Reply Brief Petitioner — Chase Nat. Bank v. Norwalk

Supreme Court brief1934

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INTHE ‘ .

Supreme Court of the United States

' October Sm 1933 woe oe te

Case NationaL Bank or THE City or New

York, Successor Trustee to THe Equita-

‘BLE TRUST Courant, or New York, N. Y.,

_ ag ot

| — :' er?

Tax Crry or Norwatk, Onto, a.

J SR oo: We ; Respondent.

REPLY BRIEF OF PETITIONER

ON WRIT OF CERTIORARI TO THE UNITED STATES

‘ CIRCUIT COURT OF APPEALS FOR THE eich

CIRCUIT.

Gero. D. WELxzs,

, Toledo, Ohio,

| \ a Counsel for Petitioner. .

Fart F. Boxeiu,*

; Tole , Ohjo,

- ‘Tracy, Coapman & WELLES,

Toledo, Ohio

Artuur A. GAMMELL, :

_. New York, N.Y. | |

Timotny N. Prerrrer, ;

. + New York, N.Y.

‘ Mrpank, Tween, Horr & Wess,

. New York, N. Y.

Of Counsel for Petitioner.

The Wilkinedn-Slost Printing Co.,. ‘

1217 Ja¢kson St., Toledo, O.

‘ e - @

S «€ .

TOPICAL INDEX

A. Introduetion re Sind antral ewe | i

B. Statement of Case SN Ce OP en ae

«. Argument. ss em Some SEs a er 3

\I: Th Injunction Granted By The District Court

Doés. Not Violate Judicial Code Section 265.

Petitioner is Entitled: To Maintain This Suit —

On The Showing Made In The District Court... 3

2 .II..Equitable Relief Is Justified Because Of Ac-

. tion Taken And faimeeirtuseane by the. Respond..

6: 5 Sn a 20

III. Petitioner Has A Valid Lien Upon Existing °

State Granted Franchises Of Its Mortgagor In ©

The Streets of Respondent , 22

a eat rh: 8 The Ordinance of October 7, "1890 Was In- me

- @fective As A Franchise Grant, But Be-

came Effective As A Mode of Use Agree-

. ment calidigeiaiia saben dei, 22

2. The Frarichiée Rights of Petitioner’ 8. , Mort

gagor in Norwalk Are Incontestible........... 30

IV. The Questions As To The Existence Of The —

Franchise' Rights’ And Petitioner’s Interest

‘Therein. Should Be Determined According To ©

The Law Of Ohio As Established At The Time

The Mortgage Was’ Given And The Bonds

DOIG | cnigggeeninenesinmesininin 40 -

«V. The Rights Of. The Predecessors of Plaintiff's : |

Mortgagor Wére Not Terminated By Any Pro- .

visions Of The Public Lighting Contract Of ~

GOD snuinnctnndetcnincsiestainieiininl 42.

VI. The Seepeuiinnt City Is Estopped To Deny.

That An Agreement As To Meds Of Use Has.

Always Exi sted alle sated 43°

D. Conclusion SPE. PRC tn sien 450

INDEX OF AUTHORITIES .

Atchison Ry. Co. v. Wells, 265 U. 8. 101........ BMA 13° 4

_ Ballard & Ballard Co. y. Munson Steamship Line, 25 .

Fed. 2nd,. 252) - | : . 19

_ Blair v. Chicago, 201 U. 8. 400...” <seibndinaalben

Bristow Battery Co. v. Board of ees mmaraaied 37 Fed. 1

2nd 504 . Soiereen ~ WB. ;

_ Burgess v. Seligman, 107 U. s. 20.:.....: : -.. 16 7

Cincinnati v. Diamond Light Co.; 4 Ohio ‘App. te 39

’ Cleveland v. Cleveland City Railway Company, 194 U. “ 3

GRRE en

Cleveland Electric Ry. Co..v. Cleveland, 204 U.S. 116... 31

Columbus Citizens Teleplione Co. v. Colunibus, 88.0. S.

SAP Saale 24°

Columbus Ry. Light’ & Power Co. v. Columbus, 249 ee

S. 399 27 (

-Columbus v. Public Utilities Cuiendediin, 103 O. S. :

79 . = ee 24, 28.

Coombes v. Getz, 285 v8. 434, 441 ieee

’ Essanay Film Mfg. Co. v. Kane, 258 U. 8. 358... 18, 19

Evanis v. Gorman, 115 Fed: 399 .....cccccccccsecccccscccceseeeee 3. 18°

Farmer v.. Octuntions Telephone Co.,:72 O: 8. 526.......

sien wn eaticzeenedd, 29, 36" |

Tecunen Sides & Trust Co. v. Meridan Waterworks 06.,

a is SIU Gicerrnensnieenegeensnnintehrereryshnennetscnnerseninente 3

Feldman v. Beier, 78 N. Y. 293.... ic aiahiehannniiiesiedlinemepiniant ‘2

| v. Page, 18 Wall. 350.,................. 14

Hane Wyant Li ghting ‘Co. v. Upper Sandus ins, 98 "

» 251 U. 8.173.

Harrison, et ‘al v. Trijlex Gold Mines, re ot al, a.

I A ieee baie lecrncenathicemes 17, 18, 30

‘Hatersly v. Waterville, 16 O. CO. ©. 226..00....01o0. ieee. eeteunin OO

, Hawks v. Hamill, 288 U. 8. 52... settee pinion 40

‘Hill v. Beebe, 13 N. Y. 556............. | et Be

: Indianapolis v. Consumers Gas Trust -Co., 144 Fed. ao. 36°

- ‘ ' +

‘ , °

. ss ts | c

Ny ~~

4\. ae re Rochester iectrie alway Company, 123 3 N. ¥. as

N. Y. 268, 48 N. E. 521 3-°

roqdway E. R. Co.,.

| ‘Kuhn Fairmont Coal Pe 215 U. ‘s. 349. => ao

a Louisville Trust, Co. v. Cincinnati, % Fed. 296; 300. 19, 35

Macklin v. Home\ Telephone Co, 10. ¢. C. 373, 70 O. 8.”

507 129, 32

; Moore-Manstisld tructiog Co. v. Electrical Installa:

: tion Ca., 234 S. 619...... 17

Northern Ohio Traction Co. v. Ohio, 245 U. p.574(

25,26, at!

Ohio Public. Seryice Cas vy. State, 274 U. 8. 12, 113 0. a

325... 25, 38 ~

Old Colony Trust Company: ve Omaha, 230 U. $..100___- ?

11, 13, 37

Old Wa} yne Life ‘Association v.. McDonongh, 204 v. 8S. 8.. 13

“ Pawhuska v. Pawhuska Oil and Gas Company, 28 Okia. .

ID . capiticitieninatiaitiehiieitiniaianealagilae 36 a (

People,.ex rel Fitzhenry tion Gas~& Electric Com-:

: pany, 254 Ill. 395, 98 N. E. 768 9

Pike’s Peak Power Company y. Colorado Springs, 105

i eR ea A

_ Pomona v. Sunset Telephone Co., 224 U. 8. 330... 35 ‘

| Queen City Telephone Co. v. Cincinnati, 73 0. 8. 64... - ‘| ;

eoeeeee- er scrennnerees ae woceee - wane en ee ee ee cee e- one 25, 32, i) J

Revised Statutes, Section 3461... nn BD, 35

Riegel v. Belt, 119 O. S. 369, 378, 379, 164 N. E. 347, ous 3:

“ — Bussell v. Detrick, 83 Fed. 2nd 176 , » @

B's Sehriver v. Woodbine Bank, 285 U..S. 467, 475... 41

Sears, Trustee v. City of Akron, 246-0. 8. 242.4: 38 +

Simon v. Southern Railway Co., 236 U. 8. 115...._.10, 19

Southern Bell Telephone Co: v. Richmond, 103 Fed. 31. 36

‘State ex rel v. hear sna Union Telephone ©o., 11° 0. C.C. -

*. pe Sd - -- MiB = 34

* Qeuus

mat

State ex rel Martin v. The Ohro Hleetrie Riwer Co., 35

O. A. R. 481, 121 0. 8. 235 saiie —_—anm F

State ex rel Matthews v. Central Union Telephone Co.,

14 O. C. C.. 273 .. 4 e

Thompson on. Corporations, Vol. 3, 3rd Ed., Sections

2343 and 2403 a

Tidal Oil Co. v. Flanagan, 263.U. 8. 444 | ‘17

‘ Toronto Electric Light Co. v. Toronto, 1917 A. C. 84,

33 Ont. L. Rep. 267 : =

Wabash R.-R. Co. v. Defiance, 167 U. S. 88 31

Western Union Telegraph Co. v. L. & N. Railroad Co.,

_» 218 Fed. 628 18

Western Union ‘Telegraph Company v. Tompe,, 51 Fed.

: « 2nd’ 1032 .13

Zanesville v. Zanesville Telegraph & Teloybene Co., 64 a

i 4 See eeee . 25, ” 34, 36.

> |

- 9 , nb TEE

Sene Court of the United utes

October. Term, 1933

290

, -

Cuase Natiowa, Bawx or Tue Crry. or New

York, Successor Trustee to THe Equtta-

BLE‘['Rust Company, or New ‘York, N. Y.,

Petitioner.

=f : vs.

Tae Crry or Norwatk, Onto, a, fa.)

Respondent.

REPLY BRIEF OF PETITIONER

ON WRIT OF CERTIORARI TO THE’ UNITED STATES

CIRCUIT COURT OF ASTEALS FOR THE SIXTH .

CIRCUIT.

+ air |

INTRODUCTION

While we are reluctant to add another brief to those

before the court, ‘we feel obliged to correct certain asser-

tions of faet contained in respendent’s brief, and to point —

out briefly what we deem to be some alae aaa ols

spondent’ 8 argument.

STATEMENT OF CASE

- Respondent claims that the record contains no evi-

_’ dence that ‘the Norwalk City Council was- informed of.

* ° an intention by the Norwalk Incandescent Light Com-

pany, the partnership formed in 1890, ‘ organize: a cor. -

poration. (Respondent’s Brief page 3). This claim is |

made in spite of the fact that at.the time of presentation

. of the ordinance of October 7, 1890, to the Council,

as shown, by the record, Mr. ,Dunmore | and Mr.

