[Vol. 125.

First Department, April, 1908. approved in New York Mail & Newspaper Transportation Co. v. Shea (30 App. Div. 266).

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

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

event.

INGRAHAM and HOUGHTON, JJ., concurred; Scorr and CLARKE, JJ., dissented.

INGRAHAM, J. (concurring):

I fully concur with Mr. Justice MCLAUGHLIN in his opinion, but I think something should be said in respect to the rule that "the contract as a grant of an exclusive right by a branch of the government is to be strictly construed in favor of the public," and, as included within this general proposition, that a grant of public property shall never by implication be extended to include property or property rights not plainly included within the description contained in the grant. This rule and its limitation was discussed by the Supreme Court of the United States in the leading case of Charles River Bridge v. Warren Bridge (11 Pet. 420). That case involved the construction of a legislative grant of a franchise, and the principle was applied, and it has been again and again applied in the Supreme Court of the United States and in this State and has never been doubted. Chief Justice TANEY, in his opinion, adopts the rule as stated in the case of Stourbridge Canal Co. v. Wheeley (2 Barn. & Ald. 793), as follows: "The canal having been made under the provisions of an act of Parliament, the rights of the plaintiffs are derived entirely from that act. This, like many other cases, is a bargain between a company of adven

App. Div.]

First Department, April, 1908.

turers and the public, the terms of which are expressed in the stat ute; and the rule of construction in all such cases is now fully established to be this - that any ambiguity in the terms of the contract must operate against the adventurers and in favor of the public, and the plaintiffs can claim nothing which is not clearly given to them by the act." Mr. Justice STORY, in his dissenting opinion in the Charles River Bridge case, thus states the rule: "It is a well known rule in the construction of private grants, if the meaning of the words be doubtful, to construe them most strongly against the grantor. But it is said that an opposite rule prevails in cases of grants by the king; for, where there is any doubt, the construction is made most favourably for the king and against the grantee. The rule is not disputed. But it is a rule of very limited application. To what cases does it apply? To such cases only, where there is a real doubt, where the grant admits of two interpretations, one of which is more extensive, and the other more restricted; so that a choice is fairly open, and either may be adopted without any violation of the apparent objects of the grant;" and again, "But what, I repeat, is most material to be stated is, that all this doctrine in relation to the king's prerogative of having a construction in his own favour, is exclusively confined to cases of mere donation, flowing from the bounty of the crown. Whenever the grant is upon a valuable consideration the rule of construction ceases, and the grant is expounded exactly as it would be in the case of a private grant favourably to the grantee. Why is this rule adopted? Plainly because the grant is a contract, and is to be interpreted according to its fair meaning. It would be to the dishonour of the government that it should pocket a fair consideration and then quibble as to the obscurities and implications of its own contract," and I cannot find that the principle as stated by Mr. Justice STORY is questioned or disapproved of. The principle of that case has been followed in many cases of the Supreme Court of the United States generally in the construction of legislative grants of a franchise to a corporation (see Fertilizing Co. v. Hyde Park, 97 U. S. 659; Coosaw Mining Co. v. South Carolina, 144 id. 550; Blair v. Chicago, 201 id. 400; Slidell v. Grandjean, 111 id. 412); and in Knoxville Water Co. v. Knoxville (200 id. 22) it was applied to a contract of a municipal corporation granting to a water company

[Vol. 125.

First Department, April, 1908. the right to construct and maintain waterworks in the city of Knox ville. In this latter case the court say : "It is true that the cases to which we have referred involved in the main the construction of legislative enactments. But the principles they announce apply with full force to ordinances and contracts by municipal corporations in respect of matters that concern the public. The authorities are all agreed that a municipal corporation, when exerting its functions for the general good, is not to be shorn of its powers by mere implication. If by contract or otherwise it may, in particular circumstances, restrict the exercise of its public powers, the intention to do so must be manifested by words so clear as not to admit of two different or inconsistent meanings." This principle was then applied because the plaintiff sought by implication to include in the contract authorizing it to construct and maintain waterworks, an obligation of the city not to itself construct such waterworks within the corporate limits. This principle has also been applied many times in this State, both as respects the grant of a public franchise by the Legislature, or the grant of property by the State or a municipal corporation. (See People ex rel. Third Ave. R. R. Co. v. Newton, 112 N.Y. 396; People v. Broadway R. R. Co., 126 id. 29; Trustecs of East Hampton v. Vail, 151 id. 463; Matter of Rhinehart v. Redfield, 93 App. Div. 410; affd. on opinion below, 179 N. Y. 569. The limitation of this principle, which is stated by Mr. Justice STORY in his dissenting opinion in the Charles River Bridge case, was considered by the Court of Appeals in the case of Langdon v. Mayor, etc., of City of New York (93 N. Y. 129). In that case the question was as to the construction of a grant by the city of certain lands under water adjacent to the upland property of the grantee for a valuable consideration. This grant contained mutual covenants for the construction of a pier into the river at the joint expense and for the mutual benefit of the parties, with a covenant on behalf of the city that the grantee should have the peaceable and quiet possession of the premises, and should use and enjoy to his own use all and all manner of wharfage, benefits and advantages growing, accruing or arising by or from the wharf or wharves to be erected on the west end of the premises; and it was claimed by the city that the general rule applicable to the construction of public grants is that such grants are to be construed most

