Case Name: Milwaukee Electric Railway & Light Company, Appellant, vs. Railroad Commission of Wisconsin, Respondent
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1913-05-31
Citations: 153 Wis. 592
Docket Number: 
Parties: Milwaukee Electric Railway & Light Company, Appellant, vs. Railroad Commission of Wisconsin, Respondent.
Judges: Barnes, J., took no part.
Reporter: Wisconsin Reports
Volume: 153
Pages: 592–637

Head Matter:
Milwaukee Electric Railway & Light Company, Appellant, vs. Railroad Commission of Wisconsin, Respondent.
April 29
May 31, 1913.
Public utilities: Street railways: Regulating rates of fare: Legislative power: Delegation to municipalities: Statutes and ordinances construed: Constitutional law: Impairing obligation of contracts: Reserved power to amend franchises: Taking of property without compensation.
1. Authority given 'ey a revised statute (sec. 1862, Stats.) to a municipal corporation to grant to a street railway corporation the use of streets “upon such terms” as the proper authorities shall determine, does not differ from the authority, given by such statute in its original form, to make such grant “upon such .terms and conditions" as the common council might impose.
2. A municipal ordinance providing that the rate of fare upon a street railway “shall be not to exceed five cents” did not make a fixed rate, as distinguished from a limitation upon the rate, and was not in that respect substantially different from a prior ordinance providing that the rate of fare “shall not exceed five cents.”
3. The power to fix rates and tolls to be charged by public utilities is one of the attributes of sovereignty, and with us is vested in the legislature.
4. No presumption can be indulged that the legislature has parted with such power, nor will doubtful words be construed as having that effect.
[5. Whether the legislature could by express language authorize municipal authorities to make contracts with public utilities fixing rates which should exist for definite periods in the future and be beyond legislative control during those periods, is not determined.]
6. Sec. 1862, Stats. — which provides that any municipal corporation may grant to a street railway company the use, “upon such terms as the proper authorities shall determine,” of streets, bridges and parkways for the purpose of laying tracks and running cars thereon, to be propelled by animals or such other power as shall be agreed on, and that every such road shall be constructed upon the most approved plan and be subject to such reasonable rules and regulations and the payment of such license fees as the municipal authorities may from time to time prescribe, — does not empower municipal authorities to make any contract with a street railway company fixing rates of fare so that they may not be changed ,by the legislature or through a legislative agency (such as the Railroad Commission) in the manner provided by law.
[7. Whether municipal ordinances relating to rates of fare upon a street railway and claimed to be in the nature of contracts are subject to alteration or repeal under sec. 1, art. XI, Const., not determined.]
Marshall and Vinje, JJ., dissent
Appeal from a judgment of the circuit court for Dane countj: E. Ray Stevests, Circuit Judge.
Affirmed.
This is an appeal from a judgment dismissing the plaintiff’s complaint, after a demurrer thereto had been sustained and the plaintiff had declined to plead over within the time granted by the court. The action is an action brought under the provisions of sec. 1797m — 64, Stats., to vacate and set aside, as unlawful and unreasonable, an order of the defendant Commission purporting to fix certain rates at which street-car tickets should be sold in packages by the plaintiff over its lines in Milwaukee; which rates were somewhat less than the rates fixed by certain Ordinances of the city previously passed. The essential facts are fairly stated in the appellant’s brief, substantially as follows:
The complaint shows that the Milwaukee Electric Bailway & Light Company is incorporated, among other purposes, for the conduct of a street railway, and that it operates a street railway extending throughout the city of Milwaukee over a large number of streets.
The company’s present street railway system involves a consolidation of five previous systems. Three of these originally were constructed as horse railways and by authority of the common council changed to electric railways. The fourth originally was planned as a cable railway, but after-wards was authorized to be constructed as an electric railway ; and the fifth was constructed as a steam motor or “dummy” road, but subsequently, by due authority, was changed to an electric line.
The plaintiff’s street railway is operated under franchises which may be divided into three classes: (1) franchises granted to individuals in 1814, and passing by mesne conveyances to the plaintiff; (2) franchises granted to other street railway corporations and also passing by mesne conveyances to the plaintiff; and (3) a franchise embodied in an ordinance and resolution enacted by- the city January 2, 1900, extending all existing franchises, which will be referred to as the “1900 ordinance.”
Of the franchises granted to individuals, some were granted to Frank B. Van Valkenburg et a»l. and some to John H. Tesch et al. All were granted during the year 1814, and were to extend for a term of fifty years from the time of the grant. Under them the street railway was constructed and is now actually being operated on some of the most important streets forming tbe key to tbe street railway situation in tbe city of Milwaukee.
