Case Name: SOUTHWEST MISSOURI RAILROAD COMPANY, Appellant, v. PUBLIC SERVICE COMMISSION
Court: Supreme Court of Missouri
Jurisdiction: Missouri
Decision Date: 1920-02-16
Citations: 281 Mo. 52
Docket Number: 
Parties: SOUTHWEST MISSOURI RAILROAD COMPANY, Appellant, v. PUBLIC SERVICE COMMISSION.
Judges: Blair, J., concurs in a separate opinion, in which Woodson, Goode and Williamson, JJ., concur; Graves, J., dissents, in a separate opinion, in which Walker, C. J., concurs; Williams, J., not sitting.
Reporter: Missouri Reports
Volume: 281
Pages: 52–71

Head Matter:
SOUTHWEST MISSOURI RAILROAD COMPANY, Appellant, v. PUBLIC SERVICE COMMISSION.
In Banc,
Feburary 16, 1920.
1. STREET RAILWAY SPURS: Discontinuance. Tbe Public Service , Commission bas the power to authorize an interurban railway company, permitted by ordinance to lay its tracks in the streets .of a city, to discontinue the use of spur tracks connecting the interurban system with railroad stations in said city, no longer essential to the operation of the interurban lines and operated at substantial loss.
Held, by GRAVES, J., dissenting, with whom WALKER, C. X, concurs, that the Commission has no power to relieve a street railway company from its contractual obligation, imposed by its franchise ordinance, to maintain its tracks in designated streets for a designated period.
2. -: -: Restriction on City’s Power: Constitutional Provision. That provision of the Constitution (Section 20 of Article 12) which forbids the General Assembly to grant the right to construct and operate a street railway within a city “without first acquiring the consent of the local authorities having control of the street” does not confer on the city power, either by ordinance or contract, to impose upon a public utility conditions of operation and maintenance which would confiscate its property or destroy its power to serve the public. This cohstitutional provision does not mean that a street railway, once properly admitted into the city, cannot be permitted by the State to take up an unprofitable portion of its tracks.
Held, by GRAVES, X, dissenting, with whom WALKER, C. X, concurs, that where the franchise contract imposes on the street railway company the obligation to operate the tracks, the State, without the city’s consent, cannot, under said constitutional provision, grant permission to abandon the tracks, since the city has the right to impose the condition, and the operation of the tracks is not an exercise of a police regulation, such as is the increase or decrease of fares.
3. -: -: Denial for Lack of Jurisdiction: Questions for Review. When the Public Service Commission has dismissed the application of an interurban railway to discontinue the operation of certain spur tracks laid in the streets of a city, on the sole ground that it is without power to grant the relief, the question whether the franchise ordinance contains express provisions • denying the company the right to take up a part of its tracks when the consent of the State is procured, and the question whether the ordinance in itself by its terms and conditions permits the company to remove unprofitable portions of its tracks, cannot be considered in an appeal from an order of the Commission refusing to consider the case on the ground that it had no jurisdiction. These are questions of fact and for determination by the Commission, and the power of the court is simply one of review, after jurisdiction has been assumed.
4. -: --: Consent of City: Abandonment of Track. It cannot be ruled that if the street railway company is permitted to remove its tracks from a part of the streets which the city consented it might occupy with its .tracks, the consent of the city to the company to enter was not given at all.
5. -: -: Abandonment at Will. A street railway company which has obtained the city’s consent to occupy certain streets with its tracks cannot abandon any of them at its will. In no ' event can it abandon a street except upon a showing that the public will not be injured.
6. -: : Regulating Use. The power1 of the city to regulate the use of streets which the city has consented a street railway company may occupy is to be ascertained by the contractual re lation. The public service character of the company subjects it to regulation, but that fact does not determine whether the regulatory power extends to a particular thing.
7. -: -: Permission to Occupy: Obligation. A more permission granted by the franchise ordinance to a railway company to occupy streets for forty-nine years is not a contract to operate for that period, nor can such an obligation be implied from the permission. . 1
field, by GRAVES, J., dissenting, with whom WALKER, C. J., concurs, that where the city has consented that a railway company may construct its lines in the streets upon condition that it operate them for 49 years, the condition is valid, does not transgress the police powers of the State, and can be abrogated only by consent of the city itself.
