Source: https://www.legalcrystal.com/case/95051/railroad-commission-vs-los-angeles-ry-corp
Timestamp: 2018-02-17 21:53:39
Document Index: 753681845

Matched Legal Cases: ['§ 501', '§ 2', '§ 2', '§ 23', '§ 23', '§ 27', '§ 15', '§ 32', '§ 23', '§ 13']

Railroad Commission Vs Los Angeles Ry Corp - Citation 95051 - Court Judgment | LegalCrystal
Railroad Commission Vs. Los Angeles Ry. Corp. - Court Judgment
LegalCrystal Citation legalcrystal.com/95051
Case Number 280 U.S. 145
Respondent Los Angeles Ry. Corp.
railroad commission v. los angeles ry. corp. - 280 u.s. 145 (1929) u.s. supreme court railroad commission v. los angeles ry. corp., 280 u.s. 145 (1929) railroad commission of california v. los angeles railway corporation no. 60 argued october 22, 1929 decided december 2, 1929 280 u.s. 145 appeal from the district court of the unitfd states for the southern district of california syllabus 1. a state may authorize a municipal corporation by agreement to establish public service rates, and thereby to suspend for a term of years not grossly excessive the exertion of governmental power by legislative action to fix just compensation to be paid for service furnished by public utilities. p. 280 u. s. 151 . .....
Railroad Commission v. Los Angeles Ry. Corp. - 280 U.S. 145 (1929)
U.S. Supreme Court Railroad Commission v. Los Angeles Ry. Corp., 280 U.S. 145 (1929)
1. A state may authorize a municipal corporation by agreement to establish public service rates, and thereby to suspend for a term of years not grossly excessive the exertion of governmental power by legislative action to fix just compensation to be paid for service furnished by public utilities. P. 280 U. S. 151 .
2. To determine whether such authority has been given in the case before it, this Court, in the absence of decisions of the state courts, must construe the state laws. P. 280 U. S. 152 .
id. § 501 (Stats.1903, p. 172), providing that the rate of fare in municipalities of the first class "must not exceed five cents." P. 280 U. S. 153 .
(2) The Broughton Franchise Act (Stats. 1893, p. 288), as amended, providing that franchises "shall be granted upon the conditions in this Act provided, and not otherwise," and requiring the sale of such franchises upon advertisement stating the character of the franchise or privilege proposed to be granted, but nowhere expressly empowering the city to establish rates by contract, and the amendment thereof, June 8, 1915 (Stats.1915, p. 1300), which authorizes grantors of such franchises to impose such additional terms and conditions, whether "governmental or contractual in character," as in their judgment are in the public interest. P. 280 U. S. 154 .
Art. I, § 2 (30), Stats.1911, p. 2063, empowering the city to fix " rates . . . for the conveyance of passengers . . . by means of street railway cars," and "To regulate, subject to the provisions of the constitution of the state . . . the construction and operation of street railways . . . ;" Art. I, § 2(40), Stats.1913, p. 1633, empowering the city to grant franchises for furnishing transportation and to prescribe the terms and conditions of such grants and to prescribe the procedure for making them. P. 280 U. S. 155 .
5. A state has power, upon the application of a street railway company, to terminate rates of fare fixed by contract between the company and a municipal corporation of the state. P. 280 U. S. 156 .
6. Under Art. XII, § 23, of the California Constitution, as amended November 3, 1914, and the Public Utilities Act of April 23, 1915, the Railroad Commission has exclusive authority to regulate rates . A five-cent street railway fare, even if established by franchise contract, maybe increased with the approval of the Commission, and not otherwise, and it is the duty of the Commission, upon finding that the rate is unjust or insufficient, to determine the just and reasonable rate thereafter to be observed. P. 280 U. S. 157 .
found the existing fares insufficient and permitted a mall increase, which the company declined, and later found the existing fares sufficient, thus in legal effect requiring the company to observe them. Held that, assuming the existing fares had been established by franchise contracts, these exercises of jurisdiction by the Commission abrogated the contracts. Pp. 280 U. S. 156 -158.
