Detroit United Railway v. City of Detroit
Opinion of the Court
delivered the opinion of the court.
The Detroit United Railway Company brought this action in the United States District Court for the Eastern District of Michigan to enjoin the City of Detroit from enforcing the provisions of an ordinance regulating street railway fares in that city. The ordinance was passed August 9, 1918. It is printed in the margin.
The question upon this appeal is: Did the bill, taking its allegations to be true, state grounds for relief to which the company was entitled upon the facts set forth? The action of the District Court was equivalent to sustaining a demurrer to the bill.
On August 7,1918, the company put in force a schedule of its own, making single fares 6 cents, with' 10 tickets for 5,5 cents, cash fare or tickets good on connecting or inter
It is further alleged that Detroit is a city of a population exceeding 750,000; that it is an industrial city with much the larger part of its male population employed in industrial plants within and adjacent to the city; that the operation of the company’s railway system was the only means of transportation of such employees from their homes to their places of employment, and that the interruption of the operation of the company’s system, or the separation in operation of the franchise from the non-franchise lines, would paralyze the industrial and business life of the city, throw thousands of its residents out of employment, and result in shutting down its industrial plants and factories. Allegations follow setting forth' the value of the company’s property, and stating that the effect of the ordinance, if enforced, will be to require the operation of the company’s system at a deficit, and, consequently, with no return on the investment.
The learned district judge answered the contention of the company by holding, in substance, that as to the non-franchise lines the remedy of the company was to abandon the service and take its property from the city streets, and that as to the franchise lines the exception of, the fifth section of the ordinance saved the company’s contract rights from impairment. There can be no question that it was within the city’s power to compel the company as to its non-franchise lines to remove its tracks from the streets of the city. This was settled in Detroit United Railway v. Detroit, 229 U. S. 39. The city did not do so. Instead of taking such action it passed the ordinance in controversy, providing for the continued operation of
The allegations of the bill, which for the present purposes must be taken as true, are ample to the effect that the enforcement of this ordinance will result in a deficit to the company. We cannot construe the exception of section five, having reference to existing franchise contracts, in. such way as to modify the requirements of section four which in explicit terms fixes the fares for trips over two or more lines whether franchise lines or not, and limits the maximum fare without charge for transfers. This must be read .in view of the definition of a continuous
In the present case the service upon the terms fixed in the ordinance, is continued for a year, the city reserving the right Jto repeal the ordinance at any time.
It is clear that the city might have taken a different course by requiring the company to remove its tracks from the non-franchise lines; it ,elected to require continued maintenance of the public service,, doubtless because it was believed that it was necessary in the existing conditions in the city to continue for a time at least the right of the railway company to operate its lines; This amounted to a grant to the company for further operation of the system, during the life of the ordinance. For this public service it was entitled to a fair return upon its investment. Elements to be taken into, consideration in valuing the property of the company in estimating a fair return are not involved in this case. If the allegations of the bill are true, and for present purposes they , must be so regarded, the continued operation of the railroad system of the company upon the fares fixed in the ordinance will result in a deficit, and deny to the company due process of law within the meaning of the Federal Constitution.
As rates of fare aré fixed on some of the existing franchise lines at 5 cents without transfers, it would follow as to . continuous trips over such franchise and non-franchise lines, such trips comprehending much of the trans
In our view the allegations of this bill for the purposes of the demurrer sufficiently alleged violations of the Constitution of the United States in the action , of the city in passing and enforcing the ordinance in controversy. The District Court should have entertained the bill, heard the application for a temporary injunction, and proceeded to a hearing and determination of the case in due course.
Reversed.
An Ordinance to fix and establish maximum rates of fares and charges which may be exacted and received by persons, corporations or partnerships operating street railways for the carriage of passengers within the City of Detroit, and to fix a penalty for the violation thereof.’
It is Hereby Ordained by the People of the City of Detroit:
Section 1. No person, partnership, or corporation operating a street railway on the streets of the City of Detroit, for the carriage of passengers for hire, shall charge more than five cents for a single ride, or six tickets for 25 cents, per person for one continuous trip within the city over any line which is now operated or shall hereafter be operated without a franchise fixing the rate of fare.
. Section 2. No such person, partnership or corporation shall charge a higher rate of fare upon any line now or hereafter operated under a franchise contract than is fixed by such franchise.
Section 3. Between the hours of five and six-thirty a. m. and four forty-five and five forty-five p. m. tickets in strips of eight for twenty-five cents shall be sold on all cars on all lines except where such sale would be contrary to the terms of a franchise contract, which tickets shall entitle the holder to the same rights between said hours as the payment of a five cent fare would.
