Erie R. Co. v. Board of Public Utility Comm'rs, 254 U.S. 394 (1921)

U.S. Supreme Court

Erie R. Co. v. Board of Public Utility Comm'rs, 254 U.S. 394 (1921) Erie Railroad Company v. Board of Public Utility Commissioners

No. 330

Argued November 16, 17, 1920

Decided January 3, 1921

254 U.S. 394

ERROR TO THE COURT OF ERRORS AND APPEALS

OF THE STATE OF NEW JERSEY

Syllabus

1. A state may require a railroad company to do away with grade crossings of public streets, whether laid out before or after the construction of the railroad, and may place upon the company the expense of executing the state's plan to accomplish this by running the streets over or beneath the tracks. P. 254 U. S. 409.

2. Of the two conflicting interests in such cases -- that of the public using the streets and that of the railroad and the public using it -- the former is paramount, and the state may constitutionally insist that the streets be kept free of danger whatever the cost to the parties introducing it. P. 254 U. S. 410. Distinguishing cases involving the power to regulate trains.

3. The authority so exercised is an obvious case of the police power, or it may be regarded as an authority impliedly reserved when the state granted to the railroad the right to occupy the land. Id.

Page 254 U. S. 395

4. The order requiring the changes should be regarded as stating a condition that must be complied with if the railroad continues to use the soil of the state, but the railroad cannot be compelled to serve at a loss. P. 254 U. S. 410.

5. There being reason to believe that safety requires the change, the facts that the execution of the plan will interfere with prior contracts and involve expenditures so heavy as to impair the efficiency of the railroad as an agency of interstate commerce, or even lead to bankruptcy, do not bring the state's order into conflict with the contract or commerce clauses of the Constitution or the due process clause of the Fourteenth Amendment. P. 254 U. S. 411.

6. The rights of the railroad company in respect of private sidings are no greater than those in respect of the main line. Id.

7. The burden of paying for the required changes may be laid upon an operating lessee railroad company without regard to the financial ability of the lessors to compensate it for the required improvements if the leases should be terminated. Id.

8. As the railroad company might be charged the entire expense, it cannot complain that only 10 percent of it is cast upon a street railway company as to streets used by the latter. P. 254 U. S. 412.

9. While it may be that an order of a state board directing such changes at heavy expense to a railroad company would be so unreasonable as to be void if the evidence plainly did not warrant a finding that the particular crossings were dangerous, yet such crossings are generally dangerous, and the conclusion reached by the board and confirmed by the state courts is entitled to much weight, and, if reasonably warranted, must stand. Id.

10. As a state may delegate legislative or quasi-legislative power to a board, subject to review in the courts (Hall v. Geiger-Jones Co., 242 U. S. 539), the constitutional aspect of changes ordered at grade crossings, as regards the railroad company affected, is the same whether the board ordering them was obliged to do so upon finding danger or had a discretion in the matter under the state law. P. 254 U. S. 413.

11. A street railway crossing the tracks of a steam road at grade increases the danger, and may be obliged to bear part of the expense of removing it. Id.

12. And where changes are lawfully ordered, a water company is not deprived of property without due process by being obliged to adjust the pipes to the new conditions at its own expense. Id.

13. In being so required, a water company is not denied equal protection of the laws as compared with a street railroad company required to pay 10 percent of the total expense of the crossing and

Page 254 U. S. 396

presumably more than the expense of merely readjusting it tracks. P. 254 U. S. 413.

14. Held that change ordered at railroad grade crossings involving expense to a telegraph company in adjusting it line did not infringe its right under the Fourteenth Amendment or violate the commerce clause. P. 254 U. S. 414.

15. An order and plan for abolishing grade crossings of a railroad and public streets, if otherwise valid, is not unconstitutional because it will dislocate private sidings connected with the railroad and put their owners to expense. Id.

89 N.L.J. 57, 24; 90 N.J.L. 672, 673, 714, 729, 677, 694, 715, affirmed.

The cases are stated in the opinion.

Page 254 U. S. 407

MR. JUSTICE HOLMES delivered the opinion of the Court.

These are writs of error brought by parties interested in an order of the Board of Public Utility Commissioners of New Jersey, dated April 20, 1915, directing a change in fifteen places in the City of Paterson, where the Erie Railroad now crosses that number of streets at grade. The order was reviewed on writs of certiorari and affirmed by the supreme court, and on appeal by the court of errors and appeals. 89 N.J.L. 57, 24; 90 N.J.L. 672, 673, 714, 729, 677, 694. The Erie Railroad Company made two applications to the supreme court, the second being based upon a refusal by the Board to grant a rehearing of its order. Accordingly, it has two writs of error here.

Page 254 U. S. 408

But the second adds nothing to the first, as we could not say that the Board unreasonably refused further delay. Those of the other parties are to the judgments affirming the original order of the Board. The Erie Railroad was ordered to make the change by carrying fourteen of the crossings under, and one at Madison Avenue over, the railroad. It will also have to bear the cost, subject to a charge to the Public Service Railway Company of ten percentum of the cost of changing three crossings used by its road. The most important questions arise in the Erie Railroad Company's case, and we take that up first.

