different states. Bond was filed, and the case removed to this court. It is clear that the case was not removable at the time service of citation was made on Fletcher. This is conceded. If Fletcher was a. party before the service by reason of the commercial character of the partnership of Fletcher, Weissenberg & Co., and his membership thereof, then service of citation at a late day in the suit would not affect the removability of the case. If he was not a party until served with citation, and at the time of such service the suit was not removable, then bringing him in would not make the case a removable one, unless there is in the suit a controversy which is wholly between citizens of different states, which can be fully determined as between them, and which could not have been tried before the term at which the removal was applied for. No such controversy it! alleged, and the record, as recited, shows that Fletcher's appearance brought no new controversy into the cause; that after his appearance it was the same as before; and that such controversy not only could have been tried at a previous term, but actually was tried. How the case would stand, as to right to remove, had. Fletcher made snch defense that there could be said to be in the suit a controversy wholly between him and citizens of a different state, and which could be fully determined as between them, and had removed the case by himself on such ground, it is not necessary to determine. As the canse stands here now it is clear that it should be remanded, and therefore the rehearing on the order heretofore granted remanding the cause is refused,
JACKSON COUNTY HORSE
'O're'/';t Court. D. Kansas. March 3, 1885.)
M:UNICIPAL CORPORATIONS--"GRANT OF. ExCLUSIVE PRIVILEGE TO STREET RAILWAYS-POWEU OF K.ANSAS CITY, KANSAS-ELl!:VATED RAILROAD-INJUNCTION.
In 1872 the city of K.ansas, in Kansas, passed an ordinance granting to the Kansas City & Wyandotfe Street Hailway Company" the sole right, for the space .of 21 years, to construct, maintain, and operate their railway over and along all the streets in said city," subject to restrictions as to grade and concHtion of road. In 1881 the company leased to the Jackson County Horse Railroad Uompany It part of its road running through a certain street, and in 1883 the city another ordinance granting to the Interstate Hapid Transit Railway Company the right t.o construct and operate an elevated railroad through certain streets, including the street occupied by the .Taekson Uounty Horse Railroad Uompany, which filed a bill to enjoin the building of the elevated foad. Held. that so much of the of 1872 as purported to give exclusive .privileges to the lessor or to complainant was beyontlthe powers vested
lReported by Robertson HowlIrd, Esq., of the St. Pun) bar.
JACKSON COUNTY HORSE R. CO.
v. INTERSTATE RAPID
TRANSIT RY. CO.
in the city of Kansas and void, and that complainant had no right to challenge the validity of the ordinance of 1883, or to restrain defendant from building its road.
In Equity. John C. Tarsney and B. F. Stringfellow, for complainant. J. P. Usher, W. C. Stewart, and W. Freeman, for defendant. BREWER, J. In this case I shall notice but a single question, and that because such question, vital to this controversy, was recently made by the subject of a careful examination; and the opinion then formed has not been changed by the able and exhaustive arguments of the learned counsel for complainant. In the case of the Atchison Street Ry. Co. v. Missouri Pac. Ry. Co., decided by the supreme court of Kansas last spring, and reported in 31 Ran. 660, S. C. 3 Pac. Rep. 284, in which case I was charged with the duty of preparing the opinion of the court, the right of a street railway to occupy the streets of the city was challenged. There, as bere, the city had passed an ordinance giving to the street railway the exclusive right to occupy the streets with its railway for a. term of years. There, as here, the city was given by its charter general supervision and control of the streets, but was not given, in express terms, power to authorize street railroads. In other words, the power vested in the city and the extent to which that power had been exercised by the city are alike. The court did not decide the precise question here presented, but expressly declined to give any opinion thereon, holding that, under the grant of general supervision and control of the streets, the city had power to permit the occupation of its streets by a street railroad. But obviously there was opened for inquiry the broad question of the powers of a city under such a. general grant, and that question was made, as I have stated heretofore, the subject of full and careful investigation. To guard against any possible misapprehension, let me here state that in what I shall hereafter say I am in no manner speaking for that court. or expressing the conclusions reached by my but am only giving my own views formed then, and strengthened by the arguments presented now. The precise question is, had the city of Kansas the power to grant for a term of years the exclusive right to occupy its streets with street railroads? That question must be answered in the negative. Let me in the outset formulate two or three unquestioned propositions: (1) The legislature has, as the general representative of the public, the power, subject to specific constitutional limitations, to grant special privileges; (2) it may, with similar limitations, grant the like power to municipal corporations as to all matters of a purely municipal nature; but, (3) as the possession by one individual of a privilege not open to acquisition by others apparently conflicts with that equality of rights which is the underlying principle of social organization and popular government, be who claims such exclusive privilege
