In Re Petition For Increase Of v. City Of Charlotte

• Citation: 101 S.E. 619
• Decision Date: 27 December 1919
• Docket Number: (No. 445.)
• Court: United States State Supreme Court of North Carolina
• Parties: In re PETITION FOR INCREASE OF STREET CAR FARES IN CITY OF CHARLOTTE. SOUTHERN PUBLIC UTILITIES CO. v. CITY OF CHARLOTTE.

101 S.E. 619

In re PETITION FOR INCREASE OF

STREET CAR FARES IN CITY OF CHARLOTTE.

SOUTHERN PUBLIC UTILITIES CO.

v.CITY OF CHARLOTTE.

(No. 445.)

Supreme Court of North Carolina.

Dec. 27, 1919.

On Appeal of City of Charlotte.

Under the police power the Legislature has authority, either directly or through appropriate governmental agency, to establish reasonable regulations for public service corporations in matters affecting the public interests, and a municipal corporation cannot, by reason of a franchise contract with a street railway company, deprive the Legislature of its regulatory powers.

Under Revival 1905, c. 20, and amendments thereto, creating a Corporation Commission and giving it general supervision over railways, street railways, etc., and power to fix rates, charges, and tariffs that may be reasonable and just, the Corporation Commission may grant a street railway company an increase in fares, notwithstanding franchise contract between the street railway company and a municipality fixing the lower maximum.

The courts lean against a construction which will make the contract provision of a franchise fixing maximum rates for street railways of indefinite duration.

On Appeal of Southern Public Utilities Company.

Appeal from Superior Court, Mecklenburg County; Adams, Judge.

In the matter of the petition of the Southern Public Utilities Company for an increase of street car fares in the City of Charlotte. The Corporation Commission granted an increase of fares, and the City of Charlotte, which opposed the petition, appealed to the superior court, which tribunal entertained the appeal, and referred the case to hear evidence. From such determination both the Southern Public Utilities Company and the City of Charlotte appeal. Affirmed.

The petition was filed by the Southern Public Utilities Company, operating street cars in the city of Charlotte, and in which it was alleged:

"That on account of the abnormal increase in the price of steel, copper, cars and all equipment and materials and the increased cost of labor incident to our business, your petitioner cannot profitably nor properly conduct its street railway at the present pre-war rates."

That it had been charging a 5 cent fare, with 11 tickets for 50 cents, and closed with the prayer that it might be granted the privilege of increasing said rate to 7 cents, with the understanding that the company would sell four tickets at 25 cents.

The city of Charlotte, made a party by notice issued by direction of the commission, appeared and resisted the application. The hearing was set for July 8th at the city of Raleigh, the parties appeared, and on suggestion from the city's counsel that, as the developments of the hearing might render a further presentation of facts necessary on the part of the city, they would ask for that privilege. The chairman replied that it was the purpose of the commission to get at the real facts with as little formality as possible and that, if it became necessary to make further investigation to set forth the substantial facts, opportunity would be given. The hearing was then entered upon; no formal answer having been filed.

For the petitioner, the president of the company was examined, making an elaborate statement of conditions, which it was claimed justified the proposed increase.

On the cross-examination the city of Charlotte sought to disclose that the facts and conditions presented did not justify the increase; that the company had given an overvaluation of the property, and had made excessive claims for depreciation, etc. At the close of the examination of this witness, the taking of the oral testimony was not further pursued.

The following day the company, by leave given, submitted to the commission certain data in illustration and support of the oral evidence of its president.

On July 13th, five days after the first hearing, pursuant to leave given, the city of Charlotte filed its formal answer, resisting the application in terms as follows:

"The city of Charlotte, in behalf of the citizens and patrons of the street car service of the petitioner responding to the petition on the above-entitled matter, say and allege as follows:

"(1) That as this respondent is advised and believes, the valuation placed on the property of the petitioner for which and upon which it claims the returns of its street railway system is excessive and larger than the actual value of said property, and that if a fair valuation is placed on such property the returns from the operation thereof at present prices would be adequate to cover all operating expenses, including overhead expenses and a reasonable sum for depreciation, and would, in addition thereto, yield the petitioner such a return upon the investment as should be satisfactory to the petitioner in war times, when all of the citizenship as well as corporations are necessarily being called upon to bear extraordinary burdens incident to the war, and to conduct their business at either no profit or at a much less profit than under normal circumstances.