Suhr, two of the: partngss, frankly told the Council

whist they proposed to do (R. 61) and prior to the passage

‘ef the ordinance the partners had discussions with mem-

bers of the Council and ‘old them what th partnership

plans were ( R. 62). Furthermore, when ‘the partnership’

property was transferred to The Incandescent. Light & ~

Power Company, the corporation organized in 1891, the

Council confirmed the action of the. partners in: transfer-

ring the partnership property to the corporation (R. 62)

‘and at page 63 of me ‘record 3 is Mr. Suhr’s testimony as

follows:

‘‘There is no question but what the Council ner

_ been acquainted with the fact that a corporation

- was being formed.” |

Smsatiet 1 at page 7 of its brief‘ says that the only

bonds now outstanding are $2,248,500 (the correct figure

is $2,600,000; see‘the record pages 425-430), and that the

first of these bonds were issued June 20, 1927, which was

after the’ filing 6f-the quo warranto cage in the state court

against petitioner’s mortgagor. ( Respondent’ 8 brief p.7).+

Respondent in its brief does not base any argument

. upon this. statement, but*if the statement is made with

some artful design of suggesting to this court that the

rights of the bondholders were acquired after the com-

mencement of the quo warranto suit arid are therefore not _

entitled to protection in this suit, it is sufficient to observe . -

that the bonds. now outstanding were issued pursuant to

the terms of the mortgage and supplemental mortgage

given ‘long before the auo y wervante suit wes filed (plain.

tiff’s exhibits 28 and 29, R. 379 and 412); and that $1,-

579,300 thereof were issyed for the redemption and in lieu.

of the same amount of bonds (specifically including those

issued upon the’ basis of the Norwalk property) sold and

distributed before the quo warranto proceeding; v was com-

; menced (R. 184-191; 4 ). There. was no payment or

'.. discharge of the mortgage and.accordingly the present

bondholders in equity occupy exactly the same position as -

the original bondholders, as the District Court held.

Memorandum opinion (R. 236) and the followiig, anthor-

_ ities there cited: ee

3 Thompson on Corporations, 3rd Ea. Sec-

tions 2343 and 2403... .

‘ Louisville Trust Co, v. Cincinnati, (C.

©. A. 6) 76°Fed. 296,300-* * . 7

’ Farmers Loan and Trust Company vs. Meri-

dian Wattrworks Company, 139 Fed. 2

_ 661, 670.

Hill vs. Beebe, 13 N. Y. 556.

Feldman v. Beier, 78 N. ¥. 293... |;

In Re Utica Nat. Brewing Co., ‘154 N, Y. 268,

48 N. E. 521

= vs. Belt, 1290. S..369, 378; 379, 164

N. E. 347, 350.

oo 1. | —o

| ARGUMENT

| . I.

The Injunction Granted by the District Court. Docs Not

Violate Judicial Code Section 265.: ‘Petitioner is En-

titled to Maintain This Suit Oa the Showing Made In

the District Court. :

Respondent makes a plain misstatement at page 12 of |

_ its brief in asserting that the District Court injunction *

4 | oa :

» + * * * enjoins the Court of Appeals of Huron Coun-.

| ty, Ohio, itself, front taking any action whatsoever

a in the, quo warranto case.’’

Respondent has gone to the length of quoting the in- —

‘junction in its entirety at. pages 8, 9 and 10 of its brief

and the italicized portion on page 9 clearly exhibits ae

thé court itself but that the City and its representatives

d others to whom notice of the injunction | should come

were enjoined |

em s error. The italicized: portion shows that not

““* * * from applying to any of the courts of the

. State of Ohio for any writ, process or order °° ° .”’.

a : =.

Obviously the state courts would not make application

_ . to themselves for the issuance of a writ or order. to enforce

~ the ouster decree, and hence respofident’ s assertion that

the state courts, themselves, are enjoined is a palpable

misconstruction. ~~

The respondent i in its brief at pages 12, 21, 22, 93 and

'. 24 labors very hard upon the argument that it was not and

‘ eould not be a party to the quo warranto case; and that it

has no standing to seek enforeement of the décree therein,

ergo-that the injunction granted by the District Court must

act upon the Court of Appeals of Huron County,“ Ohio,

otherwise the injunction could have no effect.

‘Iti is contended Yurther that the respondent City. could

not be the’ real party in interest in the quo warranté suit ~

—_

because quo warranto is the exclusive prerogative of the —

State of Ohio; that therefore the State of Ohio is the nec-

essary party i in this case, and the action should be dismiss-

ed as an attempt in effect to sue the state by indirection

in violation of the constitutional inhibition against doing =

80 without the state’s consent.

f°

i |

The respondent city asserts that the injunction does © ay

not, fall within the class of cases in which an injunction —

may be had against enforcement of a judgment by a party

- to a.state court suit, because neither of the. parties to this _

suit -were parties to the quo warranto action. Patently

quite the reverse must be true taking the case upon. the

basis -of' the respondent’s own position #just paraphrased

from its brief (respondent’s brief page 12). It is perfect-

“ly obvious that the circuit court of appeals treated the rey

spondent eity in effect as though the city had been the real -~

plaintiff in the quo wayranto” suit, otherwise that court

| would not have held Judicial Code Section 265 applicabl?

a at all. Thus respondent in its brief flatly abandons thé .

ground relied upon. by the Circuit Court of Appeals in »

its opinion, and now asks this court to affirm the decision

upon a basis diametrically opposed to the opiniongef that

court. . If, as the respondent city says, it was not a party

to the quo warranto action and had no standing asa party

Pa in the proceedings -therein, then it is entirely clear that

Section 265 does not’ bgr.petitioner from the relief obtain-

ed in the District Courtfor the simple reason that Section

265 is out of the cage all together. re

However, it dogs nét follow therefrom that the i injunc-.

. District Court was a nugatory or vain

_. thing, or that-it necessarily constituted a ‘restraint upon

the state courts, as the respondent city argues.: As the

record in this case clearly. shows, and as we have -pointéd

out in our main.brief, the respondent city instigated, fi-

nanced and conducted the quo warranto case for its own

.-profit, and not for the benefit of the State of Ohio. It

simply caused its attorneys in conjunction with the Prose- -

cuting Attorney of Huron County, Ohio to borrow the

name of the State of Ohio to bring a suit to oust the: Ohio

Mochele Power Company without clad for the rights of |

ee:

this petittoner. Certainly'the inevitable inference ig that,

unless the city is restrained from taking any steps to se-

cure the enforcement of the quo warranto decree,. it will

seek through its attorneys, or otherwise, to. get the state

‘courts to enforce the decree. The Gity sought and obtain-

_ ed the decree, under the name of the State it is true; ‘and

“it fellows 2 as the day does the night that the eity will ander. “a

take to secure the enforcement of the decree. Nor-does -

this conclusion . have to rest upon inevitable implication

or inference, because counsel for the respondent city in

their brief at page 28 in discussing the agreement which

was made in 1926 between~the city solicitor and counsel

for petitioner’s mortgagor for the maintenance of the

status ‘quo during the pendency of the quo warranto liti-*

gation: . :

“Tt shows a continuing intention upon ‘the part

of the city not to resort to anything other than or- -

‘derly court action.’’

And see also respondent ’s statement to the same effect at

page 26 of its brief.

~ What court action? Obviously it could mean only

, the insistence of the city upon carrying out the quo war-.

” ranto suit and securing the enforcement of the decree ob-

tained therein. There has been no other court action by

' the respondent city, hence we confidently say that the city

having been at all times the only motivating force back of

the quo warranto suit, the city can and should be enjoined

as decreed by the District Court. It-is not necessary

that the injunction be directed: to the state courts either

in terms or by any necessary inference of such effect. If.

this court affirms the action of the District Court, it is in-

mA conceivable that the state courts would then in complete

' disregard. of comity act upon their own volition to enforce

. 7 /

court, and thereby work a destruction of this petitioner’s

\ rights.

Nor will it do for respondent to attempt a \Setertion

of the issues as it does at page 21 of its brief in asserting

‘that petitioner’s whole case is based upon the theory that

” "ail rights~-ef-public utilities in a municipality come from

the State ‘of Ohio, which respondent asserts further is

‘jneonsistent \with our contention that the city was the real

party in interest in the quo warranto litigation.

Our claim as stated in our main brief is that petitioner

holds a valid lien which attached prior to the quo warranto

suit to franchise rights which were derived from the State

of Ohio by electric light and power ‘companies (predeces-

sors of petitioner’s mortgagor) organized prior to 1896.

Nothing in that claim is‘ inconsistent with our further

claim that the city is the only impelling force behind the

quo warranto suit. Neither does this action constitute ,

any attempt to secure relief\against the State « of Ohio by

indirection. The State of Ohio took no action to to oust peti-

tioner’s mortgagor from Norwalk; it has not sought to

intervene herein and in no manner whatever has the State

of Ohio exhibited the slightest interest in this controversy.

Nor ¢éan the city claim any rights for the State herein.

The bugaboo of the State of Ohio as the real party in in-

terest is an attempt by the city to do a ‘‘Doctor Jekyll

and Mr. Hyde’’. First the city instigates and conducts a

quo warranto suit without making petitioner a party there- —

to, and. having succeeded in getting a decree therein at-

tempts to disclaim all responsibility for the action and

says it. had nothing to do with it—that it’was solely the

affair of the State of Ohio. We respectfully submit that

the respondent city may not so easily shift its disguise for

the purpose of: destrcying petitioner’s rights.

the quo warranto decree contrary to the decision of this’

“~~

7 8

The entire argument of the respondent contains the

. erroneous suggestion that the present nent eta is con: ~

cerned solely with the quo warranto proceedings, and that

this petitioner, although not a party thereto, is bound by

what happened therein. This is not true, because as we

have shown | in‘our main brief, the bill of complaint and-

amendments and supplements thereto and the evidence

show that fsetitioner has a complete cause of action against

_the city. based, upon the city’s unlawful acts and threats

whelly apart from the quo warranto proceedings. How-

ever, confining ourselves to the narrower question as it

relates. to the quo warranto decree, we find that counsel

for the respondent have set forth and cited authorities in.

support of the proposition that quo warranto must be

brought by the state and that such action is discretionary .

with the state officials. While the authorities cited in

general support this proposition, the entire argument is

beside the mark. The real question is not whether or not

_ the city could bring a quo warranto suit in its own name—

the real question’ is whether the case made here is one

against the city or, the state. Respondent’s brief contains

no authority in support of its contention that this suit is

in reality against the State. Petitioner’s pleadings ask

no relief against the State and the decree does not at-*

tempt to enjoin the State. | eae

' Respondent asserts at page 22 of its brief. that the

Hardin-Wyandot case (93 O. S. 428) held a municipality

could not bring an action to secure the removal of an elec-

. trical distfibution system from its streets, but that the i

State of Ohio alone could bring such en action. This is an

attempt to assimilate the result in that case to respond-

ent’s theory rather than to state the actual holdings of the

- court. The State Supreme Court did not hold that a muni- |

eee,

eipal igeniiton could not ee’ ar action to secure the

removal of the system, or that it could mot be wholly re-

sponsible for the ‘bringing, < of such action in the name of

the state. \ ‘s.

