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If the period of the lease of the property and franchises of the Boston Elevated Railway Company to the Commonwealth, as provided in Spec. St. 1918, c. 159, is extended for a term of years, the General Court may provide that the Commonwealth shall guarantee the payment of principal and interest of any securities of the company that the public trustees may be authorized to issue for the purpose of effecting economies in the fiscal management of the company and of promoting more efficient service by it.
Such guarantee would not violate art. 62 of the Amendments to the Constitution of the Commonwealth or any other constitutional provision.
The fact that such securities might be outstanding after the termination of the period of public operation and management would not render such a guarantee inconsistent with art. 62 of the Amendments to the Constitution or with any other constitutional provision.
It is constitutionally competent for the General Court to exempt such securities in the hands of their holders from taxes levied under authority of the Commonwealth.
It is constitutionally competent for the General Court to effect the retirement of preferred stock of the company issued under and in accordance with St. 1911, c. 740, s. 2, and of any other class or classes of the company's stock without the consent of the holders thereof by the exercise of the power of eminent domain; and provisions of a certain bill proposed in the Senate looking toward that end were stated in an Opinion of the Justices to be constitutional.
Certain sections of such a proposed bill providing for the retirement of the corporation's preferred stock would not be repugnant to the provisions of the Federal Constitution or of the Constitution of this Commonwealth.
Under any extension of the lease of the property and franchises of the company provided in Spec. St. 1918, c. 159, or of the present system of public operation and management of the company, the provisions of art. 63 of the Amendments to the Constitution of the Commonwealth would not apply to receipts of the company during the period of such lease or of such system of operation and management, moneys received during that period in the management of the corporation not being "received on account of the commonwealth."
Any such extension of the lease or of the system of public operation and management would not be repugnant to the provisions of art. 59 of the Amendments to the Constitution of the Commonwealth or to any provision thereof.
" An Act extending the term of the lease to the Commonwealth of the properties of the Boston Elevated Railway Company and continuing public management and operation thereof," and containing provisions for the retirement of the company's preferred stock, were enacted into law, the General Court thereafter could not, by virtue of art. 59 of the Amendments to the Constitution of the Commonwealth, amend, alter or repeal any provisions of the bill as were declared thereby and by Spec. St. 1918, c. 159, to constitute a contract binding upon the Commonwealth.
If the bill of the character above described were enacted by the General Court, it would not be subject to the referendum provisions of art. 48 of the Amendments to the Constitution of the Commonwealth.
Having given their opinions under c. 3, art. 2 of the Constitution upon specific questions relating to the constitutional power of the General Court to enact a bill covering over fourteen pages of the printed record and of the character above described, the Justices respectfully asked to be excused from answering the question, " Would any provision of said bill be unconstitutional if enacted into law?"
years, may the General Court provide that the Commonwealth shall guarantee the payment of principal and interest of any securities of the company that the public trustees may be authorized to issue for the purpose of effecting economies in the fiscal management of the company and of promoting more efficient service by said company?
2. Would such guarantee violate the sixty-second article of the Amendments to the Constitution of the Commonwealth or any other provision thereof?
3. Would the fact that such securities might be outstanding after the termination of said period of public operation and management render such a guarantee inconsistent with said sixty-second article or with any other constitutional provision?
4. Is it constitutionally competent for the General Court to exempt such securities in the hands of their holders from all taxes levied under State authority?
5. Is it constitutionally competent for the General Court to effect the retirement of preferred stock of the company issued under and in accordance with section two of chapter seven hundred and forty of the acts of nineteen hundred and eleven and of any other class or classes of the company's stock, without the consent of the holders thereof, by the exercise of the power of eminent domain or otherwise?
6. Would sections twelve to fourteen, inclusive, of said bill, providing for the retirement of the company's preferred stock, be repugnant to the provisions of the Constitution of the United States prohibiting a State from passing any law impairing the obligation of a contract or to any other provision of said Constitution or of the Constitution of the Commonwealth?
7. Under any extension of the said lease or of the present system of public operation and management of said company, would the provisions of the sixty-second article of the Amendments to the Constitution of the Commonwealth apply to the receipts of the company during the period of such lease or of such system of operation and management?
Constitution of the Commonwealth or to any other provision thereof?
9. If said bill were enacted into law could the General Court thereafter, by virtue of the said fifty-ninth article, constitutionally amend, alter or repeal such provisions of said bill as are declared thereby and by said chapter one hundred and fifty-nine to constitute a contract binding upon the Commonwealth, or any of them?
10. If said bill were enacted by the General Court would it be subject to the referendum provisions of article forty-eight of the Amendments to the Constitution?
11. Would any provision of said bill be unconstitutional if enacted into law?
An Act extending the term of the lease to the Commonwealth of the properties of the Boston Elevated Railway Company and continuing public management and operation thereof.
graph and inserting in place thereof the following:- On July first, nineteen hundred and twenty-eight, or, if this act is not accepted until after said date, as soon after said acceptance as practicable, the governor, with the advice and consent of the council, shall appoint five trustees for terms of two, four, six, eight and ten years, respectively, from July first, nineteen hundred and twenty-eight, and thereafter, as the terms of the members so appointed expire, their successors shall be appointed in Eke manner for terms of ten years each, but not exceeding the period of public management and operation. The board shall organize every two years by the election of a chairman. Each trustee so appointed shall take office upon his appointment and qualification. The foregoing provisions of this section applicable to the first board of trustees appointed hereunder relative to salary, filling of vacancies, designation of chairman, and removals, shall apply to their successors appointed as aforesaid in the year nineteen hundred and twenty-eight or thereafter, except that the chairman and the member chosen as clerk shall each receive a salary of fifty-five hundred dollars,- so as to read as follows:- Section 1. The board of trustees of the Boston Elevated Railway Company is hereby created, to consist of five persons to be appointed by the governor, with the advice and consent of the council. The persons so appointed shall be sworn before entering upon the performance of their duties; shall own no stock or other securities of the Boston Elevated Railway Company or of any company owned, leased or operated by it; shall serve until July first, nineteen hundred and twenty-eight, and until their successors are duly appointed and qualified, and each shall receive from the company as compensation for his services five thousand dollars annually. In case of any vacancy in said board by reason of death, resignation or otherwise, the governor, by and with the consent of the council, shall fill the vacancy. The board shall designate one of the trustees so appointed to serve as chairman. Any member of the board may be removed for cause by the governor, with the advice and consent of the council.
the meaning of section forty of chapter two hundred and seventy-one of the General Laws, but shall be subject in all other respects to the provisions of said section to the same extent as are the directors of the Boston Elevated Railway Company, but said section shall not apply to recommendations by the governor to said trustees. The provisions of section three of chapter twelve of the General Laws shall not apply to the said board.
On July first, nineteen hundred and twenty-eight, or, if this act is not accepted until after said date, as soon after said acceptance as practicable, the governor, with the advice and consent of the council, shall a point five trustees for terms of two, four, six, eight and ten years, respectively, from July first, nineteen hundred and twenty-eight, and thereafter, as the terms of the members so appointed expire, their successors shall be appointed in like manner for terms of ten years each, but not exceeding the period of public management and operation. The board shall organize every two years by the election of a chairman. Each trustee so appointed shall take office upon his appointment and qualification. The foregoing provisions of this section applicable to the first board of trustees appointed hereunder relative to salary, filling of vacancies, designation of chairman, and removals, shall apply to their successors appointed as aforesaid in the year nineteen hundred and twenty-eight or thereafter, except that the chairman and the member chosen as clerk shall each receive a salary of fifty-five hundred dollars.
line, the words: - ; provided, that no established line or any portion thereof, or the service thereon, shall be discontinued in any city or town served by the company, without the consent of the mayor and city council or of the board of selectmen, as the case may be, after a public hearing thereon, so as to read as follows: -Section 2. Said board of trustees and their successors, hereinafter called the trustees, shall manage and operate the Boston Elevated Railway Company, hereinafter called the company, and the properties owned, leased or operated by it, until July first, nineteen hundred and forty-three, and, subject to the provisions of this act, shall take and have possession of said properties in behalf of the Commonwealth during the period of public operation, and, for the purposes of this act, shall, except as is otherwise provided in this act, have and may exercise all the rights and powers of said company and its directors, and, upon behalf of said company, shall receive and disburse its income and funds. They shall have the right to appoint and remove in their discretion the president, treasurer and clerk of the corporation, and all officers of the company other than the board of directors. They shall have the right to regulate and fix fares and charges for all services furnished or operated, including the issue, granting and withdrawal of transfers, and the imposition of charges therefor, and shall determine the character and extent of the service and facilities to be furnished, and in those respects their authority shall be exclusive and shall not be subject to the approval, control or direction of any other state board or commission; provided, that no established line or any portion thereof, or the service thereon, shall be discontinued in any city or town served by the company, without the consent of the mayor and city council or of the board of selectmen, as the case may be, after a public hearing thereon.
ment and operation to the same extent as if they were in the immediate employ of the company, but said trustees shall not be personally liable. A majority of the board shall constitute a quorum for the transaction of business, and the action of a majority of those present at any meeting shall be deemed the action of the trustees.
