Where there are no controlling provisions in state constitution
or statutes and no prior adjudication by its courts to the
contrary, a franchise for an interurban electric railway, granted
by the proper state
Page 245 U. S. 575
authority without limit as to duration, and in the absence of
circumstances showing an intention to give or accept a mere
revocable right, is a contract not subject to annulment at the will
of the granting authority.
Under the Constitution and statutes of Ohio in 1892, county
Commissioners had power to grant franchises over public roads valid
for twenty-five years, if not perpetually.
A resolution of county commissioners purporting to revoke an
electric railway franchise, and treated by the state court as
having that effect, amounts to state action, and, the franchise not
being so revocable, such resolution impairs its obligation, and is
void.
Upon renew of a judgment erroneously treating a franchise as
revocable at the will of a board of county commissioners and
upholding the board's resolution purporting to revoke it, the court
is not called upon to determine whether the franchise term has
since expired by limitation, or whether the state legislature
(which has not acted) may have reserved power to revoke or repeal
the franchise.
93 Ohio St. 46 reversed.
The case is stated in the opinion.
MR. JUSTICE McREYNOLDS delivered the opinion of the Court.
The Northern Ohio Traction & Light Company, through
successive assignments from William A. Lynch, acquired the
interurban electric railroad between Canton and Massillon, Ohio,
October, 1906; the Cleveland Trust Company is trustee under a
mortgage on the road intended to
Page 245 U. S. 576
secure an issue of bonds. The line was constructed under
resolution by the Board of County Commissioners, Stark County,
passed February 22, 1892, which granted to William A. Lynch, and
such railroad corporation as he might cause to be incorporated for
that purpose, the right to locate, construct, maintain, and operate
an electric railroad along the state highway without specifying any
limit of time. This resolution is copied in the margin. [
Footnote 1]
Page 245 U. S. 577
A disagreement concerning rates having arisen, by resolution of
March 27, 1912, the Commissioners declared the original grant to
Lynch not a perpetual franchise, but subject to termination by
either party, and that the passenger rate was excessive, and should
be reduced. It continued:
"therefore, be it resolved, that, unless said Northern Ohio
Traction & Light Company comply with the above-mentioned
matters of reduction of amount of fare charged for transporting
people between the Cities of Canton and Massillon and from
intermediate points, together with the transfer on the city lines
of Canton and Massillon, on or before the 27th day of April, 1912,
the said grant given to said William A. Lynch on February 22, 1892,
to operate an electric railroad between the said cities of Canton
and Massillon is hereby declared terminated, and the prosecuting
attorney of this county is hereby instructed to take such legal
proceedings as may be necessary to have said grant made null and
void,
Page 245 U. S. 578
and the said electric railway removed from said public highway
between the said Cities of Canton and Massillon."
April 26, 1912, the Commissioners, returning to the matter,
resolved:
"In the event that demands are not met by the said company on or
before the time mentioned in the said resolution of March 27th,
1912, the prosecuting attorney of this county be and he is hereby
instructed to immediately proceed to have injunction proceedings
filed against said Northern Ohio Traction & Light Company
restraining said company from operating said electric railway on
the public highways between the Cities of Canton and Massillon or
running cars thereon and to further compel said Northern Ohio
Traction & Light Company to remove said electric railway from
said public highway, and be it further resolved, that this
resolution be contingent upon and in accordance with the conditions
of the said resolution passed by this board on March 27th, 1912. .
. ."
Accordingly, August 13, 1912, Charles Krichbaum, prosecuting
attorney, instituted
quo warranto proceedings in the
circuit court asking that plaintiff in error Traction & Light
Company be ousted from exercising the franchise to operate a
railroad along the Canton-Massillon highway, and be compelled to
remove its tracks and switches. A demurrer was sustained because
(1) the petition did not state facts sufficient to constitute a
cause of action; (2) it did not state facts sufficient to justify
relief prayed; (5) plaintiff had no legal power to try or bring the
action. No appeal was taken from a final judgment entered June 3,
1913.