Directly opposed to respondent "s contention i is ‘People,

ex rel Fitzhenry v. Union Gas & Electric Compamy, -254 I.

395, 98 N. E. 768, which was a quo warranto suit to oust

the defendant utility company. Defendant claimed that

. plaintiff was estopped by its conduct from questioning de- .

fendant’s right to use the streets. In an attempt to avoid

’ the estoppel it was claimed that the action was by the state. |

Disposing of this claim “the court ae at page 776 of 98

N. - K.°

‘* Appellee insists that this is a a proceeding by the

state questioning the right of appellant to exercise .

a fratichise belonging to the state, and therefore “

the law of estoppel does, not apply, (1) because that

@ doctrine cannot be invoked against the state; and

(2) the state cannot be estopped by the action or

nonaction of the city. It is true, this suit was begun

in the name-of the people, but it was brought on the

rclation of the city attorney of the city of Blooming-

ton, and the affidavit of the relator filed in support .

of ‘the petition for leave to file the information

states that the suit was ‘ordered begun by the city

council of the city of Bloomington. The state grant-

ed appellant the authority to cxercise its: franchise

int the city of Bloomington, by and with the consent

of the city. The grant-from the state. was subject to

.the granting of ‘permission by the municipal an-

thorities. The state, however, was nd particulatty

interested whether the city granted the permission

by ordinance, or whether it suffered appellant to -

exercise. the franchise granted it by the. state with- -

out adopting: an ordinance licensing it to do so. So

. far as that question is concerned, therefore, the city

“10:

_ ig the real party. in interést, and the suit is to be so

- regarded and treated.- People v. Central Union

ee on 232 Hl. 260, 83 N: E. 829; Chicago

orthwesterp Railway ‘Co. v, People, 91 Th. 251.”

(alin oars) .

beaiinieed on page 14 of its brief claims a distinction

‘ between the right of interference with the enforcement of

‘money judgments and that of interference with the en-

_ forcement of a quo warranto. decree.

It is not perceived why. such a distinction’ is important

or how it can operate against this petitioner. In the one

case the plaintiff, holding the money judgment would get

ouf a writ of execution in order to collect, and in the

other case the respondent city would apply or have its own

paid counsel apply to the court to enforce the ouster. In

either case the detriment to the party wronged by the un-

conscionable enforcement of the judgment would be just as

sure and complete. It is no answer to say, as respondent

does at page 14 of its brief, that proceedings i in quo war-

Tanto are still pending within the meaning of Judicial

- Code, Section 265 because the writ of ouster remains un-

‘executed. The case in that respect stands in no different

-_position from an unexecuted. money judgment, and of

‘course respondent’s argument carried to tht logical con-

clusion would leave every coniplajnant in suits of this

character remediless in therfederal courts, for the federal

court could not act until the state court judgment had been

fully carried out, when necessarily it would be too late to

- afford complainant any relief. The situation here-is pre- _

cisely the situation which exists when any judgment has -

been obtained and an attempt is about to be made to make

an unconscionable use of that judgment, which-is recogniz-

edi in “Simon v, Southern _— Co. 236 U.S. 115 as the .

appropriate. stage for relief unaffected by the inhibitions

of Section 265.

Respondent at page 15 of its brief asserts that i in all

the cases cited by petitioner hergin where a federal court

enjoined the prevailing. party in the state court from en-—

' forcing a judgment secured therein, the judgments were

for money only. We-have “already” shown, we think, that

_ any such distinction, if it were true, would be of no im-

, portance. -

a further inconsistency in a ’s position again

—Appears in that respondent in putting forth this argument

considers itself as having been the prevailing party in the

quo warranto action, although as. observed above, it at the

same time vehemently denies that it -was a participant in |

the quo warranto suit. At all events the assertion

there can be relief only against enforcement of a nent

judgment is untrue. ‘It is necessary only to allude to the

decision of this court in the case of Old Colony Trust

Company v.“Omaha, 230 U. S. 100, in which the defendant

‘city was restrained from taking any benefit from a prior

_ decree obtained by it in federal court upholding the valid-

ity of a city ordinance: Of course upon. the point under

‘discussion it is the character of the prior judgment involv-

ed which is in issue,, and the fact that the prior suit in ‘the

Old Colony case was in the federal eourt instead of the

state court makes no difference.

It is also erroneously stated at page 13 of respond-

ent’s brief that in all of the cases cited by petitioner the

state court judgment enjoined in the federal court was

void or voidable on some well recognized equitable ground,

whereas, i in. the case ‘at bar it can be claimed only by peti-

tioner that it has not been heard upon ‘the merits of its

mortgagor’s claim of a perpetual franchise in Norwalk. |

- & . oak 3 .

It is also ‘said that the sole claim of petitioner is that

it has presented its claim that the 20-year limitation of the

1890 ordinance was not a binding covenant upon a differ-

ent theory from the presentation of the same claim. by

Ohio, Electric Power Company in the quo warranto pro-

ceedings. |

‘These assertions ™ respondent at page 13 of its brief

constitute a plain distortion of the position taken by this -

petitioner. Such statements do not take into account that

. petitioner is asserting the right to protection of a valid

lien secured before the quo warranto proceedings upon -

presently existing franchise rights of petitioner’s mort-

gagor>. and such statements are an unwarranted attempt

to limit’ ‘the question involved to the effect solely of a 20-

year orditiance, whereas it clearly appears from a refer-

ence to the record and to our main brief at page 43 and at

pages 68 to 70, both inclusive, that many vital elements

are present in thie record which make this case widely’

different from the quo warranto action. The same err-

oneous conception of ‘the issues herein appears in the

. first paragraph of respondent’s brief on page 20 thereof,

where it is stated that in all the cases cited by us for the

proposition that the enforcement of a void judgment may

befenjoined.in a federal court the judgment was either

tainted with fraud.or obtained under mistitke/ of fact.

That statement is inaccurate in any sense for it uiques-

tionably appears, from the decisions of this court that the ~

power of federal courts to restrain the enforcement of

state court jadgments is not-confined to those which are

void. Nor is it true that in every case cited by us wherein

a federal court plaintiff had relief against the enforcement

of or from-enjoying the benefits of a state-court judgment,

the state court judgment was tainted with fraud or obtain- |

5 Haas

18 .

ed under mistake of fact. Cases in wae no om thing

appeared are: ie

Old Colony Trust Co. v. 236 U.S.100

‘Atchison Ry. Co. v. Well, 265 U.S.101

. Western Union Telegraph Company v. Tom-

“o | 70 eS AS ee and Series, :

| 1032.

The true proposition is that petitions was entitled to

. Imaintain this suit unembarrassed by the quo warranto de-.

m cree on the showing made, that it was not a party to the

_.quo warranto proceedings, that it had a preexisting lien

upon the Norwalk properties and franchises of Ohio Elec-

tric Power Company, and that the enforcement of the quo.

warranto decree would irreparably injure «its property

rights, and that failure on its part to-apply for leave to in-

tervene in the state court proceedings by this petitioner,

even if it had possessed extra judicial notice thereof, could

not constitute negligence barring relief in equity. This is

the proposition established by that section of our main

brief, pages 29. to 36, both inclusive.

' We have informed counsel. for the respondent of our

intention to rely in argument upon the case of Old: Wayne .

Life Association v. McDonough, 204 U. S. 8, which was

not cited.in our main brief. _We desire to add this case

to those cited at pages 30 to 36 of our main brief for the

reason that the’opinion of the majority of the Circuit

Court of Appeals in the case at bar contains this state

ment:

‘The mortgage was given in 1925, and though the

appeliee’’ (petitioner here) ‘‘was not made a party

‘to the state suit, it is not. alleged or claimed that it

did not have knowledge.of the proceeding or that it

could not have intervened there, as mortgagee, and

asserted the claims that it now makes as the basis

of the relief here sought.’”

14 |

‘The fact that the record did not contain such evidence

seems to have been very influential i in leading the majority ~

_ of the court below to the conclusion that petitioner’ s bill

of complaint should be dismissed.

The Old W ayne Life Association case conclusively

_ shows that the court below was in error in attaching any

importance to the absenee of such evidence. That case was

an action in the state courts of Indiana against the Asgo-

ciation upon a judgment by default rendered against it in

a Pennsylvania court, the only service having been a sum-

mons served upon the Insurance Commissioner of Penn-

sylvania. '

In the case to dalexee the judgment. in the Indiana

._ state courts, the plaintiff from Pennsylvania set up ‘the '

proceedings in the courts of that state. The Association

denied the material facts of the petition and alleged, in

the words of the opinion of this court at page 14.

