103 A. 319 (Md. 1918), 52, Havre de Grace & Perryville Bridge Co. v. Towers

Docket Nº:52.
Citation:103 A. 319, 132 Md. 16
Opinion Judge:STOCKBRIDGE, J.
Attorney:W. Calvin Chesnut, of Baltimore, and Thomas H. Robinson, of Bel Air, for appellant. Osborne I. Yellott, of Baltimore, and W. Cabell Bruce, of Baltimore, for appellees.
Case Date:January 15, 1918
Court:Court of Appeals of Maryland

Page 319

103 A. 319 (Md. 1918)

132 Md. 16



TOWERS et al.

No. 52.

Court of Appeals of Maryland

January 15, 1918

Rehearing Denied April 4, 1918.

Appeal from Circuit Court No. 2 of Baltimore City; Carroll T. Bond, Judge.

Application by the Havre de Grace & Perryville Bridge Company, a corporation, to set aside an order of Albert G. Towers, E. Clay Timanus, and Philip D. Laird, constituting the Public Service Commission of Maryland, reducing toll rates. From a decree dismissing the bill, the plaintiff appeals. Reversed and remanded, with directions.


W. Calvin Chesnut, of Baltimore, and Thomas H. Robinson, of Bel Air, for appellant.

Osborne I. Yellott, of Baltimore, and W. Cabell Bruce, of Baltimore, for appellees.


There is presented by the record in this case a question of rate making by the Public Service Commission, of a somewhat unusual nature, and with regard to which no conclusion is entirely satisfactory. The rates involved are those to be charged the users of a toll bridge across the Susquehanna river from Havre de Grace in Harford county to Perryville in Cecil county in this state. The length of the bridge is 3,240 feet, in the neighborhood of three-fifths of a mile. The power of the Public Service Commission to regulate such rates of toll is derived from the provisions of an act of assembly (Laws 1916, c. 272), by which certain bridges which were authorized

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by their charters to collect toll were classified as common carriers, and made subject to the provisions of law relating to such corporations, and to the same extent under the provisions and control of the Public Service Commission. There are, therefore, no new principles involved in this case, but there is considerable difficulty in the application of those principles to the facts. A very concise statement of the more salient points out of which the case arises will help to clarify the issue and probably facilitate arriving at a correct conclusion.

A little over forty years ago the Philadelphia, Washington & Baltimore Railroad Company constructed a single track railroad bridge across the Susquehanna river for the passage of its trains between the points of Havre de Grace and Perryville. The bridge was the type then in vogue, namely, of wooden truss construction, supported by a series of piers built up from the bed of the river. Some years later in order to give greater stability to the structure the wooden trusses were replaced by wrought iron ones, and the bridge continued to be used by the Philadelphia, Washington & Baltimore Railroad Company and its successor, the Philadelphia, Baltimore & Washington Railroad Company, as a railroad bridge down to about ten years ago. At that time this bridge, which had been originally built at a cost in excess of $2,000,000, was found to be inadequate to the needs of the railroad company, both by reason of the fact that it was a single track bridge only, and that with the growth of travel, the greater weight of the locomotives and freight continually passing over it, brought a strain upon the construction of the bridge greater than it had been designed to carry when it was originally built. Assent was thereupon obtained from the Legislature of the state and the War Department for the construction of a double track railroad bridge, paralleling at a distance of about 150 feet, the bridge theretofore used. The grant of the right to construct a new bridge was coupled with a requirement for the removal of the earlier bridge.

There was at that time no highway bridge crossing the Susquehanna river at this point, nor at any point nearer than Conowingo, some 10 or 12 miles further up the river, and it was felt that it would be a great advantage to persons residing in Havre de Grace and Perryville, when the original bridge should be abandoned as a railroad bridge, to have it converted into a highway bridge. An endeavor was made to interest both county and municipal authorities on each side of the river, to undertake the conversion and maintenance of the bridge, which they declined to do, apparently because apprehensive that the revenues which would be derived from tolls would be inadequate, both to effect the necessary adaptation of the railroad bridge for use as a highway bridge, and the upkeep of it after it had been so adapted.