February 19, 1913, the Commissioners adopted another resolution
which, after referring to the one of 1892 and the construction and
operation of the railroad, stated that the grant continued from day
to day so long as both parties consented and could be terminated at
will, and then
Page 245 U. S. 579
declared "that said term of said grant and conveyance be
terminated on this date." It is in the margin. [
Footnote 2]
Page 245 U. S. 580
Obeying this last resolution, Hubert C. Pontius, prosecuting
attorney, instituted the proceeding under review in the Supreme
Court of Ohio. The petition alleged control of the railway by the
Traction & Light Company; set up resolutions of 1892 and 1913
authorizing its construction and directing removal, and declared
the company continued operations "which said conduct plaintiff
avers is without warrant or authority of law." It concluded:
"wherefore, because of the premises and matters herein
Page 245 U. S. 581
set forth, the plaintiff prays the advice of the court, and that
the defendant, to-wit, the Northern Ohio Traction & Light
Company, be compelled to answer by what warrant it claims to have
the use and to enjoy the rights, privileges, and franchises
aforesaid, in the operation of its said interurban electric
railroad between the Cities of Canton and Massillon, Ohio, in said
county and state, and that it be ousted from exercising the same
and be compelled to remove its tracks and switches from the said
Canton-Massillon road between the corporate limits of the said
Cities of Canton and Massillon, and plaintiff further prays that
such other and further relief be granted in the premises as to the
court may seem just and proper. "
Page 245 U. S. 582
The answer relied upon final judgment in proceedings instituted
by Krichbaum as an adjudication of the grant's validity; also a
resolution by the County Commissioners May 3, 1909, providing for
double tracking as recognition and continuation of original
franchise. And further:
"this defendant says that said resolution of February 22, 1892,
and said amending resolution of May 3, 1909, by the acceptance
thereof by this defendant and its predecessors in title, constitute
a contract between the Board of County Commissioners of Stark
County, Ohio, and this defendant, and that any ouster of this
defendant from its use and operation of said electric railroad
between Canton and Massillon would be an impairment of the
obligation of this defendant's contract, and a taking of the
defendant's property without due process of law, and would also be
a denial to this defendant of the equal protection of the law, all
in violation of the Constitutions of Ohio and of the United
States."
Without opinion or other explanation, the supreme court
pronounced the following decree October 19, 1915:
"This cause came on to be heard on the pleadings and the
evidence and was argued by counsel. On consideration whereof, the
court finds upon the issues joined in favor of the plaintiff on the
authority of
Gas Co. v. City of Akron, 81 Ohio St. 33. It
is therefore ordered and adjudged that the said defendant be ousted
from the exercise and use of the rights, privileges, and franchises
described in the petition of the plaintiff in the operation of the
interurban electric railroad therein described, and it is hereby
ordered to remove its tracks and switches from the said Canton and
Massillon road between the corporate limits of the said Cities of
Canton and Massillon within ninety days from this date. It is
further ordered and adjudged that the plaintiff recover of the
defendant its costs herein, taxed at $_____."
Dissenting, three members declared:
"The sole question
Page 245 U. S. 583
in this case as presented is whether the Board of County
Commissioners can revoke and annul a franchise granted by the state
without having the power so to do delegated to it by the sovereign
authority."
93 Ohio St. 466.
Plaintiffs in error maintain that the Commissioners' resolution
dated February 19, 1913, was an exercise of state authority
repugnant to the federal Constitution because it impaired their
contract, took their property without due process of law, and
denied them equal protection of the laws.
In
East Ohio Gas Co. v. City of Akron (decided October,
1909), 81 Ohio St. 33, relied upon to support the judgment below, a
city ordinance, without specifying anything as to duration,
provided
"that the East Ohio Gas Company, its successors and assigns, are
hereby granted the right to enter upon the streets, alleys and
public grounds of the city of Akron, Ohio, . . . to maintain,
operate, repair and remove mains and pipes . . . together with the
right to construct and maintain, repair and remove all necessary
regulators,"
etc. And the court said (pp. 52, 53):
"It is true that the ordinance grants the right to enter and
occupy the streets, but, in respect to the time when it shall
terminate its occupancy and withdraw, the ordinance is silent. May
we infer from this silence that the gas company has a perpetual
franchise in the streets? We are not now prepared to hold that the
company has thus acquired such a perpetual franchise. . . . It
comes, then, to this, that, in the absence of limitations as to
time, the termination of the franchise is indefinite and, to
preserve mutuality in the contract, the franchise can continue only
so long as both parties are consenting thereto."