App. Div.]

First Department, April, 1908. favorably to the public, and most strongly against the grantee; that nothing should pass by such grants except what is expressed in unequivocal language, and that whatever is not unequivocally granted is deemed to be withheld, nothing passing by implication - the principle insisted upon by the plaintiff as applying to the lease of the railroad to the defendant. In answer to this claim, Judge EARL, delivering the opinion of the court, says: "That rule of construction has been applied to gratuitous grants inade by the sovereign, of property, franchises and privileges, upon the solicitation of the grantees, and such were the grants in all the cases cited in the appellants' brief. But, so far as I have discovered, this rule has never been applied, certainly not in its full extent, to grants made for the benefit of the sovereign, upon adequate valuable consideration paid to the sovereign for the thing granted." The court cited with approval 3 Washburn on Real Property (3d ed. p. 172),* where it is said: "This strictness of construction in favor of the sovereign, and against the subject, applies only in cases where there is a real uncertainty or ambiguity in the terms of the grant. Nor, as it seems, is the rule applicable where the grant is for a valuable consideration. In such case the rule of construction between the government and the subject is the same [as] between private grantors and grantees;" and after an examination of the authorities, the learned judge says: "We have thus sufficiently referred to authorities as to the rule for the construction of public grants. It will be seen that the common-law rule is recognized in this country, which requires that all grants by the sovereign of exclusive privileges and franchises, and all gratuitous grants of land should be strictly construed against the grantee; but that the same strict rule of construction should not be applied to grants of land made for a valuable and adequate consideration paid or agreed to be paid by the grantee."

In the light of these authorities we will consider just what this contract granted to the defendant. In the first place it did not confer upon the defendant a franchise. That franchise was granted by the people of the State, and when the defendant became incorporated under the General Railroad Law (Laws of 1890, chap. 565, as amd.) it acquired a franchise to construct and operate a railroad. The *See 6th ed. § 2020.- [REP.

[Vol. 125.

First Department, April, 1908. defendant, thus having a franchise to operate a railroad, procured from McDonald an assignment of this contract between McDonald and the city of New York. By that contract McDonald agreed to construct this underground road for a price fixed to be paid by the city of New York. The city of New York leased the road constructed under the contract to McDonald. The contract provided : "The City hereby lets the railroad to the contractor for the term hereinafter mentioned. The railroad hereby leased includes the railway constructed under the routes and general plan thereof prescribed by the resolutions of the board adopted on the 14th day of January, and the 4th day of February, 1897, together with terminals, stations and all other appurtenances whatsoever of the said railroad, but not including the equipment thereof," for a fixed term. The lessee covenanted to fully equip the road, to operate it as a railroad and to pay to the city as rental for the property demised a sum equal to the annual interest upon the bonds issued, to provide means for the construction of the subway, and a further annual sum which should be equal to one per centum upon the whole amount of such bonds. This lease was certainly for a full and adequate consideration. It assured to the city during the term demised not only the interest upon the bonds which had been issued to provide means of construction, but also an amount which it was assumed would pay the principal of the bonds during the term. Many other onerous obligations were imposed upon the lessee, and in consideration of the payment of this rent and the performance of the covenants there was leased to the lessee the railroad constructed under the routes and general plan thereof prescribed by the resolution of the board and "all other appurtenances whatsoever of the said railroad." Now these ducts, the right to use which is involved in this action, were a part of the railroad constructed under this contract which was paid for by the city, or an appurtenance of the said railroad, the contractor being bound to pay the interest and one per centum of the principal each year as rental for the beneficial use of what has been constructed under the contract. The property leased to the contractor, therefore, included these ducts as well as the rest of the railroad, and he was to pay by way of rental all that it had cost the city to construct it.

It seems to me entirely clear by the terms of the lease, without