8. -: Conditions Imposed by Franchise. The constitutional provision (Section 20 of Article 12) merely secured from legislative interference the right of a city to deny entrance to a street railway, and the right to impose conditions is implied, but is not unlimited, for the conditions must be within the scope of municipal authority. The city cannot, in the exercise of its power to condition its consent, whether by franchise contract or otherwise, curtail the police power vested in the Legislature, nor draw under its dominion subject-matter not otherwise within its jurisdiction.
field, by GRAVES, J., dissenting, with whom WALKER, C. J., concurs, that a condition expressed in the franchise contract that a street railway shall operate its lines for a period of 49 years as the price of the city’s consent to construct its tracks in designated streets is valid, does not contravene the police powers of the State, and therefore the Public Service Commission cannot grant to the company, without the city’s consent, permission to abandon certain spur tracks, on the ground that their further operation is unprofitable and wasteful. - ■
9. -: -: Estoppel. The question of estoppel in favor, of a city, in consideration of conditions imposed upon a street railway company at the time a franchise ordinance to occupy the streets was enacted, does not arise in a casé in which the public, represented by the Public Service Commission, is a substantial party. ' ,
Appeal from Cole Circuit Court. — Hon. J. G. Slate, Judge.
Reversed and remanded (with directions).
McReynolds & McReynolds for appellant.
The fact that the Constitution requires the consent of the municipal authorities to the grant of the use of the streets of such city for street railway purposes, does not prevent the Public Service Commission from granting to a street railway company relief from unreasonable requirements of an ordinance granting such franchise rights in the streets. A careful reading of Section 20 of Article 12 of the Constitution shows that the limitation on the power of the General Assembly is not general, but is strictly limited to the requirement that the consent of the local authorities having control of the streets intended to be used by the street railway must be obtained. The legislature is not even prohibited. from fixing the manner and terms-on which this consent may be obtairied. An investigation of the statutory enactments since the Constitution of 1875 shows how the General Assembly has progressively assumed greater control over the granting of such .franchises and placed limitations around the rights and powers of the municipality. R. S. 1879, sec. 4879; R. S. 1889, secs. 1523, 1824, 1826, 1826, 1827; Secs. 6115-6-7-8-9', R. S. 1899; Laws 1887, p. 40. A municipality has no power to grant a franchise to a railroad over its streets unless the same is given by constitutional or legislative authority. A. & P. Railroad v. St. Louis, 66 Mo. 256. Such powers'were first granted by legislative authority. Fink v. City of St. Louis, 71 Mo. 52,; State ex rel. Kansas City v. East Fifth St. Ry. Co., 140' Mo. 539; Kavanaugh v. St. Louis, 220 Mo. 496. The Legislature has made clear its meaning as to the powers, authority and scope of duty of the Public Service Commission. State ex inf. v. Gas Co., 254 Mo. 515; State ex rel. v. Pub. Serv. Comm., 270 Mo. 547'.
