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Government may properly pay a corresponding price. But if its power to sell the land is so limited that it can make sales only to specific classes of persons, or for limited purposes, then it could not make a sale on the open market, and in condemnation proceedings by the United States it would be entitled to receive correspondingly less compensation. It is the position of the Director of the Budget that if the power of the subsidiary to sell the land is limited, the Government should proceed to acquire the land by condemnation rather than by purchase, in order to obtain the benefit of this decreased price. This question is illustrated by the case of Chicago, B. & Q. R. R. Co. v. Chicago, 166 U. S. 226, where the city of Chicago brought proceedings to condemn a portion of the railroad's right of way in order to extend a public street. It was held that since the railroad was not free to convey a part of its right of way essential to its public service, it was entitled to receive as compensation only nominal damages for the requirement of joint use of the land as compared with the former sole user.

It therefore appears that the question with which you are actually concerned will be answered by a determination of the extent of the power to sell land of the Pennsylvania Railroad and Tunnel Company, or its subsidiary, under the laws of the State of New York. In answering this question I shall assume, as dose the Solicitor of your Department in his opinion transmitted with your letter, (1) that the subsidiary company's title in fee to the land in question is valid; (2) that the railroad corporation and the subsidiary corporation were incorporated under, or are subject to, the New York Railroad Law of 1890, as now in effect; (3) that the conveyance of the fee, subject to the right of the railroad company to use the subsurface for the operation of its railroad and for station purposes, will not prevent or interfere with the due performance of its duties and obligations to the public.

The New York Railroad Law (N. Y. Laws 1890, c. 565), provides in section 4 as follows:

"SEC. 4. Additional powers conferred.-Subject to the limitations and requirements of this chapter, every railroad

corporation, in addition to the powers given by the general and stock corporation laws, shall have power:

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"2. Acquisition of real estate. To take and hold such voluntary grants of real estate and other property as shall be made to it to aid in the construction, maintenance, and accommodation of its railroad; and to acquire by condemnation such real estate and property as may be necessary for such construction and maintenance in the manner provided by law, but the real property acquired by condemnation shall be held and used only for the purposes of the corporation during the continuance of the corporate existence."

Similar powers were granted by section 7 of the Railroad Law. These provisions are now incorporated in sections 8 and 17 of chapter 49 of the New York Consolidated Laws. It is to be noted that the limitation on a railroad corporation's power to hold and use land is confined to land "acquired by condemnation," and that, inferentially at least, there is no such limitation on its power with respect to land acquired by purchase.

By the General Corporation Law, to which reference is made in the section just quoted, it is provided (N. Y. Laws, 1929, c. 650, sec. 14; amending, without substantial change, N. Y. Laws, 1890, c. 563, sec. 8, and N. Y. Laws, 1895, c. 672, sec. 11):

"SEC. 14. Every corporation as such has power, though not specified in the law under which it is incorporated:

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"3. To acquire property for the corporate purposes by grant, gift, purchase, devise or bequest, and to hold and to dispose of the same, subject to such limitations as may be prescribed by law."

The above-quoted provisions would seem to be sufficient to give a corporation subject to the New York Railroad Law power to dispose of land which is no longer needed by it in the conduct of its business, and such has been the interpretation of these statutes by the New York Court of Appeals. In Matter of City of Buffalo, 206 N. Y. 319, that court said (pp. 330-31):

"It is well settled that corporations, limited in duration, may purchase and hold the fee of land, and sell it whenever it is no longer necessary or convenient to keep it. (Nicoll v. N. Y. & E. R. R. Co., 12 N. Y. 121, 129.) In the case just cited we find the general rule very succinctly stated in the language of Chancellor Kent: Corporations have a fee simple for the purpose of alienation, but they have only a determinable fee, for the purpose of enjoyment. On the dissolution of the corporation, the reverter is to the original grantor or his heirs; but the grantor will be excluded by the alienation in fee, and in that way the corporation may defeat the possibility of a reverter.' (2 Kent. 282.) That is the rule which has been applied in this State. (People & Health Comrs. of N. Y. v. Mauran, 5 Denio, 389-401; Heath v. Barmore, 50 N. Y. 302; Yates v. Van De Bogert, 56 N. Y. 526, 530.) We can find nothing in the Railroad Law which contravenes or changes this rule. Railroad corporations are expressly authorized to acquire 'real property, or any right, interest or easement therein,' either by purchase or condemnation, and the only limitation upon this right is that every such property right, interest or easement must be taken and used for the purpose for which a railroad corporation is organized, or for some purpose stated in the Railroad Law. (Railroad Law, § 1 [7].) It is common knowledge that railroad corporations expend large sums of money for station houses, freight depots and other buildings which are all used for railroad purposes, but in the use of which there may be fluctuations and changes which are not permissible as to a railroad right of way. A passenger station or a freight depot may be discontinued or moved for reasons of business convenience or public necessity. There can surely be no doubt that in such a case a railroad company, having a title in fee to such lands which it no longer needs, may sell and convey precisely as any individual may do. (Italics mine.)"

