City and County of Denver v. Stenger

• Decision Date: 29 December 1921
• Docket Number: 5849.
• Citation: 277 F. 865
• Parties: CITY AND COUNTY OF DENVER v. STENGER.
• Court: U.S. Court of Appeals — Eighth Circuit

277 F. 865

CITY AND COUNTY OF DENVER v. STENGER.

No. 5849.

United States Court of Appeals, Eighth Circuit.

December 29, 1921

Rehearing Denied March 16, 1922.

J. A Marsh, of Denver, Colo. (Norton Montgomery, Ernest Morris and Harvey Riddell, all of Denver, Colo., on the brief), for appellant.

Gerald Hughes, of Denver, Colo. (Clayton C. Dorsey, of Denver Colo., on the brief), for appellee.

Before CARLAND, Circuit Judge, and YOUMANS and JOHNSON, District judges.

CARLAND Circuit Judge.

This is an appeal from an order granting a temporary injunction and denying appellant's motion to dismiss the petition of appellee. The injunction was granted on said petition, the intervening petition and answer of appellant, and affidavits and exhibits submitted by both sides. The order, so far as material, was in the following words:

(1) 'That the city and county of Denver, its officers agents, attorneys, and representatives, and all those acting for or on its behalf or in pursuance of its authority and direction, and each and every thereof, be enjoined and restrained from enforcing or attempting to enforce a maximum fare of six (6) cents for adults and three (3) cents for children, or any lesser fares or amounts under any existing ordinances or franchises, or the fare provisions therein contained, set forth in the petition of E. Stenger, receiver, or the petition in intervention and answer of city and county of Denver.'

(2) 'That the city and county of Denver, its officers, agents, attorneys, and representatives, and all those acting for or on its behalf or in pursuance of its authority and direction, and each and every thereof, except those acting pursuant to the police power in regulating fares and charges through the city council of said city, be enjoined and restrained from interfering with or attempting to interfere with the collection by E. Stenger, receiver, of such fares for the carriage of persons on the street railway system of the Denver Tramway Company as may be fixed and established by him within the limitations and conditions placed upon him by this decree: Provided, however, and this injunction is conditioned thereon, that E. Stenger, receiver, shall not charge for the carriage of passengers on the street railway system of the Denver Tramway Company to exceed eight (8) cents for adults and four (4) cents for children between the ages of six (6) and twelve (12) years, with free passage to children under six (6) years, and with free transfers to passengers under the conditions, rules and regulations now prevailing, and for two (2) tickets or tokens for adults fifteen (15) cents, or at the rate of seven and one-half (7 1/2) cents for an adult fare if such tickets or tokens are purchased, and likewise four (4) tickets or tokens for fares for children between the ages of six (6) and twelve (12) years at fifteen (15) cents, or at the rate of three and three-fourths (3 3/4) cents for such tickets or tokens for children when such tickets or tokens are so purchased; and further conditioned that, before any such increases in fares shall be put into effect, said E. Stenger, receiver, shall give public notice thereof by publication in two or more daily newspapers published in the city and county of Denver, and by posting a notice in each of the street cars, showing definitely the amount of fares to be charged and the date when said increase shall become effective, not less than forty-eight (48) hours prior to the time when such collection of fares shall become effective. * * * '

(5) 'This order and the enforcement thereof shall in no manner or degree whatsoever be a limitation or restriction on the legislative power of the city and county of Denver to regulate the fares to be charged for the carriage of passengers on the street railway system of the city and county of Denver, which said power is a continuing one in said city and county of Denver, but is based upon the confiscatory character of the present fares hereinabove enjoined and the failure and refusal of the city and county of Denver to further and legally and constitutionally exercise the power of regulating fares, and is without prejudice to the right of E. Stenger, receiver, to question or litigate the legality and constitutionality of any such subsequent exercise of such regulating power of said city.'

