N.Y. Railroad Law § 173: Condition upon which consent shall be given; sale of franchise at public auction

§ 173. Condition upon which consent shall be given; sale of franchise

at public auction. The consent of the local authorities in any city

having a population of three hundred thousand or more must contain the

condition that the right, franchise and privilege of using any street,

road, highway, avenue, park or public place shall be sold at public

auction to the bidder who will agree to give the city the largest

percentage per annum of the gross receipts of such corporation, with a

bond or undertaking in such form and amount and with such conditions and

sureties as may be required and approved by the comptroller or other

chief fiscal officer of the city, for the fulfillment of such agreement

and for the commencement and completion of its railroad within the time

designated by law and for the performance of such additional conditions

as the local authorities in their discretion may prescribe. Whenever

such consent shall provide for the sale at public auction of the right

to construct and operate a branch or extension of an existing railroad,

such consent shall provide that but one fare shall be exacted for

passage over such branch or extension and over the line of road which

shall have applied therefor; and further, that if such right shall be

purchased by any corporation other than the applicant, the gross

receipts from joint business shall be divided in the proportion that the

length of such extension or branch so sold shall bear to the entire

length of the road whether owned or leased which shall have applied

therefor and of such branch or extension, and that if such right shall

be purchased by the applicant, the percentage to be paid shall be

calculated on such portion of its gross receipts as shall bear the same

proportion to the whole value thereof as the length of such extension or

branch shall bear to the entire length of its road, whether owned or

leased. The bidder to which such right, franchise and privilege may be

sold must be a duly incorporated railroad corporation of this state,

organized to construct, maintain and operate a street railroad in the

city for which such consent may be given; but no such corporation shall

be entitled to bid at such sale unless at least five days prior to the

day fixed for such sale, or five days prior to the day to which such

sale shall have been duly adjourned, the corporation shall have filed

with the comptroller or other chief fiscal officer of the city, a bond

in writing and under seal, with sufficient sureties, to be approved by

such comptroller or officer, conditioned that if such right, franchise

and privilege shall be sold to such corporation, to pay to the city

where such railroad is situated the sum of fifty thousand dollars as

liquidated damages and not by way of penalty in the event of the failure

of such bidder to fulfill the terms of sale, comply with the provisions

of this article pertinent thereto, and complete and operate its railroad

according to the plan or plans and upon the route or routes fixed for

its construction within the time hereinafter designated for the

construction and completion of its railroad, and also conditioned to pay

to the corporation first applying for the consent, if it shall not be

the successful bidder, the necessary expenses incurred by such

corporation prior to the sale pursuant to the requirements and direction

of the local authorities, within twenty days after such sale and upon

the certificate of the comptroller or other officer conducting the same

as to the sum or amount to be paid. Notice of the time, place and terms

of sale, and of the route or routes to be sold, and the conditions upon

which the consent of the local authorities to the construction,

operation and extension of such street railroad will be given, must be

published by such local authorities for a least three successive weeks,

at least three times a week in two daily newspapers of the city to be

designated by the mayor. The comptroller or other chief fiscal officer

of the city shall attend and conduct such sale and may adjourn the same

from time to time, but not more than four weeks in all, unless further

adjournments should, in his discretion, be necessary by reason of the

pendency of legal proceedings, and shall cancel any bid if in excess of

the gross receipts, leaving in force the highest bid not in excess, or

if the bidder shall not have furnished adequate security entitling such

bidder to bid, or shall otherwise fail to comply with the terms and

conditions of sale, and shall resell the consent and license in the same

manner as hereinbefore provided for the first sale. The bidder who may

build and operate such railroad shall at all times keep accurate books

of account of the business and earnings of such railroad, which books

shall at all times be subject to the inspection of the local

authorities. In the event of the failure or refusal of the corporation

operating or using such railroad to pay the rental or percentages of

gross earnings agreed upon, and after notice of not less than sixty days

to pay the same, the local authorities interested therein may apply to

any court having jurisdiction upon at least twenty days' notice to such

corporation, and after it shall have had an opportunity to be heard in

its defense, for judgment declaring the consent and right to operate and

use such railroad forfeited and authorizing the sale again of the same

in the manner hereinbefore prescribed, provided, however, that no such

resale of any such consent and right heretofore granted shall be

authorized except upon the condition that the same shall be subject to

all liens and incumbrances existing on said railroads at the time such

forfeiture may have been declared. All consents hereafter given by the

local authorities, unless it be otherwise provided in such consent or in

some renewal thereof, may be forfeited at the expiration of two years

thereafter. The board of sinking fund commissioners of any city shall

have power to reduce, compromise or release any obligation or liability

to the mayor, aldermen and commonalty of such city under the provisions

of chapter six hundred and forty-two of the laws of eighteen hundred and

eighty-six, or of this chapter, whenever, in the opinion of such board,

