An order in effect requiring a street railway company to
continue operating a part of one of its lines, though it was
unremunerative and must be practically rebuilt at great expense to
conform to a change of street grade, and though the railway as a
whole, under existing rates, was not earning a fair return,
not arbitrary and not violative of the due process
clause of the Fourteenth Amendment. P. 267 U. S.
160 Ark. 1 affirmed.
Error to a judgment of the Supreme Court of Arkansas which
affirmed a judgment dismissing a bill brought by the traction
company to set aside an order made by the
Page 267 U. S. 331
city commissioners denying it leave to abandon a part of one of
its lines. The opinion is here printed as amended by an order of
April 27, 1925, which also denied a petition for rehearing.
MR. JUSTICE BRANDEIS delivered the opinion of the Court.
The Ft. Smith Light & Traction Company owns and operates in
that city a street railway system with about 22 miles of line.
Included in the system is a line extending, for a third of a mile,
on Greenwood Avenue. Under the law of Arkansas, a street railway is
not permitted to abandon any part of its line without leave of the
city commission which exercise the powers of a public utility
commission. The company applied to that board for leave to abandon
the line on Greenwood Avenue because it was, and would be,
unremunerative. It appeared, among other things, that the city had
concluded to change the grade of Greenwood Avenue; that, in
accepting its franchise, the company had agreed to conform to the
city ordinances; that these required a street railway, in case of
any change in the grade of a street, to make the grade of the
tracks conform thereto; that the cost of so relaying the tracks on
Greenwood Avenue was estimated at $11,000; that the allocated daily
earnings of this small part of the system were $2.40, the cost of
operating it $8.25, and that the total net earnings of the system
in 1922 were $16,000, which amount is about 1.7 percent of
$934,540, the estimated value of the property. The
Page 267 U. S. 332
request to abandon the Greenwood Avenue line was denied. This
suit was then brought in a court of the state to set aside the
order on the ground among others, that it deprived the company of
its property in violation of the due process clause of the
Fourteenth Amendment. The trial court denied the relief sought. Its
judgment was affirmed by the highest court of the state. 160 Ark.
1. The case is here on writ of error under § 237 of the Judicial
The Greenwood Avenue line had been in operation nearly 20 years.
No change in conditions had supervened which required the
commission to permit the abandonment, unless it were the fact that
this particular part of the system was being operated at a loss;
that continued operation would involve practical rebuilding of that
part of the line; that such rebuilding would entail a large
expenditure, and that the system as a whole was not earning a fair
return upon the value of the property used and useful in the
business. The order complained of does not deal with rates. Nor
does it involve the question of the reasonableness of service over
a particular line. Compare Atlantic Coast Line R. Co. v.
Corporation Commission, 206 U. S. 1
206 U. S. 23
Railroad Commission v. Mobile & Ohio R. Co.,
244 U. S. 388
merely requires continued operation. We cannot say that it is
inherently arbitrary. A public utility cannot, because of loss,
escape obligations voluntarily assumed. Milwaukee Electric Ry.
Co. v. Milwaukee, 252 U. S. 100
252 U. S. 105
The fact that the company must make a large expenditure in relaying
its tracks does not render the order void. Nor does the expected
deficit from operation affect its validity. A railway may be
compelled to continue the service of a branch or part of a line
although the operation involves a loss. Missouri Pacific Ry.
Co. v. Kansas, 216 U. S. 262
216 U. S. 279
Chesapeake & Ohio Ry. Co. v. Public Service
Commission, 242 U. S. 603
242 U. S. 607
Compare 264 U. S. S.
v. Eastern Texas R. Co., 264 U. S.
79, 264 U. S. 85.
This is true even where the system as a whole fails to earn a fair
return upon the value of the property. So far as appears, this
company is at liberty to surrender its franchise and discontinue
operations throughout the city. It cannot, in the absence of
contract, be compelled to continue to operate its system at a
Brooks-Scanlon Co. v. Railroad Commission of Louisiana,@
251 U. S. 396
the Constitution does not confer upon the company the right to
continue to enjoy the franchise and escape from the burdens
incident to its use.