American Loan & Trust Co. v. General Electric Co.

and conditions without discrimination and at reasonable rates." Laws 1881, ch. 54, sec. 12. The words "electric light companies" in the revised section were evidently intended to describe the same parties as the words "proprietors of any electric lighting apparatus or lines" in the original section, and to include natural persons as well as corporations. This provision imposes certain duties in behalf of the public upon the corporation or natural person engaged in the business of furnishing electric lights for hire and making use of highways in the business. By virtue of it, and also in consideration of the license to make use of highways, the corporation or natural person assumes an obligation to the State to carry on the business faithfully and impartially so far as the public are concerned. While the obligation is personal so long as the corporation or person holds the property used in its performance, it passes with the property to a vendee, and must be assumed by the latter. The Concord Electric Company is under the same obligation to furnish electric lighting facilities to the public at reasonable rates and without discrimination as was the Concord Land & Water Power Company. It succeeded that company in the business and the ownership of the plant, and the statute now applies to it the same as it formerly did to the Water Power Company. The State relies for a fulfilment of the public purposes in view, not upon its confidence in particular persons, but upon statutory provisions defining the duties of persons engaged in the business and regulating their conduct. though a corporation or a person becomes incapacitated for performing the public duties and obligations pertaining to the business by disposing of the property and franchises used in it, the public purposes are not thereby defeated. All the public duties and obligations pertaining to the business follow the property and franchises into the possession of whomsoever they go, and attach to their owners for the time being. Under these circumstances public policy does not require that such corporations should be disabled from alienating their property and franchises.

Al

A

But there is another consideration that seems conclusive. natural person may engage in the business of furnishing electric

American Loan & Trust Co. v. General Electric Co.

lights for hire, and acquire all the privileges and be subject to all the duties and obligations pertaining to the business as provided in the statute. There can be no doubt that a person so engaged is at liberty to dispose of his business and property at pleasure. The fact that the Legislature have placed a corporation engaged in the business of electric lighting upon the same footing in all respects as a natural person shows that they understood and intended that a corporation of this kind should have equal freedom as to the disposition of its property and rights. It is not difficult to see why the Legislature adopted this course. A policy that would deprive an electric light corporation of the power of selling out its business and property when it becomes financially embarrassed, or of raising money to carry on the business by a pledge of its property and franchises, would tend to defeat the fulfilment of its public purposes. A corporation so hampered might be worse than useless to its stockholders and the public. It might not be able either to use its property and franchises, or to transfer them to others for use. "It is said, if a corporation is permitted to dispose of its franchises and of its property essential to their exercise, it will disable itself from performing its obligations to the public. It might seem to be an answer in point that, unless it is permitted so to do, it will never have any ability to perform those obligations." Miller v. Railroad Co., 36 Vt. 452, 491. Nor is it apparent how unsecured creditors of a corporation could avail themselves of the property and franchises to pay their debts. The policy that would disable the corporation from pledging its property and franchises for its indebtedness would prevent them from being taken by judgment creditors upon a levy. 4 Thomp. Corp. sec. 5364; 6 Thomp. Corp. sec. 7853. All the supposed evils attending the substitution of another person or corporation for the original corporation would arise if the property and franchises were transferred by a levy, the same as if they were transferred by the foreclosure of a mortgage or by a sale. For example, how would the public be any better off by a transfer of the Bridge street station and its apparatus-property that is indispensable to the business-to the General Electric Company by a levy than

American Loan & Trust Co. v. General Electric Co.

it would be by a transfer to other persons upon a foreclosure of the mortgage to the American Loan & Trust Company?

The right to sell or pledge property is one of the principal rights pertaining to ownership, and one that is generally essential to enable the owner to use the property in business successfully. The policy adopted by the State, so far as electric light corporations are concerned, allows this right to remain unimpaired, and secures the assurance that corporations will fulfill their public duties by providing for a regulation of their use of the property. It regards mortgages of the property and franchises of such corporations, made to secure debts incurred in their authorized business, as contracts or conveyances necessary and proper for the transaction of their authorized business," as well as necessary and proper for the fulfilment of their obligations to the public.

