| Wis. | May 31, 1913
Lead Opinion
We are much indebted to counsel for the illuminating briefs and able oral arguments with which we have been favored by both sides in this case. It is but just to say that our labors have been much lightened thereby.
The case, however, is not in itself complicated or difficult of statement. There is in fact but a single question, and that is whether the ordinances referred to in the statement of facts, so far as they specify the rates of fare which may be charged, constitute contracts which are protected by the state and federal constitutions from impairment.
On the part of the appellant the familiar principle is relied on that where municipal authorities, acting under clear and unmistakable legislative authority so to do, have granted the use of streets to a public utility corporation for the purpose of serving the people, and the grant has been accepted by the utility and performance entered upon, a contract has been created between the public and the corporation, which cannot
This contention involves primarily careful consideration and construction of tbe language of tbe statute under wbicb tbe city acted in passing tbe ordinances in question.
Tbe statute in question now appears as sec. 1862, Stats. 1911, and provides that any municipal corporation or county may grant to a street railway corporation, or to any person who bas tbe right to construct, maintain, and operate street railways, “upon such terms as tbe proper authorities shall determine,” tbe use of streets, bridges, and parkways for tbe purpose of laying tracks for street railway purposes, tbe cars to be propelled by animals or such other power as may be agreed upon. Tbe section further provides that every such road shall be constructed on tbe most approved plan and be subject to “such reasonable rules and regulations and the payment of such license fees” as tbe municipal authorities may from time to time prescribe. This section first appeared in substance upon tbe statute books of tbe state as cb. 313 of tbe Laws of 1860. So far as tbe questions involved in this case are concerned there bas been no substantial change in tbe language or legal effect of tbe statute since its enactment in 1860. In tbe original act tbe grant of tbe use of tbe streets
The various ordinances, prior to the ordinance of 1900', provided that the rate of fare “shall not exceed five cents,” except for chartered cars, etc. The ordinance of 1900 changed this language somewhat and provided that the rate of fare “shall be not to exceed five cents for a single fare, except for children under ten years of age the rate of fare shall be three cents for one child and five cents for two children, and infants under three years of age free.” The last named ordinance also made elaborate provision for transfers and provided that the company “shall” sell tickets in packages of twenty-five for one dollar, etc., as will more fully appear by examination of sec. 6 of the ordinance, which is printed in full in the statement of facts. Some contention is made by the appellant to the effect that the difference in language between the earlier ordinances, which provide that the fare “shall not exceed five cents,” and the ordinance of 1900, which provides that the fare “shall be not to exceed five cents,” is indicative of a purpose in 1900 to make a fixed rate instead of placing a limitation upon the rate, but we do not regard the change in language as of any substantial significance. The two phrases seem to us as indicating the same essential purpose.
In construing the meaning of the statute in question, certain fundamental considerations must be kept clearly in mind if we would reach correct and just conclusions, and some of the more important of these considerations will first be stated.
The power to fix rates and tolls to be charged by public
We must catalogue our public utilities and try to imagine how we would get along without them if we would realize our dependence upon them. Only by so doing can we appreciate the supreme importance of the rate-making power and
No presumption can be indulged that it has parted with the power, nor will doubtful words be construed as having that effect. He who asserts that the state has surrendered any part of its sovereign power even temporarily in his favor must prove the fact by the most convincing evidence. The presumptions, if any there he, must run the other way.- If it were to be admitted for the purposes of the argument that the legislature could by express language authorize municipal authorities to make contracts with public utilities fixing rates which should exist for definite periods in the future and be beyond legislative control during those periods (a proposition concerning which we intimate no opinion), the question here is whether such express language is to be found in sec. 1862.
The section does not contain the word “contract,” nor any words of similar import, except- that the provision relating to the motive power provides that the cars shall he propelled , by animals, or “such other power as shall be agreed on.” The word “grant” is, of course, a contract word, but the grant simply covers the right to the use of the streets; nothing else is specifically authorized to be “granted.” This grant is to be upon “terms.” Not such terms as may be agreed on (as in the case of the motive power), but such terms as the municipal authorities “shall determine.” Here clearly is language appropriate to the exercise of power by the municipal authorities, rather than to the making of a contract; to the imposition of commands by a superior power rather than to the reaching of a result by negotiation and agreement between equals.
' If this question were a new one in this state we should entertain no doubt that it should be answered in the negative, but we do not regard it as new.
In the case of Manitowoc v. Manitowoc & N. T. Co. 145 Wis. 13" court="Wis." date_filed="1911-01-31" href="https://app.midpage.ai/document/city-of-manitowoc-v-manitowoc--northern-traction-co-8190108?utm_source=webapp" opinion_id="8190108">145 Wis. 13, 129 N.W. 925" court="N.D." date_filed="1910-10-21" href="https://app.midpage.ai/document/state-ex-rel-kramer-v-kiefer-6736469?utm_source=webapp" opinion_id="6736469">129 N. W. 925, the question of the proper construction of sec. 1863, Stats., with regard to the extension of street railways into adjoining towns and through other cities, so as to constitute interurban lines, was before the court. In that case the city of Manitowoc had by ordinance, passed in November, 1902, fixed the fare to be charged between the cities of Manitowoc and Two Rivers at ten cents, and the ordinance had been accepted by the interurban company, the track laid, and the line operated until May 1, 1909, when the company raised the fare to fifteen cents, and the city brought its action in equity to compel the interurban company to abide by its contract and carry all passengers at the contract rate. It was strenuously urged in that case that the ordinance and acceptance formed a contract between the state and the company, which could not be impaired by the legislature itself, while it was contended on the other side that the Railroad Commission Act had already amended and superseded the ordinance. This contention brought the question of the power of the legislature squarely into the case, and made it not only proper but really necessary to determine whether by the passage and acceptance of the ordinance the power of the state to regulate fares had been suspended. Upon these contentions it was held that while the ordinance and its acceptance
“No specific authority having been conferred on the city to enter into the contract in question, the right of the state to interfere whenever the public weal demanded was not abrogated. The contract remained valid between the parties to it until such time as the state saw fit to exercise its paramount authority, and no longer. To this extent, and to this extent only, is the contract before us a valid subsisting obligation. It would be unreasonable to hold that by enacting sec. 1862, Stats. (1898), or sec. 1863, Stats. (Supp. 1906: Laws of 1901, ch. 425), the state intended to surrender its governmental power of fixing rates. That power was- only suspended until such time as the state saw fit to act.”