See, also, in addition to the cases cited by the court, Kenney v. Wallace, 24 Hun 478, and 2 Fletcher, Cyclopedia of Corporations, sections 1111, 1112, 1187.

It appears from the papers transmitted with your letter that in 1902 the Board of Rapid Transit Commissioners granted a franchise to a predecessor of the present railroad

company and that this franchise was approved by the Board of Aldermen of the city of New York. I do not think that the power of a railroad corporation to sell land is in any way limited by this action or by the provisions of the Rapid Transit Act (N. Y. Laws, 1891, c. 4, as amended), in pursuance of which the action was taken. That Act provides in section 11 for the organization of rapid-transit corporations; and by section 24 the powers with respect to acquisition of property are stated in terms somewhat different from those contained in sections 4 and 7 of the Railroad Law. These differences, however, are not material in so far as land acquired by purchase is concerned. Moreover, these sections of the Rapid Transit Act apparently apply only to corporations formed under that Act and do not limit the power of corporations formed under the Railroad Law.

The action of the Board of Rapid Transit Commissioners was taken under section 32 of the Rapid Transit Act, as amended by N. Y. Laws, 1902, c. 584. By this section it was provided that the Board might grant a franchise to"any railroad corporation now or hereafter incorporated and for the purpose so declared in its articles of association, of constructing and operating a tunnel railroad or railroads in the said city to be connected with any railroad or railroads within the State of New York or any adjoining State and thereby forming a continuous line for the carriage of passengers and property between a point or points within and a point or points without the said city."

The situation, thus, is similar to that involved in Hudson & Manhattan R. R. Co. v. Wendel, 193 N. Y. 166, where the court said (p. 175):

"The railroad corporation was organized under the General Railroad Law. Upon obtaining the certificate of the board of rapid transit railroad commissioners and its acceptance of the terms, conditions and requirements thereof, the railroad corporation became possessed in addition to its already existing franchises of all the powers conferred by the Rapid Transit Act upon corporations specially formed thereunder * * * ""

I do not find anything in later amendments to the Rapid Transit Act, or in any of the laws transferring the powers and duties of the Board of Rapid Transit Commissioners to

other bodies, which has any effect on the power of a railroad corporation to convey land for which it has no further use in the conduct of its business.

I know of no decision of the New York courts involving directly the question of a railroad corporation's power to convey its property with a reservation of a right to use the subsurface for its corporate purposes. Since a railroad corporation's power to convey land does extend to that portion of its property for which it has no use in a horizontal sense, I see no reason why it may not likewise convey that portion of its land for which it has no further use vertically. So far as the United States is concerned there will be no difficulty in accepting title with a reservation of the subsurface rights, for the Deficiency Appropriation Act of March 4, 1929, c. 707, 45 Stat. 1623, 1660, making an appropriation "For acquisition of site for an annex" to the New York Post Office, provides that

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the Secretary of the Treasury may accept title subject to the grantors reserving rights to use the subsurface for railroad purpose and necessary reservation for light and air."

As to any part of the land which was formerly a part of a public street, it is possible that other factors, including the franchise granted to the railroad company by the City of New York, may require consideration. The facts with respect to this matter do not appear in your letter, and I express no opinion upon it. Similarly, different considerations would be involved if any of the land had been acquired by the railroad by condemnation rather than by purchase. (See Hudson & Manhattan R. Co. v. Wendel, 193 N. Y. 166.) Since you state that the land was acquired by purchase I have not considered any question which might arise with respect to land acquired by condemnation.

I am therefore of the opinion, upon the assumptions first made, that the corporation which now owns the property has the power to convey the fee, subject to the reservations stated, to any person or corporation or to the Government, and such a conveyance need not limit the use of the property to railroad purposes.

Respectfully,

WILLIAM D. MITCHELL.

To the SECRETARY OF THE TREASURY.

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