Grand Trunk Western Ry. Co. v. South Bend,
227 U.S. 544 (1913)

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U.S. Supreme Court

Grand Trunk Western Ry. Co. v. South Bend, 227 U.S. 544 (1913)

Grand Trunk Western Railway Company v. City of South Bend

No. 81

Argued December 10, 11, 1912

Decided February 24, 1913

227 U.S. 544


What the contract alleged to be impaired by subsequent legislation is is a question which this Court is bound to determine for itself, independent of decisions of the state court. Northern Pacific Ry. v. Duluth, 208 U. S. 50.

An ordinance conferring a street franchise, passed by a municipality under legislative authority, creates a valid contract binding and enforceable according to its terms. Louisville v. Cumberland Telephone Co., 225 U. S. 430.

While a validly granted franchise to use streets of a municipality may be regulated as to its use by subsequent ordinances, or repealed if its operation becomes injurious to public health or morals, the franchise, if not injurious to public health or morals, cannot be repealed and destroyed.

The police power of the state cannot be bartered away, but it cannot be used to abrogate a valid and innocuous franchise.

Tracks laid in a street under legislative authority become legalized, and, when used in the customary manner, cannot be treated as unlawful either in maintenance or operation.

Inconvenience natural to the proper use of a properly granted franchise cannot be made the basis of exercising the police power to destroy the franchise.

The power to regulate implies the existence, and not the destruction, of the thing to be controlled.

A franchise to maintain and operate a double track railway is an entirety, and if valid, the municipality cannot abrogate it as to one of the tracks, either as to all or as to a part of the distance for which it was granted. Baltimore v. Trust Company, 166 U. S. 673, distinguished.

The contract clause prevents a state from impairing the obligation of a contract, whether it acts through the legislature or a municipality exercising delegated legislative power.

The ordinance of South Bend, Indiana, of 1868, permitting a railway company to lay a double track through one of its streets, and which had been availed of as to part of the distance, was a valid exercise of

Page 227 U. S. 545

delegated legislative power, and no power to alter or repeal having been reserved, a subsequent ordinance repealing the franchise as to the double track was not a valid exercise of the police power to regulate the franchise, but an impairment of the contract, and unconstitutional under the contract clause of the Constitution.

174 Ind. 203 reversed.

In 1866, a charter was granted by the State of Indiana to plaintiff's predecessor in title whereby it was authorized to build a railroad from the Michigan line west through South Bend to the Illinois line in the direction of Chicago. The City of South Bend was a stockholder in this company, and, in 1868, passed and ordinance granting the company the right to construct its railroad through the streets of the city, no more than one track to be laid, except that the privilege was granted to lay a double track along Division Street, from the bridge over St. Joseph's River to Taylor Street. The road was constructed and a single track was built in 1871.

Thereafter, in 1881, the company acquired by condemnation and purchase, from abutting owners on Division Street, the right to use a strip 18 feet in width on which to lay a double track, and soon afterward constructed the same on Division Street for about half the permitted distance. This double track was constantly used, and in 1901 the business of the company had so increased that it was necessary to double track the entire line, and the company had so built 157 miles from Port Huron westward, and was preparing to construct the balance of the double track on Division Street, when the city, on October 14, 1901, repealed so much of the ordinance of 1868 as gave the right to a second track in Division Street. Later, when the work of construction was begun, the mayor ordered the employees to desist, and threatened to arrest any who should undertake to construct such double track.

The company thereupon filed a bill, asking that the city be enjoined from interfering with the building of the

Page 227 U. S. 546

balance of the double track. It alleged that the city was a stockholder in the original company and in one of the successors, and knew of the acquisition of the 18-foot strip in Division Street; that at all times it had recognized the validity of the contract as an entirety, and from time to time required the railroad to incur expenses called for thereunder, and was estopped from denying the validity of the double track privilege.

The bill alleges that, when the ordinance of 1868 was passed, it understood the double track could be laid whenever the business of the company made it necessary; that, in consequence of the increase of business, it is now essential to the successful operation of plaintiff's freight and passenger business that it should maintain a second track in Division Street, as by said ordinance authorized, and that to facilitate and accommodate the present volume of such traffic, said double line

"is particularly necessary because of the fact that plaintiff's freight and passenger stations in South Bend are located adjacent to Division Street, between St. Joseph's River bridge and General Taylor Street, and at said station the trains, both passenger and freight, passing over plaintiff's road, have to stop for train orders. The obstructing of the general public in the use of said street by passing trains will be much less when two tracks are used than it now is, when all trains, both ways, have to pass over a single track; that said street is 82 1/2 feet wide, and that there is ample room thereon for general travel and for said double track."

The plaintiff claims that the

"original ordinance of 1886 constituted a contract in its entirety, . . . is irrepealable by said city, either in whole or in part, and that said ordinance of repeal is void, as violative of said contract and plaintiff's right thereunder, as being in conflict with § 10 of Article I of the Constitution of the United States."

The city demurred. Later it withdrew the demurrer

Page 227 U. S. 547

and filed an answer. Subsequently it withdrew the answer and filed a general demurrer, which was sustained by the circuit court. On appeal, the Supreme Court of Indiana held that there was no charge that the city proposed to remove the double track already laid, and that the pleadings, properly construed, only involved the right to construct the balance of the double track; that, even if the ordinance of 1866 was a contract, it did not prevent the city from exercising the police power, and affirmed the judgment. (174 Ind. 203.)

Page 227 U. S. 551

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