Interborough Rapid Transit Co. v. Gilchrist
| Decision Date | 10 May 1928 |
| Citation | 26 F.2d 912 |
| Parties | INTERBOROUGH RAPID TRANSIT CO. v. GILCHRIST et al. |
| Court | U.S. District Court — Southern District of New York |
James L. Quackenbush, of New York City (William L. Ransom and Jacob H. Goetz, both of New York City, and Harry L. Butler, of Madison, Wis., of counsel), for plaintiff.
George P. Nicholson, Corp. Counsel, of New York City (Charles L. Craig, Joseph A. Devery, Edgar J. Kohler, and M. Maldwin Fertig, all of New York City, of counsel), for defendant city of New York.
Clarence M. Lewis, of New York City (Samuel Untermyer, Irwin Untermyer, Robert S. Johnstone, C. D. Williams, and G. H. Stover, all of New York City, of counsel), for defendant Transit Commission.
Murray, Aldrich & Roberts, of New York City (William Roberts, of New York City, of counsel), for defendant Manhattan Ry. Co.
Before MANTON, Circuit Judge, and KNOX and BONDY, District Judges.
The original bill in this suit was filed in the forenoon of February 14, 1928. It seeks to restrain the members of the transit commission of the metropolitan division of the department of public service of the state of New York, from enforcing various rate limitations, restricting the rate of fare charged by the plaintiff on its rapid transit railways, operated in the city of New York, to 5 cents per passenger, upon the theory that such limitations have become confiscatory under the Fourteenth Amendment to the federal Constitution. It asks that they be restrained from interfering with the plaintiff, which proposes to charge 7 cents per passenger, or such other fare in excess of 5 cents as is not confiscatory. The court is asked to restrain the transit commission from carrying out threats to do various things which deny to the plaintiff its day in court, for an adjudication of its rights as to rates, and from attempting to obstruct and defeat steps taken by the plaintiff from time to time, which it claims it is authorized to do under the statutes, to obtain relief from the alleged confiscatory 5-cent fare.
After this suit thus commenced, and on the same day, the transit commission and the city of New York, in three suits in the New York state courts, asked for injunctive relief in substance requiring the plaintiff to charge but 5 cents for each passenger and to restrain it from carrying out its proposed increase of fare per passenger. On February 17, 1928, the plaintiff filed an ancillary complaint in this court, praying that the defendants be enjoined and restrained from further prosecuting or causing prosecution of their respective suits in the state court, and restraining them from in any wise interfering with the prosecution of the original action in this court. A judge of the District Court granted an order (25 F.2d 164) which enjoined and restrained the defendants from further prosecuting the suits in the Supreme Court of the state. An application was made and granted for convening a court of three judges, pursuant to section 380 of the United States Code (28 USCA § 380).
A public service corporation which is being actually subjected to a confiscatory limitation of its rates, whether that be imposed by an order of a regulatory state body or an act of the Legislature, even though there be pending in the state court proceedings for the revision of the order, may seek injunctive relief from a federal court, when it appears that it is suffering daily from confiscation under the rate to which it is limited, and particularly where it appears that it has done all it could under the state law to obtain relief without success. Springfield Gas & El. Co. v. Barker (D. C.) 231 F. 331, 335; Love v. A. T. & S. F. R. R. Co. (C. C. A.) 185 F. 321, 324. Rules of comity or convenience must give way to constitutional rights, and there is no doubt of the duty of a District Court to take and retain jurisdiction. Oklahoma Gas Co. v. Russell, 261 U. S. 290, 293, 43 S. Ct. 353, 67 L. Ed. 659; Monroe Gaslight Co. v. Michigan Public Utilities Co. (D. C.) 292 F. 139.
The suit is here upon causes of action stated in the complaint and supported by affidavits, to which answers are filed with accompanying affidavits in opposition. It is alleged generally that the transit commission and the city of New York are enforcing various rate limitations imposed by the Legislature, and by acts legislative in character, of the state of New York, restricting the rate of fare charged by the plaintiff on each of the elevated lines and the subway divisions of the rapid transit railways operated by the plaintiff within the city to 5 cents per passenger, in breach of the Fourteenth Amendment of the Constitution, because such limitations have become confiscatory.