In this condition a charter was granted by the Legislature to certain gentlemen resident in Harford and Cecil counties, creating a bridge company, authorizing the acquisition by the company of the bridge, and its administration, with the right to charge tolls for the use thereof, conditioned only that the rates of toll should not be in excess of those charged by the company owning and operating the Conowingo bridge, and which was a much shorter structure. The seven gentlemen named in the charter effected a corporate organization, each subscribing and paying for one share of stock of the par value of $100, and, after negotiating with the railroad company, the railroad company at a cost of $89,000 adapted the bridge for use as a highway bridge, and turned the same over to the bridge corporation, which thereupon issued its stock to the several incorporators in an aggregate amount of $50,000. The bridge company expended a small sum of money, approximately $1,700, in the erection of toll houses, bridge approaches, and some other items, none of which were very large in amount. It also established rates of toll for the various classes of traffic over the bridge, from foot passengers to motor trucks, and at rates less than those in force at the Conowingo bridge, which by its charter were the maximum the new bridge company was authorized to charge.

For the first two years after the structure had been thrown open to travel as a highway bridge the revenues were inconsiderable; the gross revenue being from $6,000 to $7,000 per annum. Two factors then combined to cause thereafter a great increase in the gross revenue of the bridge, amounting for the year 1916 to somewhere between $58,000 and $60,000. These two factors were the sudden development and use, for both pleasure and business, of automobiles, the tolls from which constituted about 90 per cent. of the gross revenues of the bridge, and, second, the gross receipts were augmented to a considerable degree by the development of the state system of good roads, which brought this bridge directly upon the line of travel from Baltimore to Philadelphia and points north. It was this sudden increase in revenue, entirely unforeseen at the time that the bridge company was formed, which seems to have suggested to certain persons, residents of Harford and Cecil counties, that the rates of toll which were charged were excessive, and called for an investigation of the bridge company by the Public Service Commission, and a reduction of the rates of toll.

This litigation is the outgrowth of that investigation, which resulted in a reduction of the rates of toll to be charged, for the period of five years from October, 1916, of fully one-half; the idea of the commission being that it had reduced the income of the company

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about 48 per cent., while the company's contention is that the reduction amounts to 72 per cent. Upon the entry of the commission's order making the reduction, application was made to the circuit court No. 2 of Baltimore city to declare the action of the commission void, as being unlawful, unreasonable, and confiscatory. That court after full hearing, and with a large amount of expert testimony before it, dismissed the bill of the bridge company, and it is from that action that this appeal has been taken. At the threshold of this case is the consideration, whether the order of the commission comes within the scope of the powers granted to it by the Legislature, or whether it exceeds those powers, and for that reason is null and void.

So far as the power to fix rates is concerned, there can be no question under the language of the act that such power was granted to the commission. The order as made by the commission goes further than this, and requires the bridge company to establish and maintain a "main depreciation reserve account," and annually to make a deposit of a specified sum to the credit of such account, which fund is required to "be deposited in some safe depository paying not less than 3 per cent. per annum, compounded not less than annually, or by said directors invested in some safe investment paying an equal or higher rate of interest, the investment in either event to be subject to the prior approval of the commission." In corporations which have a bonded indebtedness, it is frequently a stipulation of the contract that a similar course shall be followed, the fund so to be accumulated being ordinarily called a sinking fund, but that is a matter arising out of contract stipulations or agreement, not because of any mandate of public authority. Other corporations maintain under various designations reserve accounts, created by the corporation as a matter of corporate policy merely. With the wisdom of the creation and maintenance of such reserve there is no concern in this case. The bridge company has no bonded indebtedness. The only question is, Is the commission invested by the Legislature with the power to direct and control the financial policy of this company? The same question was presented to this court in Laird v. B. & O. R. R. Co., 121 Md. 179, 88 A. 347, 348, 47 L. R. A. (N. S.) 1167, Ann. Cas. 1915B, 728, and it was there held that extensive as were the powers granted to the commission, they did not take away from the corporation its power of control upon a question of financial policy. The...

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