Milwaukee Electric Railway Light Company v. Railroad Commission of Wisconsin

• Decision Date: 14 June 1915
• Docket Number: No. 233,233
• Citation: 238 U.S. 174,35 S.Ct. 820,59 L.Ed. 1254
• Parties: MILWAUKEE ELECTRIC RAILWAY & LIGHT COMPANY, Plff. in Err., v. RAILROAD COMMISSION OF WISCONSIN
• Court: U.S. Supreme Court

238 U.S. 174

35 S.Ct. 820

59 L.Ed. 1254

MILWAUKEE ELECTRIC RAILWAY & LIGHT COMPANY, Plff. in Err.,

v RAILROAD COMMISSION OF WISCONSIN.

No. 233.

Argued April 20 and 21, 1915.

Decided June 14, 1915.

Messrs. Henry H. Pierce, Edwin S. Mack, William J. Curtis, George P. Miller, and Arthur W. Fairchild for plaintiff in error.

Messrs. Walter Drew and Lester C. Manson, and Mr. W. C. Owen, Attorney General of Wisconsin, for defendant in error.

Mr. Daniel W. Hoan as amicus curioe.

[Amicus Curiae Information from page 175 intentionally omitted] Mr. Justice Day delivered the opinion of the court:

This suit originated in the circuit court of Dane county, Wisconsin, and was brought by the Milwaukee Electric Railway & Light Company against the Railroad Commission of Wisconsin. The plaintiff, a street railway company, organized under the laws of Wisconsin, and authorized to conduct a street railway business in the city of Milwaukee, sought to enjoin the Railroad Commission, organized under the laws of that state of 1905, from enforcing a certain order against the company, whereby the right of the railway company to charge fares upon its railway system had been reduced below what it was contended had been previously fixed by an ordinance of the city of Milwaukee, which, it was alleged, upon acceptance, constituted an irrevocable contract between the company and the city. In the allegations of the complaint it appears that on January 2, 1900, there was granted to the plaintiff the right to operate over certain streets, and in the ordinances of that date all franchises expiring prior to December 31, 1934, were extended to that date, and all franchises which would otherwise expire subsequently to that date were made to terminate at that time.

Section 6 of the ordinance provides:

'After the passage, publication and acceptance of this ordinance by said railway company, the rate of fare for one continuous passage upon the lines of railway within said city limits of said city owned and operated by said railway company constructed under any franchise herein, heretofore or hereafter granted to said railway company or its predecessors, successors or assigns, as the case may be, shall be not to exceed 5 cents for a single fare, except for children under ten years of age the rate of fare shall be 3 cents for one child and 5 cents for two children, and infants under three years of age free. Except where cars or carriages shall be chartered at a special price, which fare shall entitle each passenger, upon demand made at the time of payment of fare, to one transfer at established points of transfer to any connecting or cross line of said railway company for passage within said city, and convenient points of transfer shall be maintained and such additional points of transfer established as will carry out the full intent and purpose of this ordinance to maintain and extend the transfer system now in force upon the lines of said railway company at the present standard of convenience for the people of said city. Each transfer ticket shall be good only for the passenger to whom it is issued, and for a continuous trip in the direction specified upon the transfer so given, and upon the first car leaving the transfer intersection after the time designated on such transfer.

'Provided, however, that after the acceptance of the terms of this ordinance the railway company shall, on demand made at its office in said city, or to the conductors on its cars operated on its lines within the corporate limits of said city, sell tickets in packages of twenty-five for $1 or six for 25 cents, each of which tickets shall entitle the holder thereof to use the same upon the cars of said railway company only between the hours of 5:30 o'clock and 8 o'clock in the morning and between the hours of 5 o'clock and 7 o'clock central standard time, in the afternoon of each day, until January 1, 1905, and shall also entitle the holder to the same privileges as are or may be accorded to passengers paying a cash fare of 5 cents; and the said railway company shall, from and after January 1, 1905, continue the sale of tickets in packages at the price aforesaid until December 31, 1934, each to be good at all hours of the day, with the same privileges as are or may be accorded to passengers paying a single cash fare of 5 cents.'

The bill sets out the acceptance of this ordinance, and thereby it is claimed the company obtained the right to charge, until December 31, 1934, a cash fare of 5 cents, and to sell tickets in packages of twenty-five for $1, or six for 25 cents, each of which tickets should entitle the holder to use the same upon the cars between the hours mentioned in the ordinance, and to have the privileges accorded to passengers paying 5 cents fare. In November, 1906, the city of Milwaukee filed a complaint with the defendant Railroad Commission for a reduction of rates of fare, and filed a similar complaint May 13th, 1908. This proceeding resulted in the order complained of, which did not interfere with the cash fare prescribed, but provided that the company should discontinue its rate of twenty five tickets for $1, and should sell tickets in packages of thirteen for 50 cents, which tickets were ordered to be accepted in payment of fare. It is alleged that this action of the Railroad Commission impairs the obligation of the contract between the city and the company, and takes the plaintiff's property without due process of law, in violation of § 10 of article 1 of the Constitution of the United States and of the 14th Amendment thereto.

On the hearing in the court of first instance, it was held that there was no contract made by the passage and acceptance of the ordinance which we have quoted, and the complaint was accordingly dismissed. Upon appeal to the supreme court of Wisconsin that judgment was affirmed (153 Wis. 592, L.R.A.——, 142 N. W. 491, Ann. Cas. 1915A, 911). The case was heard before six judges of that court. Three held that the statute upon which the plaintiff relied as conferring authority upon a municipal corporation to make the contract in question did not authorize the making of a contract which would prevent the future exercise of the authority of the state to regulate the rates of fare by legislative action. A fourth judge expressed no view upon this phase of the case, specifically holding that under the Wisconsin Constitution there was no power to delegate to municipal corporations an authority to make irrepealable contracts respecting rates. Two of the judges dissented upon the ground that there was an irrepealable contract, valid and binding between the company and the city, which was violated by the subsequent legislation creating and empowering the Railroad Commission, and because of the action of that body in reducing the rate of fare.

In the view we take of the case it is unnecessary to pass upon the question whether the ordinance had the effect to make a contract binding between the city and the company until subsequent legislative action by the state, or to decide whether the grant of the rights and privileges as to fares was, under the Wisconsin Constitution, revocable at the will of the legislature.

Section 1862 of the Revised Statutes of 1911 provides:

'Section 1862. Corporations for constructing, maintaining and operating street railways may be formed under chapter 86, and shall have powers and be governed accordingly. Any municipal corporation or county may grant to any such corporation, under whatever law formed, or to any person who has the right to construct, maintain and operate street railways the use, upon such terms as the proper authorities shall determine, of any streets, parkways, or bridges within its limits for the purpose of laying single or double tracks and running cars thereon for the carriage of freight and passengers, to be propelled by animals or such other power as shall be agreed on, with all necessary curves,...