must show clear warrant of title, if not also probable corresponding benefit to the public. Hence the familiar rule that charters, grants of franchises, privileges, etc., are to be construed in favor of the government. Doubts as to what is granted are resolved in favor of the grantor, or, as often epigrammatically said, a doubt destroys a grant. Now, coming closely to the question, the legislature has not in terms given to the city the power of granting an exclusive privilege of occupying the streets with railroads; it has not in terms given to it the right to contract away its continuous control of the streets, and its future judgment of the needs of the public in those streets, by a surrender of their occupation, for railroad purposes, to individuals for a series of years. Indeed, it has not in terms made any specific grant in respect to the occupation of streets by railroads, and their operation thereon. Upon what, then, can it be claimed that the city has the power to give to an individual the right to occupy the streets with railroads, secure him that right for a term of years, and also the right of debarring, during such term, every other citizen from a like use of the streets? It was held in the Atchison Case, supra, that the city might permit a street railroad, and this because the legislature had granted to it a general control and supervision of the streets. In this the current of opinion and authority was followed. Under such power the city may permit any ordinary use of a street as a street. A street railroad comes within the ordinary scope of such use. But power to permit one citizen to use the streets in a given way is a very different thing from power to give such citizen the right to keep every other citizen from a like use of the streets. The one is a mere street regulation-a license; the other rises into the dignity of a contract-a franchise. The one may rest upon the ordinary powers of street management and control, the other requires the support of a special grant. Doubtless the city may practically secure exclusive occupation to one railway company; i. e., by giving permission to one, and withholding permission from all others, the occupation of that one becomes, for the time being, exclusive. But that is an altogether different matter. In the one case the exclusiveness depends on the continuous will of the city; in the other upon that of the individual company. In the one the full and constant control of the streets is retained; in the other it is partially transferred to the company. Again, exclusiveness of occupation is not necessary to the full performance of a street railroad company of all its functions. The running of a street railroad on one street is in no manner interfered with by the running of a similar road on a parallel -street. Doubtless the profits of the one will be increased if the other is stopped. Monopoly implies increase of profits. But the question of profits is very different from that of the unimpeded facilities for transacting business. The latter may be granted without any exclusiveness. And power to grant all facilities for transacting busi.
JAOKSON COUNTY HORSE R. CO. ,. INTERSTATE RAPID TRANSIT BY. 00.
ness does not imply power to forbid all others from transl:lcting like business. Even where a. charter is granted by the legislature directly, it grants no exclusive right, unless the exclusiveness is expressly named. As said by Judge DILLON, 2 Mun. Corp. § 727:
"But a legislative grant of authurity to construct a street railway is not exclusive, unless so declared in terms, and therefore the legislature may at Will, and without compensation to the first company, authurize a second railway on the same streets or line. unless it has disabled itself by making the first grant irreparable and exclusive."
And if a direct grant from a legislature carries no implication of exclusiveness, why should it be presumed that the legislature inten9.ed to vest in a city the power to give exclusive privileges, when it has in terms granted no such power? Will the power to create monopolies be presumed unless it is expressly withheld? That would reverse the settled rule of construction, which is that nothing in the way of exclusiveness or monopoly passes, unless expressly named. It will not do to say that the grant of general supervision and control of the streets carries with it, by implication, the power to give exclusive vrivileges; for that grant implies a vesting in the city of continuous control. It is no authority for surrendering its constant supervision and management to any other corporation or individual. It implies that the city to-day, to-morrow, and so long as the grant remains, shall exercise its constant judgment as to the needs of the public in the streets, and not that it 1;l1ay to-day snrrender to an individual or a private corporation the right of determining a score of years hence what the public may then need. The city may to-day determine that one street railroad will answer all the wants of the public, and 80 give the privilege of occupy,ing the streets to but a single company. Ten -years hence its judgment may be that two railroads are needed. Where is the language in the charter which restricts it from carrying such judgment into effect by giving a like privilege to a second company? It is doubtless true, as counsel say, that capital is timid, and will not undertake such enterprises without a.bundant guaranties and undoubted security. But this suggests matters of policy, and presents considerations for the legislature. It does not aid in determining what powers have been granted, or in the construction of charters or ordinances. When the legislature deems that the public interests require that cities should be invested with power to grant exclusive privileges, it will say so in unmistakable terms, as it already has in some instances. Till then courts must deny the possession of such power. Decided cases on this question are few in number, yet these all speak one voice. In Davis v. The Mayor, etc., 14 N. Y. 506, it appeared that the city council had passed a resolution granting to a company the privilege of constructing and maintaining for a term of years a street railroad in Broadway, in the city of New York. The city had simply the general supervision and control of streets, as in