If it be said that sec. 1863 was in question in that case instead of sec. 1862, and hence that the language cannot be considered as decisive, the answer is that so far as the question here presented is concerned the provisions of the two sections are practically identical. Sec. 1862 authorizes the municipal authorities to “grant” .the use of streets “upon such terms” as they shall determine, and sec. 1863 authorizes “consent” to the use of streets “upon such terms” and subject to such rules and regulations and the “payment of such license fees as the council or board may from time to time prescribe.” We are of opinion, therefore, that the holding in the Manito-woc Case, to the effect that neither section indicated any legislative intention of surrendering the sovereign power of the state to regulate fares, was entirely correct and was advisedly made.
The appellant places great reliance upon the cases of Detroit v. Detroit Citizens St. R. Co. 184 U.S. 368" court="SCOTUS" date_filed="1902-03-03" href="https://app.midpage.ai/document/detroit-v-detroit-citizens-street-railway-co-95602?utm_source=webapp" opinion_id="95602">184 U. S. 368, 22 Sup. Ct. 410; Cleveland v. Cleveland City R. Co. 194 U.S. 517" court="SCOTUS" date_filed="1904-05-31" href="https://app.midpage.ai/document/city-of-cleveland-v-cleveland-city-railway-co-96115?utm_source=webapp" opinion_id="96115">194 U. S. 517,
The case here is much more similar in principle to the case of Georgia R. & B. Co. v. Smith, 128 U.S. 174" court="SCOTUS" date_filed="1888-11-05" href="https://app.midpage.ai/document/georgia-railroad--banking-co-v-smith-92320?utm_source=webapp" opinion_id="92320">128 U. S. 174, 9 Sup. Ct. 47, where the legislature in 1833 had chartered a railroad, and authorized it to charge tolls and rates of fare “not exceeding” certain specified sums. It was argued on behalf of the railroad company that by this clause the railroad was exempted from legislative interference with its rates within the designated limits for all time. This contention was however rejected, and it was said that “to effect this result the exemption must appear by such clear and unmistakable language that it cannot be reasonably construed consistently with the reservation of the power [i. e. the power to regulate rates] by the state.”
It is unnecessary to consider other questions which were much discussed by counsel in the present case. If under sec. 1862 no power was given to municipal authorities to hamper
We reach this conclusion the more readily because this state has adopted an eminently just and wise policy in dealing with the matter of rates and tolls. By the Railroad Commission legislation it has laid down the general rule that every rate must be reasonable, and has left it to a commission of experts to determine, after full investigation, the reasonable rate, and apply it. It is believed that this board passes on these questions with judicial fairness after the most careful and searching investigation of the conditions, and with a single eye to the attainment of a fair result. So long as these provisions of law remain in force and are allowed to control the situation, all danger of immature, hasty, or vindictive changes in rates is practically eliminated. On the one hand, the citizen is protected from unreasonable and excessive fares; on the other, the capitalist and investor is assured a reasonable and fair return upon his investment. No door is open for any serious injustice.
The view which is here tahen of the meaning and effect of the provisions of sec. 1862 renders unnecessary any consideration of the question whether the ordinances in question are subject to alteration or repeal under sec. 1 of art. XI of the constitution, which authorizes the enactment of general laws for the formation of corporations without banking powers, and forbids the creation of corporations by special act except in certain instances, and reserves the right to alter or repeal at any time all such general laws or special acts.
The proposition decided in this case is that see. 1862, Stats., does not empower municipal authorities to make any contract with a street railway company fixing rates of fare so
By the Court. — Judgment affirmed.
Concurrence Opinion
(concurring). Acting upon complaint of the city of Milwaukee the Railroad Commission of this state, in the exercise of power conferred upon it by secs. 1797 — 1 to 1797 — 38, Stats., on August 23, 1912, made an order requiring the appellant to discontinue its ticket rate of twenty-five tickets for one dollar, and to sell, through its conductors, tickets in packages of thirteen for fifty cents, each ticket to entitle the bearer to one continuous passage in the same general direction with privilege of one transfer between the single-fare points, upon the city lines of the appellant.