furnished by public utilities. Detroit v. Detroit Citizens' Ry. Co., 184 U. S. 368 , 184 U. S. 382 ; Vicksburg v. Vicksburg Water Works Co., 206 U. S. 496 , 206 U. S. 508 , 206 U. S. 515 ; Public Service Co. v. St. Cloud, 265 U. S. 352 , 265 U. S. 355 . And where a city, empowered by the state so to do, makes a contract with a public utility fixing the amounts to be paid for its service, the latter may not be required to serve for less even if the specified rates are unreasonably high. Detroit v. Detroit Citizens' Ry. Co., supra, 184 U. S. 389 . And, in such case, the courts may not relieve the utility from its obligation to serve at the agreed rates, however inadequate they may prove to be. Public Service Co. v. St. Cloud, supra.
This Court is bound by the decisions of the highest courts of the states as to the powers of their municipalities. Georgia Ry. Co. v. Decatur, 262 U. S. 432 , 262 U. S. 438 . Our attention has not been called to any California decision, and we think there is none, which decides that the state legislature has empowered Los Angeles to establish rates by contract. This Court is therefore required to construe the state laws on which appellants rely. As it is in the public interest that all doubts be resolved in favor of the right of the state from time to time to prescribe rates, a grant of authority to surrender the power is not to be inferred in the absence of a plain expression of purpose to that end. The delegation of authority to give up or suspend the power of rate regulation will not be found more readily than would an intention on the part of the state to authorize the bargaining away of its power to tax. Providence Bank v. Billings, 4 Pet. 514, 29 U. S. 561 ; Railroad Commission Cases, 116 U. S. 307 , 116 U. S. 325 ; Freeport Water Co. v. Freeport, 180 U. S. 587 , 180 U. S. 599 ; Stanislaus County v. San Joaquin C. & I. Co., 192 U. S. 201 , 192 U. S. 210 ; Puget Sound Traction Co. v. Reynolds, 244 U. S. 574 , 244 U. S. 579 .
This Court applied the established rule in Home Telephone Co. v. Los Angeles, 211 U. S. 265 . That company's
franchise was granted under the Broughton Franchise Act, which provided that every such franchise "shall be granted upon the conditions in this act provided and not otherwise." The city charter gave power to its council to fix charges for telephone service. The franchise stated that the rates should not exceed specified amounts. An ordinance prescribing lower rates was passed. The company brought suit for injunction against its enforcement on the ground that the ordinance violated the contract clause of the Constitution of the United States. The city insisted that it had not been empowered by the state to make such a contract, and this Court upheld its contention. It said (p. 211 U. S. 273 ):
And, dealing with the charter provision there relied on by the company, the court said (p. 211 U. S. 274 ):
Section 1 of the Broughton Franchise Act [ Footnote 1 ] provides that franchises "shall be granted upon the conditions in this act provided, and not otherwise." The Act requires the sale of such franchises upon advertisement stating the character of the franchise or privilege proposed to be granted, but it nowhere expressly empowers the city to establish rates by contract. This Court, in the Home Telephone Company case, dealt with the quoted provision. It said (p. 211 U. S. 275 ):
The appellants invoke provisions of the city charter which are printed in the margin. [ Footnote 2 ] But it requires no discussion to show that they are not sufficient to empower the city by contract to establish rates. In support of their claim, they cite Columbus Ry. & Power Co. v. Columbus, 249 U. S. 399 ; Opelika v. Opelika Sewer Co., 265 U. S. 215 ; Public Service Co. v. St. Cloud, supra, and Southern Utilities Co. v. Palatka, 268 U. S. 232 . But the Columbus case did not involve, and this Court did not there decide, the question of power. See p. 249 U. S. 407 and Cleveland v. Cleveland City R. Co., 194 U.S. at 194 U. S. 532 -534. And, in the other cases, we followed the decisions of the courts of the respective states.