Tbe franchises granted to other corporations were embodied in ordinances and resolutions of tbe city of Milwaukee and cover a number of other streets over which tbe plaintiff operates.
Tbe so-called “1900 ordinance” was passed January 2, >1900, and granted to tbe plaintiff tbe right to operate over certain portions of streets for which it theretofore-bad no franchises. It provided also that all franchises expiring prior to December 31, 1934, should be extended from the date of such previous expiration to December 31, 1934, and all franchises which otherwise would expire subsequently to December 31, 1934, were made to terminate on that date. The franchise entailed on the company the obligation to give a universal transfer and also to furnish power to swing drawbridges, make certain expenditures for strengthening bridges, and transport on its cars free of charge certain policemen, firemen, and health officers, and contained thp following provisions as to rates of fare:
“Sec. 6. After the passage, publication and acceptance of this ordinance by said railway company, the rate of fare for one continuous passage upon the lines of railway within said city limits of said city owned and operated by said railway company constructed under any franchise herein, heretofore or hereafter granted to said railway company or its predecessors, successors or assigns, as the case may be, shall be not to exceed five cents for a single fare, except for children under ten years of age the rate of fare shall be three cents for one child and five cents for two children, and infants under three years of age free. Except where cars or carriages shall be chartered at a special price, which fare shall entitle each passenger, upon demand made at the time of payment of fare, to one transfer at established points of transfer to any connecting or cross line of said railway company for passage within said city, and convenient points of transfer shall be maintained and such additional points of transfer established as will carry out the full intent and purpose of this ordinance to maintain and extend the transfer system now in force upon the lines of said railway company at the present standard of convenience for the people of said city. Each transfer ticket shall be good only for the passenger to whom it is issued, and for a continuous trip in the direction specified upon the transfer so given, and upon the first car leaving the transfer intersection after the time designated on such transfer.
“Provided, however, that after the acceptance of the terms of this ordinance the railway company shall, on demand made at its office in said city, or to the conductors on its cars operated on its lines within the corporate limits of said city, sell tickets in packages of twenty-five for one dollar or six for twenty-five cents, each of which tickets shall entitle the holder thereof tó use the same upon the cars of said railway company only between the hours of 5:30 o’clock and 8 o’clock in the morning and between the hours of 5 o’clock and 7 o’clock, central standard time, in the afternoon of each day until Janu■ary 1, 1905, and shall also entitle the holder to the same privileges as are or may be accorded to passengers paying a cash fare of five cents; and the said railway company shall, from and after January 1, 1905, continue the sale of tickets in packages at the price aforesaid until December 31, 1934, each to be good at all hours of the day, with same privileges as are or may be accorded to passengers paying a single cash fare of five cents.”
Of the various ordinances granting franchises, one, that of March 26, 1866, granted to the Milwaukee City Railway Company, one of the plaintiff’s predecessors, provided that the rate of fare should not exceed six cents, including the government tax.
All other franchises, including those granted to Van Valken-burg et at. and Tesch et al., included a provision that the rate of fare “shall not exceed five cents” except for chartered cars, etc.
The various street railway companies were all acquired by the Milwaukee Street Railway Company, and on foreclosure of its mortgage passed to the plaintiff in January, 1896. From that time on all these companies were operated by the plaintiff, and the complaint alleges that prior to 1900' the plaintiff was entitled to, charge and did charge a cash fare of five cents to each passenger and was not obliged to furnish any transfers whatever.
The plaintiff or its predecessors accepted the various franchises granted to them, respectively and fulfilled the terms thereof, and in compliance with the terms of the 1900 ordinance the plaintiff, instead of charging merely a cash fare of five cents as it theretofore had done, sold tickets at the rates prescribed in the ordinance and granted universal transfer privileges.
In November, 1906, the city of Milwaukee filed a complaint with the defendant Railroad Commission for a reduction of the rates of fare and filed a second similar complaint on May 13, 1908. In proceedings held on these complaints the Railroad Commission, on August 23, 1912, entered the-order involved in this ease. This order did not interfere with the cash fare, but provided that the company should discontinue its ticket rate of twenty-five for one dollar (the rate prescribed by the 1900 ordinance) and should sell tickets in packages of thirteen for fifty cents, which tickets were ordered to be accepted in payment of fare.
Thereupon the plaintiff instituted this action to vacate and set aside this order and enjoin the execution, performance, and enforcement thereof, and 'also prayed for a temporary injunction.
