Chesapeake & Potomac Telephone Co. v. Mayor of Baltimore

⁷⁰² Pearce, J., delivered the opinion of the Court. The appellants, being the plaintiffs below, filed a bill in the Circuit Court of Baltimore City, for the purpose of enjoining the city authorities from preventing, obstructing or in any way interfering with the construction by the plaintiffs, under the supervision of the City Commissioner, of underground conduits upon certain streets named in the bill, according to the plans of location and construction filed with the bill, or with the making of the necessary excavations for such conduits, or with the use thereof for the laying and using of telephone wires therein. The material facts of the ca'se may be condensed as follows : The Chesapeake and Potomac Telephone Company is a corporation of the State of New York, authorized to construct and operate telegraph lines partly in, and partly out of the State of New York, including all the cities, towns and villages of Maryland, and has ever since its incorporation in 1885, exercised its franchises both in the State of New York and in Baltimore City. The Chesapeake and Potomac Telephone Company of Baltimore City was incorporated under the laws of Maryland, in March, 1884, its stock being owned by the Chesapeake and Potomac Telephone Company.

It is authorized to construct telegraph lines upon any roads, highways, or streets, within the State, by erecting the necessary poles and fixtures, and to acquire the property of any telegraph companies then, or thereafter existing, and it did thus acquire various telegraph lines. By the decisions of this Court, telephone lines are included within the term, telegraph lines, and by chapter 161 of 1886, now sec. 254 of Art. 23 of the Code of Public General Laws, all corporations formed as the Chesapeake and Potomac Telephone Companj'- of Baltimore City was formed, and then in practical operation in Baltimore City, were authorized to lay any part of their lines underground, on any route where they were authorized to construct such lines above groupd, but all corporations not in practical ⁷⁰³ operation at the adoption of the Code of 1888, were obliged to obtain a special grant for this purpose from the State, and the assent and approval of the Mayor and City Council, before using either the surface, or the sub-surface of the streets. Prior to 1889 there were no underground conduits in Baltimore City for the use of telegraph or telephone lines, but during that year the plaintiffs established a Telephone Exchange in a new building upon the corner of St. Paul street and Bank lane, a thickly-settled business location in the central portion of the city, and on Maji- 9th, 1889, the Mayor and City Council enacted Ordinance number (41) forty-one, entitled “ An ordinance to provide for laying the wires of the Chesapeake and Potomac Telephone Company of Baltimore City, or of the Chesapeake and Potomac Telephone Company, or of both oh said companies, in underground conduits in the City of Baltimore.” The preamble of this ordinance sets forth that if the overhead system of wires is wholly continued, the number of such wires along the street leading to the exchange must be largely increased ; that such increase and concentration at so central a point is not desirable, and that the public convenience requires that such wires, so far as practicable, should be laid in cables underground. It then proceeds to enact and ordain that the said two Telephone Companies, acting separately or in conjunction, be authorized “ to lay their wires to be used in connection with said exchange,” in suitable conduits *• under the surface of the streets, alleys or highways in said city now traversed, orto be so traversed by their respective wires,” provided said conduits be so constructed as not to injure any vault, sewer, water or gas-pipe, and provided further, that “ the grant” above-mentioned should not be deemed an exclusive grant, and that the same should cease and determine, unless three miles of such conduits should be constructed within two years from May 9th, 1889, and that after said two years, and as rapidly as said wires should be laid in said conduits, ⁷⁰⁴ all poles of said companies along all streets upon which their conduits were so laid, should be removed, and should not be replaced, except when necessary to make connections with the buildings to be served by such conduits and wires.

It further ordained' that said Telephone Companies, “ in consideration of the rights and privileges granted to them by this ordinance,” before constructing any portion of said conduits, should comply with the following requirements : xst. To execute an agreement, in form, and with security to be approved by the Mayor and City Council, to pay to the city annually thirty cents for each lineal yard of the first four miles of conduits so constructed, and twenty cents per lineal yard for all over four miles, provided no annual payment should be less than $3,000; also, before constructing any portion of such conduits, to file with the City Commissioner a plan showing the location and character of all conduits next proposed to be constructed, which construction should always be under the supervision of the City Commissioner; and to replace all paving removed in said construction, to the satisfaction of said Commissioner. 2nd. To provide in every conduit so constructed, space, free of cost or rent for the laying therein, by the Fire Commissioners of the city, of a cable for the exclusive and official use of the Police and Fire Alarm Telegraph, and the Police and Patrol wires. 3rd. Before exercising any privileges under said ordinance, to execute a bond in the sum of $10,000, with approved security, conditioned for the faithful performance of all requirements of said ordinance on the part of the said companies.