The Supreme Court determined, in effect, that a valid franchise
to construct and maintain the railroad granted to Lynch and his
successors in 1892 was terminated by resolution of 1913. Accepting
this ruling, is the latter resolution inoperative and void because
in conflict with
Page 245 U. S. 584
Art. I, § 10, of the federal Constitution? Manifestly it
amounted to action by the state.
St. Paul Gas Light Co. v. St.
Paul, 181 U. S. 142,
181 U. S. 148;
Ross v. Oregon, 227 U. S. 150,
227 U. S.
163.
It is suggested that, in 1892, Ohio statutes only empowered
county commissioners to grant franchises not exceeding twenty-five
years in duration, and the present one accordingly expired in
February, 1917. But, by its final judgment (1915), the supreme
court recognized a valid franchise existing in 1913 and declared it
ended by the resolution of that year, without discussing the
subject of limitation. Consideration of the point is therefore
unnecessary -- our concern is with rights struck by the resolution.
We express no opinion as to whether those have now expired. Neither
are we concerned with the General Assembly's reserved power to
revoke or repeal privileges; it has taken no action. Ohio
Constitution (1851) Art. I, § 2, and Art. XIII, § 2.
Beyond serious doubt, under Constitution and statutes of Ohio,
in 1892, county commissioners had power to grant franchises over
public roads valid for twenty-five years, if not perpetually.
Nothing said by the state courts prior to
Gas Co. v. Akron
(1909) is cited which intimates that grants, without specified
limit of time, were revocable at will. Evidently this was not the
settled view in 1903, when the circuit court distinctly adjudged
that accepted ordinances by a city between 1861 and 1873,
authorizing construction and operation of street railways, silent
as to time, created perpetual rights, subject however to revocation
by the General Assembly.
State ex rel. v. Columbus Ry. Co.
(1903), 1 Ohio C.C. (N.S.) 145. This judgment was affirmed in 1905,
73 Ohio St. 363, "on the sole ground that the defendant had present
right to occupy the streets at the time of the commencement of this
action" -- a result hardly intelligible upon the theory that the
grants were revocable at will. Apparently
Page 245 U. S. 585
the doctrine announced in
Gas Co. v. Akron was not
suggested in either court.
The circumstances surrounding the grant of 1892 shows no
intention either to give or accept a mere revocable right. It would
be against common experience to conclude that rational men
wittingly invested large sums of money in building a railroad
subject to destruction at any moment by mere resolution of county
commissioners.
Detroit v. Detroit Citizens' St. Ry. Co.,
184 U. S. 368,
184 U. S.
384.
Where there are no controlling provisions in state constitution
or statutes and no prior adjudication by its courts to the
contrary, we have distinctly held that franchises like the one
under consideration are contracts not subject to annulment as here
undertaken.
Louisville v. Cumberland Telephone Co.,
224 U. S. 649,
224 U. S. 664;
Grand Trunk Western Ry. v. South Bend, 227 U.
S. 544,
227 U. S. 556;
Owensboro v. Cumberland Telephone Co., 230 U. S.
58,
230 U. S. 73;
Old Colony Trust Co. v. Omaha, 230 U.
S. 100,
230 U. S.
117.
As construed by the Supreme Court of Ohio, the resolution of
1913 impaired a valid contract, upon which plaintiffs in error
properly relied. It was accordingly invalid and without effect.
The judgment below is reversed, and the cause remanded for
further proceedings not inconsistent with this opinion.
Reversed and remanded.
MR. JUSTICE DAY took no part in the consideration or decision of
this cause.
