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applicable to cities of the second class, to a bond to appear in that court to answer any which Lexington belongs. Section 3155 pro- indictment that may be found against him. vides:

Where a bail bond taken by the police court “All fines and penalties and costs collected in in a felony case is forfeited, the proceeds of the police court shall be for the use and benefit such bond must be paid to the commonwealth. of the city, and the officer collecting such fines Indeed, this is clearly shown by sections 58 and penalties shall make daily reports of such and 94, Criminal Code Practice; section 58, collections to the treasurer, taking duplicate re- providing for the return of the forfeited ceipts therefor, one of which shall be delivered bond, with the word "forfeited" indorsed on to the auditor."

it, to the clerk of the circuit court of the

county; section 94, subsec. 1, providing that Section 3162 is as follows:

the court to which the bond is returned shall "Said court may assess, in addition to fine or

order summons against the bail and render imprisonment, any sum in his discretion, not judgment enforcing the forfeiture; subsecexceeding three dollars, as costs against any de- tion 2, that if the court fail to make the orfendant when convicted of any offense; for der, the attorney for the commonwealth may, which, if not paid, the defendant shall be com- at any time after the term, cause the clerk mitted to imprisonment in jail or workhouse, as to issue the summons against the bail. If in in case of fines. All fines, costs and forfeitures a case like the one before us the city is enshall be collected by the chief of police and paintitled to the proceeds of the forfeited bond, into the city treasury, and a duplicate receipt shall be given therefor, one of which shall be why should not the forfeiture, as in all of filed with the city auditor."

fenses against the city ordinances, be en

forced by the police court instead of the Obviously these sections do not confer up fact that the forfeiture must be enforced by

circuit court? On the other hand, the simple on the police court of the city of Lexington the circuit court, even if there were no other jurisdiction to try and finally dispose of a case of felony. The powers they confer upon ciently persuasive to show the right of the

reason to be urged, is, it seems to us, suffithe police court are such as that court may commonwealth to the proceeds of the forfeitexercise with respect to offenses committed

ed bond. in violation of ordinances of the city and within its corporate limits, or such other of- taining the commonwealth's right to the mon

[2] But there are yet other grounds susfenses as it may have jurisdiction to finally

ey. Section 1139, Kentucky Statutes, de dispose of by its judgments.

clares that: The police court of a city of the second class acts in a dual capacity. In the trial of

“All fines and forfeitures which may be imoffenses against ordinances of the city it posed by law shall inure and vest in the comjudicially acts for the city, although the whole or a part thereof, shall be given to a per

monwealth, except in cases where, by law, the prosecutions or process may run in the name

son or to some particular object, and may be reof the commonwealth for the use and bene covered by civil procedure before any judicial fit of the city; and in all such cases the tribunal having jurisdiction or upon indictment fines, forfeitures, or costs adjudged or col- of a grand jury.” lected, unless otherwise provided, go to the city, and should be disbursed as provided by Among the persons evidently referred to the sections supra. But in the trial of cer- in this section to whom parts of the fines and tain other cases involving offenses commit- forfeitures indicated go are commonwealth's ted against statute or other laws of the attorneys and clerks of the circuit court, commonwealth the police court acts in its who are required by law to render services judicial capacity for the latter alone, and in in aid of the prosecution in which they are such cases the fines, penalties, forfeitures, imposed, and all of whom are compensated and costs adjudged or collected go to the wholly or in part for their services by the commonwealth.

commonwealth out of the fines and forfeitures By section 3147, Kentucky Statutes, which, after they are collected and received by the like sections 3155–3162, applies to and defines treasurer of the state. the judicial powers of police courts of cities It will also be found that section 2285, Ky. of the second class, it is provided that the St., requires that all fines and forfeitures police court cannot finally try or punish a paid under judgments of the circuit court, person guilty of a crime, denominated a fel- without copies or execution, as well as all ony by the laws of the state. As therein jury fees, etc., shall be paid directly to the declared, its only jurisdiction, if the offense trustee of the jury fund; and section 2286 be a felony, is to sit and try it as an examin- makes it the duty of the latter to superining court; that is, it may, if the evidence tend and urge the collection of all fines and be such as to furnish reasonable grounds forfeitures going to the commonwealth. The that the person on trial has been guilty of a trustee of the jury fund does not receive felony, hold him over to the circuit court fines or forfeitures imposed by the police for indictment by the grand jury, and, if the courts or collected by the chief of police for offense be a bailable one, require of him / violation of ordinances of a city,

