Source: https://caselaw.findlaw.com/us-supreme-court/200/304.html
Timestamp: 2019-04-25 19:08:20+00:00

Document:
Mr. Charles W. Ogden for plaintiff in error.
This was a petition by Altgelt, suing by his next friend, originally filed in the district court of Bexar county, for a peremptory mandamus against the traction company, a Texas corporation operating a street railway system, commanding it to issue to the plaintiff twenty half-fare street car tickets upon the payment of 50 cents, the same being at the rate of 2 1/2 cents per ticket.
This case depends upon the construction and validity of certain legislative acts of the state of Texas from 1874, the date of the original charter, to 1903, the date of the act complained of as an impairment of the traction company's contract.
By ordinance of the city council of October 5, 1875, privilege was granted to the San Antonio Street Railway Company to construct a first- class horse railway, during the term of its charter, upon the streets of said city, upon certain routes; but the ordinance did not fix the rate of fare to be charged for the transportation of persons over its projected lines.
On August 7, 1900, the common council of the city passed an ordinance reciting the sale of the property and privileges of the former corporations, the San Antonio and Edison Companies, to the traction company, and enacting that all the rights and privileges therefore granted to the former companies, which were said to be 'now defunct,' with all the limitations, duties, contracts, and obligations imposed and required of the said San Antonio Street Railway Company, were [200 U.S. 304, 307] imposed upon the traction company. This ordinance was accepted.
It is insisted by the plaintiff in error that, under article 10, 7, of the state Constitution, above quoted, the power to grant to street railways the property rights and franchises to construct and operate a street railway within a city is withdrawn from the legislature, and conferred, if not by express words, then by necessary implication, upon the municipal authorities. We do not so read the section. It merely provides that no such law shall be passed by the legislature, granting the right to construct and operate a street railway, without first acquiring the consent of the local authorities; but we see nothing to prevent the legislature from chartering a street railway, [200 U.S. 304, 308] provided such consent be acquired. Such we understand to be the ruling of the supreme court of that state in Taylor v. Dunn, 80 Tex. 659, 16 S. W. 732, and Houston v. Houston City Street R. Co. 83 Tex. 548, 29 Am. St. Rep. 679, 19 S. W. 127. But whether an act of the legislature be necessary to charter a street railway is not involved in this case, as we are cited only to the original charter of the San Antonio Street Railway Company of 1874; although it is clear that a new charter would be inoperative to authorize the construction of the road without the consent of the municipal authorities.
Assuming, but not deciding, that the ordinance of March 16, 1899, extending the franchise of the San Antonio Street Railway, and imposing certain limitations, constituted a contract pro tanto the question still remains whether the provision 'that said street railway companies shall charge 5 cents fare for one continuous ride over any one of their lines, with one transfer to or from either line to the other,' constituted a contract with respect to which no further legislation upon that subject could be enacted without impairing its obligation. Even if construed as a contract, it was still subject to the provision of the Constitution of 1876, which, in 17 of the Bill of Rights, declared that no irrevocable or uncontrollable grant of special privileges or immunities should be made; but that all privileges granted by the legislature or created under its authority shall be subject to the control thereof.
An important consideration in this connection is that the alleged contract was made twenty-three years after the Constitution of 1876 was adopted, declaring that all privileges granted by the legislature shall be subject to its control. Clearly, it was not deprived of that control by the fact that the contract was not entered into by the legislature itself, but by a municipal corporation, since that is but an agency of the state, to which is delegated the power to regulate street railways and other municipal franchises. We have repeatedly held that where a railway was originally chartered before a new constitution took effect (and hence such charter was not limited [200 U.S. 304, 309] thereby), yet, if such road be subsequently consolidated with other roads, or accepts new privileges, after a new constitution takes effect, all contracts, privileges, and franchises conferred after the adoption of such constitution are subject to its provisions. Shields v. Ohio, 95 U.S. 319 , 24 L. ed 357; Maine C. R. Co. v. Maine, 96 U.S. 499 , 24 L. ed. 836; Atlantic & G. R. Co. v. Georgia, 98 U.S. 359 , 25 L. ed. 185; Keokuk & W. R. Co. v. Missouri, 152 U.S. 301 , 38 L. ed. 450, 14 Sup. Ct. Rep. 592; Yazoo & M. Valley R. Co. v. Adams, 180 U.S. 1, 23 , 45 S. L. ed. 395, 407, 21 Sup. Ct. Rep. 240.
In this case not only did the original San Antonio Street Railway Company become extinct by the foreclosure and sale of its property, but, under the ordinance of August 7, 1900, declaring the prior companies to be 'now defunct,' the traction company also became the owner of all the property, assets, rights, and privileges of another company, known as the San Antonio Edison Company, which thus became absorbed with the street railway company in the new corporation known as the traction company, which is admitted to have been incorporated since 1876, though the charter is not in the record. We are clearly of the opinion that, under these circumstances, it received its franchise under the Constitution of 1876, which forbade either the legislature or the municipal authorities to make any irrevocable contract.
It is true that in this ordinance it was provided that all rights and privileges previously granted to the street railway company and the Edison company were conferred unto the traction company, including all the limitations, contracts, and obligations; but this ordinance must be construed in connection with the Constitution of 1876, which made all such privileges and franchises subject to the control thereof. Such was the view taken by the court of civil appeals of Texas in this case, which expressly waived the question whether the provision of the former ordinance fixing a 5 cent fare constituted a contract or not, declaring that if it did, it was subject to further legislative control.
Under the Bill of Rights of that Constitution, the legislature could not reduce the fares to a confiscatory amount, or to an [200 U.S. 304, 310] amount which would render it unprofitable to operate the road. There is no allegation of that kind in this bill, and no evidence that the reduction of the school tickets in question would seriously impair its revenues. Indeed, it was found in the opinion of the court below that it was not contended there, and that there was nothing in the evidence tending to show, that the rate of fare claimed by the appellee under the act of 1903 is not such as to leave to the company a sufficient income to pay for repairs and a fair income on its investment.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.