wholly to the stockholders of the respective panies. The receipts for the use of telelocal companies. In fact, the Bell Telephone phones are in all cases collected by the local Company is largely instrumental in procur- companies, and the defendant company has ing the organization of local companies in no right, in any case, to make such collecNew York to transact the business carried tions, except upon a default in the payment on under their contracts, and has usually of royalties or dues by the local company, subscribed largely to the capital stock of such when, in some instances, the licensor is aucompanies. As has been observed, this busi- thorized, in order to protect itself from loss, ness is conducted under contracts between to collect, in the name of the local company, the Bell Telephone Company and the several so much of the dues owing to it by its cuslocal companies, and is usually provided for tomers as will satisfy the sums due and unin three separate contracts, adapted to the paid to the defendant company. It is also, particular use which was intended to be in some cases, upon the default of the local made of the telephones leased. These con- companies in supplying telephonic facilities tracts are quite voluminous, and are replete to their customers, authorized to take posseswith detailed qualifications and restrictions sion of their plant, and to carry on the busiimposed upon the local companies by the Bell ness until other satisfactory arrangements Telephone Company in regard to the use to can be made for carrying it on. The receipt be made of their instruments, and intended by the Bell Telephone Company of the royto protect the rights secured to the licensor alties and dues stipulated to be paid to it by by its patents. It is unnecessary to refer to its licensees discharges all of the obligations these restrictions in detail, as they do not af- assumed by the licensees under the contracts, fect the problem under consideration. So except those incurred by the restrictions upfar as the provisions of the contracts bear up on the mode of using telephones, which were on this controversy, they will be referred to introduced in the contracts by the defendant The patented instruments used consisted of a for the sole purpose of protecting its pattransmitter and a receiver, costing about tents, and its general interests, in carrying $3.50 to manufacture. The use to which on the business of leasing telephones for pub

by the lic use. defined in these contracts as—First, contracts for exchange systems; second, contracts for ephone Company, under their contracts, maj extraterritorial connecting lines; third, con- be stated, concisely, as an obligation to fur. tracts for private lines. The first class em- nish the local companies, at such times as brares the business of constructing lines and they may call for them, with a sufficient apparatus within a certain described area, number of transmitters and receivers to supand affording facilities for telephonic com- ply the demand for the same by the patrons munication between the customers or sub- and subscribers of the local companies. The scribers of the company having control of the obligations of the local companies are to exbusiness in the district in which such cus- tend the use of such instruments as much as tomers reside. This embraces the usual and possible; to furnish plant, poles, wires, ordinary mode of using telephones, and cov- switch-boards, and switches, and other appliers by far the most lucrative and extensive ances to connect the instruments leased with method of employing teiephones by the pub- the central office of the company, and with lic. Other occasional uses are those desig- such other leased instruments and lines as nated as "extraterritorial contracts” and they are permitted to connect with; to use "private lines contracts." These uses are of the instruments leased only in the prescribed a limited nature, and the receipts therefrom modes, and to pay monthly to the Bell Tele. are comparatively insignificant, amounting phone Company, in Boston, the royalties and in the aggregate to about one-fiftieth part of dues upon each instrument delivered, by the gross amount received in the business. whomsoever used, or for whatever use it may They are significant only for the use which be devoted. In the initiation of the business is attempted to be made of them through of furnishing facilities for communications some slight differences in the provisions of through telephones, it is obvious that there the contracts relating to the conduct of the were but two practical modes which the derespective kinds of business. The sums re- fendant could advantageously pursue. The quired to be paid by the local companies to first was to engage in the business of erectthe defendant company for royalties upon ing plants, wires, and appliances in the vathe instruments leased by them vary slightly rious towns and cities requiring such facili. between the various local companies, and ties, and to conduct the business through its also according to the character of the use own servants and agents. There were obwhich is made of them, but are controlled, in vious objections to this plan, as it involved certain instances, by a percentage upon the the employment of a vast capital, the incuramounts received by the local companies ring of enormous expense, and the conduct from their respective custoiners and sub- and control of an extensive and complicated scribers, and which sum is specified and fixed system, beyond the capacity of a single comin each contract. The sums, however arrived pany to successfully manage and conduct in at, are intended as the measure of the com- detail. Such a system would not only have pensation of the licensor for the use and ein- brought the property and business of the cornployment of its telephones by the local com- pany, employed in any particular state, di

