Southwest Mo. R.R. Co. v. Pub. Serv. Comm.

Feb 16, 1920

Versions:

Lead Opinion

The plaintiff is an incorporated interurban railway company connecting Carthage, Joplin, Webb City and other towns in Missouri, and extending into Kansas. The construction of this street railway in the City of Carthage was under and ordinance permitting the assignor of the company the user of a large number of local streets, and requiring in consideration thereof interurban connections by electric rapid transit, with certain other towns named in the ordinance. These interurban connections were duly constructed and are now fully maintаined by plaintiff, which, also, as incidental thereto, ran spur tracks through the streets of Carthage connecting its interurban system with two railroad stations in that city. Over these spur tracks transfers were issued by the rapid transit lines. The plaintiff asked the Public Service Commission to discontinue these spur tracks, which it alleges were not essential to the maintenance of its interurban lines and which were sparsely used, ran over a very short distance and could not be operated without a loss of $2500 a year or $50,000 in 20 years. The Commission took the view that it was without the power to grant the relief sought, however “meritorious the case presented by the company might be” and dismissed the complaint. Proper steps were taken to obtain a review of the findings and orders of the Commission, which were sustained by the Circuit Court of Cole County, from which judgment the railway company duly appealed.

I. Unless the issue in this case is distinguishable in principle from the one presented in City of St. Louis v. Public Service Commission, 207 S.W. 799, this appeal is dominated by that ruling and the judgment of the circuit court will have to be reversed and the order of the Commission sеt Discontinuance aside. The learned counsel for the Commission of Spur Track. concede the rectitude of that ruling and the cases sustaining it in this jurisdiction, but insist that said ruling related to the question of the power of the Commission to raise the rates of water, telephone and street railway companies “above those fixed by contract” with a municipality, and that they do not relate to cases like the present which involves the rights of a utility (in this instance a street railway) to discontinue the operation of any of its tracks constructed under a permissive ordinance, for the reason that it could be carried on оnly at a great loss.

The franchise of a street railway company is derivable solely from the Legislature. Its right to exercise that franchise over the streets and alleys of a particular municipality, is subject to the regulatory control of such city, which may evidence that control by an ordinance consenting to the use of its streets and alleys and designating those over which the street railway may operate its State-derived corporate powers. [Sec. 20, Art. 12, Constitution 1875.] It was ruled that the City of St. Louis, in the exercise of such a regulatory control оver its streets, could not make an inviolable contract with a street railway for a fixed rate of fare; that to do so would impinge upon the reserve power of the Legislature to exercise plenary control of any matter falling within the domain of the police power, as rate-making does. It was further held that Section 20 of Article 12 was not designed nor intended to abridge the full power of the Legislature over the class of subjects embraced within the inalienable police power of the State. [Const. Art. 12, sec. 5; Tranberger v. Railroad, 250 Mo. 46, affirmed 238 U.S. 67.] It was also held that Section 20 of Article 12 of the Constitution, to-wit: “No law shall be passed by the General Assеmbly granting the right to construct and operate a street railroad within any city, town, village, or on any public highway, without first acquiring the consent of the local authorities having control of the street or highway proposed to be occupied by such street railroad; and the franchises so granted shall not be transferred without similar assent first obtained,” did not, in terms, nor by necessary intendment, devolve upon the municipalities therein mentioned any part of the unrestricted power of the Legislature to deal with all matters pertaining to the policе power of the State where not constitutionally prohibited from so doing.

In the exercise of this great lawmaking function, the State is not obstructed by a contract between one of its agencies (cities, towns or villages) and other persons, for the reason that the State cannot alienate any of its sovereign powers which are necessary to the public welfare, or essential to the protection of the health, morals and property of its citizens. As an obvious corollary of this principle, no municipality, either by ordinance оr contract, can impose upon a public utility essential to the welfare of the people, conditions of operation or maintenance which would confiscate its property or destroy its power to serve the public.

