Southern Pacific Co. v. Portland, 227 U.S. 559 (1913)

U.S. Supreme Court

Southern Pacific Co. v. Portland, 227 U.S. 559 (1913) Southern Pacific Company v. City of Portland

No. 122

Argued January 6, 1913

Decided February 24, 1913

227 U.S. 559

APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES

FOR THE DISTRICT OF OREGON

Syllabus

Where, as in this case, a municipal ordinance, granting a franchise to use streets as authorized by the state law, expressly reserves to the city the power to make or alter regulations and to prohibit the use of a specified motive power, the grantee cannot accept it and afterwards claim that, as the state law only authorized the designation of streets, the municipality cannot exert the power reserved to prohibit the specified motive power without impairing the contract.

Although a municipality cannot defeat a grant made under authority of the state, it may, under the police power, reasonably regulate the method in which it shall be used; such regulations do not defeat the grant if it is still practicable to operate under the new regulations. Railroad Co. v. Richmond, 96 U. S. 521.

The grantee of a franchise to use the streets coupled with conditions cannot avail of the benefits and deny the validity of the conditions, or claim that the exercise of the expressly reserved power is a violation of the contract clause of the Constitution.

Page 227 U. S. 560

Where, under its reserved powers, the municipality attempts to regulate a franchise to use the streets both as to nature of motive power and cars operated, the provisions are separable, and do not stand or fall together. Laclede Gas Co. v. Murphy, 170 U. S. 99.

A franchise given by a municipality under state authority to a railroad to lay and operate tracks in a street includes the right to haul both passenger and freight cars, and a reserved power to regulate cannot be availed of to prohibit the hauling of freight cars and defeat the franchise given by the state, and to that extent impair the contract under which the railroad was constructed.

While the power to regulate a franchise does not authorize a prohibition that destroys it, the municipality may legislate in the light of facts and conditions.

Whether subsequent regulations impair the obligation of a contract should only be determined on a complete record, and where, as in this case, all the conditions were not considered by the court of original jurisdiction, the bill will be dismissed without prejudice.

The ordinance of Portland prohibiting the using of locomotives and hauling of freight cars on one of its streets occupied by a railroad under a franchise held not to be an impairment of the contract as to the locomotives, but not decided on this record whether it is an impairment as to the hauling of freight cars.

177 F. 958 affirmed.

Appeal from a decree refusing to enjoin the City of Portland from enforcing an ordinance prohibiting the Southern Pacific Company from running steam locomotives or freight cars along Fourth Street.

It appeared that the Oregon Central R. Co. was chartered to build a road from Portland to the California line. The company thereupon purchased a block of land in the city on which to locate its terminals, and applied to the council to designate the street on which the track should be laid. The general statute of the state then of force provided (Bellinger & Cotton's Code of Oregon, §§ 5077, 5078) that, whenever a private corporation was authorized to appropriate any part of any public street within the limits of any town, such corporation should locate their road upon such particular street as the local authorities might designate. But if such local authorities refused to

Page 227 U. S. 561

make such designation within a reasonable time when requested, such corporation might make such appropriation without reference thereto.

The bill alleges that, on January 6, 1869, "under and by virtue of the laws of the state and its charter then in effect," the City of Portland duly passed Ordinance 599, which provided that:

"SECTION 1. The Oregon Central is hereby authorized and permitted to lay a railway track and run cars over the same along Fourth Street, from the south boundary line of the city to the north side of G street, and as much further north as Fourth Street may be extended, upon the terms and conditions hereinafter provided."

"* * * *"

"SECTION 3. That the Common Council reserve the right to make or to alter regulations at any time, as they deem proper, for the conduct of the said road within the limits of the city, and the speed of railway cars and locomotive within said limits, and may restrict or prohibit the running of locomotives at such time and in such manner as they may deem necessary."

"* * * *"

"SECTION 5. It is hereby expressly provided that any refusal or neglect of the said Oregon Central Railroad Company to comply with the provisions and requirements of this ordinance, or any other ordinance passed in pursuance hereto shall be deemed a forfeiture of the rights and privileges herein granted, and it shall be lawful for the Common Council to declare by ordinance the forfeiture of the same, and to cause the said rails to be removed from said street."