As appellant answered the petition, no separate discussion is necessary in regard to the motion to dismiss, as the questions raised on the appeal are the same. Appellee was appointed in a creditors' suit pending in the court below wherein the Westinghouse Electric & Manufacturing Company was plaintiff and the Denver Tramway Company was defendant. The petition of appellee set forth facts which, if proven, showed the passenger fares which the appellant was seeking to enforce did not permit a reasonable and fair return for the use by the public of the property of the Tramway Company. The evidence of the petitioner in regard to confiscation was not seriously disputed, and no point is made here that the evidence does not show the rates challenged to be confiscatory in fact, although counsel does not formally admit that they are. If this appeal simply presented a question of whether the evidence showed the fares challenged to be confiscatory, the case would end here by the affirmance of the order without further discussion.

Counsel for appellant, however, raise a very important legal question. They claim that the acceptance of the ordinances and franchises hereinafter referred to by the Tramway Company and its predecessors constituted a valid and binding contract or contracts in relation to the fares to be charged by the Tramway Company, and therefore the court below had no power or jurisdiction to enjoin them as confiscatory. The strongest form in which counsel state their position in regard to these alleged contracts is substantially as follows: The acceptance of the ordinances and franchises under which the Tramway Company and its predecessors operate a street railway in the city and county of Denver constituted contracts binding upon both parties, and that though such contracts as to rates to be charged by the Tramway Company are not beyond legislative control, yet there was power to make them in the first instance and that they are valid and binding as contracts until the city and county of Denver thinks proper to change the rate.

The appellee contends that these ordinances and franchises never were at any time valid contracts binding both parties thereto as to the rates to be charged by the Tramway Company either in substance or form, and if they shall be held to be contracts, there existed no power in the city of Denver or in the city and county of Denver to make such contracts. The ordinances and franchises having to do with the fares to be charged by the Tramway Company and its predecessors are as follows:

(1) By Ordinance No. 3, 1885, the city of Denver granted to the Denver Electric & Cable Railway Company a right of way in, along, and across the streets of said city for a single or double track railway. Section 6 of this ordinance provided:

'The said company shall not be entitled to receive more than five cents for a single passage on any line of the said company's railway within this city.'

(2) By Ordinance No. 36, 1888, the city of Denver granted to the Denver City Cable Railway Company a right of way upon and across the streets, avenues, viaducts, and bridges of said city to build, equip, maintain, and operate a system of cable street railway lines. Section 5 of this ordinance provided:

'That the said the Denver City Cable Company, its successors and assigns, shall not be entitled to receive more than five cents for a single passage upon any one of the lines of said company within the city of Denver.'

(3) On May 15, 1906, a franchise was granted to the Denver City Tramway Company by the qualified taxpaying electors of the city and county of Denver. This franchise granted a right of way to locate, build, construct, operate, and maintain a single or double track railway upon, along, and across the streets, avenues, viaducts, and bridges of the city and county of Denver which were specifically named in the franchise. Section 6 of this franchise reads as follows: 'Sec. 6. The Denver City Tramway Company, grantee, shall be entitled to receive five (5) cents, and no more, for a single passage on any line of the company's railway within the city and county of Denver: Provided, that children under six (6) years of age, when accompanied by a paying passenger, shall be carried free of charge; and children over six (6) years of age, and under twelve (12) years of age, at half fare, and the conductor in charge of each car shall at all times be provided with and have on sale half fare tickets to be sold in lots of not less than two (2) nor more than ten (10) at one time.'

(4) Ordinance No. 50, 1918, passed by the council of the city and county of Denver had for its preamble the following:

'A bill for an ordinance regulating and fixing the charges and fares to be collected by the Denver Tramway Company in the city and county of Denver, for services furnished by it in said city and county.'

Section 1 of this ordinance was as follows:

'Sec 1. That from and after the passage and approval of this ordinance the rates of charges permitted to be made and collected by the Denver Tramway Company for street car fare for transporting persons within the limits of the city and county of Denver during the period of the war, and until the date of the proclamation by the President of the United States of the exchange of ratification of treaties of peace, and until the President of the United States shall surrender to private management the railroads taken...