We are quite of opinion that there is no distinction in principle between the obligation (if, indeed, any was imposed by the mere permissive ordinance in question) on the part of the street railway company to maintain two spur tracks, not indispensable to the performance of its interurban duties, at a cost of operation which would preclude them from carrying on and maintaining its interurban system for the benefit of the people of the State served by that convenience, and the duty to exact a reasonable rate for service. Both relate to adequate performance of obligation to the public and are controllable by the Legislature or its authorized agency, the Public Service Commission. [Selectmen v. Cit. St. Ry., 199 Mass. 394.] It is well stated in a recent meritorious publication, viz: “It is settled that the general police power of the State embraces the regulation of the service and rates of public utility enterprises for the promotion of public convenience and the ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍general welfare.” [Harvard Law Review, Nov. 1918, p. 741.] (Italics ours). See, also, Munn v. Illinois, 94 U.S. 113, and a number of other decisions, including State ex rel. Sedalia v. Pub. Serv. Com., 204 S.W. 497. See, also, Union Drygoods Co. v. Ga. Pub. Serv. Com. U.S. Sup. Ct. Ad. Ops. Feb. 1, 1919, p. 116.

As we understand the finding of the Public Service Commission upon the facts adduced in support of the complaint filed before it, the evidence conclusively showed that the two local spur tracks connected with the general interurban system could only be maintained аnd operated at a disastrous loss. It seems conceded that the weight of evidence fully sustains this finding of the Public Service Commission, which body only refused relief upon the notion that it was constitutionally prohibited by the terms of Section 20, Article 12, of the Constitution, supra. It has been shown that that provision of the Constitution is not restrictive of the powers of the Commission in virtue of its agency as the representative of the Legislature.

It necessarily follows that the judgment of the circuit court sustaining the order of the Commission dismissing the complaint must be reversed and the cause remanded with directions tо the circuit court to vacate that judgment and to enter a judgment setting aside the finding of the Commission and remand the cause to that body with directions to proceed in a manner not inconsistent with this opinion. It is so ordered.

Concurrence Opinion

The Public Service Commission decided it was without jurisdiction to entertain a proceeding of this kind, whatever merit might seem to inhere in the facts of a particular case. Whether this view is right or wrong is the sole question presented by this record. Since it has been suggested that the proceeding did not ride off before the Commission on the question of jurisdiction, an examination of its opinion is pertinent. In that opinion the conceded and conclusively established facts were stated as such, and the tendency of the evidence was stated as to the rest. After stating these things and observing that after an application to the city for leave to remove the tracks in question here, appellant “instituted this proceeding before the Commission,” that tribunal stated the question before it thus: “The city has challenged the jurisdiction of the Commission to grant the relief рrayed for and we have concluded this contention is well founded.” The Commission then proceeds to give its reasons for the conclusion. It holds (1) that “we have failed to find any authority in the Public Service Commission Law specifically conferring upon the Commission power to relieve a street railway company from the performance of franchise provisions granted by the city and accepted by the company, nor do we find such power necessary to enable the Commission to carry out the purpose of the law,” and (2) that “we reach the same conclusion if we consider the authority of the сity as to matters properly included within the franchise granted by it to the street railway company. Section 20 of Article 12, of the Constitution of this State provides,” etc. After discussing, in this connection, Section 20 of Article 12 of the Constitution, the Commission, in its opinion, says: “Our conclusion is, that however meritorious the case presented by the company may be on its facts, this Commission is not clothed with power to grant the relief sought.” After discussing a cross-complaint of the city and holding it cannot be considered, the opinion concludes: “It follows from the views expressed that the complaint should be dismissed.”

It is too obvious for discussion that this opinion of the Commission holds exactly what it says in express words, i.e. that the contention of the city that the Commission has no jurisdiction “is well founded.” In State ex rel. v. Public Service Commissiоn, 259 Mo. l.c. 710, the Commission had held it was “without authority to grant the relief prayed for `regardless of any evidence that may be submitted\’ and `regardless of the fact that complainant may show such rates, fares and charges to be unjust, unreasonable and confiscatory of its property.\‘” This court held the Commission had power and ordered it to proceed with the matter and dispose of it “as the facts warrant.” In this case the Commission has made an express finding it has no jurisdiction, refused ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍for that reason to consider the evidence in reaching its decision, and, I repeat, the sole question is whether this finding of no jurisdiction is correct under the law.

I. In State ex rel. Public Service Commission v. Missouri Southern Railway, 279 Mo. 460 and 489, 214 S.W. 381, it was held that a railroad company could not abandon tracks, operated in connection with its main line, without first securing permission from the Public Service Commission so to do. Identical provisions of the Public Service Commission Act of 1913 disclose Abandoning the intent of the Legislature to apply the same Tracks. principle to street railways. If these statutory provisions are valid and applicable to relator, then the Commission has reached an incorreсt conclusion as to its jurisdiction.