the case at har. The court of appeals held the resolution void; that the city had l;l0 power to make such a grant; and while some of the judges thought that the city might permit the occupation of the street by a street railway company, all agreed that so much of .the resolution as purported to bind the city for a term of years, and thus practically divest it of full control over the street, was beyond the powers granted to it. In Cooley, Const. Lim. (2d Ed.) 207, it is said that "a corporation, having power under its cha,rter to establish and regulate streets, cannot, under this authority, without explicit legislative consent, permit an individual to lay down a railway in one of its streets, and confer privileges exclusive in their character." People v. Kerr, 27 N. Y. 188; State v. Gas-light Co. 18 Ohio St. 262; Gaslight Go. v. Gas Co. 25 Coon. 20; Mayor v. Railroad Co. 26 Pa. St. 355; Com. v. Railroad Go. 27 Pa. St. 339. My conclusion, then, is that so much of the ordinance as purported to give exclusive privileges to the lessor or complainant was beyond the powers vested in the oity of Kansas, and therefore void. It has no right, therefore, to challenge the validity of the ordinance giving defendant its privileges, or to restrain the defendant from building its road. Whatever of annoyance or inoonvenience the lat· ter's road may cause, passes among those consequential injuries which give no cause of action. It must suffer these just as the citizen who uses the street where its road is constructed suffers some annoyance and inconvenience, and occasionally loss, and still without any action against it. Pro bona publico all suffer somewhat. I have considered in this case the exclusiveness of complainant's rights, but, before closing, let me suggest whether, even if it had exclusive right as to street railroads, the defendant's road would be an invasion of that right. In other words, is an elevated road technically a street railroad? Can any company having a street railroad railroad? charter, without further authority, construct an I do not care to enter into any discussion of this question, but merely suggest it as one which may sometime become of importance. 'L'he bill will be dismissed, with costs.
SCOTTISH-AMERICAN MORTGAGE Co., Limited, v. WILSON and others.
(Circuit Oourt, lJ. Kansas.. April 13,1885.)
MORTGAGE-STIPUJ,ATION AS TO INTEREST-DElFAUJ.T-ELECTION OF MORTGAGOR TO WHOLE AMOUNT DUE. .
Where a mortgage given to secure debt drawing interest at 7 per cent. covenanted that in case the made default in payment of any sum of interest when due, for more than 30 days, the mortgagee might elect to declare the whole principal debt due at once, and in Sllch case that the principal debt should draw interest at 12 per cent. from the date of the note, held that, on
SCOTTISH-AMERICAN MORTGAGE CO. 'D. WILSON.
default by the mortgagor as aforesaid, and election and declaration by the mortg-agee that the whole sum become due, that the covenant for an increased rate of interest wassufljcient to support the increased rate from the time of such election and declaration, although the agreement to pay the increased rate from the date of the note might not be all<.''Ned, as being in the nature of a penalty.
On Exceptions to Master's Report. On June 9, 1881, the defendant made a note to the order of the plaintiff, to pay, on the first day of Jnly, 1886, the sum of $65,000, at the rate of 7 per cent. per annum, payable semi-annually. In the note was a condition that if the note was not paid at maturity it should bear interest at the rate of 12 per cent. per annum from the date thereof. To the note were attached 10 interest coupons, calling for the payment, at the semi-annual period of the note, of the amount of the interest at 7 per cent. In each coupon was a clause that if not paid when due the note was to draw 12 per cent. interest after maturity. The note was secured by a mortgage, which contained the following clause:
"The said .first parties further agree that if they fail to pay anr of said money, either plincipal or interest, within thirty days after the same becomes due, or fail to perform or comply with any of the foregoing conditions or agreements, the whole sum of money herein secured may become due and payable at once, at the election of the said second party, its or assigns, without notice of such election to the first party, and this mort;.. gage may thereupon be foreclosed immediately for the whole of said money, interest, and costs, together with statutory damages in case of protest; and upon, such election by said second party; its legal representatives or assigns, that the whole sum herein secured become due and payable at once, or if default be made in the payment of the principal sum when due, or in default of payment of any sum herein covenanted to be paid for the period of thirty days after the same becomes due, or in default of performance of any covenant herein contained, the sa.id first parties agree to pay to the said secund party, its legal representatives or assigns, interest at the rate of twelve per cent. per annum, computed annually on said pri,llcipal note from the date thereof to the time when the money shall be actually paid. Any payments made on account of interest shall be credited in said computation so that the total amount "f interest collected shall lJe and not exceed the legal rate of twelve per cent."