Nothing herein contained shall be held to affect the right of the Commonwealth or any subdivision thereof to tax the company or its stockholders in the same manner and to the same extent as if the company had continued to manage and operate its own property.
SECTION 3. Said chapter one hundred and fifty-nine is hereby further amended by striking out section three and inserting in place thereof the following: - Section 3. The trustees shall have authority to make contracts in the name and on behalf of, and to issue stocks, bonds and other evidences of indebtedness of, the company, and may dispose of any preferred stock so issued without first offering the same to the stockholders. No contracts for the operation or lease of any subways, elevated or surface lines in addition to those now owned, leased or operated by the company, or any extensions thereof beyond their present limits, shall be entered into which shall involve the payment of any rental or other compensation by the company beyond the period of public operation without the consent of the directors of the company, but surface lines may be constructed or purchased beyond the limits of existing surface lines after consent of the directors has been refused, if the trustees shall determine, after a public hearing, that public necessity and convenience require such construction or purchase; provided, however, that if the Commonwealth shall elect under the provisions of section twelve to discontinue the public management and operation of the company's property, no such surface lines shall thereafter be constructed or purchased without such consent. The trustees shall cause to be paid all amounts which may from time to time become due from the company, and shall declare dividends at the appointed times upon the stock of the company and provide for the payment of the same.
SECTION 4. Said chapter. one hundred and fifty-nine is hereby further amended by striking out section six and inserting in place thereof the following: - Section 6. The trustees shall from time to time, in the manner hereinafter provided, fix such rates of fare and schedules of charges for all services furnished or operated as will reasonably insure sufficient income to meet the cost of the service, which shall include operating expenses, taxes, rentals, interest on all indebtedness, an annual payment of two hundred and fifty thousand dollars into the special retirement or sinking fund to be accumulated for the purpose of retiring bonds issued under section fifteen, an annual sum of seven hundred and fifty thousand dollars representing a part of the saving in the amount of dividend charges and other economies herein provided for, such allowance as they may deem necessary or advisable for depreciation of property and for obsolescence and losses in respect to property sold, destroyed, or abandoned, all other expenditures and charges which under the laws of the Commonwealth now or hereafter in effect may be properly chargeable against income or surplus, fixed dividends on all preferred stock of the company from time to time outstanding, and dividends on the common stock of the company from time to time outstanding at the rate of six per cent per annum on the par value thereof to and including July first, nineteen hundred and twenty-eight, and five per cent per annum on the par value thereof during the balance of the period of public operation. Dividends upon the common shares shall be payable quarterly, but no dividends shall be paid upon such common shares in excess of the rates herein specified.
in addition to those operated at the time of acceptance of this act.
SECTION 5. Said chapter one hundred and fifty-nine is hereby further amended by striking out section seven and inserting in place thereof the following:- Section 7. The trustees shall from time to time fix and put in operation rates of fare and schedules of charges for all services furnished or operated which in their judgment will produce sufficient annual income to meet the cost of service, as defined in section six, without impairment of the amount of the reserve fund as originally established.
If at any time the trustees shall be of opinion that said rates of fare or schedules of charges should be changed either with regard to the method or basis upon which the fares and transfer privileges or schedules are established, or because the same or any of them are too small or too great, or for any other reason, the trustees may adopt and put into effect new schedules or rates of fare which in their judgment will provide sufficient annual income to meet the cost of service, as defined in section six, without impairment of the amount of the reserve fund as originally established.
seven. In determining the amount of the reserve fund, for the purpose of this section only, there shall first be deducted therefrom any amounts which have been paid by the Commonwealth to the company under the provisions of section eleven and for which the Commonwealth has not been reimbursed.
SECTION 7. Section twelve of said chapter one hundred and fifty-nine is hereby amended by striking out, in the third and fourth lines, the words "the expiration of said ten year period" and inserting in place thereof the words: - July first, nineteen hundred and forty-three,- and by striking out, in the eighth and ninth lines, the words "at the expiration of the said ten year period " and inserting in place thereof the words: - on said date, so as to read as follows: Section 12. Notwithstanding anything contained in this act, the public management and operation of the railway system of the company shall continue after July first, nineteen hundred and forty-three, upon the terms and conditions herein specified until such time as the Commonwealth shall elect to discontinue such public management and operation. The Commonwealth shall have the right to terminate such public management and operation, either on said date or at any time thereafter, by appropriate legislation passed not less than two years before the date fixed for such termination.
control of the property shall then revert to the company, and if at that time the reserve fund shall be less than the amount originally established because the income during the period of public management and operation has been insufficient to pay the cost of the service, the Commonwealth shall forthwith pay over to the company an amount sufficient to restore it to its original amount; and if the amount in said reserve fund is then in excess of the amount originally established and any amount required to meet the cost of the service to the expiration of such period, such excess shall be paid into the treasury of the Commonwealth and distributed among the cities and towns in which the company operates in the same proportions as the assessments provided for by section fourteen; provided, however, that in the event of the exercise by the Commonwealth or any political subdivision thereof of the option contained in section sixteen, or of taking by eminent domain, such excess may be used toward payment of the purchase price or damage.
SECTION 9. By the acceptance of this act as provided in section sixteen, the company agrees that in no event at any time hereafter shall dividends in excess of six per cent per annum. be declared or paid upon its common stock and that in any valuation of its property for rate-making purposes there shall be deducted an amount equal to whatever sums shall have been accumulated in the sinking fund provided by section fifteen hereof, including therein any bonds issued under said section, and purchased or retired therefrom.
The provisions of this section shall not preclude the Commonwealth or any political subdivision thereof from acquiring the property and franchises of the Boston Elevated Railway Company at any time through the exercise of the power of eminent domain, and in the event of such taking the compensation to be paid to the company shall not be enhanced by reason of the passage of this act or of its amendments.
pensation payable thereunder shall not exceed a sum equal to the total outstanding shares of the company's capital stock multiplied by a sum equal to the average paid-in price of such shares in addition to the assumption of the company's entire outstanding indebtedness; or, at the election of the Commonwealth or of any such political subdivision exercising said power of eminent domain, the compensation as established in eminent domain proceedings shall be reduced by the amount of bonds issued and retired under section fifteen.
In case of liquidation or dissolution of the company the holders of the shares of common stock of the company shall not be entitled to receive for each share thereof a sum exceeding one hundred and ten dollars.
SECTION 11. Upon the appointment of the trustees whose term of service dates from the first day of July, nineteen hundred and twenty-eight, the trustees shall call, retire and cancel all preferred stocks issued under the authority of chapter seven hundred and forty of the acts of nineteen hundred and eleven or of said chapter one hundred and fifty-nine, as hereinafter provided. On or subsequent to said date, owners of shares of said preferred stocks the certificates of which have not been stamped "non assenting" as provided in section twelve, may and shall present the same to the treasurer of the company, or to such bank or trust company as may be designated by the trustees, for the purpose of surrender and cancellation, and shall receive in exchange therefor the bonds of the company issued under Section fifteen on the following basis: - for each share of first preferred stock, bonds to the face value of one hundred and thirty dollars; for each share of the second preferred stock, bonds to the face value of one hundred and fifteen dollars; and for each share of the preferred stock, bonds to the face value of one hundred and five dollars, together with accrued dividends in cash at the rates fixed for each of said classes from the last dividend date thereof to the day of the appointment of the trustees as aforesaid.
exchanged under the provisions of chapter seven hundred and forty of the acts of nineteen hundred and eleven may surrender the same and receive the proportionate amounts in bonds as aforesaid to which he would have been entitled if such exchange had been made.
Such provision for cases of stock certificates lost or destroyed may be made as the trustees shall determine.
SECTION 12. If this act is accepted as hereinafter provided, the trustees, in the name and on behalf of the company, shall forthwith notify each of the preferred stockholders of said action by registered letter addressed to each stockholder as his address appears upon the records of the company, and by publication in two daily newspapers published in the city of Boston, once each week for three successive weeks.
Any holder of shares of any class of preferred stock of the company who did not vote either in person or by proxy in favor of the acceptance of this act, may, within one hundred and twenty days after the date of the meeting at which was adopted the vote to accept this act, file with the clerk of the company or with the bank or trust company appointed by the company as the transfer agent of the class of preferred stock held by him, a writing addressed to the company declaring his opposition to the acceptance of this act and stating the number of shares held by him and the number or numbers of the certificate or certificates evidencing the same, and shall at the same time present to said clerk or said bank or trust company the certificate or certificates of stock evidencing said shares, to be stamped "non assenting".
trustees shall request the holders of such stock to surrender their shares for retirement, in accordance with the provisions of said section. The holders of all first and second preferred shares so stamped "non assenting" shall be entitled to receive the cash value of said shares to be determined as provided in section thirteen. The clerk of the company shall forthwith notify the bank or trust company acting as transfer agent of all certificates stamped by him as "non assenting", and said transfer agents shall at all times keep a separate record of certificates outstanding stamped "non assenting".
