Source: https://supreme.justia.com/cases/federal/us/242/238/
Timestamp: 2019-04-23 02:13:42+00:00

Document:
contained no reference to existing contracts nor specific mention of street railway rights, but each provided that the territory annexed should be subject to all the laws of the state applicable to the city and to all the ordinances and regulations of the city, with exceptions not here material. This litigation resulted from the contention of the city (which the state court sustained) that the outlying lines, insofar as they had come within the city through its extension, came also within the fare restrictions of the city ordinances of 1889.
(1) Upon consideration of the village and township grants and the law under which they were made (Act of 1867, §§ 13, 14 and 20), that the right to charge fare as therein permitted, upon the lines covered by those grants, was a valid right of contract whose obligation could not constitutionally be impaired by subsequent state legislation.
(2) That, conceding the validity of the Acts of 1905 and 1907 as annexation acts, yet an impairment of this contractual right, resulting from the effect given to them by the decision of the state court combined with the construction of the city ordinances as contractually binding the plaintiff in error to submit to their fare restrictions on all of its lines within the city as so extended, was an impairment attributable to the annexation acts as well as to the construction of the city ordinances.
(3) Therefore, whether the agreements imported by the ordinances of 1889, when properly construed, were operative in the added city territory was a question touching the merits of the case, and not the jurisdiction of this Court.
(4) That, read with the other city ordinances under which the franchises for the city lines were granted, the ordinances of 1889, in requiring one of the predecessors of plaintiff in error to carry passengers at reduced rates "over any of its lines in said city" and in requiring another to apply single fares and reduced rates "over the entire route of said company," were not intended to apply prospectively to lines which those companies might afterwards own within subsequent additions to the city.
(5) Even if such extended construction were allowable in respect of lines subsequently built under the actual or assumed authority of the ordinances of 1889, it could not be allowed in derogation of rights, privileges, and franchises -- especially as to fare -- arising independently under the township and village ordinances and acquired by plaintiff in error by purchase before the city was extended. Michigan Street Railway Act of 1867, § 15; Comp.Laws, 1897, § 6648, applied.
A grantee of a public grant may not be compelled to suffer the ills of a strict construction in one aspect without being accorded the benefits necessarily flowing from that construction in others.
Notwithstanding statements in Henderson Bridge Co. v. Henderson City, 141 U. S. 679, 141 U. S. 689; 173 U. S. 173 U.S. 592, 173 U. S. 602, it is settled that, when called upon to exercise jurisdiction under the contract clause, this Court must determine upon its independent judgment these questions: (1) was there a contract? (2) if so, what obligation arose from it? and (3) has that obligation been impaired by subsequent legislation?
162 Mich. 460, 173 Mich. 314, reversed.
"and may use and enjoy the rights, privileges, and franchises of such company the same, and upon the same terms, as the company whose road and franchises were so acquired might have done."
to construct railways in certain streets, including Jefferson Avenue, which extends from the center of the city in a northeasterly direction to and beyond the city limits. All the lines authorized were to commence at Campus Martius, and run thence on their several courses to the city limits, and the route along Jefferson Avenue to the eastern limits was to be completed within six months after March 31, 1863. In 1873, a section was added authorizing the construction of a second track along Jefferson Avenue. In 1862, the city limits on Jefferson Avenue were at Mt. Elliott Avenue. In 1885, they were extended to a point 200 feet east of Baldwin Avenue, and while they remained as thus fixed, and in the year 1889, a supplemental ordinance was passed granting to the Detroit City Railway, among other things, the right to extend its double track along Jefferson Avenue from its then present easterly terminus to the easterly city limits, and fixing a time within which the same should be constructed. There was a provision that the additional lines should be operated in connection with and as parts of the then present system of the Detroit City Railway, and that the company should agree, among other things, to make arrangements for carrying passengers between the hours of 5:30 and 7:00 A.M., and between 5:15 and 6:15 P.M., over any of its lines in the city for a single fare upon tickets sold at the rate of eight for twenty-five cents, with specified transfer rights.
In 1891, the city limits were further extended along Jefferson Avenue to Hurlburt Avenue, which was the easterly line of the township of Hamtramck. The railroad on Jefferson Avenue in the territory covered by this extension was constructed under franchises granted by the authorities of that township, respecting which no question is now raised.
and Village of Grosse Point and the Village of Fairview, in the years 1891, 1893, and 1895, and further powers were conferred upon plaintiff in error, after its acquisition of these lines, by ordinance of the Village of Fairview, passed May 16, 1905. These several village and township grants were for terms that have not yet expired, and contain provisions for five-cent fares within the territory covered by them.
route of the company, when offered during the morning and afternoon hours specified in the ordinance passed on the same date respecting the Detroit City lines and already referred to.
