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8 7. Bond for fulfillment of work.
§ 8. Forfeiture of franchiseHow enforced.
§ 9. No restriction on competition.
§ 10. Penalty for violations of act.

11. Repeal of conflicting acts.

Section 1. Every franchise or privilege to erect or lay telegraph and telephone wires, to construct or operate street railroads upon any public street or highway, to lay gaspipes for the purpose of carrying gas for heat and power, to erect poles or wires for transmitting electric heat and power along or upon any public street or highway, or to exercise any other privilege whatever hereafter proposed to be granted by boards of supervisors, boards of trustees, or common councils, or other governing or legislative bodies of any city and county, city or town within this state, except steam railroads and except telegraph or telephone lines doing an interstate business, and renewals of franchises for piers, chutes or wharves, shall be granted upon the conditions in this act provided, and not otherwise.

Sec. 2. An applicant for any franchise or privilege above mentioned shall file with the governing or legislative body of the municipality an application, and thereupon said governing body shall, in its discretion, advertise the fact of said application, together with a statement that it is proposed to grant the same, in one or more newspapers of the city and county, city or town wherein the said franchise or privilege is to be exercised. Said advertisements must state that bids will be received for such franchise, and that it will be awarded to the highest bidder, and the same must be published in such newspaper once a day for ten successive days, if it be a daily newspaper, and if there be no daily newspaper published in such city and county, city or town, then it shall be published in a weekly newspaper once a week for four successive weeks, and in either case the full publication must be completed not less than twenty nor more than thirty days before any further action can be taken thereon. [Amendment approved March 6, 1903; Stats. 1903, p. 90. In effect immediately.]

Sec. 3. The publication must state the character of the franchise or privilege proposed to be granted, the term for which it is granted, and, if it be a street railroad, the route to be tra

versed ; that sealed bids therefor will be received up to a certain hour and day named therein, and that the successful bidder and his assigns must, during the life of said franchise, pay to the municipality two per cent (2%) of the gross annual receipts of the person, partnership, or corporation to whom the franchise is awarded, arising from its use, operation, or possession. No percentage shall be paid for the first five (5) years succeeding the date of the franchise; but thereafter such percentage shall be payable annually; and in the event said payment is not made, said franchise shall be forfeited; provided further, that if the franchise be a renewal of a right already in existence, the payment of said percentage of gross receipts shall begin at once.

Sec. 4. In case the franchise granted shall be an extension of an existing system of street railroad, then the gross receipts shall be estimated to be one-half of the proportion of the total gross receipts of said system which the mileage of such extension bears to the total mileage of the whole system, and said estimate shall be conclusive as to the amount of the gross receipts of said extension.

Sec. 5. Said advertisement shall also contain a statement that the said franchise will be struck off, sold, and awarded to the person, firm or corporation who shall make the highest cash bid therefor; provided, only, that at the time of the opening of said bids any responsible person, firm or corporation present or represented may bid on said franchise or privilege a sum not less than ten per cent above the highest sealed bid therefor, and said bid so made may be raised not less than ten per cent by any other responsible bidder, and said bidding may so continue until finally said franchise shall be struck off, sold, and awarded by said governing body to the highest bidder therefor in gold coin of the United States. Each sealed bid shall be accompanied with cash or a certified check, payable to the treasurer of such municipality, for the full amount of said bid, and no sealed bid shall be considered unless said cash or check is inclosed therewith, and the successful bidder shall deposit, at least ten per cent of the amount of his bid with the clerk of such municipality before the franchise shall be struck off to him. And if he shall fail to make such deposit immediately, then and in that case, his bid shall not be received, and shall be considered as void, and the said franchise shall then and there be again offered for sale to the bidder who shall make the highest cash bid therefor, subject to the same conditions as to deposit, as above mentioned. Said procedure shall be had until said franchise is struck off. sold, and awarded to a bidder who shall make the necessary deposit of, at least, ten per cent of the amount of his bid therefor, as herein provided. Said successful bidder shall deposit with the clerk of such municipality, within twenty-four hours after the acceptance of his bid, the remaining ninety per cent of the amount thereof, and in case he or it shall fail to do so, then the said deposit theretofore made shall be forfeited, and the said award of said franchise shall be void, and the said franchise shall then and there, by said governing body, be again offered for sale to the highest bidder therefor, in the same manner, and under the same restriction as hereinbefore provided, and in case said bidder shall fail to deposit with the clerk of such municipality, the remaining ninety per cent of his bid, within twentyfour hours after its acceptance, the award to him of said franchise shall be set aside, and the deposit theretofore made by him shall be forfeited, and no further proceedings for a sale of said franchise shall be had unless the same shall be readvertised and again offered for sale, in the manner hereinbefore provided. [Amendment approved March 6, 1903; Stats. 1903, p. 90. In effect immediately.]