SECTION 13. Any stockholder of the company who owns any share or shares of its first or second preferred stock, the certificates evidencing which are stamped "non assenting" as above provided, may at any time within one year after the same have been presented for such stamping, request that his said shares be valued as hereinafter provided, and the value thereof shall in such case be paid, tendered or deposited to or for the account of such holder in the manner following: - The stockholder may file a petition in the Supreme Judicial Court within and for the county of Suffolk, setting forth the material facts and asking that the value of his shares may be determined. Thereupon, and upon such notice to all parties concerned as it may deem proper, the court shall pass an order requiring the certificate or certificates evidencing such shares, and duly endorsed, to be deposited with the clerk of the court, and shall, unless application for trial by jury is made in said petition, appoint three commissioners to ascertain and report the value of the shares. The report shall be made to the court as soon as is practicable, and, after due notice to the parties in interest, shall be confirmed by the court unless some error of law be made to appear upon the face of the report, in which event it shall be recommitted to the commissioners with such order as the court may make. If a trial by jury is claimed by either party, the court shall order the question of the value of the shares to be tried and determined by a jury in the superior court in the same manner in which other civil cases axe tried in that court.
The company shall be liable for and shall pay all sums found due and payable to all holders of shares in the proceedings aforesaid, including such interest, cost and expenses as the court may order, and shall likewise furnish such security for the said payment as the court may order. For the purpose of this section the value of the shares shall neither be increased nor diminished by reason of the provisions of this act or the lease of the property of the company to the Commonwealth hereunder.
SECTION 14. Upon payment, or tender or deposit with the clerk of the court of the value of said shares fixed as aforesaid, such "non assenting" shares and the certificate or certificates thereof shall become the property of and shall be transferred and delivered to the company whose right .and title to receive the same and to hold possession thereof may be enforced by the court by any appropriate process, and the company shall upon receipt of such certificate cancel the same.
Exceptions may be taken to any ruling or order of said court, to be heard and determined as in other civil cases. The court may make all such orders for the enforcement of the rights of any party to the proceedings, for consolidation of two or more petitions and their reference to the same commissioners, for the consolidation of claims for a trial by jury and framing of issues therefor, for deposit of money in court, land for the payment of interest upon the value of the stockholders' shares as determined and the payment of costs by one party to the other, as justice and the speedy settlement of the matters in controversy may require. The attorney general, in behalf of the Commonwealth, shall be made a party to such proceedings and be entitled to be heard therein.
exceeding twenty-eight million dollars. Such bonds or the proceeds thereof shall be used for the purchase or retirement of the existing preferred stocks of the company as hereinbefore provided, for the payment of judgments recovered for the value of any non assenting stock as provided in section thirteen, and the balance for capital purposes for which the company may lawfully issue stocks or bonds. Said bonds shall bear interest at the rate of four and one-half per cent per annum, shall be for the term of forty years, and may contain such provision for call in whole or in part as the trustees may determine.
The Commonwealth shall guarantee the payment of the principal and interest of all bonds issued under the authority hereof, and the state treasurer shall upon request indorse such guaranty thereon.
In case the Commonwealth shall be called upon to make any payment by virtue of said guaranty, the amount paid on account thereof, together with any interest or other charges, shall be assessed upon the cities and towns in which service under this act is operated, by an addition to the state tax next thereafter, assessed in proportion to the number of persons in said cities and towns using the service at the time of said payment, said proportion to be determined and reported to the state treasurer by the trustees from computations made in their discretion for the purpose.
The trustees shall annually deposit in a special retirement or sinking fund to be accumulated for the purpose of retiring said bonds at maturity the sum of two hundred and fifty thousand dollars. Said special fund shall be used for no other purpose, except that it may likewise be used for purchasing any of said bonds before maturity at not more than the call price stipulated thereon. Said fund may be invested in income-producing securities in the discretion of the trustees and all income accruing therefrom shall be added to the fund.
The payment of interest as it accrues on said bonds, and also the annual deposits required as aforesaid, shall be deemed part of the cost of service as defined in section six of said chapter one hundred and fifty-nine.
Said bonds, both as to principal and income, are hereby made exempt from all taxes levied under authority of the Commonwealth and shall contain a recital to such effect.
SECTION 16. This act shall take effect upon its acceptance by the holders of not less than a majority of each class of the stock of the Boston Elevated Railway Company, given at a meeting called for the purpose, and the filing of a certificate of such acceptance with the secretary of the Commonwealth; provided, that such acceptance is filed not later than October fifteenth, nineteen hundred and twenty-seven. A vote to accept this act, cast by any holder of preferred stock in the company, shall constitute an assent on the part of such stockholder to surrender for cancellation all the preferred stock held by him at the price hereinbefore assigned as the value thereof in exchange for the bonds of the company, as provided in section eleven.
None of the provisions of this act or of said chapter one hundred and fifty-nine shall be construed to constitute a contract binding upon the Commonwealth, other than the provisions which define the term of the lease herein provided for and the terms and conditions under which, during said term of public management and operation, the property owned, leased or operated by the Boston Elevated Railway Company shall be man aged and operated by the said trustees, the provisions of section thirteen of said chapter one hundred and fifty-nine, as amended by section eight of this act, and the provisions of section fifteen relative to the guaranty by the Commonwealth of the bonds of the company issued under said section fifteen, and the exemption thereof from taxation, which provisions shall constitute a contract binding upon the Commonwealth; but if during said period of management and operation the trustees shall be deprived of possession or control of said property by reason of any action to enforce any debt, claim or obligation which existed at the time the trustees took possession, the Commonwealth shall be under no obligation to pay any sum or sum under this act to meet any deficiency in income accruing while the trustees are deprived of such possession and control.
The Justices of the Supreme Judicial Court respectfully submit these answers to the questions set forth in the order adopted by the Honorable Senate on April 15, 1927. These questions relate to a pending bill (printed as Senate, No. 276 as amended) entitled, "An Act extending the term of the lease to the Commonwealth of the properties of the Boston Elevated Railway Company and continuing public management and operation thereof." It is in form and substance an amendment of Spec. St. 1918, c. 159. Copies of the order and bill are hereto annexed.
Provision was made by said c. 159 for the public operation through a board of trustees, appointed by the Governor, of the Boston Elevated Railway Company for a period of ten years and thereafter until such time as the Commonwealth shall elect to discontinue public management. That statute was in substance and effect a lease of the property of the railway company to the Commonwealth upon the terms therein specified. The validity of said c. 159 was upheld against attacks, founded upon certain of its provisions alleged to violate the Constitution, in Boston v. Treasurer & Receiver General, 237 Mass. 403, affirmed in Boston v. Jackson, 260 U. S. 309, and in Chelsea v. Treasurer & Receiver General, 237 Mass. 422. See Opinion of the Justices, 231 Mass. 603. The conclusions there reached are accepted without further discussion.
can be made only for public purposes and to promote the general welfare. That is too clear for discussion. Lowell v. Boston, 111 Mass. 454. Duffy v. Treasurer & Receiver General, 234 Mass. 42, 50. Opinion of the Justices, 240 Mass. 616, 617. The Boston Elevated Railway is devoted to a public use and its operation and management concern the public welfare. The transportation of the people at large in the district served by the Boston Elevated Railway system is a matter in which the public and the government as the representative of the people have an interest. Boston v. Treasurer & Receiver General, 237 Mass. 403, 414, and cases there collected. Boston & Albany Railroad v. New York Central Railroad, 256 Mass. 600. Prince v. Crocker, 166 Mass. 347. Browne v. Turner, 176 Mass. 9. Sears v. Street Commissioners, 180 Mass. 274, 279. The trustees take and have possession of the properties of the Boston Elevated Railway Company "in behalf of the Commonwealth during the period of public operation" by the express terms of said c. 159, s. 2. The operation and management of the Boston Elevated Railway Company during the term of the lease are to be by a board of public officers for the promotion of the general welfare, although at the same time provision is made for the conservation of the private interests of the owners of the railway company. The Commonwealth, having taken possession of the property of the railway company for a public use, can expend public money for its support and operation. It follows that the purposes of the guarantee of the securities described in question 1 are public as distinguished from private, and that public moneys may be expended and the public credit pledged therefor.
a public board, who are for all essential purposes public officers although under said c. 159, s. 2, " deemed to be acting as agents of the company and not of the commonwealth," and whose duties are prescribed by a public statute enacted by the General Court pursuant to its constitutional prerogatives.
The provision of s. 1 of the proposed act, to the effect that the trustees shall not be considered public officers within the meaning of G. L. c. 271, s. 40, does not impair or affect the general nature of their duties as public officers. The further provision exempting the trustees from the terms of G. L. c. 12, s. 3, has no bearing upon the character of their service as public officers. For all other purposes they are public officers. They perform public functions.