Without further elaboration of the reasons G. D. Milliken, Guy Herdman, and 0. P. that lead us to the conclusion already ex- Roper, all of Bowling Green, for appellees. pressed, we think the commonwealth is clearly entitled to the proceeds of the bond forfeit

CARROLL, C. J. A statement of some ed in this case; and, as such was the judg. pertinent facts appearing in the record that ment of the circuit court, it is hereby af. preceded the beginning of this ligitation, as firmed.

well as review of the litigation, will be helpful in reaching a solution of the controlling question in the case, which is: Can a street railway company, operating under a

franchise granted by a city and county, rePOTTER MATLOOK TRUST CO. V. WAR

move its rails and equipment and permaREN COUNTY et al. *

nently abandon the operation of the road (Court of Appeals of Kentucky. Jan. 21, 1919.) if it appears that it cannot be operated

except at a loss? 1. STREET RAILROADS Cm60_OPERATION AT Some years ago the council of Bowling Loss-ABANDONMENT OF FRANCHISE.

Green by an ordinance granted to the Park Where a street railroad was constructed un- City Railway Company, the predecessor in der a franchise for a specified time, the company title of the Southern Traction Company, a may be permitted to remove its tracks and aban- | “right of way over the following described don the road upon restoration of streets, where streets of the city of Bowling Green subject operation can be continued only at a loss.

to the rules regulating and restrictions here2. EMINENT DOMAIN m2(8) TAKING PRI- in set forth.” The ordinance described the

VATE PROPERTY — STREET RAILROAD – COM- streets on which the company might conPELLING OPERATION AT Loss.

struct and operate its railway and containWhere a street railroad must be necessarily ed a number of provisions regulating the operated at a loss or abandoned, and the fran- manner in which the streets should be used chise is permissive only, to require continued and kept in repair, the fares that should operation is to violate Const. § 13, providing be charged, the license tax that should be that private property shall not be taken for paid, and other matters connected with the public use without just compensation being pre

operation of the roads. viously made.

The privilege thus granted was to run for 3. STREET RAILROADS C 55 MORTGAGE a term of 50 years, which has not yet ex

FORECLOSURE-SALE OF PROPERTY AS JUNK pired.
-ABANDONMENT OF FRANCHISE.

The fiscal court of Warren county also Where the evidence does not satisfy the granted to the railway company the privi. court that a street railroad cannot be operated lege of using and occupying the public ways without loss, it may upon mortgage foreclosure of the county for a term of 20 years, not yet require it to be offered for sale as a going concern for a fixed price and, if not so sold, require expired. This order also contained some its operation by a receiver for one year to de- provisions concerning the manner in which termine such fact, before permitting sale of the the highway should be maintained, the track property as junk and the abandonment of the should be laid, as well as others regulating permissive franchise.

the operation of the road.

Neither the ordinance enacted by the counAppeal from Circuit Court, Warren cil nor the order adopted by the fiscal court County.

contained any stipulation that the street Suit by the Potter Matlock Trust Com- car company should operate its road for the pany, as trustee, against the Southern Trac- time specified in the grants or for any length tion Company, is successor of the Park City of time, although the company had the right Railway Company, and others, to enforce a

under the grants to use the highways and mortgage lien. Judgment of foreclosure was operate its road for the time specified. Nor rendered, but set aside before sale by a set- did either of the grants give to the comtlement agreement involving sale of physical pany the exclusive right to the use of the property of traction company, upon failure streets or roads, or contain any provisions to carry out which the plaintiff filed an that would prevent the city from granting amended petition to which the County of other like privileges to other companies. In Warren and the City of Bowling Green filed brief, the grants merely authorized and peranswers. From so much of a judgment of mitted the company to construct its line of foreclosure as refused to permit the physical road along highways and streets named and property to be sold as junk and removed, operate cars thereon for the time specified. the plaintiff appeals. Reversed, with direc

Under the authority of these two grants, tions.

the street railway company constructed its

line of road in the county and city and op Wright & McElroy and T. W. & R. C. P. erated cars thereon for a number of years Thomas, all of Bowling Green, for appel- In 1914, the railway company executed lant.

to the Potter Matlock Trust Company, as For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

*Rehearing denied February 21, 1919.