Before their compilation into what is now known as the Wisconsin Statutes, the acts of the legislature above referred to and the powers of the Railroad Commission thereunder were considered by this court in Minneapolis, St. P. & S. S. M. R. Co. v. Railroad Comm. 136 Wis. 146" court="Wis." date_filed="1908-06-05" href="https://app.midpage.ai/document/minneapolis-st-paul--sault-ste-marie-railway-co-v-railroad-commission-of-wisconsin-8189230?utm_source=webapp" opinion_id="8189230">136 Wis. 146, 116 N. W. 905. It was there held that these statutes, declaring that railroad rates and services shall be reasonable and creating a commission with power to investigate existing rates and services and to fix and determine what rates and services are reasonable and providing that the rates and services.so fixed shall be in force, are valid acts of legislation, and that conclusion is not questioned in the instant case, but is here mentioned as descriptive of the proceedings in which the order of the Railroad Commission is made. Under these statutes the appellant brought an action in the circuit court for Dane county against the Railroad Commission to review the said order of the latter, averring said order to be unlawful and unreasonable because the order and any law authorizing the same is a law impairing the obligation of contracts, depriving the plaintiff of property without due process of law, and in vio
“Sec. 6. After the passage, publication and acceptance of this ordinance by said railway company, tbe rate of fare for one continuous passage upon tbe lines of railway within said city limits of said city owned and operated by said railway company constructed under any franchise herein, heretofore or hereafter granted to said railway company or its predecessors, successors or assigns, -as tbe case may be, shall be not to exceed five cents for a single fare, except for children under ten years of age tbe rate of fare shall be three cents for one child and five cents for two children, and infants under three years of age free. Except where cars or carriages shall be chartered at a special price, which fare shall entitle each passenger, upon demand made at the time of payment of fare, to one transfer at established points of transfer to any connecting or cross line of said railway company, for passage, within said city, and convenient points of transfer shall be*614 maintained and such, additional points of transfer established as will carry out the full intent and purpose of this ordinance to maintain and extend the transfer system now in force upon the lines of said railway company at the present standard of convenience for the people of said city. Each transfer ticket shall be good only for the passenger to whom it is issued, and for a continuous trip in the direction specified upon the transfer so given, and upon the first car leaving the transfer intersection after the time designated on such transfer.
“Provided, however, that after the acceptance of the terms of this ordinance the railway company shall, on demand made at its office in said city, or to the conductors on its cars operated- on its lines within the corporate limits of said city, sell tickets in packages of twenty-five for one dollar or six for twenty-five cents, each of which tickets shall entitle the holder thereof to use the same upon-the cars of said railway company' only between the hours of 5:30 o’clock and 8 o’clock in the morning and between the hours of 5 o’clock and 7 o’clock, central standard time, in the afternoon of each day until January 1, 1905, and shall also entitle the holder to the same privileges as are or may be accorded to passengers paying a cash fare of five cents; and the said railway company shall, from and after January 1, 1905, continue the sale of tickets in packages at the price aforesaid until December 31, 1934, each to be good at all hours of the day, with same privileges as are or may be accorded to passengers paying a single cash fare of five cents.”
The rights and privileges granted by this ordinance and all other ordinances therein mentioned and hereinafter referred to were made to expire on December 31, 1934. The ordinance provided for acceptance in writing by the appellant, and the appellant did so accept.
In addition to the usual consideration implied by such acceptance and undertaking of the duties imposed -and the disbursement of money in construction, the appellant set forth that prior to and at the time of the enactment of said ordinance of January 2, 1900, it had succeeded, on the reorganization of a corporation called the Milwaukee Street Rail
While in possession of and operating said properties under the several franchise ordinances mentioned, the franchise ordinance of January 2, 1900, was enacted and accepted by the appellant. In accepting said last mentioned ordinance it is averred that the appellant surrendered to the city valuable rights under the prior existing ordinances and made certain concessions, substantially as follows: Appellant by such acceptance agreed that all said franchise ordinances should expire December 31, 1934; agreed to sell commutation tickets at the reduced rates mentioned; agreed to furnish the city electric power to swing drawbridges and to make improvements in streets prior to repaving thereof, to transport on its cars free of charge members of the police, fire, and health departments of said city when in uniform, also detectives of the police department, and to maintain transfer points and give
It is noticeable that all the incorporations except the earliest, viz. that of March 28, 1865, of John Plankinton and associates, were under the general incorporation laws of this state, and all the franchise ordinances authorizing the construction and operation of the street railways in the streets of the city of Milwaukee were enacted by the mayor and common council in the exercise of the power delegated to that body by sec. 1862, Stats., which first appears as ch. 313, Laws of 1860, then became sec. 1862, R. S. 1878, amended by ch. 219, Laws of 1881, then became sec. 1862, Stats. (1898), and preserves that number in the present compilation called the Wisconsin Statutes. The act of 1860 authorized any municipal corporation to grant such use as it should deem proper of any street or streets within the limits of such corporation to any street railway company organized under general or special act of the legislature of this- state or to any individual,
It has long been tbe law of this state that grants of corporate powers or privileges are strictly construed and nothing will be held to pass by implication. Janesville B. Co. v. Stoughton, 1 Pin. 667" court="Wis." date_filed="1846-07-15" href="https://app.midpage.ai/document/janesville-bridge-co-v-stoughton-6596431?utm_source=webapp" opinion_id="6596431">1 Pin. 667. And even in tbe case of natural persons something equivalent to an express contract seems to have been thought necessary. Chapin v. Crusen, 31 Wis. 209" court="Wis." date_filed="1872-01-15" href="https://app.midpage.ai/document/chapin-v-crusen-6601071?utm_source=webapp" opinion_id="6601071">31 Wis. 209. Where an act of tbe legislature or a city ordinance is claimed to create an irrepealable contract it will be strictly construed in favor of tbe state or city. State ex rel. Cream City R. Co. v. Hilbert, 72 Wis. 184" court="Wis." date_filed="1888-09-18" href="https://app.midpage.ai/document/state-ex-rel-cream-city-railway-co-v-hilbert-8182913?utm_source=webapp" opinion_id="8182913">72 Wis. 184, 39 N. W. 326. This is also tbe rule of tbe United States supreme court. Detroit Citizens’ St. R. Co. v. Detroit R. Co. 171 U.S. 48" court="SCOTUS" date_filed="1898-05-23" href="https://app.midpage.ai/document/detroit-citizens-street-railway-co-v-detroit-railway-94898?utm_source=webapp" opinion_id="94898">171 U. S. 48, 18 Sup. Ct. 732.