[
Footnote 1]
"
Resolution for Right of Way for Electric
Railway"
"Resolved, that the right is hereby granted to William A. Lynch
and to such railroad corporation as he may cause to be incorporated
for that purpose to locate, construct, maintain, and operate an
electric railroad along either side of the state road running
between Canton and Massillon, between the line of the Canton Street
Railway and the corporate limits of the City of Massillon, said
road to be constructed of ties and rails in the customary manner
with the necessary poles and wires for an electric railroad. The
ties shall not be laid nearer to the center line of said road than
nine feet, except where switches are constructed, at which places
the present traveled driveway may be slightly changed from its
location to allow for the construction of such switches. Wherever
cutting or filling may be necessary in order to establish a
suitable grade for said railroad, and such cutting or filling
encroaches upon the traveled portion of said road, or nearer than
nine feet from the center of the road, or wherever the cut or fill
would interfere with the usefulness or safety of the road, at all
such places the grade of the road shall be changed and its bed
shall be regraveled so as to restore it to its present state of
usefulness, instead of locating said railroad on one side of the
center line as above provided, the same may be located, along the
center line of said road, along the whole or any portion thereof
provided that in such case wherever so located said railroad
company, or the property owners along the road shall cause a good
and sufficient roadway to be graded on each side of said railroad,
each of said roadways to be not less than sixteen feet wide in cuts
and not less than eighteen feet wide on fills, and each roadway
shall be graveled to a width of ten feet and eight inches in
thickness and put in condition for public travel without
unreasonable delay. In case the railroad is built upon the side of
the road, crossings shall be constructed of plank or other suitable
materials at all public highway crossings or intersections and in
front of all private driveways on the side of the road on which
said railroad may be located. If the railroad be constructed in the
center of the road, the track shall be laid so that the ties shall
not be above the level of the highway on either side at the ends of
the ties, materially, or so as to prevent the crossing of teams and
vehicles over said railroad with reasonable convenience. All work
that may be done under this resolution upon and along said state
road shall be done under the supervision and subject to the control
and to the approval and acceptance of the commissioners, they
reserving the right to make such minor changes in location and the
plans and methods of grading the highway as the public interests
may require. It being understood and agreed that said Wm. A. Lynch
or the railroad company, before commencing any part of said work,
shall enter into a bond in the sum of ten thousand dollars for the
faithful performance of the conditions enjoined upon them by this
resolution. This resolution to be of no binding effect until such
bond is duly executed and accepted. It being further understood and
agreed that said Wm. A. Lynch or the railroad company, before
commencing any part of said work, shall enter into a bond in the
sum of ($5,000) five thousand dollars conditional that said Wm. A.
Lynch or said railroad company shall keep said county and said
board perfectly harmless from any and all liability to abutting
property owners growing out of the construction of said road."
[
Footnote 2]
"Resolution of the County Commissioners of Stark County,
Ohio."
"Whereas, the county Commissioners of Stark County, Ohio, on the
22d day of February, 1892, passed a resolution appearing on pages
17, 18, and 19 of Column 8, Commissioners' Journal, Stark County,
Ohio, and said resolution is as follows: [Here follows a copy of
the resolution granting a right of way to Lynch above set out.]
and,"
"Whereas, an electric interurban railway, some time after the
passage of said resolution, was built and constructed from Canton,
Ohio, to Massillon, Ohio, upon the state road between said cities,
the course described in the aforesaid resolution, and"
"Whereas, cars are now being operated upon said interurban
electric railway and have been so operated for some years, by
persons or companies, claiming to derive their rights and title
from the said William A. Lynch, and claiming that their said title,
right and interest emanate from the aforesaid resolution, and"
"Whereas, the Northern Ohio Traction & Light Company, a
corporation, is now and has been, for several years last past,
operating the interurban electric cars over said railway and
carrying passengers over said interurban electric railway between
the cities of Canton and Massillon, Ohio, and"
"Whereas, the said the Northern Ohio Traction & Light
Company claims its rights, interests, and privileges for the
conducting of said business as assignee, transferee and successors
of the said William A. Lynch, and his assigns or successors, based
and founded upon the aforesaid resolution passed by the County
Commissioners of Stark County, Ohio, on the 22d day of February,
1892, and recorded on pages 17, 18 and 19 of Volume 8,
Commissioners' Journal, Stark County, Ohio, and"
"Whereas, the Commissioners of the County of Stark and State of
Ohio contend,"
"First. That the said William A. Lynch, at the time of the
enactment of said resolution of the Commissioners of Stark County,
was not an incorporated company and was not entitled to the
privileges of which a company incorporated in Ohio for the purpose
of owning and operating an interurban electric line, was not such
an entity that he could accept the interests, rights and titles
granted by the County Commissioners of Stark County in the
aforesaid resolution."
"Second. That whatever right, title, interest, and privilege, if
any, were conveyed by the aforesaid resolution to the said William
A. Lynch were conveyed and granted to the said William A. Lynch and
to him alone, said grant and conveyance being a personal one."