The order was made under an Act of March 12, 1913, c. 57, P.L. 1913, p. 91, which is construed by the state courts to authorize it, subject to the constitutional questions to be dealt with here. The Erie Railroad's line in Paterson is over tracks originally belonging to the President and Directors of the Paterson and Hudson River Railroad Company and the Paterson and Ramapo Railroad Company, but now held by the Erie Railroad, by assignment of perpetual leases upon the terms that, if in any unforeseen way the leases terminate, the value of erections and improvements must be repaid by the lessors. They, however, are small corporations having no assets except their roads and the rentals received from the Erie Company. The leases were ratified by an Act of March 14, 1853, providing that they should not be held to confer any privilege or right not granted to the lessors by their charters. It is admitted that the statute must be taken to impose the duty of making the changes upon the company operating the road, the plaintiff in error, which is an interstate road. It put in evidence that it did not have assets sufficient to make the changes at least without interfering with the proper development of its interstate commerce, and also contended that the whole evidence did not justify the finding of the Board that the crossings were dangerous to public safety, but at most showed that

Page 254 U. S. 409

the change would be a public convenience. It is said that the order must be reasonable to be upheld, and that it is not reasonable to require an expenditure for such a purpose of over two million dollars from a company that has not more than $100,000 available, and that the order and the statute, when construed to justify it, not only interfere unwarrantably with interstate commerce and impair the obligation of contracts, but take the Erie Company's property without due process of law.

Most of the streets concerned were laid out later than the railroads, and this fact is relied upon, so far as it goes, as an additional reason for denying the power of the state to throw the burden of this improvement upon the railroad. That is the fundamental question in the case. It might seem to be answered by the summary of the decisions given in Chicago, Milwaukee & St. Paul Ry. Co. v. Minneapolis, 232 U. S. 430, 232 U. S. 438.

"It is well settled that railroad corporations may be required at their own expense not only to abolish existing grade crossings, but also to build and maintain suitable bridges or viaducts to carry highways, newly laid out, over their tracks or to carry their tracks over such highways."

Missouri Pacific Ry. Co. v. Omaha, 235 U. S. 121; Northern Pacific Ry. Co. v. Puget Sound & Willapa Harbor Ry. Co., 250 U. S. 332. For although the statement is said to be explained as a matter of state law by the previous decisions in Minnesota, it is made without reference to those decisions or to any local rule, and, moreover, the intimation of the judgment in the present case is that whatever may have been the earlier rulings, the law of New Jersey now adopts the same view.

But it is argued that the order is unreasonable in the circumstances to which we have adverted, the principle applied to the regulation of public service corporations being invoked. Mississippi R. Co. Commission v. Mobile & Ohio R. Co., 244 U. S. 388, 244 U. S. 391; Chicago,

Page 254 U. S. 410

Burlington & Quincy R. Co. v. Railroad Commissioners of Wisconsin, 237 U. S. 220. But the extent of the states' power varies in different cases from absolute to qualified, somewhat as the privilege in respect of inflicting pecuniary damage varies. The power of the state over grade crossings derives little light from cases on the power to regulate trains.

Grade crossings call for a necessary adjustment of two conflicting interests -- that of the public using the streets and that of the railroads and the public using them. Generically, the streets represent the more important interest of the two. There can be no doubt that they did when these railroads were laid out, or that the advent of automobiles has given them an additional claim to consideration. They always are the necessity of the whole public, which the railroads, vital as they are, hardly can be called to the same extent. Being places to which the public is invited and that it necessarily frequents, the state, in the care of which this interest is and from which, ultimately, the railroads derive their right to occupy the land, has a constitutional right to insist that they shall not be made dangerous to the public, whatever may be the cost to the parties introducing the danger. That is one of the most obvious cases of the police power, or, to put the same proposition in another form, the authority of the railroads to project their moving masses across thoroughfares must be taken to be subject to the implied limitation that it may be cut down whenever and so far as the safety of the public requires. It is said that, if the same requirement were made for the other grade crossings of the road, it would soon be bankrupt. That the states might be so foolish as to kill a goose that lays golden eggs for them has no bearing on their constitutional rights. If it reasonably can be said that safety requires the change, it is for them to say whether they will insist upon it, and neither prospective bankruptcy

Page 254 U. S. 411

nor engagement in interstate commerce can take away this fundamental right of the sovereign of the soil. Denver & Rio Grande R. Co. v. Denver, 250 U. S. 241, 250 U. S. 246. To engage in interstate commerce, the railroad must get onto the land, and to get onto it, must comply with the conditions imposed by the state for the safety of its citizens. Contracts made by the road are made subject to the possible exercise of the sovereign right. Denver & Rio. Grande R. Co. v. Denver, 250 U. S. 241, 250 U. S. 244; Union Dry Goods Co. v. Georgia Public Service Co., 248 U. S. 372; Louisville & Nashville R. Co. v. Mottley, 219 U. S. 467; Northern Pacific Ry. Co. v. Duluth, 208 U. S. 583; Manigault v. Springs, 199 U. S. 473, 199 U. S. 480. If the burdens imposed are so great that the road cannot be run at a profit, it can stop, whatever the misfortunes the stopping may produce. Brooks-Scanlon Co. v. R. Co. Commissioners, 251 U. S. 396. Intelligent self-interest should lead to a careful consideration of what the road is able to do without ruin, but this is not a constitutional duty. In the opinion of the courts below, the evidence justified the conclusion of the Board that the expense would not be ruinous. Many details as to the particular situation of this road are disposed of without the need of further mention by what we have said thus far.

