The Detroit Citizens' Street Railway Company, at the time this
action was commenced, was operating upwards of one hundred and
thirty-five miles of street railways in Detroit under grants and
permissions made by the city government of Detroit and by the
statutes of Michigan set forth in the statement of facts and in the
opinion of the Court in this case. This litigation arises out of
the different constructions placed by the parties upon the statutes
of Michigan, called respectively the Tram-Railway Act, and the
Street-Railway Act, both in force when said company acquired its
powers. The provisions made by those statutes are summed up in the
statement of facts.
Held:
(1) That this was not such a case as, on its face, equity could
have no jurisdiction over, and that, considering the public
interests involved, a case is made out for following the general
rule that a defense of want of equity jurisdiction will not be
recognized where it has not been taken by answer or in any other
manner and is not insisted upon on the hearing before the
court.
(2) That there can be no question in this Court as to the
competency of a state legislature, unless prohibited by
constitutional provisions,
Page 184 U. S. 369
to authorize a municipal corporation to contract with a street
railway company as to the rate of fares, and so to bind, during the
specified period, any future common council from altering or in any
way interfering with such contract.
(3) That, such a contract having once been made, the power of
the city over the subject, so far as altering the rates of fare or
other matters properly involved in and being a part of the
contract, is suspended for the period of the running of the
contract.
(4) That binding agreements had been made and entered into,
between the city, on the one side, and the companies, on the other,
relating to rates of fare, and such agreements could not be altered
without the consent of both sides.
(5) That those binding agreements constituted a contract as to
the rates, equally binding with that in regard to taxes.
(6) That the rate of fare having been fixed by positive
agreement, under express legislative authority, the subject was not
open to alteration thereafter by the common council alone, under
the right to prescribe from time to time the rules and regulations
for the running and operation of the road.
(7) That the language of the ordinance which provides that the
rate of fare for one passenger shall not be more than five cents
does not give any right to the city to reduce it below the rate of
five cents established by the company.
(8) That the provisions in the Tram-Railway Act and the
Street-Railway Act referred to are entirely harmonious, and may be
fully carried out so as to involve neither incongruity nor
inconsistency.
(9) That the extension of the terms of the city's consent beyond
the limits of the corporate life of the companies was not illegal
and void.
(10) That the fixing of rates being among the vital portions of
the agreement between the parties, it cannot be supposed that there
was any intention to permit the common council, in its discretion,
to make an alteration which might be fatal to the pecuniary success
of the company.
The bill in this suit was filed by the railway company for the
purpose of obtaining an injunction to restrain the City of Detroit
and the individual defendants from enforcing certain ordinances of
the common council of the city, adopted in 1899, reducing the rates
of fare on the various city railways of the complainant and
providing for transfers of passengers from one route to another on
payment of one fare of five cents, on the ground that such
ordinances were violations of the federal Constitution because they
impaired the obligation of contracts theretofore entered into
between the city and the various predecessors
Page 184 U. S. 370
of the complainant. The circuit court granted a decree
perpetually enjoining the defendants as prayed for, and they have
appealed therefrom to this Court.
As further ground for equitable jurisdiction, the complainant,
after setting up in the bill its alleged contracts with the city
and the attempted violation thereof by the latter, made the
following averments:
"Your orator further shows unto the court that as owner and
lessee it is now engaged in the operation of upwards of one hundred
and thirty-five miles of street railways in the streets of the City
of Detroit; that in such operation it has in use upwards of four
hundred street cars, which are propelled by electricity, and has in
its employ, engaged in such operation, upwards of one thousand men
as motormen and conductors; that it carries an average of ___
thousand passengers per day over the lines owned and operated by
it; that, under and by virtue of the provisions of said ordinances,
Exhibits A. B, C, D, and E, and the obligation of your orator to
carry such passengers as may offer themselves for carriage, it will
be subjected to innumerable demands upon the part of the traveling
public to sell to such persons as may make such demands tickets in
accordance with the provisions of said ordinances, Exhibits A, B,
C, D, and E, and to issue as provided and required thereby, and to
accept and carry such passengers and transfer the same at the rates
of fare fixed by said ordinances; that, on your orator's refusal to
comply with such demands and requests, your orator may be subjected
to numerous actions at law by persons so refused, and to annoyance,
litigation, and loss by reason thereof; that the said City of
Detroit will seek and now seeks and threatens and intends by such
power and authority as it may possess, and by vexatious legal
proceedings, to compel your orator to comply with the provisions of
said ordinances, Exhibits A, B, C, D, and E, and as a result your
orator will be put to great loss, damage, hindrance, and annoyance
in the transaction of its business, which it is entitled to carry
on without such suits, litigation, actions, annoyance, hindrance,
loss, and damage."
"That, in full reliance upon its right to charge the full rates
of fare fixed by the various contracts and grants hereinbefore
Page 184 U. S. 371
referred to, and for the purpose of procuring such money as it
was necessary that it should have for the construction,
maintenance, repairing and reconstruction, and operation of the
various lines of railway hereinbefore described, it issued its
bonds and borrowed thereon the money so needed; that your orator
and its predecessors and lessors have issued for the purposes
aforesaid bonds amounting in the aggregate to eight million two
hundred thousand dollars, payable in gold coin, with semiannual
interest at the rate of five percent per annum; that many of said
bonds mature and will be due and payable within the next three
years, and it will be necessary for your orator to borrow a
considerable amount of money to assist in the payment and
retirement of said bonds by the issue of bonds of the same
character; that all of said bonds outstanding are secured by
mortgages given at various dates, by the terms of which all of the
property, rights, privileges, and franchises of your orator, its
lessors and predecessors, including the franchises or rights fixed
by the said various contracts and grants to charge the rates of
fare therein named, together with all the tolls, fares, issues,
earnings, and profits arising therefrom, have been mortgaged to
trustees therein named for the use and benefit and security of the
holders of such bonds; that said bonds have been sold to parties
purchasing the same in the full faith and belief that your orator,
its lessors and predecessors and grantors, had the right to charge
the full rates of fare fixed by the various contracts and grants
without any right upon the part of the said City of Detroit, or of
any other person, corporation, or authority to interfere with,
lessen, reduce, or impair the same, and, the said right to have and
receive the rates of fare so fixed being so mortgaged as a part of
the security for the payment of said bonded indebtedness, the
action of said city by the adoption of the ordinances, Exhibits A
and B, is an impairment of the obligation of said contract as
against the rights of said bondholders under and by virtue of the
security created by said various mortgages and in contravention of
said Section 10 of Article I of the Constitution of the United
States."