Sec. 6. Work to erect or lay telegraph or telephone wires, to construct street railways, to lay gaspipes for the purpose of carrying gas for heat and power, to erect poles or wires for transmitting electric heat or power, along or upon any public street or highway, or to exercise any privilege whatever, a franchise for which shall have been granted in accordance with the terms of this act, shall be commenced in good faith within not more than four months from the granting of any such franchise, and if not so commenced within said time said franchise so granted shall be declared forfeited, and shall be completed within not more than three years thereafter, and if not so completed within said time said franchise so granted shall be forfeited; provided, that for good cause shown the governing or legislative body may by resolution extend the time for completion thereof, not er. ceeding three months.

Sec. 7. The successful bidder for any franchise or privilege struck off, sold, and awarded under this act shall file a bond running to said city and county, or city or town, with, at least, two good and sufficient sureties, to be approved by such governing body, in a penal sum by it to be prescribed, and set forth in the advertisement for bids, conditioned that such bidder shall well and truly observe, fulfill, and perform each and every term and condition of such franchise, and that in case of any breach of condition of such bond, the whole amount of the penal sum therein named shall be taken and deemed to be liquidated damages, and shall be recoverable from the principal and sureties upon said bond. Said bond shall be filed with such governing body within five days after such franchise is awarded, and upon the filing and approval of such bond, the said franchise shall, by said governing or legislative body, be granted by ordinance to the person, firm, or corporation to whom it has been struck off, sold, or awarded, and in case that said bond shall not be so filed, the award of such franchise shall be set aside, and any money paid therefor shall be forfeited, and said franchise shall, in the discretion of said governing or legislative body, be readvertised, and again offered for sale in the same manner, and under the same restrictions, as hereinbefore provided. (Amendment approved March 6, 1903; Stats. 1903, p. 91. In effect immediately.]

Sec. 8. It shall be the duty of the attorney general, upon the complaint of any municipality, or, in his discretion, upon the complaint of any taxpayer, to sue for the forfeiture of any franchise granted under the terms of this act, for the noncompliance with any

condition thereof. Sec. 9. No clause or condition of any kind shall be inserted in any

franchise or grant offered or sold under the terms of this act, which shall directly or indirectly restrict free and open competition in bidding therefor, and no clause or provision shall be inserted in any franchise offered for sale, which shall in anywisz favor one person, firm or corporation, as against another in bidding for the purchase thereof.

Sec. 10. Any member of any common council or other governing or legislative body of any city and county, city or town of this state, who, by his vote, violates or attempts to violate the provisions of this act, or any of them, shall be guilty of a misdemeanor, and may be punished therefor, as provided by law, and may be deprived of his office by the decree of a court of competent jurisdiction, after trial and conviction.

Sec. 11. All acts or parts of acts in conflict herewith are hereby repealed; provided, however, that nothing herein contained shall be construed as repealing or amending the following acts, to wit: "An act relating to the granting by the counties and municipalities of franchise for the construction of paths and roads for the use of bicycles and other horseless vehicles," approved March twenty-seventh, eighteen hundred and ninetyseven; “An act to authorize cities and towns to grant franchises for the construction and maintenance of railroads beyond the limits of such cities or towns leading to public parks owneul thereby," being chapter forty [fifty] of the laws of eighteen hundred and ninety-seven of the state of California.

This act shall take effect immediately.

Legislative History.

This class of legislation made its first appearance in the act of March 23, 1893 (Stats. 1893, p. 288), which act provided for the sale of restricted classes of franchises. Owing to the decision in Thompson v. Alameda Co., 111 Cal. 553, 49 Pac, 230, to the effect that no bid other than a cash bid could be accepted in purchase of a franchise sold thereunder, the act of 1897 (Stats. 1897, p. 135), was enacted, providing for percentage bids, enlarging the scope of the act of 1893, and making added provisions for the sale of franchises. In 50 far as the act of 1897 applied to the right to lay pipes for water and light, it was declared unconstitutional in Pereria v. Wallace, 129 Cal. 397, 62 Pac. 61. The act of 1897 was amended by the act of 1901 (Stats. 1901, p. 265), so as to eliminate the objectional feature, and again in 1903 (Stats. 1903, p. 91), section 7 of the act of 1901 was amended, anrplifying the provision concerning the filing of a bond by the successful bidder.

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