Capital Transit Co. v. Bosley

• Decision Date: 11 November 1948
• Docket Number: 67.
• Parties: CAPITAL TRANSIT CO. v. BOSLEY et al.
• Court: Maryland Court of Appeals

62 A.2d 267

191 Md. 502

CAPITAL TRANSIT CO. v. BOSLEY et al.

No. 67.

Court of Appeals of Maryland

November 11, 1948

Appeal from Circuit Court of Baltimore City; W. Conwell Smith, Chief Judge.

Suit in equity by the Capital Transit Company against Charles B Bosley and others, constituting the Public Service Commission of Maryland, to set aside an order of the commission fixing fares to be charged by plaintiff for transportation of school children. From an order dismissing the bill on demurrer complainant appeals.

Clarence W. Miles, of Baltimore (Harrison L. Winter and Miles, Walsh, O'Brien

p>Page & Morris, all of Baltimore, and F. G. Awalt Daryal A. Myse, and Hewes & Awalt, all of Washington, D. C., on the brief), for appellant.

S. Ralph Warnken, of Baltimore and Philip H. Dorsey, Jr., People's Counsel, of Leonardtown, for appellees.

Before MARBURY, C.J., and DELAPLAINE, COLLINS, HENDERSON, and MARKELL, JJ.

MARKELL Judge.

This is an appeal from an order dismissing, on demurrer, a bill to set aside an order of the Public Service Commission fixing fares to be charged by plaintiff for school children in Prince George's or Montgomery County.

Plaintiff, a District of Columbia corporation, operates a public passenger transportation system in Washington, with some nineteen bus lines and three electric railway lines extending into Prince George's or Montgomery County over some thirty-three routes there. Plaintiff filed with the Commission a schedule of new fares and fare zones on many of its Maryland lines. Thereupon the Commission instituted an investigation of plaintiff's 'rates and fares covering intrastate passenger transportation service in Maryland' and, pending hearing and decision, suspended operation of the new fares until April 8, 1948 and later until May 8, 1948. Art. 23, sec. 371. After extended hearings the Commission on April 22, 1948 filed a full opinion and on April 22d and 29th entered the orders now under review.

Plaintiff in 1934 succeeded to the operation of a public passenger transportation system that had been started many years before as separate units, later brought into one system. The system has been expended and enlarged from time to time as communities have grown and new developments have sprung up. In recent years, the expansion has been largely by motor bus, with little, if any, extension of rail lines, the tendency recently being to substitute bus lines for rail lines. Expansion of the system and extension of its lines to keep pace with the rapid development of the Maryland suburban sections resulted in lack of uniformity of fares in the various areas. Plaintiff's fare zones ranged from less than a mile to four miles, its cash fares from five cents to ten cents per zone, and on some of its lines it had a wide variety of ticket and weekly pass fares not uniform in application or amount.

Plaintiff's new fares and zones were designed (1) to eliminate the ticket and pass fares and establish a uniform cash fare of five cents per zone, covering all Maryland operations, with zones approximating a mile and a half in length and (2) thereby to increase its revenues so as to reduce its annual losses in Maryland to about $178,000 a year if there is no less in passengers. At the hearing plaintiff's evidence showed a net loss, for the year ended September 30, 1947, of $117,963 from Maryland rail operations, $470,191 from bus operations, a total of $588,154 from all Maryland operations. To stop these losses, by bringing up the revenues at least to equal expenses, the Commission says, 'the only logical way to obtain the additional revenue would be to increase fares'.

The Commission also says: 'The revenue figures used by the Company were not seriously questioned. * * * The method used by the Company in allocating * * * expenses was the subject of some controversy, but the record does not show that some other method would be preferable from the standpoint of the users of the service. * * * In view of the very large deficit now being experienced in the Maryland operation, it is clear to the Commission that by no possible means of allocation of the expenses would it be possible to change the result to such an extent that the deficit would be eliminated. Even if we assume that, by the use of other methods in apportioning costs, it might be possible to show a smaller annual loss for the Maryland lines, by no conceivable means would it be possible wholly to eliminate the loss, let alone provide a profit sufficient to yield a reasonable return upon the value of Company's property used in rendering service in Maryland. The commission, therefore, is convinced that it is only proper that the Company should be permitted to revise its fares and fare zones in an effect to recover some of its loss.'