trustee, a mortgage on its property to se When the order granting the injunction cure the payment of bonds amounting to was entered, a motion was made by the rail. $24,300; and in 1916 the trust company way company and Hirsch & Sons before a brought a suit against the railway company judge of this court to dissolve it in order and other persons asking that its mortgage that the contract between the railway comlien be enforced and the property covered pany and Hirsch & Sons might be carried by the mortgage, which included everything out; but the judge of this court to whom the the street railway company owned as well application was made, and the other judges as the franchises and rights granted to it who sat with him in hearing the application, by the city and county, be sold as a going refused to dissolve the injunction granted by concern upon the ground that the railway the circuit judge and in the course of a brief company was insolvent and bad defaulted opinion said: in the payment of the interest on the bonds, thus precipitating the maturity of the debt. tion whether under any circumstances a street

"We did not consider or determine the quesIn answer to this suit, the railway com- railway company that has obtained a franchise pany and the other defendants named de to operate a line of railway may, in opposition nied that the company was insolvent, and to the will of the municipality from whom the set up that its embarrassed financial condi- franchise was obtained, abandon its line of tion and inability to pay the interest on the road and remove its rails, poles, cars, and other bonded debt was due to the mismanagement equipment, but we all agreed that in any event, of its affairs.

before a company should be permitted to do this, In October, 1917, there was a judgment it should be made plain that it could not oper granting the relief prayed for by the trustee ate its road except at a loss. and ordering a sale of all the property 'If these bondholders and the stockholders, who

"We concur in what Judge Moss said that: rights and franchises of the railway com

are the same parties, do not desire a foreclosure pany as a going concern; but before a sale and a sale so as to determine whether or not was made under this judgment and on Oc- by that means a purchaser could be obtained tober 25, 1917, the railway company entered who would be willing to undertake the operainto a contract with Hirsch & Sons, by tion of the street railway, then they must conwhich, in consideration of $21,000 to be paid tinue themselves to operate, and, if at any time in cash, it sold to Hirsch & Sons with the they shall fail to do so, it might become proper consent of the directors and the trustee for and necessary for the court to take control the bondholders all of its physical property, it could be determined, either by exposing it

through a receiver and to operate same until agreeing that its rails, ties, and all other for sale, or by some other proper method, whethequipment might be removed. In other er or not said railway is capable, under reasonwords, under this contract the operation of ably economical and efficient management, of bethe road was to be permanently abandoned ing operated and continued as a going concern. and all of its physical property taken down The interest of the public demands the most and removed by Hirsch & Sons. It further thorough testing of that question before permit. appears that, when this contract was made, ting the utter destruction of the value of the the judgment ordering a sale of the road property as a street railway.'" was by agreement of all parties concerned set aside. It is obvious from this that the

It further appears from the record that, owners, the trustee for the bondholders, and while these injunction proceedings were pendperhaps the other creditors, concluded that ing, the suit filed in 1916 by the Potter Mat. the sale to Hirsch & Sons for $21,000 would lock Trust Company, as trustee, for a sale of be more beneficial to them than a sale of the road, and in which there was a judgment the road under the judgment; therefore they that was set aside, as before stated, was yet agreed that the judgment should be set aside

on the docket of the Warren circuit court, in order that the contract with Hirsch & and in February, 1918, the Potter Matlock Sons might be carried out.

Trust Company, as trustee, filed an amended A few days after this contract with Hirsch petition in which, after setting up the in& Sons was entered into and in October, solvency of the railway company and its 1917, the county of Warren and the city of default in the payment of interest, averred Bowling Green filed in the Warren circuit that the property of the railway company court suits against the railway company and could be sold for a great deal more if disHirsch & Sons asking for an injunction to mantled and sold as junk than the road and restrain Hirsch & Sons from taking down its property and privileges could be sold for or removing the physical property and equip as a going concern with an obligation upon ment of the railway company. When this the part of the purchaser to continue its opinjunction suit came on to be heard, the eration; and therefore it prayed that the judge of the circuit court granted the in- court order a sale of the road, its property junction prayed for and made an order re- and privileges as a going concern with an straining the railway company from selling obligation upon the part of the purchaser to its physical property and Hirsch & Sons continue its operation and also order a sale from taking down and removing any of the of all its physical property with the priviequipment.

lege to the purchaser to take down and remove the same, both sales to be made at the for a described period the streets and highsame time, and that one to be approved by ways mentioned in the grants, and while the the court which realized the larger sum. grants of these privileges would in them

To this amended petition the county of selves put upon the company the duty of Warren and the city of Bowling Green filed continuing the operation of the road for the answers resisting the effort of the trustee to duration of the grants, if under efficient manhave the physical property of the road sold agement it could be operated at a reasonable as junk, which would of course result in the profit, we do not think the terms or condi. permanent abandonment of the road.