By art. 2 of tbe articles of compact contained in tbe Northwest Ordinance enacted prior to tbe constitution of tbe United States, by sec. 10 of art. I of tbe constitution of tbe United States, and by sec. 12 of art. I of tbe constitution of this state, laws impairing tbe obligation of contracts are prohibited. If a contract when made was valid by tbe constitution and laws of tbe state as then expounded by tbe highest state authorities, no subsequent action by tbe state legislature or judiciary can impair its obligation. Chicago v. Sheldon, 9 Wall. 50" court="SCOTUS" date_filed="1870-02-21" href="https://app.midpage.ai/document/chicago-v-sheldon-88135?utm_source=webapp" opinion_id="88135">9 Wall. 50. A state cannot by amendment of its constitution or by tbe
If this clause of the federal constitution were limited to ex-ecutory contracts, the questions arising thereunder would not be so serious and far-reaching, for these executory contracts must in a comparatively short time be either performed or' breached and so pass out of existence, satisfied by performance or existing as a right of action for damages or specific performance, closed by recovery or barred by statutes of limitations. But it was early decided that after performance there
“As applied to corporations, every grant of franchises is a charter. It may be a grant of the mere franchise of being a corporation or a grant of powers to a corporation already in existence. In either case the grant is the company’s charter to exercise the rights and privileges and enjoy the immunities granted. Bouvier defines the word ‘charter’ to be a grant made by the sovereign either to the whole people or to a portion of them, securing to them the enjoyment of certain rights. Bouvier’s Law Dic. ‘Charter.’ ‘All franchises,’ says Chief Baron ComyN, ‘are derived.from the king and ought to be claimed by charter.’ Com. Dig. ‘Feanchises,’ A 71. ‘Besides the charter of incorporation, a body politic has granted to it other charters, by which the crown, from time to time, adds to or modifies the powers,’ etc. Grant, Corp. 13.” State v. Comm’r of R. R. Taxation, 37 N. J. Law, 228, 237.
Without express definition this rule is made one of the bases of decision in Tomlinson v. Jessup, 15 Wall. 454" court="SCOTUS" date_filed="1873-03-31" href="https://app.midpage.ai/document/tomlinson-v-jessup-88627?utm_source=webapp" opinion_id="88627">15 Wall. 454.
“The charter of a corporation formed under a general law consists of its articles of association and the law under which it is organized.” Bent v. Underdown, 156 Ind. 516" court="Ind." date_filed="1901-04-23" href="https://app.midpage.ai/document/bent-v-underdown-7054105?utm_source=webapp" opinion_id="7054105">156 Ind. 516, 60 N. E. 307; O’Brien v. Cummings, 13 Mo. App. 197" court="Mo. Ct. App." date_filed="1883-01-16" href="https://app.midpage.ai/document/obrien-v-cummings-8258644?utm_source=webapp" opinion_id="8258644">13 Mo. App. 197; State ex rel. Ross v. Anderson, 31 Ind. App. 34" court="Ind. Ct. App." date_filed="1903-04-22" href="https://app.midpage.ai/document/state-ex-rel-ross-v-anderson-3421371?utm_source=webapp" opinion_id="3421371">31 Ind. App. 34, 67 N. E. 207; State ex rel. Arosin v. Ehrmantraut, 63 Minn. 104" court="Minn." date_filed="1895-12-03" href="https://app.midpage.ai/document/state-ex-rel-arosin-v-ehrmantraut-7969158?utm_source=webapp" opinion_id="7969158">63 Minn. 104, 65 N. W. 251.
Grants by the state to a corporation of property, tangible or intangible, not in the nature of franchises, made upon a consideration moving from the corporation, are easily within the rule of the foregoing cases whether such grants be part of' the corporate charter or not. Corporations are on a par with natural persons in this respect. As to all statutes which form part of the corporate charter and which confer status, create obligations, or grant or impose powers or duties which the state is powerless to confer, create, grant, or impose without the consent of the natural persons affected, there is also a contract consummated by such consent. This also includes charter provisions indispensable to the maintenance of the status, the performance of the obligation, or the exercise of' the powers. But as regards other provisions found in a charter imposing obligations or conferring powers which the state might impose or confer upon any person or class without the consent of the latter, there is no element of contract.
In the instant case two questions are presented: (1) Was-a contract in form fixing the rates of fare to be charged during the life of the franchise ordinance of 1900 entered into by and between the city and the appellant ? Was a power delegated by the state to the city to make a contract which would.
The constitution of this state contains the following:
Sec. 1, art. XI: “Corporations without banking powers or privileges may be formed under general laws, but shall not be created by special act, except for municipal purposes, and in cases where, in the judgment of the legislature, the objects of the corporation cannot be attained under general laws. All general laws or special acts enacted under the provisions of this section may be altered or repealed by the legislature at any time after their passage.”