In 1897, the Township of Greenfield granted to the incorporators of the Grand River Electric Railway (a different corporation from that last mentioned) a franchise for tracks along the Grand River Road from the westerly line of the township to the then present city limits of Detroit, with a right to charge not exceeding five cents as the fare for any distance in Greenfield, or six tickets for twenty-five cents, with school tickets at ten for thirty cents. Under this franchise, a railroad was built along the Grand River road from the then city limits near the Boulevard throughout the Township of Greenfield.
As already indicated, all of these lines of railway, with the appurtenant rights, privileges, and franchises, were acquired by plaintiff in error shortly after its incorporation, under the authority of § 15 of the Act of 1867.
Afterwards, by an act of the legislature approved October 24, 1907 (Mich.Laws, Ex.Sess.1907, p. 55), a part of the former Village of Fairview, including Jefferson Avenue for a distance of about 12,500 feet northeastwardly from Hurlburt Avenue, was annexed to the City of Detroit. And by Acts of June 16, 1905, and June 19, 1907 (Mich. Local Acts 1905, p. 1144; Local Acts 1907, p. 940), the city limits were extended northwestwardly along Grand River Avenue for a distance of about one-half mile in territory previously part of Greenfield Township. Each of these acts provided that the annexed territory should be subject to all the laws of the state applicable to the city, and to all the ordinances and regulations of the city, with exceptions not now material.
in the ownership of the city lines on Jefferson and Grand River Avenues were intended to be applicable throughout the city as it might from time to time be enlarged, and that plaintiff in error is bound by the limitations of those ordinances as to all its lines within the city, not only as its limits existed in 1889, but also including the territory annexed in 1905 and 1907.
In case No. 1, the supreme court of the state sustained the imposition of a fine for failure to accept workingmen's tickets, so called, within the hours prescribed by the ordinance of 1889 upon the Jefferson Avenue line within the territory formerly part of the Village of Fairview, but annexed to the city by the Act of October 24, 1907. 162 Mich. 460.
In No. 4, the court sustained a judgment awarding a mandamus requiring plaintiff in error to observe the provisions of the ordinances of 1889 upon the entire Jefferson Avenue-Grand River Avenue route, so far as included within the city limits as extended in 1907. 173 Mich. 314.
In each case, plaintiff in error seasonably and expressly insisted that the several township and village grants above referred to were subsisting and valid contracts at and before the Legislature of Michigan passed the acts extending the city limits, and that those acts, if so construed or applied as to affect or modify the contracts, were in conflict with § 10 of Article I of the Constitution of the United States. And it is upon the overruling of these contentions that the cases are brought here, under § 237, Judicial Code.
such impairment of contract obligations, if any, as may arise by mere judicial decisions in the state courts without action by the legislative authority of the state. Cross Lake Shooting & Fishing Club v. Louisiana, 224 U. S. 632, 224 U. S. 639; Rank v. Mangum, 237 U. S. 309, 237 U. S. 344.
U.S. 170, 215 U. S. 175; Fisher v. New Orleans, 218 U. S. 438, 218 U. S. 440; Carondelet Canal Co. v. Louisiana, 233 U. S. 362, 233 U. S. 376; Louisiana Ry. & Nav. Co. v. Behrman, 235 U. S. 164, 235 U. S. 170. The necessary operation of the decisions under review is to give an effect to the annexation acts that substantially impairs the alleged contract rights of plaintiff in error as they theretofore stood, and it makes no difference that that result was reached in part by invoking the provisions of another agreement supposed to be binding upon plaintiff in error. Whether the agreement thus invoked, when properly construed, has the effect attributed to it is a question that touches upon the merits, and not upon the jurisdiction of this Court.
such authorities. It is plain, as was pointed out by this Court in Detroit v. Detroit Citizens' St. Ry. Co., 184 U. S. 368, 184 U. S. 385, that the legislature regarded the fixing of the rate of fare as a subject for agreement between the municipality and the company. And in these cases, as in that, the terms of the several ordinances are such as clearly to import a purpose to contract under the legislative authority thus conferred.
But it is insisted -- and to this effect was the decision of the state court -- that the terms of these contracts were in effect modified by the assent of the owners of the city lines on Jefferson and Grand River Avenues to the ordinances of January 3, 1889, and the subsequent acquisition of these lines by plaintiff in error, followed by its acquisition of the suburban lines. It is, indeed, argued that the construction placed by the state court upon the ordinances of 1889 as contracts is not subject to the review of this Court, and a declaration to this effect is cited from Henderson Bridge Co. v. Henderson City, 141 U. S. 679, 141 U. S. 689, quoted in a subsequent case of the same title in 173 U. S. 173 U.S. 592, 173 U. S. 602. But, notwithstanding what was there said, it is too well settled to be open to further debate that where this Court is called upon in the exercise of its jurisdiction to decide whether state legislation impairs the obligation of a contract, we are required to determine upon our independent judgment these questions: (1) was there a contract?; (2) if so, what obligation arose from it?, and (3) has that obligation been impaired by subsequent legislation? Houston & Texas Central R. Co. v. Texas, 177 U. S. 66, 177 U. S. 77; St. Paul Gaslight Co. v. St. Paul, 181 U. S. 142, 181 U. S. 147; Terre Haute &c. R. Co. v. Indiana, 194 U. S. 579, 194 U. S. 589.
indicated a purpose that the grants should apply as far as the city might be extended.
