Puget Sound Elec. Ry. v. Railroad Com'n of Washington

• Decision Date: 16 September 1911
• Parties: PUGET SOUND ELECTRIC RY. v. RAILROAD COMMISSION OF WASHINGTON et al. (HART et al., Interveners.
• Court: Washington Supreme Court

117 P. 739

65 Wash. 75

PUGET SOUND ELECTRIC RY. v. RAILROAD COMMISSION OF WASHINGTON et al. (HART et al., Interveners.

Supreme Court of Washington, En Banc.

September 16, 1911

Appeal from Superior Court, Thurston County; John R. Mitchell Judge.

From final orders of the Railroad Commission of Washington, made on a petition filed with it by W. H. Paulhamus, in which proceeding David Hart and others intervened, and from orders in a proceeding on petition by the Puget Sound Electric Railway involving its valuation the railway appealed to the superior court, which sustained the orders of the commission and the railway appeals. Affirmed.

A railway company, while organized as a profitable investment for its stockholders, assumes certain obligations to the public, among which is the devotion of its property to the use of the public, so that its property becomes affected with a public interest; and it is created upon the theory that it will be a public benefit, and the state confers upon it extraordinary privileges, and may exact from it in return the performance of public duties, and it holds its property in trust, not only for the pecuniary benefit of its stockholders, but for the public use as well.

Benjamin S. Grosscup (James B. Howe, William Carr Morrow, and Jno. A Shackleford, of counsel), for petitioner.

W. V. Tanner, Atty. Gen., for respondents.

MORRIS J.

This appeal brings up for review the order of the Railroad Commission of Washington, establishing a schedule of passenger rates on the lines of appellant between Seattle, Tacoma, Puyallup, and Renton. The evidence is voluminous, and the commission has made many findings relating to every detail considered by it in arriving at its conclusion. These findings are in the main conceded to be correct by appellant, as it attacks only three of them, upon which it contends the commission based its estimate of future earnings, operating expenses, depreciation, taxes, and other items taken into consideration in arriving at its conclusion that 7 per cent. is a reasonable return to appellant upon its investment. The errors alleged in the making of the final order are that it does not permit appellant to earn a reasonable return on the value of its property; that it imposes a burden of carrying passengers between Seattle and points within 10 miles of Seattle and between Tacoma and points within 10 miles of Tacoma at a rate less than the cost of the service; that it fixes a rate less than competing steam railroads charge for the same service; and that it violates the Constitution of the state, prohibiting discrimination in rates between persons and places. It will be difficult to make a proper statement of all the facts entering into the questions submitted by this appeal, and keep this opinion within proper bounds. We will therefore not attempt to make a detailed statement of all of such facts, but will refer only to such as may be necessary to give a proper understanding of the points involved. Appellant opened its line for passenger traffic between Seattle, Tacoma, and intermediate points in the fall of 1902, and published a schedule of rates which remained in force until October 17, 1909, when a new schedule was announced and put in operation, making material advances in the rates. Thereupon W. H. Paulhamus filed a petition with the commission, alleging that the new rates thus established were unfair, unreasonable, and exorbitant, and praying for a hearing. This proceeding is known as 'Cause No. 76' in the records of the commission, and coupled with it on the hearing and in the subsequent proceedings before the superior court of Thurston county is cause No. 74 in the records of the commission, involving the valuation of appellant. Appeals were taken from the final orders made by the commission in these proceedings to the superior court of Thurston county, which court in all things sustained the commission; and a subsequent appeal brings both proceedings here, where, as in the court below, they will be treated as one. It will not be necessary to make any reference to the complaint in intervention, as no new or additional questions are thereby submitted.

