. In City of Detroit v. Gas-Light Co., 43 Mich. 594 , the grant was to the corporation, or rather to the corporators or their assigns, who were to organize a corporation. The ordinance was silent upon the right of alienation, yet the sale of its entire property was held valid. It is immaterial that the construction company was not organized under the same act as was the complainant. It was organized under another act, empowering such companies to carry on the like business; and one of its objects declared in its articles of association was the purpose of erecting and operating telegraph lines, etc., in the cities and towns of the State. The public was not concerned in the transfer to another corporation. It suffered no injury. The assignee was subject to the same control and obligated to the same duties as was its assignor. Justice Christiancy, in Joy v. Plank-Road Co., 11 Mich. 165, asserted the right of corporations to dispose of their property by absolute sale or mortgage in payment of their debts, unless such right is limited by some express provision or just implication of a statute, or by the general policy of the State, to be deduced from its legislation. In this opinion Chief Justice Martin concurred. The other justices held the mortgage in that case valid under the statute, but reserved their opinions as to the general power of such corporations to mortgage.

But, whatever may be the common-law rule, the statute puts the question at rest, and expressly authorizes corporations to alienate their property. 3 How. Stat. § 4904e. The sale, therefore, to the complainant, was valid.

3. When the construction company and the complainant accepted the privileges granted to them by the laws of the State, and the municipality had duly given its permission, and the corporations had expended their money in valuable improvements, contracts were entered into which neither the State nor the municipality could impair *510 or destroy, in the absence of power to do so being reserved in the grant itself, or in the Constitution, which becomes a part of all such contracts. The Constitution and the statute clothe municipalities with power to control their streets and alleys, and protect them from things injurious and dangerous to the public; hence they have the power to make all reasonable rules and regulations for the erection and maintenance of poles and wires for telegraph and telephone companies. Here their power in the matter ceases. City of Detroit v. Gas-Light Co., 43 Mich. 594 ; City of Grand Rapids v. Hydraulic Co., 66 Mich. 606 ; City of Saginaw v. Electric Light Co., 113 Mich. 660 ; Baltimore Trust & Guarantee Co. v. Mayor, etc., of City of Baltimore, 64 Fed. 159 ; City of New Orleans v. Telephone & Telegraph Co., 40 La. Ann. 41 ( 8 Am. St. Rep. 502 ); City of Quincy v. Bull, 106 Ill. 337 ; Hudson Tel. Co. v. Mayor, etc., of Jersey City, 49 N. J. Law, 303 ( 60 Am. Rep. 619 ); Town of Areata v. Railroad Co., 92 Cal. 639 .

Since the argument, counsel for defendant have called our attention to the recent case of City of Richmond v. Southern Bell Telephone & Telegraph Co., 174 U. S. 761 . The company in that case was acting under a law of Congress, and claimed the right under the act of Congress to use the streets without interference by the city authorities. The circuit court of appeals held that the rights and privileges granted by the act of Congress were subject to the lawful exercise of the police power belonging to the State or its municipalities. This holding was affirmed by the supreme court. That case is no authority for the action of the common council in the case before us. The city of Richmond had, through its common council, adopted an ordinance prescribing the terms under which the telephone company might use its streets. The reasonableness of that ordinance was not questioned.

The question is not, as counsel for the defendant state, the right to regulate the use of its public streets. This right is conceded by the complainant, and in the petitions it *511 presented to its common council. The action of the council is practically prohibitive of the use of the streets. The defendant city, by its act of incorporation, obtained no other or greater rights or control over the complainant than the village had over it and its assignor. Both, under the police power inherent in municipalities, possessed the right of reasonable regulation. The city succeeded to the rights of the village of St. Joseph, and was in fact the same body politic. City of Grand Rapids v. Hydraulic Co., 66 Mich. 606 .

In reason and authority, it was the clear duty of the defendant to act upon the petitions presented to its common council by the complainant, and to establish reasonable rules and regulations for the erection of poles and the stretching of wires. The decree in this respect is affirmed. Decree will be entered in this court in accordance with this opinion, and the defendant given 30 days after service upon its mayor pf a certified copy of the decree to adopt rules and regulations in accordance therewith. Complainant will recover the costs of both courts.

The other Justices concurred.