For the appellant there was a brief by Miller, Mack & Fairchild, attorneys; a separate brief signed by Sullivan & Cromwell, William J. Curtis, and Henry H. Pierce, of counsel; and oral argument by Mr. Curtis, Mr. Geo. P. Miller, Mr. Edwin C. Mack, and Mr. Pierce. They contended, inter alia:
I. The city ordinances created contracts with reference to the rate of fare which are property, and are protected by the provisions of the constitutions of the United States and of this state prohibiting the impairment of contracts and the taping of property without compensation. Walla Walla v. Walla Walla W. Go. 172 U. S. 1, 9, 19 Sup. Ct. 77; City B. Go. v. Citizens’ B. Co. 166 U. S. 557, 563, 564, 567, 568; 17 Sup. Ct. 653; Detroit v. Detroit Citizens’ St. B. Go. 184 U. S. 368, 382, 383, 389, 396-398, 22 Sup. Ct. 410; Cleveland v. Cleveland City B. Go. 194 U. S. 517, 533-536, 24 Sup. Ct. 756; Cleveland v. Cleveland E. B. Co. 201 U. S. 529, 541, 26 Sup. Ct. 513; Minneapolis v. Minneapolis St. B. Co. 215 U. S. 417, 436, 437, 30 Sup. Ct. 118; Home T. & T. Co. v. Los Angeles, 211 U. S. 265, 29 Sup. Ct. 50; Linden L. Co. v. Milwaukee E. B. & L. Co. 107 Wis. 493, 83 N. W. 851.
II. The Commission’s order violates the franchises providing for the rate of fare, (a) The provision that the railways might charge a cash fare of “not to exceed five cents” gave the railways a contract right to charge a five-cent fare. Detroit v. Detroit Citizens’ St. B. Co. 184 U. S. 368, 22 Sup. Ct. 410; Minneapolis v. Minneapolis St. B. Co. 215 U. S. 417, 30 Sup. Ct. 118. (b) The Commission’s order affects only the price of tickets and that is fixed by the “1900 franchise” beyond question.
III. The legislature had no power against the will of the company to change the terms of the franchises fixing the rate of fare. Sec. 1, art. XI, Const., plainly has reference only to the formation of corporations. The grant of a franchise under sec. 1862, Stats., is not a right that comes to a corporation as part of its formation, but it is a separate subsequent grant made by the municipality. It is not a corporate power or privilege even under sub. 7 of sec. 31, art. IV. Linden L. Co. v. Milwaukee E. B. & L. Co. 107 Wis. 493, 83 N. W. 851. The distinction is clear between franchises which attach to a corporation as part of its incorporation or corporate charter and other franchises or governmental privileges. The latter, like any other property owned by a corporation, are not subject to a reserve power attached to the incorporation or formation of the company. Calumet 8.' Co. v. Chilton■, 148 Wis. 334, 370, 135 N. W. 131; In re Southern Wis. P. Co. 140 Wis. 245, 122 N. W. 801; People v. O’Brien, 111 N. Y. 1, 44, 46-52, 18 N. E. 692, 700, 703; Skaneateles W. W. Co. v. Skaneateles, 161 N. Y. 154, 55 N. E. 562; Memphis & L. B. B. Co. v. Bailroad Comm’rs, 112 U. S. 609, 619, 5 Snp. Ot. 599; Louisville v. Cumberland T. & T. Co. 224 U. S. 649, 661, 32 Sup. Ct. 572; Omaha W. Co. v. Omaha, 147 Eed. 1; Derrner v. New York T. Co. 187 Eed. 890; Los Angeles v. Los Angeles C. W. Co. 177 U. S. 558, 573, 20 Sup. Ct. 736.
