Municipal franchise

“ The rates that are charged, and the service rendered, are matters of vast importance to [Pg 35] the people of a city. Municipal ownership of such utilities has never been as extensive in this country as abroad, but the sentiment in favor of it is growing. Franchise rights used to be given for long terms, even in perpetuity, but public sentiment now demands that they be subject to revision at reasonable intervals. Most cities to-day own their own water-supply, and some of them have their own lighting plants. ”

“ For similar reasons many large companies doing business in New York or Philadelphia are organised under the laws of New Jersey.
A corporation may make an assignment just as may an individual. If all the members die the property interests pass to the rightful heirs, and under ordinary conditions the corporation still exists.
A franchise is a right granted by the State or by a municipal corporation to individuals or to a private corporation. The franchise of a railroad company is the right to operate its road. ”

“ Where the grantees of a franchise, as well as the grantors, are public bodies and the franchise is created solely for municipal objects, the grant is at all times within the control of the legislature, and consequently the charter is subject to amendment or repeal at the will of the granting power. ”

“ No one will dispute that it is entirely competent for the Legislature, when organizing municipal corporations, to prescribe the conditions under which the elective franchise shall be exercised. If, then, the legislators should come to approve this method, it could readily be applied in erecting future municipalities. ”

“ And underneath all these associations and organizations it is easy to discover the growth of a distinctly civic spirit, also manifest in special movements and conditions. The endeavor to build in one group buildings so important as a county court-house, a city hall, a public library and others reveals the willingness to surrender individual advantages to the public weal. The attempt to deal largely and justly with all municipal franchises proves the presence of a desire to serve all as well as each. ”

“ In every case where the financial condition of the municipality obliges it to rely at first upon private corporations for the construction and ownership of its public works, the franchise should expire at the end of a short term of years, and the city should then have the privilege of purchasing the works at their actual cost. ”

“ A franchise is merely a grant of the right to use public property (the streets, particularly) either in perpetuity or for a term of years and subject to certain conditions. Before any public service company can begin operations it must first secure a franchise from the state, city, town, or township as the case may be. ”

“ Some contend that a franchise is simply and purely a privilege given by the municipality to a water company to utilize the streets for the purpose of laying a system of pipes through which it may distribute and deliver water. It is not a license to do business, but a privilege to use public streets, alleys, and grounds. * * * If that interpretation is the proper one, the value of the franchise, if the property is to be purchased by a municipality, is comparatively nothing. ”

“ If the city became populous, the lots would be sold and built upon, and in the lapse of one or two generations, at most, the title of the original proprietors might well be presumed to be extinguished by sales or otherwise; so that the interest of themselves or their heirs in the streets and reservations would not be distinguishable from that of other citizens. They must also have contemplated that a municipal corporation must soon be created to manage the concerns, and police, and public interests of the city ”

“ If the legislature had placed great restrictions upon its capacity as a railroad corporation, it might plausibly be objected that the purpose of a municipal subscription to its stock would be so far thwarted. Such purpose is to promote the settlement and increase the business and enhance the value of the property of the municipality and of its citizens by furnishing the means of passage to all wishing to come or to go, and providing a means of bringing in the produce of other regions and of furnishing a market for its own. ”

“ When any small area becomes thickly and permanently settled, and a certain population is reached (which varies in different States) , the state legislature is appealed to, and a charter of incorporation as a city is granted. This enables the incorporated district to act independently of the county or township, to levy municipal taxes and carry out public improvements. Rapid as has been the growth of cities, the duties required of city governments have increased still faster.
The government of our large cities has become a question of vital importance. ”

“ The source from which the District obtains the means for maintaining public highways in the city is of no consequence so long as congress has made it, and permits it to remain, a mere municipal corporation, with such functions as pertain to municipal corporations proper. ”

“ It was very evident that many years would be required to carry out the purpose of the law respecting uniformity of franchises throughout the state, and, hence, the recent legislature, acting under the power reserved in the constitution to alter or repeal corporate franchises, and under the police power, amended every franchise, making it an indeterminate permit. ”

“ No private person can establish a public highway, or a public ferry, or railroad, or charge tolls for the use of the same, without authority from the legislature, direct or derived. These are franchises. No private person can take another's property, even for a public use, without such authority; which is the same as to say that the right of eminent domain can only be exercised by virtue of a legislative grant. This is a franchise. No persons can make themselves a body corporate and politic without legislative authority. Corporate capacity is a franchise. ”

“ It is not inconceivable that more radical needs will be recognized by legislatures and courts in the next twenty years. The need for the protection of the community against the selfishness of a few large property owners, for instance, may bring about the creation of a municipal board representing all the people of a community as a factor in the real estate market.
A municipality in the United States may become the owner of land by gift, dedication, or devise, and may use such land for any purpose whatsoever not inconsistent with the conditions of the gift, dedication, or devise. ”

