City of Mobile v. Farrell

• Decision Date: 20 December 1934
• Docket Number: 1 Div. 842.
• Citation: 158 So. 539,229 Ala. 582
• Parties: CITY OF MOBILE v. FARRELL et al.
• Court: Alabama Supreme Court

158 So. 539

229 Ala. 582

CITY OF MOBILE v. FARRELL et al.

1 Div. 842.

Supreme Court of Alabama

December 20, 1934

Rehearing Denied Jan. 24, 1935.

Appeal from Circuit Court, Mobile County; Claude A. Grayson, J Blocker Thornton, and Norvell R. Leigh, Jr., Judges.

Bill for injunction by the City of Mobile against Claude M Farrell and others. From a decree denying temporary injunction, complainant appeals.

Modified and affirmed.

Harry Seale and Stevens, McCorvey, McLeod, Goode & Turner, all of Mobile, for appellant.

D. R Coley, Jr., and W. C. Taylor, both of Mobile, for appellees.

FOSTER Justice.

We have heretofore had this case on appeal, in which the equity of the bill was upheld. 156 So. 635.

The respondents filed answers. Complainant moved for a temporary injunction. That motion was heard on notice and proof as authorized by sections 8304, 8305, Code. The court denied the motion, and complainant appealed as authorized by section 8307, Code.

There is now no serious effort by appellees to impeach the holding on former appeal, but they contend that their answer and proofs show that though the taxicab ordinance referred to may not on its face show that it is violative of their constitutional rights, it is so for the reasons specially assigned and not disclosed in the bill. The chief attack made now, as then, is that the requirement that all taxicab operators shall furnish bond by a surety company, or an indemnity insurance policy by a company qualified in Alabama, is an arbitrary and unconstitutional requirement. The insistence is that the facts alleged in the pleadings and proofs are sufficient to sustain that contention.

Briefly stated, the contention is that there are only two principal carriers of passengers on the streets of Mobile, except those designed by this ordinance to be excluded. One is the street railway company, under city franchise of its own, and the Yellow Cab Company, which has complied with the conditions of the ordinance. It also appears that two individuals have been able to comply, but that they do not materially compete with the street railway company and Yellow Cab Company; and appellees claim that their contracts of indemnity were executed by the same company which insured the Yellow Cab Company, which was instrumental in having the security arranged for them. It is contended that surety and indemnity insurance companies throughout the country have informed appellees that they have withdrawn from such coverage, though they insure the Yellow Cab Company, and the two individuals in Mobile, but no others.

Appellees make a showing that they have made every effort to induce such companies to contract for them as the ordinance requires; that no peculiar objection to them personally as risks is assigned, but simply that they decline such risks; that they are able and willing to pay any reasonable premiums on such contract, and have offered to do so, but meet with the same response, that the companies decline to make such coverage; and that it was made for the Yellow Cab Company and the two individuals for personal reasons by the local agent of the company so contracting. But that the same company informed appellees that it would not make any other such coverage.

We have not seen where just such a situation came before a court for consideration. To apply the law to it, we must understand the nature of the powers of government in respect to that situation. The right to use the public streets for hire does not exist in public or private enterprises. The privilege is a grant by sovereign authority, and is what is generally termed a franchise. 26 Corpus Juris 1012; Stephenson v. Binford, 287 U.S. 251, 53 S.Ct. 181, 77 L.Ed. 288, 87 A. L. R. 721; Hodge Drive-It-Yourself Co. v. Cincinnati, 284 U.S. 335, 52 S.Ct. 144, 76 L.Ed. 323; Packard v. Banton, 264 U.S. 140, 44 S.Ct. 257, 68 L.Ed. 596; Cloe v. State ex rel. Hale, 209 Ala. 544, 96 So. 704.

In the United States, the state Legislature has succeeded to sovereign authority in this respect, subject to constitutional limitations. 26 Corpus Juris 1024; 29 Corpus Juris 646.

The effect of a legislative franchise is limited by constitutional restrictions, such as contained in sections 22, 220, and 228, Constitution of 1901. Section 220 was not intended to divest the state of its sovereign power and invest it in cities. But it means that the right of the Legislature to grant a franchise for the use of streets in a city or town for a public utility or private enterprise is subject to the consent of such city or town. Ex parte Ashworth, 204 Ala. 391, 86 So. 84.

But for the time being, the Legislature has delegated to the cities this right as shown in sections 2016 and 2163, Code. Montgomery v. Orpheum Taxi Co., 203 Ala. 103, 82 So. 117. Cities also have a large degree of police power in respect to the use of its streets, even though the user may have a franchise. Giglio v. Barrett, 207 Ala. 278, 92 So. 668.

In construing the effect of a grant it must not be forgotten that it is in the nature of a privilege thus extended as well as the regulation of a business in which the grantee has no right otherwise to engage. Hodge Drive-It-Yourself Co. v. Cincinnati, supra.

For that reason, many cases cited by appellees are not here directly applicable. They relate to such business enterprises as are otherwise legitimately conducted, and need no permit, except as required by the act or ordinance under consideration. The right to prescribe the conditions for the transaction of such business is the police power. Yick Wo v. Hopkins, 118 U.S. 356, 6 S.Ct. 1064, 30 L.Ed. 227; Reagan v. Farmers' Loan & Trust Co., 154 U.S. 362, 14 S.Ct. 1047, 38 L.Ed. 1014; Greene v. Louisville & Interurban R. R. Co., 244 U.S. 507, 37 S.Ct. 673, 61 L.Ed. 1280, Ann. Cas. 1917E, 88.

The city of Mobile, without the enactment of an ordinance, could make a specific grant of franchise rights to one taxicab company, and withhold it from another, for no reason other than its own discretion, and thereby create a monopoly by refusing to grant the right to another. Birmingham Interurban Taxicab Service Corporation v. McLendon, 210 Ala. 525, 98 So. 578; McLendon v. Boyles Transit Co., 210 Ala. 529, 98 So. 581. This could not be done in respect to business which needs no franchise grant.

It is wholly within the province of the city authorities under section 220, Constitution, to grant its consent or withhold it to any person or group. Birmingham Interurban Taxicab Service Corporation v. McLendon, supra. Its grant, not made a contract, cannot be irrevocable, nor can the city bind itself to an exclusive right-section 22, Constitution-nor may it extend beyond the restrictions of section 228. But it is within the irrevisable discretion of the city commission to determine whether, and to what extent, the service is needed, and to fix and determine the streets and to name the grantee of the right. Birmingham Interurban Taxicab Service Corporation v. McLendon, supra; Hadfield v. Lundin, 98 Wash. 657, 168 P. 516, L. R. A. 1918B, 909, Ann. Cas. 1918C, 942.

But it is insisted that the city commission, instead of doing that passed an ordinance of general application, which fixes the limitations on the grant so as to require the applicants to perform conditions which are in contravention of constitutional right, and that the ordinance will not stand the test of constitutional authority. Frost v. R. R. Commission, 271 U.S. 583, 46 S.Ct. 605, 70 L.Ed. 1101, 47 A. L. R. 457. And, further, that the ordinance making a classification for those who are to be licensed deprives them from participating in its benefits when they should be included in a reasonable and just classification, and that they do not receive the equal protection of the laws. Smith v. Cahoon, 283 U.S. 553, 51 S.Ct. 582, 75 L.Ed. 1264; Hodge Drive-It-Yourself Co. v. Cincinnati, 284 U.S. 335, 52...