The defendant failed to pay the second interest coupon, and the plaintiffs, after electing to declare the whole mortgage due, brought an action to foreclose the same. The plaintiff, before the master in chancery, claimed interest at 12 per cent. on the note from the time the default was made and election declared by the plaintiff, and the master allowed the same. Exceptions to his report were filed, and those exceptions are now heard. J. D. S. Cook, for complainant. Howard M. Holden, in person. FOSTER, J. Had the agreement between the contracting parties stipulated for 12 per cent. interest on default of any covenant in the mortgage, commencing from the date of Buch default, and not relating back to the date of the contract, there could hardly be a doubt but it
would have been a valid contract, and not in the nature of a penalty. I can see no objection to parties entering into an agreement that on failure of payment or other covenant the whole debt shall become due at the election of the creditor, and shall then and thereafter draw a greater rate of interest. The master reports and the complainant asks for the increased rate of interest orily from the time the mortgagee declared its election to make the whole debt due, which was some time after default by the mortgagor. Is this contract sufficient to sustain that claim, or must it stand or fall as a whole? Assuming that so much of the contract as provides for computing the increased rate of interest from the date of the note until default is in the nature of a penalty, does it present a case materially different from a suit on a penal bond? In such cases courts do not apply such a rule as the whole or nothing. The uniform rule is to remit the penalty, and give judgment for the amount actually and equitably due. Contracts for penalties on a failure to perform agreements are not necessarily and absolutely void in tuto. They are not considered reo pugnant to public policy or good morals, although courts may con· sider it against good conscience to enforce them according to their terms. This mortgage provides that, in case of default by the mortgagor in any of the covenants therein contained, the principal debt should draw interest at 12 per cent. per annum, instead of 7 pel cent., to be compnted from the date of the note until the money is actually paid. Of course, those periods of time cover and include the date from which this interest has been computed; i. e., from the time default was declared by the mortgagee. There arc quite a number of reported cases which hold that a greater rate of interest may be contracted for, contingent on default, com· mencing from the date of the note, and it seems to me the weight of authority in law, if not ij;lequity, is to that effect. Satterwhite v. Me· Kie, Harp. 397; Daggett v. Pratt, 15 Mass. 177; Horner v. Hunt, 1 Blackf. 213; Gullyv. Remy, Id. 69; RU1nseyv.Matthews, 1 Bibb. (Ky.) 242; Jasper Co. v. Tavis, 76 Mo. 13; Reeves v. Stipp, 91 Ill. 609; Per contra Waller v. Long, 6 Mumf. (Va.) 71; Tierman v. Hinman, 16 Ill. 400; Shiell v. McNitt, 9 Paige, 101. The exceptions to master's report must be overruled; and it is so ordered.
AMES IRON WORKS V. WEST.
AMES IRON WORKS V. WEST
(Ui'fcuit COU1·t, I.
D. Louisiana. April, 1885.)
Previous defaults of debts, under a previous contract, where the parties wera not the same, and the waiver of default by complainants accepting a balance due with interest, do not amount to a consent on the part of complainants to the misapplication of trust funds. Where complainant has no adequate remedy at law, hnd where he presents such a case of a breach of trust as to entitle him to relief in equity, it makes no difference if the defendant is insolvent; complainant's right to have an accounting, and to follow his fund, if it can be traced, is indisputable.
SAME-.Eq,UITY JURISDICTION-ADEQUATE REMEDY.
In Chancery. On motion to appoint a receiver. J. Ward GU1'ley, Jr., for complainant. Chas. B. Singleton, Richard H. Browne, B. F. Choate, Thomas L. Bayne, and George Denegre, for defendant. PARDEE, J. The bill alleges that in March, 1884, complainant entered into a contract with the defendants by which the said defend. ants were appointed complainants' agents for the sale of their steam. engines and boilers, for a commission of 25 and 5 per cent., and upon other terms and conditions, and by which contract the defendants stipulated to render an account on or before the tenth of every month of all sales of the previous month, and to make remittances to complainants of the net proceeds within 30 days from date of sales, and to keep all proceeds of sales separate until remittance, and under no circumstances to blend said proceeds with moneys of themselves or of other parties, and to hold said proceeds as trust funds until remittance. That complainants supplied the defendants with a number of steam.engines and boilers, which they accepted and received, to be Bold according to the terms and conditions of said contract, and that during the months of March, April, May, and June, 1884, said defendants sold a number of said engines and boilers, for which they received and collected the price, but that they have wholly failed and neglected and refused to pay over the net proceeds of said sales as reo quired by said contract, amounting to the sum $9,903.47, all of which is due and unpaid. That said B. J. West's Son & Co., defendants, failed and suspended payment on or about June 6, 1884, and are insolvent, but they are still in control and possession of their said property and assets and the proceeds of complainants' said engines and boilers, and are daily selling from their stock and disposing of their assets, and the same are rapidly diminishing in number and value, to orators' prejudice and damage. That part of the property and assets now in the possession or defendants was purchased and paid for with the proceeds of the sale of complainants' engines and boilers, or with
lleported by Joseph P. Hornor, Esq., of the New Orleans bar.