The bill avers- that the plaintiffs accepted the provisions of this ordinance, and that much more than three miles of conduits were constructed within two years from its approval ; it sets forth in detail compliance by the plaintiffs with each and every requirement of the ordinance, and charges that said ordinánce so enacted and so accepted, ⁷⁰⁵ constitutes a contract reasonable in its terms, which the city was competent to make, and which is binding on both parties thereto. In 1892 the Legislature of Maryland, by chapter 200 of that session, authorized the Mayor and City Council of Baltimore to provide a series of conduits under the streets, lanes and alleys of said city, either by constructing the same, or by authorizing'their construction by any person or corporation, but expressly provided therein “that nothing herein contained shall be deemed or taken to modify or change in any manner the provisions of Ordinance number forty-one (41), or the rights and privileges granted thereby.” In 1898, the Legislature, by chapter 123 of that session, enacted the new charter of Baltimore City, being a repeal, and re-enactment with amendments, of Art. 4, of the Code of Public Local Laws. In section 6 of Art. 4, as thus, amended, under the subhead “ Streets, Bridges, and Highways,” the general powers of the Mayor and City Council in relation thereto, are enumerated and prescribed. Among these, is the power to regulate the use of streets, highways and roads, and to prevent encroachment thereon, or obstruction of the same, and to regulate the opening of street surface for the purposes authorized by law or ordinance ; to regulate the use of streets, lanes or alleys by telegraph, telephone or other wires, in, under, over or upon the same, and to require all such wires to be placed under-ground after such reasonable notice as it may prescribe; and to provide for a series of conduits — using in this last connection the exact language of the Act of 1892, and then adding, also in the exact language of that Act (except that the: word “ Article ” is substituted for the word “ Act”), that: “ nothing herein contained shall be deemed or taken to> modify or change in any manner the provisions of Ordinance number forty-one (41).” The bill then avers that in reliance upon the rights and privileges secured by Ordinance 41, the plaintiffs constructed during 1889 and 1890, in the streets of Baltimore, more ⁷⁰⁶ than eleven miles of underground conduits, in all of which space was provided, free of cost or rent, for the laying of a wire for the exclusive use of the city, and in most of which such wire was laid, and has been used by the city, from the construction of the conduits down to the present time.

That in thé year 1898 the plaintiffs found it necessary, for the accommodation of their increasing business, to construct additional underground conduits in the northern and western part of the city, in accordance with plans submitted to the City Commissioner, and that they obtained a permit therefor on August 8th, 1898, in pursuance of which, and under the supervision of the City Commissioner, they proceeded with the construction of said conduits and the laying of cables therein, until the middle of November, 1898, and that said last-mentioned cables and conduits, constructed at a cost of over $29,000, are now used in connection with said exchange, and that in all of them provision is made for a wire for the exclusive use of the city of Baltimore. The bill further avers that, while under Ordinance 41 no permit is required for the construction of said conduits, yet by Ordinance No. 2, of 1892, it is provided that no person or corporation shall, for any cause whatever, dig up, or uncover any of the streets, lanes or alleys of the city, without a written permit therfefor from the City Commissioner, approved by the Mayor; and that the plaintiffs, being willing to comply with this regulation, and having need to construct underground conduits upon Roberts, Madison and other streets, on the 24th of April, 1899, applied in writing for a permit, filing at the same time plans of the location and character of such proposed conduits as required by the ordinances ; but that on April 28th, 1899, the City Commissioner refused to issue the permits applied for, or either of them, without assigning any reason for such refusal; and the plaintiffs then charge that the true reason therefor was the passage by the Mayor and City Council, on April 18th, 1899, of an ordinance, a copy of which was filed ⁷⁰⁷ with the bill, purporting to repeal Ordinance forty-one (41), and providing that such repeal shall not interfere with the use and control of conduits constructed under Ordinance forty-one (41) before January 1st, 1898 — provided such conduits do not interfere with the future use of the streets upon which the same are constructed. The bill further charges that the permit applied for having been wrongfully refused, the plaintiffs are entitled to proceed without such permit, and are desirous to do so, but they aver that they have good reason to believe, and that they do believe that the Mayor intends to use his official authority, and his influence with the police, directed by the Marshal thereof, to prevent by force the construction of such conduits, and they therefore pray for an injunction against the Mayor and City Council of Baltimore, William T. Malster, Mayor of the City of Baltimore, and Samuel T. Hamilton, Marshal of the Police of said city, enjoining them and their agents from interfering in any manner with the construction of said conduits upon the streets named in the prayer of the bill. The bill, with exhibits sustaining its allegations, were filed May 1st, 1899, and were immediately laid before the Court, Judge Wickes, who on the same day, “ upon consideration of the foregoing bill of complaint,” passed a decree refusing the injunction — from which decree this appeal is brought.

