City of Toledo v. Toledo Rys. & Light Co.

• Decision Date: 04 June 1919
• Docket Number: 3262.
• Parties: CITY OF TOLEDO v. TOLEDO RYS. & LIGHT CO. et al.
• Court: U.S. Court of Appeals — Sixth Circuit

259 F. 450

CITY OF TOLEDO v. TOLEDO RYS. & LIGHT CO. et al.

No. 3262.

United States Court of Appeals, Sixth Circuit.

June 4, 1919

[Copyrighted Material Omitted] [Copyrighted Material Omitted]

Ralph Emery, Director of Law, and Cornell Schreiber, both of Toledo, Ohio, for appellant.

George D. Welles, of Toledo, Ohio, for appellees.

Before WARRINGTON, KNAPPEN, and DENISON, Circuit Judges.

DENISON Circuit Judge (after stating the facts as above).

1. Upon this record, and in this court, the city does not undertake to dispute the claim of the company that any rates of fare less than the proposed new schedule, would have been confiscatory, and, if enforced against the company, would have been a taking of its property without justification and would violate its constitutional rights. One of the assignments of error challenges this claim, but it is not argued. Moreover, the city took no proof on this issue and contented itself in the court below with criticisms upon the sufficiency of the company's proofs-- criticisms which we think not sound (and see note 6, infra). By the line of decisions of the Supreme Court, culminating in the Denver Water Co. Case, 246 U.S. 178, 38 Sup.Ct. 278, 62 L.Ed. 649, and the Detroit Railway Co. Case, 248 U.S. 429, 39 Sup.Ct. 151, 63 L.Ed. 341, it is now clearly settled that, when the franchise rights of a public service corporation to use the streets of a city expire, the city has the absolute right to order the discontinuance of the service and the removal of the property from the streets; that the company has a corresponding right to make such discontinuance and removal; ^[1] but that if neither party exercises this right, and if the company, at the city's request, continues to occupy the streets and to give service, the public regulatory power can be exercised only subject to the condition that it must not bring about confiscation. Every controversy of this kind must now be viewed in the light of these settled principles; and, if the city's insistence that the property shall remain devoted to public use were not sufficiently to be inferred from the general situation, it would be expressly found in the city's 1916 application in this cause. In the general principles involved, this case is not distinguishable from the Denver and Detroit Cases.

2. Of course, an injunction should not be issued except where there is reasonable ground to apprehend that the defendant will act unlawfully unless enjoined. Whether there is such reasonable apprehension presents, in every case, a question of fact. Where the trial court has seen and heard the witnesses, we are always reluctant to set aside its finding of fact; and especially must that be true where the rightfulness of the conclusion depends largely upon that general knowledge possessed by all citizens of the community, including the judge, and which cannot be reproduced in the printed record. What action the city, through its official representatives, was likely to take, could be determined by the trial judge much better than by us, and, upon a review of the proofs and the arguments here, we see no occasion to disturb his conclusion. We reach this result with the more confidence because the case is one of those where, if the defendant did not intend any unlawful act an injunction would do it no harm, save as a matter of costs and save as to its abstract right to immunity from unnecessary writs. Neither of these exceptions is vital-- although each is important, and the second may be sometimes controlling.

We cannot yield to the suggestion that if the mayor had any intent to interfere with, or obstruct the adoption of, the new schedule, he was going to do so as an individual, and not as mayor. The charter of Toledo is such that the mayor dominates the entire executive machinery. He directs the conduct of the police force as fully as he cares to do so, and whatever apprehension rightly existed had reference to the active or passive conduct of the police force or to some actual taking over or control of the entire system by, or at the instance of, the city or the mayor, as mayor.