Section 4. Where a trip is over two or more lines,, whether franchise lines or not, the maximum fare shall be five cents, and no transfer fee
Section. 5- A continuous trip means one journey from point to point within the city, whether the saméis made upon one car or one line or by means of transferring from car to car or from line to line. Each such person, partnership or corporation, and the officers, agents, servants and employés thereof, shall, upon demand, furnish proper transfers to carry into effect the provisions of this section. The provisions of this Ordinance shall not be construed as an attempt to impair the obligation of any valid .contract, but shall apply to and govern all such street railway passenger traffic in the city, except where the same is governed by the provisions of such contract.
Section 6. Any such person, partnership or corporation which shall violate the provisions of this Ordinance, or shall attempt to do so, and any officer, agent, servant or employé who shall order or direct any such violation or attempted violation of the provisions of this Ordinance, shall be guilty of an offense, and upon conviction shall be fined not to exceed five hundred dollars, or imprisoned in the Detroit House of Correction for not to exceed ninety days, or shall both fined and imprisoned in the discretion of the court, for each violation.
Section 7. This Ordinance is passed for the public welfare in the case of an emergency involving the peace, health and safety of the people of the city, and it is ordered to take immediate effect. It may be amended or repealed at any time by the Common Council of the City of Detroit. Unless so amended or repealed it shall remain in force for one year from August 9,1918.
Dissenting Opinion
dissenting.
The relation between the city and the railway company, when the ordinance which the court holds unconstitutional was passed, was this:
The company owned three classes of tracks, viz:
(a) Those in the business and residence streets most productive of traffic, constituting the greater part of the lines of the company. Its authority to maintain these tracks expired in 1909-1910. and they are designated in the record as "Non-franchise lines.” It will be convenient to refer to the streets in which these lines are located as "Non-franchise streets.”
(b) Tracks designated as “Three-cent franchise lines,” (Exhibit "T”), also largely in business and important residence streets. The company had franchises for these lines under which it was obliged to sell eight tickets for twenty-five cents good from 5.45 a. m. to 8 o’clock p. m. and six tickets for twenty-five cents good during the*438 remainder of the twenty-four hours. Such tickets entitled the holders to transfer privileges only on all three-cent lines.
(c) Disconnected sections of track, of small mileage, in streets remote from the business parts of the city. For these lines the company had unexpired franchises granted by villages and townships before thé extension of the city limits included them, which allowed a fare of five cents, in some places, in others five cents with transportation to the City Hall. The mileage of these grants varied from five miles to “six blocks” in length, they are described in the bill as lying, some to the north, others to the south, others to the east and others to the west of the city, as it was when the grants were made and, thus widely separated, they had no connection one with the Other, except over non-franchise or three-cent franchise tracks. These are designated as “Five-cent franchise lines.”
It was stated at the bar by counsel for the city, and not questioned, that there were about one hundred and fifty miles of non-franchise.lines, about sixty-five miles of the three-cent franchise lines,- and only fifty-five miles of five-cent franchise lines.
In their brief counsel for the company say that the larger part of the company’s lines had been operated for . several years prior to December, 1917, on what was known as the “Day-to-day agreement,” (and see Detroit United Railway v. Detroit, 229 U. S. 39, 42), under which a rental was paid to the city for the use of the streets and the company was. allowed, to charge a cash fare of five cents or seven tickets for twenty-five cents, except during an hour and a half, in the morning and' one hour in the evening, when tickets sold eight for twenty-five cents were accepted. For these fares transfers were given over the entire lines of the company. Either party could withdraw from this arrangement at any time, and in December,
This arrangement continued until August 2,1918, when, not satisfied, the company proposed to the city a five-cent fare with a charge of one cent for a transfer over all lines in the city one-fare zone, or, in the alternative, a six-cent fare with ten tickets for fifty-five cents and universal transfers, the franchise rates on the three-cent lines to continue, except that for the fares last named universal transfers would be given.
This proposal the city rejected and thereupon the company, without. any authority from the city, put into operation the second proposal above stated, allowing transfers over any connecting ór intersecting line within the city limits. In response to this action of the railway company the city passed the ordinance which, for two reasons, the court has held‘invalid, viz:
(1) Over certain of the franchise lines a five-cent rate of fare without transfers was provided for in the grants, and because section four of the ordinance required transportation “where a trip is over two or more lines, whether franchise lines or not,” without transfer charge, it is held that, if this provision were enforced, the effect would be to impair such five-cent franchise contracts and that the ordinance is therefore void.