The defendant has moved to dismiss the appeal upon the ground that it appears upon the face of the record, that its object is to obtain from this Court a preliminary ruling on an ex parte statement of a question involving public interests of great magnitude, without notice to defendant, or those to whom is confided the duty of protecting those interests ; but this motion cannot prevail. Sec. 29 of Art. 5 of the Code of Public General Laws provides that whenever any Court having equity jurisdiction shall refuse|to grant an injunction according to the prayer of the bill, an appeal may be taken from such refusal. This section had its origin in the Act of 1832, ch. ⁷⁰⁸ 197, which authorized an application to the Judges of the Court of Appeals, or one of them, when an injunction should have been refused by the County Court. Under that Act, only the bill and the exhibits were submitted to the Judge of the Court of Appeals, and the original papers were forthwith transmitted by the Clerk.

In Steigerwald v. Winans, 17 Md. 62 , the Court held that a complainant has the right to demand a decision on his bill, and if the injunction be refused, to appeal directly to this Court; but if he elects to postpone his appeal till proof is taken, and the cause decided on it, his right of appeal under this section is gone. In Bell v. Purvis, 15 Md. 22 , it had been previously decided that where an answer comes in before injunction ordered, and so denies the equity of the bill as to authorize dissolution of the injunction on motion to dissolve, the injunction ought not to be granted; and the same was also held in Barnum v. Gordon, 28 Md. 97 . In that case the Court said that the Judge to whom an application for an injunction is made, may with perfect propriety take time for consideration, and give notice to the parties to be affected by the injunction, and afford them an opportunity to be heard, in any case in which he may believe the purposes of justice may be thereby subserved. But it is obvious that chis is a matter necessarily within the discretion of the Court, and this discretion must in the present case, as-in all others, be deemed to be exercised with as much wisdom and propriety, in forbearing to give, as in giving such notice.

The case last mentioned was decided in 1867, and evidently, in consequence of these decisions, ch. 102 of 1868 was enacted, which added to sec. 29 of Art. 5 the provision that the right of appeal thus given shall not be prejudiced by the filing of an answer, nor by the taking of depositions with reference to the allegations of the bill, and that the appeal should be heard on a transcript of the bill or petition, with such other papers in the cause as may be necessary, so soon as conveniently may be after such trans-script shall have been filed in the Court of Appeals. ⁷⁰⁹ The Act of 1868 therefore changed the rule previously declared. In O’Brien v. Balt. Belt R. R., 74 Md. 363 , the answer was filed before injunction ordered, and, being in, was entitled to be considered, but could not per se defeat the right of appeal. In Bonaparte v. Balt., Hampden and Lake Roland Co., 75 Md. 340 , Mr. Bonaparte sought an injunction to restrain defendant from constructing its railroad across an avenue by which he had access to his premises, alleging that defendant’s charter was void, and work thereunder was being prosecuted without lawful authority.

When the bill was filed and preliminary injunction was asked for, instead of granting the injunction at once and outright, the Judge set a day for hearing and until that hearing could be had, passed a restraining order. The defendant contended that this restraining order was a preliminary injunction, and that the order passed after hearing was the dissolution of the injunction already granted, and it therefore moved to dismiss the appeal ; but the Court said it was evident the Judge below desired to know whether a case was made for preliminary injunction, and therefore ordered a hearing on the application made by the bill, and the motion to dismiss was accordingly overruled. The inference from this is too plain for controversy' — that the Judge might, had he seen fit, have granted the injunction without hearing, and that in such cáse there would have been a right of appeal. We therefore think the plaintiffs, in the course pursued, were in the exercise of their legal right to present the question raised by the appeal, and the motion to dismiss will therefore be overruled.

It is contended on the part of the defendant that Ordinance No. 41 has none of the elements of a contract, but that it is simply a license, revocable whenever the public interest requires its revocation, saving, of course, any rights which the plaintiffs have acquired up to the time of revocation, as attempted by the repealing ordinance ; while on the part of the plaintiffs it is contended that the passage of Or ⁷¹⁰ dinance No. 41 was a proposition to the plaintiffs to enter into a contract securing to them valuable rights and privileges, upon valuable considerations moving from them, and that upon acceptance by plaintiffs of the provisions of said ordinance and compliance by them with all its stipulations, a valid contract was made and concluded, and that after the construction thereunder of three miles of conduits within two years, the contract by its terms became irrevocable, and the repealing ordinance is for this reason inoperative and void. The defendant relies largely, in support of its contention, upon the decision in the Lake Roland Elevated R. R. case, 77 Md. 352 . In that case an elaborate and learned opinion was delivered by Judge Bryan, holding that the ordinance of the Mayor and City Council of Baltimore authorizing the railroad to lay down double tracks on certain streets in the city, was not irrevocable, and that a subsequent ordinance, repealing that part of the previous ordinance which authorized double tracks on Lexington street, but permitting a single track upon certain conditions, was a valid exercise of power by the Mayor and City Council, but we have not been able to discover any expression of opinion, or any intimation therein, or in the opinion delivered by Judge Alvey in overruling a motion for reargument, that the grant was regarded merely as a license, as was argued by defendant’s counsel in his brief in this case. The proof was that if double tracks were permitted on Lexington street, their existence would be incompatible with the use of that part of the street by vehicles of any description, and that the sidewalks alone would be available for use by the general public.