The further provisions of s. 3 of the proposed bill, to the effect that no contracts of the trustees for the operation or lease of additional subways, elevated or surface lines, or any extensions thereof, involving payment of rental or other compensation beyond the period of public operation shall be valid without the consent of the directors of the company, and that extensions or purchases of surface lines in certain conditions may not be made without such consent, do not affect the dominating features of the proposed bill stamping the management and operation of the corporation as public and not private. It is expressly provided by said c. 159, s. 4, that during the period of public control the board of directors of the company shall "have no control over the management and operation of the street railway system." The entire responsibility of management and operation rests upon the trustees as public officers. This responsibility is not shared with the directors of the railway company.
In these circumstances there is nothing in art. 62 of the Amendments to the Constitution which would be violated by the guarantee by the Commonwealth of securities issued by the trustees as authorized in the proposed bill.
monly is to be interpreted as stating a broad and general principle of government, regulative of all conditions arising in the future and falling within its terms. Tax Commissioner v. Putnam, 227 Mass. 522, 523, 524.
may be postponed until actual cost and loss fall upon the public treasury.
For these reasons we answer, "Yes" to question 1, and "No" to questions 2 and 3.
Question 4 is in effect whether such securities may lawfully be exempted from taxation under State laws. The proceeds from the sale of all such securities must be employed by the trustees under s. 15 of the proposed bill either for the retirement or extinguishment of preferred stocks of the company, or for capital investments for which its stock may be issued. All such proceeds, therefore, will in substance and effect be invested in property of the company.
The General Court is authorized and required "to impose and levy proportional and reasonable assessments, rates, and taxes, upon all the inhabitants of, and persons resident, and estates lying, within the said commonwealth." C. 1, s. 1, art. 4, of the Constitution. This constitutional mandate as applied to corporations means that property may be exempted from one form of taxation which bears its fair burden for the support of government through some other form of taxation. If the property of a corporation is taxed to it, its shares of stock may be exempted from taxation in the hands of stockholders. If property in which the proceeds of bonds are invested and by which they are secured is taxed, the bonds in the hands of their resident owners may be exempted from taxation. The principle upon which this kind of exemption rests is avoidance of double taxation, a principle upon which the Legislature has acted in numerous instances. Salem Iron Factory Co. v. Danvers, 10 Mass. 514. Opinion of the Justices, 195 Mass. 607, 610, 611. United States Trust Co. v. Commonwealth, 245 Mass. 75. Opinion of the Justices, 250 Mass. 590, 600, and cases there cited.
against the bonds of such companies may be made in favor of the bonds here in question is that these bonds are to be issued by a public board in possession of the property of the railway company for a public use and are to be guaranteed by the Commonwealth, all for a public purpose and the general welfare. They thus will become in a sense an obligation of the Commonwealth. There can be no doubt of the power of the Commonwealth to exempt from taxation bonds and securities issued by it. The liability of the Commonwealth on these bonds, although not primary, may be enforced and may be substantial. For this reason we are of opinion that such bonds may be exempted from taxes levied under State authority. We answer Yes to question 4.
Question 5 in substance is whether the retirement of preferred and common stocks of the company may be effected by statute without the consent of the holders thereof by the exercise of the power of eminent domain, or otherwise.
It is an underlying principle of our system of government that every person holds all and every part of his property subject to being appropriated for public use by the government for its paramount needs upon payment of reasonable and just compensation. Declaration of Rights, Massachusetts Constitution, art. 10. Amendments to Constitution of the United States, art. 5. This power of government extends to personal as well as to real estate. This power of expropriation for public use extends to shares of stock in a corporation, which represent an undivided interest in its franchise and other property. Offield v. New York, New Haven & Hartford Railroad, 203 U. S. 372. Cincinnati v. Louisville & Nashville Railroad, 223 U. S. 390, 400. Boston Water Power Co. v. Boston & Worcester Railroad, 23 Pick. 360) 392, 393. Central Bridge Corp. v. Lowell, 4 Gray 474, 481. It is competent for the General Court to effect the retirement of such stock by the exercise of eminent domain. Since that is the provision of the proposed bill, it seems unnecessary to discuss whether such retirement can be effected in any other way or upon any other principle.
railway corporation, who have not voted in favor of accepting the proposed act as provided in s. 16, may be compelled to surrender their shares to the company for retirement upon the terms therein specified. It is to be noted that the proposed act will not go into effect until accepted by the holders of a majority of each class of stock in the railway corporation. The proposed plan for retirement of the stock of nonassenting minority stockholders thus will be approved by the holders of a majority of the stock.
The provisions for the retirement of preferred stock issued under said c. 159, s. 5, as set forth in s. 12 of the proposed act, are in precise conformity to the conditions as to retirement contained in said s. 5, which became an inherent quality or infirmity of such stock when issued. By accepting the stock on such conditions, the holders assented in advance to retirement of their shares upon such terms. They made their investment upon that footing. They cannot complain. Haskell v. New Bedford, 108 Mass. 208. Opinion of the Justices, 251 Mass. 569, at page 612, and cases there collected.
The provisions in s.s. 13 and 14 of the proposed bill in effect are that the minority nonassenting holders of other classes of stock of the railway company shall surrender their shares for retirement at a price to be ascertained either (1) by an appraisal of their value by three commissioners appointed by the court, or (2) by trial by jury in the Superior Court to determine their value. Adequate provision is made for the correction of any errors of law in making such appraisal under each method. Upon payment of such value, title to those shares of stock shall vest in the railway company and the certificates of stock shall be cancelled.
The provisions as to ascertainment of the value of the shares are adequate and present no constitutional difficulty. Opinion of the Justices, 251 Mass. 569, 612-615, and cases there cited. Long Island Water Supply Co. v. Brooklyn, 166 U. S. 685.
railway company to the Commonwealth shall be disregarded, is valid. Smith v. Commonwealth, 210 Mass. 259, 262, 263.
The question remains whether the broad provisions for compulsory retirement of stock are violative of any constitutional guaranty. It is to be borne in mind that these provisions are part of a bill proposed for the purpose of effectuating public management of a public utility. Title to the shares of stock does not vest in the Commonwealth but in the railway corporation. No general principle of law prevents the General Court from authorizing a corporation to acquire title to its own stock. Worcester v. Board of Appeal, 184 Mass. 460. The Boston Elevated Railway Company, being a public corporation for the transportation of passengers for hire, belongs to the class of corporations which may be empowered to exercise the power of eminent domain. We are of opinion that this power may be conferred under the conditions set forth in the proposed bill to acquire title by eminent domain to the shares of its own stock of nonassenting minority stockholders. The provisions of the proposed bill are ample respecting the ascertainment and payment of compensation for such shares. The authorization in s. 15 of the proposed bill of the pledging of the credit of the Commonwealth for making payment for such shares is adequate assurance of prompt payment of the reasonable and just value of such shares. Therefore there is no violation of the constitutional prohibition against taking property without due process of law.
We answer to question 5 that it is constitutionally competent for the General Court to effect the retirement of such stock by the exercise of eminent domain as provided in the proposed bill.
contravention of the terms of such contract.
Manifestly the terms of the contract between the railway company and its stockholders as to ownership of stock are subject to the exercise of the power of eminent domain as provided in the proposed bill.
We do not pause to discuss whether the proposed sections might also be enacted under the police power with respect to a corporation devoted to a public use, because, as already pointed out, these provisions are valid under the power of eminent domain. See Boston & Albany Railroad v. New York Central Railroad, 256 Mass. 600, 610; Marcus Brown Holding Co. Inc. v. Feldman, 256 U. S. 170; and Boston Water Power Co. v. Boston & Worcester Railroad, 23 Pick. 360.
We answer " No " to question 6.
Question 7 presents the point whether art. 63 of the Amendments to the Constitution (printed in the order as art. 62 by mistake, as we are informed) would apply to the receipts of the company during the period of public management. It is provided in s. 1 of art. 63 that all "money received on account of the commonwealth from any source whatsoever shall be paid into the treasury thereof."
The railway company under the terms of the proposed bill remains in private ownership, although under the management of public officers. The income which may accrue from the property is in no sense public income, although restrictions are placed upon its use by the terms of the proposed bill. Profits which may accrue, save as thus restricted, belong to the railway company and not to the Commonwealth. Actions and suits for the recovery of obligations arising out of the public management must be brought by and against the railway company and not the Commonwealth. It follows that money received in the management of the railway company is not " received on account of the commonwealth" in the sense in which those words are used in said art. 63, s. 1. See in this connection United States v. McCarl, 275 U. S. 1, decided by the United States Supreme Court on October 10, 1927.
We answer " No " to question 7.
of the railway company or of the present system of public management would be repugnant to the provisions of art. 59 of the Amendments to the Constitution. That article is in these words: "Every charter, franchise or act of incorporation shall forever remain subject to revocation and amendment."