Relief is sought (a) from limitation imposed by legislative acts of the state of New York (chapter 743 of the laws of 1894) upon rates chargeable on the elevated railroad lines operated by the plaintiff, which are in large part owned by the Manhattan Railway Company, and are now operated under lease by the plaintiff; (b) from the rate provision in a certain elevated railroad extension certificate of March 19, 1913, granted by the Public Service Commission for the First District, acting in behalf of the city of New York, to the plaintiff, and to permit the plaintiff, in conformity with and in pursuance of the Public Service Commission Law and the powers conferred and delegated to it by the Legislature, including the plaintiff's tariff schedules, to establish an increase in fare chargeable by the plaintiff on the elevated lines and to secure a determination by the regulatory authority of the state; (c) as to limitations imposed by the Legislature, or acts legislative in character, of the state of New York, including the plaintiff's tariff schedules on the rates chargeable on the subways of the rapid transit railroads operated by the plaintiff, which it owns in part and which are in part owned by the city, and also the rate provision in contract No. 3, herein referred to, made March 19, 1913, between the plaintiff and the Public Service Commission of the state of New York for the First District, acting in behalf of the city for rapid transit railroad extensions within the city, in accordance with the steps taken by the plaintiff in conformity with and pursuant to the provisions of the Public Service Commission Law and the power and authority conferred upon and delegated to it by the Legislature to establish an increase in fare chargeable on the subway divisions and to secure a determination by this regulatory authority of the state.
Relief is sought, not only as to fare chargeable on the elevated and subway divisions of the rapid transit railways operated by the plaintiff, considered as separate unified systems under the legislation and acts legislative in character, but also upon all the rapid transit railways considered as a unified operation under the legislation and acts legislative in character and under the elevated extension certificate and contract No. 3 for rapid transit railroad extensions of March 19, 1913.
The ancillary bill filed makes clear the denial, by the commission, of a hearing as asked when schedules were filed on February 1, 1928, and moreover that the defendants actively sought the aid of the state court in enjoining the plaintiff from proceeding to enforce its rates as provided in the schedules. It further appears in the original bill that two previous applications to the commission and its predecessors, asking for an increase in rate had met with denial, because the commission considered itself without jurisdiction or power to grant such relief. From this it is manifest that the commission intended never to accord the plaintiff a hearing on its application, whatever its merits might be. Denial of an application for a hearing, where the statute provides for such application, amounts to confiscation, if the rate be too low. Prendergast v. N. Y. Tel. Co., 262 U. S. 43, 43 S. Ct. 466, 67 L. Ed. 853.
The Rapid Transit Act, chapter 4, of the Laws of 1891 of the state of New York, entitled "An act to provide for rapid transit railways in cities of over one million inhabitants," provided for the appointment of rapid transit commissioners in such cities, and that "they shall have and exercise the specific authority and powers hereinafter conferred, and also such other and necessary powers as may be requisite to the efficient performance of the duties imposed upon the said board by this act." Section 4 provided for the determination of the necessity of railways, the fixing of routes, and the approval and consent of the common council, and section 6 provided that, when the consent of the local authorities and property owners had been obtained, the board was required to prepare detailed plans and specifications, including equipment and safety devices. Section 7 provided for the sale of the right, privilege, and franchise to construct, maintain and operate the railways, and the terms of sale "must also specify the amount of the capital of any such corporation, and number of shares of capital stock, * * * and the maximum rates of fares and freight which such corporation may charge and collect for the carriage of persons and property."
This act was amended by chapter 729 of the Laws of 1896, section 34 as added by c. 752 of the Laws of 1894, § 9, and amended by section 10, c. 519, of the Laws of 1895, so as to provide that, in case the people should determine that any railway shall be constructed for or at the expense of the city, the board shall consider routes and plans previously adopted and proceed therewith, and that any contract for the construction of said route shall provide that the person or corporation so contracting shall, at his own cost and expense, equip, maintain, and operate the said routes or roads for a term of years, to be specified in the contract, for not less than 35 or more than 50 years, and upon "such terms and conditions as to the...
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