Complainant also averred in its bill the granting of consent by
the city to its predecessors to lay tracks in the streets and
Page 184 U. S. 372
charge tolls at the rates named in certain ordinances, for
transporting passengers, and the due assignments by the various
companies of all such rights, by purchase or lease to the
complainant, and the defendant by its answer makes no issue as to
the validity of such assignments or the ownership by complainant of
all the interests of the former companies in the contracts and
ordinances set forth in the bill.
The answer admits the passage by the common council of the
ordinances of 1899, reducing the rates of fare on the roads
operated by the complainant, and also admits that the city intends
to compel the complainant to comply with the provisions of such
ordinances, which the defendants aver are valid because, as they
claim, the former ordinances did not constitute a contract as to
rates of fare which could not be altered by the city.
This litigation arises out of the different constructions placed
by the parties upon the statutes of Michigan, called respectively
the Tram-Railway Act and the Street-Railway Act, and the various
amendments of those acts, and also out of the different claims of
the parties as to the character and validity of the ordinances
passed by the common council subsequently to the passage of those
statutes.
The Tram-Railway Act was passed in 1855, and the Street-Railway
Act in 1867. Prior to the amendment in 1861, made to the former
act, there was no authority for the incorporation of street
railways, and in the year named, that act was amended by adding
sections 33 and 34, which are as follows:
"SEC. 33. It shall be competent for parties to organize
companies under this act to construct and operate railways in and
through the streets of any town or city in this state."
"SEC. 34. All companies or corporations formed for such purposes
shall have the exclusive right to use and operate any street
railways constructed, owned, or held by them: Provided, that no
such company or corporation shall be authorized to construct a
railway under this act through the streets of any town or city
without the consent of the municipal authorities of such town or
city, and under such regulations and upon such terms and conditions
as said authorities may from time to time prescribe. "
Page 184 U. S. 373
In 1867, the above section 34 was further amended by adding an
additional proviso, as follows:
"Provided further that, after such consent shall have been given
and accepted by the company or corporation to which the same is
granted, such authorities shall make no regulations or conditions
whereby the rights or franchises so granted shall be destroyed or
unreasonably impaired, or such company or corporation be deprived
of the right of constructing, maintaining, and operating such
railway in the street in such consent or grant named pursuant to
the terms thereof."
These sections of the Tram-Railway Act, it will be seen, made no
special provisions as to rates of fare, and there were no other
sections of the act which did. The last amendment, above set out,
of section 34, was passed March 27, 1867, or twenty-two days after
the passage of the original Street-Railway Act, March 5, 1867.
The provisions of the Street-Railway Act material in this
controversy are as follows:
"SEC. 13. Any street railway corporation organized under the
provisions of this act may, with the consent of the corporate
authorities of any city or village given in and by an ordinance or
ordinances duly enacted for that purpose and under such rules,
regulations, and conditions as in and by such ordinance or
ordinances shall be prescribed, construct, use, maintain, and own a
street railway for the transportation of passengers in and upon the
lines of such streets and ways in said city or village as shall be
designated and granted from time to time for that purpose in the
ordinance or ordinances granting such consent, but no such railway
company shall construct any railway in the streets of any city or
village until the company shall have accepted in writing the terms
and conditions upon which they are permitted to use said streets,
and any such company may extend, construct, use, and maintain their
road in and along the streets or highways of any township adjacent
to said city or village upon such terms and conditions as may be
agreed upon by the company and the township board of the township,
which agreement and the acceptance by the company of the terms
thereof shall be recorded by the township clerk in the records of
his township. . . . "
Page 184 U. S. 374
"SEC. 14. After any city, village, or township shall have
consented as in this act provided to the construction and
maintenance of any street railways therein, or granted any rights
and privileges to any such company, and such consent and grant have
been accepted by the company, such township, city, or village shall
not revoke such consent, nor deprive the company of the rights and
privileges so conferred."
"SEC. 15. Any street railway company may also purchase and
acquire, either at public or private sale, whether judicial or
otherwise, or may hire any street railway in any city, village, or
township owned by any other corporation or company, together with
the real and personal estate belonging thereto, and the rights,
privileges, and franchises thereof, and may use, maintain, and
complete such road, and may use and enjoy the rights, privileges,
and franchises of such company and upon the same terms as the
company whose road and franchises were so acquired might have done.
Every street railway company may also purchase, hold, own, or take
upon lease such real estate, barns, stables, buildings, fixtures
and property as may be necessary for the use and business of their
road, and the whole or any part thereof, together with their
railway, fixtures, property, and appurtenances, rights, privileges,
and franchises, may sell, lease, dispose of, pledge or mortgage,
whenever the corporation shall deem it expedient so to do."
"SEC. 20. The rates of toll or fare which any street railway
company may charge for the transportation of persons or passengers
over their road shall be established by agreement between such
company and the corporate authorities of the city or village where
the road is located, and shall not be increased without consent of
such authorities."
"SEC. 29. All companies and corporations heretofore organized in
this state for the purpose of building and operating street
railways under the statutes then in force shall have the same
powers, rights, protection, and privileges, and shall be subject to
all the liabilities, as are hereby provided for companies and
corporations organized under the provisions of this act."
Section 30 in substance provides that all companies and
corporations thereafter formed for street railway purposes must be
organized under this act.
Page 184 U. S. 375
Some of the railroads of which the complainant is the owner or
lessee were organized under the Tram-Railway Act, and some were
organized under the Street-Railway Act of 1867. The Detroit Street
Railway Company, now owned by the complainant, was organized under
the Tram-Railway Act, and the city adopted an ordinance assenting
to the laying of tracks through the designated streets of the city
on November 24, 1862. Section 1 of the ordinance provides:
"SEC. 1. That consent, permission, and authority is hereby
given, granted and duly vested in Eben N. Wilcox and his
associates, who may be approved by the council, their successors
and assigns, organized into a corporation, under the laws of the
State of Michigan, as aforesaid, to lay a single or double track
for a railway, with all the necessary and convenient tracks for
turnouts, side tracks and switches, in and along the course of the
streets of, and bridges in, the City of Detroit, hereinafter
mentioned, and the same to keep, maintain, and use, and to operate
thereon railway cars and carriages, during all the term hereinafter
specified and described, and in the manner and upon the condition
set forth in this ordinance."
The following sections then provide for the streets in which the
rails are to be laid, the manner of laying, whether double or
single track, and various other matters not essential to
enumerate.
Section 8 reads as follows:
"The rate of fare for any distance shall not exceed five cents
in any one car, or on any one route named in this ordinance, except
where cars or carriages shall be chartered for specific purposes:
Provided, cars so chartered shall not be considered regular cars
within the meaning of the preceding section."
Section 20 limits the powers and privileges conferred by the
ordinance to thirty years from and after the date of its
passage.