The new fares were estimated to result in an annual increase in revenues of over $400,000 annually, assuming a 100% realization of the effect of the new fares. The Commission believes that an estimate of 100% realization is 'over optimistic,' but 'does not believe that a fare change of the size involved here would seriously affect riding habits.'

When plaintiff filed its schedule of new fares and zones, it also applied to the Commission for authority to abandon its Beltsville car line, to stop an annual loss of about $50,000 under existing fares or about $33,000 under the new fares. On April 22, 1948, the date of the opinion and order in the instant case, the Commission dismissed the Beltsville application. The Beltsville order is not now before us for review. In the instant case the Commission says: 'It becomes apparent from the showing that has been made on this record that there would be no point in determining at this time the value of the Company's property used and useful in rendering service in Maryland or of determining what amount of revenue is necessary in order to insure for the Company a reasonable rate for return. The revenues are deficient by such an amount as to make the questions of fair value and rate of return, for the purpose of this proceeding, of no more than academic interest. The Commission, therefore, will not undertake to determine property values or rate of return. Earlier in this opinion reference was made to an application filed by the Company for authority to abandon its Route 84 car line operating between Beltsville and Branchville. The Company alleges that this operation is conducted at a loss, but even with the saving which it estimates could be effected by abandoning the line it does not appear that revenues would be sufficient to provide any return to the Company.' The Commission 'takes note' of 'an ominous warning' in a statement by plaintiff, that the new fares proposed will provide a sound basis for experience upon which it can base additional Maryland fare changes to provide a reasonable return upon the value of its property, and hopes 'that it will not become necessary to seek further rate increases.'

By the Commission's order of April 22, 1948, plaintiff was permitted to make its schedule of new fares and zones effective, 'provided that [it] shall, at the same time, establish and make effective a schedule' for the sale of five tokens or tickets for fifteen cents, 'for use by school children, including those attending high schools,' each good for one ride in a Maryland zone. Plaintiff having declined to accept this order, the Commission on April 29, 1948, by an order reciting that plaintiff 'now provides for the sale of tickets for the use of school children on certain of its lines' in Maryland 'at less than the maximum adult fare,' and that for plaintiff to charge 'the same fare for school children as it charges for adults will result in unjust and unreasonable fares for school children' and that a three-cent ticket fare for school children will be 'just and reasonable,' ordered that plaintiff establish a schedule for three-cent ticket fares for school children and that until it shall do so it shall charge its existing fares, 'it being the opinion and finding of the Commission that such rates and fares constitute just and reasonable charges' until such time as the three-cent fares for school children shall be established.

Besides direct quotations, the statements of fact we have made are made in the Commission's opinion. The Commission also says: 'A matter that was the subject of considerable discussion at the hearing was the possibility of including in the schedule of the Company a provision which would make available a reduced fare for school children. The ticket fares now in use are available and apparently are used by school children to a great extent. The exact extent of their use is not available and there is nothing in the record to indicate how many school children regularly ride on the Company's vehicles. It is the general conclusion however, that it is likely that a great many of the children use the ticket fare which equates to 4.2 cents per zone and on that basis under the revised fares, the cost of their transportation would increase from 4.2¢ to 5¢ per zone. * * * It was testified at the hearing that while no actual data are available to support the conclusion, it is the opinion of the Company's representatives that most school children ride no farther than the limit of the zone in which they board the vehicle.' The Commission further says: 'On the showing that has been made as to the Company's earnings and expenses it is perhaps difficult to justify a requirement that the Company provide a fare...