2. But, assuming that the fares were established by the franchise contracts, we are of opinion that such contracts have been abrogated. The state had power, upon the company's application, through its Commission or otherwise, to terminate them. Pawhuska v. Pawhuska Oil & Gas Co., 250 U. S. 394 ; Trenton v. New Jersey, 262 U. S. 182 , 262 U. S. 186 ; Henderson Water Co. v. Corporation Commission, 269 U. S. 278 ; Denney v. Pacific Tel. Co., 276 U. S. 97 .
There is no decision in the courts of the state as to the effect of the proceedings before and action taken by the Commission, and therefore we are required to construe the applicable provisions of the local Constitution and statutes. Denney v. Pacific Tel. Co., supra, p. 276 U. S. 101 . Under the state constitution, Art. XII, § 23, as amended November 3, 1914, and the Public Utilities Act of April 23, 1915, the Commission has exclusive power to regulate rates. And § 27 of the Act [ Footnote 3 ] gave to street railway companies the right to charge more than five cents upon showing before the Commission that the higher charge is justified. No distinction is made between rates established by franchise contracts and those otherwise fixed. Fares may not be changed without approval of the Commission. The policy of the state is that all rates shall be just and reasonable (§ 15), and the Commission is directed, whenever, after hearing had upon its own motion or upon complaint it shall find that rates are unjust or insufficient, to determine the just and reasonable rates thereafter to be observed. § 32(a). [ Footnote 4 ] The language used
in Denney v. Pacific Tel. Co., supra, p. 276 U. S. 102 , is pertinent here:
The district court recognized that such contracts, if existing, would be a complete defense to this suit, Columbus Ry. & Power Co. v. Columbus, 249 U. S. 399 ; Georgia Ry. & Power Co. v. Decatur, 262 U. S. 432 ; Opelika v. Opelika Sewer Co., 265 U. S. 215 ; St. Cloud Public Service Co. v. St. Cloud, 265 U. S. 352 ; Southern Utilities Co. v. Palatka, 268 U. S. 232 ; expressed a strong doubt whether the city ever had the power to contract concerning the rate of fare, and, declining to pass upon that question, granted the relief prayed for solely on the ground that any such contract right which existed had been abrogated.
p. 115, made pursuant to an amendment of § 23 of Article XII of the California Constitution adopted November 3, 1914. These enactments did not purport to abrogate any existing contract. Nor did they purport to take from the city or from the county any power theretofore possessed to make a contract concerning the rate of fare. Their effect was merely to make any such contract, whether theretofore or thereafter entered into, subject to change by the Commission. Unless and until so changed, a contractual fare fixed by franchise remains in full force. Henderson Water Co. v. Corp. Comm'n, 269 U. S. 278 , 269 U. S. 281 -282. Consequently, it is not here claimed that these enactments alone abrogated the alleged contracts as to rate of fare.
Third. Nor did the action taken by the Commission in 1928, in the proceedings now under review, abrogate any existing fare provision. There also, the Commission took jurisdiction, as it was by the statute required to do. It refused to authorize a higher fare because it concluded that, for the past five years, the railway had been earning an average annual return of 7.1 percent; that it was not being efficiently operated; that the management had failed to introduce certain economics previously recommended which would have increased its net earnings, and that, for these reasons, the existing five-cent fare was just and reasonable. The Commission may have erred in its judgment, but it is clear that it did not change the rate of fare. In Georgia Ry. & Power Co. v. Decatur, 262 U. S. 432 , 262 U. S. 439 , it was held that the assumption of jurisdiction by the Commission to the extent of affirmatively ordering the continuance of existing transfer privileges did not effect an abrogation of an existing contract provision relating thereto, since such action did not conflict with the terms of the contract. Compare Los Angeles v. Los Angles City Water Co., 177 U. S. 558 , 177 U. S. 578 ; Minneapolis v. Street Ry. Co., 215 U. S. 417 , 215 U. S. 435 . In Denney v. Pacific Telephone Co., 276 U. S. 97 , the Commission had previously
have chosen to assume. In Southern Iowa Electric Co. v. Chariton, 255 U. S. 539 , a case coming from Iowa, it was held, following Iowa decisions, that, since the city lacked power to bind itself, there was no contract. And there is a statement to that effect in San Antonio v. San Antonio Public Service Co., 255 U. S. 547 , 255 U. S. 556 . But, in Southern Utilities Co. v. Palatka, 268 U. S. 232 , 268 U. S. 233 , the question was expressly left open. Obviously that is a matter of state law on which the decisions of this Court are not controlling.