Eor the respondent there were briefs and oral argument by the Attmmey General and Walter Drew, deputy attorney general; by Lester C. Mamón, special counsel; and by Daniel W. Moan, city attorney of Milwaukee, and Max Schoetz, Jr., of counsel. They argued, among other things:
I. The power to regulate in the public interest the tolls or rates of charge of one engaged in a public service is a police power inherent in the sovereignty of the state. Att’y Gen. v. Bailroad Cos. 35 Wis. 425, 589, 590; Madison, W. ■& M. P. Co. v. Beynolds, 3 Wis. 287; Whiting v. S. & F. du L. B. Co. 25 Wis. 167; Murm v. Illinois, 94 U. S. 113; Granger Cases, 94 U. S. 155, 164, 179 — 181; Wabash, St. L. & P. B. Co. v. Illinois, 118 U. S. 557, 7 Sup. Ct. 4; Buggies v. Illinois, 108 U. S. 526, 531, 2 Sup. Ct. 832; Bailroad Commission Cases, 116 U. S. 307, 325, 6 Sup. Ct. 334, 348, 349, 388, 391, 1191; Chicago •& G. T. B. Co. v. Wellman, 143 U. S. 339, 344, 12 Sup. Ct. 400; Beagan v. Farmers’ L. & T. Co. 154 U. S. 362, 14 Sup. Ct. 1047; Smyth v. Ames, 169 U. S. 466, 526; Cotting v. Kansas City S. Y. Co. 183 U. S. 79, 84, 85, 22 Sup. Ct. 30; Louisville & N. B. Co. v. Kentucky, 183 U. S. 503, 515, 517, 22 Sup. Ct. 95¡Home T. & T. Co. v. Los Angeles, 211 U. S. 265, 271, 273, 29 Sup. Ct. 50; State ex rel. Wis. T. Go. v. Sheboygan, 111 Wis. 23, 38, 86 N. W. 657; Madison v. Madison G. & E. Go. 129 Wis. 249, 264, 108 N. W. 65; Minneapolis, St. P. & S. 8. M. B. Go. v. Railroad Comm. 136 Wis. 146, 157, 159, 160, 116 N. W. 905; State ex rel. Kenosha G. & E. Go. v. Kenosha E. B. Co. 145 Wis. 337, 346, 129 N. W. 600'; La Crosse v. La Crosse G. ■& E. Go. 145 Wis. 408, 426, 130 N. W. 530; Manitowoc v. Manitowoc & N. T. Go. 145 Wis. 13, 19, 20, 129 N. W. 925; Chicago, B. <& Q. B. Go. v. Railroad Comm. 152 Wis. 654, 140 N. W. 296. There is no exception in favor of a street railway. State ex rel. Att’y Gen. v. Madison St. B. Go. 72 Wis. 612, 620, 40 N. W. 487; Hobart v. Milwmhee City B. Co. 27 Wis. 194, 199, 200; Fayetteville St. B. Go. v. A. & B. B. Co. 142 N. C. 423, 55 S. E. 345, 9 Am. & Eng. Ann. Cas. 683; Oomm. v. I. C. St. B. Go. 187 Mass. 436, 73 N. E. 530, 2 Am. & Eng. Ann. Gas. 419.
II. This sovereign power of regulation is one which belongs exclusively to and can be exercised only by the legislature. Madison v. Madison G. $ E. Co. 129 Wis. 249, 267, 108 N. W. 65; Express Gases, 117 U. S. 1, 29, 6 Sup. Ct. 542, 628, 1190'; Interstate Comm. Comm. v. C., N. O. & T. P. B. Go. 167 U. S. 479, 505, 17 Sup. Ct. 896. There is no departure from this principle of law, which makes the exercise of the state power of regulation exclusively a legislative function, in ch. 362, Laws of 1905, authorizing the Railroad Commission to ascertain and declare the lawful rate. Chicago & N. W. B. Go. v. Dey, 35 Fed. 866, 874, 875; Reagan v. Farmers’ L. & T. Co. 154 U. S. 362, 393, 394, 14 Sup. Ct. 1047; Minneapolis, St. P. & S. S. M. B. Go. v. Railroad Comm. 136 Wis. 146, 161, 163, 164, 116 N. W. 905; State ex rel. Kenosha G. & E. Go. v. Kenosha E. B. Go. 145 Wis. 337, 346-348, 129 N. W. 600.
