New-York tribune., 1921-04-14

by the forty-year franchise granted in
1899 to charge a five-cent fare, did
not feel authorized nor called upon
TO set it aside and, furthermore. that
the hearing had shown no necessity
for the change in rate asked and re-
fused the company's request"
Referred to Master
"Thereupon the company commenced
this suit by filing its bill to cnjoin the
city from enforcing the five cent fare
ordinance. 1t was prayed that if the
company WAS not permitted to put in
effect the seven-cent fare the court
would itself establish that rate, or such
other as it might find necessary to
enable the company to pay its operat-
ing expenses and to earn reasonable
sum on its investment and that per-
manent injunction securing the results
prayed oe awarded.
THE city moved to dismiss the bill
for want of jurisdiction, because it
presented no substantial Federal ques-
tion, as it showed on it's face that the
parties were bound by the tive-cent
fare provision of the franchise ordi
nance as a contract subject to be en-
forced even though the rate was con-
hscatory. The court ovcvyulcd the mo-
tion. 1t decided the existence Of con-
tract as to the five-cent fare was not
established, and hence the attempt to
enforce it, causing contiscation to re-
Constitution of the United States (267
Fed. 467).
"The city answered reiterating the
grounds OF its previous challenge to
the jurisdiction and asserting that the
franchise ordinance rate was based
upon contract resulting from that
ordinance, moreover, disputing that
confscatory character Of the tive-cen
fare and Of the power of the court,
under the assumption that it was con-
hscatory, to restrain it's enforcement"
THE case was referred to master
to report on the facts Of the law. A
few words from the report will suf-
flee. He SAID: The rate prescribed
able the company to earn a fair re-
turn; but I have reached the con-
clusion that to admit the contention
of the company would be for court
to exercise power it does not
possess; rate, reasonable when
hxed, does not became unreasonable
from the judicial point of view be-
cause of changed conditions"
Question of Contract
"The case, therefore, went to the
court upon the admitted confiscatory
character CT the rate, upon the ques-
tion of contract and upon the power Of
the court, if no such contract existed,
to restrain the contiscation Which
would result from giving effect to the
rate. The court declared that it had
jurisdiction to prevent the admitted
;ro
the five-cent rate. Concluding, how
ever, that as the court was not pri-
mary rate-making authority, it would
not fix reasonable rate to replace the
tye-cent rate, the enforcement of
which would be enjoined."
(Ihe foregoing is the court resume
Of the proceedings below.)
That in view of the admitted fact
of the conhscation the court had power
to deal with the subject, we are Of
opinion it is too clear for anything but
statement. And we think yet it is
equally clear that as the right to regu
late gave no power whatever to VIC
late the constitution by enforcing
contiscatory rate, Il result which could
only be sustained as a consequence of
the duty to pay such rate arising from
the obligations of a contract, it fol
lows tha. the solitary question to be
considered is whether contract ex-
listed empowering the city to enforce
the contiscatory rate"
"Primarily the answer to that ques-
tion must depend upon whether the
ordinance of 1899 fixing the fvc-cent
rate was contract. That it was not
and could not be, we are of the opin-
ion, is the necessary result of the pro
vision Of Section 7, Article |, of the
state constitution existing in 1899 pro-
hibiting amy irrcvocablc or uncon-
trollable grant of special privilege
when considered in the light of the
rrevocable and uncomfortable ele-
ments which must necessarily adhere