(2) Interpreting the ordinance as a grant to the company of the right to operate its lines, franchise and non-franchise, at rates which the bill alleges to be non-compensatory, the court holds it invalid because . it would deprive the company of its property without due process of law.
The case must be considered on the allegations of the
As to the first. It is not anywhere alleged in the bill that the “Five-cent franchise lines” (no complaint is made as to the 3-cent lines) can be operated separately and prof-, itably or that less income would be realized from them if operated under the terms of section four in conjunction with the non-franchise lines than if they were operated as separate properties, if such thing be possible, charging ‘ the five-cent franchise rate without transfers. Without such an allegation it is pure conjecture to say that the company would suffer loss and that its contract would be impaired by giving effect to section four. He who would strike down a law must show that the alleged unconstitutional feature injures him and operates to deprive him of rights protected by the Federal Constitution. Plymouth Coal Co. v. Pennsylvania, 232 U. S. 531, 534.
But the bill not only fails to allege that the railway company would suffer loss from giving effect to section four, but it states facts which render it highly probable, if not entirely clear, that it would benefit by it.
All five-cent franchise lines appear from the bill to be, as we have said, outlying, of limited mileage, and so wholly disconnected one from thé other that it would not be practicable to operate them profitably, if at all, except in connection with non-franchise lines. The record shows that in the past they have been so operated, with mutual transfers, and both of the proposals of the company made to the city on August 2, 1918, contemplated such operation. In the absence of allegation to the contrary, the reasonable inference from this description of the five-cent franchise lines and this practice with respect to them is, that it is not practicable to operate them profitably as separate properties and that whatever value there is in them must be realized by operating them jointly with the non-franchise lines, with mutual transfers, and that the
But, should this section four be construed to prescribe a rate for transfer over franchise lines?
The first section, as printed in the margin of the court’s opinion, prescribes a charge “for one continuous trip within the city over any line which is now operated or shall hereafter be operated, without a franchise fixing the rate of fare.”
Clearly this is intended not to apply to the franchise . lines.
The second section declares that the charge over franchise lines shall not be greater than is fixed in the franchise.
This plainly contemplates allowing the full franchise rate where one exists.
Section three provides for the special or “workingmen’s” tickets but carefully excepts from its application “all lines . . . where such sale would be 'contrary to the terms of a franchise contract.”
Section five in terms declares “the provisions of this Ordinance shall not be construed as an attempt to impair the obligation of any valid contract, but shall apply to and govern all such street railway passenger traffic in the city, except where the same is governed by the provisions of such contract.”
Thus we have in the ordinance a declaration that the rate prescribed shall apply only to non-franchise lines, that the franchise rate shall apply on ajl franchise lines, that special ticket rates shall not apply where they conflict with franchise rates, and in addition there is the general declaration that the city council is intending to deal with non-franchise lines only, and that the ordinance shall not be so construed as to impair franchise contracts.
To this we must add that, it is clear that, excluding the five-cent franchise lines, this section four would still have
AH. of this is overlooked by the court, and laying hold of the possible loss to the. company (wholly improbable as we have, seen) through the application of the section to the five-cent lines, the entire ordinance is struck down as. unconstitutional.
This judicial power of declaring laws unconstitutional is of so high and delicate a character that it has been often declared by this court that it would exercise it only in clear cases, Fletcher v. Peck, 6 Cranch, 87, 128; Fairbank v. United States, 181 U. S. 283. Every possible presumption is in- favor of a statute and this continues until the contrary is shown beyond a rational doubt, Sinking-Fund Cases, 99 U. S. 700, 718. The violation of the Constitution must be “proved beyond all reasonable doubt,” Odgen v. Saunders, 12 Wheat. 213, 270; Nicol v. Ames, 173 U. S. 509, 515.
But if it be assumed that the application of section foúr would result in loss to the company and would impair
Coming now to the second and more fundamental ground, on which the court proceeds to its conclusion. It is held that the ordinance contemplates the continued operation of the non-franchise lines, and therefore, applying the novel doctrine of the Denver Union Water Company Case, 246 U. S. 178, that it is a grant which, •if given effect, would necessarily deprive the company of its property without due process of law, since the allegations of the bill are that it would be non-compensatory.