‘ce * * that the first notice or knowledge it ever had

of the alleged judgment against it was’ long after |

the when it appears to haye been rendered.”’ \

However, in the aks of the a at page 19, “the

defendant Association introduced no evidence.’’ (Italics

ours). | The court held that the attempted service of proc-

ess in Pennsylvania was invalid and, although as we have .

just shown the Association offered no evidence that it did

not have actual knowledge of the pendency of the Penn-

sylvania case in time to have presented its defense there-

in, this court reversed the action of the Indiana courts. in

entering “judgment against the Association: based on the

Pennsylvania judgment. In doing so, this court at page

17 of its opinion quoted from the old case of Galpin v

Page, 18 Wall. 350, stating the rule as follows:

" 4* * © «Tt is a rule as old as the law, and never

»’

*»

| i 28 Si

15 tec:

more to be respected: than now, that no one shall be |

personally bound until he has had his day in court,

by which is meant, until he has-been dyly cited to .

appear, and has been afforded an opportunity to be

héard. Judgment without such citation and oppor-

tunity wants all the attributes of a judicial determi- ae

nation ; it is judictal usurpation and oppression, and |

can never be upheld where <a is justly admin-

a aad

*. Ett

We, eiaiiais submit that the court’ below erred in

holding that this petitioner is not free to maintain this

suit without showing affirmatively that.it had no knowledge

_ of the quo warranto action until after tinal judgment there-

"in, or that it could not have appeared therein to assert its

rights,

Respondent at page 16 has cited a number of cases for -

the proposition that the injunction granted by the District.

Court constitutes a direct interference with the proceed:

ings in the state court. ts

The case of Bristow Battery Co v. Board of Commts-

stoners, 37 Fed. 2nd, 504} is plainly distinguishable from

the case at bar. ©

In the report of the Bristow case there appear the

following statements:

1. ‘Clearly, the contract clause (Article 1, Sée:

tion 10) is not here involved. No claim is made that

the State or City passed a law or enacted an ordi-.

nance after these bonds were issued impairing their

obligations. *’ |

2. ‘‘Rogers County’? (the federal court plain-

tiff) ‘‘was-not a_party to either the Eaton case or the

Bristow Battery Company case. It is in no manner

. bound by the judgment in either, ‘and is as free to

ask protection of its rights in the courts of the state

- now, as it was before these cases were decided.

-4

Neither of these judgments Seis deprived * of its -.

property.”

3. ‘‘There is no diverse citizenship’’.

4. ‘*In snbstance, the bill of complaint asks a

federal court to review the rulings of the state su- °

preme court in cases to which complainant was not

a party, and to hold that the supreme court was in

- error. Such a contention does not present a federal

- question.”’

From the foregoing it sufficiently appears that the

Bristow case is not an authority bearing upon the present

~ ‘ease in any way. Here, there is diversity of citizenship;

here, the contract .clause, Article 1, paragraph 10, is in-

‘volved, and here, petitioner does not ask the federal court

to’ review the rulings of.the state supreme court and to

hold that the supreme court was in error. On the con-

trary, here, the petitioner had a right to choose the federal

court as its forum because of divérsity of citizenship, and |

a further right to choose ‘that forum becati%e of the con-

stitutional questions under the contract clause and here

petitioner presents the case on facts, varying widely from

those in the case decided by. the Supreme Court of Ohio. .

The case at bar comes within, while the Bristow case .

falls without, that class of cases in which this court and

other federal courts have held that persons situated like

. the petitioner are entitled to the independent determina-

tion of the fedéral courts upon the questions’ as to their

rights, there being -either diversity of citizenship or a con-

stitutional question, or both.

Burgess vs. Seligman, 107 U. S. 20 ©

Kuhn vs. Fairmont Coal Company, 215 U..S..

. 349. :

—

Moore-Mansfield Construction Co. vs. Elec-

trical Installation Co., 234 U. 8. 619 .

Tidal Oil Co. v. Flanagan, 263 U. S. 444. -

Furtherniore, while we insist that petitioner under the

foregoing authorities wpuld be entitled to a readjudication .

of the same questions of fact and of law determined in the

quo warranto proceedings, this case is not an attempt .to.

review the rulings of the State Supreme Court in the quo

warranto case. Hence, it is unlike the Bristow case, for it

_ there appearéd, as shown by the fourth excerpt from that

case quoted above, that it was in substance an undertaking

to review, the rulings of the Oklahoma Supreme Court.

See the fourth foot note to the opinion by Judge Hahn

in the District Court: ,

‘‘And it is not unlikely. that the decision of the

Supreme Court of Ohio would have been. in favor

of the utility upon the vitally different record made

in this case. That court’s decision to a large extent

is based upon the fact that no agreement, other. than

the Ordinance of 1890 and the street-lighting con-

tracts of| 1895 and 1905 were ever entered into with

reference to the use and occupancy of the streets.

2 * a } 7 . ry

In this case the answer of the defendant admits the

enactment of the ordinance of July 1, 1924, (Plain-

tiff’s Exhibit No. 38), which is still in full force and

effect. It applies to the Ohio Electric Power Com-

pany, and, as already noted, the city demanded and

“received full compliance with the ordinance on the

part of the utility. The ordinance is ‘tantamount to.

a consent to the use“of. the streets of the city of

Norwalk. The record in the case in the Supreme

Court of Ohio shows that the ordinance \was never

called to the attention of that court.’ (R. 238, 259)

Russell v. Detrick, 23 Fed. 2nd 175, Harrison, et al v.

— Gold Mines, wie et al, 33 Fed. 2nd, 667, and

Western Union Telegraph Co. vs. L. & N. Railroad Co.,

218 Fed. 628, were all cases in which the plaintiff sought

to restrain further proceedings in suits in state courts

prior to the securing of judgment in the state courts, and

obviously for that reason came within the inhibitions of

Judicial Code Section 265. By the same token these cases

furnish no support for the proposition that the injunction

‘granted by the District Court was an interference with the

quo warranto proceedings in the state courts. | .

| In addition, in the case of Harrison, et al vs. Triplex

Gold Mines, Ltd., it clearly appeared that the federal court

plaintiffs had been parties to the prior suit, which was

in the Canadian courts, and there had enjoyed full oppor-

tunity to present, their alleged claims that the prior judg-

ment had been obtaiued by fraud.

- In Evans vs. Gorman, 115 Fed, 399, it was very evi-

dent that the entire estate of the deceased person with

which the controversy. was concerned had come under the

jurisdiction of the state probate court before the federal

suit was instituted and relief granted. A demurrer to the

bill in the federal court was sustained upon well recogniz-

ed grounds of comity.

It is very plain that the injunction was denied in

Essanay Film Mfg. ‘Co. vs. Kane, .258 U. S. 358 be

cause it was an attempt to restrain further: prosecution

of an action still pending in a state court before judgment.

The opinion of this court in this case, as we construe it,

distinctly recognizes the right of a federal court plaintiff

to enjoin a successful litigant in a prior state court action

_ from making an unconscionable use of a judgment sqeured

in the state court.

‘‘Besides a challenge of the Sartediction of the

state court for want of due process over defendant

in personam, to be interposed in that court, and, if

? : 4

overruled, followed: by invoking the revisory juris-

diction of this court, the final judgment may be ques-

tioned collaterally, if in truth there be a want of

due process, either defensively, as in Pennoyer v.

Neff, 95 U. S. 714, 723-733; see, also, York v. Texas, |

137 U. S. 15, 20-21; Western Indeninity Co. v. Rupp,

ee 235 U.S. 261, 273; Baker v. Baker; Eccles & Co., 242

U. S. 394, 401-403; or by adopting the mbdre ag-

gressive method pursued in Simon v. Southern Ry.

-Co., supra; see, also, Wells-Fargo & Co. v. Taylor, .

254 U.S. 175, 183-185. (P. 361-2) ’”.

Louisville Trust Company v. Cincinnati, (C. C. A. 6)

+ 76 Fed. 296, relied upon by respondent at page 20 of its -

brief, upon analysis and contrast with the decisions by

this court and the decision of that court in Ballard ¢

Ballard Company v. Munson Steamship Line, 25 Fed. (2d)

252, does not furnish any support for the proposition that -

the injunction granted by the Dees Court violates Judi-

cial Code Section 265.

The sentence from the opinion in the Louisville Trust

case principally relied upon:by respondent is as follows:

‘*‘Neither would it have been proper, under Section

720, Rev. St., to have enjoined the City from apply-

ing for any writ which the state court might law-

fully issue, or to have prevented, by injunction, the

execution of such writ, although its execution might

have veen very destructive to the interests of this

complainant.’”’ -

Respondent practically recognizes at page 20 of its

brief that this statement constituted dictum because no

such injunction was involved in that case, but in any event

under the decisions of this court.in Simon v. Southern

Railway Co., 236 U. S. 115; Essanay Film Mfg. Co. v..

Kane, 258 U. S. 358, and other cases that statement can- |

-- 20

not be regarded as law. The Louisville case was decided in |

1896. .The Simon case was decided in 1915. In that case

this court first held that after final judgment in the state

. court there were no ‘‘proceedings’’ pending in the state

-eourt to which Section 265 was applicable, and affrmed

the judgments of the lower Federal Courts in awarding ©

a perpetual injunction restraining Simon from enforcing

his state court judgment by levy. Hence, to the extent.

that any statements contained on page 317 of the opinion

in the Louisville case may seem to bea decision in support

of respondent’s position, such decision must be regarded

as having been expressly overruled by this court. |

| I.

Equitable Relief is Justified Because of Action Taken and

. Threatened by the Respondent City.

That portion of respondent’s brief, pages 24 to 30, in- -

clusive, is devoted 40 contentions -that upon the recard

there is no showing that petitioner is entitled to the pro-

tection by injunction of its rights in the mortgaged fran-

-chises and properties of Ohio Electric Power Company

in Norwalk. It is first contended that the action of the

City Council in passing the resolution of March 23, 1926

and the ordinance of, May 18, .1926 (plaintiff’s exhibits

42 and 45; R. 445-449) do not constitute laws impairing

the obligation of contract, but show only an intention upon

the part of the city to follow orderly processes of litiga-

tion to determine the rights of petitioner’s mortgagor.

