Case Name: In the Matter of the Application of the City of Niagara Falls, Respondent, for a Writ of Prohibition against The Public Service Commission of the State of New York, Second District, Defendant, and International Railway Company, Appellant
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1920-07-07
Citations: 229 N.Y. 333
Docket Number: 
Parties: In the Matter of the Application of the City of Niagara Falls, Respondent, for a Writ of Prohibition against The Public Service Commission of the State of New York, Second District, Defendant, and International Railway Company, Appellant.
Judges: 
Reporter: New York Reports
Volume: 229
Pages: 333–355

Head Matter:
In the Matter of the Application of the City of Niagara Falls, Respondent, for a Writ of Prohibition against The Public Service Commission of the State of New York, Second District, Defendant, and International Railway Company, Appellant.
Public service commission — jurisdiction to consider application for increase in rates of fare on street railway where rates are fixed by contract with municipality — when writ of prohibition properly granted — legislature has constitutional power to modify rates fixed by local franchise.
1. The provisions of the Railroad Law do not disclose a legislative intent to deal with the matter of rates fixed by agreement between local authorities and a railroad corporation; consequently the public service commission is unauthorized to nullify conditions attached to such consents by increasing rates, without the consent of the local authorities, and an absolute writ of prohibition is properly granted restraining such commission from acting upon an application made to it to increase rates of fare stipulated by a municipality in 1905 as a condition to its consent to the extension of a street railway and at that time accepted and acted upon by the company. (Matter of Quinby v. Public Service Commission, 223 N. Y. 244; 227 N. Y. 601, approved and followed.) (Per Hogan, Cardozo, Andrews and Elkus, JJ.)
2. The state, acting through the legislature, has by virtue of its police power the right to regulate the fare to be charged by a street railrqad corporation and the constitutional right to modify rates fixed in a local franchise. Contracts cannot be made which in any way limit this power. The Constitution gives to a municipality the right to say whether a railroad shall be built in its public streets and may attach.to its consent such conditions as it deems necessary and proper so far as it and the railroad are concerned. But if in the exercise of police power the fare is found to be excessive and more than reasonable compensation for the service performed, it may be lowered, or raised, if found to be so low as not to be fair, just and reasonable to the corporation. (Per McLaughlin, Chase, Collin and Andrews, JJ.)
Matter of City of Niagara Falls v. Public Service Comm., 190 App. Div. 890, affirmed.
(Argued February 23, 1920;
decided July 7, 1920.)
Appeal, by permission, from an order of the Appellate Division of the Supreme Court in the third judicial department, entered December 5, 1919, which reversed an order of Special Term denying a motion for a writ of prohibition and granted said motion.
The facts, so far as material, are stated in the opinion.
Morris Cohn, Jr., and Edward E. Franchot for appellant.
The power of the public service commission to authorize an increase above the statutory rate of five cents for local fare upon the local lines of the applicant within the city of Niagara Falls is not limited or prohibited by anything contained in the consents of the local authorities. (Huntington Case, 6 P. S. C. Rep. 326; People ex rel. South Glens Falls v. P. S. Comm., 225 N. Y. 216; Matter of International Ry. Co., 226 N. Y. 474; Koehn v. P. S. Comm., 107 Misc. Rep. 151; Matter of W. S. R. R. Co., 115 N. Y. 442; Ingersoll v. N. E. R. R. Co., 157 N. Y. 453; People v. Ebelt, 180 N. Y. 470; C. C. Traction Co. v. Kingston R. R. Co., 154 N. Y. 493.) The public service commission has power to regulate, and, therefore, to increase, fares under the circumstances obtaining in the city of Niagara Falls. (Matter of International Ry. Co., 226 N. Y. 474; Towle v. Remsen, 70 N. Y. 309; Rose v. Hawley, 141 N. Y. 376; Freer v. G. S. Sanitarium Co., 131 App. Div. 352.) The facts and circumstances in the case at bar are not such as to justify the conclusion that the legislature did not intend to delegate the power of the public service commission to fix local fares in the city of Niagara Falls, particularly on those lines in respect to which the consents for the construction and operation thereof contain no fare limitation. (V. W. Power Co. v. Commonwealth, 99 S. E. Rep. 723.) A municipality obtains no contractual rights in respect of franchises to public service corporations, as against the sovereign state which may be protected under the Federal Constitution. (City of Pawhuska v. Pawhuska Oil & Gas Co., U. S. Sup. Ct. June 9, 1919; Hunter v. Pittsburgh, 207 U. S. 161; New Orleans v. New Orleans Waterworks Co., 142 U. S. 79; Worcester v. Worcester Consol. St. Ry. Co., 196 U. S. 539; Englewood v. Denver & S. P. R. Co., 248 U. S. 294.)