rectly within the system of taxation author- of furnishing telephonic facilities to the citi. ized by the laws of sucli state, but would ex- zens of the state; and, unless it was intended pose them to the imposition of taxes in each by the legislature, in the statute referred to, of such states, beyond the ability of the most to impose double taxes, it is impossible to say prosperous and wealthy corporation to bear. that the Bell Telephone Company was also The second mode of conducting such busi- liable to be taxed upon the same business, or ness, which was the one adopted, was to ap- any part thereof. In the absence of a clearly portion the territory of the Union into dis- expressed intention to do so, it will not be tricts, and to lease to and license the use of presumed that the legislature intended to imtelephones by persons or corporations in pose such taxes. each of such districts, to be used by them in As we have before said, the sole question connection with such plant, lines, and appli- is, what company, in fact, conducted and ances as they should require and supply, up- controlled the business which resulted in the on such terms and conditions as might be im- collection of income from the people of the posed by the licensor, for the protection of its state? Such business, obviously, could not rights, and the profitable and secure employ- have been practically or theoretically conment of its property, but to be conducted ducted by two companies. Neither could the with the capital of the licensees, and under receipts therefrom have been the exclusive their management and control. This system property of each of two different persons or would also subject the business, and all prop- companies. They must necessarily have been erty employed and earnings derived from the that of one or the other. This question is to business, to taxation under the laws of the be determined by an examination and constate where it was carried on. By this sys- sideration of the whole contract, and the tem the licensor retains the ownership of its facts disclosed by the submission, indicating patents, and the supervision and ownership a practical construction by the parties there of all instruments manufactured thereunder, to of such contract. It cannot correctly be and all rights of use in the various states not determined by a consideration of a few inde-, expressly granted to others, with the right of pendent and special provisions, applying to manufacturing such instruments, and leas- some of the incidents of the business, but ing them to be used in any unoccupied terri- must be reached by a consideration of all of tory, upon such terms and conditions as its provisions as an entirety. It is also manwould best promote its own interests. It was ifestly incorrect to say, under this contract, lawful for the defendant to pursue either of that a part of the business carried on could these courses; and it is not justly subject to be the business of one company and a part of censure or criticism for the course adopted, it that of another; for the actual conduct of whatever it might be. It is obvious, from the whole business, as an entirety, was inthe method of doing this business, that, what- trusted to and under the actual control of ever special provisions may be found in the but one company, either as agent or princicontracts, there could have been no intention pal, and was clearly so intended to be by the on the part of the defendant or its licensees to contract. The contract is to be construed acevade taxation in this state; for, by the mode cording to the intentions of the parties, as exadopted, the use of telephones here is conduct- hibited by its provisions and the acts of the ed wholly by corporate companies having capi-parties under it; and, unless it can be clearly tal stock, possessing a plan of business, and inferred from those sources of information. owning the plant, wires, poles, switches, and that it was intended to create a business to switch-boards necessary to carry it on, with be conducted practically and potentially by authority to collect and receive the entire the Bell Telephone Company, and that such earnings for the use of telephones in the state business has been actually created and purand subject to taxation upon all its property sued by them, the appeal must be sustained. and business. The case does not disclose the The contracts being such as were lawful for aggregate capital of the several local compa- the companies to make, and showing an innies in the state; but it is manifest that all tention that the local companies should transof the capital necessarily required in doing act business on their own capital, owning or their business is vested in and owned by such controlling the property with which the buslocal companies, and it is indisputable that iness was done, collecting and receiving the only the capital actually employed in such bus- earnings of such business, and entitled to eniness is justly subject to taxation in this joy them as its own property, subject only to state. It is manifest, therefore, that none of the payment of such obligations as it lawfully the property employed in the prosecution of incurred in the prosecution of its business, this business, or the earnings received there it is difficult to see any foundation for the from, can escape liability for the payment of claim that the business thus carried on was taxes in this state, and every duty and obli- not the business of such companies. We are gation owed by property owners to the state of the opinion that the relations existing beis fully satisfied and performed. The local tween the parties were those of licensor and companies are concededly liable for the pay- licensee and of lessor and lessee, and that the ment of all taxes on real estate and property business carried on by the local companies owned by them, and, like other corporations, was in no just sense that of the Bell Telethey are also liable for taxes upon their capi- phone Company. The rights and powers of tal stock and gross earnings for the business' the local companies were protected by con