Art. 8 of sec. 1 of the North Carolina constitution of 1815 and art. 8 of sec. 1 of the New York constitution of 1894 are literal transcripts of the section of the Wisconsin constitution above quoted, and California (1880), Michigan (1850), Maryland (1891), Maine (1815), Washington (1889), Arkansas (1874), and other states have substantially similar constitutional provisions. Long before the enactment of ch. 313, Laws of 1860, and but six years after the adoption of our state constitution, the case of Madison, W. & M. P. Co. v. Reynolds, 3 Wis. 287" court="Wis." date_filed="1854-06-15" href="https://app.midpage.ai/document/madison-watertown--milwaukee-plank-road-co-v-reynolds-6597126?utm_source=webapp" opinion_id="6597126">3 Wis. 287, and the case of Pratt v. Brown, 3 Wis. 603" court="Wis." date_filed="1854-06-15" href="https://app.midpage.ai/document/pratt-v-brown-6597193?utm_source=webapp" opinion_id="6597193">3 Wis. 603, came before this court, and the scope and effect of sec. 1 of art. XI, supra was discussed and declared. Again in 1861, in the case of Nazro v. Merchants’ Mut. Ins. Co. 14 Wis. 295" court="Wis." date_filed="1861-11-02" href="https://app.midpage.ai/document/nazro-v-merchants-mutual-insurance-6598518?utm_source=webapp" opinion_id="6598518">14 Wis. 295, this section was under consideration. It was in effect declared that all rights and franchises of a corporation are received, held, and exercised solely upon the faith of the sovereign grantor and during its pleasure. In 1870 the case of Whiting v. S. & F. du L. R. Co. 25 Wis. 167" court="Wis." date_filed="1870-01-15" href="https://app.midpage.ai/document/whiting-v-sheboygan--fond-du-lac-railroad-6600337?utm_source=webapp" opinion_id="6600337">25 Wis. 167, came before this court, and the question of reducing or regulating rates or tolls was discussed and decided, and the power to so regulate
In Att’y Gen. v. Railroad Cos. 35 Wis. 425" court="Wis." date_filed="1874-06-15" href="https://app.midpage.ai/document/attorney-general-v-chicago--northwestern-railway-co-6601552?utm_source=webapp" opinion_id="6601552">35 Wis. 425, statutes regulating rates of carriage by railways were -upheld under the quoted section of our constitution. Both the last mentioned cases are referred to and followed in Manitowoc v. Manitowoc & N. T. Co. 145 Wis. 13" court="Wis." date_filed="1911-01-31" href="https://app.midpage.ai/document/city-of-manitowoc-v-manitowoc--northern-traction-co-8190108?utm_source=webapp" opinion_id="8190108">145 Wis. 13, 129 N.W. 925" court="N.D." date_filed="1910-10-21" href="https://app.midpage.ai/document/state-ex-rel-kramer-v-kiefer-6736469?utm_source=webapp" opinion_id="6736469">129 N. W. 925. The latter case is in all essential respects like the instant case, and is authority for the proposition that where a corporation is organized under the general laws of this state and thereafter receives by ordinance from a municipality a-grant of the right to use a highway for the purpose of operating its railway thereon, and this grant specifies the rate of fare to be charged, the state may later, acting through the Railroad Commission, establish a reasonable rate different from and higher than the rate specified in the franchise ordinance. This, as I understand it, is exactly in line with Stanislaus Co. v. San Joaquin & K. R. I. & C. Co. 192 U.S. 201" court="SCOTUS" date_filed="1904-01-18" href="https://app.midpage.ai/document/stanislaus-county-v-san-joaquin--kings-river-canal--irrigation-co-95990?utm_source=webapp" opinion_id="95990">192 U. S. 201, 24 Sup. Ct. 241. Considering a similar situation somewhat stronger in favor of the corporation, the United States supreme court there said:
“The authority given by the act of 1862 enabled the board of supervisors to conditionally regulate the rates. There is no promise made in the act that the legislature would not itself subsequently alter that authority. The state simply authorized its agents, the boards of supervisors, to regulate rates, but not to reduce them below a certain point. We do not think that from this language a contract can or ought to be implied that the state might not thereafter authorize the*625 boards to reduce them, or that it might not itself do so directly.”
Passing to the consideration of the reserved power as declared in the California constitution of 1849, which like our constitution spoke of the “formation” of corporations in these words: “Corporations may be formed under general laws, but shall not be created by special act except for municipal purposes. All general laws and special acts passed pursuant to this section may be altered from time to time or repealed,” it was held, following Tomlinson v. Jessup, 15 Wall. 454" court="SCOTUS" date_filed="1873-03-31" href="https://app.midpage.ai/document/tomlinson-v-jessup-88627?utm_source=webapp" opinion_id="88627">15 Wall. 454, that the object was “to prevent a grant of corporate rights and privileges in a form which will preclude legislative interference with their exercise if the public interest should at any time require such interference. . . . The reservation affects the entire relation between the state and the corporation, and places under legislative control all rights, privileges, and immunities derived by its charter directly from the state.”