The ordinance was accepted and the road was built from the terminals along Fourth to Sheridan Street, thence south over its private property and the right of way

Page 227 U. S. 562

granted by Congress (May 5, 1870, 16 Stat. 94, c. 69) to McMinnville. From its completion in 1871 to the present time, freight and passenger cars drawn by steam locomotives have been constantly operated along Fourth Street. In 1903, the Charter of the City of Portland was amended so as to authorize the granting of street franchises, and it is alleged that the city desired the railroad to take an electric franchise, paying therefor an annual sum. It is further charged that, on May 1, 1907, over the protest of the railroad company, the council passed Ordinance 16491, to go into effect eighteen months after date, by which it was made unlawful for the Oregon Central, its assigns, their lessees, or any other person, to run or operate steam locomotives or freight cars along Fourth Street between Glisan and the southerly limits of the city, excepting freight cars for the repair or maintenance of the railway lawfully and rightfully on said street. Violations were to be punished by fine or imprisonment, and deemed a forfeiture of all rights claimed by the Oregon Central with respect to the operation of the railway on the street. On November 16, 1908, after the expiration of the eighteen months, a proceeding was instituted in the municipal court against the company and one of its agents charging that he and it "did willfully and unlawfully run and operate steam railway locomotives along Fourth Street," contrary to the provisions of Ordinance 16491.

The Southern Pacific, a Kentucky corporation, thereupon filed a bill in the United States circuit court, alleging that the Oregon Central's property had been transferred to the Oregon & California R. Co., and that, in 1887, the property and this street right had been leased to the Southern Pacific, which had since continuously operated freight and passenger cars with steam power over Fourth Street.

It averred that the railroad owned no other terminal

Page 227 U. S. 563

property than that purchased in 1869 and reached by the tracks on Fourth Street; that it was impossible to obtain any other terminal within the city accessible to the railroad from the intersection of Fourth and Sheridan Streets to the south boundary; that cars from Corvallis, on its line running south, could not be brought into the city, and its business as a common carrier conducted, if the ordinance was enforced, except by constructing at an estimated cost of $911,000, about 10 miles of road from Beaverton to Willsburg, thence across a bridge owned by the Oregon R. Co. & N. Co., and thence by the southern terminus of said railroad constructed by the Oregon Central. The bill charged that the ordinance imposed excessive penalties and illegal forfeitures; that it was arbitrary, unreasonable, and oppressive; deprived the company of property without due process of law; interfered with interstate commerce, and impaired the obligation of the contract under which the track had been laid in Fourth Street.

The city answered, denying that the Southern Pacific owned the property and franchises of the Oregon Central, on the ground that the latter company had no charter right to sell, and also offered evidence to show that, when, in 1869, the tracks were first laid on Fourth Street, there were very few buildings thereon, while it was now one of the principal thoroughfares, upon which many stores, hotels, and public structures have been erected; it proved that the locomotives and cars were much heavier than those in use when Ordinance 599 was passed, and the grade being steep, the puffing, blowing, exhaust, noise, and jar caused by steam locomotives was more disturbing and injurious than where the line is more nearly level. It also proved that the Southern Pacific was then building a cut-off or belt line, by which freight could be carried around the city instead of being hauled over Fourth Street.

The court held that, under the police power, as well as

Page 227 U. S. 564

that reserved in Ordinance 599, the city could prohibit the use of steam and the hauling of freight cars, the ordinance not being arbitrary in view of the results of hauling locomotives and cars along Fourth Street, which he found was

"quite steep, . . . and the noise, vibration, smoke, cinders, and soot from the moving steam locomotives and trains seriously interfere with the transaction of public and private business, and are a constant source of danger and inconvenience to the public."

He made no finding as to whether the company had other convenient and accessible means of reaching the terminal for handling through and local freight. But, having held that the city had power to pass Ordinance 16491, he dismissed the bill, and the carrier appealed.

Page 227 U. S. 571

MR. JUSTICE LAMAR delivered the opinion of the Court.

The bill alleged that, by virtue of the laws of the state and its charter, the City of Portland passed Ordinance 599, permitting cars to be run along Fourth Street. That ordinance reserved the right "to make and alter regulations" and to "prohibit the running of locomotives." And as the court held that this reserve power authorized the city to prohibit the use of steam, the appellant -- though originally contending that Ordinance 599 was valid and constituted a contract which could not be impaired -- now insists that, under the law of force in 1869, the city could only "designate" the street on which tracks could be located, and could not, by reservation, give itself power to prohibit the use of steam or the hauling of freight cars, nor could it provide for municipal forfeiture of a state franchise.

