Georgia Ry Electric Co v. City of Decatur

• Decision Date: 29 April 1935
• Docket Number: No. 570,570
• Citation: 55 S.Ct. 701,79 L.Ed. 1365,295 U.S. 165
• Parties: GEORGIA RY. & ELECTRIC CO. et al. v. CITY OF DECATUR
• Court: U.S. Supreme Court

295 U.S. 165

55 S.Ct. 701

79 L.Ed. 1365

GEORGIA RY. & ELECTRIC CO. et al.

v CITY OF DECATUR.

No. 570.

Argued April 3, 1935.

Decided April 29, 1935.

Mr. Walter T. Colquitt, of Atlanta, Ga., for appellants.

Mr. James A. Branch, of Atlanta, Ga., for appellee.

Mr. Justice SUTHERLAND delivered the opinion of the Court.

The Georgia Railway & Electric Company, which owned and operated street car lines in the city of Decatur and between that city and other points in the state, leased its property in 1912 to the Georgia Railway & Power Company for the term of 999 years. By the terms of the lease, the latter company bound itself to pay all taxes, rates, charges, licenses, and assessments which might be lawfully imposed and assessed against the property during the continuance of the lease.

By the terms of its charter and a consolidation agreement, the Georgia Power Company in 1927 became possessed of all the rights, franchises, etc., and subject to all the duties, liabilities, debts, and obligations of these two corporations; and thereupon their existence, with certain exceptions, ceased and became merged in the Georgia Power Company as a consolidated corporation.

On May 15, 1925, the city of Decatur, acting under a state statute,¹ ordained that a designated street over which the railway lines extended should be paved as a necessary improvement for travel and drainage; and that the cost of such pavement should be assessed in full against the Railway & Power Company for paving between the tracks and for two feet on each side thereof, the remaining cost to be assessed one-half against the real estate abutting on one side of the street where paved, and the other half against the real estate abutting on the other side. Upon the refusal of each of the three companies to pay the cost assessed for the track paving, the city filed a bill in equity against them seeking to recover the amount of the assessment, alleging the absence of all legal remedy.

In the trial court a demurrer to the bill was overruled and a motion to dismiss was denied. The motion to dismiss was based upon the ground, among others, that neither of the defendant companies had received any benefit from the paving, and that the assessment and ordinance were invalid as contravening the due process and equal protection of law clauses of the Fourteenth Amendment of the Federal Constitution. Thereafter, answers were filed, alleging that the assessment vastly exceeded the entire value of the street railway property and lines located and operated within the city, and offering to surrender them to the city, together with the franchise under which they were constructed and operated, without the necessity of levy or sale; that the only reason why such offer was not accepted was because their entire value was less than the amount of the assessment; that the paving for which the assessment was made did not benefit the lines, property, or franchise, but, on the other hand, was a detriment.

Appellants called a witness in support of the contention that their property was not benefited; but upon objection his testimony was excluded. They offered to prove by him that the pavement in question added nothing in value to the street railway property, but, on the contrary, was a detriment to its operation; that it made it more difficult and expensive to maintain the track with the pavement than without it; that the railway does not use the pavement in any way; and that it adds nothing in the way of additional travel upon the street cars. The trial court sustained an objection to the offer on the ground 'that the question of benefits by virtue of overruling the demurrer to the petition' became irrelevant and immaterial.

At the conclusion of the trial, a decree was rendered against the Georgia Railway & Power Company and the Georgia Power Company for the amount of the paving assessment, with interest, which was affirmed by the state Supreme Court on appeal. 179 Ga. 471, 176 S.E. 494. The ruling of the trial court excluding the evidence offered upon the subject of benefits was sustained on the ground that such evidence was immaterial to the consideration of the question; and the contention of the railway corporations in respect of the violation of the Federal Constitution was rejected as being without foundation.

As we read its decision, the court below held that the state statute which authorized, and the ordinance which directed, an assessment for the cost of improvements require, as the basis for their operation, the existence of benefits; and the case was dealt with in that view. The contention of the appellants, as stated by that court, was that the street railway received no benefit from the paving and assessment, and, therefore, there was an arbitrary abuse of legislative authority. But the court held that from the act of the city in adopting the ordinance a presumption arose that the paving was beneficial to the street railway company and the assessment legal. 'The burden,' it said, 'of overcoming this presumption that the action of the city was not an arbitrary abuse of the legislative authority rests upon the plaintiffs in error.' The fourth headnote, which as we understand is prepared by the court, reads in part:²

'When paving is done and assessment therefor regularly made in the manner provided in the city charter, a presumption arises that the paving and assessment were legal, and casts the burden of proof on one who attacks the assessment on the ground that the same was an arbitrary abuse of the legislative authority, because of no benefit, or that it is confiscatory.'

In the body of the opinion, there is an excerpt from an earlier decision to the effect that the power to determine benefits to be received by the property of a street railway company from local improvements is a legislative one; that this power was vested in the commissioners of the city; and that the question of benefits having been determined by the commissioners, could not be inquired into by the courts unless it is made to appear that there has been an arbitrary abuse of the power.

In this court, the city insists that, under Georgia law, 'the general rule that assessments against abutting own- ers for street improvements are sustainable only to the extent of special benefits to abutting property is not applicable to railway companies having tracks in the street improved.' And it seeks to sustain the assessment as an exercise of the police power and the alleged power of the state to alter or amend corporate charters. If the Georgia statutes had been thus construed by the state Supreme Court, a different question would be presented. The difficulty, however, is that the court, as we have said, construed the statute as contemplating the existence of benefits to the railway as a basis for the assessment, but required the railway companies to overcome a legislative presumption that such benefits existed by proof of an arbitrary abuse of the legislative authority 'because of no benefit.' By that construction we are bound, and in accordance with it must consider and determine the case. The construction becomes part of the statute as much as though it were found in appropriate words in its text. Morley v. Lake Shore Railway Co., 146 U.S. 162, 166, 13 S.Ct. 54, 36 L.Ed. 925; Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 73, 31 S.Ct. 337, 55 L.Ed. 369, Ann. Cas. 1912C, 160; Supreme Lodge, Knights of Pythias v. Meyer, 265 U.S. 30, 32, et seq., 44 S.Ct. 432, 68 L.Ed. 885.

Under the statute and ordinance thus construed, if the burden imposed is without any compensating advantage (as appellants offered to show), the arbitrary abuse of the power exercised is plain, Myles Salt Co. v. Iberia Drainage Dist., 239 U.S. 478, 485, 36 S.Ct. 204, 60 L.Ed. 392; the assessment amounts to confiscation, Bush v. Branson (C.C.A.) 248 F. 377, 380, 381. And this doctrine has been fully recognized in Georgia. Mayor, etc., of Savannah v. Knight, 172 Ga. 371, 375, 157 S.Ct. 309. Moreover, the offer of appellants to surrender all their railway property within the city, including the franchise, strongly tended to show that the...