"(2) That in arriving at the amount to be set aside for depreciation, no sum should be allowed for depreciation on real estate within the city of Charlotte, as such real estate not only does not depreciate in value, but actually enhances in value from year to year with the development and growth of the city.

"(3) That if the petitioner is entitled to amortize the cost of the Camp Greene line, it is certainly not entitled to amortize the entire cost thereof, as it is manifest that at the end of the three-year period, which is the estimated life of the said Camp Greene Lines, there shall be salvaged in the materials entering into the construction of such Camp Greene lines, and in any amortization of the cost of such lines this salvage should be taken into consideration and be deducted from the amount of the cost of such lines.

"For further and sufficient answer to the plaintiff's petition, this respondent says:

"(1) That the petitioner, the Southern Public Utilities Company, is the successor to the Charlotte Electric Railway Light & Power Company, which latter corporation is in turn the successor to the Charlotte Street Railway, which was incorporated by an act of the General Assembly of North Carolina in the session of 1883 (chapter 32).

"(2) That on the 29th day of September, 1886, the city of Charlotte and the Charlotte Street Railway Company entered into a contract, by the terms of which the said street railway company was granted the right and franchise to maintain and operate a street railway upon the streets and avenues of the city of Charlotte, and in return for which right and franchise the said street railway company contracted and agreed that not more than 5 cents be charged by said street railway company as fare for one continuous ride, from 6 a. m. to 10 p. m. within the city limits, and thereby contracted and agreed to a rate satisfactory to it for the performance of such service; and this petitioner, as the successor of the Charlotte Street Railway Company, is clothed with such rights and bound by such terms of said contract and agreement, a copy of which contract and agreement is hereto attached and made a part of this answer, and is hereby especially pleaded and offered in answer and bar to the petition herein.

"Wherefore the city of Charlotte respectfully prays that the petition in the above-entitled matter be dismissed."

And in support of this further answer it was shown that:

"The Charlotte Street Railway Company was incorporated by the General Assembly at the session of 1883, and was authorized to establish a street railway service in the city of Charlotte. On September 29, 1886, a written contract was made by this railway company and the city, in which is the following: 'Resolved that whereas the constructing and operating of lines of street railway will be of material benefit to the citizens of Charlotte, the said city agrees that it will not charge or collect a greater sum than $25 per annum upon the plant, property and franchise of the said street railway company for the period of ten years; provided that not more than 5 cents be charged by said street railway company as fare for one continuous ride from 6 o'clock a. m. to 10 o'clock p. m. within the city limits.

"The name of the Charlotte Street Railway Company was thereafter changed to the Charlotte Electric Railway Light & Power Company, to whose rights and franchises the petitioner has succeeded."

On consideration of the facts in evidence the commission made an order granting the prayer of the petitioner, the said order being in terms as follows:

"The hearing of this petition was had at the office of the commission on July 18, 1918; and, it appearing clearly to the commission that this company cannot operate and continue to give good service at the rate they were receiving under present conditions, it is therefore ordered that the Southern Public Company be and it is hereby authorized to charge a fare of seven cents for the transportation of passengers over its street railway lines located in the cities of Charlotte and Winston-Salem; that this company shall also be required to put on and offer for sale to the public in general four tickets for 25 cents. The company is also authorized, if it shall deem it advisable, to put on and offer for sale to the public generally books containing 17 tickets for the sum of $1 per book.

"This order to become effective August 1, 1918.

"This July 30, 1918."

From this order, the defendant, the respondent, gave notice of appeal as follows:

"To the Honorable the Corporation Commission, Raleigh, N. C:

"Whereas, in the above-entitled matter, the Corporation Commission overruled the exceptions filed by the city of Charlotte to the order of the honorable, the Corporation Commission, authorizing the Southern Public Utilities Company to increase its fares for street car service in the city of Charlotte:

"Now therefore, the respondent, the ...