III. The city of Milwaukee was not authorized to abrogate by ordinance or contract the sovereign power of the state to regulate appellant’s rates. It bad no general power as a municipality to make a contract in its business or proprietary capacity fixing appellant’s rates of fare. It bad no general power, by delegation from tbe legislature in tbe exercise of state agency authority, to regulate appellant’s fares and so confer tbe rights claimed by appellant by surrender of such power. Sec. 1862, Stats., expressly empowered tbe city to grant appellant only the use of its streets “upon such terms as tbe proper authorities shall determine.” In granting such a privilege of street user tbe municipality acts as agent of tbe state. It is a franchise grant by tbe state acting through tbe municipality. State ex rel. Att’y Gen. v. Madison St. B. Go. 72 Wis. 612, 619, 620, 40 N. W. 487; Wright v. Milwaukee B. B. <& L. Go. 95 Wis. 29, 36, 69 N. W. 791; Manitowoc v. Manitowoc & N. T. Go. 145 Wis. 13, 27, 129 N. W. 925. Tbe act of a municipal council in passing a franchise ordinance conferring upon a street railway company tbe right of street user is legislative in character, and such ordinances only cover, and could only cover, such rights as tbe common council bad power to grant. Lange v. La Crosse & B. B. Go. 118 Wis. 558, 562, 95 N. W. 952; State ex rel. Kenosha G. <& B. Go. v. Kenosha B. B. Co. 145 Wis. 337, 129 N. W. 600. Such grants must be strictly construed in tbe interests of tbe public and of tbe preservation of tbe powers of government. Buggies v. Illinois, 108 U. S. 526, 2 Sup. Ct. 832; jRailroad Commission Gases, 116 U. S. 307, 6 Sup. Ot. 334, 348, 349, 388, 391,1191; Home T. & T. Go. v. Los Angeles, 211U. S. 265, 29 Sup. Ct. 50'; Georgia B. & B. Go. v. Smith, 128 U. S. 174, 9 Sup. Ct. 47; Stone v. Farmers’ L. & T. Go. 116 U. S. 307, 6 Sup. Ct. 334, 388, 1191; Freeport W. Go. v. Freeport, 180 U. S. 587, 21 Sup. Ct. 493; Danville W. Go. v. Danville, 180 U. S. 619, 21 Sup. Ct. 505; Bogers Park W. Co. v. Fergus, 180 U. S. 624, 21 Sup. Ct. 490; Northern Pac. B. Go. v. Minnesota, 208 U. S. 583, 28 Sup. Ct. 341; Knoxville W.' Co. v. Knoxville, 189 U. S. 434, 23 Sup. Ct. 531. Tbe power of the city to impose “terms” cannot be construed to enlarge the power conferred upon the city so as to include the different and distinct power to grant to appellant the additional privilege of charging unreasonable and unlawful rates or to grant it immunity from governmental control and thus make the city’s gi’cmt with terms greater than an unconditional grant without terms. Immunity from governmental control of the rates of a public service company can only be by positive and express grant of the legislature.
IV. The provisions of the franchise ordinance relating to rates of fare are mere limitations upon the company’s right to charge, and do not confer on the company an irrevocable grant or binding contract right to charge the rates of fare named.
V. The legislature has power to regulate appellant’s rates of fare as a valid exercise of the power reserved to it under sec. 1, art. XI, Const. Madison, W. & M. P. Go. v. Reynolds, 3 Wis. 287, 296; Pratt v. Brown, 3 Wis. 603, 611, 615, 616; Nazro v. Merchants’ Mut. Ins. Go. 14 Wis. 295, 299, 300; Kenosha, R. & R. I. R. Go. v. Marsh, 17 Wis. 13, 17; Whiting v. 8. & F. du L. R. Go. 25 Wis. 167, 198; Pick v. Rubicon E. Go. 27 Wis. 433, 440; State v. Milwaukee G. L. Co. 29 Wis. 454, 461; Ghapin v. Grusen, 31 Wis. 209, 215; West Wis. R. Go. v. Trempealeau Go. 35 Wis. 257, 270, 271; Att’y Gen. v. Railroad Cos. 35 Wis. 425, 569-574, 576, 579; State ex rel. Gream City R. Go. v. Hilbert, 72 Wis. 184, 192, 194, 195; Ashland v. Wheeler, 88 Wis. 607, 616, 60 N. W. 818; State v. Railway Gos. 128 Wis. 449, 505, 108 N. W. 594; Manitowoc v. Manitowoc & N. T. Go. 145 Wis. 13, 28, 29, 129 N. W. 925; La Grosse v. La Grosse G. & E. Go. 145 Wis. 408, 415, 417, 130 N. W. 530; Tomlinson v. Jessup, 15 Wall. 454; Sinking Fund Gases, 99 U. S. 700, 730; Glose v. Glenwood Cemetery, 107 U. S. 466, 477, 2 Sup. Ct. 267; Shields v. Ohio, 95 U. S. 319, 324; Spring Valley W. W. Co. v. 8chattier, 110 U. S. 347, 353, 356, 4 Sup. Ct. 48; Hamilton Q. L. C. Co. v. Hamilton, 146 U. S. 258, 270, 13 Sup. Ct. 90; Northern Cent. B. Co. v. Maryland, 187 U. S. 258, 268, 269, 23 Sup. Ct. 62; Stanislaus Co. v. 8cm Joaquin & K. B. C. & I, Co. 192 U. S. 201, 211 — 213, 24 Sup. Ct. 241; Fair Hcuven & W. B. Co. v. New Haven, 203 U. S. 379, 388-390, 27 Sup. Ct. 74; Colder v. Michigan, 218 U. S. 591, 600, 31 Sup. Ct. 122; Matthews v. Corporation Comm’rs, 97 Eed. 400, 404.
