Salem, City of, v. Anson et al.

which has no limit, so long as it is within the objects and trusts for which the power was conferred. It is admitted that the legislature may, by virtue of its paramount authority, require bonds or undertakings of the grantees of such privileges, conditioned that they will construct their works within a specified time, or that they will otherwise comply with the terms of their grant, and a municipal corporation to which the exclusive power over the subject has been delegated may exercise the same right. There is no express provision in the charter of Salem authorizing the council, upon granting the privilege to use the streets, to require that the work shall be done within a specified time; nor is it necessary. It is given the exclusive power to make the grant "upon such terms and conditions" as it may prescribe, which necessarily authorizes it to impose such reasonable conditions precedent or subsequent to the granting or exercise of the franchise as may be deemed necessary or proper, including a requirement that the grantee shall give a bond, conditioned as the one in suit. City of Indianola v. Gulf, W. T. & P. Ry., 56 Tex. 594. In City of Aberdeen v. Honey, 8 Wash. 251, 35 Pac. 1097, the power of the municipality was limited by the terms of its charter, and the court held that, by reason of such limitation, it did not have the authority to exact a bond from the grantee of a franchise for a street railway. Hence that case is not authority here. We are of the opinion, therefore, that the bond in suit was valid, and within the power of the city to require and accept.

The remaining question is as to whether the sum specified in the bond is to be regarded as a penalty, or as liquidated damages. It is often difficult to determine whether a sum stipulated in a contract to be paid on breach thereof shall be considered as liquidated damages or as a penalty, and there is a wide divergence of opinion in the adjudged cases on the subject. The object is, of course, to ascertain the intention of the parties, as nearly as possible, and to enforce the contract according to their agreement. [Omitting general discussion as to liquidated damages.]

The damages to the city, if any, from Anson's failure to build his plant within the specified time, were necessarily speculative and

Salem, City of, v. Anson et al.

uncertain, if not absolutely incapable of proof. Indeed, it is quite doubtful whether the city could have been damaged in any way by such failure. It could gain nothing in its political or sovereign. capacity by the construction of the plant, and could lose nothing by its nonconstruction. The damages resulting from the loss of the promised share of the gross income of the proposed plant and the right of purchase are not covered by the bond, and, moreover, are so speculative, uncertain, and dependent upon so many contingencies, that they can scarcely be regarded as a subject of judicial investigation. But whatever the rule might be as between private individuals, this action is not to be determined wholly by the principles applicable to contracts of that kind. The sum specified in the bond is somewhat in the nature of a statutory penalty for the nonperformance of a duty enjoined by law. The ordinance granting to Anson the right and privilege to use the streets and highways of the city in the construction and maintenance of his plant had the force and effect of a statute, and by his acceptance of its provisions he became bound to comply with its terms as a statutory duty. The bond in question was given as security for the performance of such duty, and the sum specified therein is in the nature of a penalty, to be imposed as a punishment for disobeying or disregarding the provisions of the ordinance. Maryland v.

Baltimore & O. R. Co., 3 How. 534, 11 L. Ed. 714. The case of Clark v. Barnard, 108 U. S. 436, 2 Sup. Ct. 878, 27 L. Ed. 780, is very similar to the one in hand. The legislature of Rhode Island passed an act authorizing the Boston, Hartford & Erie Railroad Company to locate and construct a railroad through the State, but the act was not to go into effect unless the railroad company should, within 90 days from the adjournment of the legislature, deposit in the office of the treasurer its bond, with sureties satisfactory to the governor, in the sum of $100,000, that it would complete the road before the 1st day of January, 1872. In compliance with this statute, the railroad company made, executed and filed in the office of the treasurer an ordinary penal bond in the sum stated, conditioned as in the act required. It failed to build the road, and, in a suit to enjoin the treasurer from

Salem, City of, v. Anson et al.

receiving or collecting the sum specified in the bond, it was contended, as here, that the obligation required by the statute and given by the company was an ordinary penal bond, upon which no recovery could be had except for the damages the State actually sustained from the breach of its conditions, and, it being admitted that no damages had resulted, the money arising from the payment of a certificate of indebtedness pledged in lieu of sureties on the bond reverted to the plaintiff. This position was sustained by the trial court, but on appeal the decree was reversed, and it was held that the State was entitled to collect the full amount of the bond, notwithstanding it was admitted that it had not been damaged by the breach thereof. The judgment is based upon two principal considerations: (1), That it was not, and could not have been, intended by the parties that the bond was a mere indemnifying bond; and (2), that the sum mentioned therein was imposed by the State as a statutory penalty for the nonperformance of a statutory duty. After pointing out that no damage could possibly have arisen to the State in its sovereign or political capacity by the failure of the railroad company to construct its road as provided in the statute, Mr. Justice Matthews, speaking for the court, said:

"The question of damages and compensation was not, because it could not have been, in contemplation of the parties. There was no room for supposing that there could be any. To assume that the statute required this bond and security in this sense, in full view of the legal conclusion which it is said necessarily flows from its form, and that in the event contemplated, of the failure to build the road, all that remained to be done was that the State should hand back canceled the obligation and security it had been at such pains to exact, is to put upon the transaction an interpretation altogether inadmissible. It would have been, upon such an assumption, a vain and senseless thing, and, however private persons may be sometimes supposed to act improvidently, we are not to put such constructions, when it is legally possible to avoid them, upon the deliberate and solemn acts and transactions of a sovereign power, acting through the forms of legislation. The conclusion, in our opinion, cannot be resisted that the intention of the parties in the transaction in question was that, if the railroad should not be built within the time limited, the corporation should pay to the State, absolutely and for its own use, the sum named in the bond and secured by the deposited certificate of indebtedness. The supposition is not open that the penalty was prescribed merely in terrorem, to secure punctuality in performance, with the

Salem, City of, v. Anson et al.

reserved intention of permitting subsequent performance to condone the default, for a distinct section of the statute declares that, in case of failure to complete the road within the time limited, the act itself should be void and of no effect."

In Nilson v. Town of Jonesboro, 57 Ark. 168, 20 S. W. 1093, the city granted to Nilson the right to construct a street railway over and through the streets of the city, and took from him a bond in the sum of $500, conditioned for the faithful performance by him of the provisions of the ordinance. In an action to recover on the bond because of his failure to construct the railway within the time specified, the single question presented was whether the sum mentioned in the bond should be treated as a penalty or as liquidated damages, and, after a careful examination of the authorities, it was held that plaintiff was entitled to recover the amount specified, without proof of actual damages, and notwithstanding it appeared that the damages were in fact capable of assessment. In City of Indianola v. Gulf, W. T. & P. Ry., 56 Tex. 594, the city of Indianola granted a railway company the right to construct its road through one of the streets of the city, on the condition that it should extend it to a point 65 miles distant within a certain definite time, and exacted a bond in the sum of $50,000, conditioned for the faithful performance of the grant on its part. The company failed to construct the road, and in a suit on the bond it was held that the sum stated therein was stipulated damages, and that the city could recover the full amount thereof without proof of actual damages. It is true that in that case, as also in Nilson v. Town of Jonesboro, supra, the term "liquidated damages" was used in the contract. But the decisions did not turn upon that fact, but were principally controlled by the consideration that no accurate computation of the real damages could be made.

Within the doctrine of these cases-and they seem to be sound -the demurrer to the complaint should have been overruled. The judgment of the court below must therefore be reversed, and the cause remanded for such further proceedings as may be proper, not inconsistent with this opinion.

VOL. VIII-4

Boston Electric Light Company v. Boston Terminal Co.

USE OF ELECTRIC CONDUITS.

BOSTON ELECTRIC LIGHT COMPANY V. BOSTON TERMINAL CO.

Massachusetts; Supreme Judicial Court.

1. RIGHT OF ELECTRIC LIGHT COMPANY TO USE OF STREETS FOR ITS CONDUITS.The plaintiff, an electric light corporation, incorporated under the general laws, was authorized to lay wires under the streets of the city of Boston, subject to the condition that it should remove its conduits whenever directed so to do by the city council. Notwithstanding this condition, it was contended by the electric light company that it had acquired a right of property in the street which could not be appropriated to another public use without compensation, and that, therefore, statute 1896, chapter 516, authorizing the defendant to acquire portions of two public streets in which the plaintiff had constructed its conduits as a part of the site of the terminal station, erected under the authority of such statute, was unconstitutional. Statute 1894, chapter 454, provided for the gradual removal of all wires and electrical appliances, and gave to those operating such wires the option to remove them or to put them under ground in conduits to be constructed under regulations. It was held that the option given by such statute to place such wires under ground did not confer upon the users an absolute franchise in the street independent of the original grant, which, by its terms, was revokable at the pleasure of the city council. The rights possessed by the electric light company under its franchise are not absolute, but revokable, and the reservation of such right of revocation contained in the ordinance granting the franchise was properly exercised by the Legislature.

Exception by plaintiff from judgment for defendant. Decided January 7, 1904; reported 67 N. E. 346.

Everett W. Burdett and Chas. A. Snow, for plaintiff.

Samuel Hoar and Woodward Hudson, for defendant.

Opinion by KNOWLTON, C. J.:

This is an action of tort to recover the value of conduits laid by the plaintiff in portions of two public streets in Boston, which were discontinued by St. 1896, p. 520, ch. 516, and taken by the