"Third. That the term of the grant included in the aforesaid
resolution of the County Commissioners, passed by the County
Commissioners on the 22d day of February, 1892, as aforesaid is an
indeterminate one, continuing from day to day, and that said term
extends and continues only so long as both parties to said grant
and conveyance, to-wit: Stark County, Ohio, through its board of
County Commissioners, the grantor, and William A. Lynch, or any
company he might organize and incorporate, or any successor of the
said William A. Lynch or the said company he might organize, the
grantee, agree and consent, and that said grant and conveyance can
be terminated at any time by either party to said grant or
conveyance, or those claiming to hold or holding under said
grant."
"Now therefore be it resolved by the Board of Commissioners of
Stark County, Ohio, assembled in session, that said term of said
grant and conveyance be terminated on this date, to take effect on
this date, and that the Board of Commissioners of Stark County,
Ohio, refuse to extend to the Northern Ohio Traction & Light
Company, which company claims to hold, title, right and interest as
the successor, assignee and transferee of the aforesaid William A.
Lynch and his successors and assignees, or either of them, the term
for the operation of the aforesaid interurban electric railroad
beyond this date."
"Be it resolved that the Northern Ohio Traction & Light
Company be notified that the Commissioners of Stark County, Ohio,
have on this date terminated the term of said grant and conveyance,
under which said grant the Northern Ohio Traction & Light
Company claim the right and privilege of operating said interurban
electric railroad between Canton and Massillon, Ohio, and that the
County of Stark and State of Ohio and the Board of Commissioners of
Stark County, Ohio, will regard and do regard the operation of an
interurban electric railroad between Canton and Massillon, Ohio, on
said state road running between Canton and Massillon, Ohio, from
this date forward a usurpation and infringement upon the rights of
said Stark County, Ohio, and said Board of Commissioners of said
Stark County, Ohio."
"Be it resolved that the Prosecuting Attorney of Stark County,
Ohio, be directed and is hereby directed to take whatever steps he
may deem necessary and advisable to prohibit and prevent the
Northern Ohio Traction & Light Company or any other person,
individual, corporation, or company from continuing to operate an
interurban electric railroad between the Cities of Massillon and
Canton, Ohio, on the state road, running between said cities by
virtue of any rights, title or interest the said the Northern Ohio
Traction & Light Company or any other person, individual,
corporation or company may claim as resulting from the aforesaid
resolution, enacted by the County Commissioners of Stark County,
Ohio, on February 22, 1892."
"Be it resolved that the said the Northern Ohio Traction &
Light Company be directed and is hereby directed to remove all its
property, equipment, and belongings from the right of way described
by the aforesaid resolution, herein referred to as having been
passed by the County Commissioners of Stark County, Ohio, on
February 22, 1892, and now occupied by the said the Northern Ohio
Traction & Light Company at once."
"Be it resolved that a copy of this resolution be sent or
delivered, and the Auditor of Stark County, Ohio, is hereby
directed to send or deliver to the Northern, Ohio Traction &
Light Company a copy of this resolution."
MR. JUSTICE CLARKE, dissenting.
The parties to this suit are a board of commissioners of an Ohio
county and two corporations organized under the law of the same
state, and the jurisdiction of this Court, if it exists at all,
must be found in the claim that the resolution of the County
Commissioners of February 19, 1913, is a law of the State of Ohio
which impairs the obligation
Page 245 U. S. 586
of the grant by the Commissioners of February 22, 1892, within
the meaning of the Constitution of the United States. This
resolution, printed in the margin of the court's opinion, declares
that the Commissioners "contend" that the term of the grant of
February 22, 1892,
"is an indeterminate one, continuing from day to day, and that
said term extends and continues only so long as both parties to
said grant . . . agree and consent,"
and that it may be terminated at any time by either party to it.
The resolution then declares the grant terminated as of the date of
the resolution, and that the prosecuting attorney of the county be,
and he is, directed to take such steps as he may deem necessary to
prevent further operation of the railroad on the highway, as
provided for by the grant.