The plaintiff in error discusses with considerable detail the effect of the changes upon private sidings. But its rights in respect of these are at least no greater than those in respect of the main line, and are covered by the preceding discussion. So are the objections that, if the leases ever are terminated, it has no chance of being repaid the value of its improvements because of the smallness of the lessor corporations. They would have this property in that event, and it would be subject to their obligation, but the answer to the complaint of the plaintiff in error in all its forms is that which we have made. Whatever the cost, it may be required by New Jersey not to imperil

Page 254 U. S. 412

the highways if it does business there. We agree with the decisions below that, as the railroad company might have been charged with the whole expense, the fact that no more than ten percentum of the cost of three crossings is thrown upon a street railway company is a matter of which it cannot complain.

If we could see that the evidence plainly did not warrant a finding that the particular crossings were dangerous, there might be room for the argument that the order was so unreasonable as to be void. The number of accidents shown was small, and if we went upon that alone, we well might hesitate. But the situation is one that always is dangerous. The Board must be supposed to have known the locality and to have had an advantage similar to that of a judge who sees and hears the witnesses. The courts of the state have confirmed its judgment. The tribunals were not bound to await a collision that might cost the road a sum comparable to the cost of the change. If they were reasonably warranted in their conclusion, their judgment must stand. We cannot say that they were not. At some crossings, the danger was less than at others, but it was necessary, or at least prudent, to proceed on a general plan. Upon the whole matter, while it is difficult to avoid the apprehension that the state officials hardly gave due weight to the situation of the company as a whole in their anxiety for the wellbeing of the state, we are of opinion that they did not exceed their constitutional powers. The order should be regarded as stating a condition that must be complied with if the company continues to use the New Jersey soil. Probably the conclusion that we have reached could be supported upon the narrower ground that a continuing obligation was imposed by the charters of the plaintiff in error's lessors, and was assumed by the plaintiff in error, but that which we have stated seems to us free from doubt.

Some argument is based upon a discretion supposed

Page 254 U. S. 413

to be left to the Board by the statute, which reads that, when it appears to the Board that the crossing is dangerous, it may order, &c. The state courts seem to regard the words as imposing a positive duty, but, upon either construction, we perceive no infraction of the company's constitutional rights. If the words are imperative, the reasons that we have given apply. If they leave a discretion, it is subject to review by the courts, and this Court has no concern with the question how far legislative or quasi-legislative powers may be delegated to a commission or board. Hall v. Geiger-Jones Co., 242 U. S. 539; Engel v. O'Malley, 219 U. S. 128; Prentis v. Atlantic Coast Line Co., 211 U. S. 210, 211 U. S. 225. We deem it unnecessary to give our reasons in greater detail for deciding that the judgment against the Erie Railroad Company must be affirmed.

While the Railroad Company contends that the Public Service Railway Company should be charged more, the latter company comes here upon the proposition that it should be charged nothing. We agree with the courts below that a street railway crossing the tracks of a steam road at grade in a public street increases the danger, and may be required to bear a part of the expense of removing it. The amount charged does not appear to be excessive, and, upon the principles that we have laid down, the payment of it may be made a condition of the continued right to use the streets. Detroit, Fort Wayne & Belle Isle Ry. v. Osborn, 189 U. S. 383, 189 U. S. 390; Missouri Pacific Ry. Co. v. Omaha, 235 U. S. 121, 235 U. S. 129.

The Passaic Water Company contends that the expense of moving its pipes cannot be thrown wholly upon it -- mainly on the ground that the change of grade was unlawful. This ground fails, and the company must adjust itself to the lawfully changed conditions. It also contends that it does not receive the equal protection of the laws because the street railway, instead of being charged

Page 254 U. S. 414

the expense of moving its tracks, is charged ten percentum of the total expense at its crossings. Presumably this charge is greater than the mere adjustment of tracks to a new surface. It is based upon the share of the street railroad in creating the danger. As the street railroad cannot complain, certainly the water company cannot.

The Western Union Telegraph Company makes similar objections, and also says that its interstate commerce is interfered with, and presents from its own point of view arguments dealt with so far as they seem to us to need mention in disposing of the principal case. The other plaintiffs in error own side tracks which will be dislocated by the change, and they will be put to further expense if the plan is carried out according to what the New Jersey Court decides to be suggestions, not commands. The rights in the side tracks are subordinate to changes in the main track otherwise lawful. As against these as against the others, the judgment of the court of errors and appeals is affirmed.

Judgments affirmed.

THE CHIEF JUSTICE, MR. JUSTICE VAN DEVANTER, and MR. JUSTICE McREYNOLDS dissent.