State v. Tacoma Ry. & Power Co.

• Citation: 61 Wash. 507,112 P. 506
• Court: United States State Supreme Court of Washington
• Decision Date: 06 January 1911
• Parties: STATE ex rel. CITY OF TACOMA v. TACOMA RY. & POWER CO.

112 P. 506

61 Wash. 507

STATE ex rel. CITY OF TACOMA v. TACOMA RY. & POWER CO.

Supreme Court of Washington

January 6, 1911

Department 2. Appeal from Superior Court, Pierce County; M. L. Clifford Judge.

Mandamus by the State on the relation of the City of Tacoma against the Tacoma Railway & Power Company. From a judgment for relator, defendant appeals. Reversed and remanded.

B. S Grosscup and W. C. Morrow, for appellant.

T. L Stiles and F. R. Baker, for respondent.

CHADWICK J.

The Tacoma Railway & Power Company having, prior to April 1 1903, acquired a number of separate franchises and detached pieces of street railroads in the city of Tacoma, upon which separate fares had been charged and only a partial transfer system inaugurated, entered into a contract with the city, which was designed to settle existing disputes and differences, provide a single fare over all lines controlled by the railway, and to establish a transfer system covering all the lines controlled by it. Thereafter, by ordinance 1809, a franchise was granted to the Pacific Traction Company to build and operate a line of street railway in the city of Tacoma. Section 12 of the ordinance is, in part, as follows: '* * * and the payment of a fare shall entitle the passenger to a transfer to any other line within the city of Tacoma which may give and receive transfers to and from the lines operated under this franchise, and the presentation of a transfer from any other lines which may give and receive transfers shall entitle the holder thereof to passage on the cars operated under this franchise to any point within the city limits.' The railway company had at all times a line in operation upon Pacific avenue, thence up Ninth street to C street. This line was known as the 'Old Town' line. Several of its lines ran up and down C street, so that the intersection of Ninth and C streets was a sort of common center for passenger traffic. The city terminus of the traction company's line was on Commerce street, a street lying between Pacific avenue and C street. The traction company was owned and controlled as an opposition company, each line running to, and serving the population residing in, what is known as 'South Tacoma.' The traction line crossed the railway line at several places, but there was no physical connection between the roads. Nor did the one transfer passengers to the other. Each maintained different offices and employés, and each owned and operated shops and terminals where cars were kept and repaired. A majority of the stock of the railway company is owned by the Puget Sound Electric Railway. In the summer of 1909, the Puget Sound Electric Railway acquired a majority of the stock of the traction company, since which time, as it is said, for convenience and economy of administration and for the mutual benefit of both, roads, and especially for the advantage of the traction company, a physical connection between the two lines has been made at the intersection of C and Commerce streets, and also at Fifty- Fourth street. Freight is transferred from one line to the other. The cars of one line, to some extent at least, have been used on the other line. The offices of the traction company have been closed, and all its office work has been put upon the officers and employés of the railway company. The shops of the traction company have been closed and its machinery dismantled; the repairing being all done at the shops of the railway company. The testimony shows that the accounts and books of the two companies are separately kept; that the freight earnings on transferred freight are apportioned between the two companies by a traffic manager who acts in the same capacity for both lines; that all repairing chargeable to the traction line is done at actual cost by the railway company, with 10 per cent. added. Since the Puget Sound Electric Railway acquired control of the stock of the traction company, that company and the railway company have been managed by the same person, and the same person has been superintendent of both companies. The manager of the railway and of the traction company is not paid by either of them, but by a concern known as the Stone-Webster Company. It is pertinent to add that the railway company is a New Jersey corporation, having at the time of the trial the following officers and board of directors: President, Russell Robb; first vice president, Guy E. Tripp; treasurer, Henry B. Sawyer; secretary, Alvah K. Todd; directors, T. Nelson Perkins, John S. Bartlett, Henry B. Sawyer, Chandler Hovey, Russell Robb, A. S. Michener, John R. Turner, Sidney Z. Mitchell, and Guy E. Tripp. The traction company is a Maine corporation, with the following officers and board of directors: President, Guy E. Tripp; first vice president, Fred S. Pratt; treasurer, Henry B. Sawyer; secretary, Alvah K. Todd; directors, A. S. Michener, E. Howard George, Fred S. Pratt, Alvah K. Todd, and Guy E. Tripp. It is not shown, nor is any attempt made to show, that the appellant railway company owns any stock in the traction company, or in any way directs and controls its policy. Nor is the traction company or the Puget Sound Electric Railway the owner of a majority of the stock of both the local companies made parties to the suit; the relator's whole claim being that the appellant should bring the traction company within the terms of its settlement agreement with the city, and issue transfers 'because every external circumstance pointed toward the conclusion that it was at least operating the traction line of street railway, if it did not in fact own and control it.'

The following clause of the contract is relied on: 'Fifth: On and after the 1st day of April, 1903, the said party of the first part shall transport any person from any point or place within the corporate limits of the city of Tacoma, on any line or lines of street railway owned, operated, or controlled by said party of the first part, to the terminus of its line in Point Defiance Park for a single fare not exceeding five cents, and the party of the first part agrees that it will from and after the date of this agreement extend its present transfer system for a continuous trip one way to and from all lines within the city of Tacoma (and including that portion of the Point Defiance line outside of the city of Tacoma), but nothing in this section shall be so construed as to require the issuance of transfers which can be so used on parallel or other lines as to make it possible for a passenger to make a round trip for one fare, nor to prevent the party of the first part from making and enforcing all reasonable rules and regulations necessary, in its judgment, to prevent fraud.'

We would be glad to hold with the relator, for nothing can work greater hardship and inconvenience to the public than two lines of street railway, operating in the same community, but denying the right of transfer. But the legal effect of such ruling would be to make a judicial decree consolidating two companies which under their franchises were designed to be competing lines, a result generally held to be void on the ground of public policy, or to work a dissolution of the corporate franchise. Not only would the majority stockholders of the traction company have a right to be heard, but the minority stockholder must have his day in court as well. The right of transfer from one system to another is a matter of contract or right reserved in the franchise, and there is nothing in the railway company's franchise that would compel it to transfer passengers to another, if it be independent in law. The remedy is legislative, and not judicial.

The decisions of the Supreme Court of the United States and other authorities which we shall cite sustain appellant in the legal position it has assumed. In Pullman Palace Car Co v. Missouri P. Ry. Co., 115 U.S. 587, 6 S.Ct. 194, 29 L.Ed. 499, the Pullman Company sought to compel the Missouri Pacific Railway Company to haul its cars over certain lines owned, operated, or controlled by lease; the fact further appearing that the Missouri Pacific owned a majority of the stock of the other lines. The Supreme Court of the United States held that the contract of the Pullman Company was inoperative, except...