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tract, and they were as secure in their enjoy- | the contract, it is obvious that the intent of ment, so long as they continued to perform this requirement was simply to place and the obligations of their contracts, as the keep the instruments leased within the superAmerican Bell Telephone Company was in vision and ultimate control of the patentee, its rights. Neither the license, nor the right so as to preserve its title to the instruments, to continue their use, nor the prosecution of and effectually prevent any improper use of its business by the local company, could be them by their lessees. The conduct, managearbitrarily revoked, terminated, or annulled ment, and control of all this business was by the American Bell Telephone Company; irrevocably confided to the local companies; and the relations between them werein no just and no material distinction between the varisense those of principal and agent. These ous classes of business authorized by the conquestions have been expressly adjudicated in tract was intended to be made in respect to the circuit court of the United States in Ohio the powers, duties, and obligations of the corand by the supreme court of Pennsylvania, poration by which it was prosecuted. The in the cases of U. S. v. Telephone Co., 29 Fed. royalties and dues upon such instruments Rep. 17, and Com. v. Same, 18 Atl. Rep. 122. were collectible by the local companies as in In the former case, Judge JACKSON, deliver- other cases, and they became responsible for ing the opinion of the court, in a similar case, the payment to the Bell Telephone Company. says: “For one person to supply the means of all such royalties and dues, under all conto another to do business with or on, is not tracts and leases made by them. Much the. the doing of that business by the former. most expensive part of the plant, lines, and Transactions such as the American Bell Tele- wires required to transact this business was phone Company has had with the licensee to be supplied by the local companies, and corporations of Ohio at its place of business remained their property, and they had conin Boston, and not elsewhere, are not the trol of the business done thereon, and, within carrying on of business by it in Ohio, nor reasonable limits, of the compensation deare such licensee corporations its • managing rived therefrom. We think the court below agents.' ?" We quite agree with the doctrine gave undue effect to the provisions in the laid down in these cases, and consider them contracts inserted for the purpose of guarding; decisive of the question presented here. and protecting the rights of the patentee in.

The court below held, however, that the its patents, and have stretched them beyond relations between the Bell Company and the their natural design and significance when local companies were those of principal and referring to them as establishing an intent to agent, and that under the provisions of the give the licensor a paramount right to conact of 1880, as construed by this court in trol the business carried on by the use of the People v. Trust Co., 96 N. Y. 387, not only leased instruments. the royalties payable to the Bell Telephone From no point of view could the circumCompany, but its whole capital stock, amount-stance referred to have given the state auing to $10,000,000, was brought within thority to tax the gross earnings of the dethe jurisdiction of this state, and made sub- fendant beyond the amount received under ject to taxation, and that this result was ob- this branch of the contract, and the amount viated, for the period prior to the act of of capital required to carry it on, which would 1885, only by the magnanimity of the state naturally seem to be the cost of the telephones in neglecting to claim the whole sum which used in that branch; but it has been attemptwas due to it. The theory upon which this ed to be used to transform the character of result was reached is that the local companies the entire business carried on by the local were practically the agents of the Bell Tele- companies in this state. The express conphone Company, and, therefore, that the busi- cessions of the parties relating to this subject, ness carried on was in law that of the latter in the stipulation submitting the controversy, company. This conclusion was based upon also seems to be controlling on this subject. the effect ascribed to some of the provisions Thus, it is agreed as a fact that “provisions of their contracts applicable to the business are inserted in the contract designed to precalled “private lines," and connections with vent the illegitimate use of such lines by unthe Western Union Telegraph Company lines, authorized persons, or for the transmission of and the circumstance that the Bell Telephone messages for persons other than those authórCompany was a stockholder in the local com- ized to use such lines, and for this purpose, panies. It is argued, from the provision in as well as for the purpose of guarding against. such contracts requiring leases for the use of infringements of patents, the contract protelephonic instruments to the patrons of the vides that the title to the telephones shall reprivate lines to be madein the name of the Bell main in the Bell Telephone Company, and Telephone Company, that such provision that the New York Company shall cause the made the income derivable therefrom the same to be leased, in the name of the former property of such company, and constituted company, to such parties as the latter compathe local companies its agents in respect to ny shall select. * * Rentals payable such business. We are unable to concur in for the use of the telephones are thus in form this view. Wethink that court has ascribed to payable to the Bell Telephone Company, but this provision a significance to which, under the New York Company is authorized, so all of the circumstances of the case, it is not long as it complies with the terms of the conentitled. In view of all of the provisions of tract, to collect such rentals, and, in fact and

in practice, it does collect them; and, if the of its patents, and the cost of conducting its American Bell Telephone Company coliects manufactories in Massachusetts, it is by no any thereof, it is obliged to account thereformeans clear that the mode adopted in this to the New York Company.