On November 14, 1879, an ordinance was passed supplementary to
the one passed on November 24, 1862, which provided for extensions
by the railway company of its tracks through various other streets
of the city, and also provided, among other things, for a special
tax on the gross receipts of the several lines of railway operated
by the company, payable to the city, which
Page 184 U. S. 376
tax was to be in lieu of license or other taxes and charges
under the existing ordinances.
Section 5 of the supplemental ordinance provided that the powers
and privileges conferred and the obligations imposed on the railway
company, by the ordinance passed November 24, 1862, and the
amendments thereto, should be thereby extended and limited to
thirty years from date (November 14, 1879).
Section 6 provided that the ordinance should take immediate
effect when written acceptances of the terms thereof were filed in
the office of the city clerk of Detroit by the different companies
controlled by the Detroit City Company, and it also provided that
all ordinances or parts of ordinances in conflict with the
provisions thereof were thereby repealed, and all ordinances and
parts of ordinances not in conflict therewith were thereby affirmed
and continued in force. The acceptances were subsequently duly
filed in the city clerk's office.
A similar ordinance to that of November 14, 1879, was passed on
June 30, 1880, relative to the Fort Wayne & Elmwood Street
Railway Company, confirming and extending for thirty years its
grant under the ordinance of January 31, 1865. Similar ordinances
were passed in favor of other lines which had been organized under
the Tram-Railway Act and its amendments.
And ordinances of the same nature were passed relating to the
companies organized under the Street-Railway Act of 1867.
The original ordinance under which the city gave consent to the
laying of the rails of the Grand River Street Railway was adopted
on May 1, 1868, and the section providing for the rate of fare is
the same in language as section 8, in the foregoing ordinance
relative to the Detroit Street Railway.
The ordinance relating to the Dix Avenue Railway provided in
section 6 "that the rate of fare for a single trip shall not exceed
five cents for any distance within the city limits." Similar
language was used in section 5 of the ordinance approved by the
common council July 13, 1886, relating to the Highland Park
Railway. The eighth section of the ordinance approved by the common
council January 31, 1868, with regard to the Fort Wayne &
Elmwood Railway Company, provides that
Page 184 U. S. 377
"the rate of fare for any distance shall not exceed five cents
in any car."
These ordinances embrace the various railroads now owned or
leased and operated by the complainant, and it is in them, taken in
connection with the statutes already referred to, that the
complainant finds the contracts or agreements as to the rate of
fare, the obligation of which agreements it avers is impaired by
the later ordinances passed in 1899.
The Charter of the City of Detroit, approved June 7, 1883, by
sections 121 and 122, clothed the common council with power over
the streets, highways and alleys, to establish, open, widen,
extend, straighten, alter, vacate, etc., and generally to control
and regulate the manner in which the highways and streets, avenues,
lanes, alleys, public grounds, and spaces within the city should be
used and enjoyed.
The Constitution of the State of Michigan, article 15, section
1, provides that --
"Corporations may be formed under general laws, but shall not be
created by special act, except for municipal purposes. All laws
passed pursuant to this section may be amended, altered, or
repealed."
The various ordinances which have been referred to contain
certain reservations of the right to alter, etc., which are thus
worded: Section 19 of the grant of November 24, 1862, to the
Detroit City Railway, is as follows:
"It is hereby reserved to the Common Council of the City of
Detroit the right to make such further rules, orders, or
regulations as may from time to time be deemed necessary to protect
the interest, safety, welfare, or accommodation of the public in
relation to said railways."
Section 7 of the grant of November 14, 1879, reenacting and
extending the grant of November 24, 1862, is as follows:
"The right to amend or repeal this ordinance in case of its
violation by said company or companies is expressly reserved."
Section 3 of the grant of January 5, 1885, authorizing the Brush
Street line, is as follows:
"It is hereby reserved to the Common Council of the City of
Detroit the right to make such further rules, orders, or
regulations
Page 184 U. S. 378
as may from time to time be deemed by the common council
necessary to protect the interest, safety, welfare, or
accommodation of the city and public in relation to said
railway."
Section 3 of the Trumbull Avenue line grant of July 31, 1865, is
a literal copy of the one last quoted.
Section 18 of the grant to the Grand River Street Railway of May
1, 1868, is as follows:
"It is hereby reserved to the Common Council of the City of
Detroit the right to make such further rules, orders, or
regulations as may from time to time be deemed necessary to protect
the interest, welfare, or accommodation of the public in relation
to said railways."
The same reservation was contained in section 4 of the grant of
June 27, 1885, of the Myrtle Street route.
And section 3 of the grant of August 3, 1888, relating to the
Grand River line, is the same.
Section 19 of the grant of January 31, 1865, to the Fort Wayne
& Belle Isle Company is as follows:
"It is hereby reserved to the Common Council of the City of
Detroit the right to make such further rules, orders, or
regulations as may from time to time be deemed necessary to protect
the interest, safety, welfare, or accommodation of the public in
relation to said railways."
MR. JUSTICE PECKHAM, after making the foregoing statement of
facts, delivered the opinion of the Court.
A question has arisen at the outset as to the jurisdiction of a
court of equity over a case like the one now presented. Assuming
the right to relief in some form, has the complainant a plain and
adequate remedy at law, or is the case such in its nature
Page 184 U. S. 379
and in the relief demanded as would be cognizable in a court of
equity? The foundation of the right of action lies in the alleged
invalidity of the ordinances of 1899, reducing the rates of fare on
the railways of the complainant, because, as averred, those
ordinances are in violation of the federal Constitution as
impairing the obligation of contracts between the parties already
existing, and therefore the claim is made that they should not be
permitted to be enforced against the complainant where such
enforcement might result in a multiplicity of suits, or in
harassing and expensive litigation.
The averments in the complainant's bill upon this subject, which
are set forth in the above statement of facts, show the additional
and special grounds upon which the jurisdiction in equity is
invoked. Of course, if the complainant obey these ordinances, no
controversy can arise, but if in good faith it believe them to be
invalid and hence not binding upon it, and, without resorting to
the courts for equitable relief, it refuses to obey them, the
consequences may be not only embarrassing, but may lead to much
unnecessary and expensive litigation. Continuous demands for the
tickets mentioned in the ordinances at the reduced price therein
provided for may be made by passengers while in the cars of
complainant, and they may refuse to pay fare at the old rate, and
may carry such refusal to the point of suffering removal from the
cars on account of nonpayment of fare. What amount of force would
be necessary in the opinion of the various passengers to
demonstrate that their going was not voluntary would, of course,
give rise to disputes between them and the conductors, and would
possibly, if not probably, lead to frequent breaches of the peace
in the course of these attempts at removal. If not removed, then
the passengers would either pay no fare or the complainant would
have to accept the fare as provided in the ordinances of 1899, and
that would be the same in fact as submitting to their
enforcement.