The franchise ordinance granted by the board of supervisors under delegated authority from the state was therefore considered a part of the corporate charter and as such subject to repeal or alteration. Agencies are created and contracts are made and construed with reference to existing laws. It is not to be presumed that the legislature, by the enactment of see. 1862, Stats., intended to abrogate or suspend for a time its power of regulation or confer upon the municipal councils authority greater than that possessed by the legislature itself. Under the so-called reserved power in the constitution the legislature could not, in the conferring of corporate franchises or privileges, enact an irrepealable law. The state did not intend, therefore, that the municipality granting the use of the streets to a corporation organized under general laws should have power to do that which the legislature itself could not do. The cases of City R. Co. v. Citizens’ St. R. Co. 166 U. S. 557, 17 Sup. Ct. 653; Detroit v. Detroit Citizens’ St.
“It was contended that this amendment, prohibiting the grant of corporate powers by special act, operates as a repeal of the reserved power of altering existing special charters by special acts; that the prohibition to grant corporate powers includes, not only the creation of new corporations, but also the grant of new powers to existing corporations and by inference the limitation or regulation of existing corporate powers, by special acts; and so confines the reserved power to alter special charters, to general laws.
“The difficulty of altering special charters by general laws', which shall be uniform throughout the state, is very apparent. And if this were the true construction of the amendment, it would almost follow that special charters could no longer be repealed by special acts, and that the whole reserved power was relegated to general laws. It was even said by counsel that the charter of a corporation, organized under general law, could be repealed only by repeal of the general law; so that one corporation of one kind could not be subjected to repeal without repealing the charters of all corporations of the same kind under the same general law. This is almost an argument ad absurdum. . . .
“We shall not stop to dwell here on the importance of' the reserved power. ... We shall only assume here that it is a*628 power of great significance and gravity; of such moment, that it is impossible to believe that the legislature and the people intended to surrender or impair it; very hard to believe that they suffered themselves to surrender or impair it by implication, in an amendment designed for quite a different purpose, quite consistent with the reserved power.
“But the purpose of the amendment, so far as it affects sec. 1, art. XI, appears to us very manifest. It was designed to áct on the first clause only of the section, taking away the legislative discretion and changing the directory provision into a prohibitory one; and not to touch the second clause of the section at all, leaving the reserved power where it found it, to be exercised thereafter as theretofore, upon special charters, by special acts. . . .
“We can see nothing in the letter or spirit of the amendment to warrant us in giving it a construction to impair the reserved power. . . . And we feel bound to hold, and find no difficulty in holding, the phrase in the amendment, to grant corporate powers or privileges, to mean in principio dona-tionis, and equivalent to the phrase, to grant corporate charters. This is implied not only by the word grant, but also by the word corporate. A franchise is not essentially corporate; and it is not the grant of franchise which is prohibited, but of corporate franchise; that is, as we understand it, franchise by act of incorporation.”
What was said, therefore, is not in the nature of a limitation upon sec. 1, art. XI, but a limitation upon sub. 7, see. 32, art. IV, of the constitution. The latter is limited so that it stands as a prohibition against the granting by special act of the franchise to exist as a corporation, but the former is unlimited and includes in its power of alteration and repeal all franchises of any kind which may at any period of its existence be conferred upon a corporation. And this has been the uniform application of sec. 1, art. XI. West Wis. R. Co. v. Trempealeau Co. 35 Wis. 257" court="Wis." date_filed="1874-06-15" href="https://app.midpage.ai/document/west-wisconsin-railway-co-v-board-of-supervisors-of-trempealeau-county-6601526?utm_source=webapp" opinion_id="6601526">35 Wis. 257; Whiting v. S. & F. du L. R. Co. 25 Wis. 167" court="Wis." date_filed="1870-01-15" href="https://app.midpage.ai/document/whiting-v-sheboygan--fond-du-lac-railroad-6600337?utm_source=webapp" opinion_id="6600337">25 Wis. 167; Att’y Gen. v. Railroad Cos. 35 Wis. 425" court="Wis." date_filed="1874-06-15" href="https://app.midpage.ai/document/attorney-general-v-chicago--northwestern-railway-co-6601552?utm_source=webapp" opinion_id="6601552">35 Wis. 425; State ex rel. Cream City R. Co. v. Hilbert, 72 Wis. 184" court="Wis." date_filed="1888-09-18" href="https://app.midpage.ai/document/state-ex-rel-cream-city-railway-co-v-hilbert-8182913?utm_source=webapp" opinion_id="8182913">72 Wis. 184, 39 N. W. 326.
Upon these considerations and upon the words of sec. 1862' I come to the conclusion that no power was conferred upon the municipalities mentioned to make an unalterable or ir-repealable contract with the corporations or persons there qualified to become grantees, and hence that the municipality did not do so. There is a contract, but subject to -alteration by the state in respect to rates. The Railroad Commission was acting within its powers in making the order in question so long as the order is not confiscatory in character. I may add that in this state corporations, while subject to this reserved power, are fully protected against spoliation, confiscation of property, or even injustice by the Fourteenth amendment to the federal constitution and the equivalent provisions in our state constitution. Water Power Cases, 148 Wis. 124" court="Wis." date_filed="1912-01-30" href="https://app.midpage.ai/document/state-ex-rel-wausau-street-railroad-v-bancroft-8190445?utm_source=webapp" opinion_id="8190445">148 Wis. 124,
The following opinion was filed June 9, 1913:
Dissenting Opinion
(dissenting). I have to dissent upon the ground that the result violates the prohibition against taking private property without rendering just compensation therefor and the impairment of contract obligations.