Notwithstanding our disposition to lean towards concurrence with the view of the state court of last resort in a matter of this nature, we are unable to accept its construction of the ordinances of 1889. In the first place, we are unable to view the original ordinances as intended to extend the rights of the respective grantees beyond the then existing city limits and as far as the limits should be extended in the future. Their language does not seem to us to admit of this interpretation, and the practical construction placed upon them by the parties was to the contrary. As the city limits on Jefferson Avenue and on Grand River Avenue were extended, the respective companies obtained, and presumably were required to obtain, new grants authorizing an extension of the railways from their then present termini to the new city limits. Both of the ordinances of 1889 contained express grants to this effect with respect to Jefferson Avenue and Grand River Avenue, respectively. Each of the original city grants, and each of the ordinances of 1889, contained particular and comparatively brief limitations of time within which the authorized lines of railway were to be constructed and placed in operation. For these reasons, and because in other respects the grants are quite specific in their terms, and because the city at that time had no authority to extend its corporate limits nor to make a grant of street railway rights beyond them, we are compelled to conclude that the ordinances of 1889 had no such extensive meaning as that attributed to them by the state court.
rule, properly applied to the facts of these cases, does not bear altogether in favor of plaintiff in error. For, of course, it is not possible to adopt an extensive construction of the obligations imposed upon the city companies by the ordinances without adopting a like construction as to the extent of the franchises thereby conferred upon the companies. And can it be supposed that, if either of these companies had claimed the right to lay down tracks and operate railways in the annexed territory by virtue of the ordinances of 1889, they would not have been met with the rule that municipal grants are to be construed strictly against the grantee, and cannot be extended beyond their express terms? In any view, the ordinances, just because they were intended to be contracts, and not merely legislative enactments, ought to be regarded as having reference to a specific subject matter.
of such company, the same and upon the same terms as the company whose road and franchises were so acquired might have done."
The rate of fare being among the most material and important of the terms and conditions referred to (Detroit v. Detroit Citizens' St. Ry. Co., 184 U. S. 368, 184 U. S. 384; Minneapolis v. Minneapolis Street Railway Co., 215 U. S. 417, 215 U. S. 434), we find it impossible to regard the purchase of the suburban lines, with their rights, privileges, and franchises, as being in effect an extension of the city lines, but at the same time an abrogation of an essential part of the rights and privileges appurtenant to the acquired lines.
The state court cited and relied upon Indiana Ry. Co. v. Hoffman, 161 Ind. 593, and Peterson v. Takoma Ry. & Power Co., 60 Wash. 406. In their particular facts and circumstances, those cases differ somewhat from the cases now before us, and, without stopping here to analyze them, we deem it sufficient to say that we are unable to accept their reasoning so far as it is inconsistent with the views we have expressed.
It results that the provisions of the township and village ordinances respecting the rates of fare remained in full force and effect after the acquisition of the suburban lines by plaintiff in error, notwithstanding its previous acquisition of the city lines or the previous assent of the city railway companies to the ordinances of 1889. Because of the provision of § 10 of Article I of the Constitution of the United States, it was not within the power of the State of Michigan by any subsequent legislation to impair the obligations of those contracts, and since the judgments of the supreme court of that state gave such an effect to the annexation acts of 1905 and 1907, in conjunction with the ordinances of 1889, as to impair those obligations, the judgments must be reversed.
year 1909 because we agree with the state court (173 Mich. 321) that it was not more than a temporary provision for a modus operandi, and had not the effect of waiving any of the rights of either party.
beginning, finds an application to the new territory. This is giving effect not to the terms of the act of the legislature, but to the terms of the contract with the city, and the most that can be said against the decision of the Supreme Court of Michigan is that it gives an erroneous construction to the contract. But, since it is settled by many decisions of this Court that the contract clause of the federal Constitution does not protect contracts against impairment by the decisions of courts except where such decisions give effect to constitutions adopted or laws passed subsequent to the date of such contracts (Cross Lake Shooting & Fishing Club v. Louisiana, 224 U. S. 632), I am of opinion that there is no federal question before this Court in this case, and that the writ of error should be dismissed. This is a high and delicate power which the Court is exercising in this case, and it should be resorted to only in cases which are clear, and, for the reasons thus briefly stated, I am convinced that this is not such a case.

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 § 237
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 § 10
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