The roads operated by complainant are also indebted to an extent
of over eight million dollars, secured by mortgages upon the
railways, their franchises, rights, and privileges, together with
the tolls and fares, earnings and profits arising therefrom,
Page 184 U. S. 380
and some of this indebtedness is soon to mature, and it is
admitted that the bonds issued as evidence of such indebtedness and
secured by its mortgages were so issued and sold to and purchased
by the holders thereof in the full faith and belief that the
various roads represented by the complainant had the right to
charge the rates of fare fixed by the ordinances already mentioned,
such belief being based upon the existence and terms of such
ordinances.
The ability of the complainant to renew or extend its mortgage
indebtedness might depend upon belief in the validity of the
contracts as to the rates of fare agreed upon before the attempted
alteration thereof by the ordinances of 1899. The immediate
enforcement of these later ordinances might result in such a
decrease of income as to seriously imperil the solvency of the
complainant. An equitable action like this would certainly be more
adequate and offer more effective and immediate relief than for the
complainant to await the various actions at law to which it would
otherwise be subjected by the defendants and the individuals
demanding the reduced rates for transportation.
The mayor and corporation counsel have, as is seen, been joined
with the city as defendants in the suit. The reason for the joining
of the individual defendants would seem to be that they are the
officers upon whom would devolve the execution of the ordinances
passed by the common council, and in the answer of the defendants
it is admitted that they intend to enforce obedience by the company
to such ordinances. The case is similar in some of its aspects to
that of
Smyth v. Ames, 169 U. S. 466. It
is true there are no penalties fixed in the ordinances for
disobedience to their commands on the part of the company, but the
bill shows that there are a large number of passengers carried over
the roads of the complainant daily, amounting to many thousands,
each of whom would have the right to demand transportation at the
rates provided for by the ordinances in case they were valid. As is
said in
Smyth v. Ames, p.
169 U. S.
518:
"The transactions of a single week would expose any company
questioning the validity of the statute to a vast number of suits
by shippers, to say nothing of the heavy
Page 184 U. S. 381
penalties named in the statute. Only a court of equity is
competent to meet such an emergency and determine, once for all,
and without a multiplicity of suits, matters that affect not simply
individuals, but the interests of the entire community as involved
in the use of a public highway and in the administration of the
affairs of the
quasi-public corporation by which such
highway is maintained."
While this is not such an extreme case, and there are no
penalties provided in the ordinances for disobedience, yet the same
principle applies.
It is a matter of general public interest, as well as of vital
importance to the complainant, that the question involved in this
litigation should be determined at the earliest possible moment,
and once for all, and thus a multiplicity of suits and other
complications prevented.
Taking all these facts into consideration, and bearing in mind
that the answer does not set up any defense of the lack of
jurisdiction of a court of equity over the subject matter, and does
not insist that there is an adequate and plain remedy at law (and
no such objection has been taken at any time, and has not been
insisted upon before us), we do not feel compelled, under the
peculiar circumstances of the case, to ourselves take notice of
it.
It is not such a case as on its face equity could have no
jurisdiction over, such as an action to recover damages for an
assault, or for a libel or slander, but the question between the
parties as to the validity of various ordinances and the right of
the city to enforce them, involving, as they may, the credit and
possibly the solvency of the complainant, and taking into
consideration the public interests involved in a speedy and final
determination of the question, all these as well as other facts
already mentioned, we think, make out a case for following the
general rule that a defense of this nature will not be recognized
where it has not been taken by answer or in any other manner and is
not insisted upon on the hearing before the court.
Reynes v.
Dumont, 130 U. S. 354;
Kilbourn v. Sunderland, 130 U. S. 505;
Brown v. Lake Superior Iron Co., 134 U.
S. 530.
We do not mean to assert that in all cases of this nature
involving
Page 184 U. S. 382
simply the validity of a subsequent ordinance or law, a court of
equity would be the proper forum, but confine our decision to the
special facts of this case, including the fact that no objection
has been taken to the jurisdiction of the court at any stage of the
litigation, and is not now raised by any party to the same.
This brings us to a consideration of the questions argued at the
bar.
In furtherance of the claim by defendants that the ordinances of
1899 reducing the rates of fare are valid, it is urged that express
authority from the legislature is required to enable the common
council of a city to pass ordinances such as those described in
this case, providing for the consent of the city to the laying of
tracks and the running and operation of a railroad through its
streets and the fixing of rates of fare, and that no such power was
granted in this case, and if there were, there has been no
agreement made by the passage of the ordinances referred to in the
statement of facts. It may be conceded that clear authority from
the legislature is needed to enable the city to make a contract or
agreement like the ordinances in question, including rates of fare.
But there can be no question in this Court as to the competency of
a state legislature, unless prohibited by constitutional
provisions, to authorize a municipal corporation to contract with a
street railway company as to the rates of fare, and so to bind
during the specified period any future common council from altering
or in any way interfering with such contract.
New Orleans Gas
Company v. Louisiana Light Company, 115 U.
S. 650;
New Orleans Waterworks Company v.
Rivers, 115 U. S. 683;
St. Tammany Waterworks v. New Orleans Waterworks,
120 U. S. 64;
Walla Walla v. Walla Walla Water Company, 172 U. S.
1,
172 U. S. 9;
Los Angeles v. Los Angeles City Water Company,
177 U. S. 558,
177 U. S. 570;
Freeport Water Company v. Freeport, 180 U.
S. 587,
180 U. S. 593.
The contract once having been made, the power of the city over the
subject, so far as altering the rates of fare or other matters
properly involved in and being a part of the contract, is suspended
for the period of the running of the contract.
It is, however, urged that the terms employed in the
ordinances
Page 184 U. S. 383
under which the complainant runs its different lines of street
railways are not sufficient to constitute contracts, which may not
be altered at the pleasure of the common council. It is said that
at least in regard to the ordinances relating to those companies
organized under the Tram-Railway Act, no contract can be found in
them, as there was no special provision in that act for an
agreement between the city and a company applying for the use of
its streets, as to the rates of fare, and therefore a statement in
an ordinance upon that subject would amount to no more than a
license which might be altered or revoked at any time, and that, if
the language were a contract, it was in the power of the common
council to alter or abrogate it under section 34 of the
Tram-Railway Act.
It will be seen that, under section 34 of the Tram-Railway Act
as it was enacted in 1861, a railway corporation organized under
the act could not construct a railway through the streets of a city
without the consent of the municipal authorities "and under such
regulations and upon such terms and conditions as said authorities
may from time to time prescribe." Hence, it is argued that any
terms or conditions under which the railway company obtained the
consent of the municipal authorities might by the same authorities
be from time to time altered as they should in their discretion
think fit.