This subject is dealt with in our main brief at pages

48 and 49. It is pertinent here to observe that the respond-

ent says, beginning at the foot of its brief, page 27:

‘‘These resolutions taken as preliminary steps

to apply to a court of the country for an adjudica- :

tion of the rights of the parties are not laws impair-

ing the obligation of a contract.”’

| on

We ask ‘‘The rights of what parties’’? The ‘answer

is obvious that thé only court action which followed the

village ordinances in question was the quo warranto suit

directed only against Ohio Electric Power Compahy, in

- utter disregard of the rights of this petitioner. How can

it then be said: that the city was following orderly _process-

‘eseof law with respectto the determination of any ~ights. -

of this petitioner? And we point out again that the quoted

sentence from respondent’s brief is a further showing, if

any be necessary, in the very words of respondent itself,

that the respondent was the fnotivating force behind the

quo warranto suit, and that it is therefore necessary that

the city be enjoined, if petitioner’s rights are not to be de-

stroyed. ;

In the next place, page 29 of respondent’s. brief ex-

hibits'an inconsistency in its claims with respect to. violent

destruction of the Norwalk properties, which is nothing

less than absurd. On this one page of the brief respondent

succeeds in taking exactly opposite positions upon the

point. First, the respondent says that the poles and prop-

erty used by Ohio Electric Power Company which were

forcibly removed in 1927, (in violation of the agreement

then existing between the city. and Ohio Electric Power ‘

Company for the preservation of the status quo) were re-

_ moved under authority of-the o inance of July 1,° 1924.

- In the very next paragraph mega says as soon as

. city officials learned of the removal the employees carry-

ing on the work were ordered to desist, and in the next

paragraph respondent characterizes the removal of the

poles as being ‘‘unauthorized action of employees of the

department of light and water.” So, in the words of the

respondent, first the. removal and destruction of this prop-

erty 1s authorized, and in the next breath it is unauthor-

teed.

The fact of the mattér as to the intention of. the re- -

_ spondent city appears from the finding of the District

Court to the effect that it was a case of ‘‘proceeding sur-

reptitiously and practically in thé night time in removing

hine or ten poles on the early morning of October 26,

1927’’, (R. 237) and that petitioner was entitled to an in-

junction which would prevent a repetition of like conduct

on the part of the city, which the trial court was con-

vinced would follow unless an injunction issued.

We allude briefly also to respondent’s claim that-any «

statements attributed to Mr. Craig at the time the bill of

| complaint herein was filed with respect to the intention of

the city, cannot be regarded as proof of any ‘intention

upon the part of the respondent to use force or unlawful

means to oust petitioner’s mortgagor, because at the time ©

Mr. Craig had not been employed to represent respondent

in this litigation. .The answer to this is that\it makes no

difference that he had not then been employed in this case.

He was at the time in the employ of the city for-the pur-

pose of conducting the quo warranto suit, which had for

its object the ouster of petitioner’s mortgagor ‘(plaintiff’s

exhibit 45; R. 449), and undertook to speak for the city

which has never attempted to repudiate his‘statement of

the city’s intentions.

. .

Petitioner Has a Valid Lien Upon Existing State Granted

Franchises of its Mortgagor in. the Streets of oa

spondent,. ;

1. The Ordinance of October 7, 1890, Was Ineffective

as a Franchise Grant, Byt Became Effective as a

Mode of Use Agreement. ‘

Pages 32 to 36 of respondent’s brief are devoted to thé

argument that the Act of January 26, 1887 did not repeal

the Act of May 12, 1886, so that it is claimed the council of

the respondent city had full authority to pass the ordi-

- nance of October 7, 1890 under the forme? act. ‘This is a

step in respondent’ ~ argument that the ordinance consti-

tuted a contract binding upon petitioner’s mortgagor as

the ultimate successor to The Norwalk Incandescent Light

Company, the partnership organized in i 1890, to whieh the

ordinance was directed. .

We think it is gonclusively demonstrated by ihe case

of Hardin-W yandot Liyhting Company ‘v. Upper Sandus-

ky, 93 O. S. 428 that the 1887 Act did repeal that of 1886

. and shall not repeat at this point the argument contained © 7

in our main brief (pp. 63, 64 thereof). ‘ .

In any event, petitioner is not forced to rest its case -

upon the repeal of the 1886 Act by that of 1887. As shown |

in«our main brief (pp. 92 to 95 thereof and authorities

there cited) the predecessor companies of petitioner’s

mortgagor, when they were incorporated in 1891 and 1895,

‘ could and did derive ‘perpetual franchises direct from. the

state, and even if the ordinance of 1890 be construed as a

franchise, its acceptance could not prejudice or limit the

term of the state granted rights.

Respondent, _as anticipated, contends that in the ab~

sence of any state statute specifically authorizing the city

to grant a franchise, the city nevertheless had such power

by reason of its inherent general power to regulate and

. control its streets. This proposition of the respondent is.

not supported by a single one of the cases cited therefor

at.pages 37 and 38 of its brief. In every one of these cases

it is apparent that the city acted not under a general

power, but did so pursuant to a Specific statute.- Kins-

man Street Railroad Co. v..Broadway R. R. Co. 36 U. S.

239, is disposed of on that basis in our main Brief at page -

75 thereof.

Hattersly v. Waterville, 16 O. C. C. 226, decided in

;

“1904 ‘abet [oe no relation to the conditions. prevailing

with respect to electric light companies from 1887 to 1896,

_ Was a case where Paik yet specific statutes: regulating

_the-construction of street railroads in municipalities, and

while there is language in that ,case indicating the .court’s .

view that a municipality had general powers to permit the

operation of ‘street railroads through its streets, the rea-

soning proceeds expr essly upon the basis that the streets

are primarily for a means of ene and econvey- .

ance, \

Columbus Citizens Telephone Co..v. Columbus (1913)

88 O. S. 466,-involved the right to place telephone wires

in conduits under thé street, as to which it has been uni-

formly held that the consent of the city must. be obtained. |

_ ©. Columbus v. Public Utilities Commission /(1921) 108

| QO. S. 79, for the same reason is-equally inapplicable. It

clearly appears that. the statutes there in effect required

the consent of the city as a condition precedent, and that

the. city was acting not under a general power to control |

streets, but under the authority of state statutes (pages -

89 to 92 of that opinion). Anything said by Judge Wana-

maker in his ‘concurring opinion cannot be regarded

vither as the law of that case or as the law of Ohio.

Pike’s Peak Power Company'v. Colorado Springs (C.

C, A. 8, 1900) 1d. Fed. 1, involved an entirely différent

question, and it appears in the opinion in that case at

page 10 that the city acted ‘under the express authority

of sfate statutes. is P

Thus the cases relied upon by ——— do not sup

port its contentions. |

' Respondent at pages 39 to 44 inclusive of its. brief |

claims that this. court and the courts of Ohio have uniform-

. ly held franchise ordinances ‘such as the ordinance of

'. October 7,1890 to be valid contracts binding upon the util-

ity and its transferees. Any such conclusion could be

reached only upon the most superficial examination of ‘the

. eases in question, as we shall show. ‘ Authorities not deal-

ing with the particular state of the Ohio law as it existed

between 1887 and 1896 with reference to franchise rights

of telegraph, telephorfe and eleetric light companies in

- municipalities de not apply. .Such franchises during that

period were derived only from the state; municipatities

could not grant this type of francliise. Their only function

was to agree upon the ‘‘mode of use’’. Zanesville v. Zanes-

ville Tele graph € Telephone Company, 64 O. S, 67;

Farmer v. Columbiaga Telephone Co., 72 O. S. 526; Queen

City Telephone Cv. v.Cincinnati, 73 O. S. 64; Hardin-

W yandot = set Company v.U pper Sandusky, 93 O. S.

— 428, 291 U. 8S. 173.

. Northern Ohie Traction Company v. O Mhio (1918) 245

U. S. 574 was a case where a street ay franchise was

_ granted My county commissigrers, but the commissioners

had thé express power to make the grant under a specific

statute not under consideration here. Obviously there is

| nothing in that ease in derogation of the proposition that

the corporations organized in 189l.and 1895 acquired their

‘franchise rights directly from the State of Ohio, unaffected

by any time limitation contained in the 1890 ordinance.

In neither of the other two cases, Hardin-Wyandot

Lighting Company v. Upper Sandusky, (1919) 251 U.S.

173, and Ohio Public Service Company vs. State, 274 U.S.

12, did this court-consider the general power of a munici- .

pality apart -from statutory authority. |

An analysis of the Ohio Public Service case shows

that it does not support the proposition urged for ‘it by

respondent. Contrary to what respondent claims, the

opinion by Judge Allen in that case in 113 O. S. 325 shows

that the nature of the grant secured by the company from

_ the state was practically not discussed in argument. (Pages

330, 331 of that opinion). :

It is further evident that although the opinion contain-

_ed ‘considerable discussion as to the nature of such rights, .

the decision turned simply upon the question as to whether

those rights, whatever they were, were assignable in 1907

. in view of the provisions of the Act of 1896. At page 333

the court said: YS

“It is not of great moment to decide whether the

respondent is correct in claiming that the ordinance

of 1892 constituted a special franchise to usé the

streets of the village. In either case, whether the

right in question was derived from the state or the -

village, it was not under the circumstances set forth

in this record assignable.’’

—_~

F _. The court did, however, practically recognize that

' state granted rights were involved at page 337:

— «* * * The rights acquired by the Orrville Light, |

Heat & Power Company from the state in 1893, un-

der Sections 3454 and 3471a, Revised Statutes, could

not be annulled or revoked by the village of Orr-

ville; nor by the STat@of Ohio, after the passage of

the amendment. of 1896. ”? (Italies ours)

When this court came to review*the Ohio Public Ser- ’

vice case (274 U. S. 12) as we construe the issues and. the

- decision, this court was concerned solely with the question

of revocability of ‘the franchise rights‘ as determined ad-

versely to the company in 113 0. S. 325. It is not evident

, from the opinion of this court that its decision turned upon

the question as to whether or not thére was a state or mu-

nicipally ¢ granted franchise as respondent claims, but that

this court simply held consistently with Northern Ohio

_Traction Company v. Ohio, supra, that the franchise rights

La]

: 27

which the State Supreme Court had found to exist were

not subject to termination at the mere will of the city, and

that if the statute of 1896 were construed to sustain such

a right to terminate the franchise, it was in conflict with

the contract impairment clause of the federal constitution.

We submit that the decision in the case would have been

the same whether or not the franchise was from the state

or the municipality, so that it was wholly unnecessary for .

this court to go into the question as to the source of the

franchise. And we submit that in Hardin-Wyandot Light-

ing Company v, Upper Sandusky, 93 O. S. 428, 251 U. S.

, 173, neither the court nor the Ohio Supreme Court gave

-effect to the ordinance there involved ‘as a contract. —The

decision in each court went upon the ground that the Act

of 1896 prevented the utilty from resuming its street

lighting business without the consent of the Village after

having abandoned such rights: See our main brief pp.

