State ex rel. Indianapolis Traction & Terminal Co. v. Lewis

• Citation: 120 N.E. 129,187 Ind. 564
• Decision Date: 30 July 1918
• Docket Number: No. 23420.,23420.
• Parties: STATE ex rel. INDIANAPOLIS TRACTION & TERMINAL CO. v. LEWIS et al., Public Service Commission of Indiana.
• Court: Supreme Court of Indiana

187 Ind. 564

120 N.E. 129

STATE ex rel. INDIANAPOLIS TRACTION & TERMINAL CO.

v.LEWIS et al., Public Service Commission of Indiana.

No. 23420.

Supreme Court of Indiana.

July 30, 1918.

Appeal from Circuit Court, Marion County; Lewis B. Ewbank, Judge,

Mandamus proceedings by the State of Indiana, on the relation of the Indianapolis Traction & Terminal Company to compel Ernest I. Lewis, John W. McCardle, Charles A. Edwards, and Edwin Corr, constituting the Public Service Commission of Indiana, to take jurisdiction of a petition to allow relator to increase fares on its street cars. From a judgment sustaining a demurrer to the complaint, relator appeals. Reversed, with instructions.

F. Winter and W. H. Latta, both of Indianapolis, for appellant. Ele Stansbury, of Indianapolis, for appellee. Woodburn Masson and Samuel Ashby, both of Indianapolis, amici curiæ.

MYERS, C. J.

On November 19, 1917, the relator filed with the Public Service Commission its petition, in substance showing that it has operated a system of street railroads in the city of Indianapolis since the year 1902, charging for the carriage of passengers 5 cents when paid as a single cash fare; six tickets for 25 cents; 25 tickets for $1, with transfer privileges; that by reason of an emergency brought on by war activities in this country, the cost of every item entering into the operation and upkeep of the relator's business has increased so amazingly that without financial relief the relator must face insolvency, also rendering it unable to furnish reasonably adequate service to its patrons and to the injury of the interests of the people of the city of Indianapolis, and public generally depending upon street railway service. To meet this emergency the relator has asked permission to charge and collect from each passenger over five years of age carried upon its lines 5 cents, with transfer privileges as now in use, until the further order of the commission. To this petition the city of Indianapolis and various organizations and citizens of that city were permitted to intervene and enter special appearances before the commission, and object to the commission hearing said petition, on the ground that it had no jurisdiction over the matter set forth in the petition. The commission sustained these objections, and dismissed the petition. The relator then brought this proceeding in mandamus to compel the commission to take jurisdiction of the matter presented by the petition. Appellees' demurrer to the complaint was sustained, and, the relator refusing to plead further, judgment followed in favor of appellee. The ruling of the trial court on the demurrer to the complaint is here assigned as error.

[1] It is first insisted that the city of Indianapolis is a necessary party to this action for the reason that it is a party to the contract which the relator is seeking to have changed, to the injury of the city and its citizens. This contention cannot be sustained. The proposed change in no way affects the contract concerning any governmental function of the city, but it is limited to the rate of fare fixed by the state (Acts 1899, p. 260, § 2; section 5649, Burns 1914), and incorporated into the contract or franchise between the city and the relator's lessor, and under which the relator is using the streets of the city. City streets are a part of the public highway system of this state, and such highways are arteries of commerce under the control of the state in its sovereign capacity as represented by the Legislature. “It may either exercise the power itself directly, or may delegate it to municipalities, to quasi municipalities, or to any properly constituted body.” 13 R. C. L. p. 79. Contracts as are here in question, although entered into by the city, are nevertheless contracts of the state on the one side, and the utility on the other. For, as said in the case of Winfield v. Public Service Commission, 118 N. E. 531, 533:

“To the extent that the interests involved are not purely local to cities and incorporated towns, such power as a municipality has thereover is granted to the municipality by the state, and may be modified or withdrawn by the state from the municipality, unless the state has waived its right to do so. Therefore the municipality, so far as affects the public welfare, acts, in granting franchises to public service corporations, as the agent of the state, and cannot bind the state beyond the authority delegated by the state to the municipality in that respect. The limitations of authority in the agent are known to all, because they are reservations by virtue of the state's police power.”

In the present case the fixing of the rate of fare was not left to the municipality, as is sometimes done. The state, in this respect, acted in the interest of the public, and to the utility it was a condition for the privilege of using a portion of its highway system. Upon the facts before us we conclude that the city, in incorporating the rate schedule in the franchise in question, acted as the agent of the state, and of its authority in this respect the public, as well as the city must take notice. The city was not a necessary party. In coming to this conclusion we were not unmindful of the rule applicable to contracts made for the benefit of third persons. That rule has no application to this class of cases.

[2] The amicus curiæ makes the point challenging the power of the Legislature to consent to the surrender of a franchise granted by a city without the latter's approval, for the reason that it has the effect of destroying the right of local self-government, and is in violation of the Constitution. This court, in the case of Winfield v. Public Service Commission, supra, decided that question against such contention, and upon a further consideration we adhere to our former ruling on that point.

The relator is relying upon section 122 of the Acts of 1913, p. 167. It has not surrendered its contract made with the city March 6, 1899, to run 34 years. That act, section 101, expressly gave all public utilities operating in this state until July 1, 1915, to surrender their contracts, and to continue under an indeterminate permit. Later that time was extended to July 1, 1917. Acts 1915, p. 457. No further extensions have been granted.

[3] The real question for decision involves an examination of certain sections of the act of 1913, supra, creating the Public Service Commission, and to which it must look for its duties and its authority. The Public Service Commission is not a Legislature, although when exercising its rate-making power it is performing a legislative act. It is not a court, yet in certain matters its acts, in a sense, are quasi judicial. More strictly speaking, it is an administrative body, charged with ministerial and in some instances with legislative duties (4 R. C. L. 623), or, in other words, it is a legislative agency, assumed to be qualified by knowledge and experience to regulate the public utilities of the state with reasonable fairness and substantial justice, not only to the public, but the utility as well. Such is the theory of the law; and, unless conscientiously administered, its purpose is destroyed.

Sections 7, 47, 57, 64, 72, and 122 have to do with rate making, but the question before us for decision requires us to consider only sections 7 and 122. Section 7 has been construed. Winfield v. Public Service Commission, supra. In that case the utility had surrendered its franchise, and at the time it applied to the commission for an increase of rates, it was acting under an indeterminate permit. In the present case relator is operating under its contract. It claims the benefits of the commission's rate-making power, because there is no provision in the law expressly denying it this right. If its position in this particular is correct, then section 101, as amended in 1915, fixing the time within which public utilities might surrender their contracts, was meaningless.

[4] The doctrine is elementary that legislative action, if possible, should be so construed as to give effect and meaning to all its provisions. The 1913 public utility law introduced a new departure in the handling of public utilities, and was effective to withdraw from the municipalities certain powers theretofore exercised by them. The purpose of this law was, in part, to correct through an unprejudiced tribunal certain unfair action against the people by the utility, or by the people against the utility, and, in so far as possible, fix a uniform procedure throughout the state for all concerned. At the time this law was passed the Legislature knew that all public utilities of the state were using the streets and public thoroughfares of cities and incorporated towns as well as other public highways by consent of the state directly given, or through its regular constituted representatives. It also knew that, as to all these utilities operating under an unexpired franchise or contract, it was inhibited by the federal Constitution, article 1, § 10, from passing...