In
Pingree v. Michigan Central Railroad Company, 118
Mich. 314, decided in 1898, the Supreme Court of Michigan held that
section 15 of the laws of 1846, relating to the incorporation of
the Michigan Central Railroad Company and other sections mentioned
in the act which provided that the company might fix, regulate, and
receive tolls taken for the transportation of passengers or
property on the railroad, subject only to the limitation, as to
passengers, of three cents per mile, etc., the company having the
power to charge for tolls and transportation such sums as might be
lawfully established by the bylaws of the company, and the board of
directors having power to pass all bylaws necessary for carrying
into execution all powers vested in the company, conferred a
contract right on the corporation to fix tolls within the limits of
three cents per mile, which right could not be violated by the acts
of a succeeding legislature.
Page 184 U. S. 384
There is no provision in the act referred to in the above-cited
case, of a nature similar to the one in question here, providing
for regulations, terms, and conditions which might from time to
time be prescribed. The case shows, however, that, in the opinion
of the Supreme Court of Michigan, language similar to that used in
the ordinance (omitting such provision) amounted to a contract, and
the question remaining would be whether the further language
contained in the ordinance permitted an alteration of the terms of
the contract as the common council might from time to time
prescribe. The rate of fare is among the most material and
important of the terms and conditions which might be imposed by the
city in exchange for its consent to the laying of railroad tracks
and the running of cars thereon through its streets. It would be a
subject for grave consideration and conference between the parties,
and, when determined by mutual agreement, the rate would naturally
be regarded as fixed until another rate was adopted by a like
agreement. Can it be possible that, under this language permitting
consent upon such terms and conditions as the city might from time
to time prescribe, the power was reserved to make a rate of fare
which might ruin the whole enterprise? That a rate, once
deliberately and mutually agreed upon, might be thereafter and from
time to time altered at the pleasure of the city alone? Will it be
believed the parties thus understood the meaning of that provision?
It would hardly be credible that capitalists about to invest money
in what was then a somewhat uncertain venture, while procuring the
consent of the city to lay its rails and operate its road through
the streets in language which as to the rate of fare amounted to a
contract, and gave the company a right to charge a rate then deemed
essential for the financial success of the enterprise, would at the
same time consent that such rate then agreed upon should be subject
to change from time to time by the sole decision of the common
council. It would rather seem that the language above used did not
and was not intended to give the right to the common council to
change at its pleasure from time to time those important and
fundamental rights affecting the very existence and financial
success of the company in the operation
Page 184 U. S. 385
of its road, but that, by the use of such language, there was
simply reserved to the city council the right from time to time to
add to or alter those general regulations or rules for the proper,
safe, and efficient running of the cars, the character of service,
the speed and number of cars, and their hours of operation and
matters of a like nature, such as are described in the opinion of
the court below in this case. Such would seem to be a reasonable
construction of the language. It is unnecessary to conclusively
determine the question, because we think that, under sections 20
and 29 of the Street-Railway Act of 1867, above set out, and by the
subsequent adoption of the ordinance of 1879 (set out in the
foregoing statement of facts) relating to the Detroit City Railway
Company (and by the adoption of similar ordinances thereafter with
regard to the other companies), binding agreements were made and
entered into between the city, on the one side, and the companies,
on the other, relating to rates of fare, and such agreements could
not be altered without the consent of both sides.
These agreements had express legislative authority not only
under the Tram-Railway Act, but also and particularly under the
Street-Railway Act of 1867. By the twentieth section of the latter
act, it was provided that the rates of toll or fare, which any
street railway may charge for the transportation of persons or
passengers over its road, should be established by agreement
between the company and the corporate authorities of the city or
village where the road is located, and should not be increased
without the consent of such authorities. The provisions of this
section, among others, were by the twenty-ninth section of the act
transferred to
"all companies and corporations heretofore organized in this
state for the purpose of building and operating street railways
under the statutes then in force, shall have the same powers,
rights, protection, and privileges, and shall be subject to all the
liabilities, as hereby provided for companies organized under the
provisions of this act."
It is plain that the legislature regarded the fixing of the rate
of fare over these street railways as a subject for agreement
between the parties, and not as an exercise of a governmental
Page 184 U. S. 386
function of a legislative character by the city authorities
under a delegated power from the legislature. It was made matter of
agreement by the expressed command of the legislature. Ordinances
of a like nature were passed by the common council relating to the
other companies, and all of them were accepted in writing, and they
all had in them provisions relating to, or referred to ordinances
providing for, the rate of fare in language similar to the
foregoing.
Coming to a consideration of the effect of the language used, we
think it amounted to a contract as to rates of fare. The ordinance
of 1879 and the similar ordinances thereafter passed relating to
the other corporations, together with the Street-Railway Act of
1867, and sections 20 and 29 thereof, make out plain agreements
entered into between the parties in relation, among other things,
to the rates of fare to be charged by those companies. In the
ordinance of 1879 and in the other ordinances under consideration,
there were provisions made for special taxation of the companies
which the Supreme Court of Michigan, in
Detroit Citizens'
Street Railway Company v. Detroit, 125 Mich. 673, has held
amounted to a contract between the parties which was as binding as
though made by the legislature itself. Such decision by the Supreme
Court of Michigan is entitled to very great respect and weight. If
the ordinance constituted a contract between the parties in
relation to taxes which were to be levied upon the company, we do
not see any reason, in the language used providing for the rates of
fare, for not holding that there is a contract as to those rates
equally binding with that in regard to taxes.
In
City Railway Company v. Citizens' Street Railroad
Company, 166 U. S. 557, the
Common Council of Indianapolis, on January 18, 1864, adopted an
ordinance which said:
"Consent, permission, and authority are hereby given, granted,
and duly vested unto the company organized with R. B. Catherwood as
president, a body politic and corporate by the name of the
Citizens' Street Railway Company of Indianapolis, and their
successors, to lay a single or double track for passenger railway
lines,"
etc., under which ordinance the railway was built. This
Court
Page 184 U. S. 387
said, p.
166 U. S.
567:
"The original ordinance of January 18, 1864, was plainly a
proposition on the part of the city to grant to the company the use
of its streets for thirty years in consideration that the company
lay its tracks and operate a railway thereon upon certain
conditions prescribed by the ordinance. This proposition, when
accepted by the company and the road built and operated as
specified, became a contract which the state was not at liberty to
impair during its continuance; but if, at the expiration of the
thirty years, the road had been sold to another company, and that
company had applied for and obtained from the common council a
franchise to occupy its streets for another period, it seems to be
clear that such a contract would need no other consideration to
support it than the continued operation of the road under such
conditions as the city chose to impose."
Although in that case there was no provision in the statute
directing that the rates of fare should be established by
agreement, yet nevertheless it was held that the language used
amounted to an agreement upon the subject matter which could not be
altered during its continuance by either party.