In 1902, when the railway went into operation, the only town within 10 miles of Seattle was Georgetown, then having a population of approximately 250. Next south was Kent, some 17 miles, with a population of 755. Between that time and the going into effect of the increased rates in October, 1909, the population had increased along the line of the railway within the 10-mile zone tributary to Seattle by the establishment of new towns with their tributary inhabitants as follows: Meadows, 500; Quarry, 500; Duwamish, 500; Allentown, 500; Riverton, 450; Foster, 900; Tukwila, 600; Earlington, 500--while Georgetown had increased to 7,000. These figures are given by the commission as an approximation only of the number of inhabitants tributary to each of these points, as at the time of the findings the census of 1910 had not been made public. They will, however, be accepted as substantially correct. The same situation was developed along the southern end of the line tributary to Tacoma, where a number of small towns, ranging from a few inhabitants to 700 or 800, had grown up along the line. These points the undisputed evidence shows to be inhabited by clerks, laborers, and small wage-earners, who had purchased homes on the installment plan, attacted by the cheapness of the land and the rate of fares charged between them and Seattle and Tacoma, by which they were enabled to reach their respective places of labor in those cities almost as quickly and as cheaply as if living within the cities themselves. Under the old rates the stations south from Seattle to Tukwila, ranging in distance between 3.22 and 9.85 miles, were given a one-way rate of 10 cents and a return rate of 15 cents; while under the new rate an increase was exacted of in some instances as high as 250 per cent.; the return rate at the Seattle end being advanced as follows: Davis, to 24 cents; Meadows and Southside, to 26 cents; Floraville, to 28 cents; Cardmoores, to 28 cents; Duwamish, to 30 cents; Quarry, to 32 cents; Allentown, to 34 cents; Riverton, to 34 cents; Mortimer, to 36 cents; Foster, to 38 cents; and Tukwila,[65 Wash. 79] to 40 cents. A like advance was made at the Tacoma end. The effect of these advances was to compel many of the people at these points who labored in the cities to abandon their homes and move into the city; the evidence being conclusive that the rates were prohibitive, and, if continued, it would mean a sacrifice and abandonment of the homes in favor of cheaper transportation. It is also shown that under the old rates in the Tukwila zone the morning trains into Seattle and the evening trains out were crowded to their capacity; while under the new rate travel had fallen off to less than half. The same condition is shown within the zone tributaryto Tacoma. Other changes were: Seattle to Kent increased from 30 cents to 34 cents one way, while the round-trip rate was increased from 50 cents to 68 cents; Seattle to Tacoma, single trip increased from 60 cents to 73 cents, round trip from $1 to $1.25. This through business is shown by the evidence to constitute nearly 57 per cent. of the passenger traffic. No contention is made upon the Seattle-Tacoma rate, as it was not interfered with by the commission. From Kent to Tacoma the rate was increased from 30 cents to 39 cents one way, and round trip from 60 cents to 75 cents; Seattle to Renton increased from 15 cents to 27 cents, round trip from 25 cents to 54 cents. These instances will serve as an illustration of the character of the increase of the new rate schedule over the old. The order of the commission as to these rates was to restore the old round-trip rate between Seattle and points south, as far as Renton Junction, a distance of 11 miles, and from Tacoma north to Algona, a distance of 12 1/2 miles. The old rate was also restored between Tacoma and Points on the Puyallup line. The round trip rate from Seattle to Renton was reduced from 54 cents to 35 cents; from Seattle to Earlington from 50 cents to 30 cents. The single fare between Kent and Seattle and Kent and Tacoma was allowed to stand, but the round trip from Kent to Seattle was reduced from 68 cents to 53 cents, and from Kent to Tacoma from 78 cents to 75 cents. The effect on the schedule as a whole by the commissioners' order was to permit the increase of the new rate on 76.66 per cent. of the total passenger revenue derived by the railway which amounts approximately to an increase of nearly 25 per cent. of the old rates. The effect of these increased rates in the suburban zones tributary to Seattle and Tacoma is further shown by the result in the sales of tickets. Ticket sales at the Seattle office for travel between Seattle and Foster averaged between June 30 and October 16, 1909, under the old rate, $543.34 per month; while between October 17 and January 1, 1910, under the new rate, sales decreased to an average of $66.73. For the same time between Seattle and Riverton, under the old rate, an average of $629.45 per month, and under the new rate $80.35 per month. Between Seattle and Duwamish under the old rate sales averaged $191.25 per month, under the new rate $38.12; between Seattle and Pacific City during same period under old rate $355.34; under new rate $130.30; between Seattle and Tukwila, same period, old rate $345.91, new rate $38.96; while sales at the Kent office for the same period dropped from $3,664.35 per month to $1,460. Approximately 80 per cent. of the gross earnings of the company is derived from passenger traffic. These gross earnings for the six years the railway had been in operation prior to the hearing are:

...