Opinion
Rehearing Granted Dec. 22, 1927.
In Bank.
Application by Fred S. Newson and another for mandamus to be directed to the Board of Supervisors of Contra Costa County and W. J. Buchanan and others, members thereof, requiring them to pass as an ordinance or submit to a vote a proposed initiative ordinance granting a toll bridge franchise.
Writ discharged.
COUNSEL
Pierce & Carlson, of Richmond, for petitioners.
Archibald B. Tinning, Dist. Atty., for respondents.
J. E. Rodgers and A. F. Bray, both of Martinez, amici curiae, for American Toll Bridge Co.
OPINION
SEAWELL, J.
This is the second application made to this court wherein the prayer of respective petitioners was for the issuance of the writ of mandamus commanding the board of supervisors of the county of Contra Costa, and the members thereof acting in their official capacity, to pass as an ordinance or to submit to a vote of the electors of said county for adoption or rejection a proposed initiative ordinance granting to the Northern California Development Company, a domestic corporation, a franchise to erect, construct, and maintain a toll bridge across the Straits of Carquinez, a navigable waterway separating the county of Contra Costa and the county of Solano, between certain terminal points, with the right to charge and take tolls from persons using the same in accordance with a schedule set forth in said proposed ordinance.
A number of the questions pertinent to the main issues herein were before this court in Galvin v. Board of Supervisors, 195 Cal. 686, 235 P. 450, wherein the subject-matter of the controversy was before us. The object which failed of accomplishment in that proceeding is sought to be accomplished by the instant proceeding. In the first proceeding petitioners made an application to the board of supervisors of Contra Costa county for a grant of authority to construct and maintain a toll bridge across said Straits of Carquinez between the same terminals as are described in the instant proceeding, alleging conformity with the requirements of part 3, tit. 6, c. 4, art. 1, Political Code. Section 2843 et seq. The application was denied.
The petitioners thereupon, assuming to act in accordance with the provisions of section 4058, Political Code, prepared a proposed ordinance granting or purporting to grant to petitioners the right and privilege denied by the board of supervisors in the first instance, and by petition duly circulated procured signatures of the requisite percentage of qualified voters of the county of Contra Costa, requesting said board to pass said proposed ordinance or submit it to a vote of the people at a general or special election. The proposed ordinance and petition were accordingly submitted to said board of supervisors, with the request that it be adopted, or, if said board refused to do so, that it submit said ordinance to the electors of said county as provided by section 4058, Political Code.
Said board of supervisors, being duly advised in the premises, refused to either enact the same as an ordinance or to submit it to the electors of the county for adoption or rejection, by the electors at an initiative election or any election. Petitioners thereupon applied to this court for a writ commanding said board of supervisors to act upon said ordinance in accordance with the prayer of their petition. An alternative writ was thereupon issued by this court, and upon hearing had the relief sought therein was denied. The reasons assigned by this court in refusing to grant the relief prayed for are fully set out in Galvin v. Board of Supervisors, supra, and consist in the main of the omission of petitioners to give notice of their intended application for the construction of said bridge and to comply with certain statutory jurisdictional requirements, all of which were specifically considered in Galvin v. Board of Supervisors, supra.
The objections there urged by respondents, which were based upon certain jurisdictional grounds, and which were deemed alone sufficient to justify a denial of the application of the petition, did not include the objection brought to our attention by an examination of the articles of incorporation, which are attached to the petition herein, but which were not attached to the petition in the former proceeding. Therefore the extent of the grant of powers conferred upon the petitioning corporation was not before this court in the Galvin Case, and no point was made that said corporation was without authority to demand the right to enjoy a franchise, which may only be enjoyed by such corporations as are formed for the specific and exclusive purpose of assisting the state in the administration of governmental affairs. Neither was the point discussed by counsel in the instant case upon its first presentation to us and for this failure of consideration of an important question an order of resubmission was made. That the petitioning corporation was not incorporated in the form, manner, and for the exclusive purpose which the law exacts of a corporation in order to qualify itself to exercise governmental functions in the construction and operation of toll bridges, ferries, wharfs, chutes, or piers, and take tolls thereon from the public, is the natural, logical deduction that must be made from an examination of the various Code sections and statutes of this state which provide for corporate existence, not only for the construction and maintenance of the five divisions of the public highway system specifically mentioned in division 1, part 4, tit. 6 (section 528 et seq.), Civil Code, but also for other branches of the public highways, such as wagon roads, turnpikes and toll roads generally, none of which may be constructed and operated by corporations unless such corporations are formed for the exclusive purpose of performing the specific public service which they assume to undertake on behalf of the state.