The case, of apportioning the whole capital of rentals agreed to be paid by the lessees, al- $10,000,000 according to the proportionale though in form and in legal contemplation number of telephones used in the several payable to the American Bell Telephone Com- states, produces a correct result. While the pany, are equitably and beneficially the mon- large amount of capital stock owned by the eys of the New York Company. It seems defendant, and its prosperity, as indicated by to us that the concessions furnish an irrefu- its liberal dividends, present an attractive table answer to the argument that the provis- object to the vigilant financier seeking to ions relating to the private lines created any augment the resources of the state, it should practical distinction between such business not be forgotten that the possessor of this and that pursued under the exchange or ex- wealth is a foreign corporation, domiciled in traterritorial provisions.

the state of Massachusetts, and there subject We notice an error occurring in the state- to account for the obligations it incurs in rement of one of the learned judges writing in turn for the immunities and protection which the court below, in reference to the presence it enjoys under the laws of that state. We in the extraterritorial contracts of a provision are quite unable to sanction a principle which that such leases shall also be executed in the would subject it to the liability of being name of the Bell Telephone Company. We taxed, not only in Massachusetts, where it have carefully examined the provisions of is located, as it undoubtedly would be under those contracts, and are unable to find there the law as laid down by us in People v Minin the requirements referred to. Even, how-ing Co., 105 N. Y. 76, 11 N. E. Rep. 155, on ever, if the learned judge had (liscovered this its entire capital stock and gross earnings, fact, it probably would not have affected the but also in each state of the Union in which argument, as it would be equally sound it should own telephones leased to corporawhether based upon a provision affecting tions for the use of the people of such state, only a small part of the subject of the con un such proportion of its capital stock and tract, or upon one which covered a still larger, gross earnings as the law-makers of such but yet inconsiderable, portion thereof. It state saw fit to impose.

It state saw fit to impose. Under the rule as is manifest that so much of the argument of declared by the judgment appealed from, the the court below as is based upon the fact that defendant is now made liable to taxation upon the American Bell Telephone Company is a a proportion of its capital stock and the roystockholder in the local companies derives no alties it collects from its licensees in this support from that circumstance. In no legal state, when it is also unquestionably liable to sense can the business of a corporation be tax in Massachusetts upon all its property, said to be that of its individual stockholders. as well as capital stock and gross earnings, It is true that they have an interest in the and also, as a stockholder in the local corpobusiness carried on, and an influence in con- rations, has been made liable to pay taxes introlling its conduct; but they have created a directly upon a portion of its capital stock, legal entity to prosecute such business, make and all of its earnings in this state. We do its contracts, and be responsible for its obli- not think a construction of the agreements gations, and that entity is alone responsible between these companies which produces to persons dealing with it for the conduct of such a result is reasonable or just, or can be such business. The taxation of a foreign or reached without ascribing to the parties a domestic stockholder in a domestic corpora- design which is not fairly inferable from the tion upon the business of such corporation, language of their contracts. We are thereupon the theory that it was his business, fore of the opinion that the judgment of the would be an unreasonable exercise of the general term should be reversed, and judg. power of taxation, and such a tax, upon the ment ordered for the defendant, with costs. theory that a licensor or lessor retaining title All concur. in himself to a patented article, borrowed or leased of him by some person or corporation

(116 N. Y. 459) for the purpose of carrying on a trade or

McCLAIN 0. BROOKLYN CITY R. Co.1 business in some state, was himself carrying (Court of Appeals of New York, Second Divison such business, cannot be supported upon

ion. Nov. 26, 1889.) any known principle of law.


OPINION EVIDENCE-INSTRUCTIONS. Having arrived at the conclusion that the defendant company is not taxable at all in this

1. While plaintiff was crossing a street, he

was knocked down by horses drawing defendant's state upon its gross earnings or capital stock, street-car. In an action for the injuries caused it is unnecessary to consider the principles thereby, it appeared that the accident occurred on a upon which its capital stock should be appor- street where many cars were run; that plaintiff was tioned, in case it had been taxable, in order service; and that the car in question had just en

familiar with the locality and the extent of the car to determine the amount of tax payable on the tered on the track from a switch near where plaincapital employed in this state.

tiff was crossing. Plaintiff testified that before In view of the inconsiderable value of the starting across he looked both ways, and did not instruments owned by it in this state, and the see the horses which struck him, but saw another large amount of its capital, the great value 1 Affirming 42 Hun, 657, memo

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car halting on the main track a short distance from its cars upon the street, its duty was to use him. It appeared that the speed of the horses by reasonable care, so as to do no unnecessary which plaintiff was struck was increased on their coming on the main track. Held, that the ques- injury to persons traveling upon it. Whether tion of plaintiff's contributory negligence was for the defendant was on this

occasion chargeable the jury, and the evidence warranted a finding in with negligence was a question of fact prophis favor.