In my opinion, these questions of statutory construction, and all matters of detail, should, in the first instance, be decided by the trial court. To that end, the judgment of the district court should be vacated, and the case remanded for further proceedings, without costs to either party in this Court. Pending the decision of the trial court, an interlocutory injunction should issue. Compare City of Hammond v. Schappi Bus Line, 275 U. S. 164 ; City of Hammond v. Farina Bus Line & Transportation Co., 275 U. S. 173 ; Ohio Oil Co. v. Conway, 279 U. S. 813 . It is a serious task for us to construe and apply the written law of California. Compare Gilchrist v. Interborough Rapid Transit Co., 279 U. S. 159 , 279 U. S. 207 -209. To
Diaz v. Gonzalez, 261 U. S. 102 , 261 U. S. 106 . This Court is not peculiarly fitted for that work. We may properly postpone the irksome burden of examining the many relevant state statutes and decisions until we shall have had the aid which would be afforded by a thorough consideration of them by the judges of the district court, who are presumably more familiar with the law of California than we are. The practice is one frequently followed by this Court. [ Footnote 2/1 ]
the fundamental issue of the case. Whether such contracts exist, or ever existed, depends wholly upon the construction to be given to laws of the state. Upon these questions, the decision of the Supreme Court of California would presumably have been accepted by this Court if the case had come here on appeal from it. Compare Georgia Ry. & Power Co. v. Decatur, 262 U. S. 432 , 262 U. S. 438 ; Appleby v. City of New York, 271 U. S. 364 , 271 U. S. 380 .
The constitutional claim of confiscation gave jurisdiction to the district court. We may be required, therefore, to pass at some time upon these questions of state law. And we may do so now. But the special province of this Court is the federal law. The construction and application of the Constitution of the United States and of the legislation of Congress is its most important function. In order to give adequate consideration to the adjudication of great issues of government, it must, so far as possible, lessen the burden incident to the disposition of cases which come here for review. [ Footnote 2/2 ]
This course was pursued in the following, among other cases, in which a lower federal court erroneously left undecided a question of local law or of its application: Gainesville v. Brown-Crummer Co., 277 U. S. 54 , 277 U. S. 61 ; Hammond v. Schappi Bus Line, 275 U. S. 164 , 275 U. S. 169 -172; Hammond v. Farina Bus Line, 275 U. S. 173 , 275 U. S. 174 -175; Wilson Cypress Co. v. Pozo, 236 U. S. 635 , 236 U. S. 656 -657; in the following cases in which the lower court erroneously left undetermined a question of fact: Security Mortgage Co. v. Powers, 278 U. S. 149 , 278 U. S. 159 ; United States v. Magnolia Co., 276 U. S. 160 , 276 U. S. 164 -165; United States v. Brims, 272 U. S. 549 , 272 U. S. 553 ; Gerdes v. Lustgarten, 266 U. S. 321 , 266 U. S. 327 ; Chastleton Corp. v. Sinclair, 264 U. S. 543 , 264 U. S. 548 -549; Vitelli & Son v. United States, 250 U. S. 355 , 250 U. S. 359 ; Southern Pacific Co. v. Bogert, 250 U. S. 483 , 250 U. S. 494 , 250 U. S. 497 ; Union Pac. R. Co. v. Weld County, 247 U. S. 282 , 247 U. S. 287 ; Marconi Wireless Co. v. Simon, 246 U. S. 46 , 246 U. S. 57 ; Owensboro v. Owensboro Waterworks, 191 U. S. 358 , 191 U. S. 372 ; Chicago, Milwaukee, etc., Ry. v. Tompkins, 176 U. S. 167 , 176 U. S. 180 ; in the following cases in which the circuit court of appeals did not review the merits because of an erroneous view of the jurisdiction of the district court: Guardian Savings Co. v. Road Dist., 267 U. S. 1 , 267 U. S. 7 ; Brown v. Fletcher, 237 U. S. 583 , 237 U. S. 586 -588; cf. Louie v. United States, 254 U. S. 548 , 254 U. S. 551 ; in the following cases in which the circuit court of appeals restricted its review because it erroneously regarded the action as one at law instead of a