1. Under the Oregon Code (§§ 5077, 5078) the power to designate the street on which railroad tracks could be located was equivalent to the power to consent to the use of that street. The city was not limited to merely naming the thoroughfare, or giving or refusing its consent. But --

Page 227 U. S. 572

provided they did not defeat the state franchise -- could fix terms and reserve powers beyond those otherwise possessed by it as a municipality. The specific conditions and general powers reserved in § 3 of Ordinance 599 were not inconsistent with the grant from the state, and when, with such reservation, it was accepted by the company, it became contractual as well as legislative. The railroad could not rely on it for the purpose of laying the tracks and then deny the validity of such conditions. The ordinance was proposed and accepted as an entire contract, and, as such, was binding on the railroad as well as on the city. The power therein reserved "to make regulations," coupled with the right "to prohibit the running of locomotives at such time and in such manner as the city might deem necessary," authorized the city to prohibit the use of steam locomotives. This did not defeat the grant, inasmuch as it was permissible and practicable to use electricity, gasolene, or other motive power free from noise and vibration -- increased here above the ordinary when steam was used on a grade said to be one of the steepest, if not the steepest, in the state. The case is like Richmond, F. & P. R. Co. v. Richmond, 96 U. S. 521, where, under a somewhat similar ordinance, it was held that the city might provide that no car or engine could be drawn or propelled by steam along certain parts of the highway.

2. The appellant insists, however, that, even if the city can regulate the motive power, it cannot prohibit the hauling of freight cars, and that the invalidity of this provision and that forfeiting the franchise renders the whole Ordinance 16491 void. In reply, it is contended that, even if there were no other route than Fourth Street by which to reach the terminals, it might be necessary for the railroad to establish a freight depot in another part of the city, and make transfers by other vehicles, rather than to continue to haul freight cars through Fourth Street,

Page 227 U. S. 573

but that, in any event, the "entire ordinance would not be void if that portion relating to freight trains were found to be invalid."

The provisions relating to motive power, prohibiting the hauling of freight cars, and declaring a forfeiture for a violation of the ordinance are so far separable that they do not necessarily stand or fall together, and therefore the regulation against the use of steam can be enforced without regard to the validity of the prohibition against hauling freight cars. Laclede Gaslight Co. v. Murphy, 170 U. S. 99.

3. Even if the city could have contracted for the right to revoke the state's franchise, the council did not attempt to reserve a power to repeal, but only that it might make and alter regulations, and Ordinance 16491, whether treated as an exercise of the general police or special reserve power, recognized that the carrier might use electricity to haul passenger cars. There is nothing in that ordinance or in this record which indicates that there is any difference in result in the operation of the two classes of cars, or that the company has less right to haul one than the other. The lessee, and its assignors, as common carriers, were charged with the duty of operating both, and Ordinance 599, in permitting a railway track to be laid in Fourth Street, expressly authorized cars to be run thereon. Manifestly that gave the right to the company to transport freight, as well as passengers. But if the city can prohibit the company from operating one set of cars, it can prevent the use of the other, and under the power to regulate, it could thus defeat the franchise granted by the State of Oregon, and impair the contract under which the tracks were located and on the faith of which the terminals were constructed.

But while the power to regulate does not authorize the city to prohibit the use of the tracks in hauling freight cars, it may legislate in the light of facts and conditions

Page 227 U. S. 574

which would make restrictions reasonable and valid regulations. The extent of the power of the city and the rights of the company, however, ought not to be finally adjudicated on this record. For while the ordinance was attacked as a whole, and there was some testimony that it would be possible to reach the terminals over other railways and by means of a belt line then being constructed for handling through freight, but not finished, yet the evidence was directed to the injurious consequences resulting from the use of steam, and not from hauling cars. The bill was filed primarily to enjoin the city from prosecuting the company for running a steam locomotive. In sustaining the ordinance as a whole, the court called attention to the fact that the street was quite steep throughout the business district, and the noise, vibration, cinders, and soot from the moving steam locomotive and train seriously interfere with the transaction of business, and were a source of danger and inconvenience to the public. But nothing appears to show that the noise or danger would be different in character or result from that caused by the running of other electric cars, or that there was any reason why freight cars should be prohibited when passenger cars were permitted to be run. The city has the undoubted right to make regulations as to cars used in the transportation of local freight to and from the terminal. If, as claimed, the belt line, when completed, will afford convenient and accessible means of handling through cars without the necessity of going through Fourth Street, that fact may be given the weight to which it is entitled when regulations are made. But those issues were not clearly raised nor specifically ruled on by the lower court, and the city has neither attempted to prosecute for hauling freight cars nor attempted to enforce a forfeiture. These questions ought not to be determined here until such issues have been more definitely considered by the court of original jurisdiction. Without

Page 227 U. S. 575

prejudice to the right of either when such questions arise, the refusal to enjoin the prosecution for running a steam locomotive and the order entering a decree dismissing the bill must be

Affirmed.

MR. JUSTICE HUGHES and MR. JUSTICE PITNEY concur in the result.