Upon this question considerable stress has been laid in the
brief and in the arguments of counsel for the defendants upon the
case of
Georgia Railroad and Banking Company v. Smith,
128 U. S. 174. The
twelfth section of the charter to that company declared, among
other things, that it should have the exclusive right of
transportation or conveyance of persons, merchandise, etc., over
the railroad to be constructed, and it provided that the charge of
transportation or conveyance should not exceed fifty cents per one
hundred pounds for heavy articles, and ten cents per cubic foot on
articles of measurement for every one hundred miles, and five cents
per mile for every passenger. Permission was granted the company to
rent or farm out any part of their exclusive right of
transportation to any individual on such terms as might be agreed
upon. Pursuant to that authority, the company leased to one Wadley
for the term of ninety-nine years such privileges. Afterwards, the
Legislature of Georgia created a board of railroad commissioners
(Laws of Georgia, 1879, p. 125), and gave the board power to
prevent
Page 184 U. S. 388
railroad companies from charging other than just and reasonable
rates. That board prescribed rates for the transportation of
freight and passengers by railroad companies in the state which
were less than the maximum rates authorized by the twelfth section
of the charter of the company above referred to. The question of
the validity of this order of the board of commissioners was
brought before this Court, and it was held that the language of the
charter did not justify the holding that, notwithstanding any
altered conditions of the country in the future, the legislature
had, in 1833 at the time of the grant of the charter, contracted
that the company might for all time charge rates for the
transportation of persons or property over its line up to the
limits there designated. The reasons for so holding are stated by
Mr. Justice Field at pages
128 U. S. 180-181 of the report, and it was not thought
that in the exercise of the merely governmental function of
creating a charter and incorporating the banking and railway
company the legislature had, in regard to this particular matter of
rates, surrendered the right to alter the maximum charges. The
language used was regarded as a mere delegation of authority by the
legislature to the company to make those charges until the
authority was altered or withdrawn -- in other words, that the
language did not constitute a contract or agreement between the
parties, the legislature and the railroad company.
In the case at bar, however, the rates are fixed under the
provisions of a statute which declares that they shall be so fixed
by agreement between the parties. The ordinance of 1879 adopts that
of 1862 and reaffirms it. The rate of fare therein provided is made
a rate under the ordinance of 1879, and that ordinance was adopted
while the Street-Railway Act was in force, and which specially
provided for an agreement as to rates of fare, and the provisions
of that act were transferred to the companies organized under the
Tram-Railway Act. It may very well be that language used by a
legislature in merely conferring authority upon a company to fix
certain charges for fare might not be regarded as amounting to a
contract when the same language used by parties in fixing rates
under a legislative authority and direction to agree upon them
would be regarded as
Page 184 U. S. 389
forming a contract because the statute provided specially for
that mode of determining them. Under such direction, we are of
opinion the language used in the ordinances amounts to an
agreement, for that is the way in which the rates are to be arrived
at, and the reaffirmation of the previous language, by reaffirming
and adopting the ordinance of 1862, by the ordinance of 1879, and
its acceptance, constitute an agreement as of that time. The same
as to the ordinances relative to the other roads. The rate of fare
having been fixed by positive agreement under the expressed
legislative authority, the subject is not open to alteration
thereafter by the common council alone under the right to prescribe
from time to time the rules and regulations for the running and
operation of the road.
Nor does the language of the ordinance which provides that the
rate of fare for one passenger shall not be more than five cents
give any right to the city to reduce it below the rate of five
cents established by the company. It is a contract which gives the
company the right to charge a rate of fare up to the sum of five
cents for a single passenger, and leaves no power with the city to
reduce it without the consent of the company. The language of
section 20 in the Street-Railway Act of 1867 which provides that
the rate of fare agreed upon shall not be increased without the
consent of the city authorities does not mean that the rate may be
reduced without the consent of the railway companies, nor does it
show the parties did not suppose there was a contract between them
as to rates. That provision does not seem to perform any material
function, because, without it, the parties having agreed upon the
subject of rates, it would follow that the agreement could not be
altered by either party without the consent of the other. It may be
that it was meant that the company, while unable to increase the
rates of fare without the consent of the city authorities, had the
right to reduce the rates as it might please without consulting the
city.
It was probably inserted from abundant caution, but in no event
can it properly or fairly be regarded as an implied permission to
the city authorities to reduce the rates of fare as agreed upon
without the consent of the railway company. The reasons are
obvious, and need not be restated.
Page 184 U. S. 390
It is said, however, that section 34 of the Tram-Railway Act was
amended some twenty-two days after the passage of the
Street-Railway Act containing the above sections 20 and 29, and
that therefore the provisions of the amended Tram-Railway Act must
apply exclusively.
The amendment made to section 34 of the latter act in 1867 has
been set forth in the statement of facts above made, but for
convenience will be repeated here, as follows:
"Provided further that, after such consent shall have been given
and accepted by the company or corporation to which the same is
granted, such authorities shall make no regulations or conditions
whereby the rights or franchises so granted shall be destroyed or
unreasonably impaired, or such company or corporation be deprived
of the right of constructing, maintaining, and operating such
railway in the street in such consent or grant named pursuant to
the terms thereof."
Referring to this amendment, it is argued that the city had the
right to pass these ordinances of 1899 as a regulation and
condition for the operation of the road unless the rights or
franchises already granted to the company should thereby be
destroyed or unreasonably impaired, or unless the company would be
thereby deprived of the right of constructing, maintaining and
operating its railway pursuant to the terms of the original
consent, and such impairment is not alleged in the complainant's
bill. It is obvious that the additions to the original Tram-Railway
Act made in 1861 and 1867 were laws
in pari materia with
the Street-Railway Act passed in 1867, and should therefore be
construed together to obtain the legislative meaning.
Bearing in mind the provision of section 29 of the
Street-Railway Act, granting to other corporations the same powers
as are given to the companies organized under that act, and coming
to a consideration of the amendment to section 34 of the
Tram-Railway Act made in 1867, we find no inconsistency or
contradiction between the two acts. The amendment to the
thirty-fourth section prohibited the city from making any
regulations or conditions whereby the rights or franchises of the
company should be destroyed or unreasonably impaired, or whereby
it
Page 184 U. S. 391
should be deprived of the right of constructing, maintaining,
and operating its railway pursuant to the terms of the consent,
while section 20 of the Street-Railway Act provided in terms for an
agreement between the parties upon the question of rates of fare,
and, the parties having fixed such rate by agreement entered into
by authority of the legislature, there can be no question of its
binding force. Section 14 of the same act also safeguarded the
rights of the companies, and that section might be referred to in
aid of its rights by the company. The Tram-Railway Act amendment of
1867 is a general provision regarding regulations or conditions,
destroying or unreasonably impairing rights or franchises already
granted, or depriving the company of rights of construction and
operation, and should be construed also in connection with section
14 of the Street-Railway Act, while the matter of rates of fare is
specially provided for by section 20 of the last-named act, which
provides for an agreement on that subject. The two acts are
entirely harmonious, and may be fully carried out so as to involve
neither incongruity nor inconsistency.
