Source: http://www.chanrobles.com/usa/us_supremecourt/242/238/case.php
Timestamp: 2018-07-22 02:52:17
Document Index: 295097730

Matched Legal Cases: ['§ 8', '§ 13', '§ 14', '§ 20', '§ 6448', '§ 15']

In November, 1862, the city, by ordinance, granted to the incorporators of the Detroit City Railway the right chanroblesvirtualawlibrary
Page 242 U. S. 243
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.
From Hurlburt Avenue eastwardly to the Country Club in the township of Grosse Point -- a distance of about four and one-half miles -- the railroad on Jefferson Avenue was constructed under several grants made by the Township chanroblesvirtualawlibrary
Page 242 U. S. 244
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.
By ordinance of May 1, 1868, the city granted to the incorporators of the Grand River Street Railway Company the right to construct lines on certain streets, including Grand River Avenue to its intersection with the Michigan Central Railway at or near the then present city limits, with the right to build a second track within five years after the completion of the first. By § 8, this line was to be completed to a specified point contemporaneously with the paving of the street, and thence to the western city limits whenever public necessity, as determined by the common council, should require. By Acts of 1875 and 1885, the limits were extended from the railroad intersection to a point just beyond the boulevard. By ordinance of August 3, 1888, there was granted the right to construct single tracks on Grand River Avenue from its then present terminus to the westerly city limits, and by ordinance of January 3, 1889, the city granted the right, among others, to construct a double track railway on Grand River Avenue from Woodward Avenue to the city limits, and under this authority tracks were built to the limits just beyond the boulevard. The latter ordinance required the company to stipulate that it would sell tickets, eight for twenty-five cents, good over the entire chanroblesvirtualawlibrary
Page 242 U. S. 245
It is the contention of defendants in error that the provisions respecting fares in the two ordinances of January 3, 1889, assented to by the predecessors of plaintiff in error chanroblesvirtualawlibrary
Page 242 U. S. 246
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.
It is true, as this Court has many times decided, that the "contract clause" of the Constitution is not addressed to chanroblesvirtualawlibrary
Page 242 U. S. 247
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.
But, in this case, there were state laws passed subsequent to the making of the alleged contracts in question, in the form of the legislation of 1905 and 1907 extending the corporate limits of the city. And it is not correct to say that the decisions of the state court turned upon the mere meaning of the contracts, without reference to these subsequent laws. Assuming what in effect is conceded, that the village and township franchises constituted contracts within the protection of the federal Constitution, the force of the decisions was to abrogate the rights acquired by plaintiff in error through its acquisition of the suburban lines not merely because of the assent of the owners of the city lines to the ordinances of January 3, 1889, but because of the combined effect of those ordinances and the acts of the Legislature of Michigan that thereafter extended the city limits. It is true that no question is or can be here made respecting the authority of the legislature to add new territory to the city, and it is likewise true that the annexation acts contain no reference to existing contracts, nor any specific mention of the subject matter of street railway rights. But, in cases of this character, the jurisdiction of this Court does not depend upon the form in which the legislative action is expressed, but rather upon its practical effect and operation as construed and applied by the state court of last resort, and this irrespective of the process of reasoning by which the decision is reached or the precise extent to which reliance is placed upon the subsequent legislation. McCullough v. Virginia, 172 U. S. 102, 172 U. S. 116-117; Houston & Texas Central R. Co. v. Texas, 177 U. S. 66, 177 U. S. 77; Terre Haute &c. R. Co. v. Indiana, 194 U. S. 579, 194 U. S. 589; 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.
