280 F. 92 | 5th Cir. | 1922
Lead Opinion
This is an appeal from a decree of the District Court granting an injunction pendente lite restraining the city of New Orleans, and its officials named in said decree, from interfering with the receiver of the New Orleans Railway & Light Company in charging an eight-cent fare on said street railway system, until said order should be modified by said District Court, during the continuance of the suit pending in said District Court of the Empire Trust Company, as trustee, against said New Orleans Railway & Light Company, in which said receiver was appointed, upon the ground alleged in said bill for injunction that a lower rate of fare would deprive the complainant and said Railway Company of their property without due process of law.
The defendants did not offer any evidence contesting the allegations of the bill (which were supported by proof), but resisted the grant of the injunction upon the ground that the Railway & Light Company, and its subordinate companies, in securing their franchises had made irrevocable contracts with the city of New Orleans by which said rate was fixed at five cents, which rate could not be changed except by consent of the city, as one of the contracting parties, and that the five-cent rate was a condition to the grant of said franchises.
The court, in a very careful and full opinion rendered by Hon. Henry D. Clayton, the judge presiding, found the facts to be as claimed hv the complainant receiver, and found that under the Constitution and laws of Louisiana the city of New Orleans and the Railway Company could not make an irrevocable contract fixing street car fares; that the city of New Orleans was empowered to regulate the rates of local public utilities in its borders, having all the powers of the state delegated to it for that purpose; and that where a rate prescribed, or continued, by the city in the exercise of such power deprived the utility of its property without due process of law, as he found would be then done by any rate for street car service of less than eight cents, the city could be enjoined from enforcing the same. O’Keefe, Receiver, v. City of New Orleans (D. C.) 273 Fed. 560. This opinion sufficiently sets forth the facts and authorities supporting this conclusion and renders unnecessary any general discussion thereof by this court.
It is therefore quite clear, from the foregoing opinion, that the Constitution of Louisiana would prohibit any attempt on the part of the Legislature, or the city of New Orleans as its delegated agency, to make an irrevocable contract, preventing it dt any time from regulating the rates of a public utility. Such being the case, no contract existed with the Railway Company binding it to continue a confiscatory rate. As was said by the Supreme Court of the United States:
“The total want of power of the municipalities here in question to contract for rates, which is thus established, and the state public policy upon which the prohibition against the existence of such authority rests, absolutely exclude the existence of the right to enforce, as the result of the obligation of a contract, the concededly confiscatory rates which are involved, and therefore conclusively demonstrate the error committed below in enforcing such rates upon the theory of the existence of contract.” Southern Iowa Elec. Co. v. Chariton, 255 U. S. 539, 546, 41 Sup. Ct. 400, 65 L. Ed. 764; City of San Antonio v. San Antonio Public Service Co., 255 U. S. 547, 41 Sup. Ct. 428, 65 L. Ed. 777.
“The duty of an owner of private property used for the public service to charge only a reasonable rate and thus respect the authority of government to regulate in the public interest, and of government to regulate it. by fixing such a reasonable rate as will safeguard the rights of private ownership, are interdependent and reciprocal. * * * ”
“It would follow that that power would be required to be exerted, and hence Ihe supposed condition, operating upon the private owner, would bo nugatory. Swell a case really presents no question oí a condition, since it resolves itself into a mere issue of the exorcise by government of its regulatory power.” San Antonio v. San Antonio Public Service Co., 255 U. S. 547, 556, 41 Sup. Ct. 428, 65 L. Ed. 777.
The decree of the District Court is therefore affirmed.
Concurrence Opinion
(concurring). I base my conclusion, that the decree of the court below should be affirmed, solely upon the effect of the decision of the Supreme Court of Louisiana, rendered March 20, 1922, in State v. City of New Orleans, 91 South. 533.