YI. The regulation of appellant’s rates of fare is not a taking of its property witbin tbe inhibitory provisions of state or federal constitutions or within the recognized limitation upon the reserved power. The exercise of such inherent authority or power reserved is an act strictly in accordance with the contract and not an impairment of it, or a taking of property.,

Opinion:
Winslow, C. J.
We are much indebted to counsel for the illuminating briefs and able oral arguments with which we have been favored by both sides in this case. It is but just to say that our labors have been much lightened thereby.
The case, however, is not in itself complicated or difficult of statement. There is in fact but a single question, and that is whether the ordinances referred to in the statement of facts, so far as they specify the rates of fare which may be charged, constitute contracts which are protected by the state and federal constitutions from impairment.
On the part of the appellant the familiar principle is relied on that where municipal authorities, acting under clear and unmistakable legislative authority so to do, have granted the use of streets to a public utility corporation for the purpose of serving the people, and the grant has been accepted by the utility and performance entered upon, a contract has been created between the public and the corporation, which cannot be impaired, by subsequent legislation. Walla Walla v. Walla Walla W. Co. 172 U. S. 1, 19 Sup. Ct. 77; Wright v. Milwaukee E. R. & L. Co. 95 Wis. 29, 69 N. W. 791. We do not understand that it is seriously questioned by tbe respondent in tbe present case that so far as tbe use of tbe streets is concerned tbe grants contained in tbe ordinances before us became contracts wbicb, when accepted and acted upon, could not be subsequently impaired by legislation. Tbe primary contention of tbe respondent is, however, that so far as tbe rates of fare are concerned tbe legislature bas not given to municipal authorities tbe power to hamper future legislative action in any way, and that tbe ordinances in question, when fairly construed, do not attempt to do so.
This contention involves primarily careful consideration and construction of tbe language of tbe statute under wbicb tbe city acted in passing tbe ordinances in question.
Tbe statute in question now appears as sec. 1862, Stats. 1911, and provides that any municipal corporation or county may grant to a street railway corporation, or to any person who bas tbe right to construct, maintain, and operate street railways, "upon such terms as tbe proper authorities shall determine," tbe use of streets, bridges, and parkways for tbe purpose of laying tracks for street railway purposes, tbe cars to be propelled by animals or such other power as may be agreed upon. Tbe section further provides that every such road shall be constructed on tbe most approved plan and be subject to "such reasonable rules and regulations and the payment of such license fees" as tbe municipal authorities may from time to time prescribe. This section first appeared in substance upon tbe statute books of tbe state as cb. 313 of tbe Laws of 1860. So far as tbe questions involved in this case are concerned there bas been no substantial change in tbe language or legal effect of tbe statute since its enactment in 1860. In tbe original act tbe grant of tbe use of tbe streets was authorized to be made "upon such terms and conditions" as the common council might impose. In the revision of 1878, however, the act of 1860 was condensed into one section (sec. 1862), and in the process of condensation the word "conditions" was dropped out as surplusage, which it plainly was.
The various ordinances, prior to the ordinance of 1900', provided that the rate of fare "shall not exceed five cents," except for chartered cars, etc. The ordinance of 1900 changed this language somewhat and provided that the rate of fare "shall be not to exceed five cents for a single fare, except for children under ten years of age the rate of fare shall be three cents for one child and five cents for two children, and infants under three years of age free." The last named ordinance also made elaborate provision for transfers and provided that the company "shall" sell tickets in packages of twenty-five for one dollar, etc., as will more fully appear by examination of sec. 6 of the ordinance, which is printed in full in the statement of facts. Some contention is made by the appellant to the effect that the difference in language between the earlier ordinances, which provide that the fare "shall not exceed five cents," and the ordinance of 1900, which provides that the fare "shall be not to exceed five cents," is indicative of a purpose in 1900 to make a fixed rate instead of placing a limitation upon the rate, but we do not regard the change in language as of any substantial significance. The two phrases seem to us as indicating the same essential purpose.
In construing the meaning of the statute in question, certain fundamental considerations must be kept clearly in mind if we would reach correct and just conclusions, and some of the more important of these considerations will first be stated.