The provisions of the proposed bill and of said c. 159, of which it is an amendment, constitute a lease of the property of the railway company to the Commonwealth. It is a contract to which the parties are the railway company as lessor and the Commonwealth as lessee. That is the main feature, although there are other provisions which prescribe the powers and duties of the public managers and which deal with certain financial aspects of the affairs of the railway company. Said c. 159 and the proposed bill are propositions on behalf of the Commonwealth presented to the railway company, which do not become operative until accepted by the railway company in the manner therein provided. There may be some features in said c. 159 and the proposed bill which in a sense are amendments of the franchise charter and act of incorporation of the railway company. So far as such features affect the charter, franchise and act of incorporation of the railway company, they are not general in character but merely to enable it to enter into and continue the lease, which is the main end of the proposed bill. For example, powers are conferred upon the railway company as to making the lease which it did not possess under its earlier acts of incorporation. All these, however, are subsidiary and incidental to the main purpose of said c. 159 and of the proposed bill providing for the lease of the property of the company to the Commonwealth.
The discussion in Boston v. Treasurer & Receiver General, 237 Mass. 403, shows that said c. 159 and the proposed bill differ fundamentally from a charter, franchise or act of incorporation. They constitute in substance and effect a contract as to public business between the Commonwealth and a public service corporation. It follows that there is nothing in them repugnant to the terms of art. 59 of the Amendments to the Constitution.
We answer " No " to question 8.
The inquiry presented by question 9 is whether the General Court may constitutionally amend, alter or repeal such provisions of the proposed bill and of said c. 159 as are therein declared to constitute a contract binding upon the Commonwealth. It is expressly provided by said c. 159, s. 18, and by s. 16 of the proposed bill that certain terms of said acts when accepted by the Boston Elevated Railway Company shall constitute contracts binding upon the Commonwealth. The public faith is thus pledged explicitly in this respect. These terms in legal intendment are contractual in their nature. These terms thus solemnly declared to be contracts are not in the nature of a franchise, charter or act of incorporation of the railway company. They are assertions by the Commonwealth of its design and purpose to treat them as simple commercial contracts and not as an exercise of the sovereign power of legislation in granting or amending a franchise, charter or act of incorporation. One branch of the power of the General Court is its authority "to stipulate for, purchase and obtain all such property, privileges, easements and improvements, as may be necessary or useful to the public," and "to bind the community by their contracts therefor." Boston & Lowell Railroad v. Salem & Lowell Railroad, 2 Gray 1, 32. Boston v. Treasurer & Receiver General, 237 Mass. 403, at page 416. When the Legislature makes contracts of that nature, they are binding upon the Commonwealth and cannot by act of the Legislature alone be revoked or amended.
of depriving the General Court of its power to make in the public interest a business contract not in the nature of a charter, franchise or act of incorporation which would bind the Commonwealth and not be subject to amendment or repeal. There is a plain distinction between a charter, franchise or act of incorporation and a pure contract touching public business between the Commonwealth and a public service corporation. The latter is not affected by art. 59 of the Amendments.
Although in, general the laws as to taxation may be changed at the will of the legislative department of government, nevertheless the sovereign power itself may in certain conditions for the public welfare make a binding contract as to exemptions from taxation. New Jersey v. Wilson, 7 Cranch, 164. Home of the Friendless v. Rouse, 8 Wall. 430. Massachusetts General Hospital v. Belmont, 233 Mass. 190, 200. As to such contractual features, the proposed bill if enacted would not be subject to revocation and amendment without the consent of the railway company.
By way of precaution it may be added that neither the contract nor the due process clauses of the Constitution of the United States, nor any provisions of the Constitution of this Commonwealth, prevent or narrow the exercise of the police power. They do not have "the effect of overriding the power of the State to establish all regulations that axe reasonably necessary to secure the health, safety, good order, comfort, or general welfare of the community; . . . this power can neither be abdicated nor bargained away, and is inalienable even by express grant; and . . . all contract and property rights are held subject to its fair exercise." Atlantic Coast Line Railroad v. Goldsboro, 232 U. S. 548, 558. Wellington, petitioner, 16 Pick. 87, 101, 102. Eastern Railroad v. Boston & Maine Railroad, 111 Mass. 125, 130, 131.
We answer " No " to question 9.
particular town, city or other political division or to particular districts or localities of the commonwealth . . . shall be the subject of a referendum petition."
This question must be answered with particular reference to s. 15 of the proposed bill whereby it is provided that "in case the Commonwealth shall be called on to make any payment by virtue of said guaranty [of bonds of the railway company] the amount paid on account thereof . . . shall be assessed upon the cities and towns in which service under this act is operated," by an addition to the next State tax "assessed in proportion to the number of persons in said cities and towns using the service." The guaranty is an obligation of the Commonwealth. Provision is made for the immediate assessment of all expense actually incurred by the Commonwealth upon cities and towns particularly specified. It must be assumed that such assessments if and when required will be levied and collected as directed in the proposed bill. As a practical matter of government, the entire financial burden thus will fall exclusively upon such cities and towns and the Commonwealth will be relieved. We are of opinion that the effective operation of the proposed law is restricted to these particular cities and towns, and that therefore the proposed bill falls in the class of matters excluded from the operation of the referendum provision of the Constitution. Opinion of the Justices, 254 Mass. 617. We do not perceive any other provisions of the proposed bill which are not restricted in operation to the district served by the Boston Elevated Railway system or which bring it within the scope of the referendum provision of the Amendment.
We answer " No " to question 10.
The inquiry propounded by question 11 is whether any provision of the proposed bill would be unconstitutional if enacted into law.
In accordance with the established practice for the reasons set forth in Opinion of the Justices, 239 Mass. 606, 612, and Opinion of the Justices, 247 Mass. 589, 598, we respectfully ask to be excused from answering a general question of this nature.
The order transmitting these questions was received so near the end of the session of the General Court for 1927 that there was not time to make adequate answers before its prorogation. We have therefore taken time for deliberation, and return these answers before the reassembling of the Honorable Senate.

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2.1.	These General Terms and Conditions of STRONG are applicable to all of the aforementioned services that are rendered by STRONG itself or by a subcontractor appointed by STRONG.
2.2.	Any reference to or application of the General Terms and Conditions of the Purchaser is hereby excluded. Conflicting terms and conditions of the Purchaser shall not be binding upon STRONG, even if STRONG does not expressly reject such terms and conditions. For Purchasers outside the scope of application of the Austrian Consumer Protection Act (KSchG), agreements which deviate from these General Terms and Conditions shall be made in writing.
2.3.	Agreements made in regards to the aforementioned contractual services shall only be legally binding when they are couched in the form of a written contract and have been duly signed by STRONG. Ancillary agreements that modify the scope of the contractually agreed service shall require explicit confirmation in writing.
2.4.	The requirement to couch an agreement in writing may, subject to mutual agreement, be dispensed with for services with a total agreed consideration of less than EUR 400.00. Moreover, the contract can be concluded and simultaneously executed by STRONG carrying out the order placed by the Purchaser.
2.5.	Offers, including those in brochures, advertisements, in the web shop or the like, and with regard to price indications and delivery deadlines, shall always be non-binding and fundamentally without obligation. The technical data provided in catalogues, brochures, in the web shop or the like are prepared with all due care, errors excepted, technical modifications and modifications to design, colour or weight are reserved within reasonable limits. In particular, complaints based on differences in design, colour or weight shall be rejected if these differences fall within the tolerance range of quality guidelines, standards or within the range normal for the industry. If the purchaser is a business person, essentially only the product description of the manufacturer shall be considered as to the quality of the goods. Public statements made by the seller or the manufacturer or his agents, in particular in any advertising or labelling, with regard to certain characteristics of the item shall not represent any contractual indication of quality in respect of other companies. Verbal agreements are always non-binding and require mutual confirmation in order to attain validity and effectiveness.
3.1.	STRONG provides the Purchaser with goods and services at an agreed place. STRONG makes use of its own employees, subcontractors or other agents for this purpose.
3.2.	The Purchaser shall appoint a contact partner whose declarations, insofar as they serve the processing of the order and are not to be couched in writing in accordance with point 2 of these Terms and Conditions, and whose actions are binding for his company.
3.3.	Prior to and during execution of the agreed order, the Purchaser is required to inform STRONG about all circumstances of relevance in regards to the processing of an order and procedures that are required and essential for the preparation and execution of the order.
3.4.	The Purchaser is required to support STRONG with the execution of the order to the best of its knowledge and conscience and to create the necessary preconditions for proper execution of the order. In particular, the Purchaser undertakes to provide STRONG with all documents, data and information in the form required to fulfil contractual obligations. The Purchaser is also required to inform its employees in good time about upcoming deliveries or other services to be rendered by STRONG.
3.5.	If STRONG should be prevented in executing its agreed services under this contract, be delayed or entirely prevented from performing the acceptance test because employees, documents data or equipment of the Purchaser are not made available in an appropriate or sufficient manner, or the Purchaser intentionally or negligently fails to fulfil its duty of collaboration or does not adhere to deadlines, STRONG shall be entitled to charge the Purchaser any additional expenses incurred as a result of the impediment and to withdraw from the order.