But the defendants raise the objection that section 29 of the
Street-Railway Act cannot be applied to companies formed under any
other act for the reason that to apply it to such companies would
violate the state constitution, section 20 of art. 4, which
provides that "no law shall embrace more than one object which
shall be expressed in its title."
The title of the Street-Railway Act is "An Act to Provide for
the Formation of Street Railways," and the claim is made that the
provision of section 29 making the act applicable to other
companies is outside and beyond the object of the act as expressed
in its title.
The meaning to be given to the constitutional provision was
stated in
People ex Rel. Secretary of State v. State Insurance
Company, 19 Mich. 392, wherein Chief Justice Cooley, at page
398, said:
"We must give the constitutional provision a reasonable
construction and effect. The Constitution requires no law to
embrace more than one object, which shall be expressed in its
title. Now the object may be very comprehensive and still be
Page 184 U. S. 392
without objection, and the one before us is of that character.
But it is by no means essential that every end and means necessary
or convenient for the accomplishment of the general object should
be either referred to or necessarily indicated by the title. All
that can reasonably be required is that the title shall not be made
to cover legislation incongruous in itself, and which by no fair
intendment can be considered as having a necessary or proper
connection."
Similar provisions are to be found in the Constitutions of
several of the states, among them that of New Jersey, and the
meaning of such provision was brought before this Court in
Montclair v. Ramsdell, 107 U. S. 147, and
it was held that the provision did not require a detailed statement
or index or abstract of its contents in the title of an act, and
that it did not prevent uniting in the same act numerous provisions
for one general object fairly indicated by its title.
The Constitution of Illinois contains a similar provision, the
construction of which also came before this Court in
Jonesboro
v. Cairo &c. Railway Company, 110 U.
S. 192,
110 U. S. 199.
In that case, this Court said, through MR. JUSTICE HARLAN:
"The title of the act is 'An Act to Amend the Charter of the
Cairo & St. Louis Railroad Company.' The contention is that the
legalization of an election previously held, and at which the
people voted in favor of a subscription of stock to that company
and the granting of authority to issue bonds in payment of such
subscription, is not a subject expressed by the title of the act.
In this view we do not concur, and our conclusion is justified by
the later decisions of the Supreme Court of Illinois construing a
similar provision in the state constitution of 1870. It was held in
Johnson v. People, 83 Ill. 431, that the Constitution"
"does not require that the subject of the bill must be
specifically and exactly expressed in the title; hence we conclude
that any expression in the title which calls attention to the
subject of the bill, although in general terms, is all that is
required."
We have examined the various cases cited by counsel for the
defendants, arising in the State of Michigan under the
constitutional provision in question, and it is sufficient to say
that
Page 184 U. S. 393
we think not one of them extends that provision so as to embrace
a case like the one at bar. Narrowly considered, an act to provide
for the formation of street railway companies should contain
nothing but provisions relating to their formation and
organization, but it would be absurd to hold that the
constitutional provision would prevent the introduction into such
an act of various details in regard to the corporations after their
formation and in regard to their government, operation, regulation,
and other matters which might be fairly considered as germane to
the particular object named in the title of the statute, and hence
we think it would be a most narrow construction of the
constitutional provision to hold that, under such a title, it was
incompetent for the legislature to provide that the benefits and
obligations conferred and provided for in the act should be made
applicable to corporations of a like character already organized
and in operation. It is germane and appropriate to the subject
matter of the act, and to enact under such a title that all
companies of the like nature should have the same privileges is
fairly within the general object described in the title. This being
true, the companies organized under the Tram-Railway Act were
equally, with those organized under the Street-Railway Act, enabled
by the express authority of the legislature to enter into a
contract for a rate of fare with the city, and when, in 1879 and
the subsequent years, those companies which were organized under
the Tram-Railway Act entered into further agreements with the city
in the way of ordinances, those agreements were valid so far as the
objections heretofore considered are concerned, and not subject, in
regard to this matter, to alteration at the will of one party only.
The agreements being valid in the case of companies organized under
the Tram-Railway Act, it follows that those entered into with the
other companies organized under the Street-Railway Act were also
valid.
Still another objection is raised by the defendants to the
validity of the ordinances passed in 1879 and 1880 and 1885, by
which the powers and privileges conferred and the obligations
imposed upon the railway companies by the former ordinances were
extended and limited to thirty years from the date of the
supplemental ordinances, the objection being that the extending
of
Page 184 U. S. 394
the term of the consents beyond the then limit of the corporate
life of the companies was illegal and void. We are not of that
opinion.
This was matter of agreement between the parties. The franchise
to be a corporation came from the state, and all that the company
required from the city was its consent to the laying down of the
rails and the operation of the road through the streets of the
city, and such consent was to be given upon terms and conditions to
be agreed on. This consent, when given, became a privilege or
franchise granted to the corporation, and was property belonging to
it. By the ordinance of 1879, the duties and obligations of the
company therein mentioned were largely increased, additional taxes
were provided for, and also extensions of its tracks as stated in
the ordinance. The company also agreed to furnish all the materials
and do all the paving mentioned at its own expense. One inducement
to the company to agree upon and accept this ordinance was that the
term which the city had originally consented to for the use of its
streets by the company should be extended to thirty years from the
date of the new ordinance. Although the company itself, by the act
under which it was incorporated, was limited in its corporate life
to a term of thirty years from the date of its organization in
1862, the extension of the term of consent by the city carried such
consent about sixteen years beyond its then corporate life. Of
course, no one contends that this extension of the term for the use
of the streets of the city in any manner affected the limit of the
term of the corporate life of the company, but the limitation of
its life did not prevent it from taking franchises or other
property, the title to which would not expire with the corporation
itself. A corporation whose corporate existence was limited to a
term of years could always purchase the fee in property which it
needed for the operation of its business. If, at the end of its
term, its life were not extended, the property which it owned was
an asset payable to the shareholders after the payment of its
debts, and in a case like the present, where the consent was
assignable and transferable, particularly by virtue of section 15
of the Street-Railway Act above set forth, any company itself
having corporate existence
Page 184 U. S. 395
for that purpose could purchase the outstanding term and operate
its road thereunder. We see no reason why the company could not
take the extended term as provided for in the ordinance, and it
formed a good consideration for the agreement on the part of the
company to perform the other obligations contained in the
ordinance. This exact proposition has been determined by the
Circuit Court of Appeals for the Sixth Circuit in
Detroit
Citizens' Street Railway Company v. Detroit, 64 F. 628. In the
course of the opinion of the court in that case, the cases of
People v. O'Brien, 111 N.Y. 1, and
Miner v. New York
Central Railroad Company, 123 N.Y. 242.
