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COMMONWEALTH v. PHILADELPHIA MARKET STREET SUBWAY-ELEVATED RAILWAY COMPANY (09/25/62)

September 25, 1962

COMMONWEALTH
v.
PHILADELPHIA MARKET STREET SUBWAY-ELEVATED RAILWAY COMPANY, APPELLANT.



Appeal, No. 11, May T., 1962, from judgment of Court of Common Pleas of Dauphin County, No. 354 Commonwealth Docket 1959, in case of Commonwealth of Pennsylvania v. Philadelphia Market Street Subway-Elevated Railway Company. Judgment vacated.

COUNSEL

Robert R. Batt, with him D. V. Randall, and Hull, Leiby & Metzger, and Ballard, Spahr, Andrews & Ingersoll, for appellant.

Edward Friendman, Deputy Attorney General, with him David Stahl, Attorney General, for Commonwealth, appellee.

Before Bell, C.j., Musmanno, Cohen, Eagen and O'brien, JJ.

Author: Cohen

[ 408 Pa. Page 358]

OPINION BY MR. JUSTICE COHEN

The Philadelphia Market Street Subway-Elevated Railway Company, appellant, was originally incorporated as the Market Street Elevated Passenger Railway Company for a period of 999 years under the Act of June 7, 1901, P.L. 523, 67 P.S. ยงยง 1391, 1393-1394, 1396-1411.Its stock was thereafter purchased by the

[ 408 Pa. Page 359]

Philadelphia Rapid Transit Company (P.R.T.) which controlled almost all of the street passenger railway companies in Philadelphia at the time but which, since it had no corporate power to operate a subway-elevated system, had to expand into the subway-elevated field of operation by purchasing stock of authorized companies rather than their franchises.

On January 19, 1903, appellant leased all of its properties except its corporate franchise to P.R.T. for 997 yeas beginning January 1, 1903, in return for a stated annual rental of 6% on the amount paid in for appellant's capital stock plus $250 a year for office expenses plus all taxes and license fees imposed upon appellant. The 6% rental on the $2,800,000 paid in for the capital stock produced at net rental of $168,000 a year to appellant.

By a supplemental agreement entered into between appellant and P.R.T. on July 1, 1907, this 6% annual rental was reduced to $1.00 a year. The impetus for this change, according to the record before us, came from a proposed contract between P.R.T. and the City of Philadelphia (City) under which the various franchises for use of the streets granted by the latter to the many street passenger railway companies to whose rights the P.R.T. had succeeded were consolidated, clarified and made uniform and under which the City was given the right to purchase all of P.R.T.'s properties on or after July 1, 1957. The rental reduction was designed to permit this acquisition without a heavy fixed rental charge being assumed by the City although it was not, apparently, made a condition in the contract itself.

This state of affairs has persisted substantially in the same form until the present. Although P.R.T. underwent extensive reorganization in the period between October 1, 1934, and January 1, 1940, and emerged ...


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