II. The only constitutional provision which is put forward as justifying the holding of the Commission is Section 20 of Article 12 of the Constitution of the State, which is set out in the opinion prepared by Judge BOND in Division and transferred to Court in Banc with the case. This section expressly, so far as concerns the questions in this case, provides that the General Assembly shall not pass any law “granting the right to construct and operate a street railroad within any city . . . without first acquiring the consent” of such city. It is argued this section justifies the action of the Commission in this proceeding. There are two reasons why this positiоn is not tenable here.

There is no contention possible that Section 20 of Article 12 expressly provides that a street railway, properly admitted into a city, cannot be permitted by the State to take up an unprofitable portion of its tracks. All that could be claimed is that the city can impose such conditions as the price of its consent or that such conditions is necessarily implied.

(a) The question whether the franchise ordinance contains express provisions denying the company the right to take up a part of its tracks when the consent of the State is procured, and the quеstion whether that ordinance in itself by its terms and conditions permits the company to remove unprofitable parts of its tracks, cannot be reached in this case. These are questions of fact Matters for and for determination, in the first place, by the Review. Public Service Commission. This appeal is from an order refusing to proceed to the consideration of the case, on the ground that the Commission has no power to do so. Whether there is a valid franchise contract between relator and the city which enables the latter effectually to resist the order sought, or, in the absencе of such a franchise contract, whether the facts justify such an order are matters for investigation after jurisdiction has been assumed. The power of this court is simply one of review, and we are not authorized to review the facts, and make a finding of our own thereon until after the Commission has exerted its power over the facts and made its finding, one way or another. This is true regardless of the manner in which the law allows this Court to review the evidence on appeal in a case like this. For this reason, alone, the judgment should be reversed and the cause remanded to thе Commission for the performance of its proper function.

(b) So far as concerns the question of implying a condition from the grant of the right to enter, it is manifest none can be implied in contradiction of the terms of the franchise ordinance. Whether such an implication in this case would contravene that ordinance is a question reached only after the Implication. Commission assumes jurisdiction and reaches the facts. This it has not done. For this reason this theory of implication does not answer what is said under (a) supra.

III. Even if it be assumed that what is said in Paragraph II, supra, is not sufficient to preclude, in the circumstances of this appeal, the further consideration of the case, and that we can assume the franchise ordinance does not expressly or impliedly permit the company to remove tracks Permission to under circumstances the evidence is said to tend Remove Tracks. to show in this case, the holding of the Commission that it had no jurisdiction is nevertheless erroneous.

(a) It does not appear that the city has actually imposed any condition relating to the right of the street car company to take up track under circumstances which, in the absence of such conditions, would render it lawful.

(b) It has been suggested that since the city consented to the use of certain streets then, if abandonment of a part is permitted, it cannot be said ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍the city ever consented to the entry. This view seems based upon the idea that since the city did not originally consent to the use, solely, of Neutralizing such streets as would be occupied after a part Consent. abandonment, the consent of the city completely disappears simultaneously with the taking up of part of the track. The query is, “When did the city ever consent to the use, by themselves, of the parts of thе street still occupied after a part abandonment is permitted?” The question this argument is used to answer is whether in giving its consent, the city gives it subject to all the applicable law and in anticipation of the application of that law to its consent, and whether the law applicable permits the State to authorize the abandonment of a part of the whole line to which the consent applied. In such a situation to argue that the consent never was given if part, in a proper case, is permitted to be removed, is to assume that to be true which it is the purpose of the argument to prove. The argument proceeds in a circle. When the question is whether consent was given subject to existing law and whether that law is a certain thing, it is no answer to say that “consent was not given subject to such law because, if the existing law applied to the consent then consent was never given.” The argument cannot be advanced by this mode of reasoning.

(c) Like observations apply with equal force to certain arguments based upon the declaration that the constitutional provision is designed to confer upon the city “supreme power” over its streets, and it would be anomalous to hold that the constitutional provision “while conferring absolute power upon a city to grant the Abandonment use of its streets in the first instance, it would At Will. nevertheless permit a railway company, when the use had been granted, to abandon it at its will, regardless not only of the rights of the city but of the public.” This is subject, also, to the further criticism that no effort is being made to justify any view that the company could “abandon the use” of city streets “at its will” in any case. In fact, it has been hеld it can do nothing of the kind. This proceeding shows it is attempting nothing of the kind. In no event could it abandon a street except upon a showing that convinced the Commission or this court that the public would not be injured. The existence of this proceeding necessarily implies that much. Recurring to the first observation concerning this last mentioned argument, it is clear that in considering the question whether the city possesses a certain right or power, it is not sound argument to assume “the city\‘s power is `supreme,\’ is `absolute,\’ and, therefore, it has the power we are inquiring about.”

