Southwest Missouri Railroad Company v. Public Service Commission

• Decision Date: 16 February 1920
• Parties: SOUTHWEST MISSOURI RAILROAD COMPANY, Appellant, v. PUBLIC SERVICE COMMISSION
• Court: Missouri Supreme Court

219 S.W. 380

281 Mo. 52

SOUTHWEST MISSOURI RAILROAD COMPANY, Appellant, v. PUBLIC SERVICE COMMISSION

Supreme Court of Missouri

February 16, 1920

Appeal from Cole Circuit Court. -- Hon. J. G. Slate, Judge.

Reversed and remanded (with directions).

McReynolds & McReynolds for appellant.

The fact that the Constitution requires the consent of the municipal authorities to the grant of the use of the streets of such city for street railway purposes, does not prevent the Public Service Commission from granting to a street railway company relief from unreasonable requirements of an ordinance granting such franchise rights in the streets. A careful reading of Section 20 of Article 12 of the Constitution shows that the limitation on the power of the General Assembly is not general, but is strictly limited to the requirement that the consent of the local authorities having control of the streets intended to be used by the street railway must be obtained. The legislature is not even prohibited from fixing the manner and terms on which this consent may be obtained. An investigation of the statutory enactments since the Constitution of 1875 shows how the General Assembly has progressively assumed greater control over the granting of such franchises and placed limitations around the rights and powers of the municipality. R. S. 1879 sec. 4879; R. S. 1889, secs. 1523, 1824, 1825, 1826, 1827; Secs. 6115-6-7-8-9, R. S. 1899; Laws 1887, p. 40. A municipality has no power to grant a franchise to a railroad over its streets unless the same is given by constitutional or legislative authority. A. & P. Railroad v. St Louis, 66 Mo. 256. Such powers were first granted by legislative authority. Fink v. City of St. Louis, 71 Mo. 52; State ex rel. Kansas City v. East Fifth St. Ry Co., 140 Mo. 539; Kavanaugh v. St. Louis, 220 Mo. 496. The Legislature has made clear its meaning as to the powers, authority and scope of duty of the Public Service Commission. State ex inf. v. Gas Co., 254 Mo. 515; State ex rel. v. Pub. Serv. Comm., 270 Mo. 547.

A. Z. Patterson, General Counsel, James D. Lindsay, Assistant Counsel, for Public Service Commission.

(1) That the Legislature attempted to grant to the Public Service Commission power to release a street railway company from a franchise obligation entered into upon a subject, essentially contractual in its nature, and of the very essence of the purpose for which the company was chartered, and the franchise granted, is most doubtful. Public Service Commission Act, sec. 2, subdivisions 5, 7 and 26; Sec. 16, subdivisions 2, 3, 8 and 9; Secs. 26, 27, 43, 47 and 49; State ex rel. United Railways v. Commission, 270 Mo. 442; Lusk v. Atkinson, 268 Mo. 109; State ex rel. v. Commission, 192 S.W. 460; Quimby v. Pub. Serv. Comm., 223 N.Y. 224. (2) The grant of the franchise by the city, in respect of use of its streets, and acceptance thereof by the company, constituted a contract which neither the city nor the company could annul without the "consent" of the other. Sec. 20, Art. 12, Constitution; Springfield Ry. Co. v. City of Springfield, 85 Mo. 674; Hovelman v. K. C. Horse Ry. Co., 79 Mo. 632; State v. East Fifth St. Ry. Co., 140 Mo. 539; St. Louis & M. R. Railroad Co. v. Kirkwood, 159 Mo. 239; Blair v. Chicago, 201 U.S. 400; Grand Trunk Ry. Co. v. South Bend, 227 U.S. 544, 44 L. R. A. (N. S.) 405. (3) The State may authorize a city and a street railway company to make an inviolable contract for a definite and not grossly unreasonable period, for the occupation and use of certain streets of the city by the company, in the service of the public. Milwaukee Electric Ry. & Light Co. v. R. R. Comm., 238 U.S. 175; Home Tel. & Tel. Co. v. Los Angeles, 211 U.S. 273; Detroit v. Detroit Ry. Co., 184 U.S. 382; Cleveland v. Cleveland City Ry. Co., 194 U.S. 533. Provided the authority be granted in express and unmistakable terms; and in this case the authority is constitutional, and unmistakable. Sec. 20, Art. 12, Constitution. And the unabridged police power of the State to prescribe reasonable rates, and regulations, legislative in nature, upon subjects within the scope of the legislative power reserved by the State (Sec. 5, Art. 12, Constitution; Sedalia v. Commission, 204 S.W. 497; Fulton v. Commission, 204 S.W. 386; St. Louis v. Commission, 207 S.W. 799; Kansas City v. Kansas City Rys. Co., 140 Mo. 559;) does not destroy the contractual power of the city, exercised upon a contractual subject, in the manner and within the limits prescribed by said Section 20. (4) The State has set a limit upon its own power over the streets of its cities in the one respect of the occupation and use of those streets by a street railway company, in that the city must be contracted with, must give consent in its own constitutional right, as a condition precedent to such occupation and use. The city lets the use of a definite place, for a definite time, and for a definite purpose; the company enters upon the place, for the time, and to carry out the purpose -- a service to the public for its own prospective gain. (5) Irrespective of all the foregoing considerations, the order of the Commission should be approved, because it could not properly grant an application which neither alleged inability to operate the spurs, nor a loss on all the operations of the company, nor such impairment of its finances as would impair its ability to render efficient service to the public, upon other or more important branches of its system. State ex rel. Mo. Pac. Ry. v. Atkinson, 269 Mo. 645; Iowa v. Old Colony Trust Co., 215 F. 307 L. R. A. 1915A. 549.