A. Z. Patterson, General Counsel, James D. Lindsay, Assistant Counsel, for Public Service Commission.
(1) That the Legislature attempted to grant to the Public Service Commission power to release a street railway company from a franchise obligation entered into upon a sub ject, essentially contractual in its .nature, and of the very essence of the purpose for which the company was chartered, and the franchise granted, is most doubtful. Public Service Commission Act, sec. 2, subdivisions 5, 7 and 26; Sec. 16, subdivisions 2, 3, 8 and 9; Sees. 261, 27, 43, 47 and 49; State ex rel. United Railways v. Commission, 270 Mb. 442; Lusk v. Atkinson, 268 Mo. 109; State ex rel. v. Commission, 192 S. W. 460 ; Quimby v. Pub. Serv. Comm., 223 N. Y. 224. (2) The grant of the franchise by the city, in respect of use of its streets, and acceptance thereof by the company, constituted a contract which neither the city nor the cornu pany could annul without the “consent” of the other. Sec. 20, Art. 12, Constitution; Springfield Ry. Co. v. City of Springfield, 85 Mo. 674; Hovehnan v. K. C. Horse Ry. Co., 79 Mo. 632'; State v. East Fifth St. Ry. Co., 140 Mo. 539; St. Louis & M. R. Railroad Co. v. Kirkwood, 159 Mo. 239; Blair v. Chicago, 201 U. S. 400; Grand Trunk Ry. Co. v. South Bend, 227 U. S. 544, 44 U. R. A. (N. S.) 405. (3) The State may authorize a city and a street railway company to make an inviolable contract for a definite and not grossly unreasonable period, for the occupation and use of certain streets of the city by the company, in the service of the public. Milwaukee Electric Ry. & light Co. v. R. R. Comm., 238 U. S. 17'5; Home Tel. & Tel. Co. v. Los Angeles, 211 U. S. 273; Detroit v. Detroit Ry. Co., 184 U. S. 382; Cleveland v. Cleveland City Ry. Co., 194 U. S. 533. Provided the authority be granted in express and unmistakable terms; and in this case the authority is constitutional, and unuuistakable. Sec. 20, Art. 12, Constitution. And the unabridged police power of the State to prescribe reasonable rates, and regulations, legislative in nature, upon subjects within the scope of the legislative power reserved by the State (Sec. 5, Art. 12, Constitution; Sedalia v. Commission, 204 S. W. 497; Fulton v. Commission, 204 S. W. 386; St. Louis v. Commission, 207 S. W. 799; Kansas City v. Kansas City Rys. Co., 140 Mo. 559;) does not destroy the contractual power of the city, exercised upon a contractual subject, in the manner and within the limits prescribed by said Section 20. (4) The State has set a limit upon its own power over the streets of its cities in the one respect of the occupation and use of those streets by a street railway company, in that the city must be contracted with, must give consent in its own constitutional right, as a condition precedent to such occupation and use. The city lets the use of a definite place, for a definite time, and for a definite purpose; the company enters upon the place, for the time, and to carry out the purpose — a service to the public for its own prospective gain. (5) Irrespective of all the foregoing considerations, the order of the Commission should be approved, because it could not properly grant an application which neither alleged inability to operate the spurs, nor a loss on all the operations of the company, nor such impairment of its finances as would impair its ability to render efficient service to the public, upon other or more important branches of its system. State ex rel. Mo. Pac. Ry. v. Atkinson, 289 Mo. 646; Iowa v. Old Colony Trust Co., 215 Fed., 307 L. R. A. 1915A. 549.

Opinion:
BOND, C. J.
— The plaintiff is an incorporated interurban railway company connecting Carthage, Joplin, Webb City and other towns in Missouri, and extending into Kansas. The construction of tins street railway in the City of Carthage was under and ordinance permitting the assignor of the company the user of a large number of local streets, and requiring in consideration thereof interurban connections by electric rapid transit, with certain other towns named in the ordinance. These interurban connections were duly constructed and are now fully maintained by plaintiff, which, also, as incidental thereto, ran spur tracks through the streets of Carthage connecting its interurban system with two railroad stations in that city. Over these spur tracks transfers were issued by the rapid transit lines. The plaintiff asked the Public Service Commission to discontinue these spur tracks, which it alleges were not essential to the maintenance of its interurban lines and which were sparsely used, ran over a very short distance and could not be operated without a loss of $2500 a year or $50,000 in 20 years. The Commission took the view that it .was without the power to grant the relief sought, however "meritorious the case presented by the company might be" and dismissed the complaint. Proper steps were taken to obtain a review of the findings and orders of the Commission, which were sustained by the Circuit Court of Cole County, from which judgment the railway company duly appealed.
I. Unless the issue in this case is distinguishable in principle from the one presented in City of St. Louis v. Public Service Commission, 207 S. W. 799, this appeal is dominated by that ruling and the judgment of the circuit court will have to be reversed and the order of the Commission set aside. The learned counsel for the Commission concede the rectitude of that ruling and the cases sustaining it in this jurisdiction, but insist that said ruling related to the question of the power of the Commission to raise the rates of water, telephone and street railway companies "above those fixed by contract" with a municipality, and that they do not relate to cases like the present which involves the rights of a utility (in this instance a street railway) to discontinue the operation of any of its1 tracks constructed under a permissive ordinance, for the reason that it could be carried on only at a great loss.
