1. A contract between a city and a street railway company should
not be allowed to exempt the latter from future liability for
paving the portions of streets occupied by its tracks unless such
exemption be plainly expressed. P. 261 U. S.
Page 261 U. S. 150
2. An assessment against a street railway company for paving
between and near its tracks and rails, greater than the amount
assessed, for the rest of the pavement, on abutting lots valued
much higher than the railway property on the street, held
not arbitrary and unreasonable. P. 152.
3. Imposition of special obligations on railway companies in
respect of street paving is consistent with reasonable legislative
classification. P. 261 U. S.
182 N.C. 333 affirmed.
Error to a judgment of the Supreme Court of.North Carolina
sustaining an assessment for street paving levied against the
plaintiff in error street railway company. Certiorari also was
applied for and denied.
MR. JUSTICE McREYNOLDS delivered the opinion of the Court.
As the cause is properly here upon writ of error -- Atlantic
Coast Line v. Goldsboro, 232 U. S. 548
232 U. S. 555
-- we deny the petition for certiorari.
Plaintiff in error was incorporated by the Legislature of North
Carolina in 1901, and empowered to operate car lines in the streets
of Durham when so authorized by the municipal authorities. Shortly
thereafter and in pursuance of an agreement, they granted the
necessary authority. The Supreme Court of North Carolina, 182
Page 261 U. S. 151
333, affirmed a judgment of the superior court which sustained
an assessment of $102,942.30 made in 1920 against the corporation
for the cost of paving that portion of Main street occupied by its
tracks. It refused to make the improvement as required by an
ordinance; thereupon the city caused the work to be done and
assessed the cost against it. The formality of the proceeding is
Recovery is resisted upon two grounds: (1) That the original
contract under which the railway lines were constructed and
operated exempts and corporation from liability to pave the
roadbed. Constitution, § 10, art. I. (2) That the assessment is
excessive, unreasonable, and wholly arbitrary, and to enforce it
would deprive plaintiff in error of property without due process of
law and deny it the equal protection of the laws, contrary to the
The original contract with the city is dated February 4, 1901,
and the claim of exemption rests upon the following clause
"The said Durham Traction Company [now the Durham Public Service
Company], whenever it shall be required so to do, shall cause its
roadbed and track to be brought to surface grade at its own expense
and costs, but nothing herein contained shall be construed to
require said Durham Traction Company to pave its roadbed, but it
shall be required to restore the roadbed to the condition in which
it was it the time of laying said track, provided, however, that,
if the said city decides to put in or change its sewerage pipes on
any of the streets of said city on which the tracks of said Durham
Traction Company may be laid, the said city may require the said
Durham Traction Company to remove and replace at its own expense
the said tracks for said purpose, and said city shall incur no
liability for any delays or interruptions of the business or
traffic of the said Durham Traction Company caused thereby."
The court below held that, while this contract imposes
Page 261 U. S. 152
no liability for paving, neither does it grant exemption
therefrom. And we agree with their conclusion. Such exemptions must
plainly appear. The general rule is that doubts as to provisions in
respect of them must be resolved in favor of the municipality or
state. Cleveland Electric Ry. Co. v. Cleveland,
204 U. S. 116
204 U. S.
Purporting to proceed under "An act relating to local
improvements in municipalities," ratified by the General Assembly
of North Carolina, February 27, 1915 -- c. 56 -- the governing body
of Durham by resolution provided for improving Main Street and
directed plaintiff in error to pave between and for 18 inches
outside its tracks. The company refused to comply, and the
challenged assessment followed. Among other things, the Act of 1915
"Sec. 4. Every municipality shall have power, by resolution of
its governing body, upon petition made as provided in the next
succeeding section, to cause local improvements to be made and to
defray the expense of such improvements by local assessment, by
general taxation, and by borrowing, as herein provided. . . ."