3. The court below did nothing which interferes in the slightest with the legislative power of the city. ^[2] It has the right at any moment to require the company to vacate the streets, remove its rails, and to prescribe reasonable regulations and conditions for such removal. It has the right to give this direction either simply or compounded with an alternative. It may say: 'Here are our terms; accept and comply with them or get off. ' It cannot say: 'Because you remain and furnish service by our wish and to meet our needs, you are subject to any arbitrary conditions which we may impose. ' The order contains nothing inconsistent with this right of the city. The city does not claim that it wishes the streets vacated, nor that any action by it was intended to present to the company the alternative of accepting or getting off. In the Denver and Detroit Cases, the substantial difference between the majority and the minority of the court seems to have been as to whether the city had in fact offered such a choice to the company; here, there can be no difference of opinion on that point. ^[3] Nor does the order impair in the least the city's right to pass an ordinance fixing rates. Repeated statements by the court, if not the express proviso to this effect in the order, should make this clear; indeed, nothing is pointed out to support the stated apprehension that the city council might be in contempt if it attempted to fix rates, save the fact that the proviso permits only 'appropriate' action by the council. This word does not nullify that proviso. The council never had any right to pass a confiscatory ordinance, and we see in the word 'appropriate' no implication of any limitation except that which exists by law. It is clear to us that, without embarrassment from this order, the city council may proceed at any time, and from time to time, to fix what it regards as reasonable rates of fare, and that these must be observed by the company unless it shall be decided by competent judicial authority, provisionally or finally and according to established practice, that they will operate with confiscatory effect. ^[4]

4. The record suggests two bases for the jurisdiction of the court below. They are: First, that the proceedings are ancillary to, and dependent upon, the original Doherty judgment creditors' bill, and therefore supported by the diverse citizenship which there appeared; and, second, that the pleading filed by the company, and which was the immediate basis of the present proceeding, independently gives jurisdiction because it presents a question arising under the Constitution of the United States.

The judgment creditors' bill filed against the company, and, by amendment, against the city and the company, clearly presented a sufficient case of diverse citizenship. All the plaintiffs were citizens of New York and both defendants were citizens of Ohio. The only impeaching suggestion is that the bill was collusively filed. It appeared that Doherty & Co. owned the controlling interest in, and actually dominated, a corporation known as the Cities' Service Company, and that the Cities' Service Company owned and controlled the defendant company; but the utmost that can be inferred from this relationship is that the defendant company would do whatever Doherty & Co. desired, and would do nothing else; and, to state this result in the strongest terms and apply it to this situation, is to say that the bill was filed in the court below with the consent of the defendant company, or even to say that Doherty & Co. and the defendant company agreed that it should be so filed, as the best move for the interests of both. If this constituted that collusion which is fatal to jurisdiction on the ground of citizenship, the court should not have entertained this bill nor any ancillary proceeding solely dependent thereon; but while it does indicate 'collusion,' in the vague sense in which that word is sometimes used, we think the law is clear that, unless there is something more, a District Court of the United States should entertain a case so presented.

It is settled for this court (and we do not mean to intimate any doubt elsewhere), by our decision in City of Holland v. Holland Gas Co., Feb. 13, 1919, 257 F. 679, . . . C.C.A. . . ., that there is, in such a case, no such merger of identity between the controlling stockholder and the controlled corporation as prevents the former from pursuing, in good faith as a stranger could, any ordinary legal remedy against the latter; and so the question of collusion here becomes-- save as to degree of proof and as to mere color-- the same as if between strangers carrying out their common understanding. It is necessarily to be deduced from, if not expressly ruled in, Blair v. Chicago, 201 U.S. 400, 448, 26 Sup.Ct. 427, 50 L.Ed. 801; Chicago v. Mills, 204 U.S. 321, 330, 27 Sup.Ct. 286, 51 L.Ed. 504; Re Metropolitan Receivership, 208 U.S. 90, 110, 28 Sup.Ct. 219, 52 L.Ed. 403, and see opinion of Judge Lacombe (Pennsylvania Steel Co. et al. v. New York City Ry. Co. (C.C.) 157 F. 440, 444); and Wheeler v. Denver, 229 U.S. 342, 350, 33 Sup.Ct. 842, 57 L.Ed. 1219-- that a nonresident plaintiff has an absolute right to pursue, in a federal court, all his remedies against a resident defendant, and it makes no difference what his motive may be in electing the federal remedy. He may do so expressly because he wishes to keep the litigation out of the state courts; that is his constitutional right. See, also, Cowles v. Mercer Co., 74 U.S. (7 Wall.) 118, 122, 19 L.Ed. 86. So, it is wholly immaterial whether the defendant, in acquiescing in the plans for a federal forum, is...