3.6.	The basis for services shall be the written description of the same, which STRONG has elaborated based on the provided documents and information or those made available by the Purchaser. A description of services elaborated by STRONG must be inspected by the Purchaser for correctness and completeness. The performance description shall be deemed approved if no objections have been received within 2 (two) weeks of the description being sent to and received by the Purchaser. Change requests that are late or notified at a later time shall only be executed under separate time and price agreements.
3.7.	If it should transpire during execution of the order that the execution of the order is actually or legally impossible, then STRONG shall notify the Purchaser of this fact without delay. In this case, both contractual parties shall be entitled to withdraw from the contract. In this case, any costs and expenses incurred up to that point for the activities of STRONG in accordance with the presented, internal project accounting must be reimbursed by the Purchaser insofar as STRONG is not in any way at fault for this impossibility of fulfilment.
3.8.	The sending of products for delivery or parts thereof, documentation, service descriptions or other parts made available by the Purchaser shall be at the expense and risk of the Purchaser. STRONG is not required to take out any insurance in this regard. This can be done at the expense of the Purchaser at the written request of the Purchaser.
4.1.	STRONG shall endeavour to adhere to the agreed times of fulfilment as precisely as possible.
4.2.	Agreed deadlines are based on an estimate made in all conscience at the time of concluding the contract and are set by mutual agreement between STRONG and the Purchaser. If the agreed deadlines are exceeded, the Purchaser shall grant STRONG an appropriate extension.
4.3.	Deliveries to be made on fixed dates must be announced as such by the Purchaser when placing the order.
4.4.	If employees of STRONG are unable to adhere to deadlines for the rendering of services due to force majeure, illness, accident or other circumstances beyond STRONG's control, STRONG shall be entitled to render the services at a later date to be set by mutual agreement, to the exclusion of any obligation to make compensation.
4.5.	For orders that include definable partial services, STRONG shall be entitled to submit partial invoices for these partial deliveries.
4.6.	Delivery delays and cost increases that arise from incorrect, incomplete or subsequently modified details and information or documents made available by the Purchaser or third parties within the sphere of the Purchaser, shall not be the fault of STRONG and cannot lead to the default of STRONG. Additional costs arising from this shall be borne by the Purchaser.
5.1.	All prices are shown in EURO in accordance with the law and are exclusive of value added tax. The prices in the web shop are excluded from this. Unless otherwise agreed with the individual Purchasers, the web shop shall display the total price to the customer, inclusive of value added tax.
5.2.	The prices are based on the costs at the time of the first price offer. If the costs have increased at the time of the delivery or service, STRONG shall be entitled to adjust the prices accordingly.
5.3.	For deliveries and the rendering of services in countries for which STRONG despatches the goods for delivery from a warehouse located in Austria, statutory value added tax at the prevailing rate will be added to the invoice.
5.4.	For Purchasers and customers in countries of the European Union to which STRONG delivers goods from another country of the European Union, such invoices shall be issued without value added tax if the customer is in possession of a value added tax identification number (VAT No.) for the country appearing in the delivery address and has notified STRONG of this number prior to preparation of the invoice. If this VAT No. proves to be false or is not recognised by the competent tax authorities, STRONG reserves the right to invoice the value added tax separately, also in arrears if necessary.
5.5.	Purchasers and customers based in countries outside the European Union are responsible for paying customs duties. The invoice shall be issued for export purposes, without value added tax and duty unpaid.
5.6.	If the legal basis for import taxes or the like changes between formation of the contract and rendering of service, STRONG shall be entitled to adjust the prices accordingly and to invoice any difference in the amount afterwards as necessary.
5.7.	If fluctuations in foreign currency exchange rates cause costs to change by more than 10% to the detriment of STRONG, and the contracting parties are unable to agree on a corresponding price change, STRONG shall be entitled to withdraw from rendering the service. Any costs or damages shall be borne by the Purchaser and cannot be charged to STRONG.
5.8.	The services rendered shall be invoiced to the Purchaser following acceptance of the service. The Purchaser shall accept the services without delay. This also applies to the rendering of an agreed partial service. STRONG has the right to demand the payment of deposits as security and to suspend execution of the order until this agreed deposit has been paid by the Purchaser. All damages and any costs incurred by this delay to the rendering of service shall be borne by the Purchaser.
5.9.	Travel expenses, daily allowances and accommodation expenses for agreed training courses or services provided by STRONG or its appointed agent shall be invoiced to the Purchaser separately at the prevailing rates. Travel time is considered working time.
6.1.	The invoices, inclusive of value added tax, that have been issued by STRONG must be paid promptly on or after the invoice date without deduction and free from charges. For services relating to goods, the delivered goods shall remain the property of STRONG until payment has been made in full by the Purchaser. If the goods are to be forwarded to third parties, the Purchaser shall draw the attention of these third parties to this fact.
6.2.	For orders that encompass several units (e.g. training courses and partial deliveries, STRONG shall be entitled to invoice each individual unit or partial service after delivery or performance.
6.3.	Compliance with the agreed payment deadlines forms an important condition for the further execution of the delivery or performance of contract by STRONG. If payment (including payment of partial invoices and on-account payments) is more than 2 (two) weeks late, STRONG shall be entitled, after a single reminder and the granting of an extension of 1 (one) week, to suspend on-going work and to withdraw from the contract.
6.4.	The Purchaser is not entitled to withhold payments due to the incomplete rendering of services, claims under guarantee or warranty, or defects.
6.5.	The offsetting of claims of STRONG with counterclaims of the Purchaser is hereby expressly excluded unless STRONG has acknowledged the counterclaim. The Purchaser's right of retention shall be limited to these recognised counterclaims.
6.6.	In the event of late payment, STRONG shall be entitled to charge the Purchaser for all expenses and costs arising as well as late payment interest in the amount of 8% above the prevailing bank rate. In the event of late payment despite a reminder, STRONG shall be entitled to demand that the Purchaser pay the dunning and collection costs required for the purposeful pursuit of rights for the debt collection agencies and lawyers engaged by STRONG. For debt collection agencies, these are based on the statutory calculation rates of the debt collection agency; for lawyers in accordance with the Austrian Law on Legal Tariffs (Rechtsanwaltstarifgesetz). If STRONG performs the dunning itself, the Purchaser undertakes to pay an amount of EUR 10.00 per reminder issued.
6.7.	If the Purchaser does not accept the delivery that was delivered within the delivery period, STRONG has the right to invoice all shipping and return delivery costs incurred.
7.1.	Any liability of STRONG is in principle limited to such damage which can be proven to have been caused intentionally by or at least with the gross negligence of STRONG. The amount of liability per instance of damage shall be limited to a total of EUR 10,000.00 subject to a maximum of EUR 100,000.00 per calendar year. Liability for minor negligence is herewith expressly excluded. The limitation of liability in the area of fault does not apply to personal injury arising from consumer transactions. Further claims against STRONG, its employees or its agents of performance or supply, in particular claims for compensation due to delay, impossibility of service, positive breach of obligation, fault upon formation of contract as well as claims to the replacement of tangible damage, subsequential damage caused by defects, damage caused by disruption to operations, lost profit and lost savings as well as claims against STRONG due to claims brought against the Purchaser by third parties or due to unallowed action, are in each instance excluded unless based on intent or gross negligence.
7.2.	All claims for compensation brought against STRONG, its employees or its agents of performance and supply must be notified in writing by registered letter within 3 (three) months of the damage event occurring or shall otherwise be forfeited.
7.3.	STRONG shall not accept any liability for any loss of data during the inspection, any repair work required, other services or chargeable services. The Purchaser must ensure that the data saved on the respective equipment or data storage devices are backed up and that no sensitive data are saved on such equipment/devices.
7.4.	These limitations of liability also apply in the event of conversion or any other retroactive abolition or suspension of the contract.
8.1.	In principle, the statutory warranty periods of the Austrian Corporation Code (UGB) and the Austrian General Civil Code (ABGB) apply to the deliveries or services performed by STRONG.
8.2.	For consumers, the statutory warranty regulations of the ABGB in conjunction with the provision of the Customer Protection Act (KSchG) apply without limitation.
8.3.	If the delivery or service is made or rendered directly to a consumer on behalf of an intermediary, the commercial obligation to notify defects shall apply. A right of recourse in the context of §933b ABGB only exists if the services rendered by the intermediary do not exceed the statutory requirements of the warranty, and shall, in principle, be excluded in the case of software or applications that are not individually produced.
8.4.	The warranty period commences with the delivery of the goods or the rendering of the service and must be exercised within the statutory period in writing (e.g. by email), otherwise it will lapse.
8.5.	If the Purchaser neglects to accept the contractual services for any reason other than for a significant defect that seriously limits or renders impossible the use of the contractual services, despite STRONG having declared its acceptance readiness, the contractual service shall be deemed accepted 4 (four) weeks after the aforementioned declaration. Complaints are only valid when they concern defects that occur repeatedly and are the responsibility of STRONG.