2. The opinions of physicians who attendea erly submitted to the jury. There was eviplaintiff, founded on personal examination of his dence tending to prove that the defendant's condition, which was described, or on an hypothet- driver of the horses attached to the approachical question excluding all causes up to the time of ing car saw the plaintiff on the track in adtion, and that certain physical consequences would vance of the team, and had the opportunity result therefrom, were admissible in evidence, and to observe the danger in which the rapid were not speculative." 3. A charge that“defendant had no right to so yet made no effort to slark their movement

progress of the horses might place him, and occupy the street and use the same with its cars as to make it extremely dangerous to cross the or deviate their course so as to avoid the col.. street at all times” was proper.

lision, although the plaintiff was at or near 4. A charge that "a mere error of judgment the outer rail at the time it occurred, but does not necessarily amount to carelessness; if the that, on the contrary, the speed of the horses plaintiff took reasonable 'care, and then made a mistake as to the safest course to pursue in cross-was accelerated very considerably as they aping the street, he is not guilty of contributory neg- proached him. The circumstances, as repreligence for that reason, "-was proper.

5. A charge that plaintiff had a right to se sented by the evidence on the part of the lect any point

to go across,” and “had a right to plaintiff, warranted the conclusion that, by the go where he chose,” was not erroneous, where exercise of the reasonable care which it was the court also charged that the duty of exercising the duty of the defendant's driver to observe, due care was on plaintiff.

the injury would have been avoided. Appeal from supreme court, general term, But this fault on the part of the defendant second department.

did not charge it with liability, unless the Action by John McClain against the Brook- plaintiff was free from negligence contributlyn City Railroad Company. A judgment for sing to the calamity. This was a close and plaintiff was affirmed by the general term of the more difficult question upon the evidence. the supreme court, and defendant appeals. The plaintiff was somewhat familiar with

Samuel D. Morris, for appellant. Charles the situation in that locality, and knew someJ. Patterson, for respondent.

thing of the extent of street-car service there. BRADLEY, J. The action was brought to He was therefore able to appreciate the nerecover for personal injuries of the plaintiff, cessity of careful observation in going upon alleged to have been occasioned solely by the the street to keep out of the way of moving negligence of the defendant. On January cars, and to see that his course was clear. 24, 1885, when the plaintiff, with a small boy For that purpose it was incumbent on him in his arms, was proceeding to cross Fulton to use due care. His precautionary duty in street, in the city of Brooklyn, on foot, he that respect for his protection may not have was overtaken and knocked down by a team been so great as that imposed upon one cross-, of horses drawing one of the defendant's ing a steam-car railroad, because a train on street-cars. This occurred between 5 and 6 the latter is not subject to control, as is, to, o'clock in the afternoon, when the cars there some extent, the team drawing a street-car. were closely following each other, and thus But, as a street-car must continue on the materially interrupting passage across the rails of its track, persons otherwise traveling street. The plaintiff, after waiting several on the street are required to use care to keep minutes on the east side of Fulton street for out of its way; yet for their protection the an opportunity to cross over it, stepped be-duty rests upon the driver to keep his horses hind and close to a car on its way out of reasonably within his control upon the pubwhat was known as the “Bridge Depot lic streets. Adolph v. Railroad Co., 76 N. Switch” into and southerly up Fulton street, Y. 530; Moebus v. Herrmann, 108 N. Y. 349, and followed it closely until the car reached 15 N. E. Rep. 415. If by the exercise of reasonthe latter street and partially halted, and then able care the plaintiff could have seen the apthe plaintiff started to go across to the west proaching car, and ought to have apprehended side of the street. He nearly reached the the danger of the situation, he was chargeable outer rail of the up track, when he was run with negligence, for he was not at liberty to against by the off-side horse of the team of a take even doubtful chances of the consecar which came out of the switch on another quences of crossing the track in the face of track into Fulton street, a short distance danger, or in reliance upon the successful atback, northerly of the place where the car tempt of the driver to slack the speed of the which the plaintiff followed entered it, and

horses. Barker v. Savage, 45 N. Y. 191; was proceeding in the same direction.

Belton v. Baxter, 54 N. Y. 245; Davenport While the defendant had the right to run

v. Railroad Co., 100 N. Y. 632, 3 N. E. Rep.

305. 1 As to the admissibility of opinion evidence con The contention on the part of the defense cerning the cause and probable result of personal that, if he had looked in the direction from, injuries, see Popp v. Railroad Co., 7 N. Y. Supp. which it was coming, the plaintiff would have 249; Peterson v. Railway Co., (Minn.) 39 N. W. Rep. 485, and note; Railroad Co. v. Crist, (Ind.) seen the approaching car, had the support of 19 N. E. Rep. 310.

evidence, and upon that fact is based the'

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