suit in equity: Twist v. Prairie Oil Co., 274 U. S. 684 , 274 U. S. 692 ; Liberty Oil Co. v. Condon Bank, 260 U. S. 235 , 260 U. S. 245 ; in the following in which the circuit court of appeals erroneously narrowed the scope of its review for other reasons: Krauss Bros. Co. v. Mellon, 276 U. S. 386 , 276 U. S. 394 ; National Brake Co. v. Christensen, 254 U. S. 425 , 254 U. S. 432 ; in the following cases in which the state court placed its decision on an erroneous view of federal law, and therefore did not consider the question of local law involved: Chicago & N.W. Ry. v. Durham Co., 271 U. S. 251 , 271 U. S. 257 -258; Sioux City Bridge Co. v. Dakota County, 260 U. S. 441 , 260 U. S. 445 -447; Ward v. Love County, 253 U. S. 17 , 253 U. S. 25 . In all these cases, this Court recognized its undoubted power to decide the matters erroneously left undetermined by the courts below, but it preferred to remand the cases for further proceedings, either on the ground that the determination of the undecided issues was too burdensome a task or on the ground that those issues should more appropriately be decided, in the first instance, by the lower courts.
I agree with MR. JUSTICE BRANDEIS that this case should have been disposed of by remanding it to the district court of three judges for determination whether the railway company, under its 102 franchises, or any of them, is bound by contract to maintain a five-cent fare. That question is, I think, different from the one presented in Home Telephone Co. v. Los Angeles, 211 U. S. 265 , and
involved in Detroit v. Detroit Citizens' Railway Co., 184 U. S. 368 , and Vicksburg v. Vicksburg Water Works Co., 206 U. S. 496 , whether the city had the requisite legislative authority to bind itself not to reduce the rate of fare fixed by the franchise. Here, concededly, the power to regulate rates is reserved to the state commission, and the question preliminary to the whole case is whether the railroad company has bound itself to serve for a five-cent fare. I know of no principle of the law of contracts, qua contracts, which would preclude its doing so, even though the city had no power to obligate itself to maintain any particular rate. It has not purported to exercise such power by so contracting. It had power to grant franchises, and the grant of the franchise, without more, would be good consideration for the company's undertaking to maintain a five-cent fare. Williston on Contracts, §§ 13, 140.
But as the Court, without dealing with this aspect of the matter, has held that the railway company is not so bound, it is unnecessary to decide that the state Railroad Commission's refusal to raise the rate would have been enough to abrogate the contract, if there had been one, and the practice of the Court not to pass on questions of constitutional or state law not necessary to a decision should, I think, be scrupulously observed. Even if necessary to decide the question, I would not be prepared to say that the refusal of the Commission to fix a fare different from the contract rate would destroy the contract. By contracting for a five-cent fare, the railway company waived the protection of the due process clause of the Fourteenth Amendment. Columbus Ry. Co. v. Columbus, 249 U. S. 399 ; Southern Iowa Electric Co. v. Chariton, 255 U. S. 539 , 255 U. S. 542 ; Paducah v. Paducah Ry. Co., 261 U. S. 267 , 261 U. S. 272 ; Georgia Ry. Co. v. Decatur, 262 U. S. 432 , 262 U. S. 438 ; Henderson Water Co. v. Corporation Commission, 269 U. S. 278 , 269 U. S. 281 . Granting that the contract was subject to the power and duty of the Commission to modify it by changing the rate, that power has not been exercised, and the duty is one arising, not under the Constitution and laws of the United States, but is imposed by state statute, for breach of which a state remedy alone should be given. See Henderson Water Co. v. Corporation Commission, supra, p. p. 262 U. S. 282 ( compare Corporation Commission v. Henderson Water Co., 190 N.C. 70).