The franchise of a street railway company is derivable solely from the Legislature. Its right to exercise that franchise over the streets and alleys of a particular municipality, is subject to the regulatory control of such city, which may evidence that control by an ordinance consenting to the use of its streets and alleys and designating those over which the street railway may operate its State-derived corporate powers. [Sec. 20, Art. 12,- Con stitution 1875.] It was ruled that the City of St. Louis, in the exercise of such a regulatory control over its streets, could not make an inviolable contract, with a street railway for a fixed rate of fare; that to do so would impinge upon the reserve power of the Legislature to exercise plenary control of any matter falling' within the domain of the police power, as rate-making does. It was further held that Section 20 of Article 12 was not designed nor intended to abridge the full power of the Legislature over the class of subjects embraced within the inalienable police power of the State. [Const. Art. 12, sec. 5; Tranberger v. Railroad, 250 Mo. 46, affirmed 238 U. S. 67.] ^ It was also held that Section 20 of Article 12 of the Constitution,, to-wit: "No law shall be passed by the General Assembly granting the right to construct and operate a street railroad within any city, town, village, or on any public highway, without first acquiring the consent of the local authorities having control of the street or highway proposed to be occupied by such street railroad; and the franchises so granted shall not be transferred without similar assent first obtained," did not, in terms, nor by necessary intendment, devolve upon the municipalities therein mentioned any part of the unrestricted power of the Legislature to deal with all matters pertaining to the police power of the State where not constitutionally prohibited from so doing.
In the exercise of this great lawmaking function, the State is not obstructed by a contract between one of its agencies (cities, towns or villages) and other persons, for the reason that the State cannot alienate any of its sovereign powers which ai*e necessary to the public welfare, or essential to the protection of the health, morals and property of its citizens. As an obvious corollary of this principle, no municipality, either by ordinance or contract, can impose upon a public utility essential to the welfare of. the people, conditions of operation or maintenance which would confiscate its property or destroy its power to serve the public.
We are quite of opinion that there is no distinction in principle between the obligation (if, indeed, any was imposed by the mere permissive ordinance in question) on the part of the street railway company to maintain two spur tracks, not indispensable to the performance of its interurban duties, at a cost of operation which would preclude them from carrying- on and maintaining its interurban system for the benefit.of the people of the State served by that convenience, and the duty to exact a reasonable rate for service. Both relate to adequate performance of obligation to the public and are controllable by the Legislature or its authorized agency, the Public Service Commission. [Selectmen v. Cit. St. Ry., 199 Mass. 394.] It is well stated in a recent meritorious publication, viz: "It is settled that the general police power of the State embraces the regulation of the service and rates of public utility enterprises for the promotion of public convenience and the general welfare." [Harvard Law Review, Nov. 1918, p. 741.] (Italics ours). See, also, Munn v. Illinois, 94 U. S. 113, and a number of other decisions, including State ex rel. Sedalia v. Pub. Serv. Com., 204 S. W. 497. See, also, Union Drygoods Co. v. Ga. Pub. Serv. Com. U. S. Sup. Ct. Ad. Ops. Feb. 1, 1919, p. 116. >
As we understand the finding of the Public Service Commission upon the facts adduced in support of the complaint filed before it, the evidence conclusively showed that the two local spur tracks connected with the general interurban system could only be maintained and operated at a disastrous loss. It seems conceded that the weight of evidence fully sustains this finding of the Public Service Commission, which body only refused relief upon the notion that it was constitutionally prohibited by the terms of Section 20, Article 12, of the Constitution, supra. It has been shown that that provision of the Constitution is not restrictive of the powers of the Commission in virtue of its agency as the representative of the Legislature.
It necessarily follows that the judgment of the circuit court sustaining" the order of the Commission dismissing the complaint must be reversed and the cause remanded with directions to the circuit court to vacate that judgment and to enter a judgment setting aside the finding of the Commission and remand the cause to that body with directions to proceed in a manner not inconsistent with this opinion. It is so ordered.
PER CURIAMlThe foregoing opinion was prepared by our late associate, Bond, O. J., and was thereafter transferred to Court in Banc. After reargument and due consideration the opinion is adopted and the judgment of the circuit court is reversed and the cause remanded with the directions set out in the opinion.
Blair, J., concurs in a separate opinion, in which Woodson, Goode and Williamson, JJ., concur; Graves, J., dissents, in a separate opinion, in which Walker, C. J., concurs; Williams, J., not sitting.