BOND, C. J. Blair, J., concurs in a separate opinion, in which Woodson, Goode and Williamson, JJ., concur; Graves, J., dissents, in a separate opinion, in which Walker, C. J., concurs; Williams, J., not sitting.

OPINION

In Banc

BOND C. J.

The plaintiff is an incorporated interurban railway company connecting Carthage, Joplin, Webb City and other towns in Missouri, and extending into Kansas. The construction of this street railway in the City of Carthage was under and ordinance permitting the assignor of the company the user of a large number of local streets, and requiring in consideration thereof interurban connections by electric rapid transit, with certain other towns named in the ordinance. These interurban connections were duly constructed and are now fully maintained by plaintiff, which, also, as incidental thereto, ran spur tracks through the streets of Carthage connecting its interurban system with two railroad stations in that city. Over these spur tracks transfers were issued by the rapid transit lines. The plaintiff asked the Public Service Commission to discontinue these spur tracks, which it alleges were not essential to the maintenance of its interurban lines and which were sparsely used, ran over a very short distance and could not be operated without a loss of $ 2500 a year or $ 50,000 in 20 years. The Commission took the view that it was without the power to grant the relief sought, however "meritorious the case presented by the company might be" and dismissed the complaint. Proper steps were taken to obtain a review of the findings and orders of the Commission, which were sustained by the Circuit Court of Cole County, from which judgment the railway company duly appealed.

I. Unless the issue in this case is distinguishable in principle from the one presented in City of St. Louis v. Public Service Commission, 207 S.W. 799, this appeal is dominated by that ruling and the judgment of the circuit court will have to be reversed and the order of the Commission set aside. The learned counsel for the Commission concede the rectitude of that ruling and the cases sustaining it in this jurisdiction, but insist that said ruling related to the question of the power of the Commission to raise the rates of water, telephone and street railway companies "above those fixed by contract" with a municipality, and that they do not relate to cases like the present which involves the rights of a utility (in this instance a street railway) to discontinue the operation of any of its tracks constructed under a permissive ordinance, for the reason that it could be carried on only at a great loss.

The franchise of a street railway company is derivable solely from the Legislature. Its right to exercise that franchise over the streets and alleys of a particular municipality, is subject to the regulatory control of such city, which may evidence that control by an ordinance consenting to the use of its streets and alleys and designating those over which the street railway may operate its State-derived corporate powers. [Sec. 20, Art. 12, Constitution 1875.] It was ruled that the City of St. Louis, in the exercise of such a regulatory control over its streets, could not make an inviolable contract with a street railway for a fixed rate of fare; that to do so would impinge upon the reserve power of the Legislature to exercise plenary control of any matter falling within the domain of the police power, as rate-making does. It was further held that Section 20 of Article 12 was not designed nor intended to abridge the full power of the Legislature over the class of subjects embraced within the inalienable police power of the State. [Const. Art. 12, sec. 5; Tranberger v. Railroad, 250 Mo. 46, affirmed 238 U.S. 67.] It was also held that Section 20 of Article 12 of the Constitution, to-wit: "No law shall be passed by the General Assembly granting the right to construct and operate a street railroad within any city, town, village, or on any public highway, without first acquiring the consent of the local authorities having control of the street or highway proposed to be occupied by such street railroad; and the franchises so...