tions of the grants should be construed to reUpon hearing, the issues raised by the quire the owners of the company to continue amended petition and answers thereto, to the operation of the road when to do so gether with the evidence offered thereon, the would cause them to suffer loss, although court adjudged that the road and all of its they had exercised good business methods in property and franchises should be sold as a managing the affairs of the company. Selectwhole with an obligation upon the part of the men of Amesbury v. Citizens' Electric Street purchaser to operate it, and further adjudged Railway Co., 199 Mass. 394, 85 N. E. 419, 19 that the trustee was not entitled to a judg- L. R. A. (N. S.) 865; San Antonio Street ment for a sale of the physical property of Railway Co. v. State, 90 Tex. 520, 39 S. W. the road with the right to remove the same. 926, 35 L. R. A. 662, 59 Am. St. Rep. 834; To so much of this judgment as refused to State of Iowa v. Old Colony Trust Co., 215 permit the physical property to be sold as Fed. 307, 131 C. C. A. 581, L. R. A. 1915A, junk and removed, the trustee for the bond- 549. holders prosecutes this appeal.

It is true that when public utility corpo[1] Returning now to what we conceive to rations undertake by virtue of permissive be the principal question in the case, our grants made by public authority, as this opinion is that when it has been clearly dem- company did, the performance of a public onstrated that a street railway company, service, this undertaking, when it can be perthat has secured the privilege as this compa- formed under efficient management with fair ny or its predecessor did to construct and profit to the owners, carries with it the duty operate a line of road, cannot continue its op of performing the service in such a way as eration as a whole under good business man- that the public interest and convenience will agement except at a loss, the company may be served in the manner contemplated by the be permitted to remove all its tracks and terms of the grants and for the time therein equipment and abandon the road upon re

specified. storing the highways it occupied, in so far as

Under conditions like these, neither of the they were occupied by its tracks and other parties to the contract should be permitted equipment, to the condition of the remainder to break it or to alter its terms or conditions of the adjacent highways at the time the to the prejudice of the other or the public abandonment took place.

for whose use and benefit the contract was But in announcing this principle we wish entered into. Both parties must fulfill the it to be distinctly understood that its applica- purpose of the grant in the manner and for bility is to be confined to a state of case sim- the period of time specified. City. Railway ilar to that presented by the record. We do Co. v. Citizens' Street Railway Co., 166 U. S. not mean to go so far as to say that, where 557, 17 Sup. Ct. 653, 41 L. Ed. 1114; Clarksthere was a contract obligation upon the part burg Electric Light Co. v. City of Clarksburg of the company to operate its road for a (1900) 47 W. Va. 739, 35 S. E. 994, 50 L R. specified time, it might, upon a showing that A. 142; Louisville Home Tel. Co. v. City of the road could not be operated even under ef. Louisville, 130 Ky. 611, 113 S. W. 855; Cumficient management except at a loss, abandon berland Tel. Co. v. City of Hickman, 129 Ky. the operation of the road before the term stip-Co. v. City of Dayton, 177 Ky. 503, 197 S. W.

220, 111 S. W. 311; Chesapeake & Ohio R. R. ulated in the contract had expired.

969. It seems to us there is no reason why a contract obligation should not be enforced in als, in the absence of a contract obligation,

But we are also sure that private individuthis character of cases with the same vigor are not under a duty of any kind to serve the and fullness as in others where contract ob- public at a loss to themselves. Where there ligations are assumed and the rights of the is no contract obligation, the public has no parties are to be determined by the terms of right to expect or demand that private indithe contract and not by the profit or loss that viduals will to their own loss continue a serymay result in performing its conditions. In ice that under efficient management will not this case, however, there was no contract ob- return to them a reasonable profit on their inligation contained in the ordinance of the vestment. city or the order of the fiscal court imposing [2] To say that the owners of a public upon the company the duty of operating its utility company must, in the absence of a line of road for any specified time. · It was contract obligation, continue to render the simply granted the right to use and occupy service contemplated by a merely permissive

granť to use public ways, although it could / and that the service which they receive is unnot be done under efficient management with der all the conditions reasonably adapted to their out a loss, would be in effect holding that needs, while the performance of the duty would private property might be taken for public entail a burden and loss upon the company far use without compensation; and, of course, might in its ultimate effect embarrass or pre