“ They comprised the extension of the borough franchise to all rate paying householders, and all lodgers paying 10l. a year; the county franchise to be on a 10l. rental; elections to be by ballot and the expenses levied from the rates. The government reform bill, memorable by its 'fancy franchises,' was introduced by Disraeli on 20 Feb. Its introduction was preceded by a conference between Bright and Lord John Russell, which excited much surmise. ”

“ Municipal corporations are constituted by the incorporation of the inhabitants of boroughs; but if by statute it were declared that they should consist for the future of the mayor, aldermen, and councillors, the change would not affect the rights, powers, or liabilities of any human being. ”

“ But this overlooks the fact that the regulation of municipal corporations is a matter peculiarly within the domain of state control; that the state is not compelled by the federal constitution to grant to all its municipl corporations the same territorial extent, or the same duties and powers. A municipal corporation is, so far as its purely municipal relations are concerned, simply an agency of the state for conducting the affairs of government, and as such it is subject to the control of the legislature. ”

“ By the 'internal affairs' of a municipal corporation, in the administration of which the legislature could alone authorize it to incur a debt, was undoubtedly intended such business as municipalities of like character are usually required to engage in to fulfill their proper functions, and to effectuate the objects of their charters. ”

“ Counties, cities, and towns are municipal corporations, created by the authority of the legislature; and they derive all their powers from the source of their creation, except where the constitution of the State otherwise provides. Beyond doubt, they are, in general, made bodies politic and corporate; and are usually invested with certain subordinate legislative powers, to facilitate the due administration of their own internal affaris, and to promote the general welfare of the municipality. They have no inherent jurisdiction to make laws, or to adopt governmental regulations ”

“ This line of authority conclusively shows that the Court has never acknowledged that the States have power to do as they will with municipal corporations regardless of consequences. Legislative control of municipalities, no less than other state power, lies within the scope of relevant limitations imposed by the United States Constitution. ”

“ Nothing in this law has excited greater interest nor greater antagonism than this very question of home rule and the relations in general to municipalities. When the public utility act was first proposed there is no doubt but that the public utilities of the state thought they would gain by placing in the hands of some kind of a weak commission, a power which would protect them from the localities. They were constantly in fear of the encroachments of municipal ownership and the concerns which were granted spurious franchises in so-called competition. ”

“ These are under government control usually in cities, because they employ the public streets for carrying on the enterprise. The franchise is really an extension of the license in particular directions. This is usually issued with the expectation of great public benefit from a large investment of capital which would not be made without relief from competition, because not immediately profitable. The franchise usually carries with it certain restrictions as to use of public highways and limitation to a term of years. ”

“ A municipality is a living center of economic activity—a genuine case of essentially local economic interests. To be sure, the greater part of the manufacturing or commercial business transacted in a city belongs undubitably to the national economic system; but there is a minor part which is exclusively local. Public service corporations which control franchises in cities do not enter into inter-state commerce at all—except in those unusual cases (as in New York) where certain parts of the economic municipal body are situated in another state. ”

“ Repeated decisions of the State courts have established the rule that the legislature has the constitutional right to authorize municipal corporations to subscribe for the stock of a railroad company, and to issue their bonds to aid in the construction of such an intended improvement; that the supervisors of the municipality have the power, in case such a subscription is authorized, to subscribe for the stock of the railroad company, and to call an election to ascertain the will of the legal voters in that behalf. ”

“ THE PUBLIC OWNERSHIP OF LAND The ownership of land by the municipality is essential to the execution of many parts of a city plan. Certain acts of private owners which have a tendency to prevent the realization of a plan, either temporarily or for all time, may be enjoined by municipal regulation. ”

“ We think the following principles have been established by them and have become settled doctrines of this court, to be acted upon wherever they are applicable. Municipal corporations are political subdivisions of the state, created as convenient agencies for exercising such of the governmental powers of the state as may be intrusted to them. For the purpose of executing these powers properly and efficiently they usually are given the power to acquire, hold, and manage personal and real property. ”

“ The abuses growing out of the careless use of the franchise granting power have recently led to a more strict supervision of franchises to public service corporations. In most cities, franchises are no longer perpetual, but are limited to a definite and rather short period, say fifty years. To an increasing extent, franchises are drawn up by experts, so that the terms of the grant will safeguard the interests of the public. ”

“ Upon the merits, irrespective of the effect of the former decree, we think the object and purpose of the franchise granted to Bullock & Company, and their successors, was to permit and protect the operation of a system of waterworks to the end of the franchise term. After that time the city was to be free to supply its inhabitants itself, if it saw fit, or make other contracts with those who could supply the wants of the city in that respect. ”

“ 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 mere implication. If, by contract or otherwise mere implication. ”

“ It seems to be the consensus of opinion of eminent legal authorities that all grants of franchises for public utilities are made upon the implied condition that the corporation receiving them will properly perform its obligations by furnishing reasonable accommodations to the public; and that when a corporation has committed its property to a public use, the public has a right to require proper performance of such duties under penalty of forfeiture of the franchise. ”