The effect of the decision by the Supreme Court of Ohio is that
this "contention" of the County Commissioners that the grant is one
determinable at the will of either party to it is sound, and that
the Commissioners having elected to terminate it the rights of the
railway company were at an end. This Court reverses this decision
of the state supreme court and holds that the grant of 1892 was not
revocable at will by the County Commissioners, that the resolution
of February 19, 1913, in terms revoking it is invalid and void,
and, without deciding whether the power of the Commissioners was
limited to the granting of such a franchise for twenty-five years
and, if so, whether the grant has expired, the Court returns the
case to the state courts for further proceedings not inconsistent
with its opinion.
It is impossible for me to concur in the conclusion thus arrived
at by the Court, and my reasons for dissenting will be briefly
stated.
The resolution of February 19, 1913, is in terms simply an
expression of the "contention" of the County Commissioners as to
the legal effect of the grant of 1892, coupled
Page 245 U. S. 587
with notice of their election to terminate the same agreeably to
their interpretation of it, and with direction and authority given
to the prosecuting attorney of the county to test in the courts the
validity of the position asserted by the board.
That such a resolution to apply to the courts of the country to
establish an asserted legal right is not a law impairing the
obligation of a contract is expressly decided, it seems to me, in
Des Moines v. Des Moines City Ry. Co., 214 U.
S. 179, and in principle in
Defiance Water Co. v.
Defiance, 191 U. S. 184. A
resolution such as was passed here is the only form in which the
Board of County Commissioners could assert, in advance of
litigation, its contention as to its rights under the contract and
it is not different in effect from what it would have been if the
same contention had been expressed in another form, such as by way
of an answer filed in behalf of the Commissioners in a suit brought
by the companies to enforce what they considered to be their rights
under the grant. The decision of this Court that the obligation of
the contract was thus impaired amounts to holding
"that, whenever it is asserted on the one hand that a
municipality (county) is bound by a contract to perform a
particular act and the municipality denies that it is liable under
the contract, thereby an impairment of the contract arises in
violation of the Constitution of the United States, but this
amounts to the contention that every case involving a controversy
concerning a municipal contract is one of federal cognizance,
determinable ultimately in this Court."
This Court, in the language quoted, has declared such a
conclusion to be obvious error in
St. Paul Gas Light Co. v. St.
Paul, 181 U. S. 142,
181 U. S.
149.
These three clear and well reasoned cases seem to me to
correctly decide that the court is without jurisdiction to consider
this case, and that it should be dismissed.
Page 245 U. S. 588
But, even if we should assume that this Court has jurisdiction
to decide the case, it nevertheless would be impossible for me to
concur in the conclusion arrived at.
The resolution of the County Commissioners under discussion does
not, in words, define the term for which the franchise to operate a
railroad on the public highway is to continue. The Supreme Court of
Ohio holds that it results from this failure to define "in express
terms," "in plain terms," the duration of the grant that it should
be considered an indeterminate one, but this Court holds that this
failure to clearly define the duration of the grant results in its
being a perpetual one, unless it be otherwise limited by
constitution or statute.
The rule for the construction of grants such as we have here
will nowhere be found more clearly or imperatively stated than in
the decisions of this Court.
In
Blair v. Chicago, 201 U. S. 400,
201 U. S. 463,
a decision obviously rendered upon "great consideration," it is
declared that a corporation which would successfully assert a
private right in a public street must come prepared to show that it
has been conferred "in plain terms," "in express terms," and that
any ambiguity in the terms of the grant must be resolved in favor
of the public and against the corporation, "which can claim nothing
which is not clearly given." The sound reason given for this rule
is that "grants of this character are usually prepared by those
interested in them," and that "it serves to defeat any purpose,
concealed by the skillful use of terms, to accomplish something not
apparent on the face of the act." This is declared to be "sound
doctrine which should be vigilantly observed and enforced."
The Supreme Court of Ohio is not less definite in adopting the
same rule of construction, saying, in
Railroad Co. v.
Defiance, 52 Ohio St. 262:
"Every grant in derogation of the right of the public in the
free and unobstructed use of the streets . . .
Page 245 U. S. 589
will be construed strictly against the grantee and liberally in
favor of the public, and never extended beyond its express terms
when not indispensable to give effect to the grant."
What results from the application of this rule to the grant we
are considering?