8.6.	The warranty does not cover defects that are caused by improper operation, modified system components, the use of inappropriate organisational resources, non-standard operating conditions or system interventions by the Purchaser or third parties, or if adhesive labels or protective seals found on the purchased item have been damaged or removed by the Purchaser or a third party. Also excluded from the warranty are wearing parts and accessories as well as repairs following unauthorised interventions by third parties. If the objects of the contract are used in combination with the equipment of third parties, function and performance faults will only be covered by the warranty when such faults occur without such a combination.
8.7.	The costs of assistance and fault diagnosis as well as the remedying of faults and disruptions that are caused by the Purchaser, as well as other corrections, modifications and additions, shall be charged for and carried out by STRONG. Furthermore, STRONG shall be entitled to invoice charges for the inspection of a notified defect if this defect cannot be verified or the product-specific function is not impeded.
8.8.	Returns for servicing are to be sent to the address specified by STRONG. The Purchaser must bear the costs of these. If STRONG or an instructed subcontractor is unable to establish the described defect or reason for making a claim under warranty, or the return is not made to the servicing address specified by STRONG, the Purchaser shall bear all costs incurred.
8.9.	Returns for reasons other than servicing will not be accepted by STRONG if STRONG does not provide its duly signed consent. The Purchaser shall bear any and all costs this incurs.
8.10.	If the object of the order concerns the modification of or addition to existing services of STRONG, the warranty shall only refer to this current contractual object. This shall not reinstate the warranty for the original service.
8.11.	Obvious irregularities (typographical errors, mathematical errors, formal errors, etc.) in memoranda, minutes, operating instructions, calculations, brochures, on the websites of STRONG etc., may be corrected by STRONG at any time. Any claim to the rectification of such obvious defects is ruled out.
8.12.	Guarantees that extend beyond the statutory warranty periods and obligations must be agreed in writing in each instance in order to obtain validity.
9.1.	If an agreed delivery/performance time of 12 (twelve) weeks has been exceeded due to the gross fault of STRONG, the Purchaser shall be entitled to withdraw from the respective order by means of registered letter if the agreed (partial) service has not rendered with an appropriate additional period to be set by the Purchaser (of at least a minimum of 2 (two) weeks) and the Purchaser is not held at fault.
9.2.	Cancellations made by the Purchaser for a reason other than those mentioned in point 9.1. are only possible with the written consent of STRONG. If STRONG agrees to a cancellation and therefore a mutual dissolution of the contract, STRONG has the right to charge for the rendered services and incurred costs and a cancellation fee in the amount of 30% of the unbilled order value for the overall project.
9.3.	If the Purchaser acts in a way that entitles STRONG to withdraw from the contract, STRONG shall in any event have the right to charge for the rendered services and the costs incurred up until the point of withdrawal and a fee in the amount of 30% of the unbilled order value of the overall project. This shall not affect any claims to compensation over and above this.
10.1.	These special conditions of point 10 apply solely to Purchasers that are consumers in the context of the Consumer Protection Act (KSchG).
10.2.	The customer who is a consumer in the context of the Consumer Protection Act (KSchG) may withdraw from a contract entered into under distance selling regulations (web shop, email, fax etc.) or a contract declaration issued under distance selling regulations in accordance with § 5e KSchG by granting a period of notice of 14 days after delivery, unless one of the exceptions to the right of withdrawal in accordance with § 5f KSchG (e.g.: software) applies. It is sufficient for the declaration to withdraw to be sent within the period of notice. The withdrawal period for contracts concerning delivery of goods will expire after 14 days from the day on which the customer acquire, or a third party other than the carrier and indicated by the customer acquires, physical possession of the last ordered good, and for contracts for the rendering of services on the day of contract formation.
10.3.	In case of withdrawal, full or partial reimbursement of the price will take place in stages in exchange for the return of the goods received by the Purchaser. The cost of returning the goods shall be at the expense of the Purchaser. This point shall be deemed agreed in accordance with § 5g sec. 2 KSchG.
10.4.	The goods must be returned in an unused, resalable condition and in the original packaging. STRONG will charge an appropriate amount to cover the reduction in value for items that show indications of use or whose packaging has been damaged. The same applies if accessories or parts are missing when the goods are returned.
10.5.	As soon as the software seal on software is broken, the software has been registered or copied, or a seal on the packaging of an authorisation card (e.g. Smartcard) has been broken or this has been used or registered for the first time, the right to return no longer exists as the software can no longer be sold according to § 5 pt. 4 KSchG.
10.6.	If hardware and software components or authorisation cards are contained in a sealed package, and the software or authorisation card is not additionally protected by a further seal, all components of this packaging shall be considered a unit for which there is no right of return following the breakage of this seal.
10.7.	STRONG shall be entitled to have the returned goods inspected by employees or instructed and authorised persons for completeness and any damage that could lead to a reduction in price prior to making any full or partial reimbursement of the purchase price. If a price reduction is required, the customer will be informed of the reasons for this price reduction within two weeks of the goods being received by STRONG. If STRONG does not inspect the returned goods within this period, the customer shall have a claim to a full refund of the purchase price.
11.1.	By placing an order, the Purchaser declares his agreement with the General Conditions of Business of STRONG and shall be bound by these.
11.2.	The contract shall only come into effect with the explicit written acceptance of the order of the Purchaser by STRONG or through the actual execution of the service ordered by the Purchaser. The mere confirmation from STRONG regarding receipt of an order does not imply any acceptance and is solely intended to inform the Purchaser.
11.3.	STRONG is explicitly at liberty to accept or reject an order within 14 (fourteen) days of receipt. If STRONG rejects an order, it shall notify the purchaser of this in writing (by email, post, fax or other conceivable written form of communication). STRONG shall not be required to give any indication of its reasons of having rejected an order.
11.4.	An order is accepted by sending an order confirmation within 14 (fourteen) days of the order by post, fax or email or immediately by despatching the ordered goods.
11.5.	If neither an order confirmation nor the ordered goods have been dispatched to the purchaser within 14 (fourteen) days, the commitment period of the customer shall expire and the order shall lapse.
11.6.	Holding the goods ready at an agreed point of sale is equivalent to the despatching of the goods.
11.7.	If the ability to deliver the goods or messages to the address indicated by the Purchaser should be incorrect or change, the inability to deliver the goods or messages shall not be the responsibility of STRONG. Any additional costs incurred in this regard shall be borne by the Purchaser.
11.8.	In principle, the price for the ordered goods shall be agreed as the price indicated in the web shop at the time the customer's order is effectively actioned and in the confirmation email. Should these differ from one another and the confirmation email does not contain any obvious errors, the price which has been indicated therein shall apply.
11.9.	Should the prices in the web shop or in the confirmation email be changed by a third party without the knowledge or approval of STRONG, the prices that were listed prior to the change shall apply. In this case, STRONG undertakes to notify the customers affected by this immediately after becoming aware of such a change.
11.10.	The prices indicated in the web shop are inclusive of statutory value added tax but exclusive of shipping costs, duties, etc., unless otherwise agreed with the individual Purchaser in advance. However, the shipping costs, where known, will be indicated on the order form and in the confirmation email and shall therefore be deemed approved by the customer.
11.11.	If the ordered goods are in stock, STRONG shall forward them to the responsible courier service or hold them for collection by the Purchaser on workdays within 48 hours of being ordered or upon receipt of payment when payment has been made in advance. If STRONG is unable to fulfil the order – for example, due to non-availability of the goods – the customer shall be notified without delay. However, claims of the customer arising from the inability of STRONG to fulfil the contract are ruled out.
13.1.	The Purchaser herewith assures that the works made available by him for the rendering of contractual service are not subject to copyright or other rights.
13.2.	The Purchaser may, with the exception of contractual services intended explicitly for resale or forwarding after payment, only use such works for his own purposes, whereby the use of the results for companies in which the Purchaser has a significant vested interest shall require a separate written agreement between the Purchaser and STRONG. Moreover, all rights of use applying to all types of usage remain with STRONG.
13.3.	Any other unauthorised forwarding of contractual services, training concepts or training documents of STRONG in any legal form whatsoever, as well as short-term provision for the manufacture of reproductions, shall entitle STRONG to withdraw from the contract and to bring claims for compensation for which a full refund shall always be paid, even in the event of minor negligence.
13.4.	The forwarding of services or products of STRONG to resellers outside Austria or the territory of the country in which the service of STRONG was rendered is strictly prohibited without the prior written consent of STRONG.
13.5.	The use of logos or images of STRONG, employees of STRONG or of products delivered or services rendered by STRONG, for example for advertising purposes, may only take place upon presentation of the corresponding draft and the obtaining of permission from the Marketing department of STRONG. The corresponding conditions of use for the logos or images of STRONG must also be obtained via the Marketing department of STRONG.
14.1.	STRONG is providing every effort to keep the number of required data of our clients, customers and suppliers to a minimum and to use it only for intended purposes agreed upon with the subject or for mutual fulfilment of the contract.