' 64-66. The result may be \tested in another: way. ‘if, as

respondent says, the ordinance in that case had been re-

garded as a contract, obviously the abandonment by the

Company of the street lighting obligations would have been

such a breach thereof that the courts would have héld that

the company was not entitled to continue operation of its

commercial lighting system, the right to continue which

both courts were careful to recognize. |

The cases of Cleveland v. Cleveland City Railway

Company, 194 U.S. 517, and Columbus Ry. Light and Pow- |

er Company v. Columbus, 249 U. S. 399, can afford no com-

fort to respondent, because they were both street railway

cases and under the statutes involved therein the .munici-

pality had express statutory authorization to fix the terms

and conditions upon which the railway company might use

the streets, as distinguished from the statutes involved i in

the case at bar, where the city had no such authority.

4e«

‘“

Admittedly, respondent does not claim that its council

had authority to pass the ordinance of October 7, 1890, un-

_ der the Act of 1887, which’ we contend repealed that of —

1886. See p. 41 of respondent’ s brief. The respondent

‘also says that it had inherent power to make the grant

without respect to the Act of 1886 (p. 36 of respondent’s

brief). The lack of reason in respondent’s-claim thus

more. fully appears, for if.there was full power in the C ity

to make such a grant, which upon acceptance would be- —

come a binding cdéktract, then there was no reason why

. either the Act of 1886 or that of 1896 should have been

passed by the State Legislature. *

Respondent at-page’ 44 of its brief quotes from ‘the

separate concurring opinion of Marshall, C. ‘J. in Colum-

bus v. Public Utilities‘ Commission, 103°0. 's. 79, to the

effect that the ‘‘principle of entirety of contract must

apply”’ to that case, and on this basis the claim that -peti-

tioner-: cannot have the, benefit.of the 1890 ordinance asa.

.mode of use agreement and at the same time invoke the

_aid of the court of equity for,relief from its time limite-

tions, upon-the’ principle that entirety of contract applies.

In that case no four of the judges could agree why the

ease should be decided, as they deeided it (103 O. S..79)

and what Marshall, C. J. ‘said has no application here.

The authority cited and the. quotation therefrom is utterly

inapplicable because the respondent asspmes at least three 4

things which are not ‘true; first, that the ordinance«con-

stituted a contract; second, that the petitioner herein is

asking relief from any of its conditions,’ and third, that

petitioner is relying apon it as the mode of use agreement

“now in effect.: |

It is asetrted by respondent at page 45 of its brief

that-petitioner in claiming the. benefit of the 1890 Ordi-

nance as a mode of use agreement becomes bound. by. the

20 year limitation of term contained therein as a limitation

' upon the franchise rights themselves. This contention ig-

nores the decisions in Farmer v. Telephone Company, 7

0. 8. 526, State, ex rel Matthews, v. Central Union te

‘phone Company, 140. C. €. 273, and Macklin v. Home

Telephone Company, oe @ ae §.) 373,, affirmed 70

O. 8. 507. .

In all these cases. ordinances purporting by their

language .to grant franchise rights were treated only as

mode of use agreements, and restrictions, terms or condi-'

tions sought to be impoged by such ordinances were held

_to be beyond the powers of the municipalities.

In Farmer v. Telephone Compdny the ordinance, which

was in the ferm of a franchise, undertook in terms to im-. -

pose certain conditions as to rates and free service upon

the utility, ran to an individual and his assigns and it was

assigned to a corporation. That is the precise situation

‘in the case at*bar,:the only difference being that here the

city claims the right to make effective a lisiitation as to

the term of the rights instead of an exaction as to rates

and free service as in the Farmer case. The utility hav-

-ing been held in the Farmer case to be entitled to stand .

upon the state granted franchises unaffected by the at-

tempted exactions as to ‘rates and service, it follows that

petitioner may stand upon the state granted franchises of

the corporations organized in 1891. and 1895 respectively .

unaffected by’ the attempted 20-year term limitation of

_ the Norwalk city ordinance.

Respondent also relies heavily upon the opinions of

the State courts in fhe quo warranto case. We have point-

- ed out in our main brief (pp. 42, 43, 68-70) why those de-

cisions are not controling, and shall therefore not repeat

‘that exposition heré. « ’

“~ gn

2. The Franchise Rights of Petitioner’s Mortgagor in

’ Norwalk Are Incontestible.

Respondent at page 54 of its brief launches into the

argument that the predecessor corporations of petitioner’s

mortgagor which were organized in 1891 and 1895 respec-

tively secured thereby nothing more than the capacity to

acquire an easement in the streets and public places of

Norwalk. In other words, the claim is that incorporation °

conferred upon those companies an inchoate right of emin-

ent domain, which respondent claims further was never »

exercised by agreement with the City or by proceedings in

the Probate Court, hence that the right never réached any

fruition or became vested, and being inchoate was incap-

able of assignment. |

We feel obliged to point out that counsel for the re-

spondent at page 88 of‘their brief misstate our position by

claiming that we contend the predecessor corporations by

incorporation alone secured a complete and vested right

to use the streets and public places of Norwalk.

Respondent would have this court believe that the

sole i inquiry is what franchises did The Incandescent Light |

& Power Company and the Northern Electric Company

secure by incorporation. This is to state but half of the

question. We do not contend, as respondent would have

this court suppose, that an electric light company could

incorporate in 1891, thereafter do absolutely nothing, and

now enforce a state granted right to go upon the streets

. of Norwalk with its ‘poles and lines. Respondent has

merely erected and demolished a straw man. Obviously

such\ an incorporation followed by nonuser of the right |

would constitute a waiver and abandonment thereof.

Hardin-W yandot Lighting Company v. Upper Sandusky;

.93 O. S. 428. However, such rights ¢culd not be defeated

or limited by the respondent city so long as the companies

| 31

formed in 1891 and 1895 seasonably undertook to exercise

them. In other words, reaffirming the .position stated by

us in our main brief at pages 50 and 51, the companies

~ organized in 1891 and 1895 derived thereby from the State ©

of Ohio perpetual franchises in Norwalk subject only as

a condition subsequent to the making of an agreement .

with the city as to the mode of use of the streets and pub-

lic places, or in the event of any disagreement or failure

to agree, to direction by the Probate Court as to thé mode

of use. That this condition subsequent has been satisfied -

because the predecessor’ compemne s organized in 1891 and

— 1895 and all their successors have“always exercised their

state granted rights under an agreement with the city as

to mode of use, we have demonstrated in our main brief,

pages 71 to 92, inclusive, and we shall not repeat om ar-

‘ gument here.

But it is said by valentin that the question is one —

of statutory interpretation as to which it cannot clearly

‘be said that the predecessor companies acquired anything

more than the capacity to secure an easement, with cases

cited at page 55 of respondent’s brief. Of those cases

Blais v. Chicago, 201 U. 8. 400, Cleveland Electric Ry. Co.

v. Cleveland, 204 U. S. 116 and Wabash R. R. Co. v. De-

fiance, 167 U. S. 88 state a general rule under greatly dif-

ferent circumstances, which is undoubtedly correct. Those

eases involved. such matters as street railway franchises

under statutes making the consent of the municipality an

express requirement, and the powers of cities to make

changes in the grants of streets. Here under the statutes

in force from 1887 to 1896 and the unwavering line of de-

cisions construing: them, one thing is clear, namely, that

the consent of the city to the exercise of franchise rights

by telegraph, telephone and electric light vempanies was

not sequired. oP

~~ -

' Approaching the question from another angle, re-

spondent in furtherance of its eminent. domain theory, as-

serts that the statutory privilege of the municipality to

agree upon mode of use did not relate to or mean the ex-

ercise of the police power. That contention cannot be

sustained. In Macklin v. Home Telephone Company, 1 O.

‘““* * * The right of use of the strects and public -

-ways by the sn sl company is wholly beside and

independent. of the municipality, and, of course, is to

be enjoyed like any other right, without let or hin-

drance from the municipality, except in the proper

exercise of its police power and the efficient dis-

charge of the duty imposed upon it by the provi-

sions of Section 2640, Rev. Stat. to ‘keep the streets,

avenues, alleys, sidewalks, public grounds and ~

bridges within the corporation open and in repair,

and free from nuisance.’ -Power to discharge the

duty imposed by Section 2640, Rev. Stat., in connec-

tion with the construction of a telegraph or tele-

phone plant is given by Section 3461, Rev. Stat., and

is expressly limited to an agreement fixing the mode

of use of the streets and publie ways;* ** ” (P.

aaa

Queen City Telephone ' elite v. City of Cincianaii,

73 O. S. 64.

Resyiondent, in its brief p. 67, claims thai the imme-.

diately foregoing case supports its argument that the pre-

- decessor companies secured only an inchoate right of em-

inent domain and quotes copiously from the opinion. In

fact, respondent assumes and claims that the following

quotation, taken from page 81 of the opinion, refers to the

right of eminent domain discussed on page 77 of the opin-

ion. The quotation is:

«<* * * But, taking the sections of the statute as a

§Supreme Court that it was the police power which was in-

~*~

whole and cohsidering the conditions imposed on the

exercise of such right, it is not to be inferred that

the municipal authorities are stripped of all power |

: to finally determine any matter relating to the gen-

eral subject,’’ (P. 81) ,

Respondent neglects to cite to this court the two sen-

' tences immediately following, on page 81 of the opinion,

which are as follows:

iia? & fF sunmnbetied that by section

2640 those authorities are given the control of the

streets and are required to keep them open, in re-

' pair, and free from nuisance. It is to be noted, also,

that by no statute is power given any tribunal to au- ~

thorize permanent structures upon or in, or the use

of any street, which will incommode the public, the

dominant purpose being to facilitate public travel

and transportation.’’ (P. 81)

We respectfully submit that respondent’s assumption

has no. basis except a wish. We submit it-is clear that the

sentence relied upon by respondent quite naturally refers

to the immediately following sentences, which we have just

quoted and which, clearly exhibit the opinion of the Ohio

volved.