If there is a question firmly settled in this court, notwithstanding doubt is somewhat cast upon it by expressions in opinions, it is that an unconditional legislative privilege, not corporate, granted and accepted, is property which may be "bought and sold like any other property, and can no more be taken away for public purposes without tendering just compensation therefor than any other thing of value. The confusion which found place in our opinions after Att’y Gen. v. Railroad Cos. 35 Wis. 425" court="Wis." date_filed="1874-06-15" href="https://app.midpage.ai/document/attorney-general-v-chicago--northwestern-railway-co-6601552?utm_source=webapp" opinion_id="6601552">35 Wis. 425, 460, between such a privilege and an act of incorporation was eliminated by State ex rel. Att’y Gen. v. Portage City W. Co. 107 Wis. 441" court="Wis." date_filed="1900-09-25" href="https://app.midpage.ai/document/state-ex-rel-attorney-general-v-portage-city-water-co-8186714?utm_source=webapp" opinion_id="8186714">107 Wis. 441, 83 N. W. 697, followed by Pittsburg T. Lab. v. Milwaukee E. R. & L. Co. 110 Wis. 633" court="Wis." date_filed="1901-06-20" href="https://app.midpage.ai/document/pittsburg-testing-laboratory-ltd-v-milwaukee-electric-railway--light-co-8187013?utm_source=webapp" opinion_id="8187013">110 Wis. 633, 643, 86 N. W. 592; Linden L. Co. v. Milwaukee E. R. & L. Co. 107 Wis. 493" court="Wis." date_filed="1900-10-12" href="https://app.midpage.ai/document/linden-land-co-v-milwaukee-electric-railway--light-co-8186722?utm_source=webapp" opinion_id="8186722">107 Wis. 493, 498, 83 N. W. 851; In re
The suggestion sometimes made that a legislative privilege, not corporate, is within sec. 31, art. IV, of the constitution and within the reserve power of sec. 1, art. XI, relating to corporations, I am utterly unable to understand. Sec. 1, art. XI, does not deal at all with mere legislative privileges, but does deal with the creation of corporations and defining their powers. A grant thereunder is not inherently assignable. No constitutional regulation of power to grant mere privileges, not corporate, was ever supposed to be necessary. It has been common, from time immemorial, for sovereign authority to mate such grants. It was with a new manner of granting corporate powers that sec. 31, art. IV, dealt. The term there “for granting corporate powers or privileges, except to cities” refers to the words “corporations without banking powers or privileges may be formed under general laws, but shall not be created by special act except for municipal purposes,” in sec. 1, art. XI. The purpose of the latter section was to prevent the formation of mere private corporations by special act, except in special cases, while the amendment to sec. 31, art. IV, entirely prohibited the formation of such corporations except under the general law. Both sections deal with the same thing — the granting of privileges by act of incorporation, and not privileges which may be granted irrespective of any constitutional provision as was distinctly decided in In re Southern Wis. P. Co., supra.
So the question of whether the grant of a mere privilege, not corporate, is subject to alteration or repeal is to be solved by the terms of the grant, construed in the light of characterizing circumstances, not by any constitutional provision. .It has been so repeatedly held here. Chapin v. Crusen, 31 Wis.
We do not overlook the fact that in Manitowoc v. Manitowoc & N. T. Co. 145 Wis. 13" court="Wis." date_filed="1911-01-31" href="https://app.midpage.ai/document/city-of-manitowoc-v-manitowoc--northern-traction-co-8190108?utm_source=webapp" opinion_id="8190108">145 Wis. 13, 129 N.W. 925" court="N.D." date_filed="1910-10-21" href="https://app.midpage.ai/document/state-ex-rel-kramer-v-kiefer-6736469?utm_source=webapp" opinion_id="6736469">129 N. W. 925, the court, arguendo, spoke of a franchise owned by a corporation, as a corporate franchise, and so under the reserve power; but I think that was unnecessary to the case and the merest inadvertence. It is clearly contrary to In re Southern Wis. P. Co. and all the other cited cases. It requires but a moment’s reflection to appreciate that if such a privilege is really corporate and so within the reserve power, it cannot be granted to a corporation by special act at all, — the very question at issue in the Southern Wis. P. Co. Case. There the contrary in Stevens Point P. Co. v. Reilly, 44 Wis. 295" court="Wis." date_filed="1878-01-15" href="https://app.midpage.ai/document/stevens-point-boom-co-v-reilly-6602521?utm_source=webapp" opinion_id="6602521">44 Wis. 295, was overruled, and the logic of State ex rel. Att’y Gen. v. Portage City W. Co. 107 Wis. 441" court="Wis." date_filed="1900-09-25" href="https://app.midpage.ai/document/state-ex-rel-attorney-general-v-portage-city-water-co-8186714?utm_source=webapp" opinion_id="8186714">107 Wis. 441, 83 N. W. 697, and Linden L. Co. v. Milwaukee E. R. & L. Co. 107 Wis. 493" court="Wis." date_filed="1900-10-12" href="https://app.midpage.ai/document/linden-land-co-v-milwaukee-electric-railway--light-co-8186722?utm_source=webapp" opinion_id="8186722">107 Wis. 493, 83 N. W. 851, followed.
It is unfortunate that after all efforts made to distinguish between a franchise and a corporate franchise, the former governed by the terms of the grant and the latter by the constitutional reservation, confusion keeps cropping out, now and then, and even passes unnoticed for a time by those who have to deal specially in respect to it. I take a measure of this to myself, though I endeavored, with the concurrence of some of my brethren to whom I submitted the matter, to correct my inadvertence at the earliest possible moment. Calumet S. Co. v. Chilton, 148 Wis. 334" court="Wis." date_filed="1912-02-20" href="https://app.midpage.ai/document/calumet-service-co-v-city-of-chilton-8190481?utm_source=webapp" opinion_id="8190481">148 Wis. 334, 370, 135 N. W. 131. I think all
In this case there was a corporation in operation. The privilege was in no sense a corporate privilege. The opinion of the court practically concedes that. I am led to say what T have respecting the legislative power because the subject was advanced in this case and found some favor. However, the decision goes wholly on a construction of the statute. The idea is that, by a proper construction thereof, the right to regulate the charge for fares was not parted with by the legislature. I cannot agree with that.
