City of Helena v. Helena Light & Ry. Co.

• Decision Date: 05 April 1922
• Docket Number: 5033.
• Citation: 207 P. 337,63 Mont. 108
• Parties: CITY OF HELENA v. HELENA LIGHT & RY. CO.
• Court: Montana Supreme Court

207 P. 337

63 Mont. 108

CITY OF HELENA v. HELENA LIGHT & RY. CO.

No. 5033.

Supreme Court of Montana

April 5, 1922

Rehearing Denied June 5, 1922.

Appeal from District Court, Lewis and Clark County; A. J. Horsky Judge.

Suit by the City of Helena against the Helena Light & Railway Company. From a judgment for defendant, plaintiff appeals. Reversed and remanded.

E. C Day and H. G. McIntire, both of Helena, for appellant.

Gunn Rasch & Hall, of Helena, for respondent.

HOLLOWAY J.

On April 4, 1901, the city council of Helena enacted Ordinance 491, by the terms of which there was granted to George M Brill and his associates, successors and assigns, the right to acquire, construct, operate, and maintain a street railway system over and upon the streets and avenues of the city then occupied by the tracks of the Helena Power & Light Company, which streets and avenues were particularly mentioned, and in addition thereto the right to use "such other streets and avenues as may hereafter be deemed needful by said grantee for the conduct of his said street railway business, upon written application therefor, by and with the consent of a majority of the members of the city council." The franchise was granted for the period of 25 years, fixed a schedule of fares, a minimum number of trips to be run daily and the royalty to be paid by the grantee to the city. It provided, also, for acceptance in writing and for forfeiture for nonuser. Other provisions will receive consideration later.

The defendant Helena Light & Railway Company succeeded to all the rights granted and became subject to all the liabilities imposed by the ordinance, and in 1906 applied in writing to the city council for permission to change one of its lines by abandoning the use of Clark street and small portions of other streets and by constructing and operating the line upon Lawrence street, a portion of Harrison avenue, and a portion of Knight street thereby again completing the unit which is designated the Kenwood Line. To this application the council responded by enacting ordinance 619, which expressed the council's consent to the abandonment of the designated parts of the old line and to the construction and operation of the new line, fixed the time for the removal of the old track and the construction of the new parts, and provided for an indemnity bond and for an acceptance of the terms of the ordinance. Other provisions will be referred to later.

Acceptance of the terms of the ordinance was filed with the city, the designated changes in the line were completed, and the line as thus changed has since been operated. Early in 1921 the railway company indicated its intention to abandon that portion of the Kenwood Line from the intersection of Park avenue and Lawrence street to Kenwood, and to remove its tracks and appliances from the streets and avenues occupied by them. To prevent such action, this suit was instituted, and a temporary injunction secured. Upon final hearing a permanent injunction was denied, and a judgment entered dismissing the complaint. From that judgment this appeal is prosecuted.

It is the contention of the railway company that its right to abandon the portion of the Kenwood Line in question was expressly reserved to it in that portion of Ordinance 491 which reads as follows:

"But it is further understood and agreed that nothing in this ordinance contained shall be taken or construed as requiring the grantee to continue the operation of said railway lines or any part or portion thereof at a loss."

The language of this reservation is not well chosen and the meaning is somewhat obscure. In the granting portion of the ordinance, each of the lines constituting the defendant's railway system is described minutely; the Kenwood Line as commencing at the car barn, Cutler and Main streets, then traversing certain designated streets and avenues to the city limits. Does the reservation above authorize the railway company to abandon a part of one unit, or is it to be understood as granting permission to abandon the entire system or any entire line comprised in the system? That the latter is the correct interpretation of the provision we entertain no doubt.

It is a rule of universal application that, in all grants by the government to individuals or corporations of rights, privileges, and franchises, the words are to be taken most strongly against the grantee, and one who claims a franchise or privilege in derogation of the common rights of the public must be able to establish his claim by a grant clearly and definitely expressed and he cannot enlarge it by doubtful or equivocal provisions or probable inferences. 12 R. C. L. 194. If the grant is susceptible of two meanings, one restricting and the other enlarging the powers under the franchise, that construction will be adopted which works the least harm to the public. Blair v. Chicago, 201 U.S. 400, 26 S.Ct. 427, 50 L.Ed. 801. In Holyoke Co. v. Lyman, 15 Wall. 500, 21 L.Ed. 133, the Supreme Court of the United States expresses the rule as follows:

"Whenever privileges are granted to a corporation, and the grant comes under revision in the courts, such privileges are to be strictly construed against the corporation and in favor of the public, and * * * nothing passes but what is granted in clear and explicit terms. Whatever is not unequivocally granted in such acts is taken to have been withheld."

Many of the decided cases affirming the rule as here stated will be found cited in the notes in 26 C.J. 1031, 1032. A cogent reason for the rule is stated in Blair v. Chicago, above, as follows:

"It is matter of common knowledge that grants of this character are usually prepared by those interested in them, and submitted to the Legislature with a view to obtain from such bodies the most liberal grant of privileges which they are willing to give. This is one among many reasons why they are to be strictly construed."

That the railway company itself understood the reservation in the sense here indicated is evidenced by the fact that upon the hearing in the court below the testimony introduced by it in support of the defense that the line could be operated only at a loss related to the line in its entirety, and not to the particular portion sought to be abandoned, and common sense would seem to indicate clearly that under practically any conceivable circumstances, it would be impossible for the railway company to show that operation of any particular section of the line would necessarily result in loss. In our opinion, it is a fair construction of the reservation that it was intended only to authorize the discontinuance of any unit, the operation of which entails a loss, and that it was never intended to permit the abandonment of a part of one entire line. But, if the language employed in the reservation is susceptible of two constructions, then it is incumbent upon us to adopt the interpretation most favorable to the public. Under this construction it becomes immaterial whether by the enactment of Ordinance 619 it was intended to grant a new franchise, or only a permit to exercise the franchise granted by the language quoted first above from Ordinance 491. In other words, it is immaterial whether we have for consideration two contracts, or one contract modified by the acceptance of the later ordinance.

It is now settled beyond controversy that a public utility cannot be compelled to operate its entire business, or a branch of its business, at a loss, in the absence of a statute or contract requiring it to do so. Brooks Scanlan Co. v Railroad Commission, 251 U.S. 396, 40 S.Ct. 183, 64 L.Ed. 323; P. U. R. 1920C, 579; Bullock v. Florida, etc., 254 U.S. 513, 41 S.Ct. 193, 65 L.Ed. 380. It is equally well settled that a grant of a franchise and its acceptance constitute a contract (State ex rel. Billings v. Billings Gas Co., 55 Mont. 102, 173 P. 799), and it is the contention of the city that it has a contract with the railway company, evidenced by the franchise under which the Kenwood Line was constructed and has since been operated, which imposes upon the grantee the obligation to operate the line for the entire term of the franchise, irrespective of the question of loss. In a qualified sense this contention may be granted in the first instance; but it does not follow that the city is entitled to a permanent injunction. Questions concerning the rights which a city may acquire in its proprietary capacity are not here involved. The grant of a franchise is distinctly an act of government--the parting of a prerogative...