Buffalo East Side R. Co. v. Buffalo St. R. Co.

• Decision Date: 27 November 1888
• Citation: 111 N.Y. 132,19 N.E. 63
• Parties: BUFFALO EAST SIDE R. CO. v. BUFFALO ST. R. CO.
• Court: New York Court of Appeals Court of Appeals

111 N.Y. 132

19 N.E. 63

BUFFALO EAST SIDE R. CO.

v.BUFFALO ST. R. CO.

Court of Appeals of New York.

November 27, 1888.

Appeal from supreme court, general term, Fifth department.

Action by the Buffalo East Side Railroad Company against the Buffalo Street Railroad Company for liquidated damages for breach of a contract not to reduce the rates of fare without plaintiff's consent. Judgment for defendant, and plaintiff appeals.

The act of 1873, referred to in the opinion, regulated the rates of fare for street railroads, but exempted the contract between plaintiff and defendant from its operation.

James C. Carter and E. C. Sprague, for appellant.

Sherman S. Rogers, for respondent.

RUGER, C. J.

The plaintiff and defendant are respectively incorporated street-railroad companies, located in the city of Buffalo, and the action was brought upon a contract to recover a sum stipulated to be paid, as liquidated damages, upon a breach thereof by either party that should reduce its rates of fare below the prices authorized to be charged under the statutes in force on May 3, 1872; each party thereby agreeing to make no change therein without the consent of the other. Subsequent to this contract the legislature, by chapter 600 of the Laws of 1875, enacted, in substance, that it should be unlawful for any street railroad company in Buffalo to charge more than five cents for each passenger carried on their respective roads without regard to the distance traveled. This price was considerably less than the amount authorized to be charged by the former statute. Immediately thereafter the defendant reduced its rates of fare to the price authorized by the act of 1875, and this reduction constitutes the breach of the contract relied upon for a recovery.

No question is made but that if the act of 1875 was a valid enactment, the defendant was required to conform to it, and would have a good defense to the action. It is, however, claimed by the plaintiff that the act was unconstitutional and void, inasmuch as it impaired the obligation of contracts. The only contract claimed to have been impaired is the one sued upon. Among the defenses made to the action is the claim that the agreement had terminated, before the alleged breach, by virtue of its own limitation; and it is also urged that a reasonable construction of the language of the agreement shows that its obligations were not intended to survive any statutory reduction of the rates of fare chargeable upon such railroads. There is no express provision in the contract providing for the period of its duration, but there are several which furnish strong grounds for the inference that the parties did not intend that it should continue after an unfavorable change in the rates of fare. Among these provisions, it is only necessary to refer to one providing that ‘the said party of the first part, so long as it receives for the transportation of passengers the fare allowed by law on the 3d day of May, 1872, and no longer,’ will make connections with roads to be built by the party of the second part, and run a sufficient number of cars to accommodate all passengers applying for transportation, etc.; and another contained in the fifth paragraph, which provides that the party of the first part agrees that it will, during the continuance of the contract, charge the same rates for the transportation of passengers over its railroads, or any part thereof, that it is ‘permitted to charge by the statutes in force regulating the same on the 3d day of May, 1872, and that it will not make any change in such rates without the consent of the party of the second part.’ Similar provisions were contained in the contract relating to the obligations of the party of the second part, and contemplating the termination of the contract upon the same contingency.

It is quite clear that the parties had in view a condition of affairs under which they would not be permitted to charge and receive the rates of fare authorized by former acts, and in that event expressly provided for the termination of the contract. But the plaintiff contends that the rates authorized on May 3, 1872, still continue, so far as these two companies are concerned, by force of the obligations of their contract, and that the state was precluded by the constitutional inhibition from passing any law impairing its effect. We are not impressed with the soundness of this contention. It was competent for the parties to agree upon any period as the duration of their contract, and they might, if they chose to do so, provide that it should cease upon the passage of even an unconstitutional law. It is difficult to explain what is meant by the expressions that the contract should continue so long as the companies receive and were permitted to charge the rates authorized on May 3, 1872, and no longer, if there was no constitutional power to effect such change. Settled rules of construction require us to give some meaning and effect to all of the language employed in the contract, provided it can be done without doing violence to the plain object and intent of the parties in making their agreement. It is quite clear that the parties assumed the existence of the power of the legislature to change the rates, and contracted with reference to such a contingency. A fair and reasonable construction of the contract would seem to be that the parties intended a change effected by the voluntary action of the parties alone, and not one made in obedience to paramount authority. It would be unreasonable to say that either party intended to run the hazard and danger of disobedience to a statute of the state, and there is nothing, we think, in the contract which required it to do so. Every exercise of legislative power is presumed to be constitutional, and it cannot,...