It is conceded that it was competent for the state to make a bargain with the railway company as to the rate of fare to be charged and that such a bargain under legislative authority is within the constitutional guaranty against impairment, the same as one between private parties, The federal supreme court has spoken very decisively on that subject many times, particularly in Detroit v. Detroit Citizens’ St. R. Co. 184 U.S. 368" court="SCOTUS" date_filed="1902-03-03" href="https://app.midpage.ai/document/detroit-v-detroit-citizens-street-railway-co-95602?utm_source=webapp" opinion_id="95602">184 U. S. 368, 22 Sup. Ct. 410, and Minneapolis v. Minneapolis St. R. Co. 215 U.S. 417" court="SCOTUS" date_filed="1910-01-01" href="https://app.midpage.ai/document/city-of-minneapolis-v-minneapolis-street-railway-co-97127?utm_source=webapp" opinion_id="97127">215 U. S. 417, 30 Sup. Ct. 118.
There was no constitutional prohibition in the way of the city of Milwaukee, by legislative authorization, bargaining with the street railway company as it is claimed to have done. That it possessed such authority in very plain language cannot well be gainsaid. What could be plainer than sec. 1862: “Any municipal corporation . . . may grant to any such corporation . . . upon such terms as the proper authorities shall determine, [the use] of any streets,” etc. ? What could be plainer, inter partes, in ordinary matters ? Who would be bold enough to contend that the legislative intent was not to afford opportunity to make a contract so that a railway company could safely finance its operations ? Such certainly is as important to the public as to the railway company. The
Now conceding, as must be done, in view of the constitution and decisions here and in the federal supreme court, that the city of Milwaukee had authority by contract to confer upon the railway company authority to charge whatever fare it might see fit, up to a specified limit, was such contract made ? That the adversary parties came together to make a contract, goes without saying, as it does that the dominant mutual idea was an exchange of equivalents. The railroad company surrendered certain things and incurred certain obligations on its side. The city in return promised the railway company enjoyment of a contract right to charge for fare, “not exceeding five cents,” except for children, etc., the right to one transfer to be incident to each ticket and opportunity to be •offered to patrons to purchase “tickets in packages of twenty-five for one dollar, or six for twenty-five cents,” usable at certain times and within certain limits. Now that seems to me to be plain. Language which is plain from every viewpoint, does not admit of judicial construction. The mutual agreement that the company may charge specified rates for service, seems by necessary inference, to mean that at its option it may charge up to the maximum. If that were not the intention of the parties, what were they contracting for? The principal thing was matter of fare. All else depended on that. Would a company leave that to be changed at the
There is much which might be written on this matter, but there is no good which can come from my doing so. I have assumed the cause would be removed to the federal supreme court, as it seems to me to be in conflict with the federal decisions. True, the court rests the matter on the construction of the statute, but if the construction is unreasonable from the standpoint of the decisions of the federal supreme court under substantially the same circumstances, as in my judgment it is, there can be no escape by means of statutory construction from the effect of violation of the constitutional guaranties. If that were not so, a very easy way would exist of violating such guaranties and defying the supreme judi-. cial authority in respect to the matter.
I appreciate there is no purpose on the part of my brethren to circumvent the constitution. They have reached a conclusion as to the meaning of the statute which renders Detroit v. Detroit Citizens' St. R. Co. 184 U.S. 368" court="SCOTUS" date_filed="1902-03-03" href="https://app.midpage.ai/document/detroit-v-detroit-citizens-street-railway-co-95602?utm_source=webapp" opinion_id="95602">184 U. S. 368, 22 Sup. Ct. 410, inapplicable. That is all there is to it. They have reached that conclusion by applying, in my judgment, the doctrine of Chapin v. Crusen, 31 Wis. 209, and similar cases away beyond their legitimate limits. After resolving all reasonable doubts in favor of the municipality, it yet seems clear to me that the very thing the street railway company, and the common council of the city as well, were after was settlement for a long period of the vexed question of fares. The records show, and it is a matter of public knowledge, that disputes as to fares for years have been
Where did the Railroad Commission get its authority to supersede the contract? I appreciate the answer of the court’s opinion is that it has not attempted to supersede a contract, but to enforce its terms; that, not to exceed the ordinance limit as to fares, left the field of activity to which the Commission succeeded as to what is a reasonable fare; that the meaning of the contract is the railway company shall be privileged to charge a reasonable fare not exceeding the stated rate. That comes back to the question of construction and concedes that if the construction be wrong the decision is wrong. It is appreciated that the law under which the' Railroad Commission operated expressly reserved from the grant of administrative power, power to interfere with existing contracts which were not inherent in the corporate franchise. So if there was a contract, exempt from legislative interference, fixing the rate of fare as to the railway company, the Railroad Commission usurped authority in making the order complained of. If there was a contract which left the question open to investigation as to what was the reasonable fare it could charge, leaving the ascertainment of that a matter of
Concurrence Opinion
I concur in the foregoing opinion of Mr. Justice Marshall.