A toll bridge is a part of the public highway. All highways for the use of which the state permits a corporation to take or charge tolls become public highways by force of the right granted, subject to the further right of the licensee to collect tolls for a limited time and at the expiration of said limited period the ways become free public highways. 25 Cal.Jur. 366; People v. Davidson, 79 Cal. 166, 21 P. 538. A grant of power to a corporation to engage in the business of constructing private or public buildings, works or improvements does not empower it to exercise the functions of an agent of the government unless said corporation is formed exclusively to perform the particular services described in its charter. The statutes granting the right to incorporate for tool bridge construction purposes and regulating the operation thereof, as provided by division 1, pt. 4, tit. 6, Civil Code, and other parts of the Civil as well as the Political Code, cannot be given any other meaning than that a corporation, in order to be entitled to construct and maintain a toll bridge in its own right, must be formed under the statutes enacted for that specific purpose.
Section 528, Civil Code, as it stood at the time and for many years prior to the time petitioning corporation made its application for a license or franchise to build and operate a toll bridge across Carquinez Straits or instituted this proceeding to enforce its alleged right, provided as follows:
‘No corporation must construct, or take tolls on a bridge, ferry, wharf, chute, or pier until authority is granted therefor by the supervisors, or other governing body having authority in that behalf.’
Section 529, Civil Code, then provided that ‘every such corporation ceases to be a body corporate.’ (Certain acts which, if not performed as provided therein, automatically worked a defeasance then follow.) The language of the section, as above set out, was changed by the Legislature of 1927 to read:
‘Every such corporation which has heretofore or may hereafter be incorporated may be dissolved.’ St. 1927, p. 1200.
Subdivisions follow providing for the dissolution of the corporation for failure to comply with the statute. The causes which, it would appear, automatically worked forfeitures of corporate existence as the law stood before the 1927 amendment were failure to obtain from the board of supervisors or other governing body authority to construct and operate a toll bridge within a fixed period following the filing of its articles of incorporation; failure to commence the construction of the bridge within a stated period thereafter and to actually expend thereon at least ten per cent. of the capital stock of the corporation; failure to complete said bridge within a fixed period; and, in case of destruction of said bridge, failure to reconstruct it within a fixed term.
Section 530, Civil Code, requires the president and secretary of said toll bridge corporation to annually under oath report to the board of supervisors the cost of constructing and providing all necessary appendages and appurtenances for the use of said bridge; the amount of all moneys expended thereon since its construction for repairs and incidental purposes; the amount of its capital stock, amounts paid in and actually expended; the amount received annually for tolls and from all other sources, stating each separately; the amount of dividends made and the indebtedness of the corporation, specifying for what it was incurred and such other facts and particulars respecting the business of the corporation as the board of supervisors may require. This report the president and secretary were required to cause to be published for four weeks in the daily newspaper published nearest the bridge if required by order of the board of supervisors. A failure to make such reports subjected the corporation to a penalty of $200 and for every week permitted to elapse after such failure an additional $50 payable in each case to the county from which the authority of the corporation was derived.
It is very convincing from the foregoing provisions of the statute that the authority to construct and operate a toll bridge is to be granted only to such corporations as are formed for the exclusive purpose of constructing and maintaining a particular designated toll bridge, and this right is not conferred upon corporations not specifically formed to execute the trust which the government delegates to its agents. The regulations and penalties provided by law for the control and supervision of said corporations are not at all applicable to the management, direction or control of the ordinary corporation formed for private profit. In fact, the application of the statute providing for the creation of toll bridge and toll road corporations to corporations organized for general business purposes might prove ruinous to the stockholders of the latter class of corporations should said latter class undertake to build and operate a toll bridge in connection with other granted corporate powers conferred upon it by its charter. A failure to comply with any one of the toll road provisions would work a dissolution of the corporation to continue as a corporation for every purpose. Further, it is the clear intent of the statute that the revenue derived from the operation of toll bridges should not become mixed, intermixed or confused with funds derived from private sources of income. To this end toll bridge corporations must be kept separate and apart from all other corporations.
The strictness of accountability to which a toll bridge corporation is held to the board of supervisors of the county authorized to grant the license or franchise, and the complete supervision which it exercise with respect to its business as provided by section 530, Civil Code, demonstrates the incompatibility and inapplicability of the law providing for the creation of a quasi public corporation with the law providing for the formation of the usual corporation created for profit only. Section 529, supra, provides that ‘every such corporation ceases to be a body corporate, * * *’ meaning by the use of the word such the kind of corporation permitted to be created by the preceding section, which is a toll bridge, ferry, wharf, chute, or pier corporation. No other kind of a corporation than those named in the above-cited section may exercise the powers granted by said section. If by the language used a thing is limited to be done in a particular form or manner, it includes a negative that it shall not be done otherwise. Lewis’ Sutherland on Statutory Construction (2d Ed.) vol. 1, § 249; Martello v. Superior Court (Cal.App.) 254 P. 658.