"Sec. 6. . . . If the resolution shall provide for a street
improvement, it shall direct that any street railway company or
other railroad company having tracks on the street or streets or
part thereof to be improved shall make such street improvement with
such material and of such a character as may be approved by the
governing body, in that part of such street or streets or part
thereof which the governing body may prescribe, not to exceed,
however, the space between the tracks, the rails of the tracks, and
eighteen inches in width outside of the tracks of such company, and
that, unless such improvement shall be made on or before a day
specified in such resolution, the governing body will cause such
improvement to be made: Provided, however,
that, where any
such company shall occupy such street or streets under a franchise
or contract which
Page 261 U. S. 153
otherwise provided, such franchise or contract shall not be
affected by this act except insofar as this act may be consistent
with the provisions of such franchise or contract. . . ."
By agreement of parties, the cause was tried without a jury, and
the court found the facts. Those so found and presently relied upon
to show the arbitrary and unreasonable character of the assessment
"That the section of Main Street over which the assessment
extends is 2.02 miles in length and, including double tracks, there
are 2.65 miles of track on Main Street; that there are 154 abutting
property owners upon this portion of Main Street; that the
assessment against said company for paving Main Street is
$102,942.30, and against said 154 property owners is $89,909.56;
that the value of the property of this defendant on Main Street
within the area which is directly affected by said paving is
$100,000 and the assessed value of said abutting property is
approximately $5,083,250 exclusive of the value of property on Main
Street not taxed."
"That the cost to the Traction Company of furnishing new rails
and new cross-ties, of taking up and relaying its track on Main
Street and doing other work preparatory to the placing of the
pavement upon Main Street was $75,108.85, which has been paid by
the Traction Company and which said outlay and expenditure was made
at the order of the City of Durham; that, during the twelve months
ending May 31, 1921, the company's railway showed a loss of
$17,388.73 of meeting the operating expense and allowance for
depreciation and if the company is required to pay the paving
assessment of the City of Durham as demanded, to-wit, one-tenth of
said assessment each year, with interest, then there will be an
additional expense of one-tenth of $102,942.30 plus interest and
depreciation on same; that the gross earnings of said company from
all sources for the year ending December
Page 261 U. S. 154
31, 1920, were approximately $540,000, the net earnings
$147,000, the company having other valuable property and business
not on Main Street, including other railway not on Main
The court below held the recited facts insufficient to show that
the municipal authorities acted unreasonably or arbitrarily, and we
are unable to say that this was error. Counsel concede that the
Constitution of North Carolina reserves to the legislature power to
alter or repeal corporate charters; also that, in general, the
legislature, either directly or through recognized governmental
agencies, may impose assessments for local improvements and
prescribe the basis of apportionment. But the claim is that the
legislature undertook arbitrarily to direct plaintiff in error to
pave more than one-third of the street, while the owners of more
valuable property fronting thereon are required to pay out much
less and are assessed upon the front-foot basis.
Gast Realty & Investment Co. v. Schneider Granite
Co., 240 U. S. 55
Hancock v. City of Muskogee, 250 U.
, and Kansas City Southern Ry. Co. v. Road
Improvement District, 256 U. S. 658
cited in support of this insistence, but they do not go so far. The
power of the legislature to make reasonable classifications and to
impose a different burden upon the several classes cannot be
denied. There are obvious reasons for imposing peculiar obligations
upon a railway in respect of streets occupied by its tracks. The
facts and circumstances disclosed by the present record are not
sufficient to justify us in overruling the judgment of the state
court, which held that the assessment was not the result of
arbitrary or wholly unreasonable legislative action. Sioux City
Street Ry. Co. v. Sioux City, 138 U. S.
, 138 U. S.
-108; Fair Haven & Westville Ry. Co. v. New
Haven, 203 U. S. 379
203 U. S.
-389; Southern Wisconsin Ry. Co. v. Madison,
240 U. S. 457
240 U. S. 461
Great Northern Ry. Co. v.
Page 261 U. S. 155
434, 246 U. S.
-437; Pacific Gas & Elec. Co. v. Police
Court, 251 U. S. 22
251 U. S. 25
Milwaukee Elec. Ry. Co. v. Milwaukee, 252 U.
, 252 U. S.