such release or compromise shall be just or equitable, or for the public

interest, the reason for any such release or compromise to be stated in

the recorded proceedings of such board. No lease by any company

organized under section five of this chapter and owning a right,

privilege or franchise of using any street, avenue, highway or public

place for railroad purposes, which was sold prior to May nineteenth,

nineteen hundred and eight, under the provisions of this section, made

after said date to any street surface railroad company which is not

subject to the payment of any percentage pursuant to this section, and

which is not organized for the purpose of operating a railroad in a city

having a population of three hundred thousand or more, shall be valid

until the lessee company shall have filed in the office of the

department of state and in the office of the clerk of the county where

its certificate of incorporation is filed, its acceptance in writing and

under its corporate seal of the provisions of this section as now

amended; and upon such acceptance being filed, the total percentage

amount thereafter to be paid annually under this section and under

section one hundred and seventy-five of this chapter, shall be at the

rate of five per centum of the gross receipts derived from the operation

of the roads of the lessor and lessee companies considered as one

system. The lessee company, at the time of filing its acceptance

aforesaid, shall also file in the same offices a bond to the people of

the state, executed in duplicate by it and a surety company authorized

by law to act as surety on bonds and undertakings, in the penal sum of

fifty thousand dollars, and conditioned for the faithful payment

annually of the total percentage aforesaid, and such bond shall be

deemed to be a full compliance with the condition for a bond or

undertaking required by this section to be provided for in the

conditions of the consent of the local authorities and shall supersede

any such bond or undertaking theretofore given. Whenever it shall be

desired to unite two street surface railroad routes at some point not

over one-half mile from such respective lines or routes, and establish

by the construction of such connection a new route for public travel,

and the corporation or corporations owning or using such railroads shall

consent to operate such connection as a part of a continuous route for

one fare, and it shall appear to the local authorities that such

connection cannot be operated as an independent railroad without

inconvenience to the public, but that it is to the public advantage that

the same should be operated as a continuous line or route, with existing

railroads, or whenever for the purpose of connecting with any ferry or

railroad depot, it shall be desired to construct an extension or branch

not more than one-half mile in length, of any street surface railroad

corporation, no sale of such franchise shall be made as provided in this

section, but any consent of the local authorities for the construction

and operation of such connection, extension or branch shall provide that

the corporation or corporations operating such connection, extension or

branch shall pay into the treasury of said city annually the percentage

provided for extensions or branches in section one hundred and

seventy-five of this chapter, for the purposes, at the times, in the

manner and upon the conditions set forth in such section. Nothing herein

contained shall be construed as superseding, repealing or modifying any

provision of the charter of any city, village or town, nor as modifying

or affecting the terms of a certain contract bearing date January first,

eighteen hundred and ninety-two, entered into by and between the city of

Buffalo and the various street surface railroad corporations therein

named in said contract, nor as modifying or affecting the terms of a

certain contract bearing date the twenty-fifth day of February, eighteen

hundred and ninety, entered into by and between the city of Rochester

and the street surface railroad corporation therein named, nor as

modifying or affecting any contract heretofore entered into between a

street surface railroad corporation and any city having a population of

less than fifty thousand, town or village regulating the payment of

percentages or paving of streets, and any such city, town or village, is

hereby authorized to enter into any such form of contract with any

street surface railroad corporation, and any such contract entered into

before said date is hereby ratified and confirmed. The local authorities

may, in their discretion, make their consent to depend upon any further

conditions respecting other or further security, or deposit, suitable to

secure the construction, completion and operation of the railroad within

any time not exceeding the period prescribed in this article and

respecting the character, quality or motive power of the road to be

completed and respecting the grouping of streets, avenues and highways

into one route, or into several routes, for the purpose of a single sale

of the franchise, right or privilege for all the routes collectively, or

of the separate sale for each route or street, as said local authorities

may think expedient, and respecting the payment of the percentage agreed

to be paid at the sale upon all the lines operated by the successful

bidder within the city and respecting any matter involved in or

affecting the computation of percentage payments and respecting the use

of the railroads to be constructed under the consent by any other

company and respecting the interchange of traffic and division of fares

between the company operating such railroads and any other company, and

respecting the application of any provision herein contained as to

carriage of passengers for single fare and the division of gross

receipts and the payment of percentages to the line leased or operated

under contract by the applicant for an extension, and also respecting

any other matter concerning which, in their judgment, further conditions

would be for the public interest. Nothing herein contained shall apply

to, or affect any grant hereafter made under the provisions of title

one, chapter three of chapter three hundred and seventy-eight of the

laws of eighteen hundred and ninety-seven and the amendments thereto

known as the Greater New York charter.