Judge Bryan said it was the duty of the city authorities to preserve the streets for their primary legitimate purposes, and that it was not competent for them by such a grant to defeat these purposes. The whole opinion went upon the ground that such contracts are made upon the implied condition, understood and accepted by the grantee, that if the safety, health or morals of the public shall require the rescis ⁷¹¹ ion or modification of such contract it may be rescinded or modified under the police power of the State, or of the city, where the city has been vested by the State with such power. In illustration of the application of this rule of law we may cite the case of N. Y. & N. E. R. R. v. Bristol, 151 U. S. 556 , in which the removal of a grade-crossing constructed under the charter was ordered, and an overhead-crossing was required at the cost of the railroad. The action of the Legislature was sustained, the Court saying that the inhibitions of the Constitution of the U. S. upon the impairment of the obligation of contracts, are not violated by the legitimate exercise of legislative power in securing the public safety, health or morals.

And in the later case, of the C. B. & Q. R. R. v. Omaha, 170 U. S. 57 , where the State undertook to alter the terms of a contract under which a viaduct had been built at the joint expense of the city and the railroad, it was said that, where the subject-matter of the contract is one which affects the safety and welfare of the public, it is held to be within the supervising power of the Legislature, when exercised to protect the public safety, health or morals, and that the clause of the Federal Constitution, which protects contracts from legislative action, cannot in every case be successfully invoked. “ The presumption is that when such contracts are entered into, it is with the knowledge that parties cannot, by making agreements on subjects involving the rights of the public, withdraw such subjects from the power of the Legislature.” It was upon the same principle that this Court proceeded in Rittenhonse v. The Mayor and City Council, 25 Md. 336 , in sustaining the repeal of an ordinance providing for the erection of an almshouse, and in annulling a contract with Rittenhouse for its erection, but providing for an equitable settlement for work done under the contract. The site of the building having been found to be unhealthy, due regard for the safety of the inmates and for the public welfare required that the site should be abandoned and work upon the building discontinued. We cannot agree with the coun ⁷¹² sel for defendant, that Judge Alvey, in his opinion on the motion for reargument in the Lake Roland case, treated the grant of the privilege of the streets to the railroad as a license. We think he dealt with it as a contract, liable to rescisión or alteration only by reason of the duty of the city to keep the streets safe for their ordinary uses, and that his referenceto compensation, “in accordance with a well-established principle in the case of the revocation of an executed license,” was but a legal analogy altogether appropriate for the illustration of his argument.

We think the result of Ordinance No. 41, and of its acceptance by the plaintiffs, was the creation of a valid contract, and that there is no evidence or suggestion in the record, of any danger to the public health, safety or convenience which would warrant its rescisión by the Mayor and City Council in whole, or in part. On the contrary, the recitals of that ordinance show that both the public safety, and the public convenience were controlling considerations with the Mayor and City Council in its enactment; and in the body of the ordinance the public interests were sedulously guarded by the following provisions : 1st. That the right to lay underground conduits should not be deemed an exclusive grant so as to create a monopoly. 2nd. That the rights granted should be forfeited unless a permanent underground system was assured by the construction of at least three miles of conduits within two years thereafter. 3rd.

That all poles or lines where conduits were laid should forthwith be removed, except when required for house connection. 4th. That an annual charge of from 30 fo 20 cents for every lineal yard of conduit laid should be paid to the city. 5th. That in each conduit laid space should be provided free of cost or rent for a wire for the exclusive use of the city authorities ; and 6th. That an adequate bond should be given for the faithful performance of all these requirements.

Chapter 200 of the Acts of 1892, and the New Charter, ch. 123, of 1898, both afford evidence that there has been no change in the views entertained by the public as represented by the Charter ⁷¹³ Commission and the Legislatures of 1892 and 1893, as compared with the views of the Mayor and City Council, by whom Ordinance No. 41 was enacted, since both Acts of