Robert J. Moore, Corporation Counsel, for respondent.
The public service commission is not vested with power or jurisdiction to increase rates of fare beyond the maximum amount fixed in the franchise granted by the municipality to the railway company. (Matter of Quinby v. P. S. Comm., 223 N. Y. 244; People ex rel. N. Y. Ry. Co. v. P. S. Comm., 223 N. Y. 373; Matter of International Ry. Co. v. Rann, 224 N. Y. 87; People ex rel. Village of South Glens Falls v. P. S. Comm., 225 N. Y. 216; Matter of International Ry. Co. v. P. S. Comm., 226 N. Y. 474; Matter of Quinby, 227 N. Y. 601; Hannum v. United States, 226 U. S. 436; Canelli Wine Co. v. Tassi, 88 Misc. Rep. 574.) Where a state statute has conferred upon a municipality the power of making contracts with street railroad corporations, with respect to rates to be charged, both the' city and corporation are bound by such contracts. (Columbus R. P. & L. Co. v. City of Columbus, 249 U. S. 399.)

Opinion:
Hogan, J.
The appellant, International Railway Company, succeeded to the rights of several railroad companies operating railroads in and through the village of Niagara Falls, the village of Suspension Bridge and the town of Niagara between the two villages, a large portion of which was included in the city of Niagara Falls which was created in March, 1892.
! On August .22, 1905, the International Railway Company, desirous of extending its lines in said city, applied to the common council of the city of Niagara Falls for its consent to construct, maintain, operate and use single or double-track extensions of its railroad to be operated by electricity upon and along a number of streets constituting quite extended territory within the city of Niagara. Falls, together with the right to construct, maintain and operate turnouts, crossovers, etc., in connection with its existing tracks.
After due proceedings had, the common council granted consent to such extensions upon certain terms, the important one to be considered here being " Said Company shall not charge more than one fare of five cents for each passenger for any continuous ride or passage over its railroad and extensions within the present limits of the city of Niagara Falls." The consent was not to be operative unless the company filed its acceptance in writing of the consent and all conditions therein contained in the office of the clerk of the city of Niagara Falls. The same wits accepted and a portion of the extension made.
Upwards of thirteen years thereafter the railway company applied to the public service commission for an order permitting it to increase from five cents to seven cents the rate of fare to be charged passengers upon its road within the city of Niagara Falls. The city of Niagara Falls applied for a writ of prohibition restraining the public service commission from assuming and exercising jurisdiction of the application. The Special Term denied the motion but the order made thereon was reversed by the Appellate Division and the writ granted on the authority of Matter of Quinby v. Public Service Comm. (223 N. Y. 244).
Our decision in Matter of Quinby is controlling here. That case was argued at length March 25th, 1918, by counsel representing the parties directly interested. In addition) by permission of the court, counsel representing the public service commission, first district, the New York State Railways Company and a committee of corporation counsels of the municipalities of the state filed briefs. After a due consideration of the questions presented to this court, a decision was handed down April 5th, 1918, determining that an absolute writ of prohibition should be awarded restraining the public service commission from acting upon the application made to it to increase the rates of fare. We distinctly held in that case, without determining the limits of legislative power, that the provisions of the Railroad Law did not disclose a legislative intent to deal with the matter of rates fixed by agreement between local authorities and the railroad corporation, consequently the public service commission was unauthorized to nullify conditions attached to such consents by increasing rates without the consent of the local authorities.
Eighteen months later a motion was made in this court for the re-argument of the appeal, and it was alleged that our decisions in People ex rel. Village of South Glens Falls v. Public Service Commission (225 N. Y. 216) and Matter of International Railway Company v. Public Service Commission (226 N. Y. 474) had in substance overruled our decision in the Quinby case. We held to the contrary and not only denied the motion for the re-argument (227 N. Y. 601), but reiterated the views expressed in the original opinion.
In the instant case we are again asked to overrule our decision in the Quinby case. Here, as in that case, the question of the power of the legislature to confer upon the public service commission authority to abrogate conditions embodied in the agreement between local authorities and a railroad company is not presented, for the legislature has not undertaken to confer such power but has consistently for three successive sessions since the decision in the Quinby case declined so to do. We are now urged to hold that the legislature intended to delegate power to the public service commission to modify the rates prescribed in the contract between the local authorities and the railroad company, against the protest of the municipality, notwithstanding the refusal of three successive legislative bodies to accede to such demand for delegation of power. This we are not prepared to accede to.
The order should be affirmed, with costs.