City of New Orleans v. O'Keefe

• Decision Date: 01 April 1922
• Docket Number: 3735.
• Citation: 280 F. 92
• Parties: CITY OF NEW ORLEANS et al. v. O'KEEFE et al.
• Court: U.S. Court of Appeals — Fifth Circuit

280 F. 92

CITY OF NEW ORLEANS et al. v. O'KEEFE et al.

No. 3735.

United States Court of Appeals, Fifth Circuit.

April 1, 1922

W Catesby Jones and Rene Viosca, Asst. City Attys., and Ivy G Kittredge, City Atty., all of New Orleans, La., for appellants.

H Generes Dufour, of New Orleans, La., for appellees.

Before WALKER, BRYAN, and KING, Circuit Judges.

KING Circuit Judge.

This is an appeal from a decree of the District Court granting an injunction pendente lite restraining the city of New Orleans and its officials named in said decree, from interfering with the receiver of the New Orleans Railway & Light Company in charging an eight-cent fare on said street railway system, until said order should be modified by said District Court, during the continuance of the suit pending in said District Court of the Empire Trust Company, as trustee, against said New Orleans Railway & Light Company, in which said receiver was appointed, upon the ground alleged in said bill for injunction that a lower rate of fare would deprive the complainant and said Railway Company of their property without due process of law.

The defendants did not offer any evidence contesting the allegations of the bill (which were supported by proof), but resisted the grant of the injunction upon the ground that the Railway & Light Company, and its subordinate companies, in securing their franchises had made irrevocable contracts with the city of New Orleans by which said rate was fixed at five cents, which rate could not be changed except by consent of the city, as one of the contracting parties, and that the five-cent rate was a condition to the grant of said franchises.

The court, in a very careful and full opinion rendered by Hon. Henry D. Clayton, the judge presiding, found the facts to be as claimed by the complainant receiver, and found that under the Constitution and laws of Louisiana the city of New Orleans and the Railway Company could not make an irrevocable contract fixing street car fares; that the city of New Orleans was empowered to regulate the rates of local public utilities in its borders, having all the powers of the state delegated to it for that purpose; and that where a rate prescribed, or continued, by the city in the exercise of such power deprived the utility of its property without due process of law, as he found would be then done by any rate for street car service of less than eight cents, the city could be enjoined from enforcing the same. O'Keefe, Receiver, v. City of New Orleans (D.C.) 273 F. 560. This opinion sufficiently sets forth the facts and authorities supporting this conclusion and renders unnecessary any general discussion thereof by this court.

It was insisted in this court on behalf of the city of New Orleans that under the Constitution of Louisiana in force at the time of the grant to the several railway companies of the franchises to occupy the streets of the city, the city of New Orleans had the power to make irrevocable contracts with said railway companies as to a rate of fare to be charged, and that where such contracts were made they remained binding, even if the rate became confiscatory. Columbus Ry., Power & Light Co. v. City of Columbus, 249 U.S. 399, 39 Sup.Ct. 349, 63 L.Ed. 669, 6 A.L.R. 1648.

The powers of the city of New Orleans to regulate its public utilities have but recently been the subject of elaborate investigation by the Supreme Court of Louisiana, the results of which are given in an illuminating opinion in the case of State of Louisiana v. City of New Orleans (not yet (officially) reported) 91 So. 533, handed down on March 20,...