14.2.	STRONG expressly points out that the data provided by the client, customers and / or suppliers are stored electronically as long as this is required by law.
14.3.	The personal data such as name, title, address, telephone and fax numbers and other information required for addressing, resulting from modern communication techniques (e.g.: email address or website), delivery and billing addresses, commercial register data, the VAT number, the subject of the service and the corresponding data of the respective contact persons and authorized signatories of the client, customers and / or suppliers as well as granted credit limits and any reminders are processed and stored by STRONG for the purpose of accounting and logistics until the expiry of the warranty, statute of limitations and statutory retention period, beyond until the termination of possible legal disputes.
14.4.	The necessary data for the fulfilment of the order and the contract can be forwarded to our logistics partners, customer service partners, tax consultants, fiscal representatives, auditors, banks and credit insurers as well as in the course of web shop orders to our payment service provider.
14.5.	For orders via our web shop, the payment process takes place via a payment service provider. STRONG therefore does not receive or store any credit card or other bank details. However, in order to complete the order after completing the payment process, STRONG is using HTTP cookies which are stored on your computer.
14.6.	If authorities or courts expressly request relevant data from our clients, customers and / or suppliers and this request complies with the relevant statutory laws, we have to forward the requested data, too.
14.7.	In addition, it should be noted that within the Group our parent companies may have access to data of clients, customers and / or suppliers for controlling purposes only.
14.8.	In case STRONG has to forward the data of our clients, customers and / or suppliers to collection agencies, lawyers and the responsible judicial bodies for the purpose of collecting our claims, this forwarding is justified according Art. 6 Para. 1(f) GDPR pursuing our legitimate interests.
14.9.	After his or her explicit consent STRONG will use the data of clients, customers and / or suppliers only for sending of marketing materials, product support or other service information. In addition, our business partners are only mentioned as such to other customers, media and other third parties when clients, customers and / or suppliers have explicitly agreed to it beforehand. However, consent to the above points may be objected in writing (for example by email) at any time.
14.10.	Clients, customers and / or suppliers are obliged to announce changes of their residential or business address as well as changes of contact persons to STRONG, as long as the contractual transaction is not completely mutually fulfilled. If the information is omitted, statements shall be deemed as received even if they were sent to the last known address or the last known contact person.
14.11.	Of course, a natural person is also entitled after clear identification of her or his identity to view her or his personal data stored and processed by STRONG, to cause changes in his or her data, to learn the source of this data, as long as this information does not violate any rights deserving protection of any third parties, and to determine the erasure of her or his own data, if this does not contradict any statutory storage requirements.
14.12.	STRONG takes all technically and economically reasonable measures to protect stored data against any unauthorized access. Insofar as STRONG is not intentionally or grossly negligent disregarding their care, the assertion of claims for damages of legal persons is excluded.
15.1.	The initiation of bankruptcy proceedings over the assets of the Purchaser shall terminate the contractual relationship. However, the liquidator can continue the contractual relationship until legal annulment of the bankruptcy. In this case, however, he must submit a written application in this regard, indicating a personal declaration of liability for all payments and claims for compensation that arise after the initiation of bankruptcy proceedings, or by paying an appropriate security or deposit within 6 (six) working days of the initiation of bankruptcy proceedings, whereby Saturday, Good Friday and 24 and 31 December shall not be considered as working days. If a liquidator has not been appointed, the Purchaser can propose in writing to continue the contractual relationship by paying an appropriate security or deposit within the same period.
15.2.	The legal successors of the Purchaser are required to notify STRONG of the death of the Purchaser without delay. If a third party does not apply to enter into the contractual relationship within 2 (two) weeks after STRONG has been notified of the death of the Purchaser, the contractual relationship shall end upon the death of the Purchaser. The estate and heirs shall be liable for payments incurred between the time of death of the Purchaser and the notification of the death by STRONG without prejudice to other conditions.
16.1.	The Purchaser shall be entitled to transfer the rights and obligations under the contractual relationship to third parties only with the written consent of STRONG. If the Purchaser transfers rights and obligations under the contract to third parties without STRONG having given its consent, the third party shall be jointly liable with the Purchaser, who is liable under contract law, for requests for payment and claims for compensation from the date of acceptance on the basis of the principles of unjust enrichment.
16.2.	STRONG and the Purchaser agree not to disclose details of the contact or confidential information regarding technical, business and operational matters. The non-disclosure obligation shall remain in force after termination of the contract. It shall exist for as long as the object of non-disclosure has not been otherwise disclosed.
16.3.	If any clause of this contract should be or become invalid, it shall not affect the validity of the remaining clauses. The invalid clause must be replaced by a clause that most closely corresponds to the economic purpose of the contract.
16.4.	The contract shall be governed exclusively by Austrian law and also in exclusion of the United Nations Convention on the International Sale of Goods as well as subsequent referrals to international private and procedural law. Where not modified by these regulations, the legal regulations of Austrian law used between business persons in the context of §1 UGB shall also apply when this contract is executed and commissioned abroad.
16.5.	STRONG assumes that agreements entered into with the Purchaser will not lead to the level of judicial dispute. Nevertheless, should disputes arise, the competent court of law of the first Viennese district shall have jurisdiction in the absence of any compulsory place of jurisdiction.
16.6.	The General Terms and Conditions of STRONG and any modification of the same are published on the internet at www.strong.tv and will be sent to the Purchaser upon request.
16.7.	If the General Terms and Conditions of STRONG Ges.m.b.H. become translated into other languages, such translations shall only be used for the purposes of making them easier for the Purchaser to understand. The German-language version of the General Terms and Conditions shall, however, remain the only authentic version of the General Terms and Conditions and is the only version that may be used for the purposes of interpreting disputes.


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Justia › US Law › US Case Law › US Supreme Court › Volume 263 › Heyer v. Duplicator Manufacturing Co.
The sale, by the patentee, of a costly and durable copying machine dependent for its operation on bands of gelatine, which are attached to spools and which cost little and are quickly used up, implies a right in the purchaser to replace such bands as they wear out, without further consent of the seller, and their manufacture and sale for that purpose by another is therefore not an infringement, though the band, when used in the combination, is covered by the patent. Wilson v. Simpson, 9 How. 109. P. 263 U. S. 101.
Certiorari to a decree of the circuit court of appeals which reversed a decree of the district court and directed one for the plaintiff, the present respondent, in a suit for infringement of a patent.
This is a bill in equity brought by the respondent against the petitioner alleging the infringement of a patent. The district court dismissed the bill, but the circuit court of appeals gave the respondent a decree, one judge dissenting upon the main point. Duplicator Mfg. Co. v. Heyer, 284 F. 242. The respondent owns a patent for improvements in multiple copying machines, one element of which is a band of gelatine to which is transferred the print to be multiplied and which yields copies up to about a hundred. This band is attached to spool or spindle which fits into the machine. * Anyone may make and sell the gelatine composition, but the ground of recovery was that the defendant made and sold bands of sizes fitted for use in the plaintiff's machines and attached them to spindles, with intent that they should be so used. The main question in whether purchasers of these machines have a right to replace the gelatine bands from any source that they choose. If they have that right, the defendant, in selling to them, does no wrong. It is assumed for the purposes of argument that the claim is valid and covers the band when used in this combination, since otherwise there would be nothing to discuss.
"a more equitable right to force the disuse of the machine entirely, on account of the inoperativeness of a part of it, than the purchaser has to repair, who has, in the whole of it, a right of use."
it is use, without the further consent of the seller, for more than the sixty days in which the present gelatine might be used up. The machine lasts indefinitely, the bands are exhausted after a limited use and manifestly must be replaced. 9 How. 50 U. S. 126. The machine is costly, the bands are a cheap and common article of commerce. In Wilson v. Simpson, the purchaser was held free to replace the cutter knives that were the ultimate tool of the invention. The present case seems to us stronger in favor of the defendant. The gelatine probably has to be replaced at least as frequently as the cutter knives, and would seem to be less distinctively appropriated to the machine. In Leeds & Catlin Co. v. Victor Talking Machine Co. (No. 2), 213 U. S. 325, the question was not of a right to substitute worn out parts, but of a right to use new discs in a talking machine. The authority of Wilson v. Simpson and the cases that have followed it was fully recognized, and must be recognized here. We have only to establish the construction of a bargain on principles of common sense applied to the specific facts. We cannot doubt what the fair interpretation is, and it would not be affected even if every purchaser knew that the vendor was prepared to furnish new bands.
Inasmuch as, after the present bill had been dismissed, it was reinstated on condition that the plaintiff be limited for recovery of profits or damages to the period after the reinstatement, and as the evidence is that the only spools used since that date came from the plaintiff, we think it unnecessary to make any order touching the spools.
"42. In a multiple copying machine, the combination with a machine frame having on one side thereof a journal bearing and on the opposite side a chuck, of a duplicating band, and a spool on which said duplicating band is wound, said spool having at each end a squared chuck engaging member and a cylindrical bearing member, whereby said spool is interchangeable end for end between said chuck and journal bearing, substantially as described."

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