Commissioner of Railroads v. Grand Rapids & I. Ry. Co.

• Decision Date: 08 April 1902
• Citation: 89 N.W. 967,130 Mich. 248
• Parties: COMMISSIONER OF RAILROADS v. GRAND RAPIDS & I. RY. CO.
• Court: Michigan Supreme Court

89 N.W. 967

130 Mich. 248

COMMISSIONER OF RAILROADS v. GRAND RAPIDS & I. RY. CO.

Supreme Court of Michigan

April 8, 1902

Certiorari to circuit court, Kent county; Alfred Wolcott, Judge.

Mandamus on the relation of the commissioner of railroads against the Grand Rapids & Indiana Railway Company. Peremptory writ issued, and respondent brings certiorari. Affirmed.

T. J. O'Brien and James H. Campbell, for appellant.

Horace M. Oren (Roger Irving Wykes, of counsel), for appellee.

MONTGOMERY C.J.

This is certiorari to review proceedings of the circuit court, in which a mandamus was issued, requiring respondent to reduce its fare. It appears that the respondent was organized as a corporation on the 15th of July, 1896, under the railway law then in force, which, in part 9 of section 9 (2 Comp. Laws 1897, � 6234) fixes the rate of fare of railroad companies whose passenger trains earn more than $2,000 per mile at 2 1/2 cents per mile. The respondent comes within this provision. The respondent company was organized however, by purchasers of the property of the Grand Rapids &amp Indiana Railroad Company, on foreclosure of a mortgage given on the 1st day of August, 1884. At the time this mortgage was given the only limitation on the power to fix rates of fare was that it should not exceed three cents per mile. It is the respondent's contention that under 2 Comp. Laws 1897, � 6224, being section 2 of the railway act, it succeeded to all the rights and privileges of the Grand Rapids & Indiana Railroad Company. The answer states that the rate of fare of 2 1/2 cents per mile is unreasonable and inadequate, and, as this statement is admitted by demurrer to the answer, it is the respondent's contention that such a provision would be invalid as against the original railroad company, and that, as the respondent has succeeded to the rights of the railroad company, it is equally invalid as to it. The contention that a statute fixing unreasonable rates would constitute an impairment of the property rights of the old company, is based upon numerous decisions of the federal supreme court and of this court. The subject was discussed in Smith v. Railway Co., 114 Mich. 460, 72 N.W. 328 and the rule was recognized in both opinions in that case that legislation, the effect of which is to deprive a corporation of its property, cannot be sustained under the power to alter, amend, or repeal. See, also, Attorney General v. Looker, 111 Mich. 498, 69 N.W. 929; Detroit v. Plank Road Co., 43 Mich. 140, 5 N.W. 275. And that the fixing of unreasonable rates is an infringement of property rights of an existing corporation, within the meaning of the fourteenth amendment, appears to have been determined by the federal supreme court in Railway Co. v Wellman, 143 U.S. 339, 12 S.Ct. 400, 36 L.Ed. 176; Reagan v. Trust Co., 154 U.S. 362, 14 S.Ct. 1047, 38 L.Ed. 1014; To view preceding link please click here Road Co. v. Sandford, 164 U.S. 578, 17 S.Ct. 198, 41 L.Ed. 560; Chicago, M. & St. P. Ry. Co. v. Minnesota, 134 U.S. 418, 10 S.Ct. 702, 33 L.Ed. 970; and Railway Co. v. Smith, 173 U.S. 684, 19 S.Ct. 565, 43 L.Ed. 858. The question in this case, however, is whether the defendant corporation stands in the same position in this respect as would the original company have occupied had there been no foreclosure. The briefs contain an elaborate discussion of the question as to how far and in what respect a charter or a law authorizing an incorporation is a contract. We do not find it necessary to discuss this question at length, for, in our view, it cannot admit of doubt that corporations formed under an existing law will not be heard to question the rates fixed by the statute. They cannot avail themselves of the provisions of the law which give them the right to do business and disregard those provisions which are onerous. This was the view taken by this court in Jackson & S. Traction Co. v. Commissioner of Railroads (Mich.) 87 N.W. 133, and has the support of authority in other jurisdictions. See Thomp. Corp. � 5257, and cases cited. The case turns upon the question of whether the respondent is in position to insist that it occupies precisely the same ground that the former corporation would but for the foreclosure. 2 Comp. Laws 1897, � 6224, provides that: 'In case of the foreclosure and sale of any railroad or any part of any railroad, under any trust deed or mortgage, * * * it shall be competent and lawful for the parties who became...