(d) It is said further that “the power to grant the right to use the streets in the first instance carries with it the consequent power to regulate that use when granted. This is true not only on general principles, but is emphatically so here because of the contractual relation created between Regulation. the city and the street railway company by the grant of the use of the streets, and also on account of the public service character of the company.” The question of the regulation of the use of the streets during occupancy is not in this case. The contractual relation cannot be assumed in argument to be this or that since the inquiry here is what that contractual relation is and includes. The public service character of the relator is the thing which subjects it to regulation, but that character does not answer the question whether the regulatory power extends to a particular thing in this particular case.

(e) Another argument advanced is based upon the view that since the franchise ordinance gave the relator the right to operate for forty-nine years, therefore the franchise ordinance became a contract to operate for forty-nine years the whole line, without change. This is necessarily predicated upon the idea that the Commission took jurisdiction of the case and Contract to that it based its finding upon the evidence. The Operate. fallacy of this has been pointed out. The Commission held that the question presented was whether it had jurisdiction. It then held it had jurisdiction, could have none under any conceivable state of evidence, refused to consider the facts and dismissed the complaint because it had no jurisdiction. Further, the franсhise ordinance did not constitute a contract to operate forty-nine years. This feature of the franchise was not contractual or obligatory. It was permissive. Though it be assumed the city might have imposed an obligation to operate for a fixed period, it cannot be claimed this ordinance pretends to do so by its terms. The effort made in the argument now under consideration is to imply such an obligation from a grant of a right. If this implication arises in this case it arises in every case. It does not depend upon the constitutionаl provision referred to. It is argued it is a condition protected by that constitutional provision. It is not one arising out of it. It amounts, therefore, to a declaration that, as a matter of law, whenever a street car company (railroad and other public service corporation, as well) enters upon the enjoyment of franchise rights, or part of franchise rights granted it, it is obligated to operate the whole during the full period for which the right to operate is granted. This is raising an implication not at all necessary on the facts and clearly in restriction of the police power of the Stаte. During the time the company operated it would be subject to all valid ordinance regulations whether in the franchise or subsequently enacted. The argument implies from the franchise ordinance and a building of the car lines over a part of the streets designated therein, a contract, to operate the lines built, during the whole time over which the right might extend, affixes this implied contract, as a condition, to the consent to enter the city, and holds that this is protected from interference by the State in the exercise of the police power. In the first place, as pointed out, it is not pertinent to the question of jurisdiction; second, it assumes a permissive grant to be a contract; third, it holds that a condition implied from an arrangement between a public service corporation and a municipality by its own force frees itself from the exercise by the State of the police power, regardless of its effect in burdening the public with the necessity of paying, on going lines, the expenses of the operation of useless appendages to a street car system. In this case the burden would fall upon those using relator\‘s interurban lines. The principle sought to be established by this argument must be as broad as we have stated it or it is of no force at all to prevent the intervention of the State through the Commission.

IV. It has been consistently held that in giving its consent to the use of its streets by a street railway a city lawfully may impose conditions. The cases are collected in City of St. Louis v. Pub. Serv. Comm., 207 S.W. 799. The authority of the city to condition its assent is not expressly conferred by Conditions. Section 20 of Article 12. The power is implied from the right ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍entirely to withhold such assent. Section 20 introduced no new principle and created no new right. It merely made secure from legislative interference the right of the municipality to deny entrance to a street railway, a right theretofore quite generally existing and exercised under statutory or charter provisions. Nothing was added to the power itself by making the Constitution rather than the statutes the repository of the power. The right of the city to impose conditions is still an implied right. This right or power is not unlimited. At least as between the municipality and the public as represented by the General Assembly, the conditions affixed to the consent must be within the scope of municipal authority. Section 20 of Article 12 does not confer upon the city authority, by means of conditions imposed, to draw under its dominion subject-matter not otherwise within its jurisdiction. Neither can such conditions be employed to require the performance of a forbidden act nor to limit the taxing power of the Legislature. The question of estoppel in favor of the city, referred to in cases in this State, does not arise in a case in which the public, represented by the Commission, is a substantial party. It is also settled that a city by means оf conditions engrafted upon consent cannot limit, control or interfere with the police power or its exertion in the regulation of street railways. [3 Dillon on Mun. Corp. sec. 1229; St. Louis v. Pub. Serv. Com., supra.] These limitations upon the city\‘s power to condition its consent existed before the adoption of the Constitution. They arise irresistibly out of the nature of municipalities and their relations to the State. They were carried into Section 20 of Article 12 as certainly as was the power to impose conditions at all.