The power to fix rates and tolls to be charged by public utilities is one of tbe attributes of sovereignty. With ns this great power is vested in the legislature, ahd when the legislature speaks upon the subject its voice is controlling and supreme, unless indeed some constitutional guaranty is invaded. Madison v. Madison G. & E. Co. 129 Wis. 249, 108 N. W. 65. A century ago this great power was of little practical importance, and very seldom used. The public utility as we know it had not yet come. Life was comparatively simple, individual wants few, and individual resources generally sufficient to provide for them. The ordinary citizen knew little about gas and less about electricity, which he regarded as nothing more than a supernatural and remorseless destroying force. He drove his own horse, if fortunate enough to own one, drank water from his own well, had no telephone, sent no telegrams, used no railroad, sent no express packages, and was dependent upon no public utility, either for the necessities or the luxuries of life. No such life is possible today, however. The progress of science and invention, combined with the tremendous growth of congested urban areas, has made the great mass of the people absolutely dependent upon the great public utilities of the time. Modem business and modern life could not go on without them. The urban citizen of today goes to his business upon the street railway and transacts it with the aid of the telegraph, the telephone, the express company, and the commercial railway. The gas and electric companies light his home, cook his meals, furnish him power for domestic operations, and sometimes even furnish him heat; while water companies provide him with water and telephone companies afford him opportunity at any moment for conversation with friends either at home or in distant cities.
We must catalogue our public utilities and try to imagine how we would get along without them if we would realize our dependence upon them. Only by so doing can we appreciate the supreme importance of the rate-making power and the necessity of keeping that power intact in the hands of the legislature. If it he not so kept the opportunities for abuse are numerous. Clearly the legislature should not part with the power, even for a limited time, except upon the most potent and convincing considerations.
No presumption can be indulged that it has parted with the power, nor will doubtful words be construed as having that effect. He who asserts that the state has surrendered any part of its sovereign power even temporarily in his favor must prove the fact by the most convincing evidence. The presumptions, if any there he, must run the other way.- If it were to be admitted for the purposes of the argument that the legislature could by express language authorize municipal authorities to make contracts with public utilities fixing rates which should exist for definite periods in the future and be beyond legislative control during those periods (a proposition concerning which we intimate no opinion), the question here is whether such express language is to be found in sec. 1862.
The section does not contain the word "contract," nor any words of similar import, except- that the provision relating to the motive power provides that the cars shall he propelled , by animals, or "such other power as shall be agreed on." The word "grant" is, of course, a contract word, but the grant simply covers the right to the use of the streets; nothing else is specifically authorized to be "granted." This grant is to be upon "terms." Not such terms as may be agreed on (as in the case of the motive power), but such terms as the municipal authorities "shall determine." Here clearly is language appropriate to the exercise of power by the municipal authorities, rather than to the making of a contract; to the imposition of commands by a superior power rather than to the reaching of a result by negotiation and agreement between equals.
Assuming that under this language a city might make a contract with a public utility, fixing rates or tolls for a definite period, which would hind the city itself and prevent any change of rates hy the city authorities during the contract period, the question still remains whether the section can he construed as giving the city authorities any power to bargain away the sovereign right of the state to regulate fares and tolls and lower them, if found to he excessive.
' If this question were a new one in this state we should entertain no doubt that it should be answered in the negative, but we do not regard it as new.
In the case of Manitowoc v. Manitowoc & N. T. Co. 145 Wis. 13, 129 N. W. 925, the question of the proper construction of sec. 1863, Stats., with regard to the extension of street railways into adjoining towns and through other cities, so as to constitute interurban lines, was before the court. In that case the city of Manitowoc had by ordinance, passed in November, 1902, fixed the fare to be charged between the cities of Manitowoc and Two Rivers at ten cents, and the ordinance had been accepted by the interurban company, the track laid, and the line operated until May 1, 1909, when the company raised the fare to fifteen cents, and the city brought its action in equity to compel the interurban company to abide by its contract and carry all passengers at the contract rate. It was strenuously urged in that case that the ordinance and acceptance formed a contract between the state and the company, which could not be impaired by the legislature itself, while it was contended on the other side that the Railroad Commission Act had already amended and superseded the ordinance. This contention brought the question of the power of the legislature squarely into the case, and made it not only proper but really necessary to determine whether by the passage and acceptance of the ordinance the power of the state to regulate fares had been suspended. Upon these contentions it was held that while the ordinance and its acceptance constituted a contract wbicb bound the interurban company to carry passengers at the ten-eent rate in the absence of legislative action, still the power of the legislature to regulate rates had not been in any way impaired by the action of the city and the company. In this connection this court then said:
"No specific authority having been conferred on the city to enter into the contract in question, the right of the state to interfere whenever the public weal demanded was not abrogated. The contract remained valid between the parties to it until such time as the state saw fit to exercise its paramount authority, and no longer. To this extent, and to this extent only, is the contract before us a valid subsisting obligation. It would be unreasonable to hold that by enacting sec. 1862, Stats. (1898), or sec. 1863, Stats. (Supp. 1906: Laws of 1901, ch. 425), the state intended to surrender its governmental power of fixing rates. That power was- only suspended until such time as the state saw fit to act."