The fact that two such courts as this one and the Supreme Court
of Ohio differ so widely that the one holds the grant on its face
to be perpetual, and the other holds it to be determinable at will,
is, to me, convincing evidence that a perpetual grant is not
conferred "in plain terms," "in express terms," that it is
"something not apparent on the face of the grant," and that
therefore to give such a construction to the resolution is to find
in it a most vital and important provision which "those interested"
in obtaining the grant would have been eager to incorporate into it
had they thought it possible to obtain consent to it. It is
impossible for me to doubt that a proposal to the County
Commissioners to make the resolution read
"Resolved, that the right is hereby granted . . . to construct,
maintain and operate perpetually an electric railroad . . . on the
state road between Canton and Massillon"
would have been summarily rejected by the Commissioners. The
public indignation which the making of such a grant would have
excited was sufficient protection against its being made "in plain
terms," and the rule we have quoted, in my judgment, should be the
protection of the public against such a result's being accomplished
by construction.
The Supreme Court of Ohio may have been influenced in its
decision of this case by the fact that, from the time, when the
development of the state became such as to make of public
importance the terms of grants of street railway rights in the
streets and public roads of that state, the General Assembly of the
state limited to twenty-five years the term for which such rights
might be granted, either
Page 245 U. S. 590
by county commissioners or by municipal corporations. It is
difficult for a man living in such a legal atmosphere with respect
to such grants to think in terms of perpetual franchises. (An
attempt to remove this restriction from grants by county
commissioners was declared unconstitutional by the supreme court in
Railway Company v. Railway Company, 5 Ohio C.C. (N.S.)
583,
aff'd, 73 Ohio St. 364.)
The decision of this case by the Supreme Court of Ohio is
without written opinion, but it is rested by the court upon its
previous decision in
East Ohio Gas Co. v. Akron, 81 Ohio
St. 33. In that case, the City of Akron contended that the
franchise granted to the Gas Company, in terms unrestricted as to
time, was perpetual, and the Gas Company contended that it was
determinable at the will of either party. After having the case
under advisement for six months, and, as the Court says in its
opinion, "on account of its great importance to the public as well
as to all public service corporations," having given unusual
consideration to the case, the contention of the Gas Company was
sustained, and the grant was held "simply determinable, existing
only so long as the parties mutually agree thereto." Paragraph
three of the syllabus of the case, which in Ohio has the approval
of the entire court, reads:
"While much regard will be given to the clear intention of the
parties, yet, where the contract is entirely silent as to a
particular matter, the courts will exercise great caution not to
include in the contract by construction, something which was
intended to be excluded."
This decision was rendered in 1909 by a unanimous court, and six
years later it was made authority for the decision of this case.
There is no supreme court authority in Ohio to the contrary. The
judgment by an inferior court, cited in the majority opinion, that
street railway grants made before the statutory limit of
twenty-five years was imposed and silent as to duration were
perpetual, was
Page 245 U. S. 591
promptly discountenanced when the case reached the supreme
court. 73 Ohio St. 363.
A decision by a state supreme court, repeated after the lapse of
six years, of a question involving the construction of local laws
is, in my judgment, entitled to very great weight.
There was no question raised in the Ohio court but that a
contract was created by the passing and accepting of the resolution
of 1892, and the record shows that the sole question for decision,
and which was decided, was whether the grant was an indeterminate
or a perpetual one. If the grant had contained an express provision
that it was revocable at will, it would have been impossible,
having any regard to the meaning of words, to have said that the
resolution of 1913 impaired its obligation. It would have been
simply and only a form of exercising a legal right the exercise of
which was contemplated by the contract. The case is not different
if the grant, without such expression, really means, as the Supreme
Court of Ohio held that it means, the same thing as if such
provision had been incorporated into it, and since the state court
arrived at its result by the construction of the grant wholly
unaffected by the subsequent resolution terminating it, it seems
clear enough, upon repeated decisions of this Court, that a
decision should not be rendered here based on the theory that the
grant was impaired by a resolution in form terminating it. While
this Court has held that in such cases it will for itself determine
whether a contract exists and what its terms are, yet where the
decision of the state court is so manifestly unaffected by the
later "law," as it is in this case, it should be given weight and
authority comparable at least to that which would have been given
it if it had been directed to the validity of the granting "law"
under the state constitution.