Coming to a brief consideration of ‘Public Ferries and Toll Bridges,’ as that subject appears under part 3, tit. 6, c. 4, art. 1, Political Code, it is found that the granting of rights, fixing the amount of license tax to be paid, rate of tolls that may be collected, and term of operation are matters in the exclusive control of the board of supervisors. In addition, every owner of a toll bridge must annually report to the board of supervisors from which the license is obtained the actual cost of its construction; repairs made during each preceding year; expense of labor and hire, and other costs necessarily incurred in the conduct of the business; the amount of amortization and taxes actually paid in the conduct of the business; amount of tolls collected; the estimated cash value of the bridge exclusive of the franchise. The various provisions of the Political Code are repugnant to the theory that a corporation existing for general business purposes merely is entitled to demand a license to construct and operate a toll bridge in connection with its other business. Every corporation making application for a franchise must attach to and file with its application a copy of its articles of incorporation certified by the secretary of state or the county clerk where filed. Pol. Code, § 2871. The reason therefor is to show that it is such a corporation as is entitled to a franchise. If it is not, it becomes the duty of the board of supervisors of deny its application.
Petitioner herein has been incorporated under the general laws since August 25, 1924, with its principal place of business in the city and county of San Francisco. It did not make application for the franchise demanded herein until long after the statutory limit fixed by section 529, Civil Code, had gone by. It makes no pretense that it was organized for the exclusive purpose of constructing and operating a toll bridge across Carquinez Straits or constructing such a bridge at any named or described locality. Its subscribers of stock were associated together ‘for the purpose of incorporating a private corporation under the laws of the state of California.’ Petitioner’s corporate powers, as set forth in its articles of incorporation, are numerous and various. In a summary of said powers petitioner has reproduced the only language to be found in its articles of incorporation which may be said to relate in any way to its right to deal in or with franchises. We quote from petitioner’s brief:
‘To engage in and carry on a general business for profit in constructing many structures, such as roads, bridges, wharves, piers, railroads, water systems, reclamation and irrigation works, dams, reservoirs, sea walls, electric systems, telegraph and telephone lines, factories and buildings and structures of every nature and description. To acquire, hold, enjoy and operate under franchises and rights of every description which can be acquired by grant from public authorities. To collect tolls for and charges from such franchises, structures, etc. (excepting only those permitted to be operated only by corporations formed for a specific purpose, such as railroads, wagon roads, telegraph lines, banks, etc.). [Italics supplied.] To deal in and operate various types of realty, mines, agricultural lands, etc. To deal in patents and secret processes. To deal in personal property. To enter into contracts of every nature with governmental agencies * * * to effect the general purposes thereof.’
It will be noted that no reference is made of any intention on the part of the corporation to construct and maintain a toll bridge ever the Carquinez Straits. The language which refers at all to the collection of tolls as charges arising from franchise rights is expressed in the most general terms. By its language it expressly excepts from its powers wagon roads and those corporations formed for specific purposes, in which class toll bridges are unquestionably included. The power authorizing said corporation to build and construct public buildings and public improvements and engage in the business described in its articles of incorporation, did not confer upon it the right to construct and operate a toll bridge across Carquinez Straits.
Our views upon this point are further fortified by the fact that section 529, Civil Code, provided prior to and at the time this proceeding was commenced that if within six months from filing its articles of incorporation the applying corporation does not obtain such authority from the board of supervisors (the right to construct and operate the toll bridge) it ‘ceases to be body corporate.’ By the amendment of 1927 the time within which said authority must be obtained was extended to one year. By the same amendment, as above pointed out, the mandatory language was stricken out and the words such corporation ‘may be dissolved’ substituted in its place. Under the law, as it stood until 1927, no corporation organized to engage in any kind of business for profit or for any purpose whatever, including the exercise of toll privileges, was eligible to receive or demand a franchise for the operation of a toll bridge. By the amendment of 1927 such corporation may be dissolved if it fails to comply with any of the enumerated duties set out under a specific title of the Code providing for the organization and regulation of corporations formed for a specific purpose. No such hazard as above pointed out was intended to menace the corporate existence of a long-existing corporation formed for general business purposes or to capriciously deny it a privilege obtainable by corporations subsequently organized. A construction that leads to an absurd result is to be avoided. Therefore, we must conclude that the statutes relate to corporations that are formed for a special purpose. The time limit and forfeiture provisions in such cases are reasonable and workable; in other cases they are not.
No question of the dissolution of the corporation is presented by this proceeding, which may be done only by a quo warranto proceeding, as argued by petitioner corporation. The sole question we decide in that respect is that petitioner in its corporate form is not authorized to exercise the privileges it seeks to enforce by this proceeding. The board of supervisors upon an inspection of its articles of incorporation doubtless concluded that it did not have jurisdiction to adopt the ordinance requested nor to do the idle thing of submitting to initiative vote an ordinance which, if adopted, conferred no right upon petitioner. That which cannot be done by the board of supervisors could not be done by initiative. Galvin v. Board of Supervisors, supra.
Other questions of considerable importance, such as whether a franchise right to construct and operate a toll bridge over navigable waters is a proper subject for the application of the initiative and referendum provisions of the state Constitution and Political Code, and the alleged insufficiency of description of the Solano county terminus, are rendered moot by the view we take of the law governing the corporate rights of petitioner in the premises.
The writ is discharged.
We concur: WASTE, C. J.; RICHARDS, J.; SHENK, J.; CURTIS, J.; PRESTON, J.