If it be said that sec. 1863 was in question in that case instead of sec. 1862, and hence that the language cannot be considered as decisive, the answer is that so far as the question here presented is concerned the provisions of the two sections are practically identical. Sec. 1862 authorizes the municipal authorities to "grant" .the use of streets "upon such terms" as they shall determine, and sec. 1863 authorizes "consent" to the use of streets "upon such terms" and subject to such rules and regulations and the "payment of such license fees as the council or board may from time to time prescribe." We are of opinion, therefore, that the holding in the Manito-woc Case, to the effect that neither section indicated any legislative intention of surrendering the sovereign power of the state to regulate fares, was entirely correct and was advisedly made.
The appellant places great reliance upon the cases of Detroit v. Detroit Citizens St. R. Co. 184 U. S. 368, 22 Sup. Ct. 410; Cleveland v. Cleveland City R. Co. 194 U. S. 517, 24 Sup. Ct. 756; and Minneapolis v. Minneapolis St. R. Co. 215 U. S. 417, 30 Sup. Ct. 118. Iu none of these cases, however, was the question here presented before the court. Those cases were all actions between the city and a street railway company operating under a city ordinance, passed under legislative authority, fixing the rates of fare to be charged, which ordinance had been accepted by the company, and in each of them the city had endeavored to lower the rates of fare by subsequently enacted ordinances. In each case it was held that the ordinance and its acceptance constituted a contract between the city and the company which was binding on both parties during its term, and hence that the subsequent ordinance attempting to lower the contract rate of fare was an attempt to impair the obligations of a contract, and void. This was practically the decision of this court in the Manitowoc Case, and these cases were there cited. In no way, however, do they affect the question whether the legislature of the state has lost its sovereign power to fix reasonable rates.
The case here is much more similar in principle to the case of Georgia R. & B. Co. v. Smith, 128 U. S. 174, 9 Sup. Ct. 47, where the legislature in 1833 had chartered a railroad, and authorized it to charge tolls and rates of fare "not exceeding" certain specified sums. It was argued on behalf of the railroad company that by this clause the railroad was exempted from legislative interference with its rates within the designated limits for all time. This contention was however rejected, and it was said that "to effect this result the exemption must appear by such clear and unmistakable language that it cannot be reasonably construed consistently with the reservation of the power [i. e. the power to regulate rates] by the state."
It is unnecessary to consider other questions which were much discussed by counsel in the present case. If under sec. 1862 no power was given to municipal authorities to hamper or impair the sovereign right of the state to regulate fares, then the ordinances in question cannot, of course, affect that power, whatever may be their terms. So far as the state is concerned the ordinance constitutes no obstacle to the exercise of its power to regulate rates.
We reach this conclusion the more readily because this state has adopted an eminently just and wise policy in dealing with the matter of rates and tolls. By the Railroad Commission legislation it has laid down the general rule that every rate must be reasonable, and has left it to a commission of experts to determine, after full investigation, the reasonable rate, and apply it. It is believed that this board passes on these questions with judicial fairness after the most careful and searching investigation of the conditions, and with a single eye to the attainment of a fair result. So long as these provisions of law remain in force and are allowed to control the situation, all danger of immature, hasty, or vindictive changes in rates is practically eliminated. On the one hand, the citizen is protected from unreasonable and excessive fares; on the other, the capitalist and investor is assured a reasonable and fair return upon his investment. No door is open for any serious injustice.
The view which is here tahen of the meaning and effect of the provisions of sec. 1862 renders unnecessary any consideration of the question whether the ordinances in question are subject to alteration or repeal under sec. 1 of art. XI of the constitution, which authorizes the enactment of general laws for the formation of corporations without banking powers, and forbids the creation of corporations by special act except in certain instances, and reserves the right to alter or repeal at any time all such general laws or special acts.
The proposition decided in this case is that see. 1862, Stats., does not empower municipal authorities to make any contract with a street railway company fixing rates of fare so that- they may not be changed by the legislature, or through a legislative agency in the manner provided by law.
By the Court. — Judgment affirmed.