The power to declare laws of states unconstitutional and to
reverse the judgments of the supreme courts of
Page 245 U. S. 592
states is so fateful and is so unprecedented in the history of
governments other than ours that, as this Court has repeatedly
declared, it should be exercised only in cases which are clear, and
it is impossible for me to think that this is such a case.
The only reason given by the Court in its opinion for differing
with the Supreme Court of Ohio in its construction of the granting
resolution of 1892 is that:
"The circumstances surrounding the grant of 1892 show no
intention either to give or accept a mere revocable right. It would
be against common experience to conclude that rational men
wittingly invested large sums of money in building a railroad
subject to destruction at any moment by mere resolution of county
Commissioners."
There is no evidence whatever in this record that there were any
special circumstances "surrounding the grant of 1892," and to
undertake to infer what the unexpressed intention of the parties to
this grant was twenty-five years ago is, it seems to me, an unusual
and unpromising enterprise.
That it would be against common experience to conclude that
rational men would wittingly invest their money in a railroad
constructed under a grant determinable by the action of county
commissioners is reasoning which it seems is more persuasive with
courts than with investors or men of affairs. To reason upon what
is reasonable is always uncertain and often misleading, but in this
case we have ascertained facts to guide us.
Until recent years, street railroad franchises (locations), and
also electric light, gas, and other public utility franchises were
revocable in Massachusetts, by aldermen in cities, and by selectmen
in towns (counties), and they are still in the main so revocable,
save that, as to railroad grants, revocation is now subject to
approval by the State Railroad Commission, and as to some other
"locations," revocation is subject to approval by the Board of Gas
and
Page 245 U. S. 593
Electric Light Commissioners. Mass.Rev.Laws, 1902, vol. 2, §§ 7,
32, pp. 1044, 1051.
Springfield v. Springfield St. Ry.
Co., 182 Mass. 41, 48;
Boston Electric Light Co. v. Boston
Terminal Co., 184 Mass. 566;
Metropolitan Home Telephone
Co. v. Emerson, 202 Mass. 402. Yet hundreds of millions of
dollars have been invested in that state in dependence upon these
revocable ordinances.
In legislating for the District of Columbia, Congress has
followed the Massachusetts example and has made street railroad
grants indeterminate and revocable at the will of Congress. Act May
17, 1862, c. 73, 12 Stat. § 6, 390; Act July 29, 1892, c. 322, 27
Stat. § 8.
Wisconsin, in 1907, adopted the principle of indeterminate
franchises (Laws of Wisconsin, 1909, p. 775, § 1797t), and the new
Constitution of Michigan recognizes it by providing that any
franchise not revocable at will shall require the affirmative vote
of sixty percent of the voters before it can become valid.
Constitution, 1908, Art. 8, § 25. Wilcox Municipal Franchises, vol.
1, pp. 36, 37, vol. II, pp. 46, 47, and c. 27.
This form of franchise has been called "a tenure during good
behavior," it has resulted in superior service to the public, and,
to the surprise of those who reason
a priori on the
subject, such franchises have proved in effect perpetual. This type
of franchise is undergoing modification in various parts of the
country, which will, no doubt, improve it, but, of it even as it
now is, Wilcox has this to say:
"Unquestionably, with the recognition of the unspeakable wrong
that is inherent in the grant of perpetual franchises, and the
great practical disadvantages that usually arise in connection with
limited-term grants, public sentiment is rapidly crystalizing in
favor of the indeterminate franchise as the most promising basis
for public control of street railways."
Municipal Franchises, Vol. II, p. 240.
Page 245 U. S. 594
Perpetual franchises have proved to be such a burden in
communities upon which they have been imposed (Wilcox, vol. II, c.
26) that, for the reasons so well stated in
Blair v. Chicago,
supra, it is impossible for me to agree that any grant is
perpetual unless the language used in it is so express and clear
that reasonable men cannot differ in giving to it that effect.
Thus, for the reasons (1) that a perpetual grant is not "in
plain terms" made by the resolution of 1892; (2) that appropriate
consideration seems to me not to be given to the decision of the
Supreme Court of Ohio, and (3) that the reasons stated for
inferring that an irrevocable franchise was intended by the
granting power in the case before us are not sound reasons, I
should dissent from the opinion of the Court even if convinced that
it had jurisdiction to decide the case.
MR. JUSTICE BRANDEIS concurs in this dissent.