Formerly the Legislature had full power over city streets and rights of street railways thereon. It is still the source of the powers of a street railway organized in this State. The charter is from the State. Such charter does not relieve the corporation from obedience to regulatory statutes valid as exertions of the police power. Neither, as stated, can the city in the exercise of its power to condition its consent, whether by franchise contract or otherwise, curtail the police power vested in the Legislature. [State v. Railroad, 242 Mo. l.c. 375; City of Fulton v. Pub. Serv. Com., 275 Mo. 67; City of St. Louis v. Pub. Serv. Com., 207 S.W. l.c. 805.]

The power of the city to refuse admission to a street railway is beyond legislative control. Doubtless there are conditions which may be affixеd pursuant to the city\‘s implied power under Section 20 which are equally exempt therefrom. A city in a particular case might impose conditions which are invalid, and it may be the city would not have given its assent to the entry of the company except for these conditions. Whether such conditions are merely void or whether their invalidity is ground for avoiding the whole franchise are not questions determinable on this record.

I concur in the opinion of Judge BOND except as herein otherwise indicated. Woodson, Williamson and Goode, JJ., concur.

Dissenting Opinion

I have not changed my views in this cаse. The Constitution requires the assent of the city, before a street railway company may construct its lines over the streets of the city. The city can say the assent is given, but upon the condition that the street railway company shall operate its lines for a certain and definite number of years. In this case it was 49 years. This is a valid condition, and it requires the assent of the city to undo what has been done. This condition does not strike at the police powers of the State. If the company is losing money, it can increase its charge through thе Public Service Commission. The sole case made before the Commission was the loss of money in the operation of the road. The case was heard, evidence taken, and opinion written in which the facts are stated. Under the Constitution the Commission had no power to uproot the franchise contract as to the term the railroad should perform its public service. This term of the contract does not contravene the police powers, and is valid. The rate clauses of these franchises are invalid, because they do contravene the police power. The actual ruling of the Commission may be awkwardly expressed, but the fact remains that they said to the railway company, in effect, if all you say is true, and all your evidence is true, we can\‘t relieve you, because under Section 20 of Article 12, you had to get the assent of the city, and you say that you did get such assent upon condition that the cars were to be run for a definite time, and this condition we can not change, because it was a proper one under the constitutional provision. In other words, you ask rеlief which we can\‘t grant under your own evidence and statement of the case. You asked for the constitutional assent of the city, and you say that you got such assent coupled with a lawful condition, which condition you accepted, tore up the streets and built the road. Now when you discover that your road does not pay, you ask us to strike from the contract a lawful condition under Section 20 of Article 12 of the Constitution, and this the Commission has no power to do. This is the substance of the ruling by the Commission, and we think it correct.

The case was in fact tried, and an opinion detailing thе facts found was written. The opinion used the word jurisdiction, ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍where it really meant that the Commission has no power, by reason of rights given the city under Section 20 of Article 12, to change or ignore the terms of a written contract. We have held that the Commission can ignore the rate terms of the franchise contract, because such terms entrenched upon the police powers of the State. But we have never gone so far as to say that the Commission can ignore other provisions of the franchise contract, which do not contravene the poliсe powers. In the instant case the Public Service Commission in the opinion simply says we can\‘t ignore this valid condition of this franchise contract. This is the sum and substance of its ruling, and nothing more. The Commission as shown by the opinion exercised its power, but refused relief on the theory that it had no power (jurisdiction) to set aside the franchise contract. The judgment should be affirmed. Walker, C.J., concurs in these views.

Addendum

The foregoing opinion was prepared by our late associate, BOND, C.J., and was thereafter transferred to Court in Banc. After reargument and due consideration the opinion is adopted and the judgment of the circuit court is reversed and the cause remanded with the directions set out in the opinion. Blair, J., concurs in a separate opinion, in which Woodson, Goode and Williamson, JJ., concur; Graves, J., dissents, in a separate opinion, in which Walker, C.J., concurs; Williams, J., not sitting.