And we further, submit. that it is demonstrated beyond }

any ‘further question that the words of the statutes giving

the city the right to agree upon a mode of use constitute a

recognition of the city’s right to a reasonable exercise of

the police power by Hardin-Wyandot Lighting Co. v. Up-

per Sandusky, 251 U. 8. 173 at page 178.

It is not necessary, as respondent suggests, for us to

maintain the ‘proposition that the city could barter away~

- its police power. Nothing in the statute with relation

to mode of use indicates that the mode of. use must be fixed

for any certain length of time. An agreement under the

' statute by the city and the utility with respect to mode of

use for the duration of one hour ‘accompanied by the ex-

ercise by. the utility of its rights in the streets under the

statute would have been a sufficient performance of the

condition subsequent as to a mode of use agreement. We

direct the court’s attention to the fact that from 1890 to

July; 1924 the predecessors of petitioner’s mortgggor oc-

cupied the streets withe@t a suggestion from the respond-

ent city that there should be any change in the mode of

_use. On July 1, 1924 the city’s council enacted a new ordi- |

nance regulating the construction and maintenance of elec-

tric light and power wires and petitioner ’s mortgagor and

its predecessors complied therewith. How can it then be:

said that there has ever been a failure to satisfy the re-

quirements of the 1887 statute which provided that the city—__

and the company might agree upon the mode of use? How

can it be said under such facts that any of the predecessor

companies were ever obliged to exercise an inchoate right

of eminent domain in order to secure a vested easement as

the city argues? payne

We direct attention, briefly, to some of the authorities ~

impose a limitation of term which would. be binding upon

petitioner’s mortgagors and its*predecessors: State Ex

Rel v. Central Union Telephone Co., 11 0. C. C. 55 (re-

spondent’s brief page’ 70) was decided six years before

Zanesville v. Zanesville Telegraph and Telephone Co., 64

O. 8S. 67, and tathe extent the statements contained there-

in are in conflict with the Zanesville case and the litie of

easés following it; they can not be regarded as law. Further-

more State Ex Rel v. Central Union Telephone Co. was

again before the Cirenit Court in 14 0. C. C. 273 upon the

merits and it was then held that the city was in no position

. :

to oust the company until it was made to appear that no

agreement as to mode of use could be made and that the -

company, after such failure, delayed unreasonably in ap-

plying: to the Probate Court fo fix a mode of uge. The Ae-

cision went upon the ground that the words in the propos-

ed ordinance as to rentals was an attempt by ‘the munici-

pality to secure an illegal exaction in violation of Section

3461, -Revised Statutes. This holding necessarily in-

consistent with the first ruling.

-The broad contention of the respondent city that it

could actually place a limitation in time upon the state

granted rights is also. based upon another line of cases

construing statutes patently dissimilar from the statutes

here considered. _ : = ‘

Louisville. Trust-Company v. City of Cincinnati, (C.

C. A. 6) 76*Fed., 296 involved] the street railway statute of

1852 which empowered municipalities ‘‘to agree upon the

manner and upon the terms and conditions’’ (italics ours)

. upon which their streets might be used. It will be seen at

once that the word ‘‘manner”’ ¢ that statute is equivalent

to the term ‘‘mode of use”’ in the statute here under con-

sideration, and that the broader phrase ‘terms and condi-

tions’’ in the street railway. statute therefore cannot pos-

sibly,he synonomous with ‘‘mode of use’’ as respondent

so pontifically asserts at page 79 of its brief.

Furthermore, in the very quotation from the Louis-

ville Trust \Case given in respondent’s brief-at page 76,

the court points out the distinction between franchises

conferred by the state by organization under the state law,

_and franchises such as those arising under the street rail-

way act which come from the municipality.

Pomona v. Sunset Telephone Company, 224 U..S. 330.

involved a constitutional amendment making the right of

' utilities dependent upon such conditions as the municipal-

PAG a ct aR RO UA EEO RE ea MN gh tA 8 ‘ o™~

ity might prescribe. Southern Bell Telephone & Tele-

grayh Co. v. Richmond, 103 Fed. 31 involved a statute giv-

ing use of streets with ‘*consent’’ of the city. Indianapolis

te Consumers Gas Trust ¢ "»mpany, 144 Fed. 640 involved

-an Indiana statute expressly conferring upon the city the

righi to grant or refuse adicense. In Re Rochester Elec-

tric Railway Company, 123 a. Y¥. ddl, involved a statute

. requiring municipal consent. The State, Ex Rel. Martin

~The Ohio Electric Poker Company, 35 O. A. R481, af-

fieined’ 121 O. S. 235 has been dealt with in our main brief

at pages 68-70. Paw huska v. Pawhuska Oil and Gas *Com-,

_ pany, 28 Okla. 563 was concerned with a statute contain-

ing the words ‘subject to the control of the local muni-

cipalities.’’ ‘Toronto ‘Electric Light Company ev. Toronto,

1917 A. C. 84, 33 Ont. L. Rep. 267 is likewise beside the

_point because, under the statutes there involved, no right

¢could exist or continue without the consent of the city.

The cases relied upon by respondent .can not. be *e-

garded as applicable upon the ground that the right to fix

‘‘terms and conditions”’

the municipality is the same as the right to agree on mode

of use. Any such cont@ntion ignores the fact that the ‘sta-

tute conferred no absolute powers upon municipalities, but.

that in the event of failure to agree, provision was made

for resort to the Probate Court to direct the mode of tse.

Whatever night have Been the interpretation relgtive to

the occupation of streets by railroads, the Ohio Supreme |

Court has held time and again that the privilege of agree-

pose ‘‘terms and ‘eonditions.’% Zanesville vy. Zanesville

Kista and Telephone aiideias. 64.0. S. 67; Farmer

» Columbiana County Telephone Co. 72 O. S. 526; Queen

ails Telephone Company v. Cincinnati, 73 O. S. 64.

The franchises are in perpetuity.

or to require the ‘‘qonsent’’ of .

gs sh —

. E 37 .

Northerw Ohie Traction Co, *, Ohio, 245 U. Ss. 374;° 4

Old Colony Trust Co. v. Omaha, ai U.S. 100-112-117. | -

Respondent’ s whole’argument, that the predecessor . sa

companies. ‘secured only an inchoate right of eminent do-

main, which was not assignable, and “which was swept +4

away by the Act of 1896, is permeated by the fallacious as-

sumption that there was never any agreement as to mode

of use. An agreement as to mode of use for any Jength of

time prior to the Act of 1896 was sufficient to make the ,

franchise rights indefeasible yo far as the city is con-

cerned.

There has always been agreement ‘as to mode of use. | =

The city by the ordinance of 1890, w hich: in terms dealt 3

with mode of use, tendered: an agreement which ran to a/ -

named partnership, its successors and assigns for a period

* of twenty years, The eity kuew at the time ‘that the im ‘

- tention of the partners was’ toNorm a corporation (see

supra, page 2 aid record pages 61,,62 and 63). The

city_knex of the transfer of all the partners’ "property, in-

eluding any Tights i in the 1890 ordinance to the corporation

formed in 1891. Thereafter all. of the successors in title

used the street¢ of the city with the city’s full knowledge

in accordance with the terms of the ordinance of 1890.

The city dealt contractually with regard to street lighting.

with some of the companies by contracts made i in 1895 and

1905.qAt the conclusion of the twenty-year period in 1910,

and theFeafter, the various companies continued the same

mode of use. Thc various companies and. the city have.

for years made joint use of each other’s poles, pursuant

to’ ordinance passed ‘in 1916 (plaintiff’s exhibit 37, R.

436) after the time when the city claims all rights were

gone. When the various -eompanies “made any changes in :,

the system the approval of the city authorities was ob-

tained. The city has never to the present time demanded

F638

‘

any new agreement of any kind, with the exception of the

ied with

acts as’

7 is now

ordinanee of 19: a4. The companies lave cor

the ordinance of 192%, and without repeating't

et forth in our main brie? at pages 83 to 89, the ¢

. pera to say that there 4 was never any agr cement as to

_ mode of use.

Upon these facts it is ridjeulous to talk about an in-

choate ri¢ht of eminent domain.

It is asserted hy respondent that an agreement as to

mode of use under the-Act of 1887 could be made only by

the method prescribed under Revised Statutes of Ohio

Se¢tion 1693, respondent’s brief page 95. A glance at that

statute shows that it was referable only to contracts by a

municipatity, that is, obligations by which the municipality

-weuld. become bouxd for the payment of money or some

other valuable consideration. Cities between 1887 ‘and

1896 having had novrights to, exact compensatien, impose

terms or otherwise contract with electric light companies

as to the right to use the streets, respondent’s argument

bared npon this statute must fall, because its based upon

«the false premise that municipalities could contract with

“regard to the occupation of their streets by such com-

panies |

_ The ease of Sears, Trustee, v. City of Akron, 24 U.8

243, respondent’s brief page 105, was ‘concerned solely

with the effect: of legislation upon inchoate rights. The

samé observation applies to the cases cited at page 108

of résnondent’ s brief. As- pointed out in our main brief

_and by the District Court, the record shows no attempt

by the state to exercise the reserve power with reference

to the rights of petitioner’s mortgagor or its predecessors.

The case of Ohio Public Service Company v. Ohio, ex

rel Fritz, 274 U. S. 12, effectively disposes of the areu-

an a 39 7 ; ; |

“ment, that the franchise rights could be. cut off on the ;

strength of the Act of 1896.~ a

* Respendent’s -argumenfy to the effect that the Ordi-

nance of July 1, 1924 does not have‘any bearing upon this

case consists of the assertion, without any authority there- —

for, that the ordinance could not-be a consént to thé use .

~ of, the streets under the Act of. 1896 and could not be an

agreement as to mode of use under the Act of 1887.. It is .