There are general laws which expressly authorize railroad corporations and street railway corporations to incur debts and secure their payment by mortgages of their property and franchises. Laws 1897, ch. 71, sec. 1; Laws 1895, ch. 27, secs. 16, 17; Laws 1897, ch. 74, sec. 1. During the past ten years fourteen electric light companies have been incorporated in this State by special charters, and each of them was expressly authorized to mortgage its property and franchises. Laws 1893, chs. 201, 227, 273, 303; Laws 1897, chs. 144, 172, 173, 184, 202, 203, 206; Laws 1899, chs. 208, 218; Laws 1901, ch. 243. Five acts have been passed authorizing the consolidation of electric light companies, each of which expressly gave the consolidated corporation like authority. Laws 1897, ch. 137; Laws 1899, ch. 164; Laws 1901, chs. 189, 195, 276. The charters of three corporations previously granted have been amended by introducing into them authority of this kind. Laws 1893, chs. 177, 193, 301. It is said by the defendants upon their brief that of ninety-eight special charters granted by the Legislature since 1887 to gas, electric light, electric railway, water, aqueduct, telephone and telegraph companies eighty have contained authority to mortgage the corporation's property or property and franchises. This legislation all tends very strongly to prove the existence of a public policy in this State

American Loan & Trust Co. v. General Electric Co.

which allows quasi public corporations-even railroad corporations the same freedom to incur debts and pledge their property and franchises therefor that is possessed by other corporations and by natural persons. Whatever the public policy may be in respect

to other corporations, no doubt is entertained that it allows electric light and power corporations, formed under the general laws, and making use of public highways for stringing wires under licenses granted by selectmen, to alienate or mortgage their property and secondary franchises. Accordingly it is held that the Concord Electric Company has power to mortgage its property and franchises. In other States similar views have been taken under similar conditions. City of Detroit v. Gaslight Co., 43 Mich. 594, 5 N. W. 1039; Hunt v. Gaslight Co., 95 Tenn. 136, 31 S. W. 1006; Hays v. Coal Co., 29 Ohio St. 330; Evans v. Heating Co., 157 Mass. 37, 31 N. E. 698.

Case discharged. All concurred.

Baxter Springs, City of, v. Baxter Springs Light & Power Co.

MUNICIPAL CONTROL.

BAXTER SPRINGS, CITY OF, V. BAXTER SPRINGS LIGHT & P. Co.

Kansas; Supreme Court, Div. No. 2.

1. ORDINANCE ACCEPTED CONSTITUTES CONTRACT.—An ordinance of a city, duly passed and published, conferring certain privileges and imposing certain duties upon an electric light company, which, under the charter of the city, it had power to confer, the terms of which ordinance were accepted by the company as therein provided, constitutes a contract between the city and such company, binding upon both.

2. PROOF OF ACCEPTANCE.-To show its acceptance of the terms of such an ordinance, the company may introduce a written receipt, signed by the city clerk, that a written acceptance of the terms thereof had been left with him; the ordinance itself providing that the company should file with the city clerk of the city a written acceptance of the terms thereof within a given time.

3. DESIGNATION OF NUMBER AND LOCATION OF LAMPS.-An ordinance provided that the company should furnish, at a price therein named, as many lights as the city may order, to be located where it should order, within certain limits. Held, that such order need not be expressed in the form of an ordinance, although the charter of the city provides that it can only contract by ordinance; the mere designation of number and location of lamps not being a contract.

4. EXCUSE FROM PAYMENT.-An infirmity in an executory contract which might be taken advantage of by its repudiation before execution will not avail to excuse from payment for benefits received thereunder after execution. This rule applies to a municipality as well as to an individual.

Error by defendant from judgment for plaintiff. Reported 64 Kan. 591, 68 Pac. 63; decided March 8, 1902.

W. R. Cowley, for plaintiff in error.

E. M. Tracewell and Blue & Glasse, for defendant in error.

Opinion by CUNNINGHAM, J.:

This was an action by the Baxter Springs Light & Power Company against the city of Baxter Springs to recover for electric