Coming, then, to the merits: not only is it not disputed, but it is not open to serious dispute, that the original village and township grants were contractual in their nature. It appears that the recipients of those grants, like their successor, the plaintiff in error, became incorporated under the Street Railway Act of 1867, of which § 13 provides that consent for the construction and maintenance of a street railway is to be given by the corporate authorities in an ordinance to be enacted for the purpose, and under such rules, regulations, and conditions as may be prescribed by such ordinance, but that no such railway shall be constructed until the company shall have accepted in writing the terms and conditions upon which they are permitted to use the streets. By § 14, after any city, village, or township shall thus have consented to the construction and maintenance of street railways, or granted rights and privileges to the company, and such consent and grant shall have been accepted by the company, the consent shall not be revoked or the company deprived of the rights and privileges conferred. And, by § 20, the rates of toll or fare to be charged by the company are to be established by agreement between it and the corporate authorities, and are not to be increased without consent of chanroblesvirtualawlibrary
Page 242 U. S. 249
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, of course, in the present cases, the crucial question is what were the obligations of the contracts as they stood at the time of the subsequent legislation? And therefore it becomes material to determine whether, by voluntary action of the parties between the making of the suburban chanroblesvirtualawlibrary
Page 242 U. S. 250
grants and the passage of the annexation acts, the obligations arising out of those grants had been modified. The state court deemed that the assent of the Detroit City Railway to that provision of the first-mentioned ordinance of January 3, 1889, which required it to carry passengers at reduced rates "over any of its lines in said city" applied to any and all lines it either then owned or might thereafter acquire, and comprehended all territory within the limits of the city, including any extension of the municipal boundaries or of the company's lines within those boundaries, and that, by the acquisition of the lines of the Detroit City Railway, plaintiff in error became bound by this agreement, and was obliged to observe it, even with respect to the lines that it afterwards acquired as assignee of the Grosse Point and Fairview franchises, so far as those lines were included in the extended city limits. It was said (162 Mich. 462) that there were two methods of extending street railways: one by construction, the other by purchase under § 6448 (2 Comp.Laws 1897), being § 15 of the Act of 1867; that "the purchased railway becomes as much a part of the system as does the railroad as constructed," and that the ordinance of 1889 was made in view of the power of the legislature to increase or diminish the territory within the city, and the real intent was to provide for single fares within the city limits as they should from time to time be fixed. In 173 Mich. 314, similar reasoning was applied to the ordinance of 1889 respecting the Grand River Avenue line and the obligation imposed upon the owner of that line to apply the single fare and the reduced rates "over the entire route of said company." The court considered (173 Mich. 325, 326) that certain of the language used in the original ordinance of 1862 to the Detroit City Railway and in that of 1868 to the Grand River Street Railway Company showed that the probable growth of the city and development of its public utilities were anticipated, and chanroblesvirtualawlibrary
Page 242 U. S. 251
Defendants in error invoke the established rule that the terms of a municipal grant or franchise should be construed strictly as against the grantee, and as favorably to the grantor as its terms permit. The state court deemed the rule to be applicable. 162 Mich. 465; 173 Mich. 323. It is at least doubtful, however, whether the chanroblesvirtualawlibrary
Page 242 U. S. 252
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.
"may use and enjoy the rights, privileges, and franchises
Page 242 U. S. 253
of such company, the same and upon the same terms as the company whose road and franchises were so acquired might have done."
We have made no particular mention of an agreement entered into between the city and plaintiff in error in the chanroblesvirtualawlibrary
Page 242 U. S. 254
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.
I greatly regret that I cannot concur in the decision just announced. The opinion of the majority of the Court plainly regards the act of the Legislature of the State of Michigan, extending the corporate limits of the City of Detroit, as a valid law, passed in the exercise of an undoubted power in the legislature to deal as it does with the municipal corporations of that state, and its validity for the purposes for which it was intended is not questioned. It will remain a valid law after this decision as it was before. In substance, the decision of this Court is that the Supreme Court of Michigan, in deciding that there is an implied condition in the contract between the City of Detroit and the railway company that the rates of fare therein provided for shall apply within the city limits when extended, and in requiring the railway company to accept the same fares throughout the new city limits as were accepted throughout the former limits, gives an effect to the extension act which impairs the railway company's contract with the city. I am of the opinion that for the state supreme court thus to interpret the terms of the contract of the railway company with the city is not to give an effect to the valid extension act of the legislature which violates the provision of the Constitution prohibiting a state from passing "any law impairing the obligation of contracts." The passing of the valid extension act merely created a situation under which the implied condition, existing in the fare contract from its chanroblesvirtualawlibrary
Page 242 U. S. 255
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.