‘said to be solely a unilateral act by the. city_in the exercise

of the police power. While we most emphatically ‘deny ,

that it was necessary for the predecessor company operat-

ing in Norwalk at the stime this ordingfeé was passed to

secure a ‘consent shee Act of 1896, if this court should

be of the opinigf that sch a consent was requisite, no rea-

_ son_whateve y's gfven- nor authority” cited as to why the

ordinance could not -eopstitute such consent: , es

Certainly the company accepted the provisions of the

ordinance by complying, therewith, If, as we maintain, the

ordinance upon compliance therewith by the company

‘amounted to a modification of the old agreement or a new

agreement as to ‘mode of use, the contention that the ordi-

nance was a police’ measure “is. (perfectly consistént with

the position that we have taken, that the provision for -

agreement as to mode of use in the 1887 Act was for ‘the.

sole purpose of recognizing the police power of municipal-

ities. | : ; ~

Cincinnati v. Diamond Light Co., 4 Ohio App .177, cit-

_ ed‘at page 116 of respondent’ s brief has no bearing here.

ts | Respondent says in. that case the eourt denied a claim |

. that an ordinance similar to that of July 1, 1924 constituted, -

| a, ¢rant of right to lay conduits.in the streets. That the

erdinances are not similar is shown by the quotation from

‘the Cincinnati sa a page 117, respondent’s brief,

_ from which it. appeays that it was applicable only in the

. ‘

‘ s ‘ :

- ‘ . 4

P . . & *.

: Nesithe. P : 0 ’

ee o _

“event that municipal grants by other ordinances should

- first be made. The court?s decision there was based on a

provision which was omitted from the Norwalk ordinance; °

of 1924. The case therefore inferentially supports oul

i“

position.

en s :

e@ OO AV. . '

The _ Question As To The _Existgqnce Of The” Franchise .

. Rights And Petitioner’s Interest Therein ald Be -

Determined According To The Law . io’ As Es:

tablished At The Time The Mortgage." gives And. .

The ‘Bonds Issued.

We have been informed py suicuale for the respondent .

City that ‘they will rely Am argument: upon the ‘case of

Hawks v. Hamill, 268" U8.. ag. Apparently their claim

will be that that décision by this court supports their con-

tention that this court should follow the decision’ in the

_ qo beet case. (State ex rel Marlix v. Ohio Eleetric’

Powesr Co., 1210.8 . 230) decided after the” acquisition of

petitioner’ s rights involved hereing.

a> | Hawks v. Hanil having been decided Januap9, 1933,

the facts of that case are undoubtedly fresh in the minds’

of. the-members of thid court and we shall not repeat them.

AS. we construe the language of this. court in that ”¢ case, ih

does not enunciate the ‘standards of independent: - judgment

which this court would deeit~ appropriate under the far

different condftions of the case at bar. .There the jurisdic-

tion of the Federal Courts was invoked solely upon the

gfound of ‘diversity of citizenship. - Here. the’ jurisdiction ‘.

of the Federal Courts is invoked by. petitioner not only >

upon the ground of diversity of citizenship, but also upon

the claims of contract impairment and. lack of due Process

‘of. law. This court in the Hawks’ case specifically reecogniz-

ed. that different standards of independent judgment would

be appropriate: under the ‘conditions here present.

, a

“—

ft*2* > No controversy ‘is liere as to the impair- |

ment of the obligation of a contract in violation of

the restraints of the federal pre -7 oa We are

ge to confuse the standards of independent, judg-

ment appropriate in such conditions 0° ° (inion

— ; ee, A ey ae

. Page 9 of” that épinfun. 2

Coombes v. Getz, 285 U. S. 434, 441; —

‘Schriver v. Woodbine Bank, 285 U. S. 467,

” 475. j | Sf

There’the perpetual franchise to construct and operate

, a toll bridge was invalid under the single state court de-

cision’ rendered after the acquisition of the franchise be-.

cause it V ioyated a provision of the Stat8 Constitution a ae

hibiting perpetusties, which’ provision was in eXistence at

the time of the grant. ° Here, according to the law of Ohio tke

existing at tlic time of the franchise grants, as interpreted

by an unbroken line of decisions by the Supreme Court

of Ohio and by this court ini ‘cases from, Ohio, tendered

prior to the acduisition of petitioner’ s rights, the fran-

chises were valid, grants in perpetuity. | .

There, although the decision of the’ Oklahoma Su- ’

preme Court interpreting the term ‘‘perpetuities”’ as used

inthe State Cofistitution came after the franchise grant, ~

there had not been pr ior to the grant any decision by ‘the ,

state courts passing upon the validity of such a perpetual

‘grant as that relied upon. Here, prior to the agquisition

of ‘petitioner’s rights, there had been, as: stated above, an

.unwavering line of deeisions, in’ reliance upon which the —

ai Fights of tthe bond-holders were aequired prior to the i in-

stitution of the quo warranto suit.

There the case did not call for a decision as to the

ownership of the bridge or thé right of complainants i.

tear it down thereafter, ‘but related to the privilege of

—

ve Da a a wx prs .

PR naire aaah Ai Bil

2% i = saa

oF ks g's ee

saniitieaiae’ in exactinigpayments from the public for its

use while maintaing an obstruction of navigable waters.

Here the case involves the very essence of the bondholders’

security and does not involve any public , interest such as

that in the: Hawks ease. Here the respondent city is in’

terested . in ousting petitioner’s mortgagor which, will re-

sult in destroying the mortgaged property only in the

proprietary capacity of the City for its profit, because the

City in 1915 erected and ptt into operation a- municipal

plant which competes for the commercial business.

Furthermore, the decision in the quo warranto case

was made on a vitally diffeyent record from that in this

ease, It is not unlikely that on this record the decision of

the Ohio Supreme Court could lave been the same as that

_of the Distri¢t Court. This court in the Hawks case, stat-

ed the principle that the single decision of the state court

to be followed. should bes lear and unequivocal. The quo

- warranto decision does not nfect that requirement. / ¥n faet

it is not.a decision. at all of the case made by petitioner i in

the courts ‘below.

\ Ve:

The Rights ‘OF The an See Of Plaintiff’s Sisdiiniee

Were Not Terminated By Any Provision Of The Public —

Lighting Contract Of 1905.

We shal\not- repeat the argument contained in our

main brief u upon this feature, but will allude briefly to the

wholly unjustified claim at*page 119 of. respondent’s -brief

that the contract included within its scope rights with re-

spect to commercial and residence lighting service. It will.

be noted by a reference to thé-etause in the cohtract of

1905 (see respondent’s ‘brief“page 119) which did mention

commercial and residence lighting, that it was for the sole

purpose of preserving the right of the city to revoke the —

strect lighting rights, in- the event the company should

‘fail either to furnish street lighting or commercial and

residence lighting no such failure ever occurred), and ob- .

viously had ‘no ‘other or further effect.

Hee also the opinion of the Suprerne Court of. Ohio

in the quo warranto case, 121 O. S. 235, where the court

said, speaking of the 1905 contract:

if" * * no reference being made therein to corn:

mercial lighting * * * ”’ | che

(Appendix to respondent’s brief, page 175).

3. . “a ‘VIL : :

The Respondent City Is Estopped To Deny That An Agree-

ment As To Mode “Of Use Has Always Existed.

At page 124 of its brief respondent ‘sets. forth an im- .

‘perfect recitation of the bases of the estoppel which we

claim. nee j |

The bases of tlie satel upon which we rely-a are » set

out at pages $4, 85 and 91 of our main brief.

Respondent.-claims ‘that: po esto 1 can be predicated

upon the construction of the plant nd distribution system

in 1890 because the ordinance wag a grant to a partnership

and conveyed no rights after 1910. The claim ignores.the

facts that the ordinance ran to the successors and assigns

of the partnership and the council knew at the time that

“there was to be a corporate ‘successor, and of course the

corporate successors invested their money in the system.

- with the full knowledge and acquiescence of the city. The

generating plant erected in 1895 was of double the capa-

gity required to furnish service both to the public. apd -

private néeds of the city (R. 68) ‘and would not have

= except upon the understanding that the com-

pany possessed a continuous right to serve private/con- .

sumers (R. 73, 75).. The claim at page 129 of respondent’s.

ot ea = ee

briet that the city. took the, position at conferenees in™1914 a

ween city oflicials and reprentayves of the Cleveland, ?

southwestern and Columbus Railway Conjpany that the

we ie Was without right to oceupy the streets after

September 1, 1915 has no basis whatever in anything con-

tained in the record at the pages cited or anywhere’ else.

Respondent says that no claim of any franchise right, per-

petual or otherwise, waS ever inade by any of the com-

panies. There was no occasion for any such assertion un-

=. til the Village challenged the company’s right by the 1926,

‘ordinances. -The Village knew, however, that the "arious |

companies were openly and notoriously operating in the

streets at all tigies obviously under a claim of continuing

right. ‘The duty was on the city to notify the company if.

it was dissatisfied with the mode of use, This is ‘not. a

t case of continued use of the streets after termination of a

franchise. The point is the city by its conduct led the vari-

ous companies to believe the mode of use was satisfactory.

The city is therefore estopped to assert that there is no

“sueh agreement. Contrary to what, respondent | says at

page 131 of its: brief, there is evidence of capital invest-

ments after 1910. (R. 78, 84, 99). Respondent cannot help

itself on the issue of estoppel by “laiming as it does at

pages 151, 132 that the. equipment of petitioner’s mort-.

gagor in the City of Norwalk is in a sad state of repair

upon the hasis of fragmentary bits of evidence in the ree-

ord. Neithpr ean respondent avoid the estoppel by the -

itatethens 9 page 133 of its brief that it liad nothing to do

with the assessment of taxes and no standing to-object

thereto. The point, is it received its portion of the taxes

without objegtion. (R: 280.) ion ee. “

‘Misa, Tween, ness & Yew : ne .

(New York, N. ¥. ah -? ; a

“as an admission of, statenients contain

a ne a omaaien

, o ‘ .

: : D.-

CONCLUSION *

er matters

construed

ink . We think

sed of in our prin-

Our oision to mention herein | any “0

touched upon in espondent’ s brief is n

any such matters ‘are effectively dis

cipal brief. ‘

fully submitted,

4 f n . Gro. D. WELLEs, a “i

a | Toledo, Ohia, | ”

x 71% Counsel for Petitioner.

Karu F, Boxe,

Toledo, Ohio,

Tracy, Cuapman & WELLES, | | /

Toledo, Ohio :

. e ‘

Artuur A. GAMMELL, ; | Me

: : ra :

New York, N.Y. of ae

s . : Z ka "

TimotHy N. PFEIFFER, oF

. New York, N. Y.

Of. Cownse! for Petitioner.

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EIR THORS |

RRR PPE EN IS APT INS Oe ME I ee NT TT

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