People v.
O'Brien is one of the leading cases in New York upon that
subject, and it was there held that a corporation, although created
for a limited period, might acquire title in fee to property
necessary for its use, and where the grant to a corporation of the
franchise to construct and operate its road in the streets of a
city is not, by its terms, limited and revocable, the grant is in
fee, vesting the grantee with an interest in the street in
perpetuity to the extent necessary for a street railroad; the
rights granted to be exercised by the corporation or whomsoever may
lawfully succeed to such rights. In that case, the authorities show
that a franchise of the above nature is invested with the character
of property and is transferable as such, independently of the life
of the original corporation. The other case, in 123 N.Y., announces
the same doctrine. It is not a new one, and the decisions have all
been one way, in favor of the right of a corporation, limited as to
the time of its corporate existence, to purchase or acquire by
agreement or condemnation property for its use, the title to which
it might own in fee.
The case above cited in the Circuit Court of Appeals for the
Sixth Circuit, it will be noticed, is between the same parties as
the case at bar, and if the judgment therein had been pleaded or
put in evidence upon the trial of this action, we cannot now see
why it would not have been
res judicata between the
parties in this suit upon that question at least as to the
particular road then under discussion.
In
Detroit v. Ellis, 103 Mich.
Page 184 U. S. 396
612, upon an application for a mandamus, the decision of the
United States circuit court of appeals was regarded as
res
judicata of the question in issue in that suit on an
application by the city and certain individual citizens for a
mandamus to compel the attorney general to file an information in
the nature of
quo warranto to inquire by what right the
railway company maintained and used its tracks in the streets after
the date named. Without treating the case in the circuit court of
appeals as strictly
res judicata, we regard the conclusion
arrived at by that court upon the question under discussion as
correct, and consequently the objection now urged by the defendants
to the validity of the ordinance of 1879 and the other ordinances
similar to it cannot be maintained.
The further objection is made that, under the power of
alteration and repeal provided for in the Constitution of Michigan
and under the terms of the various ordinances giving power to the
common council in certain cases to provide for further rules and
regulations, the right is reserved to the common council to alter
the rates of fare provided for in the various ordinances under
consideration, as it alone may regard reasonable and just, without
the consent of the company.
The Constitution of the State of Michigan, article 15, section
1, provides:
"Corporations may be formed under general laws, but shall not be
created by special act except for municipal purposes. All laws
passed pursuant to this section may be amended, altered, or
repealed."
Counsel for the defendants contends
"that the regulation of rates of fare or toll upon the street
railway is a governmental function, delegated by the Legislature of
the State of Michigan to the municipalities, and no matter in what
form such delegation of power may be exercised, whether by
ordinance or an assumed contract, it is nevertheless a law, subject
to alteration, amendment, or repeal. It has not been the policy of
the State of Michigan since the adoption of the present
Constitution to permit irrevocable legislation. The state cannot do
it itself, and if it cannot, surely one of its creatures like a
city cannot be permitted to do that which its creator is prohibited
from doing."
We have already seen that the legislature was competent to
Page 184 U. S. 397
grant to the City of Detroit the right to give its consent to
the laying of the tracks of a street railway and the operation of
the same in and through its streets upon such terms and conditions
as the parties might agree upon. The grant of this power was not
the formation of a municipal corporation, directly or indirectly,
either in substance or effect. The legislative act which granted
the power to the city could not be altered, amended, or repealed by
the latter. No such power was given to it by the legislature, and
probably could not even be delegated in any event. It is sufficient
to say that none was attempted.
City Railway Company v.
Citizens' Railway Company, 166 U. S. 557,
166 U. S.
563.
The legislature has not attempted to interfere with the rights
of the street railway companies in Detroit, and hence the extent of
its power so to do is not involved in the case.
We are then brought to the question of the reservations in the
ordinance themselves. An examination of them leads us to the
conclusion that not one provided or was intended to provide for a
power to alter an agreement in relation to the rates of fare
entered into between the parties. The right from time to time to
make such further rules, orders, or regulations as to the common
council may seem proper cannot be held to extend to the alteration
of a contract as to the rate of fare which shall be charged for the
transportation of passengers. We think, as was stated by the court
below, that this reservation permitted the city to make further
rules or regulations than those contained in the ordinances, in
regard
"to all matters incident to the construction and operation of
the road, such as the location of the tracks in the streets, the
placing of switches and turntables, the repair of the pavement
between the tracks, the removal or limitation of the number of
tracks, in the interest of public travel, the frequency with which
cars should be run for the public convenience, the stopping of cars
at street crossings, the use of fenders, the rate of speed to be
maintained, the sale of tickets, and generally to details of the
conduct and operation of the railway, which experience might show
to be necessary, in addition to or in amendment of those specified
in the consent for the protection of life, the accommodation of the
public,
Page 184 U. S. 398
and the avoidance of injury to private property. Such
regulations are not invasions of the contract rights of the
company, and are just and reasonable."
Lake Shore & Michigan Southern Railway Company v.
Ohio, 173 U. S. 285,
173 U. S.
305.
The fixing of rates is, as we have already said, among the most
vital portions of the agreement between the parties contained in
the ordinances. It cannot be supposed for one moment, with regard
to a right so fundamental in its nature, that there was any
intention to permit the common council, in its discretion, to
thereafter make an alteration which might be fatal to the pecuniary
success of the company. For the reasons already given, we think the
language used does not in fact give any such power to the common
council. The ordinances of 1899 are, so far as this record shows,
the first wherein the common council has assumed to make any change
in the rates of fare without the assent of the company to be
affected thereby. From 1862 until 1899, there seems to have been no
attempt to exercise this alleged power of alteration by the common
council without the consent of the railway company. While the rate
of fare existed as agreed upon between the city and the railway
company, expenditures involving millions of dollars were entered
upon, changing the mode of transportation from animal to electric
power, and no claim seems ever to have been made on the part of the
city of a right of alteration to be exercised in accordance only
with its own views of reason and propriety. This in itself is a
strong implication of the want of any such power under the various
reservations set forth in the foregoing statement of facts and
contained in the ordinances specified. But, aside from that and
considering only the nature of the right itself growing out of the
agreement as to fares, we are of the opinion that not one of the
reservations of the right to make further rules or regulations
could by any fair construction be held to include the right on the
part of the city, at its own pleasure, to reduce the rates of fare
agreed upon in those ordinances.
We have thus answered the chief objections of the city to the
maintenance of this action. Some others have been made which we
have examined, but do not think it necessary to further
Page 184 U. S. 399
refer to them than to say they are in our opinion not well
founded.
We think the conclusions arrived at by the court below are
correct, and its judgment is therefore
Affirmed.