in excess of any benefit conferred, and which this cannot be done. There would be little vent the performance of other duties in respect difference, as it seems to us, between a rul- to larger interests, and affecting a far greater ing that the private property of an individual number of citizens, the court will withhold its might be boldly taken without compensation hands." for some public use, and a holding requiring the private individual to render, under a To the same effect is State of Kansas v. grant like the one here in question, a public Dodge City Railroad Co., 53 Kan. 329, 36 service at a personal loss to himself. To au- Pac. 755, 24 L. R. A. 564. thorize the doing of either one or the other In Jack v. Williams (C. C. A.) 113 Fed. 823, of these things would plainly be a violation the court had before it the question whether of the provision contained in section 13 of the owners of a railroad could be compelled the Constitution that

to operate it at a loss, and said: "Nor shall any man's property be taken or "To be thus useful to the public, the road must applied to public use

without just be kept up in such a condition that life and compensation being previously made to him." property both must be made as safe as pracThe views we have expressed appear to be and freight must be reasonable. And the rea

ticable. The rates of transportation of persons so sound as not to require citation of au- sonable number of trains must be kept up, dethority in support of them, but authority is pendent upon the circumstances surrounding the not wanting. In Northern Pacific Railway railway. Whilst thus serving the public, howCo. v. Territory of Washington, 142 U. S. ever, no corporation or private person is obliged 492, 12 Sup. Ct. 283, 35 L. Ed. 1092, the to continue the service without a reasonable court said:

remuneration. No one can be compelled to

serve the public for nothing. Private property "But if the charter of a railroad corporation of no kind, including railroad property, can be simply authorizes the corporation, without re-used for public purposes without compensation. quiring it, to construct and maintain a railroad Smyth v. Ames, 169 U. S. 467, 18 Sup. Ct. 418, to a certain point, it has been held that it can- | 42 L. Ed. 819; Road Co. v. Sandford, 164 U. not be compelled by mandamus to complete or S. 578, 17 Sup. Ct. 198, 41 L. Ed. 560; Chicago, to maintain its road to that point, when it would M. & St. P. R. Co. v. Minnesota, 134 U. S. not be remunerative."

418, 10 Sup. Ct. 462, 33 L. Ed. 970; Railway In Sherwood v. Atlantic Railroad Co., 94 43 L. Ed. 858.

Co. v. Smith, 173 U. S. 684, 19 Sup. Ct. 565,

All these cases determine that Va. 291, 26 S. E. 943, the court, in consider- a railroad company, in the full enjoyment and ing the question whether a railroad company use and capacity to use its franchises, cannot could be compelled by mandamus to operate be compelled to exercise its franchises without its road at a loss to the stockholders, said: reasonable remuneration. A fortiori a railroad “Where the line of railway, taken as a whole, not be compelled to operate that road, not only

corporation, or a person owning a railroad, cancannot be profitably maintained; where its op

without remuneration, but at a loss. And this eration, when discreetly and economically man

not by any means because such corporation or aged, is attended with loss-it is difficult to perceive how a court can, by mandamus or other person is insolvent. If a citizen has the wealth wise, compel its operation to be continued. If of the Rothschilds, he cannot be compelled to

use a dollar of his wealth for public purposes the loss is the result of improvident and un

without compensation." thrifty management, the court may, at the suit of those interested, take charge of it for the benefit of all concerned, and run it through the This case was affirmed by the Circuit Court instrumentality of a receiver; but, if the of Appeals in State of South Carolina v. Jack, traffic of the road is really insufficient to sup-145 Fed. 281, 76 C. C. A. 165. port a wise and economical administration of

The case of Southern Railway Co. in Kenits affairs, there would seem to be no escape tucky v. Hatchett, 174 Ky. 463, 192 S. W. from its ultimate abandonment. Such cases are possible, though rare. It more frequently hap

694, L. R. A. 1917D, 1105, is relied on by pens, however, that a part of the line becomes counsel for the county and city; but there unprofitable, though the system as a whole may is no conflict whatever between what was be valuable. In such an event, the court will said in that case and what we have said in inquire, first, as to the positive duties imposed this one. The facts of the two cases are radby the charter, and compel their performance by ically different, and the principle announced appropriate remedies, while with respect to in the Hatchett Case has no application to those duties which were not imposed by the the facts of this case. It should, however, charter, but which have been assumed by the be said that in the Hatchett Case, although corporation under permissive grants of power, it will consider all the circumstances of the case,

the court ruled that a solvent railroad comand if upon the facts it shall appear that the pany could not abandon a portion of its road duty unfulfilled inflicts no particular injury or merely because the operation of such portion hardship upon those who make the complaint, was unremunerative, it yet recognized and

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