We are now dealing, not with an alleged attempt on the part of the city to require the company to operate its five-cent and its three-cent franchise lines at a loss, but with an offer to it of a right to operate the lines in the non-franchise streets, in which it has no rights, in conjunction with its other lines at what is alleged to be a non-compensatory rate for the entire system. The right of the company to operate, the five-cent and three-cent lines was complete without the ordinance and the operation of them, as separate properties, was quite unaffected by it.
.In defining the relation between the city and the company as it was before the ordinance, which is declared invalid, was passed, the court holds, as it must (229 TJ. S. 39), that the company had no rights in the non-franchise streets, and that the city had the right to order its tracks taken out of them.
Thereupon the city made its counter-proposal by tendering the ordinance rates to the company, which promptly rejected them. It seems equally clear that this proposal and the rejection of it did not change the relations of the parties and that they continued precisely as they were before and as they were defined in the opinion of the court — the railway company without any rights whatever in the non-franchise streets. But, not so says the court, for the reason that the ordinance implies that the lines are to be operated and, under the Denver Case, it must therefore be interpreted as a grant, (contrary it would seem to Blair v. Chicago, 201 U. S. 400, 463), and, since it is alleged that the rates prescribed are non-compensatory, it is an invalid grant.
If it be conceded that the ordinance is in terms a grant, yet since every grant implies and requires a grantee, when the company refused to accept it the grant necessarily failed. It is obvious and elementary that no person or . Corporation can be made a grantee against his or its will. Kent Com., 13th ed., vol. 4, p. 455, note b. Thus, again, even on the assumption of the court, it would seem that the ordinance failed to change the relations of the parties from what they were before.
The conclusion of the District Court. that this ease can be distinguished from the Denver Union Water Company Case, and therefore is not to be ruled by it, seems Bound, but the distinction need not be discussed.
The application of the principle of that case to this one must result in depriving the city of the power to treat with the company for terms for the operation of the tracks
If the management of the company was misinformed as to the effect of the expiring of its franchises, as seems probable (229 U. S. 39), or if it underestimated the difficulties in the way of seeming an extension of them; the result, as declared by this court in the case just cited, was to deprive the company of all legal rights in the non-franchise streets, and while its misfortune may be regretted, the apparent hardship of the situation is no valid ground for raising a constitutional right in favor of one of the parties, which will result in depriving the other party of an advantage which has. lawfully come to it. Substantial justice is more likely to result from trusting to the sense of fairness of a community in dealing with such cases than from imposing upon a city a contract which a court shall make for them. The language used by Mr. Justice Holmes, when dissenting in the Denver Case, 246 II. S. 196, is sharply applicable to this case, rmtiaMs mutandis: “We must assume that the Water Company
For the reasons thus stated, I think that the ordinance is valid, and that the judgment of the District Court should be affirmed, and therefore I am compelled to dissent from the opinion and judgment of the court.
Reference
- Cited By
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- Where the District Court, in denying a preliminary injunction, of its own motion dismisses the bill, its action is equivalent to sustaining a demurrer, and, upon appeal, the allegations of the bill must be taken as true. P. 431. A city, instead of exercising its power to compel the removal of tracks operated by a street car company without franchise, passed an ordinance looking to their continued operation by the company and prescribing fares and transfer privileges and penalties for violations. Hold, equivalent to a grant of a right to operate during the life of the ordinance, entitling the company to a fair return on its investment. Denver v. Denver Union Water Company, 246 U. S. 178. P. 435. A company operated a system of city street car lines, for some of which it had franchises entitling it to charge a certain fare and for others no franchises. An ordinance, regulating the entire system,‘purported explicitly to fix the fares for trips over two or more lines, whether franchise or not, and forbade extra charge for transfers, defining a continuous trip as a journey from one point to another' in the city, whether made ofi-one car or line, or by transferring from car to car or from line to line; declaring, however, that it should not be construed as an attempt to impair the obligation of any valid contract, but should apply to and govern all such street railway passenger traffic in the city except where governed by the provisions of such contract. Held: (1) That the latter declaration must be construed as referring only to trips wholly on the franchise lines (p. 435); (2) that if its enforcement would result in a deficit to the company, as alleged, the ordinance violated the due process clause. P. 436. ' An ordinance compelling a street car company to carry passengers on continuous trips over franchise lines to and over non-franchise lines, and vice versa, for ■ a fare no greater than its franchises entitle it to charge upon the former alone, impairs the obligation of the franchise contracts. Detroit United Railway v. Michigan, 242 U. S. 238. P. 437. Reversed.