Berman v. Denver Tramway Corp.
| Decision Date | 03 July 1952 |
| Docket Number | No. 4397.,4397. |
| Citation | 197 F.2d 946 |
| Parties | BERMAN v. DENVER TRAMWAY CORP. et al. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Abe L. Hoffman, Denver, Colo. (Norman E. Berman and Molly O. Edison, Denver, Colo., on the brief), for appellant.
Montgomery Dorsey, Denver, Colo. (Allan R. Phipps and Thomas Keely, Denver, Colo., on the brief), for appellee Denver Tramway Corp.
Before BRATTON, HUXMAN, and PICKETT, Circuit Judges.
This appeal is another link in the chain of litigation relating to fares and charges of The Denver Tramway Company and The Denver Tramway Corporation, sometimes hereinafter referred to as the old company and the company, respectively, for the transportation of passengers in Denver, Colorado. In 1920, Westinghouse Electric & Manufacturing Company filed in the United States Court for Colorado a creditor's bill against the old company. The receiver — appointed with power to continue operating the transportation system — filed in the proceeding a petition concerning operating conditions and fares. The City and County of Denver, hereinafter referred to as the city and county, intervened and pleaded among other things in response to the petition that under ordinances enacted in 1885 and 1888 maximum fares of five cents were contractually fixed; and that rates subsequently authorized by provision contained in a franchise at six cents for adults and three cents for children did not change the contractual obligations of the company under the ordinances. The court entered an interlocutory decree restraining the city and county from enforcing maximum fares of six cents for adults and three cents for children, or any less fares, and authorizing the receiver to charge and collect fares not in excess of eight cents for adults, with two tickets or tokens for not more than fifteen cents, and not in excess of four cents for children between the ages of six and twelve years, with four tickets or tokens for not more than fifteen cents. The city and county appealed, and the interlocutory decree was affirmed. City and County of Denver v. Stenger, 10 Cir., 277 F. 865. In 1924, the court entered a final decree in which it expressly determined and adjudicated among other things that the provisions of the ordinances of 1885 and 1888 purporting to limit fares to five cents for single passage were not contractual in effect but were regulatory in the exercise of the police power of the city and county; and that the provisions in such ordinance limiting fares to five cents, and the provisions in the franchise fixing or attempting to fix fares at a maximum of six cents or less for adults and three cents or less for children under twelve years of age, were confiscatory insofar as they required the receiver, the old company, or the successors and assigns of them, or either of them, to put into effect and maintain charges for transportation less than those which would afford just compensation, such compensation being fixed at not less than 7½ per cent net annual return upon a valuation of $23,514,769 for the used and useful property of the city lines of the company. In mandatory terms, the decree enjoined the city and county from enforcing or attempting to enforce against the receiver, the old company, and the successors and assigns of them, or either of them, any of the provisions of such ordinances or franchise fixing maximum fares of six cents or less for adult passengers, and three cents or less for children under twelve years of age; enjoined the city and county from interfering with the receiver, the old company, or the successors and assigns of them, or either of them, in the collection of such fares as they might fix, provided that the net return therefrom should not exceed an annual return of 7½ per cent on a valuation of $23,514,769, after certain deductions; and enjoined the city and county from bringing or causing to be brought any litigation to enforce the provisions of such ordinances or franchise limiting the maximum fares to six cents or less for adult passengers, and three cents or less for children under twelve years of age, or to compel the receiver, the old company, or their respective successors and assigns, to comply with the provisions of such ordinances or franchise in relation to maximum rates, or to interfere or attempt to interfere with the collection of such fares and charges by the receiver, the old company, or their respective successors and assigns, as were permitted under the terms of the decree. The decree provided that it should not be any limitation whatever upon the legislative power of the city and county properly and legally to regulate fares, provided only that the regulations not be confiscatory in character or violative of due process. And provision was made for any party to the action, or its successors and assigns, to make application to vacate, modify, or extend the injunction because of change in circumstances thereafter occurring, or for additional relief by reason of acts occurring after the date of the decree. The property involved in the proceeding was sold at judicial sale. The company was the ultimate purchaser and its acquisition of the property was approved in the order of the court confirming the sale. The city and county appealed from the final decree. The receiver was discharged. Pursuant to a stipulation filed in the circuit court of appeals, the company as successor in interest to the receiver was substituted as appellee. And with a modification which has no material bearing here, the decree was affirmed. City and County of Denver v. Denver Tramway Corp., 10 Cir., 23 F.2d 287, certiorari denied, 278 U.S. 616, 49 S.Ct. 20, 73 L.Ed. 539.
Approximately twenty-five years after entry of the final decree to which reference has been made, Norman E. Berman instituted in the state court of Colorado a conventional class action against the city and county and the company attacking the validity of an ordinance of the city and county enacted in 1948 in which maximum rates were fixed of ten cents for adults and children over twelve years of age other than school children, five cents for school children under nineteen years of age when going to or returning from school and holding school cards, and five cents for children six years of age or more and less than twelve years of age. Both defendants responded. The court sustained motions to dismiss the action on the ground that the complaint failed to state a claim upon which relief could be granted. On appeal, it was held that in the city and county the granting of franchises, the regulation of rates, and the extension or enlargement of franchise privileges can be effectuated only through a vote of the qualified electors in the manner provided in the charter of such city and county, and that the ordinance in question was void. Berman v. City and County of Denver, 120 Colo. 218, 209 P.2d 754. After remand, Berman filed in the action a petition in which it was alleged among other things that the ordinances of 1885 and 1888 constituted contracts by which the company was at all times bound to charge rates not in excess of five cents; that the ordinance enacted in 1948 was void insofar as it authorized rates in excess of that amount; and that fares of ten cents were being illegally collected. An accounting and restitution of the excess charges was sought.
The company filed in the action in the United States Court a pleading in the nature of a supplemental bill or complaint in which it was alleged in substance that the institution and maintenance of the action in the state court...
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